ANNUAL REPORT. ENZER CORPORATION LTD Annual Report 2008

Transcription

1 ENZER CORPORATION LTD Annual Report 2008 ANNUAL REPORT This document has been prepared by the Company and its contents have been reviewed by the Company s Sponsor, Stamford Corporate Services Pte Ltd, for compliance with the relevant rules of the Exchange. The Company s Sponsor has not independently verified the contents of this document. This document has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this document including the correctness of any of the statements or opinions made or reports contained in this document. The contact person for the Sponsor is Mr Bernard Lui Tel: BernardLui@stamfordlaw.com.sg

2 Contents Corporate Information 01 Chairman s Message 02 Business Review 03 Directors Profi le 04 Key Executives Profi le 06 Statement of Corporate Governance 07 Financial Contents 14 Statistics of Shareholdings 62 Notice of Annual General Meeting 64 Proxy Form

3 Corporate Information Board of Directors Jonathan Lim Keng Hock (appointed on 23 May 2008) Ang Eng Chin (appointed on 11 April 2001) William Teo Choon Kow (appointed on 1 June 2005) Wong Yen Siang (appointed on 15 August 2007) Tan Ah Mee (appointed on 21 August 2007) Leonard Tay Gim Sin (appointed on 29 May 2008) Secretary Ong Beng Hong Tan Swee Gek Registered Offi ce Blk 4012 Ang Mo Kio Ave 10 #06-08, TECHplace I Singapore Tel : (65) Fax : (65) Website : Co. registration No.: E Auditors Baker Tilly TFWLCL Partner-in-charge: Lim Poh Suan (since the financial year ended 31 March 2007) 15 Beach Road #03-10 Beach Centre Singapore Nominating Committee William Teo Choon Kow (Chairman) Wong Yen Siang Tan Ah Mee Leonard Tay Gim Sin Continuing Sponsor Stamford Corporate Services Pte Ltd 9, Raffl es Place, #32-00 Republic Plaza, Singapore Remuneration Committee Tan Ah Mee (Chairman) William Teo Choon Kow Wong Yen Siang Leonard Tay Gim Sin Employees Share Option Committee Ang Eng Chin (Chairman) William Teo Choon Kow Tan Ah Mee Wong Yen Siang Share Registrar B.A.C.S. Private Limited 63 Cantonment Road Singapore Audit Committee Wong Yen Siang (Chairman) William Teo Choon Kow Tan Ah Mee Leonard Tay Gim Sin 08 1

4 Chairman s Message Dear Valued Shareholders, There were many events that happened during the fi nancial year within the Company and the Group. Initially, due to losses in the previous fi nancial year, Messrs Tay Swee Sze & Associates were appointed as Corporate Advisors on 6 June 2007 to evaluate the fi nancial position and business prospects of the Group. This eventually led to their appointment as Judicial Manager on 31 August 2007 and as Liquidators on 16 January 2008 for Enzer Electronics Pte Ltd, a wholly owned subsidiary. The original founders of the Company sold their entire stake of approximately 65% in the Company on 16 July As a result, some Board members resigned and new members were appointed. On 6 September 2007 the Company placed out 14,878,000 shares for a net consideration of S$3,192,000 for investment and working capital requirements. During the year, the Board of Directors approved two proposed investments in Shanghai Jianhua Communications Co Ltd and Luckybull Limited. These two companies have their base of operations located in The Peoples Republic of China and are registered entities in The Peoples Republic of China and British Virgin Island respectively. A total of S$2,700,000 was paid out as deposits from proceeds of the share placement. As at the date of this report both of these two transactions have yet to be completed. On 22 February 2008, the Company appointed Stamford Corporate Services Pte Ltd as its Continuing Sponsor and as such, it is now listed on SGX- Catalist. Future Prospects and Plans The only business remaining in the Group is its retail operations and this contributed to about S$1,652,000 in turnover during the fi nancial year. The Company is currently evaluating various options available and is also reviewing the two proposed acquisitions mentioned above. The Company is also looking for a quick resolution with the fi nancial institutions mentioned above so that it will be able to move forward and begin a new lease of life. The present Board which I now chair comprises of professionals and entrepreneurs who will expand all efforts to bring in new and profitable businesses for the Company in the shortest possible time so that it will benefi t all shareholders. In the meantime I would like to advise all valued shareholders to refrain from taking any action in respect of the shares in the Company which may be prejudicial to their interest, and also to exercise caution when dealing in the shares of the Company. Acknowledgements On behalf of the Board of Directors, I would like to extend our gratitude and appreciation to Mr William Teo Choon Kow who is not seeking re-election as an independent director. We would like to thank him for his valuable contributions to the Company and wish him well in his future endeavours. I would also like to take this opportunity to thank all our valued shareholders and extend my appreciation to the management and staff of the company for their efforts and contributions. With the liquidation of its wholly owned subsidiary Enzer Electronics Pte Ltd the majority of the Group s businesses have been discontinued. The Group is currently in the process of deregistering its overseas subsidiaries as well as some of its Singapore subsidiaries. At this time, management is also trying to reach an agreement with fi nancial institutions that had provided facilities to Enzer Electronics Pte Ltd. These fi nancial institutions were provided with Corporate Guarantees by Enzer Corporation Ltd in return for the facilities. Subsequently, after the fi nancial year end, the Company s proposed Zero Coupon Convertible Bond for S$150,000,000 has been given in-principle approval by SGX and approved by shareholders in a related Extraordinary General Meeting. JONATHAN LIM KENG HOCK Chairman 2

5 Business Review During the financial year the Electronic Components and Consumer Products Division were discontinued and a major subsidiary, Enzer Electronics Pte Ltd (EEPL) was put under liquidation. The Group s fi nancial statement was therefore reclassifi ed under continuing and discontinued businesses. As a result of the lost of our distributorship in Bowers & Wilkins Loudspeakers Ltd (B&W) and the uncertainty in the market due to the liquidation of EEPL, our turnover from continuing operations recorded a drop from $2.6 million in FY2007 to $1.6 million in FY2008. The Group recorded a loss from continuing operations of $0.7 million in the current year under review as compared to $0.2 million for the fi nancial year ended 31 March Losses from discontinued operations amounted to $5.2 million and total losses amounted to $5.9 million for the current fi nancial year. With the discontinuation of the Electronic Components and Consumer Products Division, all overseas subsidiaries and all joint venture companies are now dormant. We are now taking steps to deregister these companies. Currently only two subsidiaries remain operational, they are, Monsoon Home Theatre Entertainment Pte. Ltd. and Enzer Acoustics Pte Ltd. Subsequent to the end of the fi nancial year a proposed Zero Coupon Convertible Bond for $150,000,000 was given in-principle approval by SGX and approved by shareholders in a related Extraordinary General Meeting. The Bonds are available for draw down in tranches of $2,000,000 and convertible to ordinary shares in the company at $0.22 per share. The Board of Directors are also constantly on the lookout for acquisitions and investments that would be benefi cial to the Company and shareholders. 3

6 Directors' Profile Mr Jonathan Lim Keng Hock Non-Executive Director and Non-Executive Chairman Mr Lim was appointed as a Non Executive Chairman of the Company on 23 May, He was a top student of VITB (now known as ITE) in Since founding Romar (Romar) Positioning Equipment Pte Ltd, Mr Lim has been its Managing Director for the past 24 years and its core businesses are in the manufacturing of positioning automation equipment for handling and welding as well as the supply and integration to and for the oil and gas industry, alternative energy, infrastructural and transportation industries with subsidiaries and factories in Singapore and China. Romar also have distribution facilities and associates in more than 30 countries globally. In 2008, Romar was acquired by a multi-billion dollar MNC company with listed parents in the United Kingdom. Romar was re-organised under Romar s global businesses division as Romar Positioning Equipment International Pte Ltd. Romar s global business division is headed by Mr Lim as its Managing Director. Mr Lim is also the Non-Executive Director and Non-Executive Chairman of the listed SNF Corporation Limited Mr Lim led and managed the Romar Group successfully from a start-up to being the third place recipient in the Singapore E50 Award in the year An entrepreneur, Mr Lim is also an investor/promoter/venture capitalist in various listed and unlisted companies in advanced materials, oil sands, heavy oil and mineral businesses in both North and South America. Mr Ang Eng Chin Chief Executive Offi cer Mr Ang, one of the founding members of the group, has been an Executive Director and the Chief Executive Offi cer of the Company since 11 April 2001 and 1 January 2007 respectively and was last re-elected on 31 July He stepped down as an Audit Committee member on 23 December Mr Ang oversees the Group s daily operations and has been involved in accounting and fi nancial functions. He is also responsible for negotiation with bankers, credit control and the overall profi tability of the Group. Prior to starting the Group s business in 1984, Mr Ang started his career as a marketing Executive for the exports of fresh cut orchids for about a year in Multico Orchids (S) Pte Ltd. Mr Ang holds a Masters degree in Business Administration from the Dalhousie University and a Bachelor of Commerce (Honours) degree from Dalhousie University, majoring in Accountancy. Mr William Teo Choon Kow Non Executive Independent Director Chairman of Nominating Committee Member of Audit and Remuneration Committees Mr Teo was appointed as a Non Executive Independent Director of the Company on 1 June He is a venture capitalist and a corporate advisor to SME companies. He is also the Independent Director of See Hup Seng Ltd, Eastern Holdings Limited and Wee Hur Holdings Ltd. He has many years of experience in the banking as well as fi nancial consulting and corporate fi nance sectors. Mr. Teo holds a Master in Management from Asian Institute of Management, Philippines. He is a qualifi ed accountant and member of ICPAS, ACCA. Mr Wong Yen Siang Non Executive Independent Director Mr Wong was appointed as a Non Executive Independent Director of the Company on 15 August Mr. Wong served as a Non Executive Independent Director, Chairman of the Audit Committee as well as a member of the Nominating, Remuneration and Employees Share Option Committees of the Company since 21 August Mr Wong holds a Bachelor of Commerce degree from the Nanyang University and he started his career with a local bank. In his 20 years with the bank, he worked in various areas of responsibilities covering credit and marketing functions before pursuing new commercial opportunities in the automobile and engineering industries. He is presently on the board of two other listed companies, Chuan Soon Huat Industrial Group Limited and Singapore Windsor Holdings Limited as an Independent Director as well as the Chairman of the Audit Committee and member of the Nominating and Remuneration Committees. 4

7 Directors' Profile Dr Tan Ah Mee Non Executive Independent Director Dr Tan was appointed as a Non Executive Independent Director of the Company on 21 August Dr Tan served as a Non Executive Independent Director, Chairman of the Remuneration Committee as well as a member of the Nominating, Audit and Employees Share Option Committees of the Company since 21 August 2007.Dr Tan is currently an Executive Director of Hengda Investments Pte Ltd which is involved in Toll Road operations in The Peoples Republic of China.He is also a Director of Winsta Holding Pte Ltd. Dr Tan holds a Advanced Diploma in Works Management from The Institution of Works Manager in The United Kingdom. Dr Tan also holds a Masters of Business Administration and Doctor of Philosophy in Business Administration from International Management Centre in The United Kingdom. Mr Leonard Tay Gim Sin Non Executive Independent Director Mr Tay was appointed as a Non Executive Independent Director of the Company on 29 May He was also appointed as a member of each of the Audit Committee, the Nominating Committee and Remuneration Committee. He has a proven track record in evaluating and improving fi nancial/business policies and operations. Effective leader, communicator, problem solver and team builder dedicated to achieving goals. Mr Tay is an Executive director of Altitude Trust Management Pte Ltd., Altitude Sub-Trust One Management Pte Ltd., Altitude One Pte Ltd., and Non Executive Director Of Swiber Holdings Limited and ISDN Holding Limited. Mr Tay holds a Bachelor of Business, Accounting from Monash University, Melbourne Australia. He is a member of Institute of Certified Public Accountants of Singapore (ICPAS) and CPA Australia. 5

8 Key Executives, Profile Mr Lim Choon Seng Financial Controller Mr Lim joined the Group in October 2007 and has many years of experience in the Construction, Engineering and Manufacturing industries. He is an Accountant registered with the Institute of Certifi ed Public Accountants - Singapore as well as with The Association of Chartered Certifi ed Accountants - United Kingdom. 6

9 Statement of Corporate Governance Enzer Corporation Limited ( Enzer or the Company ) is committed to the high standard of corporate governance in conformity with the Code of Corporate Governance and in compliance with the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading Limited (SGX-ST). Board Matters Principle 1: Board s Conduct and its Affairs Principle 2: Board s Composition and Balance The Board provides strategic directions to the Management of the Company and approves major investment decisions apart from fulfi lling its statutory duties to ensure that the Group s strategies are in the interests of the Company and its shareholders. The Board members are: Jonathan Lim Keng Hock Ang Eng Chin William Teo Choon Kow Wong Yen Siang Tan Ah Mee Leonard Tay Gim Sin (Non Executive / Chairman) (Chief Executive Offi cer) (Non Executive / Independent Director) (Non Executive / Independent Director) (Non Executive / Independent Director) (Non Executive / Independent Director) The Board has satisfied the Code where one-third of our directors are independent. The Board is of the opinion that its current size is reasonably effective and efficient considering the nature and size of the Group s activities. Key information of the Directors academic and professional qualifi cations is set out in the page 5 of this Annual Report. The Board conducts meetings at least twice a year in addition to ad-hoc meetings, where necessary. The attendances of the director at meetings of the Board and Board Committees during the fi nancial year were as follows: Meetings Board Meeting Audit Committee Nominating Committee Remuneration Committee No. of Meetings Held* Jonathan Lim Keng Hock (1) Ang Eng Chin William Teo Choon Kow Wong Yen Siang (2) Tan Ah Mee (3) Leonard Tay Gim Sin (4) Notes: 1. Mr Jonathan Lim Keng Hock was only appointed as the Chairman of the Board on 23 May 2008 after the fi nancial year under review. 2. Mr Wong Yen Siang was appointed as the Chairman of the Audit Committee and a member each of the Remuneration Committee and Nominating Committee on 15 August He had only attended the meetings of the Audit Committee and the Board held after his appointment and no meetings of the Remuneration Committee and Nominating Committee were convened in the fi nancial year under review after his appointment. 7

10 Statement of Corporate Governance 3. Dr Tan Ah Mee was appointed as the Chairman of the Remuneration Committee and a member each of the Audit Committee and Nominating Committee on 21 August He had only attended the meetings of Audit Committee and the Board held after his appointment and no meetings of the Remuneration Committee and Nominating Committee were convened in the fi nancial year under review after his appointment. 4. Mr Leonard Tay Gim Sin was only appointed as a director of the Company on 29 May 2008 after the fi nancial year under review. * The above does not include directors who have resigned. The Company believes that the contributions from each Director can be refl ected in other ways other than the reporting of attendances of each Director at Board and Committee meetings as well as the frequency of such meeting. A Director would have been appointed on the strength of his experience and stature, and his potential to contribute to the proper guidance of the Group and its businesses. To focus on a Director s attendances at formal meetings alone may lead to a narrow view of a Director s contribution. It may also not do justice to his or her contributions, which can be in many forms, including Management s access to him or her for guidance or exchange of views outside the formal environment of the Board. Principle 3: Chairman and Chief Executive Offi cer ( CEO ) Mr Jonathan Lim Keng Hock is the Chairman. Mr Ang Eng Chin is the CEO. This separation of roles is in line with the recommendation of the Code of Corporate Governance 2005 where Guideline 3.1 states that the Chairman and the CEO is separate persons to ensure an appropriate balance of power increased accountability and greater capacity of the Board for independent decision making. The Board has considered this guideline and therefore regarded a separation of roles necessary to ensure that the Group s strategic plans going forward are executed effectively and effi ciently to bring the Company to the next level of growth. Board Committees Nominating Committee ( NC ) Principle 4: Board Membership Principle 5: Board Performance The Nominating Committee ( NC ) comprises four Non Executive Independent Directors. The members are Mr William Teo Choon Kow (Chairman), Dr Tan Ah Mee, Mr Wong Yen Siang and Mr Leonard Tay Gim Sin. The NC adopts a set of Terms of Reference which, among others, include the following functions: i. To appoint or re-appoint members of the Board and the various Board Committees. ii. To evaluate and assess the effectiveness of the Board as a whole, and the contribution made by each individual director to the effectiveness of the Board. The NC has considered a number of factors, including those set out in the Code, for the purpose of such evaluation and assessment. iii. To determine the independence of Directors. The financial indicators set out in the Code as guides for the evaluation of Directors are, in the Company s opinion, less applicable to Directors. In any case, such financial indicators provide a snapshot of a Company s performance, and do not fully measure the sustainable long term wealth and value creation of the Company. When a vacancy arises the NC is tasked to seek suitable candidates through interviews of internal candidates, recommendation by executive search agencies, recommendation through directors own contacts and advertisement in the media if necessary. 8

11 Statement of Corporate Governance New directors are appointed by way of a Board Resolution, after the NC has approved their nomination. Such new directors submit themselves for re-election at the next Annual General Meeting ( AGM ). The Company s Articles of Association requires one-third of the Board to retire by rotation at every AGM. Currently, the directors submit themselves for re-nomination and re-election at regular intervals. The Board, through the delegation of its authority to the NC, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, fi nance and management skills critical to the Group s business and that each Director, through his or her unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. The NC is of the view that the current Board size of fi ve Directors is appropriate taking into account the nature and scope of the Group s operations, the core competencies of knowledge and business experiences of the Directors to govern and meet the Group s objectives. The NC is of the opinion that the Directors, who have been classifi ed as independent under the Board Composition section, are indeed independent and the current size of the Board is adequate for the purposes of the Group. The Board has no dissenting view on the Chairman s Message to shareholders for the year under review. Remuneration Committee ( RC ) Principle 7: Procedures for Developing Remuneration Policies Principle 8: Level and Mix of Remuneration Principle 9: Disclosure on Remuneration The Remuneration Committee ( RC ) comprises four Non Executive Independent Directors. The members are Dr Tan Ah Mee (Chairman), Mr William Teo Choon Kow, Mr Wong Yen Siang and Mr Leonard Tay Gim Sin. The RC adopts a set of Terms of Reference which among others include the following functions: i. To review and recommend appropriate remuneration policy and package (in all its forms, including but not limited to directors fees, salaries, allowances, bonuses, options and benefi ts-in-kind) and associated matters of the executive and non executive directors of the Board and key executives of the Group; ii. To review and approve the Company s compensation policies, structures and service contracts as proposed by the Company s Managing Director, for any relatives of a Director and/or a substantial shareholder who are employed in managerial positions by the Company, or any of its subsidiary companies. iii. To oversee the administration of the Employees Share Option Scheme ( the ESOS ) No director or member of the RC shall be involved in deciding his own remuneration, except for providing information and documents specifi cally requested by the RC to assist it in its deliberations. The RC may obtain expert professional advice on remuneration matters, if required. The RC will review and recommend to the Board any grant of options in respect of ESOS. During the year, there were no options granted. The Executive Director is remunerated based on the performance of the Group and the individual. Non Executive Directors are only paid directors fees. The RC recommends the payment of such fees to be approved by the shareholders as a lump sum payment at the AGM of the Company. 9

12 Statement of Corporate Governance A breakdown showing the level and mix of each individual s director s remuneration for FY2008 was as follows: Remuneration Band (S$) Salary # % Bonus % Directors Fees % Total % Boyd Au Weng Lee Weng Kee (1) Below 250, Ang Eng Chin Below 250, William Teo Choon Kow Below 250, Wong Yen Siang (5) Below 250, Tan Ah Mee (4) Below 250, Cheng Yee Seng (2) Below 250, Low Shiong Jin (3) Below 250, # Salary includes basic salary, statutory contributions and benefi ts-in-kind. * The above refers only to director s remuneration which has been paid in FY Mr Boyd Au Weng Lee Weng Kee was appointed as an executive director of the Company on 23 December 1992 and resigned on 30 July His total remuneration for the period that he served as an executive director during the current fi nancial year amounts to $63, Mr Cheng Yee Seng was appointed as a Non executive Chairman of the Company on 31 October 2007 and resigned on 1 March His total remuneration for the period that he served as an independent director during the current fi nancial year amounts to $ 13, Mr Low Shiong Jin was appointed as an executive director of the Company on 15 August 2007 and resigned on 16 May His total remuneration for the period that he served as an executive director during the current fi nancial year amounts to $1, Dr Tan Ah Mee was appointed as an independent director of the Company on 21 August His total remuneration for the period that he served as a Director during the current fi nancial year amounts to $17, Mr Wong Yen Siang was appointed as an independent director of the Company on 15 August His total remuneration for the period that he served as a Director during the current fi nancial year amounts to $21,875. The breakdown of the remuneration of the top 5 executives of the Group is not disclosed in this Annual Report due to confi dentiality and avoidance of poaching of the Company s staff. None of our employees are related to the Directors of the Company. Audit Committee ( AC ) Principle 11: Audit Committee Principle 12: Internal Controls The AC comprises four Non Executive Independent Directors. The members are Mr Wong Yen Siang (Chairman), Mr William Teo Choon Kow, Dr Tan Ah Mee and Mr Leonard Tay Gim Sin. Majority of the member has appropriate accounting or related fi nancial management expertise or experience to discharge the AC s functions. The Committee met at least twice during the year. The following are some of the functions of the Committee:- i. To review with the external auditors their audit plans and results of their examination; 10 ii. To review the half year and full year fi nancial statements of the Company before submission to the board of directors and auditors report;

13 Statement of Corporate Governance iii. To review the half-yearly and annual announcements as well as the press release on the results and fi nancial positions of the Company and the Group; iv. To review the requirements for approval and disclosure of interested persons transactions ( IPT ) and where necessary, review and seek approval for IPT; and v. To make recommendations to the board on the appointment of external auditors. The AC has full access to and co-operation by the Management and full discretion to invite any director, executive offi cers to attend its meetings, and been given resources to enable the Committee to discharge its functions properly. The external auditors have unrestricted access to the AC. The following subsidiary and joint venture companies shown in page 48 of this Annual Report are not signifi cant subsidiaries of the Company as defined under Rule 718 of the Listing Manual (Section B: Rules of Catalist) and the Company has complied with these Rules stipulated in the Listing Manual (Section B: Rules of Catalist): Enzer Electronics (Thailand) Co. Ltd Enzer Holdings Co., Ltd Enzer Electronics (HK) Co. Ltd Enzer Electronics S.A. (proprietary) Ltd Enzer Electronics Sdn Bhd Enzer Networks Pte Ltd Enzer Charis Pte Ltd Baker Tilly TFWLCL, the Company s external auditors, carried out a review of the effectiveness of the Company s material controls, in the course of their audit. However, the review was not primarily detected towards the discovery of weaknesses or the detection of fraud, or other irregularities and should not therefore be relied upon to show that no other weaknesses exist. Material non-compliance and internal control weaknesses noted during their statutory audit are reported to the AC together with their recommendations. Based on the audit reports and the management controls in place, the AC is satisfi ed that there are adequate internal controls in the Group. The AC held separate meetings with the auditors without presence of Management. It is satisfi ed with the independence and objectivity of the external auditors and it was noted that the external auditors do not provide any non-audit services. In order to ensure that the Board is able to fulfi ll its responsibilities, management provides the Board members with management reports. In addition, all relevant information on material events and transactions are circulated to directors as and when they arise. Whenever necessary, senior management staff will be invited to attend the Board meetings to answer queries and provide detailed insights into their areas of operations. The directors have been provided with the phone numbers and particulars of the Company s senior management and company secretary to facilitate access. The directors are kept informed by management on the status of on-going activities between Board meetings. Where a decision has to be made before a Board meeting, a circulating directors resolution is done in accordance with the Articles and the directors are provided with all necessary information to enable them to make informed decisions. The company secretary will also ensure that any queries made by the directors will be answered promptly by management. Where all the directors, either individually or as a group, in the furtherance of their duties, require professional advice, the company secretary can be approached to assist them to obtain independent professional advice, at the Company s expense. Board members have separate and independent access to the company secretary at all times. The Company has adopted a Whistle-Blowing Policy in compliance to the recommendations of the Code of Corporate Governance

14 Statement of Corporate Governance Principle 13: Internal Audit The Board supports the need of an internal audit function where its primary objective is to maintain a system of internal controls and processes to safeguard shareholders investment and the Group s assets. The Board is looking into the possibility of appointing a qualifi ed professional to perform the Company s internal audit function. Such services when engaged, will report directly to the Chairman of the AC on audit matters and to the CEO on administrative function. Communication with shareholders Principle 10: Accountability and Audit Principle 14: Communication with Shareholders Principle 15: Greater Shareholder Participation The Board of directors is accountable to the shareholders and while the Management of the Company is accountable to the Board. All the announcements, interim and full year fi nancial results are released via SGXNET for disseminating to shareholders and the public. All shareholders of the Company receive the Annual Report and notice of AGM. The notice is also advertised in the newspaper. At AGMs, shareholders are given the opportunity to air their views and ask Directors or management questions regarding the Company. The external auditors are present and available to address questions at the Company s General Meetings. The Articles allow a member of the Company to appoint proxy/proxies to attend and vote at all general meetings on his/her behalf. Dealings in securities The Company adopts a Code of Best Practices on Securities Transactions that is in line with the Best Practices Guide issued by the SGX-ST. The Code sets out the implication of insider dealings of the shares and guidance to offi cers on dealings in the Company s shares. All Directors and offi cers of the Group are reminded not to deal during the period commencing one month before the announcement of the Company s interim and full year s results, as the case may be, and ending on the date of the announcement of the relevant results. To the best of our knowledge no offi cer of the Company has dealt in the Company s securities on short-term considerations. Risk Management The Group is exposed to a number of possible risks, which may arise from economic, business, market and fi nancial factors and developments that may affect the Group s future performance. These risks may be categorised as follows: We have discontinued our electronics components and consumer products business On 31 August 2007, Enzer Electronics Pte Ltd ( EEPL ), a major subsidiary of the Group was placed under judicial management. Subsequently, the judicial manager applied to and obtained approval from the High Court on 16 January 2008 to wind up EEPL. The Company has given corporate guarantees to certain banks and a fi nance company for granting facilities to EEPL. As EEPL is under liquidation, the Company has made a provision of $6.23 million in its fi nancial statements for the current fi nancial year for EEPL s borrowings which are secured by these corporate guarantees. With the liquidation of its major subsidiary as well as the cessation of businesses in subsidiaries overseas, the Group s electronic components and consumer products business were discontinued leaving only its retail distribution business and this may have a material adverse impact on the Group s business. We operate in a highly competitive environment The entry barriers for the retail industry are generally low as the capital requirements for such businesses are not high. We face competition from existing industry peers and new entrants. In order to compete effectively, we may have to lower our selling prices or increase our costs. In the event we are unable to compete effectively in our industry, our business and fi nancial performance may be materially and adversely affected. 12

15 Statement of Corporate Governance We have ceased to be a distributor of the B&W Group As announced by the Company on 5 May 2008, our wholly owned subsidiary and retail distribution division, Enzer Acoustics Pte. Ltd. ( Acoustics ) has ceased to be a distributor of B&W Group Limited ( B&W ) which includes B&W Loudspeakers and Classe Audio brands. Acoustics will now undertake the role as a retailer. The loss of a material distributorship arrangement may have a material adverse impact on the Group s business. The composition of our Board of directors has gone through signifi cant changes. The Group s success depends to a large extend on the continued active involvement of the members of its Board of Directors. In the last three fi nancial years, the composition of the Board of Directors of the Group has undergone signifi cant changes. As the Board of Director is generally responsible for the overall direction of the business, the loss of the services of any one of the Directors without suitable and timely replacement may have a material adverse impact on the Group s business. Our proposed investments may or may not be completed. In FY 2008, the Company entered into two separate agreements to invest in Shanghai Jianhua Satellite Communication Co. Ltd. and Luckybull Limited. Both companies operates from the People s Republic of China and are registered entities in the Peoples Republic of China and the British Virgin Islands respectively. It must be noted that the above investments may or may not be completed. In the event that the proposed investments are not completed, there may be a material adverse impact on the Group s business. Even if the proposed investments are completed, there is no assurance that the proposed investments will be profi table and thus the completion of the proposed investments may not have a positive effect on the fi nancial performance of the Company. We are subject to general and political risks associated with doing businesses outside Singapore There are risks inherent in doing business overseas and therefore the proposed investments in the Peoples Republic of China will be subjected to such risks. These risks would include unexpected changes in regulatory requirements relating to the operation of businesses, or unexpected changes on rules in profit repatriation, greater legal uncertainties regarding our legal liability or enforcement of our legal rights and political and social risks. Any of these risks, if materialised, can adversely affect our operations, and consequently our fi nancial performance. Dependence on key personnel The Group s success is attributable to the concerted contributors for the Group s success in order to adhere to its moving forward strategy. Whilst competitive remuneration packages are offered to retain and motivate these key personnel, the Group s operations and performance may be disrupted if there is any loss of employment services with them. The Group manages the risk by encouraging our employees to stay abreast with the technological/market developments through regular informal meetings and training sessions. In additions to the above, the fi nancial risk management is disclosed on Note 29 of the fi nancial statement. To the best of their knowledge, the Directors are of the opinion that the Company s current risk management systems are adequate, however the risk management systems are being reviewed regularly and updated as the needs arises. Interested Person Transactions In compliance with Rule 907 of the SGX-ST Listing Manual (Section B: Rules of Catalist), there were no transactions with interested persons for the financial year ended 31 March 2008 which exceeds the stipulated threshold. Only transactions greater than S$100,000 each entered into with the same interested person were aggregated. The aggregate value of such transactions entered into with the same person did not exceed the threshold as stipulated in Rule 907 of the SGX-ST Listing Manual (Section B: Rules of Catalist). Material Contracts There are no material contract entered into by the Company or any of its subsidiaries involving the interests of the CEO or any other Director or controlling shareholder and the Company has complied to Rule 1204(8) of the SGX-ST Listing Manual (Section B: Rules of Catalist). Under our internal guidelines, Board of Director s approval will be required for all types of material transactions that are not in the normal course of our business. 13

16 Financial Contents Report of the Directors 15 Statement by Directors 17 Independent Auditor s Report 18 Balance Sheets 21 Consolidated Profi t and Loss Account 22 Statements of Changes in Equity 23 Consolidated Statement of Cash Flows 25 Notes to the Financial Statements 28 14

17 Report of the Directors The directors are pleased to present their report to the members together with the audited consolidated fi nancial statements of Enzer Corporation Limited (the Company) and its subsidiary companies (the Group) for the fi nancial year ended 31 March 2008 and the balance sheet and statement of changes in equity of the Company as at 31 March Directors The directors of the Company in offi ce at the date of this report are: Ang Eng Chin (appointed on 11 April 2001) William Teo Choon Kow (appointed on 1 June 2005) Tan Ah Mee (appointed on 21 August 2007) Wong Yen Siang (appointed on 15 August 2007) Jonathan Lim Keng Hock (appointed on 23 May 2008) Tay Gim Sin Leonard (appointed on 29 May 2008) Arrangements to enable directors to acquire shares or debentures Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate. Directors' interest in shares or debentures The following directors, who held offi ce at the end of the fi nancial year, had, according to the register of directors shareholdings required to be kept under section 164 of the Companies Act, an interest in shares of the Company and related corporations, as stated below :- At 1 April 2007 or date of appointment, if later Direct interest At 31 March 2008 At 21 April 2008 Deemed interest At 1 April 2007 or date of appointment, At 31 March if later 2008 At 21 April 2008 The Company Ordinary shares Low Shiong Jin 24,576,000 24,576,000 (Appointed on and resigned on ) Low Shiong Jin is deemed to have an interest in the shares held by the Company in all its subsidiary companies. Except as disclosed above, no other director had an interest in any shares or debentures of the Company or related corporations either at the beginning of the financial year or date of appointment, if later, or the end of the fi nancial year and on 21 April Directors contractual benefi ts Since the end of the previous fi nancial year, no director of the Company has received or become entitled to receive a benefi t (other than a benefit or any fi xed salary of a full-time employee of the Company included in the aggregate amount of emoluments shown in the fi nancial statements, or any emoluments received from a related corporation) by reason of a contract made by the Company or a related corporation with the director, or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest. 15

18 Report of the Directors Share option scheme During the financial year, no options to take up shares of the Company or any subsidiary companies were granted and no shares were issued by virtue of the exercise of options to take up shares of the Company or any subsidiary. There were no shares under option at the end of the fi nancial year. Audit committee The Audit Committee performed the functions specifi ed in the Companies Act. The functions performed are detailed in the Report on Corporate Governance. Independent auditor The independent auditor, Baker Tilly TFWLCL, has expressed its willingness to accept re-appointment. On behalf of the Board of Directors, Ang Eng Chin Director Wong Yen Siang Director Singapore 15 July

19 Statement by Directors Pursuant to Section 201(15) We, Wong Yen Siang and Ang Eng Chin, being two of the directors of Enzer Corporation Limited, do hereby state that, in the opinion of the directors, (a) the balance sheets, consolidated profi t and loss account, statements of changes in equity and consolidated statement of cash fl ows together with the notes thereto on pages 21 to 61 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2008 and of the results of the business, changes in equity and cash fl ows of the Group and changes in equity of the Company for the year then ended, and (b) as at the date of this statement, subject to the successful outcome of the bond issue and new business introduced into the Group, as mentioned in note 27 to the financial statements, there are reasonable grounds to believe the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors, Ang Eng Chin Director Wong Yen Siang Director Singapore 15 July

20 Independent Auditor s Report to the Members of Enzer Corporation Limited We have audited the accompanying fi nancial statements of Enzer Corporation Limited ( the Company ) and its subsidiaries ( the Group ) as set out on pages 21 to 61, which comprise the balance sheets of the Group and the Company as at 31 March 2008, and the income statement, statement of changes in equity and cash flow statement of the Group and statement of changes in equity of the Company for the fi nancial year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act ) and Singapore Financial Reporting Standards. This responsibility includes:- (a) devising and maintaining a system of internal accounting controls suffi cient 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 profi t and loss account and balance sheet and to maintain accountability of assets; (b) selecting and applying appropriate accounting policies; and (c) making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Basis of Disclaimer 1) Subsidiary company under liquidation As disclosed in note 21, Enzer Electronics Pte Ltd ( EEPL ), a wholly owned subsidiary of the Company was placed under Judicial Management by the High Court on 31 August 2007 and thereafter on 16 January 2008; the High Court approved the application by the Judicial Manager for the winding up of EEPL. The fi nancial statements of EEPL have been deconsolidated from the fi nancial statements of the Company and its subsidiaries ( the Group ) with effect from 31 August 2007, the date EEPL was placed under Judicial Management. The consolidated profi t and loss account for the year ended 31 March 2008 included unaudited results of EEPL for the period from 1 April 2007 to 31 August 2007 and unreconciled balances between the Group s subsidiaries and EEPL. As EEPL was placed under Judicial Management and eventually under liquidation, we are unable to carry out procedures necessary to satisfy ourselves as to whether the management accounts of EEPL for the period from 1 April 2007 to 31 August 2007 are in form and content appropriate and proper for the purpose of the inclusion in the consolidated fi nancial statements of the Group for the year ended 31 March

21 Independent Auditor s Report to the Members of Enzer Corporation Limited Basis of Disclaimer (cont d) 2) Deposits for proposed investments We were not able to verify the validity and recoverability of deposit of $200,000 placed for the investment in Shanghai Jianhua Telecommunication Satellite Co., Ltd (the Shanghai Jianhua ) included in the balance sheet as at 31 March 2008 as disclosed in note 10 to the fi nancial statements. We were also not able to ascertain the recoverability of $2,500,000 for the deposit placed for the investment in Luckybull Limited (the Luckybull ) included in the balance sheet as at 31 March 2008 as disclosed in note 10 to the fi nancial statements. 3) Audit opinion of the subsidiaries fi nancial statements The auditors of Enzer Electronics Sdn Bhd and Enzer Electronics SA (Proprietary) Limited have made qualifi cations in their report stating that they were not able to verify the trade and other receivables, trade and other payables, inventories and the fi xed assets at 31 March Due to the signifi cant matters mentioned above, the subsidiaries auditors have issued disclaimer opinions on the fi nancial statements of the two subsidiaries. The total net assets and total net losses of the two subsidiaries which are included in the consolidated fi nancial statements of the Group amounted to $105,850 and $2,705,425 respectively. 4) Going concern As mentioned in paragraph 1 above, EEPL, a major subsidiary of the Group was placed under liquidation resulting in the Electronics components and Consumer products business of the Group s business being discontinued. The closure of these businesses which contributed 95% of the Group s 2007 revenue left the Group with only its retail distribution represented by the continuing activities of two subsidiary companies, both of which incurred losses totaling $434,395 for the year and had capital defi ciency totaling $2,647,679 at 31 March Arising from the liquidation of EEPL, the Company has made a provision of $6,230,000 in its fi nancial statements in respect of corporate guarantees given to financial institutions for facilities extended to EEPL. The Group incurred a net loss of $5,929,529 for the year ended 31 March At 31 March 2008, the Group and Company s liabilities exceeded its total assets by $5,123,772 and $4,019,033 respectively. The Company has entered into an agreement with a potential subscriber to raise capital funds up to $150 million for working capital and investment purposes by way of issue of convertible bonds subject to fulfi llment of conditions precedents. The Company has also entered into agreements to invest in certain projects in China subject to fulfi llment of conditions precedents. The financial statements of the Group and the Company have been prepared on a going concern basis. The validity of the going concern assumption on which the financial statements of the Group and Company are prepared depends on whether the bond issue is successful and new business is introduced into the Group. In the event of failure to secure additional adequate capital funds, the Group and Company will no longer be able to continue as going concerns and may not be able to realise their assets and discharge theirs liabilities in the normal course of business. The financial statements of the Group and the Company do not take into account any adjustments to the fi nancial statements that would 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 significantly from the amounts at which they are currently recorded in the balance sheet. In addition, the Group and Company may have to provide for any further liabilities which may arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities. 5) Auditor s opinion for 2007 fi nancial statements A disclaimer opinion had been issued for the fi nancial statements of the Group and the Company for the fi nancial year ended 31 March