cmz holdings ltd. outdoor I get zipped

Transcription

1 outdoor I get zipped

2 Over 25 years of development and commitment, the Group today is a leading zipper manufacturer in the PRC with our zipper brand name CMZ

3 1 outdoor I get zipped 04 Corporate Profile 05 Chairman s and CEO Statement 08 Board of Directors 10 Key Management 11 Financial and Operational Highlight 15 Our Products

4 I annual report outdoor I get zipped PRODUCTION ART VERITAS PTE LTD CMZ HOLDINGS LTD. HEADQUARTERS 112 Robinson Road, #12-04 Singapore CHINA OFFICE Yixing Economic Development Zone, Jiangsu Province, PRC For enquiries, us at: ir@cmz-zipper.com PUBLISHER CMZ HOLDINGS LTD. 112 Robinson Road, #12-04 Singapore DESIGN AND PRODUCTION ART VERITAS Copyright 2011 CMZ. All rights reserved.

5 3 outdoor I get zipped CMZ HOLDINGS LTD I 驰马拉链控股有限公司 OUR CUSTOMERS These are some of the international and PRC brand names we serve: LEVI S, Calvin Klein, UMBRO, TARGET, G-STAR RAW, PUMA, GUESS, WAL MART, Bosideng, MARKS & SPENCER, REEBOK, Etam, ROUSE GROUP CO., LTD., DKNY, Lotto, BESTSELLER, PEACEBIRD, Europe Carrefour, Meters Bonwe and E LAND ETC CMZ Zipper (Wuxi) Co., Ltd 驰马拉链 ( 无锡 ) 有限公司 CMZ Zipper (Hong Kong) Co., Ltd 驰马拉链 ( 香港 ) 有限公司 CMZ Holdings Ltd. ( the Group ) is one of the China s top 10 zippers brand with outstanding leadership position in the zipper industry, specialized in producing and selling complete metal, resin and nylon zippers to branded mid-to-high end garment. Through years of continuous research and development and marketing, we have created a brand name CMZ for our zippers. The consistent high and stable quality of CMZ zippers has won wide recognition from the domestic as well as the international garment market which pays a premium for quality zippers. With production based in Yixing city, Jiangsu Province, PRC, the Group s has production capacity of 400 million zippers per annum, servicing over 2000 customers spanning the PRC, Europe, USA, Asia and Middle East, that cover renowned international garment brands like Calvin Klein, DKNY, Kappa, Levi s, Guess, Reebok, Wal-mart, Carrefour Europe, Bosideng and E-land and many others. The Group focuses on enhancing its brand name through continuous improvement and innovation of its products and production processes. It has achieved ISO 9001 standard and its zippers quality have passed various critical industrial quality standards like the ASTM, BS, JIS and AS. These international quality standards serve as pre-requisite for our zippers to qualify for uses in the mid-to-high garment. The Group has also obtained the Oeko-Tex Standard 100 certificate, which is an international accreditation for environment-friendly products. The Group was listed on the main board of Singapore Exchange Securities Trading Limited on 16 July 2007.

6 I annual report corporate information 企业资料 BOARD OF DIRECTORS 董事局 Executive : 执行 : Shao Kesheng (Executive Chairman) 邵克生 ( 执行主席 ) Shao Dajun (Executive Director & Chief Executive Officer) 邵达君 ( 执行董事兼首席执行官 ) Non-Executive : 非执行 : Shen Bin 沈斌 Lien Kait Long (Lead Independent Director) 连克农 ( 首席独立董事 ) Siow Chee Keong (Independent Director) 萧子强 ( 独立董事 ) AUDIT COMMITTEE 审计委员会 Lien Kait Long (Chairman) 连克农 ( 主席 ) Siow Chee Keong 萧子强 Shen Bin 沈斌 NOMINATING COMMITTEE 提名委员会 Siow Chee Keong (Chairman) 萧子强 ( 主席 ) Shao Dajun 邵达君 Shen Bin 沈斌 REMUNERATION COMMITTEE 薪酬委员会 Siow Chee Keong (Chairman) 萧子强 ( 主席 ) Lien Kait Long 连克农 Shen Bin 沈斌 COMPANY SECRETARY 公司秘书 Lim Mee Fun, ACIS REGISTERED OFFICE 注册办事处 112 Robinson Road #12-04 Singapore Telephone : (65) Facsimile : (65) PRINCIPAL PLACE OF BUSINESS 主要营业地点 Yixing Economic Development Zone, 宜兴经济开发区 Jiangsu Province, PRC 江苏省, 中国 Telephone : (86) Facsimile : (86) Website : SHARE REGISTRAR 股票登记处 Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.) 8 Cross Street #11-00 PWC Building Singapore AUDITORS 审计师 Crowe Horwath First Trust LLP (Public Accountants and Certified Public Accountants) 7 Temasek Boulevard #11-01 Suntec Tower One Singapore AUDIT PARTNER-IN-CHARGE 审计合伙负责人 Goh Sia (Appointed with effect from financial year ended 31 March 2010)

7 5 outdoor I get zipped chairman s and ceo s statement 主席和首席执行官致辞 稳健 - 成长 SHAO KESHENG 邵克生 Executive Chairman 执行主席 SHAO DAJUN 邵达君 Executive Director and CEO 执行董事和首席执行官 DEAR SHAREHOLDERS, On behalf of the Board of Directors of CMZ Holdings Ltd. (the Group or CMZ ), we are pleased to present our Annual Report for the financial year ended 31 March 2011 ( FY2011 ). 各位尊敬的股东, 我们谨代表驰马拉链控股有限公司 ( 集团 或 CMZ 或 驰马 ) 董事局, 很荣幸地向大家呈报截至 2011 年 3 月 31 日 ( 2011 财务年 ) 的年度股东报告 FY2011 has been a challenging year for our Group due to a complex global and domestic economic development. With the enthusiasm to further excel in the PRC zipper industry and on the back of the gradual global economic recovery, the Group registered a continuous growth in its revenue and net profit. During the year, we recorded total revenue of RMB253.9 million and net profit of RMB45.3 million, representing a growth of 30.5% and 18.5% respectively when compared with previous year. The overall quantities of zippers sold in FY2011 increased year-on-year by 20.4% to million pieces 财务年是本集团在较为复杂的国际国内环境下艰苦奋斗的一年 我们秉着在中国拉链制造行业中持续成长的热忱, 加上环球经济逐渐的复苏, 保持了集团经营持续的增长 在这一年, 我们取得了约人民币 2.54 亿的销售收入和人民币 4530 万的净利润 销售收入和净利润的同比增长分别为 30.5% 和 18.5% 拉链总体的销售量达到了 20.4% 的年增长, 总共 2.2 亿条

8 I annual report chairman s and ceo s statement 主席和首席执行官致辞 During FY2011, the Group accomplished its plan to rationalize the production flows of its resin and nylon zippers where a new production plant, with a total built up area of 8,717 square meters and construction cost of approximately RMB11.2 million, was constructed to house the manufacturing facilities of resin zippers separately from those of nylon zippers. We believe that the rationalization plan will allow us to increase our manufacturing efficiencies and to meet strengthen quality requirement of our zippers from customers. We have also invested approximately RMB12.0 million to acquire various new production equipment to i) automate certain zipper manufacturing processes so as to reduce reliance on our labour force, ii) improve manufacturing efficiencies, and iii) enhance our products performance and appearance. These capital expenditure, although did not entails directly to significantly increase in our production capacities, are crucial in maintaining our market and products competitiveness. 在 2011 财务年间, 我们完成了优化树脂拉链和尼龙拉链生产流程的重大计划 在这计划里, 我们建造了一座全新的树脂拉链生产大楼 这座大楼的总建造面积为 8717 平方米, 总耗资约人民币 1120 万, 用以装备生产树脂拉链的全部设备和工序 在这计划完成后, 树脂拉链和尼龙拉链的生产设备和工序已完全分割在各自的生产大楼 我们相信这个生产布局, 将易于我们提升生产效率, 以迎合客户对我们拉链日益严峻的品质要求 此外, 我们也投资了约人民币 1200 万在新的生产设备上 这些生产设备的投资主要目的有 i) 自动化一些拉链生产流程, 以减低对劳动力的依赖性,ii) 提高生产效率, 和 iii) 优化产品功能和外观设计 这些资本支出, 虽然没有直接扩大我们的生产能力, 但是对于维持我们在市场上的竞争地位和产品的竞争力是非常重要的 The Group had completed its capital reduction exercise as announced in previous year, where a cash distribution of approximately RMB44.8 million was made to the shareholders. Notwithstanding with this exercise, the cash position of the Group remained healthy for future operation. 集团也完成了在上财务年度公布的削减股本计划 这计划里, 集团为股东们以现金支付方式分配了共约人民币 4480 万 尽管如此, 集团的资金情况还是保持稳健的

9 7 outdoor I get zipped chairman s and ceo s statement 主席和首席执行官致辞 OUTLOOK AND DEVELOPMENT STRATEGY While the global economy is gradually recovering from the 2008 financial crisis, and overall PRC garment and apparel exports continues its ascending strength, the Group remains prudent in our development and expansion strategies, in view of the appreciation trend of RMB against the world major currencies, as well as the rising labour cost and higher pollution and environmental compliance measures in the PRC. While strong RMB posts threat to further growth of the export of garment and apparel from PRC, and hence the demand for our zippers, the rising labour cost will deteriorate profit margin of our industry which is labour intensive, and the strengthening measures on pollution and environmental controls in the PRC will affect our future development. This explained the reason for our capital expenditure on process automation equipment, instead of expanding our manufacturing capacities. 今后展望和发展策略 在环球经济逐渐复苏, 中国整体的服装出口持续增长的情况下, 我们对于今后集团的发展和扩张策略上, 由于人民币汇率的上涨, 还有中国国内不断上升的劳动成本及更为严格的环保形势, 我们保持了谨慎的态度 这是因为人民币汇率的提高将不利于中国服装的出口业务, 而不断上涨的劳动成本, 对于我们作为劳动密集性的制造行业, 影响了我们的盈利能力, 更为严格的环保要求将限制了我们在本地的发展 这也是我们没有采取扩大产能, 而选择了自动化生产流程的投入的原因 The Group will remain cautious in all aspects, and will further strengthen its effort to formulate and implement appropriate production and marketing strategies in order to generate future growth of our market presence and profitability. 集团将在各方面继续保持谨慎的经营管理, 并将加倍努力的营造和采取适当的生产和市场策略, 以争取继续壮大我们的市场位置和盈利能力

10 I annual report board of directors MR.SHAO KESHENG Executive Chairman and Executive Director Mr. Shao Kesheng is our Executive Chairman and Executive Director and was appointed to our Board in November He was also the Chairman of our subsidiary, CMZ Zipper (Wuxi) Co., Ltd. ( CMZ Zipper ). Mr. Shao has more than 20 years of experience in the zipper industry and is responsible for directing our Group s overall strategy and growth. He founded our Group in 1985 with the establishment of Yixing Chima Zipper Plant ( 宜兴驰马拉链厂 ) and has through the years been instrumental in leading the Group s expansion and growth. Prior to that, from 1981 to 1986, he was the head of plant operations in Yixing Textile Plant ( 宜兴市纺织厂 ). From 1975 to 1981, Mr. Shao was the head of supply and sales division of Yixing Qiting Chemical Plant ( 宜兴市屺亭化工厂 ). MR.SHAO DAJUN CEO and Executive Director Mr. Shao Dajun is our CEO and Executive Director and was appointed to our Board in March He is responsible for the management of our Group s business operations. He is also the general manager of CMZ Zipper in charge of overall business operations since January From August 1998 to December 1998, he was the head of plant of CMZ Zipper. Mr. Shao joined CMZ Zipper in January From January 1993 to July 1998, he held various positions including procurement officer, head of supply division, head of planning and operations department and deputy head of CMZ Zipper. Prior to that, Mr. Shao was a general worker with Yixing Food Mechanical Plant ( 宜兴市粮食机械厂 ) from July 1992 to December Mr. Shao graduated from Yancheng Institute of Technology ( 盐城工学院 ) (formally known as Yancheng Vocational College ( 盐城工业专科学院 ) with a diploma in mechanical engineering in As testament of his leadership and management capabilities, he has been awarded awards including the The Fourth Ten Outstanding Young Rural Entrepreneur of Jiangsu Province ( 第四届江苏省十大杰出青年乡镇企业家 ) in 2000 and Caring Employer and Outstanding Entrepreneur of Jiangsu ( 关爱员工优秀民营企业家 ) in Shao Dajun is the son-in-law of our Executive Chairman and Executive Director, Shao Kesheng.

11 9 outdoor I get zipped MR.SHEN BIN Non-Executive Director Mr. Shen Bin is our Non-Executive Director and was appointed to our Board in March Since September 2006, Mr. Shen held the position of deputy general manager of the International Trading and Business Department of Shanghai Longtou (Group) Stock Co., Ltd ( 上海龙头 ( 集团 ) 股份有限公司 ), a listed company in the PRC engaged in the garment manufacturing and trading business. Mr. Shen started his career in 1968 and was a platoon leader in the Heilongjiang No. 67 Production and Construction Corps ( 黑龙江生产建设兵团 67 团 ) from 1970 to Between 1971 and 1979, he was a security officer and head of armed forces of the Heilongjiang Reclamation Bureau Chahayang Agricultural Affairs Taipinghu ( 黑龙江农垦局查哈阳农务太平湖 ). Between 1979 and 1985, he was the production room in charge of garment production at Shanghai No.9 Knitting Plant ( 上海针织九厂 ), which is engaged in the principal business of manufacture and sale of inner-garment. From 1987 to March 2007, Mr. Shen held the position of deputy general manager of Shanghai Three Gun Group, and from 1989 to March 2007, he was also the general manger of Shanghai Three Gun Group Import and Export Co., Ltd ( 上海三枪进出口有限公司 ), both companies of which are the subsidiaries of Shanghai Longtou (Group) Stock Co., Ltd. Mr. Shen sits on the several committees including the Shanghai Foreign Economic and Trading Enterprises Association (Third Committee) ( 上海对外经济贸易企业协会第三届常务 ) as a director of the Third Committee, Shanghai International Chamber of Commerce, Shanghai World Trade Center Association ( 上海国际纺织商会 ) as a Committee Director and the China Textile Chamber of Commerce ( 中国纺织商会 ) as a Committee Director. He obtained a Tertiary certificate from the Shanghai Textile Industry Bureau Committee School ( 中国上海市纺织工业局委员会党校 ), Professional Management Training Class ( 党政管理专业干部培训班 ) in MR.LIEN KAIT LONG Lead Independent Director Mr. Lien Kait Long is our Lead Independent Director and was appointed to our Board in May He has extensive experience in accounting and finance, corporate management and business investment. He currently serves as an independent director on the board of several Singapore and Chinese companies listed on the Singapore Exchange Securities Trading Limited. The listed companies that he has present and prior experience in are from diverse industries including manufacturing, telecommunications, offshore and marine, oil and gas service provider, stocklist cum trading, textile and food and beverage. He has held a number of senior management positions as well as executive directorships in various public and private corporations in Singapore, Hong Kong and China. Between March 2004 and March 2006, he was the deputy president of Shenzhen Flink Investment & Development Co., Ltd. Prior to that, between 2002 and 2003, Mr. Lien was the finance director of PDC Corp. Ltd. Prior to that, he was an Executive Director in China Strategic Holdings Limited (Hong Kong) from 1998 to Between 1996 and 1998, Lien Kait Long was the General Manager in charge of the China division of Hong Leong Corporation Limited and was responsible for overseeing the group s joint venture operations in China. He was also the Director of China Yuchai International Ltd. at the same time. From 1993 to 1996, he was in charge of international operations of the RGM Group, a conglomerate of diverse businesses and was also a director in charge of international operations in Asia Pacific Resources International Limited. He was the finance director of China Strategic Holdings Limited (Hong Kong) from 1992 to Between 1981 to 1992, he was the General Manager (Finance and Investment) of United Industrial Corporation Ltd. Mr. Lien holds a degree in Bachelor of Commerce from Nanyang University, and is a fellow of the Institute of Certified Public Accountants of Singapore since July 2004 and of CPA Australia since May MR.SIOW CHEE KEONG Independent Director Mr. Siow Chee Keong is our Independent Director and was appointed to our Board in May He has more than 30 years of audit and management experience in operations, business systems, information technology, finance, and accounting with commercial and financial organizations in Canada, U.S.A, England and Singapore. Among his many accomplishment, he has established and managed internal audit functions of two stock exchanges and depositories, namely the Singapore Stock Exchange and the Vancouver Stock Exchange, West Canada Depository Trust Company and Central Depository (Pte) Limited, and a financial institution, namely Principal Group Limited. He is currently an audit and risk management consultant and offers his services to public listed companies. Mr. Siow qualified as a Chartered Certified Accountant with the Association of Chartered Certified Accountants in 1981, a Certified Internal Auditor of the Institute of Internal Auditors Inc. in 1985 and a Certified General Accountants of Canada in He graduated from the University of Warwick, England, with a Master of Business Administration in 1998.

12 I annual report key management MR. DAI HANQUAN Head of Sales and Marketing Mr. Dai Hanquan is our head of sales and marketing and is responsible for planning the sales and marketing activities of our Group. Mr. Dai joined CMZ Zipper as sales representative in January 2003 after he completed his undergraduate course from the Yancheng Institute of Technology ( 盐城工学院 ). He was promoted as the manager of International Trade Department of CMZ Zipper in January 2006 and to his present position as head of sales and marketing in August MR. LI YONGJIAN Financial Controller Mr. Li Yongjian is our financial controller. He joined CMZ Zipper in January 2003 as the finance manager, and was promoted to his present position as the financial controller in January His responsibilities include overseeing the financial, accounting and taxation aspects of our Group. He started his career in the finance and accounting field in March 1975 when he joined Yixing Qiting Fire Resistance Factory as the accounts technician. From February 1985 to February 2000, he was the chief accountant of various government owned entities under the Yixing Qiting Town Co-operations and Yixing Qiting Cold Storage Equipment Factory. From February 2000 to December 2002, he was the chief accountant of Yixing City HuaShi Chemical Factory before joining CMZ Zipper in January Mr. Li holds diploma in Finance and Accounting of the International Business Faculty of Nanjing University, China, and was accredited as Accounting technical professional by China Wuxi Accounting Bureau Committee in MR. YU SHIYANG Head Of Operations Mr. Yu Shiyang is our head of operations and is responsible for our Group s production planning requirements. Since November 2006, he has been in charge of the operations of CMZ Zipper. Prior to that, Mr. Yu was the manager of planning department and deputy general manager of the production department of CMZ Zipper between July 2006 and October He was also the manager of the supply department of CMZ Zipper from January 2006 to October Mr. Yu joined CMZ Zipper in July 1999 and assumed various positions since then. Mr. Yu graduated in 1999 from Yancheng Institute of Technology ( 盐城工学院 ) with a Diploma in Business Management (Financial Accounting) and also obtained an Operations Head Training Certificate from the Fudan University, College of Continuing Education ( 复旦大学继续教育学院 ). MR. DAI YUANYANG Head Of Human Resource And Administrative Department Mr. Dai Yuanyang is our head of human resource and administrative department since August 2010, and is responsible for planning, directing and coordinating human resource management activities for CMZ Zipper. Before joining CMZ Zipper in January 2006 as the human resource manager, Mr. Dai was the marketing executive and project manager of Shanghai Rong Fu Exhibition Service Co., Ltd from January 2001 to December From January 2003 to June 2004, he was the Senior Business Manager of Cai Zhi Corporate Development Co., Ltd (Wuxi Branch). From July 2004 to December 2005, he was the Senior Trainer of Hua Runjing Core Semiconductor Co., Ltd. Mr. Dai attained diploma in computer application from the Huaihai Technology Eastport College ( 淮海工学院东港学院 ) in 1998, and completed his human resource management course in the Xuzhou Technology College ( 徐州工程学院 ) in MR. WANG XIAOPING Head Of Research & Development Department Mr. Wang Xiaoping is our head of research & development department and is responsible for research work and developing of new products of the Group. Mr. Wang joined CMZ Zipper in August 1985 when he began his career as the repair technician. Over the years, he had assumed various positions in CMZ Zipper that include the production supervisor of zipper tape production floor, production supervisor of metal zipper production floor, team supervisor for technical and plant department, as well as the technical and construction manager. With his vast knowledge in zipper production process, he was promoted to his present position as the head of research & development department.

13 11 outdoor I get zipped financial and operational highlight 集团财务和运营摘要 % net profit margin % net profit margin % net profit margin FY 财务年 FY 财务年 FY 财务年 FOR THE YEAR RMB 000 RMB 000 RMB 000 Revenue 收入 253, , ,983 Gross profit 毛利 98,876 80,269 68,305 Profit before tax 税前利润 52,758 44,584 40,087 Profit after tax 税后利润 45,265 38,190 34,415 Gross profit margin 毛利率 38.9% 41.3% 39.7% Net profit margin 净利率 17.8% 19.6% 20.0% AS AT THE YEAR END Total assets 资产合计 257, , ,249 Total equity 股东权益 211, , ,911 Total liabilities 负债总计 45,961 28,274 21,338 Debts-to-equity ratio (times) 资本负债率 PER SHARE Earnings per share (RMBcents) 每股收益 ( 人民币分 ) - Basic 基本 Net assets value (RMBcents) 每股净资产 ( 人民币分 ) Return on shareholders equity 股权收益率 21% 18% 19% Return on total assets 总资产收益率 18% 16% 17%

14 I annual report financial and operational highlight 集团财务和运营摘要 revenue 收入 ( RMB'000") ( 人民币千元 ) net profit 净利润 ( RMB'000") ( 人民币千元 ) 194, ,870 38,190 45, ,983 34,415 FY2009 FY2010 FY2011 FY2009 FY2010 FY2011 harvest REVIEW OF OPERATING RESULTS For the financial year ended 31 March 2011 ( FY2011 ), the Group registered total revenue of RMB253.9 million, an increase of 30.5% from RMB194.5 million for FY2010. This was primarily due to an increase of 20.4% in overall quantities of zippers sold in FY2011 compared to that of FY2010, coupled with increase in average selling price of zippers. The Group sold million pieces of zippers in FY2011 and million pieces of zippers in FY2010. 经营业绩回顾 集团在 FY2011 财务年取得了共计人民币 2.54 亿的总销售收入, 相比 FY2010 财务年人民币 1.94 亿的总销售, 实现了大约 30.5% 的增长率 这个增长率主要是由于 FY2011 财务年的总拉链销售数量同比增长了 20.4%, 还有 FY2011 年较高的拉链销售平均单价也是其中的原因 FY2011 财务年, 集团的总拉链销售数量达到了约 2.20 亿条, 而 FY2010 财务年的总拉链销售数量为 1.82 亿条 In tandem with the increase in revenue, the Group s gross profit increased by RMB18.6 million or 23.2% in FY2011 to RMB98.9 million. However, as a result of higher cost of raw materials and production wages, the Group s gross profit margin declined by 2.4% from 41.3% in FY2010 to 38.9% in FY2011. 随着总销售收入的增长, 集团在 FY2011 财务年的毛利总额也增长了约人民币 1,860 万, 或 23.2% 至人民币 9,890 万 然而, 由于原材料价格和生产员工工资的增长,FY2011 财务年间, 集团的毛利率从 FY2010 财务年的 41.3% 降至 38.9% Selling and distribution expenses increased by RMB2.1 million or 14.4% to RMB16.4 million in FY2011. The increase was due mainly to increase in sales activities in FY2011 which led to higher salaries and wages to sales representatives. FY2011 财务年的销售费用共增加了约人民币 210 万至人民币 1,640 万, 这主要是因为 FY2011 财务年销售活动的增加, 促使了较高的销售人员工资和佣金等费用

15 13 outdoor I get zipped financial and operational highlight 集团财务和运营摘要 Administrative expenses increased by RMB6.7 million or 26.7% to RMB31.8 million in FY2011. The increase was due mainly to increase in wages and salaries, and expenses related to staff benefit, increase in travelling expenses and increase in repair expenses. FY2011 财务年的管理费用共增加了约人民币 670 万至人民币 3,180 万, 这主要是由于管理人员工资, 社会保险, 员工福利及其它相关费用大幅增加的原因 此外, FY2011 财务年, 其它管理费用如差旅费和修理费用也相应增加了 Other operating income decreased by RMB1.82 million to RMB1.7 million in FY2011. The decrease was attributable to decrease in incentive grants received by the Group from the PRC government. FY2011 财务年期间, 其他经营收入减少了约人民币 182 万至人民币 170 万, 这主要是由于中国政府奖给本集团的奖励金降低的原因 Other operating expenses decreased marginally by RMB76,000 to approximately RMB0.5 million in FY2011. FY2011 财务年期间, 其他经营费用稍微降低了人民币 7.6 万, 报人民币 50 万 The net finance income of RMB0.8 million in FY2011 comprised mainly of bank interest income of RMB0.5 million, accrued interest income from the held-to-maturity financial assets of RMB0.9 million and net foreign exchange loss of RMB0.6 million. There were no finance expenses incurred during FY2011, other than the bank charges incurred on ordinary banking transactions. FY2011 财务年的净财务收入约为人民币 80 万, 这主要是 FY2011 财务年的银行定存利息收入约人民币 50 万, 以及金融基金单位利息收入约人民币 90 万 外汇兑换而造成的亏损约人民币 60 万 FY2011 财务年内, 除了一些一般的银行手续费用以外, 集团并没有其他任何的财务贷款利息或费用 The Group s net profit after tax increased by RMB7.1 million or 18.5% from RMB38.2 million to RMB45.3 million in FY2011. The increase is due mainly increase in revenue. FY2011 财务年的净税后利润从 FY2010 财务年的人民币 3,820 万, 增长了人民币 710 万, 或 18.5%, 至人民币 4,530 万 这主要是由集团较高的总销售收入所贡献的 REVIEW OF FINANCIAL POSITION The Group strikes to achieve continual growth in its operating results whilst maintaining a healthy balance sheet with minimum gearing ratio. At the end of FY2011 and FY2010, the Group did not have any borrowings from any financial institutions. Based on the cash and bank balances at the end of FY2011, the Group does not foresee any fund raising requirement, either through bank borrowings or new issue of shares, in the next twelve months. Total equity increased marginally by RMB2.0 million or 1.0% to RMB211.4 million in FY2011. The increase is due mainly to net comprehensive income of RMB46.9 million in FY2011, which was partially offset by capital reduction and cash distribution to shareholders during the financial year totalling to RMB44.8 million. 财务状况回顾 集团的努力目标是在追求业绩和业务增长的同时, 强调较平衡稳健 低负债扛杆的资产负债比率 在 FY2011 和 FY2010 财务年末, 集团没有任何金融机构的贷款 根据集团目前的现金和银行存款, 集团预计在未来 12 个月内将不存在着任何融资的需要 FY2011 财务年末, 集团的总股东权益增加了人民币 200 万, 或 1.0%, 至人民币 2.11 亿 主要是因为在 FY2011 财务年, 集团取得了人民币 4,690 万的综合性收入, 和公司削减股本约人民币 4,480 万以现金分配方式分发了给股东的原因

16 I annual report financial and operational highlight 集团财务和运营摘要 The Group s cash flow position remained stable with net cash inflow from operating activities of RMB34.8 million in FY2011. Cash and bank balances amounted to RMB44.8 million at the end of FY2011 compared with RMB72.1 million at the end of FY2010. The decrease in cash and bank balances was due mainly to capital reduction and cash distribution to shareholders in FY2011. 集团的现金流量状况仍然保持稳健 FY2011 财务年净经营活动现金流入达人民币 3,480 万 与 FY2010 财务年末现金和银行存款人民币 7,210 万相比较,FY2011 财务年年末现金和银行存款总值约达到人民币 4,480 万 现金和银行存款降低是因为公司削减股本的原因 REVIEW OF OPERATION In FY2011, the Group achieved an increase of 20.4% in overall quantities of zippers sold due mainly to higher sales orders received from both its existing and new customers in the PRC, which led to a comparatively higher utilisation of our production capacity when compared with that of FY2010. 经营回顾 FY2011 财务年, 由于来自新旧客户定单量的上升, 集团的总拉链销售数量取得了 20.4% 的增长, 并提高了集团相比 FY2010 财务年的整体生产产能使用率 The Group had also adjusted higher the average selling prices of various zipper types it manufactured in FY2011 as a result of the increase in cost of raw materials and production wages. As a result of higher cost, the Group s gross profit margin declined by 2.4% in FY2011. 由于原材料价格和劳动成本的增长, 集团在 FY2011 财务年上调了拉链的平均销售单价 然而, 因为较高的成本增长, 集团总体的毛利率还是下降了约 2.4% The Group s overall personnel expenses had increased significantly in FY2011 by RMB9.1 million, or 24.1% to RMB46.8 million, as a result of the raising labour cost in the PRC. To reduce its reliance on labour force in production processes, the Group continues its investment in process automation with capital expenditure in related equipment totalling to approximately RMB3.9 million in FY2011. FY2011 财务年间, 由于中国总体的劳动工资增长的原因, 集团的总工资开销大幅增长了约人民币 910 万, 或 24.1% 至人民币 4,682 万 为了减低集团对劳动力生产的依赖性, 集团在 FY2011 财务年间, 持续了对自动化生产设备的投资, 而相关的设备投资共达到了约人民币 390 万

17 15 outdoor I get zipped OUR PRODUCTS NYLON ZIPPERS These are shaped by heating polyester pellets under high temperature, and undergo the processes of sewing, dyeing, reprocessing, assembling and examination. They are widely used in sleeping bags handbags and garments such as pockets, trousers, skirts and sports wear. METAL ZIPPERS These are produced by deep processing and assembling of metal materials such as copper and aluminium alloy. Being durable, they are widely used in high-end garments such as trousers, children wears, jackets, jeans and working cloth, and luggage bags. RESIN ZIPPERS These are made of polyoxymethylene and go through the processes of shaping, colour matching, processing, assembling and examination. They are widely used in down feather garments, ski clothes, windbreakers, exposure clothes and luggage bags.

18 I annual report

19 CORPORATE GOVERNANCE REPORT

20 annual report Corporate Governance Report The Board of Directors (the Board ) of CMZ Holdings Ltd. (the Company ) is committed to high standards of corporate governance within and throughout the Company and its subsidiaries (the Group ) by following closely the recommendations of the Code of Corporate Governance 2005 (the Code ) to advance its mission to create value for the Group s customers and shareholders. This report sets out the Company s corporate governance practices with specific reference to the principles of the Code. BOARD MATTERS Principle 1: Board s Conduct of Its Affairs The primary function of the Board is to protect and enhance long-term value and returns for its shareholders. The Board oversees the Group s overall policies, strategies and objectives, key operational initiatives, performance and measurement, internal control and risk management, major funding and investment proposals, financial performance reviews and corporate governance practices. Approval of the Board is required for matters such as corporate restructuring, mergers and acquisition, major investments and divestments, material acquisitions and disposals of assets, major corporate policies on key areas of operations, share issuance, dividend and other returns to shareholders, acceptances of bank facilities, annual budget, release of the Group s half year and full year s results and interested person transactions of a material nature. The Board conducts regular scheduled meetings on a half-yearly basis to coincide with the announcement of the Group s half-yearly results. Ad-hoc Board meetings are convened as and when they are deemed necessary in between the scheduled meetings. The Articles of Association of the Company provide for Directors to convene meetings by ways of tele-conferencing, video conferencing, audio or other similar communications equipment. When a physical Board meeting is not possible, timely communication with members of the Board can be achieved through electronic means and the circulation of written resolutions for approval by the relevant members of the Board or Board committees. The Board is also being informed about the operation of the Group through regular updates by Management in period other than the half-yearly meeting. To assist in the execution of its responsibilities, the Board has delegated specific authority to the various Board committees namely the Audit Committee, Nominating Committee and Remuneration Committee. All Board Committees are chaired by an independent Director and consist a majority of independent Directors. Principle 2: Board Composition and Balance Presently, the Board comprises five Directors of whom two are executive Directors, one is non-executive Director, and two are non-executive independent Directors. The profile of the Directors is set out on pages 8 and 9 of this Annual Report. The present composition of the Board complies with the Code s guidelines that independent make up one-third of the Board. The Nominating Committee reviews the independence of each Director on an annual basis.

21 19 outdoor I get zipped Corporate Governance Report The Nominating Committee also review the size and composition of the Board on an annual basis to ensure that it has an appropriate mix of expertise and experience, and collectively possesses the necessary core competencies for effective functioning and informed decision-making. The Board considers its current Board size appropriate for the nature and scope of the Group s operations. Each director has been appointed on the strength of his caliber, experience and stature and is expected to bring a valuable range of experience and expertise to contribute to the development of the Group strategy and the performance of its business. Non-executive Directors contribute to the Board process by monitoring and reviewing Management s performance against goals and objectives. Their views and opinions provide alternative perspectives to the Group s business. When challenging Management proposals or, decisions, they bring independent judgement to bear on business activities and transactions involving conflicts of interest and other complexities. Principle 3: Chairman & Chief Executive Officer To ensure a balance of power and authority within the Company, the role of the Executive Chairman and the Chief Executive Officer ( CEO ) of the Company are undertaken by Mr. Shao Kesheng and Mr. Shao Dajun respectively. The Executive Chairman, Mr. Shao Kesheng is the founder of the Group and plays a key role in developing the business of the Group and provides the Group with strong leadership and vision. He manages the business of the Board and the Board committees. He approves the agendas for the Board and exercise control over the quality, quantity, accuracy and timeliness of information flow between the Board and Management of the Company. He encourages constructive relations between the Board and Management and amongst the Board members. All major decisions made by the Executive Chairman are reviewed by the Board. The CEO manages the businesses of the Group and implements the decision made by the Board. The CEO is responsible for the day-to-day operation of the Group. The performance and appointment of the Executive Chairman and the CEO to the Board are reviewed periodically by the Nominating Committee and their remuneration package is reviewed periodically by the Remuneration Committee. Both the Nominating Committee and Remuneration Committee comprise a majority of non-executive Directors. As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power and authority in a single individual. In line with the recommendations in the Code, Mr. Lien Kait Long has been appointed the Lead Independent Director of the Company to address the concerns, if any, of the Company s shareholders.

22 annual report Corporate Governance Report Principle 4: Board Membership The Nominating Committee ( NC ), regulated by a set of written terms of reference, comprises three Directors, majority of whom are non-executive, including the Chairman who is not, and who is not directly associated with, any substantial shareholder of the Company. The nature of the Director s appointment of the Board and the details of their membership on the Board committees are set out below: Directors Board Membership Audit Remuneration Nominating Shao Kesheng Executive / Chairman Shao Dajun Executive / CEO Member Shen Bin Non- Executive Member Member Member Lien Kait Long Independent Chairman Member Siow Chee Keong Independent Member Chairman Chairman The NC makes recommendations to the Board on all nominations for new appointments and re-appointments to the Board and the Board Committees. In the case of nomination for re-appointment, the NC reviews the Directors contribution and performance to decide whether a Director is able to and has been adequately carrying out his duties as a Director. It ascertains the independence of independent and non-executive Directors and evaluates the Board s performance. In accordance with the Company s Articles of Association, each Director is required to retire at least once in every three years by rotation and all newly appointed Directors will have to retire at the next Annual General Meeting following their appointments. The retiring Directors are eligible to offer themselves for re-election. Pursuant to Article 88 of the Company s Articles of Association, Directors of the Company who were newly appointed by the Board since the last AGM will have to retire at the forthcoming AGM. In this regard, the NC recommended the re-appointment of two Directors, namely, Lien Kait Long and Shen Bin pursuant to Article 89 of the Company s Articles of Association at the forthcoming Annual General Meeting. The Board has also accepted the NC s recommendation and these two Directors will be offering themselves for re-election. Principle 5: Board Performance The Company acknowledges the importance of a formal assessment of Board performance and has adopted a formal system of evaluating Board performance as a whole. An evaluation of Board performance will be conducted annually to identify areas of improvement and as a form of good Board management practice. The evaluation of Board s performance as a whole deals with matters on Board composition, information to the Board, Board procedures, Board accountability and CEO / top management. The NC is of the opinion that the Board is able to exercise objective judgement on corporate affairs independently and no individual or small group of individuals dominates the Board s decision making process.

23 21 outdoor I get zipped Corporate Governance Report The attendances of each Board member at the meetings of the Board and other committees in respect of the financial year ended 31 March 2011 are as follows: Board meeting Audit Remuneration Nominating Directors Held Attended Held Attended Held Attended Held Attended Shao Kesheng 2 2 Shao Dajun Shen Bin Lien Kait Long Siow Chee Keong Principle 6: Access to Information Board members are provided with adequate and timely information on Board affairs and issues that require the Board s decision. All Directors have independent access to the Group s senior management and the Company Secretary. All Directors are provided with complete and adequate information prior to Board meetings and on an ongoing basis. The Company Secretary provides secretarial support to the Board, ensure adherence to Board procedures and relevant rules and regulations, which are applicable to the Company. The Company Secretary attends all Board meetings. Should Directors, whether as a group or individually, need independent professional advice to fulfill their duties, such advice will be obtained from a professional entity of the Director s choice and the cost of such professional advice will be borne by the Company. REMUNERATION MATTERS Principle 7: Principle 8: Principle 9: Procedure for Developing Remuneration Policies Level and Mix of Remuneration Disclosure on Remuneration The Remuneration Committee ( RC ), regulated by a set of written terms of reference, comprises three non-executive Directors, majority of whom, including the Chairman is independent. The RC meets at least once annually. The RC reviews and recommends to the Board (a) the remuneration packages of all Executive Directors and Executive Officers of the Group, (b) directors fees for Non-Executive Directors, which are subject to shareholders approval at the AGM, and (c) all service contracts of the Executive Directors. If required, the RC will seek expert advice inside and/or outside the Company on remuneration of all Directors. The Chairman and CEO s remuneration as set out in their service agreements, which consist mainly of salary. In accordance with the service agreement, the CEO is also entitled to an incentive bonus to be determined based on the formula set out in the Company s IPO Prospectus dated 6 July 2007.

24 annual report Corporate Governance Report The Non-Executive Directors do not have any service agreements with the Company. Except for directors fees, which have to be approved by Shareholders at every annual general meeting ( AGM ), the Non-Executive Directors do not receive any other forms of remuneration from the Company. The RC had recommended to the Board (i) an amount of S$100,000 as directors fees for the financial year ended 31 March 2011; and (ii) an amount of S$100,000 as directors fees for the year ending 31 March 2012 to be paid quarterly in arrears. The Board will table these at the forthcoming AGM for shareholders approval. Other than the Directors fees for the independent and non-executive Directors that are set in accordance within a remuneration framework, the Board has decided that the policy on annual remuneration will not be tabled at the forthcoming AGM. No Director is involved in deciding his own remuneration. Breakdown of each individual Director s remuneration, in percentage terms showing the level and mix for the financial year ended 31 March 2011, is as follows: Salary Bonus Director s fees Other benefits Total Name of Director % % % % % S$250,000 to below S$500,000 Shao Dajun Below S$250,000 Shao Kesheng Shen Bin Lien Kait Long Siow Chee Keong There was no employee of the Group who are immediate family members of a director or substantial shareholder and whose remuneration exceeds S$150,000 during the financial year ended 31 March Details of remuneration paid to the top Executive Officers of the Group (who are not Directors) for the financial year ended 31 March 2011 are set out below: Name of Executive Officer Below S$250,000 Salary Bonus Other benefits Total % % % % Dai Hanquan Li Yongjian Yu Shiyang Dai Yuanyang Wang Xiaoping Pei Shizhong** Wong Yoon Thim^^ ** Pei Shizhong had resigned as Head of Sales & Marketing Department for the Group with effect from 18 August ^^ Wong Yoon Thim had resigned as Chief Financial Controller of the Group with effect from 15 November 2010.

25 23 outdoor I get zipped Corporate Governance Report ACCOUNTABILITY AND AUDIT Principle 10: Accountability The Board provides to the shareholders, a balanced and understandable assessment of the Company s performance, position and prospects through the presentation of the annual financial statements and results announcements at least every half yearly. The Management currently provides the Board with appropriately detailed management accounts of the Group s performance, position and prospects on a timely basis in order for the Board to discharge its duties effectively. Principle 11: Audit Committee The Audit Committee ( AC ), regulated by a set of written terms of reference, comprises three Directors, majority of whom, including the Chairman is independent. The Independent Directors do not have any existing business or professional relationship of a material nature with the Group, other Directors or substantial shareholders. Of the three members, two members are independent Directors of the Company, who bring with them invaluable managerial and professional expertise in the financial, legal and business management spheres. The AC meets at least twice times a year and as and when deemed appropriate to carry out its functions. The AC has full access to and the co-operation of Management, has full discretion to invite any Director or Executive Officer to attend its meetings and has been given adequate resources to enable it to discharge its functions. The AC also has the explicit powers to conduct or authorize investigations into any matters within its terms of reference. The AC performs the following functions: Reviews the annual and half yearly financial statements of the Company and the Group before submission to the Board for adoption; Reviews with the external auditors, their audit plans and audit reports; Reviews the cooperation given by the Company s officers to the external and internal auditors; Reviews interested person transactions; Reviews the adequacy of the Company s internal controls and effectiveness of the Company s internal audit function; Nominates and review the appointment or re-appointment of external auditors; and Reviews the independence of the external auditors annually. The Company has put in place a Whistle-Blowing Policy. The AC reviews arrangements by which staff may in confidence, raise their concerns about possible improprieties in matters of financial reporting or other matters. The objective of the Policy is to ensure that arrangements are in place, for the independent investigation of such concerns and for appropriate follow-up action. Both the AC and Board have reviewed the appointment of different auditors for its subsidiaries and/or significant associated companies and satisfied that the appointment of different auditors would not compromise the standard and effectiveness of the audit of the Company. Accordingly, the Company has complied with Rule 716 of the Listing Rules of the SGX-ST.

26 annual report Corporate Governance Report The external auditor, Crowe Horwath First Trust LLP, did not provide any non-audit services during the financial year ended 31 March 2011 and the Company did not pay any non-audit fees to the external auditor. Hence, the AC is of the opinion that there is no issue relating to provision of non-audit service that may affect their independence and objectivity. The AC had recommended the re-appointment of Crowe Horwath First Trust LLP as external auditors at the forthcoming AGM. Annually, the AC meets with the external auditors and internal auditors without the presence of Management. Principle 12: Internal Controls The Board recognizes that no internal control system will preclude all errors and irregularities. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders investments and the Group s assets. The AC has engaged external and internal auditors to review the adequacy of the Group s system of internal controls, ensure internal control weaknesses are ratified. The AC will ensure that a review of the effectiveness of the Group s material internal controls, including financial, operational and compliance controls and risk management, is conducted annually. In this respect, the AC will review the audit plans, and the findings of the auditors and will ensure that the Group follows up on the auditors recommendations raised, if any, during the audit process. Management will regularly review the Group s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Group s policies and strategies. Principle 13: Internal Audit In accordance with the AC s recommendation, the Company has appointed Paul Wan & Co as its Internal Auditor (IA) with duties to: Assess if adequate system of internal controls are in place to protect the fund and assets of the Group and to ensure control procedures are complied with; Assess if operation of the business processes under review are conducted efficiently and effectively; and identify and recommend improvement to internal control procedures, where required. The IA reports directly to the AC Chairman on internal audit matters and to Management on administrative matters. The AC also meets the IA at least once a year without the presence of Management. The AC has reviewed the Group s internal control assessment and based on the internal auditors and external auditors reports and the internal controls in place, it is satisfied that there are continuous improvement for internal controls in the Group. To ensure the adequacy of the internal audit function, the AC reviews and approves the internal audit plan on an annual basis.

27 25 outdoor I get zipped Corporate Governance Report COMMUNICATION WITH SHAREHOLDERS Principle 14: Principle 15: Communication with Shareholders Greater Shareholder Participation The Board is mindful of the obligation to keep shareholders informed of all major developments that affect the Group in accordance with the SGX-ST listing rules. The Board places great emphasis on investor relations. The Company strives to maintain a high standard of transparency and to promote better investor communications. Information is communicated to shareholders on a timely basis through: annual reports that are prepared and issued to all shareholders within the mandatory period; announcements and press releases issued via SGXNET and the press; notices of shareholders meetings are advertised in a newspaper in Singapore; and the Company s website at at which shareholders can access information on the Group. Shareholders are encouraged to attend and participate at the Company s general meetings to ensure a high level of accountability and to stay informed of the group s strategy and goals. The Board (including the Chairman of the respective Board committees) as well as Management attends the Company s AGM to address any question that shareholders may have. The external auditors also attend the AGM to address shareholders queries about the conduct of audit and the preparation and content of the auditors report. SECURITIES TRANSACTIONS The Group has adopted a set of code of conduct to provide guidance to its officers regarding dealings in the Company s securities, in compliance with Rule 1207(18) of the Listing Manual of the SGX-ST. The Group prohibits the Directors and employees to trade in the Company s securities, during the period beginning 1 month before the date of the announcement of the full year or half year results respectively and ending on the date of the announcement of the relevant results. Directors and employees are also advised against dealing in the securities when they are in possession of any unpublished material price-sensitive information of the Group. INTERESTED PERSON TRANSACTIONS The Company has adopted an internal policy governing procedures for the identification, approval and monitoring of interested person transactions (the IPTs ). All IPTs are subject to review by the AC to ensure that they are carried out on an arm s length basis, on normal commercial terms and will not be prejudicial to the interests of the shareholders. In the event that a member of the AC is interested in any IPTs, he will abstain from reviewing that particular transaction.

28 annual report Corporate Governance Report The Board will ensure that all disclosure, approval and other requirements on IPTs, including those required by prevailing legislation, the Listing Manual and accounting standards are complied with. Save as disclosed under the section Notice to the Financial Statements on page 76 of this Annual Report, there were no other interested person transaction (with value more than S$100,000) conducted during the financial year ended 31 March MATERIAL CONTRACTS Save for the Service Agreements entered with Shao Kesheng and Shao Dajun, there were no material contracts during the financial year ended 31 March 2011 as required to be reported under Rule 1207(8). RISK MANAGEMENT The Company does not have a Risk Management Committee. However, the management regularly reviews the Company s and the Group s business and operational activities 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 Directors and the AC.

29 27 outdoor I get zipped 企业治理报告 驰马拉链控股有限公司 ( 简称 公司 ) 的董事局致力于公司及其子公司 ( 合称 集团 ) 内外贯彻执行高水平的企业治理标准, 并遵从颁布的 2005 年企业治理准则 ( 简称 准则 ), 以完成其为集团客户和股东创造价值的使命 本报告列举了公司参考了准则中的特定原则要求, 而采用的企业治理条例 董事局事项 原则 1: 董事局对其事务的管理 董事局的主要职责是保障和提高股东的长期利益和回报 董事局检查集团的总体主要方针 战略和目标 重要运营措施 监控及鉴定成果表现 集团内部的控制及风险管理 主要的投资集资建议 财务表现的审查和公司治理的实践 下列是必需董事局批准的事项 : 公司重组 兼并收购 重大投资和撤资 重大资产收购及出售 关于公司主要的运营政策 股票发行 股息和其他的股东收益 银行授信额度的接受 年度预算 集团全年或半年报告的发布以及具有重要性质的关联方交易 董事局每半年召开一次例常会议, 这是与集团每半年的业绩公告发布是一致的 当董事认为有必要时, 董事局可于例会之间召开特别董事局会议 公司章程规定董事可以通过电话会议 视频会议 音频或其他类似交流设备召开会议 当没有必要当面召开董事局会议时, 董事局或董事局成员可以通过电子通讯方式以及书面决议的方式, 与其他董事局成员进行实时的交流 除董事局会议以外, 管理层也将定期向董事局汇报集团的运营情况 为帮助其履行职责, 董事局可将特定权力授予相关的董事局委员会 : 审计委员会 提名委员会和薪酬委员会 所有董事局委员会都是由独立董事担任主席的, 而这些委员会的成员大部分都是由独立董事组成的 原则 2: 董事局的结构和平衡 目前, 董事局由 5 名成员组成, 其中 2 名为执行董事,1 名为非执行董事, 另外 2 名为非执行独立董事 请参阅本年度报告的第 8 和 9 页关于各位董事的资历详情 公司目前的董事局结构是符合守则中的规定条例的, 既独立董事人数至少须占董事局总人数的三分之一 提名委员会每年度审查董事的独立性 提名委员会每年度审查董事局的结构和组织, 以确保董事局的成员结构既达到专业性和治理经验的合理平衡, 又同时具有有效运行和作出决策时所必要的核心竞争力 董事局认为其目前的董事局规模和结构是适合集团目前运营的性质和范围的 每一位董事的任用是根据其专业才能 工作阅历和成就来决定的, 并能为集团在制定发展策略和运营业绩方面, 贡献其丰富的经验和专业意见 非执行董事的任务是通过参考集团运营目标和实际绩效来考核管理层的表现, 并参与董事局执行其任务的过程 他们的观点和意见给集团的业务提供另一种视角和考量 对管理层的建议和决策提出质疑时, 他们能为牵涉到利益冲突和其他复杂事项的业务活动和交易作出独立的判断

30 annual report 企业治理报告 原则 3: 主席及首席执行官 为了确保公司内部权利与职能的平衡, 公司的主席和和首席执行官 ( CEO ) 分别由邵克生和邵达君担任 公司的主席, 邵克生先生是集团的创始人, 在集团发展中起着重要作用, 给集团带来了强有力的领导和方向 他掌管董事局和董事局委员会的事务, 并核准董事局会议议程, 负责董事局和公司管理层之间的信息流的质量 数量准确性和时效性 他推广董事局与管理层之间以及执行董事和独立董事之间建立建设性的关系 主席所作的所有重大决定都必须要通过董事局审查的 CEO 管理集团事务并执行董事会的决定, 同时也负责集团日常运作 主席和 CEO 的委任以及他们的表现考核和薪酬, 分别由提名委员会和薪酬委员会定期审查监督, 后向董事局报告 提名委员会和薪酬委员会的成员多数是由非执行董事组成的 同样的, 董事局认为在防止权力和权威过于集中于同一个人身上方面, 董事局有足够的保障措施 根据准则的建议, 连克农先生被任命为本公司首席独立董事, 表达公司股东的担忧 ( 如有 ) 原则 4: 董事局成员 提名委员会 ( NC ), 为其职权范围书管制和规范, 由其中 3 名董事组成 大部分的 NC 成员是非执行董事, 而且包括 NC 的主席在内, 它们都不是公司的大股东, 也不与公司大股东有直接利益挂钩 下列是董事局成员在各董事局委员会担任的职务明细 : 董事姓名董事会成员资格审计委员会薪酬委员会提名委员会 邵克生 执行主席 邵达君 首席执行官 成员 沈斌 非执行董事 成员 成员 成员 连克农 独立董事 主席 成员 萧子强 独立董事 成员 主席 主席 NC 将新委任和重新委任的所有被提名者推荐给董事局和董事局委员会 关于重新委任董事事项, NC 将根据董事的贡献和表现, 以确定相关董事是否有能力并已充分履行了其董事该有的职责 NC 确定独立董事和非执行董事的独立性并对董事局的整体表现作出评价 根据本公司章程, 每名董事, 在三年内至少轮流离任一次, 新任命的董事在其任命之后的下一次年度股东大会上自动离任 离任的董事可以重新选举 根据公司章程第 88 条上的规定, 上次年度股东大会上由董事局任命的公司董事在下一次年度股东大会上必须离任 据此, 依照公司章程第 89 条, NC 在下次年度股东大会上将推荐重新任命 2 名董事, 分别为连克农和沈斌 董事局也接受了 NC 的推荐, 此 2 名董事将重新参加选举

31 29 outdoor I get zipped 企业治理报告 原则 5: 董事局表现 公司认同对董事局的表现进行评估之重要性, 为此已采纳了一套正规的评估体制 为确定董事局在履行其职责时需要改进的地方, 并把它视为是一项良好的管理实践, 每年对董事局表现进行评估. 对董事局表现的总体评价主要涉及董事局布局 对董事局的报告 董事局程序 董事局尽责表现以及首席执行官 / 高级管理人员等事项 提名委员会认为董事局能够在公司的事务上, 独立地执行其客观的判断, 没有个体或者小的个体组织支配董事局的决策过程. 在截止到 2011 年 3 月 31 日的财务年中, 董事局和各委员会会议的出席情况如下 : 董事会会议 审计委员会 薪酬委员会 提名委员会 董事姓名 举行次数 出席次数 举行次数 出席次数 举行次数 出席次数 举行次数 出席次数 邵克生 邵达君 沈斌 连克农 萧子强 原则 6: 获取信息 董事局成员就需要董事局作出决定的事项和问题上获取充足和及时的信息 所有董事可以独立的接触集团高级管理人员和公司秘书以获取相关的信息 所有董事在董事局会议前可实时接触完整和充足的信息 公司秘书向董事局提供秘书服务, 确保遵守董事局程序和相关适用于公司的规则和法规 公司秘书参与所有董事局会议 无论是以个人还是集体的名义, 当董事需要有独立的专业性意见来完成其职责时, 董事可选择咨询专业机构来获取该专业性意见, 而相关的费用将由公司承担 薪酬事项 原则 7: 原则 8: 原则 9: 推进薪酬政策的程序 薪酬水平和组合 薪酬的披露 薪酬委员会 ( RC ), 为其职权范围书规范, 由其中 3 名董事组成, 而大部分的 RC 成员, 包括 RC 的主席, 都是非执行董事 RC 每年至少开会一次 RC 就以下事项进行审查并向董事局作出建议 :(a) 集团所有执行董事和执行官的薪酬 (b) 非执行董事的董事费, 受制于股东在年度股东大会上的批准 (c) 执行董事的所有服务协议 如有必要,RC 将就所有董事薪酬事项在公司内部和 / 或外部征询专家意见

32 annual report 企业治理报告 主席和首席执行官的薪酬, 根据他们个别与公司签定执行董事服务协议上规定的, 主要是由每月工资组成的 而根据首席执行官的服务协议 除了每个月的工资, 首席执行官也可以支取以公司在 2007 年 7 月 6 日首次公开发行招股说明书所决定的奖金 非执行董事与公司不签任何服务协议 除了必须在每年年度股东大会上由股东批准的董事费, 非执行董事不再从本公司获取其他任何形式的报酬 RC 向董事局建议 (a) 截止 2011 年 3 月 31 日的财务年, 董事费为新币 10 万元 ; 以及 (b) 将截止于 2012 年 3 月 31 日的财务年, 董事费为新币 10 万元, 并在每季度发放 董事局将在下次年度股东大会上讨论以征得股东批准 除了根据薪酬框架确定的独立和非执行董事的董事费, 董事局决定将不会在下次年度股东大会上讨论其他关于年度薪酬的政策 每位董事成员都不得参与决定他本身的薪酬 下表是截止 2011 年 3 月 31 日财务年内, 每位董事的薪酬明细, 分别以百分比显示 : 董事姓名新币 250,000 至新币 500,000 以下 薪水 奖金 董事费 其他收益 总计 % % % % % 邵达君 新币 250,000 以下邵克生 沈斌 连克农 萧子强 截止 2011 年 3 月 31 日财务年内, 集团没有一位职员是董事或者大股东的直属家庭成员而其薪酬是超过新币 15 万元的 截止 2011 年 3 月 31 日财务年内, 支付给集团执行官 ( 非董事 ) 的详细薪酬详细列表如下 : 执行官名字 薪水奖金其他收益总计 % % % % 新币 250,000 以下戴汉权 李永健 俞世洋 戴远洋 王小平 裴世中 ** 黄润添 ^^ ** 裴世中, 集团的营销总监已于 2010 年 8 月 18 日离职 ^^ 黄润添, 集团的财务总监已于 2010 年 11 月 15 日离职

33 31 outdoor I get zipped 企业治理报告 责任制及审计 原则 10: 责任制 董事局至少每半年向股东陈述公司和集团的财务报告和业绩公告, 提供公司的运营表现 运营现状和前景的合理, 保守的评论 目前, 管理层按时向董事局提供关于集团的运营表现 运营现状和前景的管理记录和相关适用的信息, 以便董事局有效地履行其责任 原则 11: 审计委员会 审计委员会 ( AC ), 为其职权范围书管制和规范, 由其中 3 名董事组成, 而大部分的 AC 成员, 包括 AC 的主席, 都是独立的 3 名 AC 成员中,2 名是公司独立董事, 为公司的财务 法律和企业管理方面提供有效的管理和专业意见 如认为为执行其职责所必要,AC 每年至少会面 2 次 AC 可以直接接触管理层并得到其配合 AC 也可以自主决定邀请任何一名董事或者执行官参与其会议, 以获得足够的信息资源使其履行职责 AC 也有权在其授权调查范围内执行或批准调查任何事项 AC 履行下列职责 : 在将公司和集团年度和半年度财务报告提交给董事局之前对其进行审查 ; 与外部审计师审查有关的审计计划和审计报告 ; 审查公司高级职员给外部审计师和内部审计师提供的合作 ; 审查关联人交易 ; 审查公司内部控制的充足性和公司内部审计师职能的有效性 ; 提名外部审计师并对其任命和重新任命进行审查 ; 和 每年审查外部审计师的独立性 公司采用了检举揭发政策 AC 审查相关的程序安排以让公司任何职员可以提出关于可能不适当的财务报告或其他事项 该政策的目的是保证相关程序已完善的建立, 让有关事项给予独立的调查和进行适当的后续行动 AC 和董事会审核了有关集团子公司, 或显著的联合股份公司聘请集团外部审计师以外的审计师进行审计工作的事宜, 并对聘请不同的外部审计师将不会影响公司整体审计的水平和有效性 因此, 公司在这方面已遵守了新加坡证券交易所的上市手册规则第 716 条 在截止 2011 年 3 月 31 日的财务年内, 外部审计师 Crowe Horwath First Trust LLP 没有提供任何非审计服务, 因此 AC 认为没有存在因提供非审计服务而可能影响外部审计师工作的独立性和客观性的有关问题 AC 建议在下次年度股东大会上重新聘用 Crowe Horwath First Trust LLP 为外部审计师 每年, AC 将在管理层不在场的情况下同内控审计师和外部审计师会晤

34 annual report 企业治理报告 原则 12: 内部控制 董事会意识到没有一个内部控制系统能够排除所有错误和犯规的风险 该系统的设计旨在管理而不是完全排除业务失败的风险 这些控制能够向股东投资和集团资产的保护提供合理的, 但不是绝对的保证 审计委员会要求外部和内控审计师检查集团内部控制系统的充分性, 确保内部控制缺陷得到矫正 审计委员会将确保对集团内控的有效性进行年度检查, 包括财务, 经营以及合法控制和风险管理 在这个方面, 审计委员会将在审计进行过程中, 检查审计计划和审计师发现的问题, 并确保集团能够根据审计师提出的建议实施相应的改进措施 管理层会定期检查集团业务和运营情况, 从而在集团运营方针和战略范围内, 来判觉集团的重大业务风险事项, 和能够控制并减轻这些风险的恰当措施 原则 13: 内控审计 根据审计委员会的推荐, 公司聘请了内控审计师, 其职责如下 : 评估保护集团资金和资产的内部控制系统是否恰当以及确保控制程序的实施 ; 评估所检查的业务流程运作是否有效率和有效地进行 ; 和 如果有必要的话, 确定和建议内部控制程序的改进 对于内控审计事宜, 内控审计师直接向审计委员会主席报告 ; 对于行政事宜, 内控审计师将直接向管理层报告 审计委员会每年至少一次在管理层不出席的情况下与内部审计师会晤 审计委员会已经审查了集团的内部控制评估 参考内审和外审的报告以及目前的内控情况, 审计委员会对集团内部控制的不断改进表示满意 为了保证内控审计职能的恰当性, 审计委员会将每年对内部审计计划进行审批 与股东的沟通 原则 14: 原则 15: 与股东的沟通增加股东参与程度 董事局应有义务不忘通知股东所有根据新加坡证券交易所上市准则影响集团的所有重大发展 董事局很重视同投资者的关系 公司力争维持一个高水平的透明度和促进同投资者的交流 通过以下方式按时向股东提供信息 : 在法定期限内准备和提供年度报告给所有的股东 ; 通过新加坡证券交易所网和媒体发布的公告和新闻稿 ; 在新加坡报纸上刊登的股东会议通知 ; 和 股东可以获取集团信息的公司网址

35 33 outdoor I get zipped 企业治理报告 鼓励股东参加公司的年度股东大会以保证高水平的责任感, 获得集团运营策略和目标的相关信息 董事局 ( 包括相应委员会主席 ) 以及管理层参加公司年度股东大会回答股东提出的任何问题 外部审计师也参加年度股东大会, 就审计的情况和审计报告制备和内容回答股东的质询 证券交易 集团已采用一系列行为准则对其管理人员就根据新加坡证券交易所上市手册规则第 1207(18) 条关于公司交易证券提供指引 在全年报告或半年报告公告前 1 个月开始, 相关结果公布日结束的时期之内, 集团禁止董事和员工交易公司证券 董事和员工也劝告不得在其持有集团未公布的重要价格敏感信息时, 进行交易证券 关联人士交易 公司采用一套内部政策管理程序来明确, 批准和监督关联方交易 所有关联方交易都需要经过审计委员会的审核, 确保交易是按普通商业条款进行的, 不会损害股东的利益 如果审计委员会中的任何一名成员牵涉到关联方交易, 他将不参与该交易的审核 董事会确保严格遵守所有关联方交易的披露, 批准和其他关联方交易, 都符合现行法律, 新加坡证券交易所上市手册和会计准则规定的要求 除了在年报的第 76 页 财务报告注解 部分中披露的, 截止 2011 年 3 月 31 日为止没有其他的关联方交易 ( 超过新币 10 万 ) 需要披露. 重要合同 除了与邵克生和邵达君签订的服务协议, 在截止 2011 年 3 月 31 日的财务年内没有其他需要根据 1207(8) 规则披露的其他重要合同 风险管理 公司没有风险管理委员会 然而, 管理层经常审查公司及集团的业务和运作活动来确认具有显著商业风险的地方以及控制和减少风险的适当的措施 管理层审查所有重大控制政策和程序, 向董事局和 AC 反映所有重大事项

36 annual report contents 35 Directors Report 38 Statement by Directors 39 Independent Auditors Report 41 Balance Sheets 43 Consolidated Statement of Comprehensive Income 44 Consolidated Statement of Changes In Equity 45 Consolidated Statement of Cash Flows 46 Notes to The Financial Statements 89 Statistic of Shareholdings 92 Notice of Annual General Meeting Proxy Form

37 35 outdoor I get zipped DIRECTORS REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 The directors present their report to the members together with the audited financial statements of CMZ Holdings Ltd. (the Company ) and its subsidiaries (the Group ) for the financial year ended 31 March 2011 and the balance sheet of the Company as at 31 March Directors The directors of the Company in office at the date of this report are as follows: Shao Kesheng Shao Dajun Shen Bin Lien Kait Long Siow Chee Keong Arrangements to enable directors to acquire benefits by means of the acquisition of shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Directors interests in shares or debentures According to the register kept by the Company for the purposes of section 164 of the Singapore Companies Act, Cap.50, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: Company Shareholdings registered in name of director At 31 March 2011 At 31 March 2010 Shareholdings in which a director is deemed to have an interest At 31 March 2011 At 31 March 2010 Ordinary shares Shao Kesheng 193,538, ,538,374 Shao Dajun 193,538, ,538,374 The directors interests in the shares of the Company at 21 April 2011 were the same as those as at 31 March Shao Kesheng and Shao Dajun are deemed to be interested by virtue of their shareholdings held by the ultimate holding company, Allied Sincere Limited. By virtue of section 7 of the Singapore Companies Act, Cap.50, Shao Kesheng and Shao Dajun are deemed to have interests in the share capital of the wholly-owned subsidiaries of the Company. 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 or the end of the financial year.

38 annual report DIRECTORS REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Directors contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations. Share options During the financial year, no options to take up unissued shares of the Company or its subsidiaries were granted and no shares were issued by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year. Audit committee The members of the Audit Committee at the date of this report are as follows: Lien Kait Long (Chairman) Siow Chee Keong Shen Bin The Audit Committee performs the functions specified by Section 201B(5) of the Singapore Companies Act, Cap.50, the Listing Manual of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance. In performing those functions, the Audit Committee reviewed: the scope and the results of internal audit procedures with the internal auditors; the audit plan of the Company s independent auditors and any recommendations on internal accounting controls arising from the statutory audit; the assistance given by the Company s management to the independent auditors; the periodic results announcements prior to their submission to the Board for approval; the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 31 March 2011 prior to their submission to the Board of Directors, as well as the independent auditors report on the balance sheet of the Company and the consolidated financial statements of the Group; and interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited).

39 37 outdoor I get zipped DIRECTORS REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Audit committee The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee convened two meetings during the financial year ended 31 March 2011 with attendance from majority of its members and has also met with internal and external auditors, without the presence of the Company s management, at least once a year. The Audit Committee has recommended to the Board of Directors that the independent auditors, Crowe Horwath First Trust LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. The Audit Committee has conducted an annual review of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their renomination. Further details regarding the Audit Committee are disclosed in the Report on Corporate Governance. Independent auditors The independent auditors, Horwath First Trust LLP, who are now practicing under the name of Crowe Horwath First Trust LLP with effect from 18 November 2010, have expressed their willingness to accept re-appointment as auditors of the Company. On behalf of the Board of Directors SHAO KESHENG Director SHAO DAJUN Director Singapore 8 July 2011

40 annual report Statement by Directors In the opinion of the directors, (a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 41 to 88 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 2011 and of the results, changes in equity and cash flows of the Group for the financial year then ended; and (b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors SHAO KESHENG Director SHAO DAJUN Director Singapore 8 July 2011

41 39 outdoor I get zipped INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CMZ HOLDINGS LTD. Report on the Financial Statements We have audited the accompanying financial statements of CMZ Holdings Ltd. (the Company ) and its subsidiaries (the Group ) set out on pages 41 to 88, which comprise the balance sheets of the Company and of the Group as at 31 March 2011, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act ) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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.

42 annual report INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CMZ HOLDINGS LTD. Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2011, and the results, changes in equity and cash flows of the Group for the financial year ended on that date. 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 have been properly kept in accordance with the provisions of the Act. Crowe Horwath First Trust LLP Public Accountants and Certified Public Accountants Singapore 8 July 2011

43 41 outdoor I get zipped BALANCE SHEETS AS AT 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ) Note Group Company RMB 000 RMB 000 RMB 000 RMB 000 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 3 80, ,904 80, ,904 Treasury shares 4 (4,863) (4,863) (4,863) (4,863) 75, ,041 75, ,041 Other reserves Statutory reserves 5 32,570 24,951 Merger deficit 6 (2,243) (2,243) Translation deficit 7 (405) (2,012) (274) (1,932) 29,922 20,696 (274) (1,932) Revenue reserve / (Accumulated losses) 8 106,253 68,607 (7,258) (1,682) TOTAL EQUITY 211, ,344 67, ,427 ASSETS Non-current assets Subsidiaries 9 65,066 65,066 Property, plant and equipment 10 93,066 76,616 6 Land use rights 11 9,866 10, ,932 86,717 65,066 65,072 Current assets Held-to-maturity financial asset 12 10,037 Inventories 13 35,520 19,757 Trade receivables 14 55,785 43,836 Other receivables, deposits and prepayments 15 18,311 5, Due from subsidiaries (non-trade) 16 5,931 6,005 Cash and bank balances 17 44,782 72, , , ,901 5,996 53,050 TOTAL ASSETS 257, ,618 71, ,122 The accompanying notes are an integral part of the financial statements.

44 annual report BALANCE SHEETS AS AT 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ) Note Group Company RMB 000 RMB 000 RMB 000 RMB 000 LIABILITIES Current liabilities Trade payables 26,654 18,766 Other payables and accruals 18 17,094 8,339 1,686 1,050 Due to ultimate holding company (non trade) 16 1,300 1,300 Due to directors (non-trade) Provision for income tax TOTAL LIABILITIES 45,961 28,274 3,400 1,695 NET ASSETS 211, ,344 67, ,427 The accompanying notes are an integral part of the financial statements.

45 43 outdoor I get zipped CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ) Note RMB 000 RMB 000 Revenue , ,543 Cost of sales (154,994) (114,274) Gross profit 98,876 80,269 Other operating income 20 1,722 3,544 Selling and distribution expenses (16,402) (14,342) Administrative expenses (31,776) (25,088) Other operating expenses 21 (450) (526) Profit from operations 51,970 43,857 Finance income 1,429 1,691 Finance expenses (641) (964) Net finance income Profit before tax 23 52,758 44,584 Income tax 25 (7,493) (6,394) Net profit for the year 45,265 38,190 Other comprehensive income Foreign currency translation 1,607 2,351 Total comprehensive income for the year 46,872 40,541 Earnings per share (RMB cents) 26 Basic Diluted The accompanying notes are an integral part of the financial statements.

46 annual report CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ) Share capital Treasury shares Statutory reserves Revenue reserve Merger deficit Translation deficit Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 (Note 3) (Note 4) (Note 5) (Note 6) Balance at 1 April ,904 (4,863) 18,106 51,370 (2,243) (4,363) 182,911 Total comprehensive income for the year 38,190 2,351 40,541 Transferred to statutory reserves 6,845 (6,845) Dividends (Note 29) (14,108) (14,108) Balance at 31 March ,904 (4,863) 24,951 68,607 (2,243) (2,012) 209,344 Balance at 1 April ,904 (4,863) 24,951 68,607 (2,243) (2,012) 209,344 Total comprehensive income for the year 45,265 1,607 46,872 Transferred to statutory reserves 7,619 (7,619) Capital reduction exercise (Note 3) (44,847) (44,847) Balance at 31 March ,057 (4,863) 32, ,253 (2,243) (405) 211,369 The accompanying notes are an integral part of the financial statements.

47 45 outdoor I get zipped CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ) RMB 000 RMB 000 Cash flows from operating activities Profit before tax 52,758 44,584 Adjustments: Amortisation of land use rights Depreciation of property, plant and equipment 8,397 8,076 Interest income (491) (528) (Gain) Loss on disposal of property, plant and equipment (16) 83 Property, plant and equipment written off Operating profit before working capital changes 61,002 52,434 Inventories (15,763) (6,876) Trade receivables (11,949) (12,161) Other receivables, deposits and prepayment (3,144) (179) Trade payables 7,888 3,621 Other payables and accruals (Note A) 2,695 3,367 Due to directors (non-trade) (231) 101 Cash generated from operations 40,498 40,307 Interest income received Income tax paid (7,518) (6,547) Net cash from operating activities 33,471 34,288 Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment (Note A) (19,668) (13,200) Acquisition of land use rights (113) Net cash used in investing activities (18,890) (13,284) Cash flows from financing activities Due to ultimate holding company 1,300 Capital reduction exercise (Note 3) (44,847) Dividends paid (14,108) Net cash used in financing activities (43,547) (14,108) Effect of changes in currency translation 1,607 2,351 Net (decrease) increase in cash and cash equivalents (28,966) 6,896 Cash and cash equivalents at beginning of year (Note 17) 72,141 62,894 Cash and cash equivalents at end of year (Note 17) 44,782 72,141 Note A During the financial year, the Group acquired property, plant and equipment with an aggregate cost of approximately RMB 25,728,000 of which approximately RMB 6,060,000 remained unpaid as at 31 March Cash payments of RMB 19,668,000 were made to purchase these property, plant and equipment. The accompanying notes are an integral part of the financial statements.

48 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. GENERAL INFORMATION CMZ Holdings Ltd. (the Company ) is a limited liability company domiciled and incorporated in Singapore. The address of the Company s registered office is 112 Robinson Road, #12-04, Singapore The address of its principal place of business is Yixing Economic Development Zone, Yixing City, Jiangsu Province, People s Republic of China ( PRC ). The Company s immediate and ultimate holding company is Allied Sincere Limited, a company incorporated in the British Virgin Islands. The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are disclosed in Note 9 to the financial statements. The financial statements for the year ended 31 March 2011 were authorised for issue in accordance with a resolution of the Board of Directors on 8 July SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below and are drawn up in accordance with the Singapore Financial Reporting Standards ( FRS ). The preparation of the financial statements in conformity with FRS requires management to exercise its judgement, in the process of applying the Group s accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management s best knowledge of current events and actions, actual results may ultimately differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements and areas involving a higher degree of judgement or complexity, are disclosed in this Note. Adoption of new and revised standards On 1 April 2010, the Group adopted the new or amended FRS and Interpretations of FRS ( INT FRS ) that are mandatory for application from that date. Changes to the Group s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group s and Company s accounting policies and had no material effect on the amounts reported for the current or prior financial years, except as disclosed below:

49 47 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Adoption of new and revised standards (a) FRS 3 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009) The revised FRS 3 introduces a number of changes to the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. Changes in significant accounting policies resulting from the adoption of the revised FRS 3 include: Transaction costs would no longer be capitalized as part of the cost of acquisition but will be expensed immediately; Consideration contingent on future events are recognised at fair value on the acquisition date and any changes in the amount of consideration to be paid will no longer be adjusted against goodwill but recognised in profit or loss; The Group elects for each acquisition of a business, to measure non-controlling interest at fair value, or at the non-controlling interest s proportionate share of the acquiree s identifiable net assets, and this impacts the amount of goodwill; and When a business is acquired in stages, the previously held equity interests in the acquiree is remeasured to fair value at the acquisition date with any corresponding gain or loss recognised in profit or loss, and this impacts the amount of goodwill recognised. According to its transitional provisions, the revised FRS 3 has been applied prospectively, and does not impact on the Group s financial statements in respect of assets and liabilities that arose from business combinations whose acquisition dates are before 1 April The changes will affect future business combinations. (b) FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009) Changes in significant accounting policies resulting from the adoption of the revised FRS 27 include: A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss recognised in profit or loss; Losses incurred by a subsidiary are allocated to the non-controlling interest even if the losses exceed the non-controlling interest in the subsidiary s equity; and When control over a subsidiary is lost, any interest retained is measured at fair value with the corresponding gain or loss recognised in profit or loss. According to its transitional provisions, the revised FRS 27 has been applied prospectively, and does not impact the Group s financial statements in respect of disposal of subsidiaries before 1 April 2010.

50 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Adoption of new and revised standards (c) Amendment to FRS 7 Cash Flow Statements (effective for annual periods beginning on or after 1 January 2010) Under the amendment, only expenditures that result in a recognised asset in the balance sheet can be classified as investing activities in the statement of cash flows. Previously, such expenditure could be classified as investing activities in the statement of cash flows. This change has been applied retrospectively. It had no material effect on the amounts presented in the statement of cash flows for the current or prior year. 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 Amendment to FRS 32 Financial Instruments: Presentation Classification of Rights Issues 1 February 2010 INT FRS 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 Revised FRS 24 Related Party Disclosures 1 January 2011 Amendments to INT FRS 14 Prepayments of a Minimum Funding Requirement 1 January 2011 Except for the revised FRS 24, the directors expect that the adoption of the other 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 revised FRS 24 is described below. Revised FRS 24 Related Party Disclosures The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that person s family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the definition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in 2012.

51 49 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Group accounting Subsidiaries (i) Consolidation Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. (ii) Acquisition of businesses The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest s proportionate share of the acquiree s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

52 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Group accounting Subsidiaries (iii) Disposals of subsidiaries or businesses The assets and liabilities of the subsidiary, including any goodwill, are derecognised when a change in the Company s ownership interest in a subsidiary results in a loss of control over the subsidiary. Amounts recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard. Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained investment at the date when control is lost and its fair value is recognised in profit or loss. Currency translation Functional and presentation currency The individual financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates ( functional currency ). The consolidated financial statements are presented in Chinese Renminbi ( RMB ), which is the functional currency of the Company. 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 balance sheet date 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.

53 51 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Currency translation Translation of the Group s financial statements The assets and liabilities of foreign operations are translated into Chinese Renminbi 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 transactions. The exchange differences arising on the translation are reconciled 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 the 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 non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. The Group has elected to recycle the accumulated exchange differences in the separate component of other comprehensive income that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation. 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 directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment and the accounting policy for borrowing costs is set out in this Note. The cost of an item of property, plant and equipment is recognised as an asset if, and only if it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment loss. Construction in progress includes all cost of construction and other direct costs. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group s accounting policy. Construction in progress is reclassified to the appropriate category of property, plant and equipment when complete and ready to use.

54 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Property, plant and equipment Construction in progress is not depreciated. All other items of property, plant and equipment are depreciated using the straight-line method to write-off the cost of the assets less estimated residual value over their estimated useful lives. The estimated useful lives and residual values have been taken as follows: - Estimated useful lives (Years) Estimated residual value as a percentage of cost Leasehold buildings % Plant and machinery % Office equipment % Motor vehicles % Fully depreciated assets are retained in the financial statements until they are no longer in use. The residual value, estimated useful life and depreciation method are reviewed periodically to ensure that the amount, method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss within other income (expenses) and the revaluation reserve related to those asset, if any, is transferred directly to retained earnings. Land use rights Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised on a straight-line basis over the lease term of 50 years. Subsidiaries Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company s balance sheet. On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

55 53 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES 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 an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is calculated as the higher of the asset s value in use and the asset s or cashgenerating unit s fair value less costs to sell and is determined for an individual asset, unless the asset does not generate cash inflows that are largely dependent on 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, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators. Impairment losses of continuing operations are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. For assets excluding goodwill, 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 assets 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 recoverable amount of an asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. This 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 and loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Financial assets Initial recognition and measurement Financial assets are recognised on the balance sheet 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. Financial assets are initially recognised at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

56 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Financial assets Subsequent measurement The Group classifies its investments in financial assets in the following categories: loans and receivables and held-to-maturity investments. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except those maturing more than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are presented as trade and other receivables and cash and bank balances on the balance sheet. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. (ii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except those maturing within 12 months after the balance sheet date which are presented as current assets. The Group s held-to-maturity investments include investment in unit trust. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Derecognition Financial assets are derecognised when the contractual rights to the cash flows from the financial assets have expired or have been transferred. 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 had been recognised 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 basis where the purchase or sale of financial assets are under a contract whose terms require delivery of the assets within the timeframe established by the market concerned.

57 55 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Impairment of financial assets The Group assess as at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. (i) 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. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and 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. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the 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. 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. (ii) Financial assets carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at 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 current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

58 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Inventories Inventories are stated at the lower of cost and net realisable value. Raw materials comprise purchase costs accounted for on a weighted average basis or first-in first-out basis. Work-in-progress and finished goods comprise cost of direct materials, direct labour and an attributable proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to be incurred for selling and distribution. Related parties A party is considered to be related to the Group if: (a) (b) (c) (d) (e) (f) the party, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Group; or has an interest in the Group that gives it significant influence over the Group; or has joint control over the Group; the party is an associate; a jointly-controlled entity; the party is a member of the key management personnel of the Group or its parent; the party is a close member of the family of any individual referred to in (a) and (c); the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to (c) or (d); or the party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group. Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand, deposits with financial institutions, and short term, highly liquid investments readily convertible to known amounts of cash and subjected to an insignificant risk of changes in value. Financial liabilities Initial recognition and measurement Financial liabilities within the scope of FRS 39 are recognised on the balance sheet 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. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs.

59 57 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Financial liabilities Subsequent measurement Subsequent to initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when liabilities are derecognised, and through the amortisation process. Derecognition A financial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled or expired. 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 the profit or loss. Provisions A provision is recognised when there is a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed regularly 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. Where the effect of the time value of money is material, the provision is 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. Share capital and treasury shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital. When ordinary shares are reacquired ( treasury shares ), the amount of consideration paid including any directly attributable incremental costs is recognised directly in equity, until they are cancelled, sold or reissued. When treasury shares are subsequently cancelled, the cost of the treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the revenue reserve of the Company, if the shares are purchased out of earnings of the Company. Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders.

60 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES 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. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates and sales 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. The following specific recognition criteria must also be met before revenue is recognised: Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed. 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. Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the effective interest rates applicable. Government grants Government grant are recognised at their fair value where there is reasonable assurance that the grant will be received and all terms and conditions relating to the grants have been complied with. Where the grant relates to income, the government grant shall be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income may be presented as a credit in profit or loss, either separately or under a general heading such as Other income. Alternatively, they are deducted in reporting the related expenses. Operating lease Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the consolidated statement of comprehensive income on a straight-line basis over the lease term. Employees benefits (i) Retirement benefits The Group participates in the national schemes as defined by the laws of the countries in which it has operations. Singapore The Company makes contribution to the Central Provident Fund (CPF) Scheme in Singapore, a defined contribution pension scheme.

61 59 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Employees benefits (i) Retirement benefits PRC The subsidiary, CMZ Zipper (Wuxi) Co., Ltd. incorporated and operating in the PRC, is required to provide certain retirement plan contribution to their employees under existing PRC regulations. Contributions are provided at rates stipulated by the PRC regulations and are managed by government agencies, which are responsible for administering these amounts for the subsidiary s employees. Hong Kong The subsidiary, CMZ Zipper (Hong Kong) Co., Limited incorporated and operating in Hong Kong, is required to provide certain retirement plan contribution to their employees under the Mandatory Provident Fund Ordinance ( MPF Ordinance ) in Hong Kong. Contributions are provided at rates stipulated under the MPF Ordinance. Obligations for contributions to defined contribution retirement plans are recognised as an expense in the period in which the related service is performed. (ii) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance sheet date. Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been substantially enacted by the balance sheet date 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. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

62 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Income tax Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. Deferred tax assets or liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. The Group s sales of goods in the PRC are subjected to VAT at the applicable tax rate of 17% for PRC domestic sales. Input tax on purchases can be deducted from output VAT. The net amount of VAT recoverable from, or payable to, the tax authority is included as part of Trade receivables or Trade payables in the balance sheet. The Group s export sales are not subject to VAT. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments. The management does not allocate resources and assess performance by operating segment as the Group s major business comprises of the manufacturing and sale of zippers and sewing threads is attributable to a single geographical region, which is the PRC. Accordingly, no separate analysis of segment information is presented. Critical accounting estimates and assumptions Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions 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.

63 61 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 2. SIGNIFICANT ACCOUNTING POLICIES Critical accounting estimates and assumptions (a) Depreciation of plant and machinery The cost of plant and machinery used for the manufacture of zippers is depreciated on a straight-line basis over the estimated useful lives of the assets. Management estimates the useful lives of the production lines to be 10 years. The net carrying amount of the Group s plant and machinery as at 31 March 2011 is approximately RMB38,206,000 (2010: RMB31,440,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of these plant and machinery. Therefore, future depreciation charges could be revised. (b) Depreciation of leasehold buildings The cost of construction of buildings is depreciated on a straight-line basis over the estimated useful life of 20 years. The net carrying amount of the Group s leasehold buildings as at 31 March 2011 is approximately RMB48,076,000 (2010: RMB38,941,000). Changes in the physical condition of the buildings could impact the economic useful life and residual value of the asset. As at 31 March 2011, there are no indications that the remaining economic useful life of these leasehold buildings is significantly lower than the remaining useful life. (c) Net realisable value of inventories Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitors actions in response to severe industry cycles. Management reassesses the estimations at end of each financial year. The carrying amount of the Group s inventories is disclosed in Note 13. (d) Impairment of trade and other receivables Impairment of trade and other receivables are established when there is objective evidence that the Group will not be able to collect all amounts due according to original terms of receivables. An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior periods may no longer exist or may have decreased. Where the actual results differ from the amounts that were initially assessed, such differences will result in material adjustment to the carrying amounts within the next financial year. The carrying amount of the Group s trade receivables and other receivables are disclosed in Note 14 and Note 15 respectively.

64 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 3. SHARE CAPITAL Group and Company Number of ordinary shares RMB 000 RMB 000 Issued and paid up: At the beginning of the year 304,652, ,652, , ,904 Capital reduction exercise (Note 1) (44,847) At the end of the year 304,652, ,652,000 80, ,904 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All issued shares are fully paid and there is no par value for these ordinary shares. Note 1 On 22 February 2010, the Company announced a capital reduction exercise pursuant to the Singapore Companies Act, which was approved by the High Court on 11 May In connection with the capital reduction exercise, the Company made a cash distribution of approximately S$8.9 million (RMB44.8 million), equivalent to S$0.03 per paid-up ordinary share to the shareholders of the Company. Upon payment of the cash distribution on the payment date on 14 June 2010, the share capital of the Company was reduced by approximately S$8.9 million (RMB44.8 million). There are no changes in the total number of issued shares of the Company after the payment of cash distribution. 4. TREASURY SHARES Number of shares Group and Company 2011 Number of RMB 000 shares 2010 RMB 000 At the beginning and end of the year 6,816,000 (4,863) 6,816,000 (4,863) Treasury shares relate to ordinary shares held by the Company. The Company did not acquire any shares in the Company in 2011 and 2010 through purchases on the Singapore Exchange.

65 63 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 5. STATUTORY RESERVES Statutory reserves funds comprise: Percentage of contribution from profit after tax Group RMB 000 RMB 000 (a) Statutory reserve fund 10% 21,712 16,633 (b) Staff welfare reserve 5% 10,858 8,318 32,570 24,951 The non-distributable reserves represent amounts set aside in compliance with the local laws in PRC where the subsidiary operates. (a) In accordance with the Law of the PRC on Enterprise Operated Exclusively with Foreign Capital and the subsidiary s Articles of Association, the subsidiary, CMZ Zipper (Wuxi) Co., Ltd., a wholly foreign-owned enterprise must make appropriation to a statutory reserve fund ( SRF ). At least 10% of the statutory after tax profits as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF. If the cumulative total of the SRF reaches 50% of an enterprise s registered capital, the enterprise will not be required to make any further appropriation. (b) The PRC subsidiary, CMZ Zipper (Wuxi) Co., Ltd., has appropriated 5% of its profit after tax to the statutory staff welfare reserve fund on a voluntary basis as allowed by its respective Articles of Association. The statutory staff welfare reserve fund would be used for the collective welfare of the employees. The total statutory reserves may be used to offset accumulated losses or increase the registered capital of the company, subjected to approval from the relevant PRC authorities and is not available for dividend distribution to shareholders. The PRC enterprise is prohibited from distributing dividends unless the losses (if any) of previous years have been made good. 6. MERGER DEFICIT The merger deficit arises from the difference between the purchase consideration and the carrying value of the assets acquired under the pooling-of-interests method of consolidation. 7. TRANSLATION DEFICIT Company RMB 000 RMB 000 At the beginning of the year (1,932) (6,710) Net currency translation difference of financial statements of foreign subsidiaries 1,658 4,778 At the end of the year (274) (1,932)

66 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 8. REVENUE RESERVE / (ACCUMULATED LOSSES) Company RMB 000 RMB 000 At the beginning of the year (1,682) 15,319 Dividends (Note 29) (14,108) Loss for the year (5,576) (2,893) At the end of the year (7,258) (1,682) 9. SUBSIDIARIES Company RMB 000 RMB 000 Unquoted equity interest, at cost At beginning and end of the year 65,066 65,066 Details of the subsidiaries are as follows: Name of subsidiaries Place of incorporation/ business Principal activities Effective equity held by the Group Cost of investment % % RMB 000 RMB 000 CMZ Zipper (Wuxi) PRC Production and sale of Co., Ltd. (1) zippers and sewing thread ,057 65,057 CMZ Zipper (Hong Kong) Co., Limited. (2) Hong Kong Marketing and sale of zippers and garment accessories ,066 65,066 (1) Audited by Jiangsu Tianhua Dapeng Certified Public Accountants Co., Ltd., a firm of Certified Public Accountants in the PRC for local statutory reporting and by Crowe Horwath First Trust LLP for consolidation purposes. (2) Audited by Chan Yip Keung & Co. Certified Public Accountants, a firm of Certified Public Accountants in Hong Kong for local statutory reporting and reviewed by Crowe Horwath First Trust LLP, for the financial year ended 31 March 2011 for consolidation purposes.

67 65 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 10. PROPERTY, PLANT AND EQUIPMENT Group Leasehold buildings Plant and machinery Office equipment Motor vehicles Construction in progress Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Cost As at 1 April ,308 54,321 7,259 3, ,574 Additions 4,833 4,235 1,181 2,951 13,200 Disposal (78) (154) (76) (25) (333) Written off (4) (4) Reclassification (75) 75 Transfer 738 1,114 (1,852) As at 31 March ,801 59,441 8,435 3,581 1, ,437 As at 1 April ,801 59,441 8,435 3,581 1, ,437 Additions 46 1, ,507 25,728 Disposal (805) (69) (557) (1,431) Written off (441) (441) Transfer 11,230 12,015 (23,245) As at 31 March ,031 70,256 9,374 3,191 2, ,293 Accumulated depreciation As at 1 April ,000 23,770 3,311 1,886 34,967 Charge for the year 1,884 4,368 1, ,076 Disposal (24) (108) (66) (23) (221) Written off (1) (1) Reclassification (29) 29 As at 31 March ,860 28,001 4,511 2,449 42,821 As at 1 April ,860 28,001 4,511 2,449 42,821 Charge for the year 2,095 4,644 1, ,397 Disposal (273) (7) (389) (669) Written off (322) (322) As at 31 March ,955 32,050 5,803 2,419 50,227 Net carrying value As at 31 March ,076 38,206 3, ,441 93,066 As at 31 March 2010 and 1 April ,941 31,440 3,924 1,132 1,179 76,616 As at 1 April ,308 30,551 3,948 1, ,607

68 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 10. PROPERTY, PLANT AND EQUIPMENT Company Office equipment RMB 000 Cost As at 1 April 2009, 1 April 2010 and 31 March Accumulated depreciation As at 1 April Charge for the year 14 As at 31 March As at 1 April Charge for the year 6 As at 31 March Net carrying value As at 31 March 2011 As at 31 March 2010 and 1 April As at 1 April

69 67 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 11. LAND USE RIGHTS Group RMB 000 Cost As at 1 April ,215 Additions 113 As at 31 March ,328 As at 1 April 2010 and 31 March ,328 Accumulated amortisation As at 1 April 2009 (1,011) Amortisation for the year (216) As at 31 March 2010 (1,227) As at 1 April 2010 (1,227) Amortisation for the year (235) As at 31 March 2011 (1,462) Net carrying value As at 31 March ,866 As at 31 March 2010 and 1 April ,101 As at 1 April , HELD-TO-MATURITY FINANCIAL ASSET Group RMB 000 RMB 000 Unquoted security Unit trust with fixed interest of 11.5% per annum and maturity date of 31 January 2011 PRC Current portion 10,037

70 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 12. HELD-TO-MATURITY FINANCIAL ASSET The fair value of the unit trust at the balance sheet date is as follow: Group RMB 000 RMB 000 Unit trust with fixed interest of 11.5% per annum and maturity date of 31 January ,917 As at 31 March 2010, the fair value is based on discounted cash flows using market interest rate of 5.4% for an equivalent unit trust with fixed interest of 11.5% per annum and maturity date on 31 January Upon maturity during the financial year, held-to-maturity financial asset has been reclassified to other receivables, deposits and prepayments. Subsequent to year-end, the Group received the total cost of investment of the heldto-maturity financial asset (principal plus interests). 13. INVENTORIES Group RMB 000 RMB 000 Raw materials 17,834 11,959 Work-in-progress 7,864 6,469 Finished goods 9,822 1,329 35,520 19,757 The cost of inventories recognised as expenses and included in cost of sales amounted to RMB142,379,246 (2010: RMB109,276,427). The movement in allowance for inventory obsolescence is as follows: Group RMB 000 RMB 000 Balance at the beginning and end of the year

71 69 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 14. TRADE RECEIVABLES Group RMB 000 RMB 000 Trade receivables 51,474 42,330 Allowance for impairment of trade receivables (Note 32(c)) (994) (827) 50,480 41,503 Notes receivables 4,591 2,045 Value added tax receivable ,785 43, OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Company RMB 000 RMB 000 RMB 000 RMB 000 Other receivables (Note A) 14,611 3, Allowance for impairment of other receivables (65) (261) 14,546 2, Advances to suppliers 2,870 1,359 Prepayments Advances to employees Deposits ,311 5, Note A Other receivables include held-to-maturity financial asset, amounting to approximately RMB 13,450,000 (Note 12). 16. DUE FROM SUBSIDIARIES/DUE TO ULTIMATE HOLDING COMPANY/DUE TO DIRECTORS (NON-TRADE) These non-trade balances are unsecured, interest-free and repayable on demand.

72 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 17. CASH AND BANK BALANCES Group Company RMB 000 RMB 000 RMB 000 RMB 000 Cash and bank balances 13,782 20, ,532 Fixed deposits 31,000 51,477 41,477 44,782 72, ,009 The fixed deposits have maturity periods ranging from 90 days to 180 days (2010: 90 days to 180 days) and yield interest income at effective rates ranging from 1.91% to 2.20% (2010: 0.52% to 2.25%) per annum. Fixed deposits with maturity dates more than 3 months can be withdrawn anytime before the maturity dates without penalty. However, any interest receivable will be forfeited upon pre-mature withdrawal. As the principal value of the deposits is readily convertible to cash, they form part of the cash and bank balances in the consolidated statement of cash flows. 18. OTHER PAYABLES AND ACCRUALS Group Company RMB 000 RMB 000 RMB 000 RMB 000 Accrued operating expenses 1,991 1,451 1,686 1,005 Advances from customers 3,306 1,493 Accrued payroll 4,281 2,846 Other payables 7,516 2, ,094 8,339 1,686 1, REVENUE Group RMB 000 RMB 000 Zippers 248, ,459 Sewing threads 5,121 4, , ,543

73 71 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 20. OTHER OPERATING INCOME Group RMB 000 RMB 000 Sale of semi-finished goods 1, Gain on disposal of property, plant and equipment 16 Government grants 70 2,203 Write back of allowance for impairment of trade receivables 344 Write back of allowance for impairment of other receivables 196 Others ,722 3,544 For the financial year ended 31 March 2010, government grants relate mainly to a one-off cash grants received from the local government authority in the PRC, which are mainly grants awarded to public listed entities to support international business development. There are no unfulfilled conditions or contingencies attached to these grants. 21. OTHER OPERATING EXPENSES Group RMB 000 RMB 000 Allowance for impairment of trade receivables 167 Allowance for impairment of other receivables 261 Inventories written off 29 Donations Loss on disposal of property, plant and equipment 83 Property, plant and equipment written off

74 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 22. NET FINANCE INCOME Group RMB 000 RMB 000 Finance income Bank interest income Interest income held-to-maturity financial asset 938 1,163 1,429 1,691 Finance expenses Loss on foreign exchange, net (570) (899) Bank charges (71) (65) (641) (964) Net finance income PROFIT BEFORE TAX This is determined after charging / (crediting) the following: Group RMB 000 RMB 000 Amortisation of land use rights Allowance (Write back) for impairment for trade receivables 167 (344) (Write back) Allowance for impairment of other receivables (196) 261 Inventories written off 29 Depreciation of property, plant and equipment 8,397 8,076 Directors remuneration directors of the Company 2,617 2,286 directors of subsidiaries Directors fees directors of the Company (Gain) Loss on disposal of property, plant and equipment (16) 83 Operating lease expenses Personnel expenses (Note 24) 46,816 37,737 Property, plant and equipment written off Research and development expenses 5,830 2,559

75 73 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 24. PERSONNEL EXPENSES Group RMB 000 RMB 000 Wages, salaries and bonuses* 40,480 33,696 Pension contributions 3,530 2,820 Other personnel expenses 2,806 1,221 46,816 37,737 * Include directors remuneration as disclosed in Note INCOME TAX Major components of income tax expense for the financial years ended 31 March 2011 and 31 March 2010 were: Group RMB 000 RMB 000 Current tax current year 7,351 6,381 under-provision in prior year ,493 6,394 The reconciliation of the tax expense and the product of accounting profit multiplied by the applicable rate is as follows: Group RMB 000 RMB 000 Profit before tax 52,758 44,584 Tax at PRC preferential rate of 25% (2010: 25%) 13,190 11,146 Tax effect of expenses that are non-deductible in determining taxable profit Tax effect of differences in tax rates 1,316 1,243 Tax effect of income exempted from tax (7,185) (6,380) Under-provision in prior year ,493 6,394

76 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 25. INCOME TAX The Company The Company has no taxable income for the financial year ended 31 March The statutory income tax rate for the period ended 31 March 2011 applicable to the Company is 17% (2010: 17%). CMZ Zipper (Wuxi) Co., Ltd. The subsidiary is entitled to an exemption from Enterprise Income Tax ( EIT ) for the first two profitable years of operation and thereafter a 50% reduction in EIT for the following three financial years. The first profitable year of the subsidiary is the financial year ended 31 December In accordance with the revised Income Tax Law of the PRC effective on 1 January 2008, the statutory tax rate for PRC companies is levied at 25%. Accordingly, the subsidiary is entitled to a concessionary income tax rate of 12.5%, which represents a 50% relief from the applicable rate of 25% with effect from 1 January 2008 to 31 December Under the New Corporate Income Tax Law ( CIT Law ), PRC companies which are qualified as High / New Technology Enterprises ( HNTE ) from 1 January 2008 are entitled to a concessionary tax rate of 15% which represents a 10% relief from the applicable tax rate of 25%. On 22 December 2009, the subsidiary was qualified as HNTE and accordingly the subsidiary is taxed at 15% for calendar year ending CMZ Zipper (Hong Kong) Co., Limited The subsidiary has no taxable income during the period from the year ended 31 March The statutory income tax rate for the period ended 31 March 2011 applicable to the subsidiary is 16.5% (2010: 16.5%). No deferred tax has been provided, as the Group did not have any significant temporary differences which gave rise to a deferred tax asset or liability at the balance sheet date. The aggregate amount of temporary differences associated with undistributed earnings of the PRC subsidiary for which deferred tax liabilities have not been recognised is approximately RMB 5,687,000 (2010: RMB 3,528,000). No liability has been recognised in respect of temporary differences associated with undistributed earnings of the PRC subsidiary because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

77 75 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 26. EARNINGS PER SHARE The calculations of earnings per share are based on the profits and numbers of shares shown below. Group RMB 000 RMB 000 Profit attributable to shareholders 45,265 38,190 Number of shares RMB 000 RMB 000 Weighted average number of shares 297,836, ,836,000 Basic earnings per share amounts are calculated by dividing net profit for the year attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is the same as the basic earnings per share as no share options, warrants or other compound financial instruments with dilutive effect were granted during the financial year or outstanding at the end of the financial year. 27. DIRECTORS REMUNERATION Number of directors of the Company in remuneration bands is disclosed below: Company S$250,000 to S$499, Below S$250,

78 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 28. RELATED PARTY INFORMATION Some of the arrangements with related parties (as defined in Note 2 above) and the effects of these bases determined between the parties are reflected elsewhere in this report. The balances due from related parties are unsecured, interest-free and repayable on demand. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related companies are disclosed below. Group Company RMB 000 RMB 000 RMB 000 RMB 000 Purchases of property, plant and equipment from directors 4,833 Payments to key management personnel 4,657 4,452 3,615 3,490 The remuneration of directors and key management is determined by the remuneration committee having regard to the performance of individuals and market trends. 29. DIVIDENDS Company RMB 000 RMB 000 Final tax exempt (one-tier) dividend paid in respect of the financial year ended 31 March 2009 of S$0.01 (approximately RMB 4.74 cents) per share 14,108 14,108

79 77 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 30. COMMITMENTS (a) Non-cancellable operating lease commitments As at 31 March 2011, the Group leases various sales offices under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. Lease terms do not contain restrictions on the Group s activities concerning dividends, additional debt or further leasing. The future aggregate minimum lease payable under non-cancellable operating leases contracted for as at 31 March 2011 but not recognised as liabilities are as follows: Group Company RMB 000 RMB 000 RMB 000 RMB 000 Future minimum lease payments not later than 1 year year through 5 years (b) Capital expenditure commitments Group RMB 000 RMB 000 Capital expenditure commitments in respect of contracts placed 2,899 (c) Other commitment Group RMB 000 RMB 000 Donation commitment 2,250 2,400 On 19 January 2007, the subsidiary, CMZ Zipper (Wuxi) Co., Ltd. committed to donate RMB 3 million to a charitable organisation. This amount is payable over a period of 20 years, in equal installments of RMB150,000 per annum commencing from January 2007.

80 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 31. SEGMENT INFORMATION No separate analysis of operating segment is presented as the management does not allocate resources and assess performance by operating segments. The Group s major business comprise of the manufacture and sale of zipper and sewing thread and the Group s revenue, expenses, results, assets, liabilities and capital expenditure are principally attributable to a single geographical region, which is the PRC. 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies The main risks arising from the Group s financial instruments are foreign exchange risk, liquidity risk and credit 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 policies. It is the Group s policy not to trade in derivative contracts. (a) Market risk (i) Foreign exchange risk As the Group s transactions are primarily denominated in RMB, it is subject to minimal foreign exchange exposure. The Group has cash and bank balances denominated in Singapore dollars, United States dollars and Hong Kong dollars. Accordingly, the Group s balance sheets can be affected by movements in these exchange rates.

81 79 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Currently, the PRC government imposes control over foreign currencies. RMB, the official currency in the PRC, is not freely convertible. Enterprises operating in the PRC can enter into exchange transactions through the People s Bank of China or other authorised financial institutions. The Group has not entered into any derivative instruments for hedging or trading purposes. Group As at 31 March 2011 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Financial assets Trade receivables ,207 55,785 Other receivables and deposits ,102 15,110 Cash and bank balances ,546 44, , ,677 Financial liabilities Trade payables 26,654 26,654 Other payables and accruals 1, ,083 13,788 Other financial liabilities 1,714 1,714 3, ,737 42,156 Net financial (liabilities) assets (3,336) ,118 73,521 Less: Net financial liabilities (assets) denominated in the respective entities functional currencies 3,336 (116) (76,118) (72,898) Foreign currency exposure

82 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Group As at 31 March 2010 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Financial assets Trade receivables 1,602 42,234 43,836 Other receivables and deposits ,444 3,476 Cash and bank balances 47, ,937 72,141 Held-to-maturity financial asset 10,037 10,037 47,028 1, , ,490 Financial liabilities Trade payables 18,766 18,766 Other payables and accruals 1, ,778 6,846 Other financial liabilities , ,544 26,257 Net financial assets 45,333 1, , ,233 Less: Net financial assets denominated in the respective entities functional currencies (45,333) (151) (56,108) (101,592) Foreign currency exposure 1,641 1,641

83 81 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Company As at 31 March 2011 Singapore Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 Financial assets Other receivables 5 5 Cash and bank balances Other financial assets 5,931 5, ,931 5,996 Financial liabilities Other payables and accruals 1,686 1,686 Other financial liabilities 1,714 1,714 3,400 3,400 Net financial (liabilities) assets (3,335) 5,931 2,596 Less: Net financial assets denominated in the respective entities functional currencies 3,335 3,335 Foreign currency exposure 5,931 5,931

84 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Company As at 31 March 2010 Singapore Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 Financial assets Other receivables Cash and bank balances 47,009 47,009 Other financial assets 6,005 6,005 47,028 6,005 53,033 Financial liabilities Other payables and accruals 1,050 1,050 Other financial liabilities ,695 1,695 Net financial assets 45,333 6,005 51,338 Less: Net financial assets denominated in the respective entities functional currencies (45,333) (45,333) Foreign currency exposure 6,005 6,005

85 83 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Foreign exchange risk sensitivity The following table details the sensitivity to a 10% increase and decrease in the Chinese Renminbi against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. If the Chinese Renminbi strengthens by 10% against the relevant foreign currency, profit or loss will increase (decrease) by: Group 2010 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Profit or loss (62) (62) Company Profit or loss Group 2009 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Profit or loss (164) (164) Company Profit or loss

86 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (a) Market risk (i) Foreign exchange risk Foreign exchange risk sensitivity If the Chinese Renminbi weakens by 10% against the relevant foreign currency, profit or loss will increase (decrease) by: Group 2010 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Profit or loss Company Profit or loss (591) (591) Group 2009 Singapore Dollars United States Dollars Hong Kong Dollars Chinese Renminbi Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Profit or loss Company Profit or loss (601) (601)

87 85 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (b) Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and bank balances deemed adequate by management to finance the Group s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations. The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can be required to pay. Group On demand or within 1 year RMB 000 As at 31 March 2011 Trade payables 26,654 Other payables and accruals 13,788 Other financial liabilities 1,714 42,156 As at 31 March 2010 Trade payables 18,766 Other payables and accruals 6,846 Other financial liabilities ,257 Company On demand or within 1 year RMB 000 As at 31 March 2011 Other payables and accruals 1,686 Other financial liabilities 1,714 3,400 As at 31 March 2010 Other payables and accruals 1,050 Other financial liabilities 645 1,695

88 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (c) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining sufficient security where appropriate to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties. Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Board of Directors based on ongoing credit evaluation. The counterparty s payment profile and credit exposure are continuously monitored at the entity level by the respective management and at the Group level by the Board of Directors. As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The carrying amounts of cash and bank balances, trade and other receivables represent the Group s maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk. The Group s and Company s major classes of financial assets are cash and bank balances, trade receivables and amounts due from subsidiaries. Cash and bank balances are placed with reputable local financial institutions. Therefore, credit risk arises mainly from the inability of its customers to make payments when due. The amounts presented in the balance sheet are net of allowances for impairment of receivables, estimated by management based on prior experience and the current economic environment. Concentrations of credit risk with respect to trade receivables are limited due to the Group s large number of customers. Management believes that there is no anticipated additional credit risk beyond the amount of allowance for impairment made in the Group s trade receivables. The trade receivables arise mainly from companies incorporated in the People s Republic of China.

89 87 outdoor I get zipped NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (c) Credit risk The age analysis of trade receivables is as follows: Group RMB 000 RMB 000 Not past due and not impaired 46,465 30,255 Past due but not impaired Past due 0 to 3 months 3,346 8,338 Past due 3 to 6 months 5,655 4,664 Past due over 6 months ,320 13,581 Impaired trade receivables Less: Allowance for impairment loss (994) (827) 55,785 43,836 The movement in allowance for impairment loss is as follows: Group RMB 000 RMB 000 Balance at beginning of the year 827 1,171 Allowance (Write back) made during the year 167 (344) Balance at end of the year The Group has provided fully for all receivables over 360 days because historical experience is such that receivables that are past due beyond 360 days are generally not recoverable. Trade receivables less than 360 days are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

90 annual report NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 Amounts in thousands of Chinese Renminbi ( RMB ), unless otherwise stated 32. FINANCIAL INSTRUMENTS Financial risk management objectives and policies (d) Fair values of financial instruments (i) Fair values of financial instruments by classes that are carried at fair value and whose carrying amounts are reasonable approximation of fair value The carrying amounts of cash and bank balances, trade and other receivables (including amounts due from subsidiaries) and trade and other payables (including amounts due to directors and due to ultimate holding company) approximate their respective fair values due to the relatively short-term maturity of these financial instruments. (ii) Fair values of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value Group RMB 000 RMB 000 RMB 000 RMB 000 Carrying value Fair value Carrying value Fair value Held-to-maturity financial asset (Note 12) 10,037 12,917 (e) Capital risk management policies and objectives The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and bank balances and equity attributable to equity holders of the parent, comprising issued capital and reserves as disclosed in Notes 3 to 8. The Board of Directors reviews the capital structure on an annual basis. As part of this review, the Board of Directors considers the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debts.

91 89 outdoor I get zipped STATISTIC OF SHAREHOLDINGS 股权持有统计资料 SHAREHODERS INFORMATION AS AT 22 JUNE 2011 截止 2011 年 6 月 22 日股东资料 Class of shares : Ordinary share 股票类级 : 普通股 Voting rights excluding treasury shares : One vote per share 投票权 ( 不包括已回购的股票 ) : 每股一投票权 No. of issued shares 已发行股票总数 : 304,652,000 No. of issued shares excluding treasury shares : 297,836,000 已发行股票总数 ( 不包括已回购的股票 ) No. / Percentage of treasury shares : 6,816,000 (2.28%) 已回购的股票总数 ( 百分比 ) STATISTIC OF SHAREHOLDINGS AS AT 22 JUNE 2011 截止 2011 年 6 月 22 日股权持有统计资料 Size of Shareholdings 股权比例分类 Number of Shareholders 股东人数 % of Shareholders Number of Shares 持有股票数量 % of Shareholdings ,000 10, ,451, ,001 1,000, ,375, ,000,001 and above ,009, Grand Total ,836,

92 annual report STATISTIC OF SHAREHOLDINGS 股权持有统计资料 TWENTY LARGEST SHAREHOLDERS AS AT 22 JUNE 2011 截止 2011 年 6 月 22 日持股量最大的首二十名股东 No. 秩序 Name of Shareholders 股东名字 Number of Shares 持有股票数 % of Shareholdings 1. Allied Sincere Limited 193,538, DBS Vickers Securities (Singapore) Pte Ltd 29,276, DBS Nominees Pte Ltd 28,905, Wan Qingtao 9,030, OCBC Securities Private Ltd 3,630, Shi Shengxi 3,179, CIMB Securities (Singapore) Pte Ltd 2,626, Shu Lifen 2,143, Yang Pei Cheng 2,068, Liu Yunhua 1,428, Phillip Securities Pte Ltd 1,184, Tran Chanh Lien Janine 900, Altrade Investments Pte Ltd 800, Chen Ye 685, Kim Eng Securities Pte. Ltd. 626, Ong Tiak Beng 538, Chu Wenhua 500, Tao Ran 435, Lau Eng Seng 400, Raffles Nominees (Pte) Ltd 400, TOTAL 282,293, Note: % Based on 297,836,000 shares (excluding shares held as treasury shares) as at 22 June 2011 * Treasury Shares as at 22 June ,816,000 shares

93 91 outdoor I get zipped STATISTIC OF SHAREHOLDINGS 股权持有统计资料 SUBSTANTIAL SHAREHOLDERS AS AT 22 JUNE 2011 截止 2011 年 6 月 22 日大股东 (As recorded in the Register of Substantial Shareholders) ( 根据大股东名册记录 ) Direct Interest 直接利益 % Deemed Interest 间接利益 % Allied Sincere Limited* 193,538, Shao Kesheng* 193,538, Shao Dajun* 193,538, Shao Minwei* 193,538, Notes: * Allied Sincere Limited is a company incorporated in British Virgin Island and is owned by Shao Kesheng (61%), Shao Dajun (16%) and Shao Minwei (11%). Shao Dajun is the son-in-law of Shao Kesheng. Shao Minwei is the daughter of Shao Kesheng and the spouse of Shao Dajun. As such, Shao Kesheng, Shao Dajun and Shao Minwei are deemed to be interested in the 193,538,374 CMZ Holdings Ltd. shares held by Allied Sincere Limited. PERCENTAGE OF SHAREHOLDING IN PUBLIC S HANDS AS AT 22 JUNE 2011 截止 2011 年 6 月 22 日公众持股比例 35.02% of the Company s shares (excluding treasury shares) are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST. 公众持有的公司股份 ( 不包括已回购的股票 ) 比例是 35.02% 因此, 公司已遵守新加坡证券交易所上市手册规则第 723 条

94 annual report Notice of Annual General Meeting CMZ HOLDINGS LTD Registration No R (Incorporated in the Republic of Singapore) (the Company ) NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of CMZ Holdings Ltd. will be held at 168 Robinson Road, Capital Tower, 9th Floor, FTSE Room, Singapore on Friday, 29 July 2011 at 3.00 p.m. for the following purposes : As Ordinary Business 1. To receive and adopt the Directors Report and the Audited Accounts for the financial year ended 31 March 2011, together with the Auditors Report thereon. (Resolution 1) 2. To approve the payment of Directors fees of S$100,000 for the financial year ended 31 March (2010 : S$100,000) (Resolution 2) 3. To approve the payment of Directors fees of S$100,000 for the financial year ending 31 March 2012, to be paid quarterly in arrears. (2011 : S$100,000) (Resolution 3) (See Explanatory Note 1) 4. To re-elect the following Directors retiring pursuant to the Company s Articles of Association. (i) Mr. Lien Kait Long (retiring under Article 89). (Resolution 4) (See Explanatory Note 2) (ii) Mr. Shen Bin (retiring under Article 89). (Resolution 5) (See Explanatory Note 3) 5. To re-appoint Messrs Crowe Horwath First Trust LLP as auditors and to authorise the Directors to fix their remuneration. (Resolution 6) 6. To transact any other business that may be transacted at an Annual General Meeting.

95 93 outdoor I get zipped Notice of Annual General Meeting As Special Business To consider and, if thought fit, to pass the following resolutions as ordinary resolutions with or without modifications:- 7. Authority to allot and issue new shares That pursuant to the Company s Articles of Association and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, authority be given to the Directors of the Company to issue shares ( Shares ) whether by way of rights, bonus or otherwise, and/or 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) warrants, debentures or other instruments convertible into Shares at any time and upon such terms and conditions and to such persons as the Directors may, in their absolute discretion, deem fit provided that: (a) the aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, of which the aggregate number of Shares and convertible securities to be issued other than on a pro-rata basis to all shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the share capital of the Company; (b) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (a) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) of the Company as at the date of the passing of this Resolution, after adjusting for: (i) (ii) (iii) new shares arising from the conversion or exercise of convertible securities; new shares arising from exercising share options or vesting of Share awards outstanding or subsisting at the time this Resolution is passed; and any subsequent bonus issue, consolidation or subdivision of shares; (c) And that such authority shall, unless revoked or varied by the Company in general meeting, continue in force (i) until the conclusion of the Company s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of such convertible securities. (Resolution 7) (See Explanatory Note 4) On behalf of the Board Shao Kesheng Executive Chairman 13 July 2011

96 annual report Notice of Annual General Meeting Explanatory Notes: 1. The Ordinary Resolution 3 proposed in item 3, if passed, will authorise the Directors of the Company to pay Directors fees for the year ending 31 March 2012 to Directors quarterly in arrears. 2. Mr. Lien Kait Long is an Independent & Non-Executive Director of the Company. He serves as Chairman of Audit and member of Remuneration Committees. If re-elected, he will continue to serve as a Chairman of Audit and member of Remuneration Committees. 3. Mr. Shen Bin serves as member of Audit, Remuneration and Nominating Committees. If re-elected, he will continue to serve as a member of Audit, Remuneration and Nominating Committees. 4. The Ordinary Resolution 7 proposed in item 7, if passed, will authorise the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to allot and issue shares in the Company up to a limit not exceeding in aggregate 50% of the Company s total number of issued shares excluding treasury shares, and such limit may be increased to 100% if the Company undertakes to issue shares via a pro-rata renounceable rights issue. The total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall not exceed 20% of the Company s total number of issued shares excluding treasury shares at the time the resolution is passed, for such purposes as they consider would be in the interests of the Company. The authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company. Notes: 1. A Member of the Company entitled to attend and vote may appoint not more than two proxies to attend and vote instead of him. A proxy need not be a member and where there is more than one proxy, the proportion (expressed as a percentage of the whole) of his shareholding to be represented by each proxy must be stated. 2. If a proxy is to be appointed, the form must be deposited at the Registered Office of the Company at 112 Robinson Road, #12-04, Singapore not less than 48 hours before the Meeting.

97 Proxy Form CMZ HOLDINGS LTD. Registration No R (Incorporated in the Republic of Singapore) IMPORTANT: 1. For investors who have used their CPF moneys to buy shares in the Capital of CMZ Holdings Ltd., this report is forwarded to them at the request of their 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. I/We, NRIC/Passport No.: of being a member/members of CMZ HOLDINGS LTD. (the Company ), hereby appoint: Name Address NRIC/Passport Number Proportion of Shareholdings and/or (please delete as appropriate) or failing him/her, the Chairman of the 5th Annual General Meeting of the Company (the Meeting ) as *my/our *proxy/ proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Meeting of the Company, to be held at 168 Robinson Road, Capital Tower, 9th Floor, FTSE Room, Singapore , on Friday, 29 July 2011 at 3.00 p.m. and at any adjournment thereof. Please indicate with an X in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as set out in the Notice of the Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Meeting. No. Resolutions: For Against 1. To receive and adopt the Directors Report and the Audited Accounts for the financial year ended 31 March 2011, together with the Auditors Report thereon. 2. To approve payment of Directors fees for the year ended 31 March 2011 amounting to S$100, To approve payment of Directors fees for the year ending 31 March 2012 amounting to S$100,000, to be paid quarterly in arrears. 4. To re-elect Mr Lien Kait Long as Director (retiring under Article 89). 5. To re-elect Mr Shen Bin as Director (retiring under Article 89). 6. To re-appoint Messrs Crowe Horwath First Trust LLP as auditors and to authorise the Directors to fix their remuneration. 7. To authorise Directors to issue shares Dated this day of 2011 Signature(s) of member(s)/common Seal Total Number of Ordinary Shares Held

98 Notes: 1. A member of the Company entitled to attend and vote at the above 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 and where there is more than one proxy, the proportion of Shares to be represented by each proxy must be stated. 2. Where a member appoints two proxies, the appointment shall be invalid unless he/she specified the proportion (expressed as a percentage of the whole) of his/her shareholding to be represented by each proxy. 3. This instrument of proxy must be signed by the appointor or his/her duly authorised attorney or, if the appointor is a body corporate, signed by a duly authorised officer or its attorney or affixed with its common seal thereto. 4. A body corporate which is a member may also appoint by resolution of its directors or other governing body an authorised representative in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore to act for and on behalf of such body corporate. 5. This instrument appointing a proxy or proxies (together with the power of attorney (if any) under which it is signed or a certified copy thereof), must be deposited at the registered office of the Company at 112 Robinson Road, #12-04, Singapore not less than 48 hours before the time fixed for holding the Annual General Meeting. 6. Please insert the total number of shares held by you. If you have shares entered against your name on 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. If no number is inserted, this instrument of proxy will be deemed to relate to all the shares held by you. 7. The Company shall be entitled to reject this instrument of proxy 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 this instrument of proxy. In addition, in the case of members whose shares are deposited with The Central Depository (Pte) Limited ( CDP ), the Company may reject any instrument of proxy lodged if such member is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for the holding of the Annual General Meeting as certified by CDP to the Company.

99 2011 outdoor I get zipped CMZ HOLDINGS LTD. 112 Robinson Road, #12-04 Singapore