ASIAN MICRO HOLDINGS LIMITED

Transcription

1 ASIAN MICRO HOLDINGS LIMITED Go Green for the ECO Future Annual Report 2012

2 CONTENTS 01 Corporate Information 02 Corporate Profile 04 Chairman s Message 06 Board of Directors 08 Key Management 09 Financial Highlights 11 Report on Corporate Governance 22 Directors Report 28 Statement by Directors 29 Independent Auditor s Report 31 Balance Sheets 33 Consolidated Statement of Comprehensive Income 34 Statements of Changes in Equity 37 Consolidated Cash Flow Statement 39 Notes to the Financial Statements 91 Statistics of Shareholdings 92 Shareholders Information 93 Notice of Annual General Meeting Proxy Form This annual report has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), RHT Capital Pte. Ltd. for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Company s Sponsor has not independently verified the contents of this annual report including the correctness of any of the figures used, statements or opinions made. This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report including the correctness of any of the statements or opinions made or reports contained in this annual report. The contact person for the Sponsor is Mr. Lau Yan Wai Telephone number:

3 Corporate Information Board of Directors Executive Lim Kee Victor Lim CEO and Group Managing Director Lin Xianglong, Winchester Executive Director Ng Chee Wee Executive Director and Group Financial Controller Non-Executive Dr. Wang Kai Yuen Non-Executive Chairman Teo Kio Chang Chiaw Choon Independent Director Chue Wai Tat Independent Director Audit Committee Dr. Wang Kai Yuen Chairman Teo Kio Chang Chiaw Choon Chue Wai Tat Nominating Committee Teo Kio Chang Chiaw Choon Chairman Dr. Wang Kai Yuen Chue Wai Tat Remuneration Committee Dr. Wang Kai Yuen Chairman Teo Kio Chang Chiaw Choon Chue Wai Tat Company Secretary Lee Ellen Registered and Business Office 1 Tech Park Crescent Tuas Tech Park Singapore Tel: / Fax: Website: Bankers Malayan Banking Berhad United Overseas Bank Limited Share Registrar B.A.C.S. Private Limited 63 Cantonment Road Singapore Continuing Sponsor RHT Capital Pte. Ltd. 6 Battery Road #10-01 Singapore Auditors Ernst & Young LLP One Raffles Quay North Tower Level 18 Singapore Partner-in-charge: Philip Ling (Since financial year ended 30 June 2011) Annual Report

4 2 Asian Micro Holdings Limited

5 Corporate Profile Asian Micro Holdings Limited (listed in the SGX-SESDAQ in September 1999), provides Compressed Natural Gas ( CNG ) supply related products & services. The Group s secondary core business is in recycling and precision cleaning of packaging trays and media/disk cassettes used in the hard disk drive and semiconductor industries in Singapore and Thailand. The Group is also serving these industries with clean room grade plastic packaging bags and materials for packaging cleaned finished products. The Group is supplying CNG skids which are used for storing and transporting CNG to the local industries for gas cutting, heat treatment and power generation. It can also be used for powering of natural gas engines and off-the-road vehicles. The Group continually explores innovative methods of introducing industrial consumers to the use of natural gas and energy saving methods. Our customers are namely from the oil and gas, marine and offshore, aviation, shipyard and manufacturing industries. The Group provides natural gas as an alternative fuels which is gaining popularity in the shipyards industries to be used for steel gas cutting, natural gas to the industries for powering up power generator to reduce electricity cost. The Group also imports, sell or lease specialized vehicles like CNG prime movers, CNG tractors and CNG forklifts which cut down CO2 emission, reduces pollutants PM2.5 and many other hazardous hydrocarbon emissions. The Group will embark on growth on energy related business and strive to add value to customers, shareholders and its staff. Annual Report

6 CHAIRMAN S MESSAGE On behalf of the Board of Directors, I am presenting the Annual Report and the Audited Financial Statements of Asian Micro Holdings Limited and its subsidiaries for the financial year ended. FY 2012 remained competitive for the Group as the global export market for storage devices was badly affected by the drop in demands for the hard disk drives ( HDD ). Together with the natural disaster in Thailand, this ultimately affected our cleaning service and clean room plastics packaging bags manufacturing business. However, after the floods in Thailand, we were able to expedite our recovery process to recognize the insurance claims earlier than expected and to resume the operations within a short period. Net loss attributable to shareholders after taking into consideration of taxation and minority interest amounted to S$0.5 million or a decrease of 89% compared to the net loss of S$4.4 million in FY Looking Ahead Dr. Wang Kai Yuen, Chairman Financial Performance For FY 2012, the Group s consolidated revenue decreased 32% or S$2.8 million from S$8.6 million in FY 2011 to S$5.8 million in FY The decrease in revenue is mainly due to closure of our Thailand plants as a result of the massive flooding in Thailand and the absence of revenue for the infrastructure project in current year. The business will remain challenging in FY 2013 and the Group will continue its cost cutting effort and measures to render all the subsidiaries profitable. The Group is focusing on improving on profit making subsidiaries and taking action to terminate any loss making business. The Group will continue to promote the use of natural gas in the manufacturing and service industries for the purposes of gas cutting, heat treatment processes, powering of natural gas tractors and electrical power generation in the marine and offshore industries. We will continue to improve on our business strategies to generate new sources of revenue and earnings for the Group, thereby enhancing shareholders value in the long run. 4 Asian Micro Holdings Limited

7 CHAIRMAN S MESSAGE Corporate Governance The Group remains committed to maintaining our regime of high standards of corporate governance. We pledge to provide timely and accurate information through announcements and investor relations activities for the benefits of all stakeholders. Appreciation On behalf of the Board, I would like to thank all shareholders for their continued loyalty and support to the Company despite the continued losses. We also acknowledge the strong support of our customers, bankers and business associates of our Company in 2012 and we are looking forward to your strong support to help us to achieve a better 2013 and beyond. Last, but not least, I would like to thank all staff and management for their dedicated service and sacrifice in FY 2012 and hope that FY 2013 will yield better results. Dr. Wang Kai Yuen Chairman 28 September 2012 Annual Report

8 BOARD OF DIRECTORS Dr. Wang Kai Yuen Dr. Wang Kai Yuen was appointed as the Independent Non-Executive Chairman of the Group on 26 August He had been an Independent Director of the Group since He is also the Chairman of the Company s Audit and Remuneration Committees and a member of the Nominating Committee. He retired as Managing Director of Fuji Xerox Singapore Software Centre in December He holds several other directorships including directorships in ComfortDelGro Corporation Limited, COSCO Corporation (Singapore) Ltd, Hiap Hoe Ltd, HLH Ltd, EOC Ltd, SuperBowl Holdings Ltd, Xpress Holdings Ltd, Ezion Holdings Ltd, Matex International Ltd, A-Sonic Aerospace Ltd and China Aviation Oil (Singapore) Corporation Ltd. Dr. Wang holds a Bachelor of Engineering (Electrical Engineering) (Hons) from the University of Singapore and a Masters of Science (Industrial Engineering), a Masters of Science (Electrical Engineering) and a PhD (Engineering) from Stanford University, USA. 6 Asian Micro Holdings Limited

9 BOARD OF DIRECTORS 100% ECO Friendly 2. Mr. lim kee Victor Lim Mr. Lim Kee Victor Lim is the Chief Executive Officer ( CEO ) and Group Managing Director of the Company. Victor Lim is the key founder of the Group and currently provides the overall strategic direction and policy decisions of the Group. Prior to setting up the Group, Victor Lim was the Engineering Support Manager in Micropolis Singapore Ltd (a producer of high capacity Hard Disk Drives) from 1983 to Victor Lim holds a Diploma in Production Engineering from the Singapore Polytechnic and has more than 25 years experience in the electronic and hard disk drive industry. 3. Mr. Chue Wai Tat Mr. Chue Wai Tat was appointed as an Independent Non-Executive Director of the Company in July He started his career with the Inland Revenue Department (now known as Inland Revenue Authority of Singapore) for 10 years before joining the private sector. He has accumulated more than 20 years of experience, mainly in senior finance position in MNC and GLC such as Group/Regional/Controller of MNC (Universal Furniture, Seagate Technology, Asia Pacific Resources International Ltd) and VP Group Finance of Media Corporation of Singapore Pte Ltd, before retiring on 31 December Since March 2011, he has taken up retirement positions and is currently with Venus Beauty Pte Ltd. Mr. Chue holds a Bachelor of Social Science (Economics & Political Science) (Hons) from the University of Singapore and was qualified and admitted as a Fellow member of the Association of Chartered Certified Accountants (ACCA) and a nonpracticing Fellow member of the Institute of Certified Public Accountants of Singapore (ICPAS). 4. Mr. Teo Kio Chang Chiaw Choon Mr. Teo Kio Chang Chiaw Choon is an Independent Non-Executive Director of the Company since He is also the Chairman of the Group s Nominating Committee and a member of the Audit and Remuneration Committees. He is a partner of KC Teo Consultants, a management consultancy firm since Mr. Chang holds a Bachelor of Science (Honours) degree from the Nanyang University. 5. Mr. Ng Chee Wee Mr. Ng Chee Wee joined the Group in August 2010 as Group Financial Controller and was appointed as an Executive Director of the Company in May He has the overall responsibility for the Group s finance, accounting, treasury, legal and tax functions. Mr. Ng has more than 10 years experience in the accounting and finance fields for various industries. He holds a Diploma with Merit in Accountancy from Ngee Ann Polytechnic in Singapore and completed the Association of Chartered Certified Accountants course in He is a Fellow member of the Association of Chartered Certified Accountants (ACCA) and a nonpractising member of the Institute of Certified Public Accountants of Singapore (ICPAS). 6. Mr. Lin Xianglong, Winchester Mr. Lin Xianglong, Winchester was appointed as an Executive Director of the Company in August He is the Deputy Managing Director for the Group s Natural Gas Vehicle ( NGV ) related business division in Thailand. He is also the overall responsible person for marketing department for the Group s business activities in Singapore and Thailand. Besides overseeing the operation of the CNG conversion centres in Thailand, he is now responsible for the Clean Room packaging materials business for the Hard Disk Drive industries ( HDD ) in Singapore and Thailand. Prior to this, Winchester Lin joined the Group as a Sales Executive in June 2007 and was subsequently promoted to Business Development Manager in September 2008 and Deputy Managing Director in October He holds a Diploma in Marketing from Nanyang Polytechnic. Winchester Lin is the son of the CEO and Group Managing Director, Victor Lim. Annual Report

10 KEY MANAGEMENT MR. Ng Cher Lek Mr. Ng Cher Lek is the Production Manager for ACI Industries Pte Ltd. He is responsible for the cleaning and recycling operations in Singapore and supporting the Deputy Managing Director for business development and sales. He has more than 20 years of manufacturing experience in the hard disk drive and semiconductor industries in various operational departments and holding positions of Production/ Manufacturing Manager, Senior Engineering Manager & Senior Operation Manager. He holds a Diploma in Mechanical Engineering from Singapore Polytechnic and a Diploma in Management Studies from Singapore Institute of Management. MS. CHEW KAH YAN Ms. Leong Lai Heng Ms. Leong Lai Heng was an Executive Director of the Company since February 1997 and has resigned from the Board in August She is currently working as an advisor for the Company and director of the subsidiaries. She is the spouse of the CEO and Group Managing Director, Victor Lim and mother of the Executive Director, Winchester Lin. Ms. Chew Kah Yan is the Group Accountant responsible and overseeing the group s accounting, financial and tax functions. Prior to joining the group, Ms. Chew was the Audit Senior of Deloitte & Touche LLP, Singapore. She completed the Association of Chartered Certified Accountants course in 2006 and is a member of the Association of Chartered Certified Accountants (ACCA). Mr. Lim See Wai Mr. Lim See Wai is the Assistant Engineering Director for AM NGV (S) Pte Ltd. He is responsible for the development and expansion of CNG-related projects and has more than 3 years experience in this field. He joined the company as a Mechanical Engineer and was subsequently promoted to Project Development Manager in October 2008 and Assistant Engineering Director in October He holds a Bachelor s degree in Mechanical Industry Engineering from University Technology Malaysia. 8 Asian Micro Holdings Limited

11 FINANCIAL HIGHLIGHTS S$ 000 S$ 000 S$ 000 S$ 000 S$ 000 (reclassified) Results of Operation Turnover 21,115 12,113 20,704 8,575 5,806 Profit / (Loss) before taxation and non-controlling interest (5,496) (7,678) (3,011) (4,640) (306) Taxation 9 8 (70) 211 (162) Profit / (Loss) from discontinued operation, net of tax (145) Profit / (Loss) after taxation but before non-controlling interest (5,632) (7,670) (3,081) (4,429) (468) Attributable to : Owners of the parent (5,445) (7,499) (3,023) (3,897) (258) Non-controlling interest (187) (171) (58) (532) (210) Financial Position Fixed Assets 5,183 2,066 1,716 1,098 1,210 Investment Property 3,200 Associated Company Current Assets 12,198 7,953 6,602 4,177 4,209 Current Liabilities (6,576) (5,023) (6,047) (4,028) (4,200) Net Current Assets 5,622 2, Non Current Liabilities (1,750) (184) (105) (469) (1,046) Representing Shareholders Equity 12,204 4,888 1,997 1, Non-controlling interest (419) (617) EPS before Taxation (S$cents) (1.59) (2.17) (0.83) (1.00) (0.07) EPS after Taxation & NCI (S$cents) (1.59) (2.17) (0.84) (0.96) (0.10) NTA per Share (S$cents) Annual Report

12 FINANCIAL HIGHLIGHTS TURNOVER (S$ 000) Turnover by region (S$ 000) 5,806 8,575 20,704 12,113 21,115 Singapore 4,439 Thailand 1,367 5,806 Thailand 1, NET LOSS ATTRIBUTABLE TO SHAREHOLDERS (S$ 000) Singapore 4, Turnover by business activitiets (S$ 000) Tray recycling 1,773 Manufacturing 2,176 NGV related 1,857 5, ,897 3,023 7,499 5,445 NGV related 1,857 Tray recycling 1, Asian Micro Holdings Limited Manufacturing 2,176

13 Report on Corporate Governance Asian Micro Holdings Limited (the Company ) recognizes the importance of corporate governance and is committed to uphold the high standards of corporate governance, and to put in place effective self-regulatory corporate practices to preserve and enhance long term shareholders value. This report outlines the Company s corporate governance practices with specific reference to the Code of Corporate Governance 2005 (the Code ). BOARD MATTERS Principle 1 Board s Conduct of its Affairs The Board meets regularly, both formally and informally, and as frequent as warranted by particular circumstances. The principal functions of the Board, apart from its statutory responsibilities are: (a) (b) (c) (d) (e) (f) to approve the Group s corporate policies, financial objectives and direction of the Group and monitoring performance of management; to approve annual budgets, key operational issues, major funding and investment proposals; to set overall strategies and supervision of the Group s business and affairs; to review the financial performance of the Group; to approve nominations of Directors and appointment to the various Board committees and key managerial personnel; and to assume responsibility for corporate governance. The Board discharges its responsibilities either directly or indirectly through the various Board committees. The Board delegates the formulation of business policies and day-to-day management to the Chief Executive Officer. The Board conducts regular scheduled meetings. In the financial year under review, the Board met twice. Ad-hoc meetings are convened as and when required. The attendance of Directors at meetings of the Board and Board committees, as well as the frequency of such meetings, is disclosed in this report. A formal letter of appointment is provided to all new Directors. The letter indicates the amount of time commitment required and the scope of duties. The Company has adopted a policy that welcomes the Directors to request for further explanations, briefings or informal discussions on any aspect of the Company s operations or businesses from the Management. Newly appointed Directors will receive appropriate training and orientation programmes to familiarize themselves with the operations of the Company and its major business processes. The Management monitors changes to regulations and accounting standards closely. To keep pace with accounting, legal, industry specific knowledge and regulatory changes, where these changes have an important bearing on the Company or Directors disclosure obligations, Directors are briefed either during Board meetings or at specially convened sessions. Annual Report

14 Report on Corporate Governance Principle 2 Board Composition and Balance Currently, the members of the Board are: Executive Directors Mr. Lim Kee Victor Lim (Chief Executive Officer & Group Managing Director) Mr. Lin Xianglong, Winchester (Executive Director) (Appointed on 24 August 2011) Mr. Ng Chee Wee (Executive Director & Group Financial Controller) Independent Non-Executive Directors Dr. Wang Kai Yuen (Chairman) Mr. Teo Kio Chang Chiaw Choon Mr. Chue Wai Tat (Appointed on 6 July 2011) The Nominating Committee is of the view that the current Board comprises Directors who, have the appropriate mix of diversity, expertise and experience, and collectively possess the necessary core competencies for effective functioning and informed decision-making. The Board has reviewed its composition of Directors and is satisfied that such composition is appropriate for the nature and scope of the Group s operations and facilitates effective decision-making. The Board will constantly examine its size, with the view to determining its impact upon its effectiveness. With the retirement of Dr. Wang Kai Yuen, who will not be seeking for re-election at this forthcoming Annual General Meeting ( AGM ), the Board is of the view that its current size, consisting of five Directors (excluding Dr. Wang), is appropriate, taking into account the nature and scope of the operations and current financial positions of the Group. Members of the Board are constantly in touch with the Management to provide advice and guidance on strategic issues and on matters for which their expertise will be constructive to the Group. Key information on the Directors is set out below and on pages 6 and 7 of this Annual Report. Name of Director Age Mr. Lim Kee Victor Lim 55 Mr. Lin Xianglong, Winchester 28 Mr. Ng Chee Wee 39 Dr. Wang Kai Yuen 65 Mr. Teo Kio Chang Chiaw Choon 65 Mr. Chue Wai Tat 65 Directorship (a) Date first appointed (b) Date last re-elected (a) 18/2/1997 (b) NA (a) 24/8/2011 (b) 28/10/2011 (a) 6/5/2011 (b) 28/10/2011 (a) 20/8/1999 (b) 28/10/2009 (a) 20/8/1999 (b) 28/10/2011 (a) 6/7/2011 (b) 28/10/2011 Due for re-election at next AGM Retiring pursuant to Article 89 Retiring pursuant to Article Asian Micro Holdings Limited

15 Report on Corporate Governance Principle 3 Chairman and Chief Executive Officer Dr. Wang Kai Yuen was the Chairman of the Company since 26 August He will be due for re-election at this forthcoming AGM pursuant to Article 89 of the Company s Articles of Association and had indicated that he will not be seeking for re-election. Mr. Lim Kee Victor Lim will be appointed as the Executive Chairman, replacing Dr. Wang Kai Yuen, after the conclusion of the aforesaid AGM. The Chairman bears responsibility for the conduct of the Board. The responsibilities of the Chairman include: (a) (b) (c) (d) (e) (f) scheduling meetings that enable the Board to perform its duties responsibly while not interfering with the flow of the Company s operations; exercising control over quality, quantity and timeliness of the flow of information between Management and the Board; assisting to ensure compliance with the Company s guidelines on corporate governance; encourage effective communication with shareholders; facilitating the effective contribution of non-executive directors; and encouraging constructive relations between executive and non-executive directors and management. Mr. Lim Kee Victor Lim, the Chief Executive Officer and Group Managing Director, bears executive responsibility for the Company s business. Mr. Victor Lim sets the business strategies and directions for the Group and manages the business operations of the Group with Mr. Lin Xianglong, Winchester and Mr. Ng Chee Wee, who are Executive Directors and other management staff. Mr. Chue Wai Tat will be appointed as Lead Independent Director at the conclusion of the forthcoming AGM. The Board confirms that the following factors sufficiently ensure that power is not concentrated in the hands of one individual and that there is the required accountability and independent decision making by the Board is maintained: (a) (b) Active participation by independent directors during board meetings who challenge the assumptions and proposals of the management on all relevant issues affecting the affairs and the business of the Group; and The appointment of a Lead Independent Director to address shareholders concerns which have not been resolved through the normal channels of the Chairman and CEO or for which such contact is inappropriate. The Lead Independent Director also acts as the principal liaison between the independent directors and the Chairman on sensitive issues. Annual Report

16 Report on Corporate Governance Principle 4 Board Membership The Nominating Committee ( NC ) comprises three Directors, of whom, including the Chairman, are independent nonexecutive Directors. The members are: Mr. Teo Kio Chang Chiaw Choon Dr. Wang Kai Yuen Mr. Chue Wai Tat (Chairman) The principal functions of the NC are: (a) (b) (c) (d) (e) (f) (g) to identify candidates, review nominations for both appointment and re-appointment of the Directors to the Board for its approval. For the appointment of new candidates to the Board, the proposed appointee s background, experience and other board memberships will be taken into account; to review the Board structure and size including the composition of the Board generally and the balance between executive and non-executive Directors appointed to the Board, and make recommendations to the Board with regard to any adjustments that are deemed necessary; to review the independence of each Director annually; to assess the effectiveness of the Board as a whole, and the contribution by each Director to the effectiveness of the Board; to decide how the performance of the Board may be evaluated and to propose objective performance criteria; to report to the Board its findings from time to time on matters arising and requiring the attention of the NC; and to undertake such other reviews, projects, functions, duties and responsibilities as may be requested by the Board. The NC has adopted written terms of reference. In accordance with Article 88 and Article 89 of the Articles of Association of the Company, new Directors must submit themselves for re-election at the next Annual General Meeting of the Company and one-third of the Directors, other than the Managing Director, who are eligible for re-election must retire by rotation at every AGM. The Directors of the Company submit themselves for re-nomination and re-election at the regular intervals at least every 3 years. The NC has recommended the nomination of Mr. Ng Chee Wee for re-election at the forthcoming AGM. Dr. Wang Kai Yuen, an Independent Non-Executive Director and Chairman of the Company who is due for retirement pursuant to Article 89 of the Articles of Association of the Company, will not be seeking for re-election at the forthcoming AGM. Following the retirement of Dr. Wang Kai Yuen at the forthcoming AGM, he will step down as a member of the Nominating Committee. The Committee is of the view that its current size, excluding Dr. Wang Kai Yuen, is appropriate, taking into account the nature and scope of the operations and current financial positions of the Group. The Company has in place a system to assess the performance of the Board as a whole. The result of the exercise is reviewed by the NC before submitting to the Board for discussing and determining areas for improvement and enhancing of the Board effectiveness. The Board adopts the independence test recommended by the Code. Taking into account the independence test, the NC considers and determines the independence of directors. Key information regarding the directors is set out in this Annual Report under the heading titled Board of Directors. 14 Asian Micro Holdings Limited

17 Report on Corporate Governance Principle 5 Board Performance In determining the objective performance criteria for evaluation and determination for the FY2012, the NC had considered the attendance, participation and contribution of individual Directors at Board and Committee meetings to evaluate each Director s performance. The attendances of the Directors at meetings of the Board and Board Committees during the year are as follows: Board Meeting Audit Committee Remuneration Committee Nominating Committee No. of meeting held : Name of Director : Lim Kee Victor Lim 2 NA NA NA Lin Xianglong, Winchester 1 1 NA NA NA Ng Chee Wee 1 NA NA NA Dr. Wang Kai Yuen Teo Kio Chang Chiaw Choon Chue Wai Tat appointed on 24 August appointed on 6 July Principle 6 Access to Information Board members are provided with adequate and timely information prior to Board meetings, and on an ongoing basis, have separate and independent access to the Company s senior management. Detailed Board Committee/Board papers are prepared for each Board Committee/Board meeting. The Board papers include sufficient information on financial, business and corporate issues from Management to enable Directors to be properly informed on issues to be considered at Board Meetings. The Board has separate and independent access to the Company s senior management and the Company Secretary to address any enquires at all times. The Company Secretary attends Board meetings and is responsible for ensuring that Board procedures are followed. The Company Secretary ensures that the Company complies with the requirements of the Companies Act Cap. 50. Together with the management staff of the Company, the Company Secretary is responsible for compliance with all other SGX-ST rules and regulations, which are applicable to the Company. In addition, the Board takes independent professional advice as and when necessary to enable it to discharge its duty and responsibilities effectively. The cost of such professional advice will be borne by the Company. The appointment and the removal of the Company Secretary are subject to the Board s approval. Annual Report

18 Report on Corporate Governance REMUNERATION MATTERS Principle 7 Principle 8 Principle 9 Procedures for Developing Remuneration Policies Level and Mix of Remuneration Disclosure on Remuneration The Remuneration Committee ( RC ) comprises the following members: Dr. Wang Kai Yuen Mr. Teo Kio Chang Chiaw Choon Mr. Chue Wai Tat (Chairman) Following the retirement of Dr. Wang Kai Yuen at the forthcoming AGM, he will step down as the Chairman and member of the RC. The Committee is of the view that its current size, excluding Dr. Wang Kai Yuen, is appropriate, taking into account the nature and scope of the operations and current financial positions of the Group. Mr. Teo Kio Chang Chiaw Choon will be appointed as the Chairman of RC, replacing Dr. Wang Kai Yuen, effective following the conclusion of the forthcoming AGM. The principal responsibilities of the RC are: to review and recommend to the Board an appropriate and competitive framework of remuneration for the Board and key executives of the Group to attract, retain and motivate employees of the required caliber to manage the Company successfully; to determine and recommend to the Board specific remuneration packages for each Executive Director, taking into account factors including remuneration packages of Executive Directors in comparable industries as well as the performance of the Company and that of the Executive Directors; to review Management s proposal of the fees for Independent Non-Executive Directors; and to ensure that the remuneration policies and systems of the Group supports the Group s objectives and strategies. The RC has adopted written terms of reference. The remuneration package adopted for the Executive Directors is as per the service contract entered into between the respective Executive Director and the Company. The NC, together with the RC, decides on the specific remuneration package for an Executive Director upon recruitment. Thereafter, the RC reviews subsequent increments, bonuses and allowances where these payments are discretionary. No Director or member of the RC is involved in deciding his or her own remuneration. The RC reviews what compensation commitments the executive directors service contracts would entail in event of early termination and aims to be fair and avoid rewarding inadequate performance. The service contract may be terminated by either the Company or Executive Directors giving to the other at least 6 months prior written notice. The RC is of view that the Directors service contracts are not excessively long or with onerous removal clauses. Independent Non-Executive Directors do not enter into any Service Contracts with the Company. Save for the receipt of directors fees and participation in the Company s Employees Share Option Scheme, Independent Non-Executive Directors do not receive any remuneration from the Company. Directors fees are set in accordance with a remuneration framework comprising basic fees, attendance fees and additional fees for serving on any of the Board Committees. Directors fees are approved by the shareholders of the Company as a lump sum payment at the Annual General Meeting of the Company. No employees of the Company and its subsidiaries are related to Directors or the Chief Executive Officer whose remuneration exceeded S$150,000 during the financial year ended. 16 Asian Micro Holdings Limited

19 Report on Corporate Governance The following table shows the breakdown of the fees and remuneration of Directors (in percentage terms) for the year ended : Remuneration band and name of directors Fee Salary Other Benefits including benefits in kind Total % % % % Below S$250,000 : Lim Kee Victor Lim Leong Lai Heng Lin Xianglong, Winchester Ng Chee Wee Dr. Wang Kai Yuen Teo Kio Chang Chiaw Choon Chue Wai Tat resigned on 24 August appointed on 24 August appointed on 6 July The annual remuneration for key executives (in percentage terms) during the year is as follows: Key executives Salary Bonus Other Benefits Total % % % % Below S$250,000 : Leong Lai Heng Lin Xianglong, Winchester Lim See Wai Ng Cher Lek Chew Kah Yan Yang Lei Ang Chee Hao appointed as Advisor on 24 August revoked as Alternate Director to Mdm. Leong Lai Heng on 24 August appointed as Group Accountant on 16 April resigned as Group Accountant on 12 April resigned as Sales and Marketing Executive on 10 November Annual Report

20 Report on Corporate Governance ACCOUNTABILITY AND AUDIT Principle 10 Accountability In presenting the annual financial statements and half-yearly announcements to shareholders, it is the aim of the Board to provide the shareholders with a detailed analysis, explanation and assessment of the Group s financial position and prospects. Management currently provides all members of the Board with appropriately detailed management accounts of the Group s performance, position and prospects on a half-yearly and such management accounts are provided to executive directors on a monthly basis. Principle 11 Audit Committee Principle 12 Internal Control Principle 13 Internal Audit The Audit Committee ( AC ) comprises the following members, all of whom are Independent Non-Executive Directors, appropriately qualified to discharge their responsibilities: Dr. Wang Kai Yuen Mr. Teo Kio Chang Chiaw Choon Mr. Chue Wai Tat (Chairman) Following the retirement of Dr. Wang Kai Yuen at the forthcoming AGM, he will step down as Chairman and member of the AC. The Committee is of the view that its current size, excluding Dr. Wang Kai Yuen, is appropriate, taking into account the nature and scope of the operations and current financial positions of the Group. Mr. Chue Wai Tat will be appointed as the Chairman of AC, replacing Dr. Wang Kai Yuen, effective following the conclusion of the forthcoming AGM. The AC met twice (2) in FY2012. The principal functions of the AC are: to recommend to the Board of Directors the External Auditors to be nominated; to review the scope, audit plans, results and effectiveness of the External Auditors; to review any related significant findings and recommendations of the External Auditors, together with Management s responses thereto; to review the adequacy of the Group s system of internal controls, financial and management reporting systems; to review with Management on significant risks or exposures that exist and assesses the steps that Management has taken to minimize such risks to the Group; to review with Management the announcement of the interim and full-year results of the Group and its financial statements; to review interested party transactions as may be required by the regulatory authorities or the provisions of the Companies Act; to review legal and regulatory matters that may have a material impact on the financial statements and reports action and minutes of the AC to the Board of Directors with such recommendations as the AC considers appropriate; and to review arrangements by which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. 18 Asian Micro Holdings Limited

21 Report on Corporate Governance The Group has complied with Rule 712 and Rule 715 of Section B of the Singapore Exchange Securities Trading Limited Listing Manual: Rules of Catalist. The AC had adopted written terms of reference. The AC has full access to and receives co-operation from the Management, and has full discretion to invite members of the management to attend its meetings. Reasonable resources have been given to enable it to discharge its functions. Minutes of the AC meetings are circulated to the Board for its information. The AC has reviewed the audit and non-audit services provided by the external auditors, Ernst & Young LLP. The fees on audit services incurred during the reporting year are as follows: 2012 $ 000 Fees on audit services paid/payable to - Auditors of the Company Other auditors 11 Fees on non-audit services paid/payable to - Auditors of the Company 35 - Other auditors The AC has conducted an annual review of all non-audit services by the external auditors to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors and has recommended to the Board the re-appointment of Messrs Ernst & Young LLP as the auditors of the Company. The AC has met with the external auditors annually, without the presence of the Company s management. The Board recognizes its responsibility for the Group s system of internal controls and the need to review its adequacy and integrity regularly in order to safeguard the Group s assets and therefore shareholders investments in the Group, but recognized that no cost effective system will preclude all frauds and irregularities, as the internal control system can only mitigate but not eliminate the risks of frauds or irregularities. The Management has put in place reasonably adequate internal control systems to provide the Board with reasonable assurance against material misstatement or loss. The Company has also implemented a whistle blowing policy which provides a mechanism for staff of the Company to in confidence, raise concerns about fraud and other possible improprieties in matters of financial reporting or other matters. In addition, the Board has also relied to a certain extent, the review by the external auditors of the Company s internal control relevant to the Company s preparation of the financial statements that give a true and fair view. The review conducted by the external auditors is for the purpose of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. The auditors recommendations on internal accounting control weakness, if any noted during their audit, are reported to the AC. Based on the internal controls established and maintained by the Group, work performed by the external auditors and reviews performed by Management, the Board, with the concurrence of the AC, is of the opinion that the system of internal controls on financial, operational and compliance risks maintained by the Group are adequate in meeting the needs of the Group in its current business environment. As the present scope of the Company s activities is not substantial, the Company does not have its own internal audit department. The Company will commission an external party to conduct an independent internal audit as and when it deems fit. Annual Report

22 Report on Corporate Governance COMMUNICATION WITH SHAREHOLDERS Principle 14 Shareholder Rights Principle 15 Communication with Shareholder Principle 16 Conduct of Shareholder Meetings In line with the continuous disclosure obligations of the Company and pursuant to the Listing Manual of the SGX-ST and the Companies Act, Chapter 50, shareholders shall be informed of all major developments that impact the Group, in a timely manner. The Company does not practice selective disclosure. All material and price sensitive information as well as information on the Company s new initiatives are publicly released via SGXNET. In addition, the Company also responds to enquiries from shareholders, investors, analysts, fund managers and the press. All shareholders of the Company receive a copy of the Annual Report and Notice of Annual General Meeting ( AGM ) annually. The Notice of the AGM is also advertised in a daily newspaper and made available on the SGX-ST website. At the AGM, shareholders are given the opportunity to air their views and ask questions regarding the Company and the Group. The Articles of Association of the Company allows shareholders to appoint one or two proxies to attend and vote in their stead at the AGM. Each item of special business included in the Notice of meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at meetings. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the AGM to answer questions relating to the work of these committees. The external auditors are also present to assist the Directors in addressing any relevant queries from shareholders. The Company Secretary records minutes of every AGM and the minutes will be made available to the shareholders upon their request. RISK MANAGEMENT The Company does not have a Risk Management Committee. However, the Management reviews the Group s business and operational activities regularly to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the Audit Committee. DEALINGS IN SECURITIES The Company has a clear policy on the trading of its shares by directors, executives and employees within the Group. The Company has adopted its own internal Code of Best Practices on Securities Transactions ( the Securities Transactions Code ). The Securities Transactions Code provides guidance to the directors and executives of the Group with regard to dealing in the Company s shares. It emphasizes that the law on insider trading is applicable at all times, notwithstanding the window periods for dealing in the shares. The Securities Transactions Code also enables the Company to monitor such share transactions by requiring employees to report to the Company whenever they deal in the Company s shares. The Group issues circulars to its directors, executives and employees informing them that they must not trade in the listed securities of the Company one month before the announcement of the Group s half-yearly and full year results and ending on the date of the announcement of such results. The directors are required to notify the Company of any dealings in the Company s securities (during the open window period) within two (2) business days of the transactions. The Board is satisfied with the Group s commitment in compliance with the Code, and on the adequacy of internal controls within the Group. The Group has complied with its Best Practices on Securities Transactions. 20 Asian Micro Holdings Limited

23 Report on Corporate Governance MATERIAL CONTRACTS Save for the service contracts between the Executive Directors and the Company, and the interested person transactions described below, there are no other material contracts of the Company or its subsidiaries involving the interest of the chief executive officer or any director or controlling shareholders which are either still subsisting at the end of the financial year or entered into since the end of the previous financial year. INTERESTED PERSON TRANSACTIONS The Company has established procedures to ensure that all transactions with interested persons are reported on a timely manner to the Audit Committee and that such transactions are carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders. The aggregate value of the interested person transactions entered into FY2012 is as follows: - Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transaction less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Ultraline Technology (S) Pte Ltd $120,000 NON-SPONSOR FEES The Company is currently under the SGX-ST Catalist sponsor-supervised regime. The Continuing Sponsor of the Company is RHT Capital Pte. Ltd. Asian Corporate Advisors Pte. Ltd. was the Continuing Sponsor of the Company up to 13 January The Company appoints RHT Capital Pte. Ltd. as its Continuing Sponsor with effect from 14 January In compliance with Rule 1204(21) of the Catalist Rule, there was no non-sponsor fee paid by the Company to the sponsor for the year ended. TREASURY SHARES There are no treasury shares held by the Company. Annual Report

24 directors report The directors present their report to the members together with the audited consolidated financial statements of Asian Micro Holdings Limited (the Company ) and its subsidiaries (collectively, the Group ) and the balance sheet and statement of changes in equity of the Company for the financial year ended. Directors The directors of the Company in office at the date of this report are: Dr. Wang Kai Yuen Lim Kee Victor Lim Ng Chee Wee Teo Kio Chang Chiaw Choon Chue Wai Tat (appointed on 6 July 2011) Lin Xianglong, Winchester (appointed on 24 August 2011) Arrangements to enable directors to acquire shares and debentures Except for the Asian Micro Holdings Limited Employees Share Option Plan as described below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. Directors interests in shares and debentures The following directors, who held office at the end of the financial year, had, according to the register of directors shareholdings required to be kept under section 164 of the Companies Act, Cap. 50, an interest in shares of the Company and related corporations (other than wholly-owned subsidiaries), as stated below: Direct interest Deemed interest At 1 July 2011 or date of appointment At 30 June 2012 At 21 July 2012 At 1 July 2011 or date of appointment At 30 June 2012 At 21 July 2012 The Company Asian Micro Holdings Limited (Ordinary shares) Lim Kee Victor Lim 104,741, ,741, ,741, ,218, ,218, ,218,304 Dr. Wang Kai Yuen 1,526,000 1,526,000 1,526,000 Teo Kio Chang Chiaw Choon 600, , ,000 Ng Chee Wee 100, , ,000 Lin Xianglong, Winchester 11,550,000 11,550,000 11,550, Asian Micro Holdings Limited

25 directors report Directors interests in shares and debentures (cont d) Direct interest At beginning of the year or date of appointment At end of the year At 21 July 2012 Exercise price $ Exercise period The Company Asian Micro Holdings Limited (Options to subscribe for ordinary shares) Lim Kee Victor Lim 2,000,000 2,000,000 2,000, November 2011 November 2020 Ng Chee Wee 1,500,000 1,500,000 1,500, November 2011 November ,500,000 1,500, July 2012 October 2020 Dr. Wang Kai Yuen 574,000 August 2004 September 2011 * 1,180,000 October 2004 September 2011 * 1,500,000 December 2010 September 2011 * 4,000,000 4,000,000 4,000, November 2011 November ,000,000 1,000, July 2012 October 2020 Teo Kio Chang Chiaw Choon 1,500,000 October 2004 September 2011 * 900,000 December 2010 September 2011 * 2,500,000 2,500,000 2,500, November 2011 November , , July 2012 October 2020 Lin Xianglong, Winchester 2,000,000 2,000,000 2,000, November 2011 November 2020 * The Employees Share Option Scheme expired on September By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Lim Kee Victor Lim is deemed to have an interest in shares of the subsidiaries of the Company. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company or of related corporations either at the beginning of the financial year, date of appointment, if later or end of the financial year or 21 July Directors contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except for significant transactions with related parties as disclosed in Note 27 to the accompanying financial statements. Annual Report

26 directors report Share options Asian Micro Employees Share Option Scheme 1. Asian Micro Employees Share Option Scheme (the ESOS 2001 ) was approved by the shareholders at an extraordinary general meeting held on 28 September The ESOS 2001 was subsequently terminated by shareholders at an extraordinary general meeting held on 28 October The balance of the options expired in September The remuneration committee administered the ES0S 2001 during the financial year. 3. No option has been granted during the financial year. 4. Details of the options to subscribe for ordinary shares of the Company granted to directors of the Company pursuant to the ES0S 2001 as at are as follows: Name of directors Options granted during the financial year Aggregate Aggregate options granted options since forfeited since commencement of ment of commence- ESOS 2001 ESOS 2001 Aggregate options exercised since commencement of ESOS 2001 Aggregate options outstanding as at end of financial year Dr. Wang Kai Yuen 6,380,000 (5,254,000) (1,126,000) Teo Kio Chang Chiaw Choon 4,300,000 (2,600,000) (1,700,000) 5. Apart from the following who have in aggregate received 5% or more of the total number of options available under the ESOS 2001, none of the other executive directors and employees of the Group who participated in the ESOS 2001 has received 5% or more of the total number of options available under the ESOS 2001: Total options granted Total % of options under the ESOS 2001 Dr. Wang Kai Yuen 6,380, % Teo Kio Chang Chiaw Choon 4,300, % Except for the above, no options have been granted to other directors, controlling shareholders of the Company or their associates under ESOS The options do not entitle the holder to participate, by virtue of the options, in any share issue of any other corporation. None of the options were granted at a discount during the financial year. 24 Asian Micro Holdings Limited

27 directors report Share options (cont d) Asian Micro Employees Share Option Scheme Asian Micro Employees Share Option Scheme 2010 (the ESOS 2010 ) was approved by shareholders at an extraordinary general meeting held on 28 October The remuneration committee administered the ESOS 2010 during the financial year. 3. During the financial year ended, the Company granted 5,400,000 share options under the ESOS These options are only exercisable after the first anniversary of the Date of Grant of options. These options expire on 27 October 2020 and are exercisable if the employee remains in service. 4. Details of the balance of the options to subscribe for ordinary shares of the Company pursuant to the ESOS 2010 as at are as follows: Grant date Expiry date Exercise price (S$) Number of options November 2010 November ,200,000 July 2011 October ,800,000 26,000, Details of the options to subscribe for ordinary shares of the Company granted to directors of the Company pursuant to the ESOS 2010 are as follows: Name of directors Options granted during the financial year Aggregate options granted since commencement of ESOS 2010 Aggregate options cancelled since commencement of ESOS 2010 Aggregate options exercised since commencement of ESOS 2010 Aggregate options outstanding as at end of financial year Lim Kee Victor Lim 2,000,000 2,000,000 Ng Chee Wee 1,500,000 3,000,000 3,000,000 Dr. Wang Kai Yuen 1,000,000 5,000,000 5,000,000 Teo Kio Chang Chiaw Choon 500,000 3,000,000 3,000,000 Lin Xianglong, Winchester 2,000,000 2,000,000 Leong Lai Heng * 2,000,000 2,000,000 Name of Associates of controlling shareholders Lim Kee Hing 2,000,000 2,000,000 * Resigned as director of the Company on 24 August Annual Report

28 directors report Share options (cont d) Asian Micro Employees Share Option Scheme 2010 (cont d) 6. Apart from the following who have in aggregate received 5% or more of the total number of options available under the Plan, none of the other executive directors and employees of the Group who participated in the Plan has received 5% or more of the total number of options available under the Plan as at : Total options granted Total % of options under the ESOS 2010 Lim Kee Victor Lim 2,000, % Dr. Wang Kai Yuen 5,000, % Ng Chee Wee 3,000, % Teo Kio Chang Chiaw Choon 3,000, % Lin Xianglong, Winchester 2,000, % Leong Lai Heng * 2,000, % * Resigned as director of the Company on 24 August Except for the above, no options have been granted to other directors, controlling shareholders of the Company or their associates under ESOS The options do not entitle the holder to participate, by virtue of the options, in any share issue of any other corporation. None of the options were granted at a discount during the financial year. 26 Asian Micro Holdings Limited

29 directors report Audit committee The audit committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50. The functions performed are detailed in the Report on Corporate Governance. Auditors Ernst & Young LLP have expressed their willingness to accept reappointment as auditors. On behalf of the Board of directors, Lim Kee Victor Lim Director Lin Xianglong, Winchester Director Singapore 2 October 2012 Annual Report

30 statement by directors We, Lim Kee Victor Lim and Lin Xianglong, Winchester, being two of the directors of Asian Micro Holdings Limited, do hereby state that, in the opinion of the directors, (i) (ii) the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date, and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due, on the assumption that, as stated in Note 2.1 to the financial statements, the Group and the Company will generate adequate cash flows from operations and continue to receive continuing financial support from two major shareholders of the Company. On behalf of the Board of directors, Lim Kee Victor Lim Director Lin Xianglong, Winchester Director Singapore 2 October Asian Micro Holdings Limited

31 independent auditor s report For the financial year ended To the Members of Asian Micro Holdings Limited Report on the Financial Statements We have audited the accompanying financial statements of Asian Micro Holdings Limited (the Company ) and its subsidiaries (collectively the Group ) set out on pages 31 to 90, which comprise the balance sheets of the Group and the Company as at, the statements of changes in equity of the Group and the Company and the consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the 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, Cap. 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditor s Responsibility Our responsibility is to express an opinion on these 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the 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 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, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2012 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date. Emphasis of matter We draw attention to Note 2.1 to the financial statements. The Group and the Company incurred a net loss after taxation of $468,401 and $1,489,566, respectively, for the financial year ended and as at that date, the Company s current and total liabilities exceeded its current and total assets by $2,012,595 and $1,986,286 respectively. These factors indicate the existence of an uncertainty which may cast significant doubt about the Group s and the Company s ability to continue as going concerns. As discussed more fully in Note 2.1 to the financial statements, these financial statements have been prepared on a going concern basis on the assumption that the Group and the Company will generate adequate cash flows from operations and continue to receive continuing financial support from two major shareholders of the Company (one of whom is also a director of the Company). Our opinion is not qualified in respect of this matter. Annual Report

32 independent auditor s report For the financial year ended 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. Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 2 October Asian Micro Holdings Limited

33 balance sheets As at 30 June, 2012 Group Company Note $ $ $ $ Non-current assets Property, plant and equipment 3 1,209,698 1,097, ,904 33,805 Investments in subsidiaries ,459,031 Investments in associate 5(a) Other investments 5(b) Current assets Inventories 6 870,705 1,380,055 Trade and other receivables 7 1,292,321 1,636,371 10,147 4,335 Prepayments 92, ,334 12,498 13,502 Due from related parties (non-trade) 8 108, ,333 5,059 2,561 Fixed deposits 9 428, ,033 25,188 25,666 Cash and bank balances 9 1,416, ,807 3, ,209,313 4,176,933 55,971 47,019 Total assets 5,419,011 5,274, ,918 1,539,855 Current liabilities Trade and other payables 10 1,520,140 1,777,647 70, ,488 Accrued expenses , , , ,277 Loan from related party 8 331,210 Provision 14 Due to subsidiaries (non-trade), net 8 1,524,477 1,420,451 Due to related parties (non-trade) 8 1,092, , ,548 Bills payable to bank , ,833 Obligations under finance lease ,720 72,884 78,641 7,184 Provision for taxation 17,036 4,200,431 4,028,229 2,068,566 2,159,400 Net current assets/(liabilities) 8, ,704 (2,012,595) (2,112,381) Non-current liabilities Obligations under finance lease , , ,270 15,740 Deferred tax liabilities Due to related parties (non-trade) 8 366, ,783 Loan from related party 8 301, ,000 1,046, , ,638 16,325 Total liabilities 5,246,447 4,497,207 2,561,204 2,175,725 Net assets/(liabilities) 172, ,625 (1,986,286) (635,870) Annual Report

34 balance sheets As at 30 June, 2012 Equity attributable to owners of the Company Group Company Note $ $ $ $ Share capital 15 38,673,928 38,673,928 38,673,928 38,673,928 Share option reserve , , , ,987 Foreign currency translation reserve 1,236,064 1,524,093 Other reserve 96,189 96,189 96,189 96,189 Accumulated losses (39,537,722) (39,487,296) (41,077,896) (39,795,974) 789,952 1,196,901 (1,986,286) (635,870) Non-controlling interests (617,388) (419,276) Total equity 172, ,625 (1,986,286) (635,870) Total equity and liabilities 5,419,011 5,274, ,918 1,539,855 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 32 Asian Micro Holdings Limited

35 Consolidated Statement of Comprehensive Income For the year ended Note $ $ Revenue 17 5,805,517 8,575,068 Cost of sales (4,496,998) (6,970,665) Gross profit 1,308,519 1,604,403 Other operating income 18 1,841, ,666 Distribution and selling expenses (130,257) (267,126) Administrative expenses (2,696,009) (3,857,170) Other operating expenses 19 (560,775) (2,515,885) Loss from operations (236,985) (4,576,112) Financial expenses 21 (72,057) (67,341) Financial income 21 2,456 3,290 Loss before taxation 20 (306,586) (4,640,163) Taxation 23 (161,815) 211,103 Net loss for the year (468,401) (4,429,060) Other comprehensive income Foreign currency translation (275,810) 1,720,577 Foreign currency reserve realised on disposal of subsidiaries 4 (400,275) Other comprehensive (loss)/income for the year, net of tax (275,810) 1,320,302 Total comprehensive loss for the year (744,211) (3,108,758) Loss attributable to: Owners of the Company (258,070) (3,896,590) Non-controlling interests (210,331) (532,470) (468,401) (4,429,060) Total comprehensive income attributable to: Owners of the Company (546,099) (2,519,914) Non-controlling interests (198,112) (588,844) (744,211) (3,108,758) Loss per share attributable to owners of the Company (cents per share) Basic 24 (0.06) (0.94) Diluted 24 (0.06) (0.94) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. Annual Report

36 Statements of changes in equity For the year ended 2011 Group Total equity Equity attributable to owners of the Company Share capital Attributable to owners of the Company Accumulated losses Other reserve total Foreign currency translation reserve Premium paid on acquisition of noncontrolling interests* Share option reserve Noncontrolling interests $ $ $ $ $ $ $ $ $ Opening balance at 1 July ,166,548 1,996,980 37,173,928 (34,995,336) 96, ,417 (638,162) 212, ,568 Net loss for the year (4,429,060) (3,896,590) (3,896,590) (532,470) Other comprehensive loss for the year, net of tax 1,320,302 1,376,676 (638,162) 1,376, ,162 (56,374) Total comprehensive loss for the year (3,108,758) (2,519,914) (4,534,752) 1,376, ,162 (588,844) Contributions by and distributions to owners Grant of equity-settled share options to employees (Note 16) 219, , ,835 Expiry of employee share options (Note 16) 42,792 (42,792) Capitalisation of payables to certain directors 1,500,000 1,500,000 1,500,000 Total transactions with owners in their capacity as owners 1,719,835 1,719,835 1,500,000 42, ,043 Closing balance at 30 June ,625 1,196,901 38,673,928 (39,487,296) 96,189 1,524, ,987 (419,276) * Upon disposal of the subsidiary in 2011, the Group transferred the premium arising from the acquisition of non-controlling interest in prior year to accumulated losses. 34 Asian Micro Holdings Limited

37 Statements of changes in equity For the year ended 2012 Group Total equity Equity attributable to owners of the Company Share capital Attributable to owners of the Company Accumulated losses Other reserve total Foreign currency translation reserve Share option reserve Noncontrolling interests $ $ $ $ $ $ $ $ Opening balance at 1 July ,625 1,196,901 38,673,928 (39,487,296) 96,189 1,524, ,987 (419,276) Net loss for the year (468,401) (258,070) (258,070) (210,331) Other comprehensive loss for the year, net of tax (275,810) (288,029) (288,029) 12,219 Total comprehensive loss for the year (744,211) (546,099) (258,070) (288,029) (198,112) Contributions by and distributions to owners Grant of equity-settled share options to employees (Note 16) 139, , ,150 Expiry of employee share options (Note 16) 207,644 (207,644) Total transactions with owners in their capacity as owners 139, , ,644 (68,494) Closing balance at 172, ,952 38,673,928 (39,537,722) 96,189 1,236, ,493 (617,388) Annual Report

38 Statements of changes in equity For the year ended Company Share Accumulated Other Share option capital losses reserve reserve Total equity $ $ $ $ $ Balance as at 1 July ,173,928 (36,114,993) 96, ,944 1,368,068 Total comprehensive loss for the year (3,723,773) (3,723,773) Grant of equity-settled share options to employees (Note 16) 219, ,835 Expiry of employee share options (Note 16) 42,792 (42,792) Capitalisation of payables to certain directors 1,500,000 1,500,000 Total transactions with owners in the capacity as owners 1,500,000 42, ,043 1,719,835 Balance as at 30 June ,673,928 (39,795,974) 96, ,987 (635,870) Balance as at 1 July ,673,928 (39,795,974) 96, ,987 (635,870) Total comprehensive loss for the year (1,489,566) (1,489,566) Grant of equity-settled share options to employees (Note 16) 139, ,150 Expiry of employee share options (Note 16) 207,644 (207,644) Total transactions with owners in the capacity as owners 207,644 (68,494) 139,150 Balance as at 38,673,928 (41,077,896) 96, ,493 (1,986,286) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 36 Asian Micro Holdings Limited

39 consolidated cash flow statement For the year ended Note $ $ Cash flow from operating activities Loss before taxation (306,586) (4,640,163) Adjustments: Allowance for doubtful debts (trade) 48,410 12,639 Allowance for doubtful debts (non-trade) 2,646 3,253 Write-off of doubtful debts (trade) Allowance for stocks obsolescence 113, ,397 Write-off of stocks 257,465 Write-down of stocks 10,351 Write-back of allowance for doubtful debts (6,207) Write-back of allowance for stock obsolescence (8,246) (8,066) Gain on disposal of subsidiaries (163,214) Depreciation of property, plant and equipment 376, ,662 Property, plant and equipment written off 52,393 Gain on disposal of property, plant and equipment (129,039) (91,000) Impairment loss on property, plant and equipment 352, ,153 Waiver of payables (2,050) Write-back of provision for warranty (51,797) Interest expense 48,612 47,704 Interest income (2,456) (3,290) Share-based payment expenses 139, ,835 Operating cash flows before changes in working capital 902,894 (3,249,208) Decrease in stocks 112, ,349 Decrease in trade and other receivables 241, ,415 (Increase)/decrease in prepayments (2,079) 128,819 Increase in amount due from/(to) related parties 401, ,899 (Decrease)/increase in trade and other payables (370,648) 817,537 Decrease in provision (51,797) Decrease in bills payable to bank (224,752) (460,520) Cash generated from/(used in) operations 1,060,780 (889,506) Interest paid (48,612) (47,704) Interest income received 2,456 3,290 Income taxes paid (38,836) Net cash generated from/(used in) operating activities 1,014,624 (972,756) Annual Report

40 consolidated cash flow statement For the year ended Note $ $ Cash flow from investing activities Net cash flow from disposal of subsidiaries 4 (13,948) Proceeds from disposal of property, plant and equipment 177, ,977 Purchase of property, plant and equipment 3 (273,589) (225,815) Net cash (used in)/generated from investing activities (95,652) 97,214 Cash flows from financing activities Loan from related parties 333, ,000 Repayment of finance lease obligations (100,367) (145,290) Fixed deposits pledged (1,927) (51,837) Net cash generated from financing activities 230, ,873 Net increase/(decrease) in cash and cash equivalents 1,149,833 (772,669) Effect of exchange rate changes in cash and cash equivalents (5,318) (5,637) Cash and cash equivalents at beginning of year 271,807 1,050,113 Cash and cash equivalents at end of year 9 1,416, ,807 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 38 Asian Micro Holdings Limited

41 1. Corporate information Asian Micro Holdings Limited is a limited liability company incorporated in Singapore and is listed on the Stock Exchange of Singapore Catalist Sponsor-Supervised regime ( Catalist ). The registered office and principal place of business of Asian Micro Holdings Limited is located at 1 Tech Park Crescent, Tuas Tech Park, Singapore The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are those of transportation service of CNG refilling gas, tray washing and recycling services, manufacturing of clean room grade polythene packaging materials and trading in clean room supplies. Details of these subsidiaries are disclosed in Note 4 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 2. Summary of significant accounting policies The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards ( FRS ). The financial statements have been prepared on the historical cost basis. The financial statements are presented in Singapore Dollars (SGD or $). 2.1 Fundamental accounting concept The Group and the Company incurred a net loss after taxation of $468,401 (2011: $4,429,060) and $1,489,566 (2011: $3,723,773), respectively for the financial year ended and as at that date, the Company s current and total liabilities exceeded current and total assets by $2,012,595 (2011: $2,112,381) and $1,986,286 (2011: $635,870) respectively. These factors indicate the existence of an uncertainty which may affect the validity of the going concern assumption on which the accompanying financial statements are prepared. Two of the Company s major shareholders (one of whom is also a director of the Company) have agreed to provide continuing financial support to the Group and the Company to enable the Group and the Company to meet their obligations as and when the need arises. In addition, they have given a commitment to (i) not to recall for payment of amounts due to them and amounts due to companies controlled by them as at until such time as the Group s cash flow enables such payment, and (ii) allow the Group to defer payments of future salaries to them and rental payable to companies controlled by them until such time as the Group s cash flow enables such payment. The Directors are of the view that it is appropriate to prepare these financial statements on a going concern basis on the assumption that the Group and the Company will generate adequate cash flows from operations and continue to receive continuing financial support from the two major shareholders as disclosed above. If the Group and the Company are unable to continue in operational existence for the foreseeable future, the Group and the Company may be unable to discharge their liabilities in the normal course of business and adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ from the amounts at which they are currently recorded in the balance sheets. In addition, the Group and the Company may have to reclassify non-current assets and liabilities as current assets and liabilities. No such adjustments have been made to these financial statements. 2.2 Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 July Adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company. Annual Report

42 2. Summary of significant accounting policies (cont d) 2.3 Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Description Effective for annual periods beginning on or after Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012 Amendments to FRS 1 Presentation of Items of Comprehensive Income 1 July 2012 Revised FRS 19 Employee Benefits 1 January 2013 FRS 113 Fair Value Measurements 1 January 2013 Amendments to FRS 107 Disclosures: Offsetting Financial Assets and Financial Liabilities 1 January 2013 Revised FRS 27 Separate Financial Statements 1 January 2014 Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014 Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014 FRS 110 Consolidated Financial Statements 1 January 2014 FRS 111 Joint Arrangements 1 January 2014 FRS 112 Disclosure of Interests in Other Entities 1 January 2014 Except for the Amendments to FRS 1 and FRS 112, the directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the Amendments to FRS 1 and FRS 12 is described below. Amendments to FRS 1 Presentation of Items of Other Comprehensive Income The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (OCI) is effective for financial periods beginning on or after 1 July The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard. FRS 112 Disclosure of Interests in Other Entities FRS 112 is effective for financial periods beginning on or after 1 January FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. The Group is currently determining the impact of the disclosure requirements. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in Asian Micro Holdings Limited

43 2. Summary of significant accounting policies (cont d) 2.4 Significant accounting estimates and judgements The preparation of the Group s financial statements requires management to make estimates, judgements and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosures of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Depreciation of plant and equipment The costs of plant and equipment for the manufacturing activities are depreciated on a straight-line basis over the useful lives of the plant and equipment. Management estimates the useful lives of the plant and equipment to be within 1 to 10 years. These are common life expectancies applied in the industry. The carrying amount of the Group s plant and equipment at is stated in Note 3 to the financial statements. 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. (ii) Impairment of non-financial assets The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. When value in use calculations are undertaken, management estimates the expected future cash flows from the asset or cash-generating unit and chooses a suitable discounted rate in order to calculate the present value of those cash flows. (iii) Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. The Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts of the Group s loans and receivables at the balance sheet date are disclosed in Note 7 to the financial statements. Annual Report

44 2. Summary of significant accounting policies (cont d) 2.4 Significant accounting estimates and judgements (cont d) (iv) Income taxes The Group has exposure to income taxes in a number of jurisdictions. Significant judgement is involved in determining the group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits. The carrying value of the unrecognised tax losses and unutilised capital allowances at were $10,992,151 (2011: $10,421,815) and $20,199 ( 2011: $28,000) respectively. (v) Employee share options The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 25. (vi) Impairment of investment in subsidiary and associated companies The Group assesses at the end of each reporting period whether there is any objective evidence that the investments in a subsidiary is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the industry/sector performance, operational and financing cash flow. Management will exercise significant judgement to evaluate the financial conditions and business prospects of the investments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on the forecasted performance of the subsidiary company. The carrying amounts of the Group s investments in subsidiary and associated companies at the balance sheet date are disclosed in Notes 4 and 5 to the financial statements. (vii) Provision for warranty The Group recognises provision for warranty in accordance with the accounting policy stated in Note The Group has made assumptions in relation to the expected costs of repair and maintenance. At 30 June 2011, the provision of $51,797 had been reversed as the warranty period has lapsed during the year. 42 Asian Micro Holdings Limited

45 2. Summary of significant accounting policies (cont d) 2.5 Basis of consolidation (A) Basis of consolidation Basis of consolidation from 1 January 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when controls is lost; De-recognises the carrying amount of any non-controlling interest; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; and Re-classifies the Group s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. Basis of consolidation prior to 1 January 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company. Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 have not been restated. Annual Report

46 2. Summary of significant accounting policies (cont d) 2.5 Basis of consolidation (cont d) (B) Business combinations Business combinations from 1 January 2010 Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest s proportionate share of the acquiree s identifiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.9(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Business combinations prior to 1 January 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree s identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. 44 Asian Micro Holdings Limited

47 2. Summary of significant accounting policies (cont d) 2.6 Transactions with non-controlling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 2.7 Foreign currency The Group s consolidated financial statements are presented in Singapore Dollars, which is also the Company s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (a) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. (b) Consolidated financial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to noncontrolling interest and are not recognised in profit or loss. For partial disposals of associates that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Annual Report

48 2. Summary of significant accounting policies (cont d) 2.8 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful life of the asset as follows: Years Furniture and fittings 5-10 Air conditioners 3-10 Machinery, equipment and motor vehicles 3-10 Office equipment and computers 1-10 Renovations and electrical installations 3-10 Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use. Fully depreciated assets are retained in the financial statements until they are no longer in use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the income statement in the year the asset is derecognised. 2.9 Intangible assets Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. 46 Asian Micro Holdings Limited

49 2. Summary of significant accounting policies (cont d) 2.9 Intangible assets (cont d) Goodwill (cont d) Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operation disposed of and the portion of the cash-generating unit retained. The Group s goodwill was fully impaired in prior year Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses are recognised in profit or loss. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset s or cash-generating unit s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit or loss Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. Annual Report

50 2. Summary of significant accounting policies (cont d) 2.12 Associates An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Group s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Group s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Group s share of the net fair value of the associate s identifiable asset, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group s share of results of the associate in the period in which the investment is acquired. The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from the transactions between the Group and the associate are eliminated to the extent of the interest in the associates. When the Group s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group s investment in its associates. The Group determines at each balance sheet date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the profit or loss. The financial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the financial and operation decision in the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss Financial assets Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement Loans and receivables Non-derivatives financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. 48 Asian Micro Holdings Limited

51 2. Summary of significant accounting policies (cont d) 2.13 Financial assets (cont d) Available-for-sale financial assets Available-for-sale financial assets include equity investments, which are neither classified as held for trading nor designated at fair value through profit or loss. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in other comprehensive income is recognised in profit or loss. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, ie the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concern Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss. When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. Annual Report

52 2. Summary of significant accounting policies (cont d) 2.14 Impairment of financial assets (cont d) Financial assets carried at amortised cost (cont d) To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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 was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. Available-for-sale financial assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income Cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank and demand deposits. These also include bank overdrafts that form an integral part of the Group s cash management Inventories Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows: Raw materials purchase costs on a first-in first-out basis; Finished goods and work-in-progress costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. 50 Asian Micro Holdings Limited

53 2. Summary of significant accounting policies (cont d) 2.17 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Provision for warranty Provisions for warranty-related costs are recognised when the product is sold or service provided Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Derecognition A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss Borrowing costs Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing cost consist of interest and other costs that an entity incurs in connections with the borrowing of funds. Annual Report

54 2. Summary of significant accounting policies (cont d) 2.20 Employee benefits (i) Defined contribution plan The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. (ii) Employee share option plans 2.21 Leases Employees and directors of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted which takes into account market conditions and non-vesting conditions. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense. No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market condition or non-vesting condition is satisfied, provided that all other performance and/ or service conditions are satisfied. In the case where the option does not vest as the result of a failure to meet a non-vesting condition that is within the control of the Group or the employee, it is accounted for as a cancellation. In such case, the amount of the compensation cost that otherwise would be recognised over the remainder of the vesting period is recognised immediately in profit or loss upon cancellation. The employee share option reserve is transferred to retained earnings upon expiry of the share option. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued. The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. (i) As lessee Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. 52 Asian Micro Holdings Limited

55 2. Summary of significant accounting policies (cont d) 2.21 Leases (cont d) (ii) As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating leases are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.22(vi) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements except for the vehicle registration services where the Group has concluded that it is acting as an agent and records revenue on net basis. The following specific recognition criteria must also be met before revenue is recognised: (i) Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (ii) Tray washing and recycling services Revenue on tray washing and recycling services is recognised when the work is completed and the recycled items are delivered to the customer. (iii) Compressed natural gas supply products and services Revenue on compressed natural gas supply products is recognised upon the completion of installation and commissioning of the equipment, and transfer of title and risk of the compressed natural gas to the customer, usually on delivery. Revenue on services is recognised when services are rendered. (iv) Interest income Interest income is recognised using the effective interest method. (v) Management fees Management fees are recognised when services are rendered. (vi) Rental income Rental income is accounted for on a straight-line basis over the leased terms. (vii) Commission income Commission income is recognised on accrual basis. Annual Report

56 2. Summary of significant accounting policies (cont d) 2.23 Taxes (i) Current tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. (ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting period. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. (iii) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except: Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. 54 Asian Micro Holdings Limited

57 2. Summary of significant accounting policies (cont d) 2.24 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective deputy managers responsible for the performance of the respective segments under their charge. The deputy managers report directly to the CEO of the Company who regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 31, including the factors used to identify the reportable segments and the measurement basis of segment information Share capital and share issue expenses Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group Related parties A related party is defined as follows: (a) A person or a close member of that person s family is related to the Group and Company if that person: (i) (ii) (iii) Has control or joint control over the Company; Has significant influence over the Company; or Is a member of the key management personnel of the Group or Company or of a parent of the Company. (b) An entity is related to the Group and the Company if any of the following conditions applies: (i) (ii) (iii) (iv) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); One entity is an associate of the other entity (or an associate of a member of a group of which the other entity is a member); The entity is controlled or jointly controlled by a person identified in (a); and A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). Annual Report

58 3. Property, plant and equipment Group Furniture and fittings Air conditioners Machinery, equipment and motor vehicles Office equipment and computers Renovations and electrical installations Assets under construction Total $ $ $ $ $ $ $ Cost At 1 July , ,776 10,122, ,881 3,011, ,568 14,588,830 Additions 458,384 19,162 59, ,725 Disposals (7,038) (794,043) (187,768) (988,849) Transfer 16,300 (16,300) Disposal of subsidiaries (1,320,302) (115,096) (688,178) (2,123,576) Written off (216,208) (97,858) (558,041) (387,154) (1,194,872) (25,500) (2,479,633) Translation difference (6,144) (5,326) (574,304) (28,332) (102,344) (716,450) At 30 June 2011 and 1 July ,079 85,592 7,350, ,461 1,026,026 59,179 8,817,047 Additions 54, ,144 3, ,392 Disposals (2,334) (232,294) (2,178) (236,806) Transfer 59,179 (59,179) Translation difference (32) , , ,839 At 27, ,652 8,024, ,667 1,038,000 9,496, Asian Micro Holdings Limited

59 3. Property, plant and equipment (cont d) Group Furniture and fittings Air conditioners Machinery, equipment and motor vehicles Office equipment and computers Renovations and electrical installations Assets under construction Total $ $ $ $ $ $ $ Accumulated depreciation At 1 July , ,792 9,053, ,925 2,780,476 12,872,315 Charge for the year 3,441 23, ,394 18,017 16, ,662 Disposals (7,038) (768,066) (775,104) Disposal of subsidiaries (1,318,770) (93,867) (641,167) (2,053,804) Impairment loss 1, ,049 7, ,153 Written off (213,459) (97,858) (538,437) (382,614) (1,194,872) (2,427,240) Translation difference (6,133) (5,561) (430,465) (27,518) (93,157) (562,834) At 30 June 2011 and 1 July ,493 46,266 6,591, , ,197 7,719,148 Charge for the year 12 33, ,675 7,598 12, ,380 Disposals (2,334) (183,396) (2,178) (187,908) Impairment loss 352, ,001 Translation difference (28) 98 19, ,963 27,153 At 24,477 77,111 7,103, , ,174 8,286,774 Net book value At 30 June ,586 39, ,951 80, ,829 59,179 1,097,899 At 2,570 60, ,211 75, ,826 1,209,698 Annual Report

60 3. Property, plant and equipment (cont d) Company Office equipment and computer Motor vehicles Furniture and fittings Total $ $ $ $ Cost At 1 July ,835 6,136 43,971 Additions At 30 June 2011 and 1 July ,835 6,136 44,670 Additions 524, ,828 At ,663 6, ,498 Accumulated depreciation At 1 July ,136 6,136 Depreciation charge for the year 4,729 4,729 At 30 June 2011 and 1 July ,729 6,136 10,865 Depreciation charge for the year ,030 39,729 At ,759 6,136 50,594 Net book value At 30 June ,106 33,805 At 518, ,904 During the year, the Group acquired property, plant and equipment with an aggregate cost of approximately $273,589 (2011: $225,815) by cash payment, $382,928 (2011: $155,455) by means of finance leases, $96,900 (2011: $Nil) through advance from two major shareholders and $55,975 (2011: $155,455) by prepayment made as at 30 June Assets under finance lease During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of approximately $382,928 (2011: $155,455) and $332,928 (2011: $Nil) respectively, by means of finance leases. The Group s and the Company s carrying amount of machinery, equipment and motor vehicles held under finance leases as at was approximately $776,651 (2011: $279,088) and $518,901 (2011: $37,835) respectively. Leased assets are pledged as security for the related finance lease liabilities. Assets under construction In 2011, the CNG refilling station has been fully constructed and disposed to a customer following the change in the intention of use. The gain on disposal amounting to $32,232 has been recognised in revenue. Impairment loss During the financial year, a subsidiary of the Group within the Natural Gas Vehicle ( NGV ) related business segment made impairment of its motor vehicles as this subsidiary had been making losses. The impairment loss amounting to $352,001 (2011: $166,153) has been recognised in administrative expenses. 58 Asian Micro Holdings Limited

61 4. Investments in subsidiaries Company $ $ Unquoted equity investments, at cost 9,264,170 9,264,170 Less: Impairment loss (9,264,127) (7,805,139) Carrying amount of investments 43 1,459,031 During the financial year, management performed an impairment test for the investments in Asian Micro Sdn Bhd as it had been inactive for the past few years and management decided not to revive the subsidiary. Full impairment losses of $1,458,988 was recognized to fully write down the carrying amount of this subsidiary. For the year ended 30 June 2011, management performed an impairment test for the investments in AM NGV (S) Pte Ltd and SO NGV (S) Pte Ltd as these subsidiaries had been persistently making losses. Full impairment losses of $600,000 and $46, respectively, were recognised to fully write down the carrying amount of these subsidiaries as based on the financial budgets approved by the management, these subsidiaries are unable to generate sufficient operating cash flows. (i) Details of the subsidiaries held by the Company at the end of the financial year are as follows: Name of company Country of incorporation and place of business Principal activities Effective equity interest held by the Group Cost of investment by the Company % % $ $ Held by the Company Asian Micro (S) Pte Ltd Singapore Precision tray cleaning ( AMS ) (1) services Asian Micro (Thailand) Co., Ltd. ( AMT ) (2) Thailand Precision tray cleaning services and manufacturer of clean room grade polythene packaging materials AM NGV (S) Pte Ltd ( AM NGV (S) ) (1) Singapore Trading in natural gas vehicle ( NGV ) and compressed natural gas ( CNG ) supplies ACI Industries Pte Ltd Singapore Trading in clean room ( ACI ) (1) supplies ,865,290 3,865, ,510,101 1,510, , , , ,387 Asian Micro Sdn. Bhd. Malaysia Currently inactive ,765,013 2,765,013 ( AMM ) (3) Annual Report

62 4. Investments in subsidiaries (cont d) (i) Details of the subsidiaries held by the Company at the end of the financial year are as follows (cont d): Name of company Country of incorporation and place of business Principal activities Effective equity interest held by the Group Cost of investment by the Company % % $ $ Held by the Company A-P Engineering Pte Ltd Singapore Currently under ( APE ) (3) liquidation , ,263 SO NGV (S) Pte Ltd Singapore Currently inactive ( SO NGV (S) ) (1) AM NGV (T) Co., Ltd. Thailand Currently under ( AM NGV (T) ) (3) liquidation , ,000 AM NGV Auto Sales (Thailand) Co., Ltd. ( AM NGV Autosales (T) ) (2) Thailand Trading of NGV supplies 49 (Note a) ,264,170 9,264,170 (ii) Details of the subsidiaries held by subsidiary companies at the end of the financial year are as follows: Name of company Country of incorporation and place of business Principal activities Effective equity interest held by the Group Cost of investment by the Company % % $ $ Held by subsidiary companies Asian Micro Technology (Wuxi) Co., Ltd ( AMW ) (3) Wuxi Asian Brite Technology Co., Ltd ( ABT ) (3) People s Republic of China People s Republic of China Currently inactive Currently inactive (1) Audited by Ernst & Young LLP, Singapore. (2) Audited by J.C. Accounting Office, Thailand. (3) Not required to be audited by the laws of its country of incorporation. Note (a): While the Group holds 49% of issued share capital in AM NGV Autosales (T), it has control over the financial and operational policies via the majority representation on the board of directors of AM NGV Autosales (T). Accordingly, AM NGV Autosales (T) is accounted for as a subsidiary of the Group. 60 Asian Micro Holdings Limited

63 4. Investments in subsidiaries (cont d) Disposals of MBT Group and SAMRT In 2011, the Group disposed off its equity interests in Micro Brite Technology Pte Ltd ( MBT ) and its subsidiary, Asian Micro Technology (Suzhou) Co. Ltd (the MBT Group ) and Suzhou Asian Micro Recovery Technology ( SAMRT ) for cash consideration of $1 and forgiveness of trade and other payables of $302,985 respectively. The disposals resulted in a gain on disposal amounting to $163,214. Values of the assets and liabilities of MBT Group and SAMRT at the date of disposal and cash flow effects were: SAMRT Cash and cash equivalents 13,948 Plant and equipment 69,772 Other assets 671,498 Total liabilities (500,307) Carrying values of net liabilities 254,911 Less: Forgiveness of trade and other payables (1) (302,985) (48,074) Foreign currency reserve realised on disposal 5,962 Gain on disposal of SAMRT (42,112) 2011 $ MBT Group Other assets 317,417 Total liabilities (1,144,797) Carrying values of net liabilities (827,380) Less: Sale consideration (1) (827,381) Foreign currency reserve realised on disposal (406,237) Allowance for doubtful trade and other receivables (2) 1,112,516 Gain on disposal of MBT Group (121,102) Sale consideration 1 Less: Cash and cash equivalents Cash inflow 1 Net gain on disposal of subsidiaries (Note 18) (163,214) Net cash outflow (13,948) (1) As at date of disposal, the Group recorded trade payables of $302,985 due to SAMRT. The buyer of SAMRT agreed to forgo the payables in exchange of the 51% equity interest in SAMRT. (2) Upon disposal of MBT Group, the Group assessed the recoverability of the receivables from MBT Group and full allowance for doubtful trade and other receivables has been made. Annual Report

64 5(a) Investment in associated company Group Company $ $ Unquoted equity investments, at cost 127,389 84,926 At 1 July Share of post acquisition reserves (59,283) 68,106 84,926 Reclassified to other investments (68,106) (84,926) At 30 June Impairment loss At 1 July (68,106) (84,926) Reclassified to other investments 68,106 84,926 At 30 June Carrying value at 30 June In 2011, the Group and the Company reclassified investment in Suria Professional Service Centre Sdn. Bhd., an associated company to other investments as the Group no longer has significant influence over the financial and operational decisions in this entity. 5(b) Other Investments Group Company $ $ $ $ Available for sale financial assets Unquoted equity investments, at cost At 1 July 68,106 84,926 Reclassified from investment in associated company 68,106 84,926 At 30 June 68,106 68,106 84,926 84,926 Impairment loss At 1 July (68,106) (84,926) Reclassified from investment in associated company (68,106) (84,926) At 30 June (68,106) (68,106) (84,926) (84,926) Carrying value at 30 June 62 Asian Micro Holdings Limited

65 5(b) Other Investments (cont d) Details of other investment is as follows: Name of company Principal activities Country of incorporation and place of business Effective equity interest held by the Group % % Suria Professional Service Centre Sdn. Bhd. ( Suria ) (1) Conversion of natural gas vehicles Malaysia Held by the Company Held by a subsidiary (1) Audited by a local firm in Malaysia. 6. Inventories Group $ $ Raw materials 76, ,151 Work-in-progress 15,197 8,310 Finished goods 779,265 1,240,594 Total inventories at lower of cost and net realisable value 870,705 1,380,055 During the financial year, the Group wrote down $124,072 (2011: $714,397) of inventories which are recognised as expenses in the income statement. During the financial year, the Group wrote off $257,465 of inventories which are recognised as expenses in the income statement (Note 19). During the year, the Group reversed $8,246 (2011: $8,066) being part of an inventory write-down made previously, as the inventories were sold to customers above their carrying amounts. Annual Report

66 7. Trade and other receivables Group Company $ $ $ $ Trade and other receivables (current): Trade receivables 1,041,214 1,029,166 Other debtors 145, ,282 10,147 4,335 Deposits 105,388 98,923 1,292,321 1,636,371 10,147 4,335 Due from related parties (non-trade) (Note 8) 108, ,333 5,059 2,561 Add: Cash and bank balances (Note 9) 1,845, ,840 28,267 26,621 Total loans and receivables 3,246,441 2,443,544 43,473 33,517 Trade receivables Trade receivables are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. During the financial year, the Group wrote off $485 (2011: $543) of trade receivables which are recognised as expenses in the income statement. Allowance for doubtful trade and other receivables For the year ended, the impairment loss recognised in the profit or loss for trade and other receivables was $48,410 (2011: $12,639) and $2,646 (2011: $3,253), respectively. As at, trade receivables of the Group denominated in foreign currencies are as follows: Group $ $ Singapore dollars 24,415 United States dollars 261, , , ,608 As at, other receivables and deposits of the Group denominated in the foreign currencies are as follows: Group $ $ Singapore dollars 73,700 United States dollars 7,248 Other receivables and deposits of the Company were denominated in its functional currency. 80, Asian Micro Holdings Limited

67 7. Trade and other receivables (cont d) The Group s trade and other receivables that are impaired at the balance sheet date and the movement of the allowance accounts are as follows: Group $ $ Movement in trade receivables allowance accounts: At 1 July 274, ,899 Charge for the year 48,410 12,639 Write-back (6,207) Write-off (167,859) Exchange differences 82 (17,025) At 30 June 322, ,447 Movement in other receivables allowance accounts: At 1 July 80, ,979 Charge for the year 2,646 3,253 Reclassified from a related party (Note 8) 1,112,516 Write-off (245,000) Exchange differences (8) At 30 June 1,195,386 80,232 The above represents a provision for individually impaired trade and other receivables whose carrying values aggregate $322,939 (2011: $274,447) and $1,195,386 (2011: $80,232) respectively as at year end. Trade and other receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. Receivables that are past due but not impaired The Group has trade receivables amounting to $285,560 (2011: $341,342) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows: Group $ $ Trade receivables past due: Less than 30 days 229, , to 60 days 7,983 52, to 90 days 8,477 6, to 120 days 6,440 1,825 More than 120 days 33,100 52, , ,342 Annual Report

68 8. Due to subsidiaries (non-trade), net Due from/(to) related parties (non-trade) (current) Due to related parties (non-trade) (non-current) Loan from related party (current) Loan from related party (non-current) These amounts are unsecured and are to be settled in cash. These amounts are interest-free and are repayable on demand except for the non-current loan and a current loan from related parties of $200,000 which bears interest at prevailing market interest rate of 3% (2011: 5.25%) per annum as at year end. The related parties have agreed not to recall non-current amount due to them and non-current loan for repayment until such time as the Group s cash flow enables such repayment (See Note 2.1). In 2011, the Company entered into an agreement with two executive directors to capitalise a portion of the loan from directors of $367,584 by the issuance of new ordinary shares at $0.015 each in the share capital of the Company (See Note 15). Due to subsidiaries (non-trade), net are stated after deducting the following allowance for doubtful receivables: Movement of allowance for doubtful receivables Company $ $ Balance at 1 July 23,080,176 20,060,499 Provision during the year 35,950 3,019,677 Write back during the year (579,808) Balance at 30 June 22,536,318 23,080,176 Due from related parties (non-trade) are stated after deducting the following allowance for doubtful receivables: Movement of allowance for doubtful receivables Group $ $ Balance at 1 July 1,112,516 Provision during the year 1,511,316 Written-off during the year (398,800) Reclassified to other receivables (Note 7) (1,112,516) Balance at 30 June 1,112,516 Movement of allowance for doubtful debts for amount due from related parties are recognised in other operating income as gain on disposal of subsidiaries on year Asian Micro Holdings Limited

69 9. Cash and cash equivalents Cash and cash equivalents as at 30 June were as follows: Group Company $ $ $ $ Cash and bank balances 1,416, ,807 3, Fixed deposits 428, ,033 25,188 25,666 1,845, ,840 28,267 26,621 Less: Fixed deposits pledged* (428,959) (427,033) (25,188) (25,666) Cash and cash equivalents 1,416, ,807 3, * This relates to fixed deposits pledged in connection with credit facilities granted by banks (Note 11). Cash at bank earns interest at rates based on daily bank deposit rates ranging from 0.00% to 0.25% (2011: 0.00% to 0.25%) per annum. As at, cash and bank balances of the Group denominated in foreign currencies are as follows: Group $ $ Singapore dollars 25,794 United States dollars 223,751 81,560 Cash and cash equivalents of the Company were denominated in its functional currency. 223, ,354 Fixed deposits are placed with financial institutions for varying periods of between 1 month to 1 year depending on the immediate cash requirements of the Group. The fixed deposits earn interest at fixed deposit rates ranging from 0.15% to 0.625% (2011: 0.00% to 0.625%) per annum for SGD fixed deposits and 1.75% (2011: from 2.25% to 2.5%) per annum for Thai Baht (THB) fixed deposit. Annual Report

70 10. Trade and other payables Group Company $ $ $ $ Trade and other payables: Trade payables 835, ,690 Other payables 684,918 1,069,957 70, ,488 Total trade and other payables 1,520,140 1,777,647 70, ,488 Add: - Accrued expenses (Note 13) 878, , , ,277 - Loan from related party (current) (Note 8) 331,210 - Due to subsidiaries (non-trade), net (Note 8) 1,524,477 1,420,451 - Due to related parties (non-trade) (current) (Note 8) 1,092, , ,548 - Bills payable to bank (Note 11) 231, ,833 Obligation under finance lease (Note 12) - current 146,720 72,884 78,641 7,184 - non-current 377, , ,270 15,740 Due to related parties (non-trade) (non-current) (Note 8) 366, ,783 Loan from related party (non-trade) (non-current) (Note 8) 301, ,000 Total financial liabilities carried at amortised cost 5,245,862 4,479,586 2,560,619 2,175,140 Trade payables Trade payables are non-interest bearing and are normally settled on 30 to 90 day terms. As at, trade payables of the Group denominated in foreign currencies are as follows: Group $ $ United States dollars 126, ,837 Other payables Other payables are non-interest bearing and are normally settled on 30 to 90 day terms. As at, other payables of the Group denominated in foreign currencies are as follows: Group $ $ Singapore dollars 124, ,328 United States dollars 31 Other payables of the Company were denominated in its functional currency. 68 Asian Micro Holdings Limited

71 11. Bills payable to banks The bills payable are secured and have repayment terms of less than 12 months. As at, bills payable of the Group denominated in foreign currency are as follows: Group $ $ United States dollars 134, ,547 Interest on bills payable to banks was charged at 2.88% to 6.75% (2011: 2.88% to 6.75%) per annum. The Group s trading facilities are secured by: (i) corporate guarantee of $2,540,000 (2011: $2,540,000) from the Company; (ii) fixed deposits from the Group and the Company of $428,959 (2011: $427,033) and $25,188 (2011: $25,666) respectively; (iii) (iv) a legal mortgage over a property of a related party, American Converters Industries Pte Ltd, which is owned by two major shareholders of the Company (one of whom is also a director of the Company); and joint and several guarantee of $440,000 from the two major shareholders of the Company (one of whom is also a director of the Company). 12. Obligations under finance leases Average effective interest rate % p.a. Maturity Group Company $ $ $ $ Current: Obligations under finance leases (secured) (Note 26(b)) 6.131% ,720 72,884 78,641 7,184 Non-current: Obligations under finance leases (secured) (Note 26(b)) 6.383% , , ,270 15,740 Obligations under finance leases These obligations are secured by a charge over the leased assets (Note 3). Annual Report

72 13. Accrued expenses Group Company $ $ $ $ Accrued expenses 701, , , ,477 Accrued personnel expenses 177, , , , , , ,277 Accrued personnel expenses include executive directors salaries payable of $Nil (2011: $246,637) to two major shareholders of the Company (one of whom is also a director of the Company). In 2011, the Company entered into an agreement with two executive directors to capitalise the directors salaries payable of $1,132,416, by the issuance of new ordinary shares at $0.015 each in the share capital of the Company. 14. Provision Group 2011 $ Provision for warranty At 1 July 51,797 Arose during the financial year Unused amount reversed (51,797) At 30 June In 2011, the Group reversed the provision for warranty as the warranty period has lapsed. 15. Share capital Number of shares Group and Company $ $ Issued and fully paid ordinary shares: At 1 July 463,591, ,591,043 38,673,928 37,173,928 Capitalisation of Directors salaries 75,494,400 1,132,416 Loan from directors 24,505, ,584 At 30 June 463,591, ,591,043 38,673,928 38,673,928 In 2011, the Company capitalised the directors salaries payable to certain executive directors and a portion of the loan from directors of $1,132,416 and $367,584, respectively, by the issuance of new ordinary shares at $0.015 each in the share capital of the Company. The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value. The Company has an employee share option plan (Note 25) under which options to subscribe for the Company s ordinary shares have been granted to employees of the Group. 70 Asian Micro Holdings Limited

73 16. Share option reserve Share option reserve represents the equity-settled share options granted to employees (Note 25). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry of the share options to retained earnings. Group and Company $ $ At 1 July 389, ,944 Grant of equity-settled share options 139, ,835 Expiry of share options (207,644) (42,792) At 30 June 321, , Revenue Group $ $ Natural Gas Vehicle ( NGV ) related business 1,855,877 2,895,005 Plastic scrap recovery 183,107 Sales of manufactured goods 2,246,183 2,013,949 Tray washing and recycling services 1,703,457 3,483,007 5,805,517 8,575, Other operating income Other operating income comprises the following: Group $ $ Claim from insurance (1,309,909) (35,891) Foreign exchange gain (276,541) Gain on disposal of property, plant and equipment (129,039) (91,000) Gain on disposal of subsidiaries (163,214) Rental income (4,893) Sales of scrap (33,265) (101,441) Write back of allowance for doubtful debts (6,207) Write back of allowance for stocks obsolescence (8,246) (8,066) Write back of provision of warranty (51,797) Waiver of payables (2,050) Others (79,644) (1,841,537) (459,666) Annual Report

74 19. Other operating expenses Other operating expenses comprises the following: Group $ $ Allowance for doubtful debts (non-trade) 2,646 3,253 Allowance for doubtful debts (trade) 48,410 12,639 Allowance for stocks obsolescence 113, ,397 Property, plant and equipment written off 52,393 Flood related expenses - Stocks written off 238,061 - Others 127,240 Foreign exchange loss 1,672,237 Stocks written off 19,404 Stocks written down 10,351 Write off of doubtful debts (trade) Others , ,775 2,515, Loss before taxation The following items have been included in arriving at loss before tax from operations: Group $ $ Cost of inventories sold 2,188,460 3,146,094 Audit fees: - Auditors of the Company 103, ,397 - Other auditors 11,687 17,194 Non-audit fees: - Auditors of the Company 35,000 36,630 Depreciation of property, plant and equipment 376, ,662 Operating lease expense 510, ,566 Salaries and bonuses 1,919,672 2,789,118 Tax penalty 43,817 Central Provident Fund contributions 144, ,943 Share-based payments 139, ,835 Other personnel expenses 92,411 91,601 Property, plant and equipment written off 352, ,153 Included in the above is compensation of key management personnel as disclosed in Note 27(b). 72 Asian Micro Holdings Limited

75 21. Financial expenses/(income) Group $ $ Financial expenses Interest expense on: - bank overdrafts 4,850 2,267 - finance leases 20,245 16,910 - late interest charges 917 1,524 - bills payable to banks 11,350 21,783 - loan from related parties 11,250 5,220 48,612 47,704 Bank charges 23,445 19,637 72,057 67,341 Financial income Interest income from - fixed deposits and bank balances (2,456) (3,290) 22. Directors remuneration The number of directors of the Company whose emoluments fall within the following bands: $ $ $250,000 to $499,999 2 Below $250,000 7* 6* 7 8 * Includes directors resigned during the year. Annual Report

76 23. Taxation Major components of income tax expense for the year ended 30 June were: Group $ $ Current income tax - under/(over) provision in respect of prior years 161,815 (211,103) A reconciliation of the tax expense and the product of accounting profit multiplied by the applicable tax rate is as follows: Group $ $ Loss before tax (306,586) (4,640,163) Tax at the applicable tax rate of 17% (52,120) (788,828) Tax effect of expenses not deductible for tax purposes 440, ,957 Tax effect on income not subject to tax (418,727) (47,466) Under/(over) provision of tax in respect of prior year 161,815 (211,103) Deferred tax assets not recognised 96, ,744 Effects of different tax rates in other countries (66,511) (372,407) Tax expense/(credit) 161,815 (211,103) Deferred taxation at 30 June relate to the following: Group Company $ $ $ $ Deferred tax liabilities - excess of net book value over tax written down value of fixed assets (585) (585) (585) (585) Deferred tax liabilities (585) (585) (585) (585) The Group As at, the Group has unrecognised tax losses and unutilised capital allowances of approximately $10,992,151 (2011: $10,421,815) and $20,199 (2011: $28,000), which are available for offset against future taxable profits, subject to agreement by the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the Group operates. No deferred tax is recognised on these losses and unutilised capital allowances in accordance with the accounting policy as set out in Note 2.23(ii). Management intends to transfer unabsorbed capital allowances and trade losses of $89,870 (2011: $193,000) from a subsidiary to a certain other subsidiary under the group relief system, subject to compliance with relevant rules and procedures and agreement of the Inland Revenue Authority of Singapore. 74 Asian Micro Holdings Limited

77 24. Loss per share Basic loss per share is calculated by dividing the loss for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year. Diluted loss per share is calculated by dividing the loss for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year plus weighted average number of ordinary shares that would be issued on the conversion of all the dilution potential shares into ordinary shares. The following table reflects the loss and share data used in the computation of basic and diluted loss per share for the years ended 30 June: Group $ $ Net loss attributable to owners of the parent used in the computation of basic and diluted loss per share (258,070) (3,896,590) Weighted average number of ordinary shares for basic and diluted loss per share 463,591, ,275,975 For the year ended, 26,000,000 (2011: 36,857,000) of share options granted to employees under the existing employee share option scheme have not been included in the calculation of diluted loss per share because they are anti-dilutive for the current financial year presented. 25. Employee benefits The Company has 2 employee share option schemes, Asian Micro Holdings Limited Employees Share Option Scheme ( the ESOS 2001 ), and Asian Micro Holdings Limited Employees Share Option Scheme (2010) ( the ESOS 2010 ) to confirmed staff. Asian Micro Holdings Limited Employees Share Option Scheme ( the ESOS 2001 ) The exercise price of the options is set at the average market price for the 5 consecutive trading days immediately preceding the offering date of the option. The options may be exercisable immediately or at any time from 1 to 3 years beginning on the first anniversary of the date of grant up to 28 September Options granted are cancelled when the option holder ceases to be under full time employment of the Company or any corporation in the Group subject to certain exceptions at the discretion of the Company. There are no cash settlement alternatives. The balance of the options expired in September Annual Report

78 25. Employee benefits (cont d) Asian Micro Holdings Limited Employees Share Option Scheme 2010 ( the ESOS 2010 ) The exercise price of the options is set at the average market price for the 5 consecutive trading days immediately preceding the offering date of the option. The options may be exercisable immediately or at any time from 1 to 10 years beginning on the first anniversary of the date of grant. Options granted are cancelled when the option holder ceases to be under full time employment of the Company or any corporation in the Group subject to certain exceptions at the discretion of the Company. There are no cash settlement alternatives. There has been no modification to the scheme during the year. Information with respect to the number of options granted under both schemes is as follows: Date granted Option exercise period Exercise price Balance at 1 July 2011 Options exercised during the year Balance at ESOS 2001 October 2001 October September 2011 $ ,000 (800,000) November 2001 November September 2011 $ ,000 (152,000) May 2002 May September 2011 $ ,000 (56,000) June 2002 June September 2011 $ ,000 (68,000) August 2003 August September 2011 $ ,000 (21,000) August 2003 August September 2011 $ ,000 (574,000) October 2003 October September 2011 $ ,646,000 (2,646,000) October 2005 October September 2011 $ ,000 (525,000) May 2007 May September 2011 $ ,000 (550,000) June 2007 June September 2011 $ ,000 (230,000) June 2007 June September 2011 $ ,000 (200,000) July 2008 July September 2011 $ ,000 (675,000) September 2008 September September 2011 $ ,000 (50,000) December 2009 December September 2011 $ ,960,000 (7,960,000) 14,507,000 (14,507,000) 76 Asian Micro Holdings Limited

79 25. Employee benefits (cont d) Asian Micro Holdings Limited Employees Share Option Scheme 2010 ( the ESOS 2010 ) (cont d) There is no option issued, forfeited, exercised during the year. Date granted Option exercise period Exercise price Balance at 1 July 2011 Options issued during the year Options forfeited during the year Options exercised during the year Balance at 30 June 2012 ESOS 2010 November November $ ,350,000 (1,150,000) 21,200, October 2020 July 2011 July October 2020 $0.01 5,400,000 (600,000) 4,800,000 Movement of share options during the year 22,350,000 5,400,000 (1,750,000) 26,000,000 The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year. No. WAEP($) No. WAEP($) ESOS 2001 Outstanding at beginning of year (1) 14,507, ,307, Forfeited during the year (7,800,000) 0.03 Expired during the year (14,507,000) 0.06 Outstanding at end of year 14,507, ESOS 2010 Outstanding at beginning of year 22,350, Granted during the year (2) 5,400, ,450, Forfeited during the year (1,750,000) (3,100,000) Outstanding at end of year (3) 26,000, ,350, (1) Included within these balances are equity-settled options that were not recognized in accordance with FRS 102 as these equity-settled options were granted on or before 22 November These options have been subsequently modified and therefore do not need to be accounted for in accordance with FRS 102. (2) The weighted average fair value of options granted during the year was $0.01 (2011: $0.015). (3) The exercise price for options outstanding at the end of the year was $0.01 and $0.015 (2011: $0.015). The weighted average remaining contractual life for these options is 8 years. Annual Report

80 25. Employee benefits (cont d) Fair value of share options granted The fair value of share options as at the date of grant is estimated using the Binomial Option Pricing Model, taking into account the terms and conditions upon which the options were granted. The inputs to the model used for the years ended and 30 June 2011 are shown below Dividend yield % (year) Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Share price ($) The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. 26. Commitments and contingencies (a) Operating lease commitments as lessee The Group leases certain properties under lease agreements. These leases have an average life of between 2 and 3 years with no renewal option or contingent rent provision included in the contracts. There are no restrictions placed upon the Group or the Company by entering into these leases. Operating lease payments recognised in the consolidated profit or loss during the year amounted to $510,665 (2011: $639,566). Future minimum lease payments under non-cancellable operating leases as at 30 June are as follows: Group $ $ Within one year 569,155 After one year but not more than five years 105, ,455 The Group has not entered into any non-cancellable leases as lessor. Rental income is generated on an adhoc basis. 78 Asian Micro Holdings Limited

81 26. Commitments and contingencies (cont d) (b) Finance lease commitments The Group has finance leases for certain items of machinery, equipment and motor vehicles (Note 3). There are no restrictions placed upon the Group by entering into these leases. The average discount rate implicit in the leases is 6.13% % (2011: 7.19%) per annum. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Minimum lease payments Present value of payments Group Minimum lease payments Present value of payments $ $ $ $ Not later than one year 167, ,720 87,187 72,884 Later than one year but not later than five years 404, , , ,393 Total minimum lease payments 571, , , ,277 Less: Amounts representing finance charges (47,411) (29,861) Present value of minimum lease payments 523, , , ,277 Minimum lease payments Present value of payments Company Minimum lease payments Present value of payments $ $ $ $ Not later than one year 89,472 78,641 8,928 7,184 Later than one year but not later than five years 255, ,270 17,100 15,740 Total minimum lease payments 344, ,911 26,028 22,924 Less: Amounts representing finance charges (24,705) (3,104) Present value of minimum lease payments 319, ,911 22,924 22,924 (c) Continuing financial support As at, the Company had given undertakings to certain subsidiaries to provide financial support to enable them to operate as going concerns and to meet their obligations for at least 12 months from the respective date of their directors report. Annual Report

82 27. Related party disclosures The following are the significant intercompany transactions entered into by the Group with its related parties: (a) Sales and purchases of goods and services and others Group $ $ Rental expense paid/payable to related parties * 261, ,382 Sale of goods 97,035 Interest expenses payable to related parties 11,250 5,220 * The Group has entered into contracts with Asian Micro Industries (Thailand) Co., Ltd, Ultraline Holdings (Thailand) Co., Ltd, American Converters Industries Pte Ltd and Ultraline Technology Pte Ltd, which are owned by two major shareholders of the Company (one of whom is also a director of the Company), for the lease of factories on a time cost reimbursement basis. (b) Compensation of key management personnel Group $ $ Short-term employee benefits 722,909 1,186,983 Central provident fund contributions 69,099 89,296 Share-based payments 109,650 87,397 Total compensation paid to key management personnel 901,658 1,363,676 Comprise amounts for: - Directors of the Company 541, ,085 - Other key management personnel 360, , ,658 1,363, Financial risk management objectives and policies The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The Board of directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. The following sections provide details regarding the Group s and Company s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. There has been no change to the Group s exposure to these financial risks or the manner to which it manages and measures the risks. 80 Asian Micro Holdings Limited

83 28. Financial risk management objectives and policies (cont d) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group s and the Company s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. Trade and other receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. Exposure to credit risk At the balance sheet date, the Group s and the Company s maximum exposure to credit risk is represented by: the carrying amount of each class of financial assets recognised in the balance sheets; and a nominal amount of $2,540,000 (2011: $2,540,000) relating to a corporate guarantee provided by the Company to a bank on subsidiaries bank facility. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group s trade receivables at the balance sheet date is as follows: Group $ % of total $ % of total By country: Singapore 673, , Thailand 367, , ,041, ,029, At the balance sheet date, approximately 51% (2011: 38%) of the Group s trade receivables were due from 3 major customers. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and bank balances, that are neither past due nor impaired, are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 7 (Trade and other receivables). Annual Report

84 28. Financial risk management objectives and policies (cont d) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The table below summarises the maturity profile of the Group s and the Company s financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations year or less 1 to 5 years Over 5 years Total $ $ $ $ Group Financial assets Trade and other receivables 1,292,321 1,292,321 Due from related parties (non-trade) 108, ,839 Fixed deposits 428, ,959 Cash and bank balances 1,416,322 1,416,322 Total undiscounted financial assets 3,246,441 3,246,441 Financial liabilities Trade and other payables 1,520,140 1,520,140 Accrued expenses 878, ,839 Due to related parties (non-trade) 1,092, ,367 1,458,808 Bills payable to bank 231, ,081 Obligations under finance lease 167, , ,250 Loan from related parties 331, , ,155 Total undiscounted financial liabilities 4,220,722 1,090,551 5,311,273 Total net undiscounted financial liabilities (974,281) (1,090,551) (2,064,832) Company Financial assets Trade and other receivables 10,147 10,147 Due from related parties (non-trade) 5,059 5,059 Fixed deposits 25,188 25,188 Cash and bank balances 3,079 3,079 Total undiscounted financial assets 43,473 43,473 Financial liabilities Trade and other payables 70,648 70,648 Accrued expenses 294, ,252 Due to related parties (non-trade) 100, , ,301 Due to subsidiaries (non-trade) 1,524,477 1,524,477 Obligations under finance lease 89, , ,616 Total undiscounted financial liabilities 2,079, ,927 2,585,294 Total net undiscounted financial liabilities (2,035,894) (505,927) (2,541,821) 82 Asian Micro Holdings Limited

85 28. Financial risk management objectives and policies (cont d) Liquidity risk (cont d) year or less 1 to 5 years Over 5 years Total $ $ $ $ Group Financial assets Trade and other receivables 1,636,371 1,636,371 Due from related parties (non-trade) 108, ,333 Fixed deposits 427, ,074 Cash and bank balances 271, ,807 Total undiscounted financial assets 2,443,585 2,443,585 Financial liabilities Trade and other payables 1,777,647 1,777,647 Accrued expenses (non-trade) 920, ,001 Due to related parties 784, ,828 Bills payable to bank 455, ,833 Obligations under finance lease 87, , ,138 Loan from related party (non-trade) 324, ,750 Total undiscounted financial liabilities 4,025, ,701 4,534,197 Total net undiscounted financial liabilities (1,581,911) 508,701 2,090,612 Company Financial assets Trade and other receivables 4,335 4,335 Due from related parties (non-trade) 2,561 2,561 Fixed deposits 25,666 25,666 Cash and bank balances Total undiscounted financial assets 33,517 33,517 Financial liabilities Trade and other payables 149, ,488 Accrued expenses 582, ,277 Due to subsidiaries (non-trade) 1,420,451 1,420,451 Obligations under finance lease 8,928 17,100 26,028 Total undiscounted financial liabilities 2,161,144 17,100 2,178,244 Total net undiscounted financial liabilities (2,127,627) (17,100) (2,144,727) Annual Report

86 28. Financial risk management objectives and policies (cont d) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. The Group s and the Company s exposure to interest rate risk arises primarily from their obligations under finance lease and loan from related parties. The Group s and the Company s policy is to manage interest cost using fixed rate debts. Foreign currency risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, THB, USD and Renminbi (RMB). The foreign currencies in which these transactions are denominated are mainly U.S Dollars (USD). Approximately 49% (2011: 37%) of the Group s sales are denominated in foreign currencies whilst 82% (2011: 54%) of purchases are denominated in the respective functional currencies of the Group entities. The Group has trade receivables, trade payables and bills payable to bank denominated in foreign currency. At the balance sheet date, trade receivables, trade payables and bills payable to bank denominated in foreign currency balances (mainly in USD) amounted to $261,972, $126,797 and $134,533 (2011: $433,608, $122,877 and $354,547) respectively. The Group and the Company also hold cash denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances are mainly in USD. The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia, People s Republic of China ( PRC ) and Thailand. The Group s net investments in Malaysia, PRC and Thailand are not hedged. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity to a reasonably possible change in the USD, with all other variables held constant, of the Group s loss net of tax. Group Loss net of tax $ 000 $ 000 USD - strengthened 3% (2011: 12%) (15) (22) - weakened 3% (2011: 12%) Asian Micro Holdings Limited

87 29. Fair value of financial instruments (a) Fair value of financial instruments that are carried at fair value Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), and Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs) The Group has not classified any financial instrument under Level 1 and Level 2. (b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Current trade and other receivables (Note 7), due from related parties (Note 8), trade and other payables (Note 10), accrued expenses (Note 13), due to subsidiaries/related parties (current) (Note 8), current loan from related parties (Note 8), obligations under finance leases (current) (Note 12) and bills payable to bank (Note 11) The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. (c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value Group Total carrying amount Aggregate fair value $ $ $ $ Finance lease obligations repayable after 1 year but within 5 years 377, , , ,327 Company Finance lease obligations repayable after 1 year but within 5 years 241, ,299 Determination of fair value The fair value has been determined using discounted estimated cash flows. The discount rates used are the current market incremental lending rates for similar types of leasing arrangements at the balance sheet date. The non-current amount due to related parties (non-trade) and loan from related party have no repayment terms and are repayable only when the cash flows of the Group permits. Accordingly, the fair value of the payables are not determinable as the timing of the future cash out flows cannot be estimated reliably. Annual Report

88 30. Capital management The primary objective of the Group s capital management is to ensure that it maintains adequate funds to support its business activities and to continue as a going concern. The Group s primary objective in capital management is to maintain on appropriate capital base so as to maintain investor, creditor and market confidence, and to continue to maintain the future development and growth of the business. To maintain or adjust the capital structure, the Group may issue new shares. There were no changes in the Group s approach to capital management during the year. 31. Segment information For management purposes, the Group is organised into business units based on their product and services, and has five reportable operating segments as follows: Tray washing and recycling Tray washing and recycling segment provides services of recycling and precision cleaning of packaging trays and media/disk cassettes used in the hard disk drive and semiconductor industries. This segment also includes precision parts cleaning and parts visual inspection as well as clean room laundry cleaning services. Manufacturing Manufacturing segment refers to manufacturing of clean room grade packaging products such as LDPE/HDPE bags, ESD bags and aluminum moisture barrier bags for the electronics and hard disk drive industries. Corporate The corporate segment is involved in Group-level corporate services. Natural Gas Vehicle ( NGV ) related business NGV related business segment refers to the trading of NGV related products such as bi-fuel conversion kits and cylinders and transportation of CNG refilling gas service. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arm s length basis in a manner similar to transactions with third parties. 86 Asian Micro Holdings Limited

89 31. Segment information (cont d) Geographical information The Group s geographical information are based on the location of the Group s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. Information about major customers Revenues from one major customer in the NGV related business segment amounted to $1,311,508 (2011: $2,140,487). Revenues from one major customer in the manufacturing business segment amounted to $1,170,857 (2011: $983,344). In 2011, revenues from one major customer in the tray washing and recycling segment amounted to $1,235,886. Annual Report

90 31. Segment information (cont d) Segments The following table presents revenue and results information regarding the Group s reportable operating segments for the financial years ended 30 June 2012 and 2011 (in $ 000). Tray washing and recycling Manufacturing Plastic waste recycling Natural Gas Vehicle ( NGV ) related business Corporate and others Elimination Consolidated $ $ $ $ $ $ $ $ $ $ $ $ $ $ Segment revenue Sales to external customers 1,773 3,483 2,176 2, ,857 2,895 5,806 8,575 Inter-segment 960 1,650 (1,157) (1,901) sales Total revenue 1,953 3,483 2,193 2, ,857 2, ,650 (1,157) (1,901) 5,806 8,575 Segment results 790 (1,605) 393 (28) 27 (2,570) (1,528) (2,970) (1,772) 4, (237) (4,576) Financial expenses (72) (67) Financial income 2 3 Share of results of associated companies Loss before taxation Tax (expense)/ credit (306) (4,640) (162) 211 Loss for the year (468) (4,429) 88 Asian Micro Holdings Limited

91 31. Segment information (cont d) Segments (cont d) Tray washing and recycling Manufacturing Plastic waste recycling Natural Gas Vehicle ( NGV ) related business Corporate and others Elimination Consolidated $ $ $ $ $ $ $ $ $ $ $ $ $ $ Segment assets 6,495 6,327 3,066 1,389 4,152 4,449 1,974 2,563 (10,268) (9,453) 5,419 5,275 Total assets 5,419 5,275 Segment liabilities 22,872 20,853 3,994 2,187 14,021 10,392 4,133 4,130 (40,407) (40,407) 4,613 3,499 Unallocated liabilities Total liabilities 5,246 4,497 Capital expenditure (47) Depreciation Impairment losses of property, plant and equipment The following table presents revenue and assets information based on the geographical location of customers and assets, respectively, for the years ended and 2011 (in $ 000). Singapore Malaysia Thailand PRC Others Total $ $ $ $ $ $ $ $ $ $ $ $ Sales to external customer 4,439 7,100 1,367 1, ,806 8,575 Assets 3,772 3, ,634 1, ,419 5,275 Annual Report

92 32. Events occurring after the reporting period On 6 July 2012, the Company granted 11,050,000 share options, with an exercise price of S$0.022 for each option, pursuant to the Asian Micro Employees Share Option Scheme 2010 ( the ESOS 2010 ) to employees of the Group. 6,500,000 of the share options were granted to the directors of the Company. 33. Authorisation of financial statements The financial statements for the year ended were authorised for issue in accordance with a resolution of the directors on 2 October Asian Micro Holdings Limited

93 statistics of shareholdings As at 12 September 2012 NO. OF SHARES ISSUED : 464,591,043 CLASS OF SHARES : ORDINARY SHARES VOTING RIGHTS : 1 VOTE PER SHARE The Company does not hold any treasury shares. SIZE OF SHAREHOLDINGS NO. OF SHAREHOLDERS % NO. OF SHARES % , ,000 10,000 2, ,829, ,001 1,000,000 1, ,309, ,000,001 & ABOVE ,451, TOTAL 3, ,591, Top Twenty Shareholders as at 12 September 2012 NAME OF SHAREHOLDERS NO. OF SHARES % LIM KEE VICTOR LIM 138,741, LEONG LAI HENG 118,646, LIN XIANGLONG, WINCHESTER 11,550, KELVIN CHNG BOON KIAN 7,840, LEE DEH KHUAN 7,033, LIN MEIJUAN SOPHIA 6,008, UOB KAY HIAN PTE LTD 4,727, AMERICAN CONVERTERS INDUSTRIES PTE LTD 3,866, UNITED OVERSEAS BANK NOMINEES (PTE) LTD 3,547, DBS NOMINEES PTE LTD 3,280, MOHAMED HASAN MARICAN S/O KADIR MOHIDEEN SAIBU MARICAR 2,700, DBS VICKERS SECURITIES (S) PTE LTD 2,481, TAN SEW MENG 2,210, ZHANG JILEI 2,142, CHOO CHEE KIONG 2,000, PIYAWAT JIRAWATOPHAT 1,664, WANG KAI YUEN 1,526, H VISHANDASS 1,500, ULTRALINE TECHNOLOGY (S) PTE LTD 1,449, OCBC SECURITIES PRIVATE LTD 1,446, ,357, % 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. Annual Report

94 Shareholders information As at 12 September 2012 SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders) NAME OF SHAREHOLDER DIRECT INTEREST DEEMED INTEREST LIM KEE VICTOR LIM (a) 138,741, % 125,218, % LEONG LAI HENG (b) 118,646, % 145,312, % Notes: (a) Mr. Lim Kee Victor Lim s deemed interest arose through 496,000 shares held by DBS Nominees (Private) Limited, 1,449,105 shares held by Ultraline Technology (S) Pte Ltd and 3,866,439 shares held by American Converters Industries Pte Ltd. He is also deemed to have an interest in the 119,406,760 shares held by his spouse, Mdm. Leong Lai Heng. (b) Mdm. Leong Lai Heng s deemed interest arose through 760,000 shares held by United Overseas Bank Nominees (Private) Limited, 1,449,105 shares held by Ultraline Technology (S) Pte Ltd and 3,866,439 shares held by American Converters Industries Pte Ltd. She is also deemed to have an interest in the 139,237,217 shares held by her spouse, Mr. Lim Kee Victor Lim. * Mr. Lim Kee Victor Lim and Mdm. Leong Lai Heng each own 50% of the entire issued and paid-up share capital of Ultraline Technology (S) Pte Ltd and American Converters Industries Pte Ltd. 92 Asian Micro Holdings Limited

95 notice of annual general meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of Asian Micro Holdings Limited (the Company ) will be held at Raffles Marina, 10 Tuas West Drive, Singapore on Wednesday, 24 October 2012 at a.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and the Audited Financial Statements of the Company for the financial year ended together with the Auditors Report thereon. (Resolution 1) 2. To record the retirement of Dr. Wang Kai Yuen, an Independent Non-Executive Director of the Company, who is retiring pursuant to Article 89 of the Articles of Association of the Company and will not be seeking for re-election. 3. To re-elect Mr. Ng Chee Wee, an Executive Director of the Company retiring pursuant to Article 89 of the Articles of Association of the Company. (Resolution 2) 4. To approve the payment of Directors fees of S$53, for the year ended. (2011: S$50,663.23). (Resolution 3) 5. To re-appoint Messrs Ernst & Young LLP as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 4) 6. To transact any other ordinary business which may properly 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 That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of Section B of the Singapore Exchange Securities Trading Limited Listing Manual: Rules of Catalist (the Catalist Rules ), 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 (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force, 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) to be issued pursuant to this Resolution shall not exceed one hundred per centum (100%) of the total number of issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed fifty per centum (50%) of the total number of issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); Annual Report

96 notice of annual general meeting (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 that may be issued under sub-paragraph (1) above, the total number of issued shares shall be based on the total number of issued 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 any convertible securities; new shares arising from exercising share options or vesting of share awards which are 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 authority conferred by this Resolution, the Company shall comply with the provisions of the Catalist Rules 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, such authority shall 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. [See Explanatory Note (i)] (Resolution 5) 8. Authority to issue shares under the Asian Micro Employees Share Option Scheme 2010 That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the prevailing Asian Micro Employees Share Option Scheme 2010 (the Scheme ) 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 exercise of options granted by the Company under the Scheme, 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 Scheme shall not exceed twenty five per centum (25%) of the total number of issued 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. [See Explanatory Note (ii)] (Resolution 6) By Order of the Board Lee Ellen Secretary Singapore, 9 October Asian Micro Holdings Limited

97 notice of annual general meeting Explanatory Notes: (i) The Ordinary Resolution 5 in item 7 above, if passed, will empower the Directors of the Company, effective 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 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 in the capital of the Company, of which up to 50% may be issued other than on a pro-rata basis to shareholders. For determining the aggregate number of shares that may be issued, the total number of issued shares will be calculated based on the total number of issued shares in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares. (ii) The Ordinary Resolution 6 in item 8 above, if passed, will empower the Directors of the Company, effective 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 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 exercise of options granted or to be granted under the Scheme up to a number not exceeding in aggregate (for the entire duration of the Scheme) twenty five per centum (25%) of the total number of issued shares in the capital of the Company from time to time. 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. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 1 Tech Park Crescent, Singapore not less than forty-eight (48) hours before the time appointed for holding the Meeting. Annual Report

98 This page has been intentionally left blank.

99 ASIAN MICRO HOLDINGS LIMITED (Company Registration No K) (Incorporated In The Republic of Singapore with limited liability) PROXY FORM (Please see notes overleaf before completing this Form) IMPORTANT: 1. For investors who have used their CPF monies to buy Asian Micro Holdings Limited s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf. I/We, of being a member/members of Asian Micro Holdings Limited, hereby appoint: Name NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address and/or (delete as appropriate) Name NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/ proxies to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting ) of the Company to be held on 24 October 2012 at a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [ ] within the box provided.) No. Resolutions relating to: For Against 1 Directors Report and Audited Financial Statements for the financial year ended 2 Re-election of Mr. Ng Chee Wee as a Director 3 Approval of Directors fees amounting to S$53, Re-appointment of Messrs Ernst & Young LLP as Auditors 5 Authority to issue new shares 6 Authority to issue shares under the Asian Micro Employees Share Option Scheme 2010 Dated this day of 2012 Total number of Shares in: No. of Shares (a) CDP Register (b) Register of Members & Signature of Shareholder(s) or, Common Seal of Corporate Shareholder

100 Notes: 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. 2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. 3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy. 4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting. 5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 1 Tech Park Crescent, Singapore not less than 48 hours before the time appointed for the Meeting. 6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument. 7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore. General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

101 ASIAN MICRO HOLDINGS LIMITED No. 1, Tech Park Crescent, Tuas Tech Park, Singapore Tel: Fax: Company Registration No K Annual Report