AMTEK ENGINEERING LTD

Transcription

1 INFORMATION MEMORANDUM DATED 10 MAY 2013 AMTEK ENGINEERING LTD (Incorporated in the Republic of Singapore on 22 October 1980) (UEN / Company Registration No K) S$500,000,000 Multicurrency Medium Term Note Programme (the Programme ) This Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Information Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of notes (the Notes ) to be issued from time to time by Amtek Engineering Ltd (the Issuer ) pursuant to the Programme may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, (iii) where the Notes are initially acquired pursuant to an offer in reliance of Section 274 or 275 of the SFA, pursuant to, and in accordance with the conditions of, Section 276 of the SFA and any other applicable provision of the SFA, or (iv) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (i) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or (in the case of such corporation) where the transfer arises from an offer referred to in Section 276(3)(i)(B) of the SFA or (in the case of such trust) where the transfer arises from an offer referred to in Section 276(4)(i)(B) of the SFA; (ii) where no consideration is or will be given for the transfer; (iii) where the transfer is by operation of law; (iv) as specified in Section 276(7) of the SFA; or (v) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. Application has been made to the Singapore Exchange Securities Trading Limited (the SGX-ST ) for permission to deal in, and for quotation of, any Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the Official List of the SGX-ST. In addition, at the relevant time of issue of the Notes which are agreed at or prior to the time of issue to be listed on the Official List of the SGX-ST, a separate application will be made to the SGX-ST for the permission to deal in, and for quotation of, such Notes on the Official List of the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List of the SGX-ST. There is no assurance that the application to the SGX-ST for permission to deal in, and for quotation of, the Notes of any Series (as defined herein) will be approved. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. The approval in-principle from, and admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Issuer, its subsidiaries, its associated companies, the Programme and/or the Notes. Unlisted Notes may also be issued under the Programme. The relevant Pricing Supplement (as defined below) in respect of any Series will specify whether or not such Notes will be listed, and if so, which exchange(s) the Notes are to be listed on. Joint Arrangers

2 TABLE OF CONTENTS PAGE NOTICE... 1 FORWARD-LOOKING STATEMENTS... 4 DOCUMENTS INCORPORATED BY REFERENCE... 5 DEFINITIONS... 6 CORPORATE INFORMATION SUMMARY OF THE PROGRAMME TERMS AND CONDITIONS OF THE NOTES RISK FACTORS THE ISSUER PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS CLEARING AND SETTLEMENT SINGAPORE TAXATION SUBSCRIPTION, PURCHASE AND DISTRIBUTION APPENDIX I GENERAL AND OTHER INFORMATION APPENDIX II AUDITED FINANCIAL STATEMENTS OF AMTEK ENGINEERING LTD AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 30 JUNE APPENDIX III AUDITED FINANCIAL STATEMENTS OF AMTEK ENGINEERING LTD AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 30 JUNE APPENDIX IV UNAUDITED RESULTS OF THE ISSUER AND ITS SUBSIDIARIES FOR THE HALF YEAR ENDED 31 DECEMBER APPENDIX V UNAUDITED RESULTS OF THE ISSUER AND ITS SUBSIDIARIES FOR THE THIRD QUARTER ENDED 31 MARCH

3 NOTICE DBS Bank Ltd. and Standard Chartered Bank (together, the Arrangers ) have been authorised by the Issuer to arrange the Programme described herein. Under the Programme, the Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time issue Notes denominated in Singapore dollars and/or any other currencies. This Information Memorandum contains information with regard to the Issuer and the Group (as defined herein) and to the Notes. The Issuer, having made all reasonable enquiries, confirms that this Information Memorandum contains all information which is material in the context of the Programme and the issue and offering of the Notes, that all the information contained herein is true and accurate in all material respects, that the opinions and intentions expressed in this Information Memorandum have been carefully considered, and that there are no other facts the omission of which in the context of the Programme and the issue and offering of the Notes would make any such information or expressions of opinion or intention misleading in any material respect. Notes may be issued in Series (as defined herein) having one or more issue dates and the same maturity date, and on identical terms (including as to listing) except (in the case of Notes other than Variable Rate Notes (as described in the section Summary of the Programme )) for the issue dates, issue prices and/or the dates of the first payment of interest, or (in the case of Variable Rate Notes) for the issue prices and rates of interest. Each Series may be issued in one or more Tranches (as defined herein) on the same or different issue dates. The Notes will be issued in bearer form and may be listed on a stock exchange. The Notes will initially be represented by either a Temporary Global Note (as defined herein) or a Permanent Global Note (as defined herein) which will be deposited on the issue date with either CDP (as defined herein) or a common deposit ary for Euroclear and Clearstream, Luxembourg (each as defined herein) or otherwise delivered as agreed between the Issuer and the relevant Dealer(s) (as defined herein). Subject to compliance with all relevant laws, regulations and directives, the Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s), and may be subject to redemption or purchase in whole or in part. The Notes will bear interest at a fixed, floating, variable or hybrid rate or may not bear interest or may be such other notes as may be agreed between the Issuer and the relevant Dealer(s). The Notes will be repayable at par, at a specified amount above or below par or at an amount determined by reference to a formula, in each case with terms as specified in the Pricing Supplement issued in relation to each Series or Tranche of Notes. Details applicable to each Series or Tranche of Notes will be specified in the applicable Pricing Supplement (as defined herein) which is to be read in conjunction with this Information Memorandum. The maximum aggregate principal amount of the Notes to be issued, when added to the aggregate principal amount of all Notes outstanding (as defined in the Trust Deed referred to herein) shall be S$500,000,000 (or its equivalent in any other currencies) or such amount increased in accordance with the terms of the Programme Agreement (as defined herein). No person has been authorised to give any information or to make any representation other than those contained in this Information Memorandum and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, either of the Arrangers or any of the Dealers. Save as expressly stated in this Information Memorandum, nothing contained herein is, or may be relied upon as, a promise or representation as to the future performance or policies of the Issuer or any of its subsidiaries or associated companies (if any). Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme may be used for the purpose of, and does not constitute an offer of, or solicitation or invitation by or on behalf of the Issuer, either of the Arrangers or any of the Dealers to subscribe for or purchase, the Notes in any jurisdiction or under any circumstances in which such offer, solicitation or invitation is unlawful or not authorised, or to any person to whom it is unlawful to make such offer, solicitation or invitation. The distribution and publication of this Information Memorandum or any such other document or information and the offer of the Notes in certain jurisdictions may be restricted by law. Persons who distribute or publish this Information Memorandum or any such other document or information or into whose possession this Information Memorandum or any such other document or information comes are required to inform themselves about and to observe any such restrictions and all applicable laws, orders, rules and regulations. 1

4 The Notes have not been, and will not be, registered under the Securities Act (as defined herein) and are subject to U.S. tax law requirements and restrictions. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to U.S. persons (as defined in the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder). Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme shall be deemed to constitute an offer of, or an invitation by or on behalf of the Issuer, either of the Arrangers or any of the Dealers to subscribe for or purchase, any of the Notes. This Information Memorandum and a ll other documents or materials in relation to the issue, offering or sale of the Notes have been prepared solely for the purpose of the initial sale by the relevant Dealers of the Notes from time to time to be issued pursuant to the Programme. This Information Memorandum and such other documents or materials are made available to the recipients thereof solely on the basis that they are persons falling within the ambit of Section 274 and/or Section 275 of the SFA and may not be relied upon by any person other than persons to whom the Notes are sold or with whom they are placed by the relevant Dealers as aforesaid or for any other purpose. Recipients of this Information Memorandum shall not reissue, circulate or distribute this Information Memorandum or any part thereof in any manner whatsoever. Neither the delivery of this Information Memorandum (or any part thereof) nor the issue, offering, purchase or sale of the Notes shall, under any circumstances, constitute a representation, or give rise to any implication, that there has been no change in the prospects, results of operations or general affairs of the Issuer or any of its subsidiaries or associated companies (if any) or in the information herein since the date hereof or the date on which this Information Memorandum has been most recently amended or supplemented. The Arrangers and the Dealers have not separately verified the information contained in this Information Memorandum. None of the Arrangers, any of the Dealers and any of their respective officers or employees is making any representation or warranty expressed or implied as to the merits of the Notes or the subscription for, purchase or acquisition thereof, the creditworthiness or financial condition or otherwise of the Issuer or its subsidiaries or associated companies (if any). Further, neither of the Arrangers nor any of the Dealers makes any representation or warranty as to the Issuer, its subsidiaries or associated companies (if any) or as to the accuracy, reliability or completeness of the information set out herein (including the legal and regulatory requirements pertaining to Sections 274, 275 and 276 or any other provisions of the SFA) and the documents which are incorporated by reference in, and form part of, this Information Memorandum. To the fullest extent permitted by law, none of the Arrangers and the Dealers accept any responsibility for the contents of this Information Memorandum or for any other statement, made or purported to be made by either of the Arrangers or any of the Dealers or on its behalf in connection with the Issuer or the issue and offering of the Notes. Each Arranger and each Dealer accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Information Memorandum or any such statement. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the issue of the Notes is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, either of the Arrangers or any of the Dealers that any recipient of this Information Memorandum or such other document or information (or such part thereof) should subscribe for or purchase any of the Notes. A prospective purchaser shall make its own assessment of the foregoing and other relevant matters including the financial condition and affairs and the creditworthiness of the Issuer and its subsidiaries and associated companies (if any), and obtain its own independent legal or other advice thereon, and its investment shall be deemed to be based on its own independent investigation of the financial condition and affairs and its appraisal of the creditworthiness of the Issuer. Accordingly, notwithstanding anything herein, none of the Issuer, either of the Arrangers, any of the Dealers or any of their respective officers, employees or agents shall be held responsible for any loss or damage suffered or incurred by the recipients of this Information Memorandum or such other document or information (or such part thereof) as a result of or arising from anything expressly or implicitly contained in or referred 2

5 to in this Information Memorandum or such other document or information (or such part thereof) and the same shall not constitute a ground for rescission of any purchase or acquisition of any of the Notes by a recipient of this Information Memorandum or such other document or information (or such part thereof). Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain conditions set out in the Programme Agreement and the issue of the Notes by the Issuer pursuant to the Programme Agreement. Any offer, invitation to offer or agreement made in connection with the purchase or acquisition of the Notes or pursuant to this Information Memorandum shall (without any liability or responsibility on the part of the Issuer, either of the Arrangers or any of the Dealers) lapse and cease to have any effect if (for any other reason whatsoever) the Notes are not issued by the Issuer pursuant to the Programme Agreement. Any discrepancies (if any) in the tables included herein between the listed amounts and totals thereof are due to rounding. The attention of recipients of this Information Memorandum is drawn to the restrictions on the resale of the Notes set out in the section Subscription, Purchase and Distribution on pages 96 and 97 of this Information Memorandum. Any person who is invited to purchase or subscribe for the Notes or to whom this Information Memorandum is sent shall not make any offer or sale, directly or indirectly, of any Notes or distribute or cause to be distributed any document or other material in connection therewith in any country or jurisdiction except in such manner and in such circumstances as will result in compliance with any applicable laws and regulations. It is recommended that persons proposing to subscribe for or purchase any of the Notes consult their own legal and other advisers before purchasing or acquiring the Notes. Prospective purchasers of Notes are advised to consult their own tax advisers concerning the tax consequences of the acquisition, ownership or disposal of Notes. 3

6 FORWARD-LOOKING STATEMENTS Some statements in this Information Memorandum may be deemed to be forward-looking statements. All statements contained in this Information Memorandum that are not statements of historical fact constitute forward-looking statements. Some of these statements can be identified by forward-looking terms such as anticipates, estimates, projects, expects, believes, intends, plans, aims, seeks, may, will, should, could or other similar expressions. However, these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements include statements concerning the Issuer s plans, objectives, goals, strategies, future operations and performance and the assumptions underlying these forward-looking statements. These forward-looking statements are contained in the sections entitled Risk Factors and The Issuer and other sections of this Information Memorandum. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Issuer and/or the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others: changes in general political, social and economic conditions; changes in currency exchange and interest rates; demographic changes; changes in competitive conditions; and other factors beyond the control of the Issuer and the Group. Some of these factors are discussed in greater detail in this Information Memorandum, in particular, but not limited to, the discussion under the section Risk Factors. If one or more of the risks or uncertainties materialise, or if any of the Issuer s underlying assumptions prove to be incomplete or inaccurate, the Issuer s and/or the Group s actual results, performance or achievements may vary from those expected, expressed or implied by the forward-looking statements. Given the risks and uncertainties that may cause the actual future results, performance or achievements of the Issuer or the Group to be materially different from the results, performance or achievements expected, expressed or implied by the forward-looking statements in this Information Memorandum, undue reliance must not be placed on such forward-looking statements. None of the Issuer, the Group, the Arrangers, the Dealers, the Trustee and the Agents represents or warrants that the actual future results, performance or achievements of the Issuer or the Group will be as discussed in those statements. Any forward-looking statements contained in this Information Memorandum speak only as at the date of this Information Memorandum. Each of the Issuer, the Arrangers and the Dealers expressly disclaims any obligation or undertaking to disseminate publicly or otherwise after the date of this Information Memorandum any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations thereof or any change in events, conditions or circumstances on which any such forward-looking statement is based. 4

7 DOCUMENTS INCORPORATED BY REFERENCE The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated by reference in, and to form part of, this Information Memorandum: (a) (b) (c) the most recent published audited consolidated financial statements of the Group; the most recent unaudited consolidated interim results of the Group which is made available on SGXNET by the Issuer; and any supplement or amendment to this Information Memorandum issued by the Issuer. This Information Memorandum is to be read in conjunction with all such documents which are incorporated by reference herein and, with respect to any Series or Tranche of Notes, any Pricing Supplement in respect of such Series or Tranche. Any statement contained in this Information Memorandum or in a document deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained in this Information Memorandum or in such subsequent document that is also deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum. Copies of all documents deemed incorporated by reference herein are available for inspection at the specified office of the Issuing and Paying Agent (as defined herein). 5

8 DEFINITIONS The following definitions have, where appropriate, been used in this Information Memorandum: 1HFY2012 : Half year ended 31 December HFY2013 : Half year ended 31 December QFY2013 : First quarter ended 30 September QFY2012 : Second quarter ended 31 December 2011 Agency Agreement : The Agency Agreement dated 10 May 2013 between (1) the Issuer, as issuer, (2) the Issuing and Paying Agent, as issuing and paying agent, (3) the Agent Bank, as agent bank, and (4) the Trustee, as trustee, as amended, varied or supplemented from time to time Agent Bank : DBS Bank Ltd. Arrangers : DBS Bank Ltd. and Standard Chartered Bank Business Day : (i) (in the context of Notes denominated in Singapore Dollars) a day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are open for business in Singapore; (ii) (iii) (in the context of Notes denominated in euro) a day on which the TARGET System is open for settlement of payment in euro; and (in the context of Notes denominated in a currency other than Singapore Dollars and euro) a day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks and foreign exchange markets are open for general business in Singapore and the principal financial centre for that currency CDP : The Central Depository (Pte) Limited Clearstream, Luxembourg : Clearstream Banking, société anonyme Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Conditions : In relation to the Notes of any Series, the terms and conditions applicable thereto, which shall be substantially in the form set out in part II of schedule 1 to the Trust Deed, as modified, with respect to any Notes represented by a Global Note, by the provisions of such Global Note, shall incorporate any additional provisions forming part of such terms and conditions set out in the Pricing Supplement(s) relating to the Notes of such Series and shall be endorsed on the Definitive Notes subject to amendment and completion as referred to in the first paragraph appearing after the heading Terms and Conditions of the Notes as set out in part II of schedule 1 of the Trust Deed, and any reference to a particular numbered Condition shall be construed accordingly 6

9 Couponholders : The holders of the Coupons Coupons : The interest coupons appertaining to an interest bearing definitive Note Dealers : Persons appointed as dealers under the Programme Directors : The directors (including alternate directors, if any) of the Issuer as at the date of this Information Memorandum EU : European Union Euroclear : Euroclear Bank S.A./N.V. FY : Financial year ended 30 June Group : The Issuer and its subsidiaries Issuer : Amtek Engineering Ltd Issuing and Paying Agent : DBS Bank Ltd. ITA : The Income Tax Act, Chapter 134 of Singapore, as amended or modified from time to time Latest Practicable Date : 3 May 2013 MAS : The Monetary Authority of Singapore Noteholders : The holders of the Notes Notes : The notes to be issued by the Issuer under the Programme PRC : People s Republic of China Pricing Supplement : In relation to a Series or Tranche, a pricing supplement, to be read in conjunction with this Information Memorandum, issued specifying the relevant issue details in relation to such Series or, as the case may be, Tranche Principal Subsidiary : at any particular time, any subsidiary of the Issuer whose total assets or profit after tax, as shown by the accounts of such subsidiary (consolidated in the case of a subsidiary which itself has subsidiaries), based upon which the latest audited consolidated accounts of the Group have been prepared, are at least 15 per cent. of the total assets or, as the case may be, profit after tax of the Group as shown by such audited consolidated accounts, provided that if any such subsidiary (the transferor ) shall at any time transfer the whole or any substantial part of its business, undertaking or assets to another subsidiary or the Issuer (the transferee ) then: (a) if the whole of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall thereupon cease to be a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary; and 7

10 (b) if a part only of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall remain a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary. Any subsidiary which becomes a Principal Subsidiary by virtue of (a) above or which remains or becomes a Principal Subsidiary by virtue of (b) above shall continue to be a Principal Subsidiary until the earlier of: (i) (ii) the date of issue of the first audited consolidated accounts of the Group prepared as at a date later than the date of the relevant transfer which show the total assets or profit after tax as shown by the accounts of such subsidiary (consolidated in the case of a subsidiary which itself has subsidiaries), based upon which such audited consolidated accounts have been prepared, to be less than 15 per cent. of the total assets or, as the case may be, profit after tax of the Group, as shown by such audited consolidated accounts, and a report by the Auditors (as defined in the Trust Deed) as described below which shows the total assets or, as the case may be, the profit after tax of such subsidiary to be less than 15 per cent. of the total assets or, as the case may be, profit after tax of the Group, as shown by such report of the Auditors. A report by the Auditors, who shall also be responsible for producing any pro-forma accounts required for the above purposes, that in their opinion a subsidiary is or is not a Principal Subsidiary shall, in the absence of manifest error, be conclusive Programme : The S$500,000,000 Multicurrency Medium Term Note Programme of the Issuer Programme Agreement : The Programme Agreement dated 10 May 2013 made between (1) the Issuer, as issuer, and (2) DBS Bank Ltd. and Standard Chartered Bank, as arrangers and dealers, as amended, varied or supplemented from time to time Securities Act : Securities Act of 1933 of the United States, as amended Series : (1) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (a) expressed to be consolidated and forming a single series and (b) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (2) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest SFA : Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time SGX-ST : Singapore Exchange Securities Trading Limited 8

11 Shares : Ordinary shares in the capital of the Issuer Tranche : Notes which are identical in all respects (including listing) Trust Deed : The Trust Deed dated 10 May 2013 made between (1) the Issuer, as issuer, and (2) the Trustee, as trustee, as amended, varied or supplemented from time to time Trustee : DBS Trustee Limited United States or U.S. : United States of America Renminbi : The lawful currency of the PRC. S$ or $ and cents : Singapore dollars and cents respectively US$ or US Dollar : United States dollars % : Per cent. Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference to a time of day in this Information Memorandum shall be a reference to Singapore time unless otherwise stated. Any reference in this Information Memorandum to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or the SFA or any statutory modification thereof and used in this Information Memorandum shall, where applicable, have the meaning ascribed to it under the Companies Act, or as the case may be, the SFA. 9

12 CORPORATE INFORMATION Board of Directors : Daniel Yeong Bou W ai (Chairman and Chief Executive Officer) Sheila Ng Won Lein (Executive Director, Deputy Chief Executive Officer and Chief Financial Officer) Ang Tong Huat (Executive Director, Group Chief Operating Officer, Precision Engineering Division) William Edward Alastair Morrison (Non-Executive Director) Sigit Prasetya (Non-Executive Director) Low Seow Juan (Lead Independent Director and Remuneration Committee Chairman) Steven Lim Kok Hoong (Independent Director and Audit Committee Chairman) Leong Horn Kee (Independent Director and Nominating Committee Chairman) Company Secretaries : Tan San-Ju Jocelin Soon Swee Har Registered Office : 35 Pioneer Road North Singapore Auditors to the Issuer : Ernst & Young LLP Level 18 North Tower One Raffles Quay Singapore Arrangers of the Programme : DBS Bank Ltd. 12 Marina Boulevard, Level 42 Marina Bay Financial Centre Tower 3 Singapore Standard Chartered Bank 8 Marina Boulevard, Level 20 Marina Bay Financial Centre Tower 1 Singapore Solicitors to the Arrangers and the Trustee : WongPartnership LLP 12 Marina Boulevard Level 28 Marina Bay Financial Centre Tower 3 Singapore Solicitors to the Issuer : Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore Issuing and Paying Agent and Agent Bank : DBS Bank Ltd. 60 Alexandra Terrace The Comtech #05-27 Singapore Trustee for the Noteholders : DBS Trustee Limited 12 Marina Boulevard #44-01/04 Marina Bay Financial Centre Tower 3 Singapore

13 SUMMARY OF THE PROGRAMME The following summary is derived from, and should be read in conjunction with, the full text of this Information Memorandum (and any relevant supplement to this Information Memorandum), the Programme Agreement, the Trust Deed, the Agency Agreement and the relevant Pricing Supplement. Issuer : Amtek Engineering Ltd. Arrangers : DBS Bank Ltd. and Standard Chartered Bank. Dealers : DBS Bank Ltd. and Standard Chartered Bank and/or such other Dealers as may be appointed by the Issuer in accordance with the Programme Agreement. Issuing and Paying Agent and Agent Bank : DBS Bank Ltd. Trustee : DBS Trustee Limited. Description : S$500,000,000 Multicurrency Medium Term Note Programme. Programme Size : The maximum aggregate principal amount of the Notes outstanding at any time shall be S$500,000,000 (or its equivalent in other currencies) or such higher amount as may be increased in accordance with the terms of the Programme Agreement. Currency : Subject to compliance with all relevant laws, regulations and directives, Notes may be issued in Singapore dollars or any other currency agreed between the Issuer and the relevant Dealer(s). Method of Issue : Notes may be issued from time to time under the Programme on a syndicated or non-syndicated basis. Each Series may be issued in one or more Tranches, on the same or different issue dates. The specific terms of each Series or Tranche will be specified in the relevant Pricing Supplement. Issue Price : Notes may be issued at par or at a discount, or premium, to par. Maturities : Subject to compliance with all relevant laws, regulations and directives, Notes shall have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s). Mandatory Redemption : Unless previously redeemed or purchased and cancelled in accordance with the Conditions, each Note will be redeemed at its redemption amount on the maturity date shown on its face (if it is shown on its face to be a Fixed Rate Note, Hybrid Note (during the Fixed Rate Period (as defined in the Trust Deed)) or Zero-Coupon Note) or on the interest payment date falling in the redemption month shown on its face (if it is shown on its face to be a Floating Rate Note, Variable Rate Note or a Hybrid Note (during the Floating Rate Period (as defined in the Trust Deed))). Interest Basis : Notes may bear interest at fixed, floating, variable or hybrid rate or such other rate as may be agreed between the Issuer and the relevant Dealer(s) or may not bear interest. Fixed Rate Notes : Fixed Rate Notes will bear a fixed rate of interest which will be payable in arrear on specified dates and at maturity. 11

14 Floating Rate Notes : Floating Rate Notes which are denominated in Singapore dollars will bear interest to be determined separately for each Series by reference to S$ SIBOR or S$ SWAP RATE (or in any other case such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin. Floating Rate Notes which are denominated in other currencies will bear interest to be determined separately for each Series by reference to such other benchmark as may be agreed between the Issuer and the relevant Dealer(s), as adjusted for any applicable margin. Interest periods in relation to the Floating Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue. Variable Rate Notes : Variable Rate Notes will bear interest at a variable rate determined in accordance with the Conditions. Interest periods in relation to the Variable Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue. Hybrid Notes : Hybrid Notes will bear interest, during the fixed rate period to be agreed between the Issuer and the relevant Dealer(s), at a fixed rate of interest which will be payable in arrear on specified dates and at maturity and, during the floating rate period to be agreed between the Issuer and the relevant Dealer(s) at the rate of interest to be determined by reference to S$ SIBOR or S$ SWAP RATE (or such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin (provided that if the Hybrid Notes are denominated in a currency other than Singapore dollars, such Hybrid Notes will bear interest to be determined separately by reference to such benchmark as may be agreed between the Issuer and the relevant Dealer(s)), in each case payable at the end of each interest period to be agreed between the Issuer and the relevant Dealer(s). Zero-Coupon Notes : Zero-Coupon Notes may be issued at their nominal amount or at a discount to it and will not bear interest other than in the case of late payment. Form and Denomination of Notes : The Notes will be issued in bearer form only and in such denominations as may be agreed between the Issuer and the relevant Dealer(s). Custody of the Notes : Notes which are to be cleared through CDP are required to be kept with CDP as authorised deposit ary. Notes which are cleared through Euroclear and/or Clearstream, Luxembourg are required to be kept with a common deposit ary on behalf of Euroclear and Clearstream, Luxembourg. Status of the Notes : The Notes and Coupons of all Series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer from time to time outstanding. 12

15 Redemption and Purchase : If so provided on the face of the Notes and the relevant Pricing Supplement, Notes may be redeemed (either in whole or in part) prior to their stated maturity at the option of the Issuer and/or the holders of the Notes. Further, if so provided on the face of the Notes and the relevant Pricing Supplement, Notes may be purchased by the Issuer (either in whole or in part) prior to their stated maturity at the option of the Issuer and/or the holders of the Notes. Redemption at the option of the Noteholders in the event of cessation or suspension of trading of Shares : Following the occurrence of a Relevant Event (as defined below), the Issuer shall, at the option of the holder of any Note, redeem such Note on the Relevant Event Redemption Date (as defined below) at its redemption amount, together with interest accrued to the date fixed for redemption. For the purposes of this paragraph: A Relevant Event occurs: ( a) when the shares of the Issuer cease to be listed or admitted to trading on the SGX-ST; or ( b) when trading in the shares of the Issuer on the SGX-ST is suspended for a period equal to or exceeding 7 consecutive trading days, and Relevant Event Occurrence Date, in the case of ( a) above means the date of cessation of listing or admission to trading on the SGX-ST and in the case of ( b) above means the date immediately following the expiry of the 7-trading day period. Relevant Event Redemption Date shall be the date (or, if such date is not a business day, on the immediately preceding business day) falling 75 days after the Relevant Event Occurrence Date. trading day means a day on which the SGX-ST is open for securities trading. Negative Pledge : The Issuer has covenanted with the Trustee that so long as any of the Notes or Coupons remains outstanding, it will not, and will ensure that none of its Principal Subsidiaries will, create or permit to be created or have outstanding any security on or over the whole or any part of their assets, present or future, save for: (a) (b) any security created over any asset existing on the date of the Trust Deed which has been disclosed to the Trustee in writing on or prior to the date of the Trust Deed and any security to be created over such asset in connection with the extension or refinancing of the original credit facilities secured by such asset, provided that the amount secured by any such security may not be increased except with the prior consent of the Noteholders by way of an Extraordinary Resolution (as defined in the Trust Deed); any liens or rights of set-off arising solely by operation of law in respect of indebtedness which either (1) has been due for less than 14 days or (2) is being contested in good faith and by appropriate means; 13

16 (c) (d) (e) (f) (g) (h) any netting or set-off arrangement entered into by the Issuer or any of its Principal Subsidiaries provided that such arrangements are made pursuant to commercial activity in the ordinary course of business or pursuant to intra-group transactions within the Group; pledges of goods or cash and/or related documents of title arising in the ordinary course of business as security for indebtedness to a bank or financial institution directly relating to the goods or documents over which that pledge exists or any security created (whether over cash or otherwise) in connection with the provision of letters of credit, performance bonds, bills of lading, shipping guarantees, airway bills, bank guarantees or other documentary credits or any other kinds of trade facilities provided that such documentary credits or trade facilities are obtained in the ordinary course of business in connection with the sale or purchase of goods by the Issuer or any subsidiary; any security over any assets acquired and/or developed by it ((in the case of a development of such asset) whether such assets are acquired before or after the date of the Trust Deed) after the date of the Trust Deed for the sole purpose of financing or refinancing the acquisition or development of such assets (whether such financing or refinancing is raised or the development is undertaken, by itself, any related corporation, joint venture partner or any joint venture company in which it has an interest) and securing a principal amount not exceeding the cost of that acquisition and/or development; any security created prior to and subsisting at the time of the acquisition of any asset by it after the date of the Trust Deed, provided that the amount secured by any such security may not exceed the cost of acquisition of such asset; any security arising out of title retention provisions in a supplier s or financier s normal conditions of supply, hire purchase or leasing arrangement in respect of assets acquired by the Issuer or relevant Principal Subsidiary in the ordinary course of business; and any other security created or permitted to subsist, the terms of which have been approved by the Noteholders by way of an Extraordinary Resolution. Financial Covenants : The Issuer has covenanted with the Trustee that for so long as any of the Notes or Coupons remains outstanding, it will ensure that: (a) (b) the ratio of the Consolidated Net Debt (as defined in the Trust Deed) to the Consolidated EBITDA (as defined in the Trust Deed) will not at any time be more than 3.5:1; the Total Equity (as defined in the Trust Deed) will not at any time be less than US$120,000,000; 14

17 (c) (d) the ratio of the Consolidated Net Debt to the Total Equity will not at any time be more than 1.75:1; and the ratio of the Consolidated EBITDA to the Consolidated Interest Expense (as defined in the Trust Deed) will not at any time be less than 4:1. Non-Disposal Covenant : The Issuer has covenanted with the Trustee that it shall not, and will ensure that none of its subsidiaries will, (whether by a single transaction or a number of related or unrelated transactions and whether at one time or over a period of time) sell, transfer, lease out, lend or otherwise dispose of (whether outright, by a sale-andrepurchase or sale-and-leaseback arrangement, or otherwise) all or substantially all of its assets nor of any part of its assets which, either alone or when aggregated with all other disposals required to be taken into account under this paragraph, is likely to have a material adverse effect on the Issuer. The following disposals shall not be taken into account under this paragraph: (a) (b) (c) (d) (e) (f) disposals in the ordinary course of business on arm s length and on normal commercial terms and as permitted by applicable laws and regulations; any disposal or sale of assets which are obsolete, excess or no longer required for the purpose of its business; any exchange of assets for other assets of a similar nature, fitness for purpose and value; any disposal to another member of the Group; any disposal of any shares in Cheval Electronics Enclosures Co., Ltd (a company incorporated in Thailand with registration number ); and any disposal which the Trustee or the Noteholders by way of Extraordinary Resolution shall have agreed shall not be taken into account. Events of Default : See Condition 9 of the Notes. Taxation : All payments in respect of the Notes and Coupons by or on behalf of the Issuer shall be free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature ( Taxes ) imposed or levied by or on behalf of Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment: 15

18 (a) (b) by or on behalf of a holder who is subject to such Taxes by reason of his being connected with Singapore (including, without limitation, the holder being (A) a resident in Singapore for tax purposes or (B) a non-resident of Singapore who has been granted an exemption by the Inland Revenue Authority of Singapore in respect of the requirement to withhold tax on payments made to it) otherwise than by reason only of the holding of such Note or Coupon or the receipt of any sums due in respect of such Note or Coupon; or more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to such additional amounts on presenting the same for payment on the last day of such period of 30 days. For further details, see the section on Singapore Taxation below. Listing : Each Series of the Notes may, if so agreed between the Issuer and the relevant Dealer(s), be listed on the SGX-ST or any stock exchange(s) as may be agreed between the Issuer and the relevant Dealer(s), subject to all necessary approvals having been obtained. Selling Restrictions : For a description of certain restrictions on offers, sales and deliveries of Notes and the distribution of offering material relating to the Notes, see the section on Subscription, Purchase and Distribution below. Further restrictions may apply in connection with any particular Series or Tranche of Notes. Governing Law : The Programme and any Notes issued under the Programme will be governed by, and construed in accordance with, the laws of Singapore. 16

19 TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions which, subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be endorsed on the Notes in definitive form issued in exchange for the Global Note(s) representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive Notes. References in the Conditions to Notes are to the Notes of one Series only, not to all Notes that may be i ssued under the Programme. Details of the relevant Series are shown on the face of the relevant Notes and in the relevant Pricing Supplement. The Notes are constituted by a Trust Deed (as amended, varied or supplemented from time to time, the Trust Deed ) dated 10 May 2013 made between (1) Amtek Engineering Ltd, as issuer (the Issuer, which expression shall include its successors and permitted assigns), and (2) DBS Trustee Limited (the Trustee, which expression shall wherever the context so admits include such company and all other persons for the time being the trustee or trustees of the Trust Deed), as trustee of the Noteholders (as defined below), and (where applicable) the Notes are issued with the benefit of a deed of covenant (as amended, varied or supplemented from time to time, the Deed of Covenant ) dated 10 May 2013 relating to the Notes executed by the Issuer. These terms and conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Notes and Coupons referred to below. The Issuer has entered into an agency agreement (as amended, varied or supplemented from time to time, the Agency Agreement ) dated 10 May 2013 made between (1) the Issuer, as issuer, (2) DBS Bank Ltd., as issuing and paying agent (in such capacity, the Issuing and Paying Agent ) and agent bank, (in such capacity, the Agent Bank ) and (3) the Trustee, as trustee. The Noteholders and the holders of the coupons (the Coupons ) appertaining to the interest-bearing Notes (the Couponholders ) are bound by and are deemed to have notice of all of the provisions of the Trust Deed, the Agency Agreement and the Deed of Covenant. Copies of the Trust Deed, the Agency Agreement and the Deed of Covenant are available for inspection at the principal office of the Trustee for the time being and at the specified office of the Issuing and Paying Agent for the time being. 1. FORM, DENOMINATION AND TITLE (a) Form and Denomination (i) The Notes of the Series of which this Note forms part (in these Conditions, the Notes ) are issued in bearer form in each case in the Denomination Amount shown hereon. (b) (ii) (iii) Title (i) (ii) This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Hybrid Note or a note that does not bear interest (a Zero-Coupon Note ), a combination of any of the foregoing or any other type of Note (depending upon the Interest and Redemption/Payment Basis shown on its face). Notes are serially numbered and issued with Coupons attached, save in the case of Zero-Coupon Notes in which case references to interest (other than in relation to default interest referred to in Condition 6(f)) in these Conditions are not applicable. Subject as set out below, title to the Notes and the Coupons appertaining thereto shall pass by delivery. Except as ordered by a court of competent jurisdiction or as required by law, the holder of any Note or Coupon shall be deemed to be and may be treated as the absolute owner of such Note or of such Coupon, as the case may be, for the purpose 17

20 of receiving payment thereof or on account thereof and for all other purposes, whether or not such Note or Coupon shall be overdue and notwithstanding any notice of ownership, theft, loss or forgery thereof or any writing thereon made by anyone, and no person shall be liable for so treating the holder. (iii) (iv) (v) For so long as any of the Notes is represented by a Global Note and such Global Note is held by The Central Depository (Pte) Limited ( CDP ), each person who is for the time being shown in the records of CDP as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by CDP as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes, save in the case of manifest error) shall be treated by the Issuer, the Trustee, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such principal amount of Notes other than with respect to the payment of principal, interest and/or any other amounts in respect of the Notes, for which purpose the bearer of the Global Note shall be treated by the Issuer, the Trustee, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and subject to the terms of the Global Note (and the expressions Noteholder and holder of Notes and related expressions, where the context requires, shall be construed accordingly). Notes which are represented by the Global Note and held by CDP will be transferable only in accordance with the rules and procedures for the time being of CDP. For so long as any of the Notes is represented by a Global Note and such Global Note is held by a common deposit ary for Euroclear Bank S.A./N.V. ( Euroclear ) and/or Clearstream Banking, société anonyme ( Clearstream, Luxembourg ), each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by Euroclear and/or Clearstream, Luxembourg as to the principal amount of such Notes (as the case may be) standing to the account of any person shall be conclusive and binding for all purposes, save in the case of manifest error) shall be treated by the Issuer, the Trustee, the Issuing and Paying Agent, the Agent Bank and all other agents of the Issuer and the Trustee as the holder of such principal amount of such Notes other than with respect to the payment of principal, interest and/or any other amounts in respect of such Notes, for which purpose the bearer of the Global Note shall be treated by the Issuer, the Trustee, the Issuing and Paying Agent, Agent Bank and all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and subject to the terms of the Global Note (and the expressions Noteholder and holder of Notes and related expressions, where the context requires, shall be construed accordingly). Notes which are represented by a Global Note and held by Euroclear and/or Clearstream, Luxembourg will be transferable only in accordance with the rules and procedures for the time being of Euroclear and/or Clearstream, Luxembourg. In these Conditions, Global Note means the relevant Temporary Global Note representing each Series or the relevant Permanent Global Note representing each Series, Noteholder means the bearer of any Definitive Note (as defined in the Trust Deed) and holder (in relation to a Definitive Note or Coupon) means the bearer of any Definitive Note or Coupon, Series means (A) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (1) expressed to be consolidated and forming a single series and (2) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (B) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest and Tranche means Notes which are identical in all respects (including as to listing). 18

21 (vi) Words and expressions defined in the Trust Deed or used in the applicable Pricing Supplement (as defined in the Trust Deed) shall have the same meanings where used in these Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail. 2. STATUS The Notes and Coupons of all Series constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer. The Notes and Coupons shall at all times rank pari passu and rateably without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer from time to time outstanding. 3. NEGATIVE PLEDGE AND FINANCIAL COVENANTS (a) The Issuer has covenanted with the Trustee in the Trust Deed that, so long as any of the Notes or Coupons remains outstanding, it will not, and will ensure that none of its Principal Subsidiaries (as defined below) will, create or permit to be created or have outstanding any security on or over the whole or any part of their assets, present or future, save for: (i) (ii) (iii) (iv) (v) (vi) any security created over any asset existing on the date of the Trust Deed which has been disclosed to the Trustee in writing on or prior to the date of the Trust Deed and any security to be created over such asset in connection with the extension or refinancing of the original credit facilities secured by such asset, provided that the amount secured by any such security may not be increased except with the prior consent of the Noteholders by way of an Extraordinary Resolution (as defined in the Trust Deed); any liens or rights of set-off arising solely by operation of law in respect of indebtedness which either (1) has been due for less than 14 days or (2) is being contested in good faith and by appropriate means; any netting or set-off arrangement entered into by the Issuer or any of its Principal Subsidiaries provided that such arrangements are made pursuant to commercial activity in the ordinary course of business or pursuant to intra-group transactions within the Group; pledges of goods or cash and/or related documents of title arising in the ordinary course of business as security for indebtedness to a bank or financial institution directly relating to the goods or documents over which that pledge exists or any security created (whether over cash or otherwise) in connection with the provision of letters of credit, performance bonds, bills of lading, shipping guarantees, airway bills, bank guarantees or other documentary credits or any other kinds of trade facilities provided that such documentary credits or trade facilities are obtained in the ordinary course of business in connection with the sale or purchase of goods by the Issuer or any subsidiary; any security over any assets acquired and/or developed by it ((in the case of a development of such asset) whether such assets are acquired before or after the date of the Trust Deed) after the date of the Trust Deed for the sole purpose of financing or refinancing the acquisition or development of such assets (whether such financing or refinancing is raised or the development is undertaken, by itself, any related corporation, joint venture partner or any joint venture company in which it has an interest) and securing a principal amount not exceeding the cost of that acquisition and/or development; any security created prior to and subsisting at the time of the acquisition of any asset by it after the date of the Trust Deed, provided that the amount secured by any such security may not exceed the cost of acquisition of such asset; 19

22 (vii) (viii) any security arising out of title retention provisions in a supplier s or financier s normal conditions of supply, hire purchase or leasing arrangement in respect of assets acquired by the Issuer or relevant Principal Subsidiary in the ordinary course of business; and any other security created or permitted to subsist, the terms of which have been approved by the Noteholders by way of an Extraordinary Resolution. (b) The Issuer has further covenanted with the Trustee in the Trust Deed that, for so long as any of the Notes or Coupons remains outstanding, it will ensure that: (i) (ii) (iii) (iv) the ratio of the Consolidated Net Debt (as defined in the Trust Deed) to the Consolidated EBITDA (as defined in the Trust Deed) will not at any time be more than 3.5:1; the Total Equity (as defined in the Trust Deed) will not at any time be less than US$120,000,000; the ratio of the Consolidated Net Debt to the Total Equity will not at any time be more than 1.75:1; and the ratio of the Consolidated EBITDA to the Consolidated Interest Expense (as defined in the Trust Deed) will not at any time be less than 4:1. 4. RATE OF INTEREST (I) INTEREST ON FIXED RATE NOTES (a) Interest Rate and Accrual Each Fixed Rate Note bears interest on its Calculation Amount (as defined in Condition 4(II)(e)) from the Interest Commencement Date (as defined in Condition 4(II)(e)) in respect thereof and as shown on the face of such Note at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of such Note in each year and on the Maturity Date shown on the face of such Note if that date does not fall on an Interest Payment Date. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date (and if the Interest Commencement Date is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the Maturity Date falls before the date on which the first payment of interest would otherwise be due. If the Maturity Date is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the Interest Commencement Date, as the case may be) to the Maturity Date will amount to the Final Broken Amount shown on the face of the Note. Interest will cease to accrue on each Fixed Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption Amount shown on the face of the Note is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(I) to the Relevant Date (as defined in Condition 7(b)). (b) Calculations In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction shown on the face of such Note. 20

23 (II) INTEREST ON FLOATING RATE NOTES OR VARIABLE RATE NOTES (a) Interest Payment Dates Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note, and such interest will be payable in arrear on each interest payment date ( Interest Payment Date ). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the Specified Number of Months ) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date (and which corresponds numerically with such preceding Interest Payment Date or the Interest Commencement Date, as the case may be), provided that the Agreed Yield (as defined in Condition 4(II)(c)) in respect of any Variable Rate Note for any Interest Period (as defined below) relating to that Variable Rate Note shall be payable on the first day of that Interest Period. If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day (as defined below), then if the Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the immediately preceding business day and (ii) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (2) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (4) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day. The period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is herein called an Interest Period. Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption Amount is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(II) to the Relevant Date. (b) Rate of Interest - Floating Rate Notes (i) Each Floating Rate Note bears interest at a floating rate determined by reference to a Benchmark as stated on the face of such Floating Rate Note, being (in the case of Notes which are denominated in Singapore Dollars) SIBOR (in which case such Note will be a SIBOR Note) or Swap Rate (in which case such Note will be a Swap Rate Note) or in any case (or in the case of Notes which are denominated in a currency other than Singapore Dollars) such other Benchmark as is set out on the face of such Note. Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Note. The Spread is the percentage rate per annum specified on the face of such Note as being applicable to the rate of interest for such Note. The rate of interest so calculated shall be subject to Condition 4(V)(a). The rate of interest payable in respect of a Floating Rate Note from time to time is referred to in these Conditions as the Rate of Interest. 21

24 (ii) The Rate of Interest payable from time to time in respect of each Floating Rate Note will be determined by the Agent Bank on the basis of the following provisions: (1) in the case of Floating Rate Notes which are SIBOR Notes: (A) (B) (C) (D) (E) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period which appears on Page ABSI on the monitor of the Bloomberg agency under the caption ASSOCIATION OF BANKS IN SG SWAP OFFER AND SIBOR FIXING RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed SGD SIBOR (or such other replacement page thereof) and as adjusted by the Spread (if any); if on any Interest Determination Date, no such rate appears on Page ABSI on the monitor of the Bloomberg agency (or such other replacement page thereof), the Agent Bank will, at or about the Relevant Time on such Interest Determination Date, determine the Rate of Interest for such Interest Period which shall be the rate which appears on the Reuters Screen ABSIRFIX01 Page under the caption ASSOCIATION OF BANKS IN SINGAPORE SIBOR AND SWAP OFFER RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed SGD SIBOR (or such other replacement page thereof) and as adjusted by the Spread (if any); if no such rate appears on the Reuters Screen ABSIRFIX01 Page (or such other replacement page thereof or such other Screen Page (as defined below) as may be provided hereon) or if the Reuters Screen ABSIRFIX01 Page (or such other replacement page thereof or such other Screen Page as may be provided hereon) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of each of the Reference Banks to provide the Agent Bank with the rate at which deposits in Singapore dollars are offered by it at approximately the Relevant Time on the Interest Determination Date to prime banks in the Singapore interbank market for a period equivalent to the duration of such Interest Period commencing on such Interest Payment Date in an amount comparable to the aggregate principal amount of the relevant Floating Rate Notes. The Rate of Interest for such Interest Period shall be the arithmetic mean (rounded up, if necessary, to four decimal places) of such offered quotations and as adjusted by the Spread (if any), as determined by the Agent Bank; if on any Interest Determination Date two but not all the Reference Banks provide the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be determined in accordance with (C) above on the basis of the quotations of those Reference Banks providing such quotations; and if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to four decimal places) of the prime lending rates for Singapore Dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); 22

25 (2) in the case of Floating Rate Notes which are Swap Rate Notes: (A) (B) (C) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the Average Swap Rate for such Interest Period (determined by the Agent Bank as being the rate which appears on Page ABSI on the monitor of the Bloomberg agency under the caption ASSOCIATION OF BANKS IN SG - SWAP OFFER AND SIBOR FIXING RATES - RATES AT 11:00AM SINGAPORE TIME and under the column headed SGD SWAP OFFER (or such other page as may replace Page ABSI for the purpose of displaying the swap rates of leading reference banks) at or about the Relevant Time on such Interest Determination Date and for a period equal to the duration of such Interest Period) and as adjusted by the Spread (if any); if on any Interest Determination Date, no such rate appears on Page ABSI on the monitor of the Bloomberg agency (or such other replacement page thereof), the Agent Bank will determine the Rate of Interest for such Interest Period which shall be the Average Swap Rate for such Interest Period (determined by the Agent Bank as being the rate which appears on the Reuters Screen ABSIRFIX01 Page under the caption ASSOCIATION OF BANKS IN SINGAPORE SIBOR AND SWAP OFFER RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed SGD SWAP OFFER (or such other page as may replace the Reuters Screen ABSIRFIX01 Page for the purpose of displaying the swap rates of leading reference banks) at or about the Relevant Time on such Interest Determination Date and for a period equal to the duration of such Interest Period) and as adjusted by the Spread (if any); if on any Interest Determination Date, no such rate is quoted on the Reuters Screen ABSIRFIX01 Page (or such other replacement page thereof or such other Screen Page as may be provided hereon) or if the Reuters Screen ABSIRFIX01 Page (or such other replacement page thereof or such other Screen Page as may be provided hereon) is unavailable for any reason, the Agent Bank will determine the Average Swap Rate (which shall be rounded up, if necessary, to four decimal places) for such Interest Period in accordance with the following formula: In the case of Premium: Average Swap Rate = 365 (Premium x 36500) x SIBOR (T x Spot Rate) + (SIBOR x Premium) 365 x (Spot Rate) 360 In the case of Discount: Average Swap Rate = 365 (Discount x 36500) x SIBOR (T x Spot Rate) - (SIBOR x Discount) 365 x (Spot Rate)

26 where: SIBOR = the rate which appears on Page ABSI on the monitor of the Bloomberg agency under the caption ASSOCIATION OF BANKS IN SG SWAP OFFER AND SIBOR FIXING RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed USD SIBOR (or such other page as may replace Page ABSI for the purpose of displaying Singapore interbank United States dollar offered rates of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Spot Rate = the rate being the composite quotation or in the absence of which, the arithmetic mean (rounded up, if necessary, to four decimal places) (determined by the Agent Bank) of the rates quoted by the Reference Banks and which appear on Page ABSI on the monitor of the Bloomberg agency under the caption ASSOCIATION OF BANKS IN SG FX and SGD Swap Points (or such other page as may replace Page ABSI for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Premium or Discount = the rate being the composite quotation or in the absence of which, the arithmetic mean (rounded up, if necessary, to four decimal places) (determined by the Agent Bank) of the rates quoted by the Reference Banks for a period equal to the duration of the Interest Period concerned which appears on Page ABSI on the monitor of the Bloomberg agency under the caption ASSOCIATION OF BANKS IN SG FX and SGD Swap Points (or such other page as may replace Page ABSI for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; and T = the number of days in the Interest Period concerned. The Rate of Interest for such Interest Period shall be the Average Swap Rate (as determined by the Agent Bank) and as adjusted by the Spread (if any); (D) if on any Interest Determination Date, any one of the components for the purposes of calculating the Average Swap Rate under (C) above is not quoted on Page ABSI on the monitor of the Bloomberg agency (or such other replacement page thereof) or if Page ABSI on the monitor of the Bloomberg agency (or such other replacement page thereof) is unavailable for any reason, the Agent Bank will determine the Average Swap Rate (which shall be rounded up, if necessary, to four decimal places) for such Interest Period in accordance with the following formula: 24

27 In the case of Premium: Average Swap Rate = 365 (Premium x 36500) x SIBOR (T x Spot Rate) + (SIBOR x Premium) 365 x (Spot Rate) 360 In the case of Discount: Average Swap Rate = 365 (Discount x 36500) x SIBOR (T x Spot Rate) - (SIBOR x Discount) 365 x (Spot Rate) 360 where: SIBOR = the rate which appears on the Reuters Screen ABSIRFIX01 Page under the caption ASSOCIATION OF BANKS IN SINGAPORE SIBOR AND SWAP OFFER RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed USD SIBOR (or such other page as may replace the Reuters Screen ABSIRFIX01 Page for the purpose of displaying Singapore interbank United States dollar offered rates of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Spot Rate = the rate being the composite quotation or in the absence of which, the arithmetic mean (rounded up, if necessary, to four decimal places) (determined by the Agent Bank) of the rates quoted by the Reference Banks and which appear on the Reuters Screen ABSIRFIX06 Page under the caption ASSOCIATION OF BANKS IN SINGAPORE SGD SPOT AND SWAP OFFER RATES RATES AT 11:00AM SINGAPORE TIME and under the column headed SPOT (or such other page as may replace the Reuters Screen ABSIRFIX06 Page for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Premium or Discount = the rate being the composite quotation or in the absence of which, the arithmetic mean (rounded up, if necessary, to four decimal places) (determined by the Agent Bank) of the rates quoted by the Reference Banks for a period equal to the duration of the Interest Period concerned which appear on the Reuters Screen ABSIRFIX06-7 Pages under the caption ASSOCIATION OF BANKS IN SINGAPORE SGD SPOT AND SWAP OFFER RATES RATES AT 11:00AM SINGAPORE TIME (or such other page as may replace the Reuters Screen ABSIRFIX06-7 Pages for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the 25

28 Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; and T = the number of days in the Interest Period concerned. The Rate of Interest for such Interest Period shall be the Average Swap Rate (as determined by the Agent Bank) and as adjusted by the Spread (if any); (E) if on any Interest Determination Date any one of the components for the purposes of calculating the Average Swap Rate under (D) above is not quoted on the relevant Reuters Screen Page (or such other replacement page as aforesaid) or the relevant Reuters Screen Page (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of the Reference Banks to provide the Agent Bank with quotations of their Swap Rates for the Interest Period concerned at or about the Relevant Time on that Interest Determination Date and the Rate of Interest for such Interest Period shall be the Average Swap Rate for such Interest Period (which shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the Swap Rates quoted by the Reference Banks to the Agent Bank) and as adjusted by the Spread (if any). The Swap Rate of a Reference Bank means the rate at which that Reference Bank can generate Singapore Dollars for the Interest Period concerned in the Singapore inter-bank market at or about the Relevant Time on the relevant Interest Determination Date and shall be determined as follows: In the case of Premium: Swap Rate = 365 (Premium x 36500) x SIBOR (T x Spot Rate) + (SIBOR x Premium) 365 x (Spot Rate) 360 In the case of Discount: Swap Rate = 365 (Discount x 36500) x SIBOR (T x Spot Rate) - (SIBOR x Discount) 365 x (Spot Rate) 360 where: SIBOR = the rate per annum at which United States dollar deposits for a period equal to the duration of the Interest Period concerned are being offered by that Reference Bank to prime banks in the Singapore inter-bank market at or about the Relevant Time on the relevant Interest Determination Date; Spot Rate = the rate at which that Reference Bank sells United States dollars spot in exchange for Singapore Dollars in the Singapore inter-bank market at or about the Relevant Time on the relevant Interest Determination Date; 26

29 Premium = the premium that would have been paid by that Reference Bank in buying United States dollars forward in exchange for Singapore Dollars on the last day of the Interest Period concerned in the Singapore inter-bank market; Discount = the discount that would have been received by that Reference Bank in buying United States dollars forward in exchange for Singapore Dollars on the last day of the Interest Period concerned in the Singapore inter-bank market; and T = the number of days in the Interest Period concerned; and (F) if on any Interest Determination Date, one only or none of the Reference Banks provides the Agent Bank with such quotation, the Average Swap Rate shall be determined by the Agent Bank to be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and the Rate of Interest for the relevant Interest Period shall be the Average Swap Rate (as so determined by the Agent Bank) and as adjusted by the Spread (if any), or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the Rate of Interest for the relevant Interest Period shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the prime lending rates for Singapore Dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); and (3) in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate Notes or which are denominated in a currency other than Singapore Dollars, the Agent Bank will determine the Rate of Interest in respect of any Interest Period at or about the Relevant Time on the Interest Determination Date in respect of such Interest Period as follows: (A) if the Primary Source (as defined below) for the Floating Rate is a Screen Page (as defined below), subject as provided below, the Rate of Interest in respect of such Interest Period shall be: (aa) the Relevant Rate (as defined below) (where such Relevant Rate on such Screen Page is a composite quotation or is customarily supplied by one entity); or (bb) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Screen Page, in each case appearing on such Screen Page at the Relevant Time on the Interest Determination Date, and as adjusted by the Spread (if any); 27

30 (B) (C) if the Primary Source for the Floating Rate is Reference Banks or if paragraph (b)(ii)(3)(a)(aa) applies and no Relevant Rate appears on the Screen Page at the Relevant Time on the Interest Determination Date or if paragraph (b)(ii)(3)(a)(bb) applies and fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to four decimal places) of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre (as defined below) at the Relevant Time on the Interest Determination Date and as adjusted by the Spread (if any); and if paragraph (b)(ii)(3)(b) applies and the Agent Bank determines that fewer than two Reference Banks are so quoting Relevant Rates, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date. (iii) (iv) On the last day of each Interest Period, the Issuer will pay interest on each Floating Rate Note to which such Interest Period relates at the Rate of Interest for such Interest Period. For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is less than zero, (subject to any applicable Minimum Rate of Interest) the Rate of Interest in relation to such Interest Period shall be zero. (c) Rate of Interest - Variable Rate Notes (i) Each Variable Rate Note bears interest at a variable rate determined in accordance with the provisions of this paragraph (c). The interest payable in respect of a Variable Rate Note on the first day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the Agreed Yield and the rate of interest payable in respect of a Variable Rate Note on the last day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the Rate of Interest. (ii) The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect of each Variable Rate Note for each Interest Period shall, subject as referred to in paragraph (c)(iv) below, be determined as follows: (1) not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor later than 3.00 p.m. (Singapore time) on the third business day prior to the commencement of each Interest Period, the Issuer and the Relevant Dealer (as defined below) shall endeavour to agree on the following: (A) (B) (C) whether interest in respect of such Variable Rate Note is to be paid on the first day or the last day of such Interest Period; if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Rate of Interest for such Variable Rate Note for such Interest Period shall be zero); and if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in respect of such Variable Rate Note for such Interest Period (an Agreed Rate ) and, in the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period; and 28

31 (2) if the Issuer and the Relevant Dealer shall not have agreed either an Agreed Yield or an Agreed Rate in respect of such Variable Rate Note for such Interest Period by 3.00 p.m. (Singapore time) on the third business day prior to the commencement of such Interest Period, or if there shall be no Relevant Dealer during the period for agreement referred to in (1) above, the Rate of Interest for such Variable Rate Note for such Interest Period shall automatically be the rate per annum equal to the Fall Back Rate (as defined below) for such Interest Period. (iii) The Issuer has undertaken in the Agency Agreement that it will as soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note is determined but not later than a.m. (Singapore time) on the next following business day notify the Issuing and Paying Agent and the Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period. In addition, the Issuer will, as soon as possible after a request from any Noteholder, cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable Rate Note to be notified by the Issuing and Paying Agent to the relevant Noteholder. (iv) For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest Period for which there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no Relevant Dealer in respect of the Variable Rate Note(s) shall be the rate (the Fall Back Rate ) determined by reference to a Benchmark as stated on the face of such Variable Rate Note(s), being (in the case of Variable Rate Notes which are denominated in Singapore Dollars) SIBOR (in which case such Variable Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable Rate Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable Rate Notes which are denominated in a currency other than Singapore Dollars) such other Benchmark as is set out on the face of such Variable Rate Note(s). Such rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Variable Rate Note. The Spread is the percentage rate per annum specified on the face of such Variable Rate Note as being applicable to the rate of interest for such Variable Rate Note. The rate of interest so calculated shall be subject to Condition 4(V)(a). The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be determined by the Agent Bank in accordance with the provisions of Condition 4(II)(b)(ii) (mutatis mutandis) and references therein to Rate of Interest shall mean Fall Back Rate. (v) (vi) If interest is payable in respect of a Variable Rate Note on the first day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Agreed Yield applicable to such Variable Rate Note for such Interest Period on the first day of such Interest Period. If interest is payable in respect of a Variable Rate Note on the last day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Interest Amount for such Variable Rate Note for such Interest Period on the last day of such Interest Period. For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is less than zero, (subject to any applicable Minimum Rate of Interest) the Rate of Interest in relation to such Interest Period shall be zero. 29

32 (d) (e) Minimum Rate of Interest If the applicable Pricing Supplement specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period is determined in accordance with Condition 4(II)(b) or Condition 4(II)(c) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. Definitions As used in these Conditions: Benchmark means the rate specified as such in the applicable Pricing Supplement; business day means: (i) (ii) (iii) (in the case of Notes denominated in Singapore Dollars) a day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are open for business in Singapore; (in the case of Notes denominated in euro) a day on which the TARGET System is open for settlement of payment in euro; and (in the case of Notes denominated in a currency other than Singapore Dollars and euro), a day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks and foreign exchange markets are open for business in Singapore and the principal financial centre for that currency; Calculation Amount means the amount specified as such on the face of any Note, or if no such amount is so specified, the Denomination Amount of such Note as shown on the face thereof; Interest Commencement Date means the Issue Date or such other date as may be specified as the Interest Commencement Date on the face of such Note; Interest Determination Date means, in respect of any Interest Period, that number of business days prior thereto as is set out in the applicable Pricing Supplement or on the face of the relevant Note; Primary Source means the Screen Page specified as such in the applicable Pricing Supplement and (in the case of any Screen Page provided by any information service other than the Bloomberg agency or the Reuters Monitor Money Rates Service ( Reuters )) agreed to by the Agent Bank; Reference Banks means the institutions specified as such in the applicable Pricing Supplement or, if none, three major banks selected by the Agent Bank in the interbank market that is most closely connected with the Benchmark; Relevant Currency means the currency in which the Notes are denominated; Relevant Dealer means, in respect of any Variable Rate Note, the Dealer party to the Programme Agreement referred to in the Agency Agreement with whom the Issuer has concluded or is negotiating an agreement for the issue of such Variable Rate Note pursuant to the Programme Agreement; Relevant Financial Centre means, in the case of interest to be determined on an Interest Determination Date with respect to any Floating Rate Note or Variable Rate Note, the financial centre with which the relevant Benchmark is most closely connected or, if none is so connected, Singapore; 30

33 Relevant Rate means the Benchmark for a Calculation Amount of the Relevant Currency for a period (if applicable or appropriate to the Benchmark) equal to the relevant Interest Period; Relevant Time means, with respect to any Interest Determination Date, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Relevant Currency in the interbank market in the Relevant Financial Centre; Screen Page means such page, section, caption, column or other part of a particular information service (including, but not limited to, the Bloomberg agency and Reuters) as may be specified in the applicable Pricing Supplement for the purpose of providing the Benchmark, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Benchmark; and TARGET System means the Trans-European Automated Real Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor thereto. (III) INTEREST ON HYBRID NOTES (a) Interest Rate and Accrual Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note. (b) Fixed Rate Period (i) In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Fixed Rate Period at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of the Note in each year and on the last day of the Fixed Rate Period if that date does not fall on an Interest Payment Date. (ii) (iii) (iv) The first payment of interest will be made on the Interest Payment Date next following the first day of the Fixed Rate Period (and if the first day of the Fixed Rate Period is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the last day of the Fixed Rate Period falls before the date on which the first payment of interest would otherwise be due. If the last day of the Fixed Rate Period is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the first day of the Fixed Rate Period, as the case may be) to the last day of the Fixed Rate Period will amount to the Final Broken Amount shown on the face of the Note. Where the due date of redemption of any Hybrid Note falls within the Fixed Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal (or the Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) to the Relevant Date. In the case of a Hybrid Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction shown on the face of such Note during the Fixed Rate Period. 31

34 (c) Floating Rate Period (i) In respect of the Floating Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Floating Rate Period, and such interest will be payable in arrear on each interest payment date ( Interest Payment Date ). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the Specified Number of Months ) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the first day of the Floating Rate Period (and which corresponds numerically with such preceding Interest Payment Date or the first day of the Floating Rate Period, as the case may be). If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day, then if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (1) such date shall be brought forward to the immediately preceding business day and (2) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (C) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day. (ii) (iii) (iv) The period beginning on (and including) the first day of the Floating Rate Period and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is herein called an Interest Period. Where the due date of redemption of any Hybrid Note falls within the Floating Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation thereof, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) to the Relevant Date. The provisions of Condition 4(II)(b) shall apply to each Hybrid Note during the Floating Rate Period as though references therein to Floating Rate Notes are references to Hybrid Notes. (IV) ZERO-COUPON NOTES Where a Note the Interest Basis of which is specified to be Zero-Coupon is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Note (determined in accordance with Condition 5(h)). As from the Maturity Date, the rate of interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 5(h)). 32

35 (V) CALCULATIONS IN RESPECT OF FLOATING RATE NOTES, VARIABLE RATE NOTES AND HYBRID NOTES (a) Determination of Rate of Interest and Calculation of Interest Amounts The Agent Bank will, as soon as practicable after the Relevant Time on each Interest Determination Date determine the Rate of Interest and calculate the amount of interest payable (the Interest Amounts ) in respect of each Calculation Amount of the relevant Floating Rate Notes, Variable Rate Notes or (where applicable) Hybrid Notes for the relevant Interest Period (including the first day, but excluding the last day, of such Interest Period). The amount of interest payable in respect of any such Note shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount, by the Day Count Fraction shown on the Note and rounding the resultant figure to the nearest sub-unit of the Relevant Currency. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Agent Bank shall (in the absence of manifest error) be final and binding upon all parties. (b) (c) (d) Notification The Agent Bank will cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to the Issuing and Paying Agent, the Trustee, the Issuer and (in the case of Floating Rate Notes) to be notified to Noteholders in accordance with Condition 15 as soon as possible after their determination but in no event later than the fourth business day thereafter. The Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period by reason of any Interest Payment Date not being a business day. If the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes become due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest and Interest Amounts need to be made unless the Trustee requires otherwise. Determination or Calculation by the Trustee If the Agent Bank does not at any material time determine or calculate the Rate of Interest for an Interest Period or any Interest Amount, the Trustee shall do so. In doing so, the Trustee shall apply the foregoing provisions of this Condition 4, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects, it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. Agent Bank and Reference Banks The Issuer will procure that, so long as any Floating Rate Note, Variable Rate Note or Hybrid Note remains outstanding, there shall at all times be three Reference Banks (or such other number as may be required) and, so long as any Floating Rate Note, Variable Rate Note, Hybrid Note or Zero-Coupon Note remains outstanding, there shall at all times be an Agent Bank. If any Reference Bank or Agent Bank (acting through its relevant office) is unable or unwilling to act as such or if the Agent Bank fails duly to establish the Rate of Interest for any Interest Period or to calculate the Interest Amounts, the Issuer will appoint another bank with an office in the Relevant Financial Centre to act as such in its place. The Agent Bank may not resign its duties without a successor having been appointed as aforesaid. 5. REDEMPTION AND PURCHASE (a) Redemption at Maturity Date Unless previously redeemed or purchased and cancelled as provided below, this Note will be redeemed at its Redemption Amount on the Maturity Date shown on its face (if this Note is shown on its face to be a Fixed Rate Note, Hybrid Note (during the Fixed Rate Period) or 33

36 Zero-Coupon Note) or on the Interest Payment Date falling in the Redemption Month shown on its face (if this Note is shown on its face to be a Floating Rate Note, Variable Rate Note or Hybrid Note (during the Floating Rate Period)). So long as the Notes are listed on any Stock Exchange (as defined in the Trust Deed), the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any redemption of Notes. (b) Redemption at Option of Noteholder (i) General: If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note on the date or dates so provided at its Redemption Amount, together with interest accrued to the date fixed for redemption. To exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with the Issuing and Paying Agent at its specified office, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent or the Issuer (as applicable) within the Noteholder s Redemption Option Period shown on the face hereof. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. (ii) Cessation or Suspension of Trading of the Shares of the Issuer: Following the occurrence of a Relevant Event (as defined below), the Issuer shall, at the option of the holder of any Note, redeem such Note on the Relevant Event Redemption Date (as defined below) at its Redemption Amount, together with interest accrued to the date fixed for redemption. To exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with the Issuing and Paying Agent at its specified office, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent ( Relevant Event Redemption Notice ) by not later than 45 days following the date upon which notice thereof is given to Noteholders by the Issuer in accordance with Condition 15. A Relevant Event Redemption Notice, once delivered, shall be irrevocable and may not be withdrawn (except as provided in the Agency Agreement) without the Issuer s consent and the Issuer shall redeem the Notes the subject of the Relevant Event Redemption Notice as aforesaid on the Relevant Event Redemption Date. The Issuer shall within five (5) business days of a Relevant Event Occurrence Date, give notice to the Trustee, the Issuing and Paying Agent and the Noteholders in accordance with Condition 15, which notice shall specify: (a) (b) (c) (d) the date on which the cessation of listing or admission of trading, or as the case may be, suspension of trading of the shares of the Issuer commenced; the date by which the Relevant Event Redemption Notice must be given; the date on which and the method by which the Redemption Amount will be paid; and the name and specified office of the Issuing and Paying Agent, provided that any failure by the Issuer to give such notice shall not prejudice any Noteholder of such option. For the avoidance of doubt, the Trustee shall not be required to take any steps to ascertain whether a Relevant Event or any event which could lead to the occurrence of a Relevant Event has occurred and shall not be responsible or liable to Noteholders for any loss arising from any failure to do so. 34

37 For the purposes of these Conditions: A Relevant Event occurs: (i) (ii) when the shares of the Issuer cease to be listed or admitted to trading on the SGX-ST (as defined in the Trust Deed); or when trading in the shares of the Issuer on the SGX-ST is suspended for a period equal to or exceeding 7 consecutive trading days, and Relevant Event Occurrence Date, in the case of (i) above means the date of cessation of listing or admission to trading on the SGX-ST and in the case of (ii) above means the date immediately following the expiry of the 7-trading day period. Relevant Event Redemption Date shall be the date (or, if such date is not a business day, on the immediately preceding business day) falling 75 days after the Relevant Event Occurrence Date. trading day means a day on which the SGX-ST is open for securities trading. (c) Redemption at Option of the Issuer If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within the Issuer s Redemption Option Period shown on the face hereof, redeem all or, if so provided, some of the Notes at their Redemption Amount or integral multiples thereof, and on the date or dates so provided. Any such redemption of Notes shall be at their Redemption Amount, together with interest accrued to the date fixed for redemption. All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition 5(c). In the case of a partial redemption of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be redeemed, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be fair and reasonable in the circumstances, taking account of prevailing market practices, subject to compliance with any applicable laws. So long as the Notes are listed on any Stock Exchange, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any redemption of Notes. (d) Purchase at the Option of the Issuer If so provided hereon, the Issuer shall have the option to purchase all or any of the Fixed Rate Notes, Floating Rate Notes, Variable Rate Notes or Hybrid Notes at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Noteholders shall be bound to sell such Notes to the Issuer accordingly. To exercise such option, the Issuer shall give irrevocable notice to the Noteholders within the Issuer s Purchase Option Period shown on the face hereof. Such Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. In the case of a purchase of some only of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be purchased, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on any Stock Exchange, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any purchase of Notes. 35

38 (e) Purchase at the Option of Noteholders (i) Each Noteholder shall have the option to have all or any of his Variable Rate Notes purchased by the Issuer at their Redemption Amount on any Interest Payment Date and the Issuer will purchase such Variable Rate Notes accordingly. To exercise such option, a Noteholder shall deposit any Variable Rate Notes to be purchased with the Issuing and Paying Agent at its specified office together with all Coupons relating to such Variable Rate Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent within the Noteholders VRN Purchase Option Period shown on the face hereof. Any Variable Rate Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Variable Rate Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Variable Rate Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. (ii) If so provided hereon, each Noteholder shall have the option to have all or any of his Fixed Rate Notes, Floating Rate Notes or Hybrid Notes purchased by the Issuer at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Issuer will purchase such Notes accordingly. To exercise such option, a Noteholder shall deposit any Notes to be purchased with the Issuing and Paying Agent at its specified office together with all Coupons relating to such Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent within the Noteholders Purchase Option Period shown on the face hereof. Any Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. (f) Redemption for Taxation Reasons If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not in part, on any Interest Payment Date or, if so specified hereon, at any time on giving not less than 30 nor more than 60 days notice to the Noteholders (which notice shall be irrevocable), at their Redemption Amount or (in the case of Zero-Coupon Notes) Early Redemption Amount (as determined in accordance with Condition 5(h)) (together with interest accrued to (but excluding) the date fixed for redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7, or increase the payment of such additional amounts, as a result of any change in, or amendment to, the laws (or any regulations, rulings or other administrative pronouncements promulgated thereunder) of Singapore or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws, regulations, rulings or other administrative pronouncements, which change or amendment is made public on or after the Issue Date or any other date specified in the Pricing Supplement, and (ii) such obligations cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Issuing and Paying Agent a certificate signed by a duly authorised officer of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal or tax advisors of recognised standing to the effect that the Issuer has or is likely to become obliged to pay such additional amounts as a result of such change or amendment. 36

39 (g) Purchases The Issuer or any of its subsidiaries may at any time purchase Notes at any price (provided that they are purchased together with all unmatured Coupons relating to them) in the open market or otherwise, provided that in any such case such purchase or purchases is in compliance with all relevant laws, regulations and directives. Notes purchased by the Issuer or any of its subsidiaries may be surrendered by the purchaser through the Issuer to the Issuing and Paying Agent for cancellation or may at the option of the Issuer or relevant subsidiary be held or resold. For the purposes of these Conditions, directive includes any present or future directive, regulation, request, requirement, rule or credit restraint programme of any relevant agency, authority, central bank department, government, legislative, minister, ministry, official public or statutory corporation, self-regulating organisation, or stock exchange. (h) Early Redemption of Zero-Coupon Notes (i) The Early Redemption Amount payable in respect of any Zero-Coupon Note, the Early Redemption Amount of which is not linked to an index and/or formula, upon redemption of such Note pursuant to Condition 5(f) or upon it becoming due and payable as provided in Condition 9, shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon. (ii) (iii) Subject to the provisions of Condition 5(h)(iii), the Amortised Face Amount of any such Note shall be the scheduled Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually. If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 5(f) or upon it becoming due and payable as provided in Condition 9 is not paid when due, the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note as defined in Condition 5(h)(ii), except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this Condition 5(h)(iii) will continue to be made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Redemption Amount of such Note on the Maturity Date together with any interest which may accrue in accordance with Condition 4(IV). Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction shown on the face of such Note. (i) Cancellation All Notes purchased by or on behalf of the Issuer or any of its subsidiaries may be surrendered for cancellation by surrendering each such Note together with all unmatured Coupons to the Issuing and Paying Agent at its specified office and, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold. 6. PAYMENTS (a) Principal and Interest Payments of principal (or, as the case may be, Redemption Amounts) and interest in respect of the Notes will, subject as mentioned below, be made against presentation and surrender of the relevant Notes or Coupons, as the case may be, at the specified office of the Issuing 37

40 and Paying Agent by a cheque drawn in the currency in which that payment is due on, or, at the option of the holders, by transfer to an account maintained by the payee in that currency with a bank in the principal financial centre for that currency or, in the case of euro, in a city in which banks have access to the TARGET System. (b) (c) Payments subject to law etc. All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments. Appointment of Agents The Issuing and Paying Agent initially appointed by the Issuer and its specified office are listed below. The Issuer reserves the right at any time to vary or terminate the appointment of the Issuing and Paying Agent and/or the Agent Bank in accordance with the terms of the Agency Agreement and to appoint additional or other Agents, provided that it will at all times maintain (i) an Issuing and Paying Agent having a specified office in Singapore and (ii) an Agent Bank where the Conditions so require. Notice of any such change or any change of any specified office will promptly be given to the Noteholders in accordance with Condition 15. Subject to the provisions of the Agency Agreement, the Agency Agreement may be amended by the Issuer, the Issuing and Paying Agent, the Agent Bank and the Trustee, without the consent of any Noteholder or Couponholder, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained therein. Any such amendment shall be binding on the Noteholders and Couponholders. (d) Unmatured Coupons (i) Fixed Rate Notes and Hybrid Notes should be surrendered for payment together with all unmatured Coupons (if any) relating to such Notes (and, in the case of Hybrid Notes, relating to interest payable during the Fixed Rate Period), failing which an amount equal to the face value of each missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears to the total principal due) will be deducted from the Redemption Amount due for payment. Any amount so deducted will be paid in the manner mentioned above against surrender of such missing Coupon within a period of five (5) years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 8). (ii) (iii) (iv) Subject to the provisions of the relevant Pricing Supplement upon the due date for redemption of any Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured Coupons relating to such Note (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period) (whether or not attached) shall become void and no payment shall be made in respect of them. Where any Floating Rate Note, Variable Rate Note or Hybrid Note is presented for redemption without all unmatured Coupons relating to it (and, in the case of the Hybrid Note, relating to interest payable during the Floating Rate Period), redemption shall be made only against the provision of such indemnity as the Issuer may require. If the due date for redemption or repayment of any Note is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Note. 38

41 (e) (f) Non-business days Subject as provided in the relevant Pricing Supplement and/or in these Conditions, if any date for the payment in respect of any Note or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day and shall not be entitled to any further interest or other payment in respect of any such delay. Default Interest If on or after the due date for payment of any sum in respect of the Notes, payment of all or any part of such sum is not made against due presentation of the Notes or, as the case may be, the Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum determined by the Issuing and Paying Agent to be equal to two per cent. per annum above (in the case of a Fixed Rate Note or a Hybrid Note during the Fixed Rate Period) the Interest Rate applicable to such Note, (in the case of a Floating Rate Note or a Hybrid Note during the Floating Rate Period) the Rate of Interest applicable to such Note or (in the case of a Variable Rate Note) the variable rate by which the Agreed Yield applicable to such Note is determined or, as the case may be, the Rate of Interest applicable to such Note, or in the case of a Zero-Coupon Note, as provided for in the relevant Pricing Supplement. So long as the default continues then such rate shall be re-calculated on the same basis at intervals of such duration as the Issuing and Paying Agent may select, save that the amount of unpaid interest at the above rate accruing during the preceding such period shall be added to the amount in respect of which the Issuer is in default and itself bear interest accordingly. Interest at the rate(s) determined in accordance with this paragraph shall be calculated on the Day Count Fraction shown on the face of such Note and the actual number of days elapsed, shall accrue on a daily basis and shall be immediately due and payable by the Issuer. 7. TAXATION (a) Payment after Withholding All payments in respect of the Notes and Coupons by or on behalf of the Issuer shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature ( Taxes ) imposed or levied by or on behalf of Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment: (i) (ii) by or on behalf of a holder who is subject to such Taxes by reason of his being connected with Singapore (including, without limitation, the holder being (A) a resident in Singapore for tax purposes or (B) a non-resident of Singapore who has been granted an exemption by the Inland Revenue Authority of Singapore in respect of the requirement to withhold tax on payments made to it) otherwise than by reason only of the holding of such Note or Coupon or the receipt of any sums due in respect of such Note or Coupon; or more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to such additional amounts on presenting the same for payment on the last day of such period of 30 days. (b) Interpretation As used in these Conditions, Relevant Date in respect of any Note or Coupon means the date on which payment in respect thereof first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date falling seven days after that on which notice is duly given to the Noteholders in accordance with Condition 15 that, upon further presentation 39

42 of the Note or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon presentation, and references to principal shall be deemed to include any premium payable in respect of the Notes, all Redemption Amounts, Early Redemption Amounts and all other amounts in the nature of principal payable pursuant to Condition 5, interest shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 4 and any reference to principal and/ or premium and/or Redemption Amounts and/or interest and/or Early Redemption Amounts shall be deemed to include any additional amounts which may be payable under these Conditions. 8. PRESCRIPTION The Notes and Coupons shall become void unless presented for payment within five (5) years from the appropriate Relevant Date for payment. 9. EVENTS OF DEFAULT If any of the following events ( Events of Default ) occurs, the Trustee at its discretion may, and if so requested in writing by the holders of at least 25 per cent. in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, give notice in writing to the Issuer that the Notes are immediately repayable, whereupon the Redemption Amount of such Notes or (in the case of Zero-Coupon Notes) the Early Redemption Amount of such Notes together with accrued interest to the date of payment shall become immediately due and payable: (a) (b) (c) the Issuer does not pay any principal or interest payable by it under any of the Notes when due and such default continues for a period of three (3) business days after the due date; the Issuer fails to perform or observe any one or more of its obligations (other than the payment obligation referred to in Condition 9(a)) under any of the Transaction Documents (as defined in the Trust Deed) or any of the Notes and, if in the opinion of the Trustee that default is capable of remedy, it is not in the opinion of the Trustee remedied within 14 days after notice of default shall have been given by the Trustee to the Issuer; any representation, warranty or statement made by the Issuer in any of the Transaction Documents or any of the Notes or in any document delivered under any of the Transaction Documents or any of the Notes is not complied with in any respect or is or proves to have been incorrect in any respect when made or deemed repeated and if the event resulting in such non-compliance or incorrectness is in the opinion of the Trustee capable of remedy, it is not in the opinion of the Trustee remedied within 14 days after notice of such non-compliance or incorrectness shall have been given by the Trustee to the Issuer; (d) (i) (A) (I) any other present or future indebtedness of the Issuer or any of its Principal Subsidiaries in respect of borrowed money is or is declared to be or is capable of being rendered due and payable before its stated maturity by reason of any actual or potential default, event of default or the like (however described), (II) any such indebtedness of the Issuer or any of its Principal Subsidiaries in respect of borrowed money is not paid when due or, as the case may be, within any originally applicable grace period in any agreement relating to that indebtedness or (B) as a result of any actual or potential default, event of default or the like (however described), any facility relating to any such indebtedness is declared to be or is cancelled or terminated before its normal expiry date or any person otherwise entitled to use any such facility is not so entitled; or (ii) the Issuer or any of its Principal Subsidiaries fails to pay when due or expressed to be due, any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised, 40

43 provided that no Event of Default will occur under this Condition 9(d) unless and until the aggregate amount of the indebtedness in respect of which one or more of the events mentioned above in this Condition 9(d) has/have occurred equals or exceeds US$15,000,000 (or its equivalent in any other currency or currencies); (e) (i) the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or any material part of its Business (as defined in the Trust Deed) or (ii) the Issuer or any of its subsidiaries (save as permitted under Clause 16(x) of the Trust Deed) disposes or threatens to dispose of the whole or a substantial part of its property or assets; (f) (i) any corporate action or legal proceeding is taken with a view to the winding-up or termination of the Issuer or any of its Principal Subsidiaries or for the appointment of a liquidator (including a provisional liquidator), receiver, judicial manager, trustee, administrator, agent or similar officer of the Issuer or any of its Principal Subsidiaries or over all or any material part of the assets of the Issuer or any of its Principal Subsidiaries (except (1) (in the case of voluntary liquidation or winding-up of a Principal Subsidiary only not involving insolvency) for the purpose of and followed by an amalgamation, reconstruction, reorganisation, merger or consolidation and such event is not likely to have a material adverse effect (as defined in the Trust Deed) on the Issuer or (2) on terms approved by the Noteholders by way of an Extraordinary Resolution before such event occurs); or (ii) a receiver, trustee, administrator, agent or similar officer of the Issuer or any of its Principal Subsidiaries or over all or any material part of the assets of the Issuer or any of its Principal Subsidiaries is appointed; (g) (h) (i) (j) (k) the Issuer or any of its Principal Subsidiaries is (or is, or would be deemed by law or a court to be) insolvent or unable to pay its debts as they fall due, or stops, suspends or threatens to stop or suspend payment of all or any material part of (or a particular type of) its indebtedness (other than those which are both (i) not by reason of financial difficulty and (ii) are being contested in good faith and by appropriate proceedings), begins negotiations or takes any other proceeding for the deferral, rescheduling or other readjustment of all or any material part of (or a particular type of) its indebtedness (or of any material part which it will otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or scheme or composition with or for the benefit of its creditors or a moratorium is agreed or declared in respect of or affecting all or any material part of (or of a particular type of) its indebtedness; a distress, attachment or execution or other legal process is levied, enforced or sued out on or against all or any material part of the assets of the Issuer or any of its Principal Subsidiaries and is not discharged within 21 days; any security on or over the whole or any material part of the assets of the Issuer or any of its Principal Subsidiaries becomes enforceable; any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any material part of the assets of the Issuer or any of its Principal Subsidiaries; any action, condition or thing (including the obtaining of any necessary consent) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under each of the Transaction Documents and the Notes, (ii) to ensure that those obligations are valid, legally binding and enforceable, (iii) to ensure that those obligations rank and will at all times rank in accordance with Condition 2 or (iv) to make the Transaction Documents and the Notes admissible in evidence in the courts of Singapore is not taken, fulfilled or done (in the case of any action, condition or thing required to be taken, fulfilled or done by law, within the time period prescribed by the relevant law), or any such consent ceases to be in full force and effect without modification or any condition in or relating to any such consent is not complied with (unless that consent or condition is no longer required or applicable); 41

44 (l) (m) (n) (o) (p) it is or will become unlawful or illegal for the Issuer to observe, perform or comply with any one or more of its obligations under any of the Notes or any Transaction Document; any Transaction Document or any of the Notes ceases or is claimed by the Issuer to cease at any time and for any reason to constitute legal and valid obligations of the Issuer, binding upon it in accordance with its terms; any litigation, arbitration or administrative proceeding (other than those which are of a frivolous or vexatious nature and discharged within 30 days of its commencement) is current or pending against the Issuer or any of its Principal Subsidiaries (i) to restrain the entry into, exercise of any of the rights and/or the performance or enforcement of or compliance with any of the obligations of the Issuer under the Transaction Documents or any of the Notes or (ii) which has or is reasonably likely to have a material adverse effect on the Issuer; any event occurs which, under the laws of any relevant jurisdiction, has an analogous effect to any of the events referred to in Condition 9(f), (g), (h), (i) or (j); or the Issuer or any of its subsidiaries is declared by the Minister of Finance to be a declared company under the provisions of Part IX of the Companies Act (as defined in the Trust Deed) and such declaration has a material adverse effect on the Issuer. In these Conditions: Group means the Issuer and its subsidiaries; Principal Subsidiary means, at any particular time, any subsidiary of the Issuer whose total assets or profit after tax, as shown by the accounts of such subsidiary (consolidated in the case of a subsidiary which itself has subsidiaries), based upon which the latest audited consolidated accounts of the Group have been prepared, are at least 15 per cent. of the total assets or, as the case may be, profit after tax of the Group as shown by such audited consolidated accounts, provided that if any such subsidiary (the transferor ) shall at any time transfer the whole or any substantial part of its business, undertaking or assets to another subsidiary or the Issuer (the transferee ) then: (aa) if the whole of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall thereupon cease to be a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary; and (bb) if a part only of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall remain a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary. Any subsidiary which becomes a Principal Subsidiary by virtue of (aa) above or which remains or becomes a Principal Subsidiary by virtue of (bb) above shall continue to be a Principal Subsidiary until the earlier of: (I) (II) the date of issue of the first audited consolidated accounts of the Group prepared as at a date later than the date of the relevant transfer which show the total assets or profit after tax as shown by the accounts of such subsidiary (consolidated in the case of a subsidiary which itself has subsidiaries), based upon which such audited consolidated accounts have been prepared, to be less than 15 per cent. of the total assets or, as the case may be, profit after tax of the Group, as shown by such audited consolidated accounts, and a report by the Auditors (as defined in the Trust Deed) as described below which shows the total assets or, as the case may be, the profit after tax of such subsidiary to be less than 15 per cent. of the total assets or, as the case may be, profit after tax of the Group, as shown by such report of the Auditors. A report by the Auditors, who shall also be responsible for producing any pro-forma accounts required for the above purposes, that in their opinion a subsidiary is or is not a Principal Subsidiary shall, in the absence of manifest error, be conclusive; and 42

45 subsidiary has the meaning ascribed to it in section 5 of the Companies Act. 10. ENFORCEMENT At any time after the Notes shall have become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce repayment of the Notes, together with accrued interest, but it shall not be bound to take any such proceedings unless (a) it shall have been so requested in writing by the holders of not less than 25 per cent. in principal amount of the Notes outstanding or so directed by an Extraordinary Resolution and (b) it shall have been indemnified and/or secured by the Noteholders to its satisfaction. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails or neglects to do so within a reasonable period and such failure or neglect is continuing. 11. MEETING OF NOTEHOLDERS AND MODIFICATIONS (a) The Trust Deed contains provisions for convening meetings of Noteholders of a Series to consider any matter affecting their interests, including modification by Extraordinary Resolution of the Notes of such Series (including these Conditions insofar as the same may apply to such Notes) or any of the provisions of the Trust Deed. (b) (c) (d) The Trustee or the Issuer at any time may, and the Trustee upon the request in writing by Noteholders holding not less than 10 per cent. in principal amount of the Notes of any Series for the time being outstanding shall, convene a meeting of the Noteholders of that Series. An Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders of the relevant Series (save where provided to the contrary in the Trust Deed and these Conditions), whether present or not and on all relevant Couponholders, except that any Extraordinary Resolution proposed, inter alia, (i) to amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest Amounts on the Notes, (ii) to reduce or cancel the principal amount of, or any premium payable on redemption of, the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates of interest or the basis for calculating any amount of interest in respect of the Notes, (iv) to vary the currency or currencies of payment or denomination of the Notes, (v) to take any steps that as specified hereon may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply, (vi) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution or (vii) to vary any method of, or basis for, calculating the Redemption Amount or the Early Redemption Amount including the calculation of the Amortised Face Amount, will only be binding if passed at a meeting of the Noteholders of the relevant Series (or at any adjournment thereof) at which a special quorum (provided for in the Trust Deed) is present. The Trustee may agree, without the consent of the Noteholders or Couponholders, to any modification (subject to certain exceptions mentioned in the Trust Deed) of, or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions or any of the provisions of the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or may agree, without any such consent as aforesaid, to any modification, waiver or authorisation which, in its opinion, is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of Singapore law or is required by Euroclear and/or Clearstream, Luxembourg and/or CDP and/or any other clearing system in which the Notes may be held. Any such modification, waiver or authorisation shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon as practicable. In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as 43

46 a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders. (e) (f) These Conditions may be amended, modified, or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series. For the purpose of ascertaining the right to attend and vote at any meeting of the Noteholders convened for the purpose of and in relation to Conditions 9, 10 and 11 and Clauses 9.2 and 28 of, and Schedule 4 to, the Trust Deed, those Notes (if any) which are beneficially held by, or are held on behalf of the Issuer, and any of its related corporations and not cancelled shall (unless and until ceasing to be so held) be disregarded when determining whether the requisite quorum of such meeting has been met and any votes cast or purported to be cast at such meeting in respect of such Notes shall be disregarded and be null and void. 12. REPLACEMENT OF NOTES AND COUPONS Should any Note or Coupon be lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, at the specified office of the Issuing and Paying Agent (or at the specified office of such other Issuing and Paying Agent as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to the Noteholders in accordance with Condition 15) upon payment by the claimant of the costs, expenses and duties incurred in connection with the replacement and on such terms as to evidence, undertaking, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note or Coupon is subsequently presented for payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of such Note or Coupon) or otherwise as the Issuer may require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued. 13. FURTHER ISSUES The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes having the same terms and conditions as the Notes of any Series and so that the same shall be consolidated and form a single Series with such Notes, and references in these Conditions to Notes shall be construed accordingly. 14. INDEMNIFICATION OF THE TRUSTEE AND ITS CONTRACTING WITH THE COMPANY The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer and to act as trustee of the holders of any other securities issued by, or relating to, the Issuer, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith. The Trust Deed also provides that the Trustee will not be liable for, inter alia, any action taken or omitted by it except to the extent that a court of competent jurisdiction determines that the Trustee s gross negligence, wilful default or fraud was the primary cause of any loss to the Noteholders, and that each Noteholder shall be solely responsible for making and continuing to make its own 44

47 independent appraisal of and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer, and the Trustee shall not at any time have any responsibility for the same and each Noteholder shall not rely on the Trustee in this respect thereof. 15. NOTICES Notices to the holders will be valid if published in a daily newspaper of general circulation in Singapore (or, if the holders of any Notes can be identified, notices to such holders will also be valid if they are given to each of such holders). It is expected that such publication will be made in The Business Times. Notices will, if published more than once or on different dates, be deemed to have been given on the date of the first publication in such newspaper as provided above. Couponholders shall be deemed for all purposes to have notice of the contents of any notice to the holders in accordance with this Condition 15. Until such time as any Definitive Notes are issued, there may, so long as the Global Note(s) is or are held in its or their entirety on behalf of CDP, or as the case may be, Euroclear and/or Clearstream, Luxembourg, be substituted for such publication in such newspapers the delivery of the relevant notice to (subject to the agreement of CDP) CDP, or as the case may be, Euroclear and/or Clearstream, Luxembourg for communication by it to the Noteholders, except that if the Notes are listed on the SGX-ST and the rules of such exchange so require, notice will in any event be published in accordance with the first paragraph. Any such notice shall be deemed to have been given to the Noteholders on the seventh day after the day on which the said notice was given to CDP, or as the case may be, Euroclear and/or Clearstream, Luxembourg. Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Issuing and Paying Agent. Whilst the Notes are represented by a Global Note, such notice may be given by any Noteholder to the Issuing and Paying Agent through CDP, or as the case may be, Euroclear and/ or Clearstream, Luxembourg in such manner as the Issuing and Paying Agent and CDP, or as the case may be, Euroclear and/or Clearstream, Luxembourg may approve for this purpose. Notwithstanding the other provisions of this Condition, in any case where the identity and addresses of all the Noteholders are known to the Issuer, notices to such holders may be given individually by recorded delivery mail to such addresses and will be deemed to have been given when received at such addresses. 16. GOVERNING LAW The Notes and the Coupons are governed by, and shall be construed in accordance with, the laws of Singapore. 17. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT (CHAPTER 53B OF SINGAPORE) No person shall have any right under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce or enjoy the benefit of any term or condition of this Note. 45

48 RISK FACTORS Prior to making an investment or divestment decision, prospective investors in or existing holders of the Notes should carefully consider all of the information set forth in this Information Memorandum including any documents incorporated by reference herein and the risk factors set out below. The risk factors set out below do not purport to be complete or comprehensive of all the risks that may be involved in the businesses of the Issuer or the Group or any decision to purchase, own or dispose of the Notes. Additional risks which the Issuer is currently unaware of may also impair the business, assets, financial condition, performance, results of operations and/or prospects of the Issuer and/or the Group. If any of the following risk factors develops into actual events, the business, assets, financial condition, performance, results of operations and/or prospects of the Issuer and/or the Group could be materially and adversely affected. In such cases, the ability of the Issuer to comply with its obligations under the Trust Deed and the Notes may be adversely affected. LIMITATIONS OF THIS INFORMATION MEMORANDUM This Information Memorandum does not purport to nor does it contain all information that a prospective investor in or existing holder of the Notes may require in investigating the Issuer or the Group, prior to making an investment or divestment decision in relation to the Notes issued under the Programme. This Information Memorandum is not, and does not purport to be, investment advice. A prospective investor should make an investment in the Notes only after it has determined that such investment is suitable for its investment objectives. Determining whether an investment in the Notes is suitable is a prospective investor s responsibility. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the Notes (or any part thereof) is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, either of the Arrangers or any of the Dealers that any recipient of this Information Memorandum or any such other document or information (or any part thereof) should subscribe for or purchase or sell any of the Notes. Each person receiving this Information Memorandum acknowledges that such person has not relied on the Issuer or its subsidiaries and/ or associated companies (if any), either of the Arrangers or any of the Dealers or any person affiliated with each of them in connection with its investigation of the accuracy or completeness of the information contained herein or of any additional information considered by it to be necessary in connection with its investment or divestment decision. Any recipient of this Information Memorandum contemplating subscribing for or purchasing or selling any of the Notes should determine for itself the relevance of the information contained in this Information Memorandum and any such other document or information (or such part thereof) and its investment or divestment should be, and shall be deemed to be, based solely upon its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and its subsidiaries and/or associated companies (if any), the terms and conditions of the Notes and any other factors relevant to its decision, including the merits and risks involved. A prospective investor should consult with its legal, tax and financial advisers prior to deciding to make an investment in the Notes. RISKS RELATING TO THE BUSINESS AND OPERATIONS OF THE GROUP The Group is affected by developments in the industries in which its customers operate The Group derives its revenues largely from customers in the following industry sectors: casing and enclosures, mass storage, consumer electronics, automotive, electrical and electronic components and imaging and printing. Factors affecting any of these industries in general, or any of the Group s customers in particular, could adversely affect the Group because its revenue growth largely depends on the continued growth of its customers business in their respective industries. These factors include: seasonality of demand for its customers products which may cause its manufacturing capacity to be underutilised for periods of time; its customers failure to successfully market their products, to gain or retain widespread commercial acceptance of their products or to compete effectively in their industries; loss of market share for its customers products, which may lead its customers to reduce or discontinue purchasing its solutions and to reduce prices, thereby exerting pricing pressure on it; 46

49 economic conditions in the markets in which its customers operate, in particular, the United States, Europe and the PRC, including recessionary periods such as the recent global economic downturn; and product design changes that may reduce or eliminate demand for the components it supplies. The Group s sales depends on the success of its customers, some of which operate in businesses associated with rapid technological change and consequent product obsolescence. If economic conditions and demand for the Group s customers products deteriorate, it may experience a material adverse effect on its business, operating results and financial condition. The Group is dependent on its major customers, and a loss of or reduction in sales to a major customer would adversely affect it The loss of a major customer, if not replaced, would adversely affect the Group. In FY2012, the revenue from the Group s top two major customers amounted to US$73 million and US$71.8 million respectively, which together represented 21.4% of the Group s revenue. Developments adverse to its major customers or their products, or the failure of a major customer to pay for components or services on a timely basis or at all, could have an adverse effect on it. The Group s performance depends on sales to its largest customers and any material delay, cancellation or reduction of orders from these customers or other significant customers may have a material adverse effect on its results of operations. In addition, some of the Group s larger customers could make substantial demands on it, including demands on product pricing and contractual terms, which may result in the allocation of pricing risk to it and the imposition of additional obligations and restrictions. Any changes in the terms under which the Group supplies its services or the loss of a major customer or reduction in sales to a major customer, if not replaced, may adversely affect the Group. If the Group s customers stop or reduce their outsourcing of manufacturing supply chain management, its business could suffer The Group depends on outsourcing by its customers and derives revenues from the manufacturing supply chain management services it provides. Current and prospective customers continuously evaluate its capabilities against other providers as well as against the merits of manufacturing products themselves. Some of the Group s customers have the in-house ability to design or manufacture the products it produces and in a downturn its customers may choose to design and manufacture products internally rather than outsource these functions to external providers such as the Group. The Group s business would be adversely affected if its customers and prospective customers decide to perform some or all of these functions internally. Similarly, the Group depends on new outsourcing opportunities to grow its revenues, and its business would be adversely affected if it is not successful in gaining additional business from these opportunities or if its customers and prospective customers do not outsource additional manufacturing business or reduce such outsourcing. Many of the Group s customers do not commit to long-term production schedules, which makes it difficult for the Group to schedule production accurately and achieve maximum efficiency of its manufacturing capacity The Group s customers do not commit to long-term contracts. Many of its customers do not commit to firm production schedules for more than one month in advance and it continues to experience reduced lead-times in customer orders. Additionally, customers may change production quantities or delay production with little lead-time or advance notice. Therefore, the Group relies on and plans its production and inventory levels based on its customers advance orders, commitments or forecasts, as well as its internal assessments and forecasts of customer demand. The volume and timing of sales to the Group s customers may vary due to, among others: variation in demand for or discontinuation of its customers products; its customers attempts to manage their inventory; design changes; changes in its customers manufacturing strategies; and 47

50 acquisitions of or consolidation among customers. The variations in volume and timing of sales make it difficult to schedule production and optimise utilisation of manufacturing capacity. This uncertainty may require the Group to increase staffing and incur other expenses in order to meet an unexpected increase in customer demand, potentially placing a significant burden on its resources. Additionally, a failure to respond to such increases adequately may cause customer dissatisfaction, which may negatively affect the Group s relationship with its customers. Further, in order to secure sufficient production scale, the Group may make capital investments in advance of anticipated customer demand. Such investments may lead to low utilisation levels if customer demand forecasts change and the Group is unable to utilise the additional capacity. Because fixed costs make up a large proportion of its total production costs, a reduction in customer demand can have a significant adverse impact on its gross profits and operating results. Suppliers may require the Group to purchase materials and components in minimum quantities that exceed customer requirements and this may have an adverse impact on its gross profits and operating results. Additionally, the Group orders materials and components based on customer forecasts and orders. In the past, anticipated orders from many of the Group s customers have failed to materialise and delivery schedules have been deferred as a result of changes in its customers business needs. The Group has also allowed long-term customers to delay orders so that excess inventory can be absorbed. Such order fluctuations and deferrals have had a material adverse effect on the Group in the past, and it may experience similar fluctuations and deferrals in the future, which may have a material adverse effect on its business, operating results and financial condition. The Group competes with numerous other precision engineering/manufacturing services and design providers and competition from these providers may affect the profitability of its business The Group operates in a highly competitive industry. It competes with numerous companies that provide precision engineering and manufacturing services as well as design providers in various individual industry sectors. Many of the Group s competitors have international operations and significant financial resources and some have substantially greater manufacturing, research and design and marketing resources than the Group. These competitors may, among others: respond more quickly to new or emerging technologies; have greater name recognition, critical mass or geographic market presence; be better able to take advantage of acquisition opportunities; adapt more quickly to changes in customer requirements; devote greater resources to the development, promotion and sale of their services; be better positioned to compete on price for their services, due to any combination of lower costs of labour, raw materials, components, facilities or other operating items, or willingness to make sales or provide services at lower margins than the Group; consolidate with other competitors in the Group s industry which may create increased pricing and competitive pressures on its business; and be better able to utilise excess capacity which may reduce the cost of their products or services. Competitors with lower cost structures may have a competitive advantage when bidding for business with the Group s customers. The Group also expects its competitors to continue to improve the performance of their current products or services, to reduce prices of their existing products or services and to introduce new products or services that may offer greater performance and improved pricing. Additionally, the Group may face competition from new entrants to its business. Any of these developments could cause a decline in sales and average selling prices, a loss of market share of its products or services or profit margin compression. 48

51 The Group may not be able to maintain its design, engineering, technological and manufacturing process expertise The markets for the Group s precision engineering/manufacturing services are characterised by rapidly changing technologies and evolving process development. The continued success of the Group s business will depend upon its ability to: hire, retain and expand its pool of qualified engineering and technical personnel; maintain technological leadership in its industry; develop and market manufacturing services that meet changing customer needs; and successfully anticipate or respond to technological changes in manufacturing processes in a cost effective and timely manner. The Group cannot be certain that it will develop the capabilities required by its customers in the future. The emergence of new technologies, industry standards or customer requirements may render its equipment, inventory or processes obsolete or uncompetitive. The Group may have to acquire new technologies and equipment to remain competitive, and this may require it to incur significant expense and capital investment, which could reduce its margins and affect its operating results. When the Group establishes or acquires new facilities, it may not be able to maintain or develop its engineering, technological and manufacturing process expertise due to a lack of trained personnel, effective training of new staff or technical difficulties with machinery. The Group s failure to anticipate and adapt to its customers changing technological needs and requirements or to hire and retain a sufficient number of engineers and maintain its engineering, technological and manufacturing expertise may have a material adverse effect on its business. The Group may encounter difficulties expanding into new end markets and providing more valueadded services As the Group expands its business by entering into new end markets and providing more value-added services, it may encounter difficulties that result in higher than expected costs associated with such activities and customer dissatisfaction with its performance. Potential difficulties related to the Group s growth and provision of additional products and services include: a lack of trained personnel to manage its operations and customer contracts appropriately; maintaining customer, supplier, employee and other favourable business relationships during a period of transition; effective training of staff to manage new customers and products; unanticipated disruptions in its operations due to technical difficulties, which may impact its ability to deliver to its customers on time, to produce quality products and to ensure overall customer satisfaction; additional competition in new markets; and making necessary technological improvements in manufacturing processes. Any of these factors could prevent the Group from realising the anticipated benefits of expanding into new end markets or the benefits it expected to realise from providing more value-added services and could adversely affect its business and operating results. Increasing costs of doing business in many countries in which the Group operates may adversely affect its business and financial results Increasing costs such as labour and overhead costs in the countries in which the Group operates may erode its profit margins and compromise its price competitiveness. Historically, the low cost of labour in certain of the countries in which the Group operates had been a competitive advantage but labour costs in these countries, including the PRC, Indonesia and Malaysia, have been increasing. The Group s 49

52 profitability is also dependent on its ability to manage and contain its other operating expenses such as the cost of utilities, factory supplies, factory space costs, equipment rental, repairs and maintenance and freight and packaging expenses. In the event that the Group is unable to manage any increase in its labour and other operating expenses in an environment where revenue does not increase proportionately, its business and financial results would be adversely affected. The Group is subject to risks of currency fluctuations and related hedging operations, and the appreciation of the currencies of countries in which it conducts its manufacturing operations, particularly the PRC, may negatively affect the profitability of its business Most of the Group s sales are in US dollar and it maintains its accounts in US dollar. Changes in exchange rates among other currencies such as the Singapore dollar, Malaysian Ringgit, the Indonesian Rupiah, the Czech Koruna, the PRC Renminbi or the Euro to the US dollar may negatively affect the Group s cost of sales, margins and net revenue where its expenses and revenues are denominated in different currencies. The Group cannot predict the effect of future exchange rate fluctuations. It may from time to time use financial instruments, primarily short-term forward contracts, to hedge US dollar and other currency commitments arising from foreign currency obligations. The Group does not have a fixed hedging policy currently. Where possible, it endeavours to match its non-functional currency exchange requirements to its receipts and convert, buy or sell any shortfall accordingly to meet its monthly requirements. If the Group s hedging activities are not successful or if it changes or reduces these hedging activities in the future, it may experience significant unexpected expenses from fluctuations in exchange rates. Additionally, if the duration of the Group s forward contracts exceeds a month, it would have to mark-to-market the value of such contracts which could cause it to recognise losses in its accounts. Volatility in the prices of raw materials and energy prices could adversely affect the Group s results of operations The prices of raw materials the Group relies on, such as steel, aluminium and copper, are based on global supply and demand conditions, as are the prices of petroleum-based components such as plastic. The Group s policy is not to purchase raw materials prior to receiving a binding customer forecast or order, but it cannot be certain that this policy will be strictly adhered to. While the Group currently passes through the price of raw materials to its customers, it may not be able to continue to do so in the future and volatility in the prices of raw materials may affect customer demand for certain products. In addition, the Group, along with its suppliers and customers, rely on various energy sources for a number of activities connected with its business, such as the transportation of raw materials and finished products. Energy and utility prices, including electricity and water prices, and in particular prices for petroleumbased energy sources, are volatile and have been on an upward trend. Increased operating costs, such as transportation costs, of the Group s suppliers and customers arising from volatility in the prices of any such energy sources could be passed through to it and it may not be able to increase its product prices sufficiently or at all to offset such increased costs. The impact of any volatility in the prices of raw materials it relies on or in energy prices or the reduction in the demand for certain products caused by such price volatility of energy and raw materials could result in a loss of revenue and profitability and adversely affect the Group s results of operations. The Group depends on its key executive officers, managers and skilled personnel and may have difficulty retaining and recruiting qualified employees The Group s success depends to a large extent upon the continued services of its executive officers, senior management personnel, managers and other skilled personnel and its ability to recruit skilled personnel to maintain and expand its operations. The Group could be affected by the loss of any of its executive officers who are responsible for formulating and implementing its business plan and strategy, and who have been instrumental in its growth and development. The Group cannot assure investors that it will retain its executive officers and other key employees through its employee share plans or other initiatives. In addition, in order to manage its growth, it will need to recruit and retain additional management personnel and other skilled employees. However, competition for skilled technical personnel among companies that rely on engineering and technology is high, and the loss of qualified employees or an inability to attract, retain and motivate additional skilled employees required for the operation and expansion of the Group s business could hinder its ability to conduct its design, engineering and manufacturing activities successfully and to develop marketable products. The Group has experienced 50

53 constraints in recruiting and retaining highly skilled workers in the markets in which it operates, such as in the PRC. The Group cannot assure investors that it will be able to attract the skilled personnel it requires, or to retain those whom it has trained at its cost, or whether suitable and timely replacements can be found for employees who leave it. If the Group is not able to do so, its business and its ability to continue to grow could be affected. The Group may incur additional expenses and delays due to technical problems or other interruptions at its manufacturing facilities Disruptions in operations due to technical problems or other interruptions such as floods or fire could adversely affect the manufacturing capacity of the Group s facilities. Such interruptions could cause delays in production and cause it to incur additional expenses such as charges for expedited deliveries for products that are delayed. Additionally, the Group s customers have the ability to cancel purchase orders in the event of any delays in production and may decrease future orders if delays are persistent. To the extent that such disruptions do not result from damage to its physical property, these may not be covered by its business interruption insurance. Any such disruptions may adversely affect the Group s operations and its financial results. The operations of the Group s manufacturing facilities may be disrupted by union activities, equipment failures and other problems The Group has unionised employees in some of its facilities in Indonesia, Malaysia, the Czech Republic and France. As at 31 December 2012, the Group has a total of 1,530 unionised personnel. For such employees, it has entered into collective bargaining agreements with the respective labour unions. Such agreements may in the future limit the Group s ability to contain increases in its labour costs as its ability to control its future labour costs depends partly on the outcome of its wage negotiations with its employees. Furthermore, any future collective bargaining agreements may lead to further increases in the Group s labour costs. Although the Group s employees in other jurisdictions are currently not unionised, there can be no assurance that they will continue to remain as such. Union activities and other labour-related problems not linked to union activities may disrupt the Group s operations and adversely affect its business and results of operations. The Group cannot provide any assurance that it will not be affected by any such labour unrest, or increase in labour cost, or interruptions to the operations of its existing manufacturing plants or new manufacturing plants that it may set up in the future. In addition, the Group relies on automation technology in its manufacturing processes. The Group may incur high costs upfront in procuring such technology and the Group may not be able to recover such costs through the sale of its products. The Group cannot provide any assurance that it will not be affected by any breakdowns in such manufacturing equipment or that such equipment will operate at its maximum capacity. Maintenance of such manufacturing equipment may also be costly and may interrupt the Group s production processes. Any disruptions to its manufacturing facilities as a result of labour-related or equipment-related disturbances could affect its ability to meet its delivery and efficiency targets resulting in an adverse effect on its customer relationships and its financial results. Such disruptions may not be covered by the Group s business interruption insurance. Any disruption in the Group s information systems could disrupt its operations and would be adverse to its business and financial operations The Group depends on information systems such as its enterprise resource planning system to support its customers requirements and to successfully manage its business, including managing orders, supplies, accounting controls and payroll. Any inability to successfully manage the procurement, development, implementation or execution of its information systems and back-up systems, including matters related to system security, reliability, performance and access, as well as any inability of these systems to fulfil their intended purpose within its business, could have an adverse effect on its business and financial performance. Such disruptions may not be covered by the Group s business interruption insurance. 51

54 The Group operates across multiple countries and jurisdictions which creates logistical challenges in its operations The distances between the PRC, Southeast Asia and Europe create a number of logistical and communications challenges for the Group. These challenges include managing operations across multiple time zones, directing the manufacture and delivery of products across long distances, coordinating procurement of components and raw materials and their delivery to multiple locations, and coordinating the activities and decisions of the members of its core management team, who are based in a number of different countries. Failure to manage such challenges may adversely affect its business and results of operations. Failure of the Group s customers to pay the amounts owed to it in a timely manner may adversely affect its financial condition and operating results The Group generally provides payment terms ranging from 30 to 90 days. As a result, it generates significant accounts receivable from sales to its customers, representing 44.8% of current assets as of 31 December Accounts receivable from sales to customers at 31 December 2012 were US$138.7 million. If any of the Group s customers have insufficient liquidity, the Group could encounter significant delays or defaults in payments owed to it by such customers, and it may need to extend its payment terms or restructure the receivables owed to it, which could have a significant adverse effect on its financial condition. Any deterioration in the financial condition of the Group s customers will increase the risk of uncollectible receivables. Global economic uncertainty could also affect its customers ability to pay its receivables in a timely manner or at all or result in customers going into bankruptcy or reorganisation proceedings, which could also affect its ability to collect its receivables. While the Group is dependent on its customers for its strategic relationships, it is also exposed to electronics manufacturing services providers ( EMS providers ), to whom it sells some of the components, casings and enclosures it supplies to its customers. The Group sells to these EMS providers at the direction of its customers and its customers are not liable for payment for the components, casings and enclosures that it sells to these third parties. The Group s products and services may be subject to warranty claims and its design services offerings may result in additional exposure to product liability, intellectual property infringement and other claims The Group s standard-term sales contracts generally include warranties for a period of one year or more to its customers for manufacturing defects where its products or services do not conform to the specifications stipulated by its customers. A successful claim for damages arising as a result of such defects or deficiencies may affect the Group s business reputation. In addition, as the Group pursues new end markets, warranty requirements will vary and it may be less effective in pricing its products to appropriately capture the warranty costs. These defects may also expose the Group to liability to pay for the recall of a product or require the Group to indemnify its customers for the costs of any such recalls which they face as a result of using items manufactured by the Group in their products. Additionally, the Group s end-to-end services include design services relating to products that it manufactures for its customers (including end-user products and components). Providing such services can expose the Group to different or greater potential liabilities than those it faces when providing its regular manufacturing services. For instance, the Group s design services business increases its exposure to potential product liability claims resulting from injuries caused by defects in products it designs, as well as potential claims that products it designs or processes it uses infringe on third-party intellectual property rights. Such claims could subject the Group to significant liability for damages, subject the infringing portion of its business to injunction and, regardless of its merits, could be time-consuming and expensive to resolve. The Group may also have greater potential exposure from warranty claims and product recalls due to problems caused by product design. Although the Group has product liability insurance coverage, it may not be sufficient to cover the full extent of its product liability, if at all. A successful product liability claim in excess of the Group s insurance coverage or any material claim for which insurance coverage was denied or limited and for which indemnification was not available could have a material adverse effect on its business, results of operations and financial condition. 52

55 The success of the Group s end-to-end solution activities depends in part on its ability to obtain, protect and leverage intellectual property rights to its designs The Group strives to obtain and protect certain intellectual property rights to its technology and processes through trade secret laws, its internal security systems, confidentiality procedures (including nondisclosure agreements with its customers and suppliers) and employee confidentiality agreements. The Group believes that having a significant level of protected proprietary technology gives it a competitive advantage in marketing its services. However, the Group cannot be certain that the measures that it employs will adequately safeguard its intellectual property rights or prevent unauthorised use of its technology and processes. Additionally, the Group cannot ensure that it will be able to enforce its patents even if the patents are obtained. If the Group is unable to obtain and protect intellectual property rights embodied within its designs, this could reduce or eliminate the competitive advantages of its proprietary technology, which would harm its business. The Group may encounter difficulties in completing or integrating acquisitions or may divest its member companies, which could adversely affect its operating results The Group expects to expand its presence in new end markets, expand its capabilities and acquire new customers, some of which may occur through acquisitions. These transactions may involve acquisitions of entire companies, portions of companies, the entry into of joint ventures and acquisitions of businesses or selected assets. Potential challenges related to the Group s acquisitions and joint ventures include: paying an excessive price for acquisitions and/or incurring higher than expected acquisition costs; difficulty in integrating acquired operations, systems and businesses; difficulty in implementing its financial and management controls, reporting systems and procedures; difficulty in maintaining customer, supplier, employee or other favourable business relationships of acquired operations and restructuring or terminating unfavourable relationships; ensuring sufficient due diligence prior to an acquisition and addressing unforeseen liabilities of acquired businesses; making acquisitions in new end markets or in technologies where its knowledge or experience is limited; failing to realise the benefits from goodwill and intangible assets resulting from acquisitions which may result in write-downs; and failing to achieve anticipated business volumes. Any of these factors could prevent the Group from realising the anticipated benefits of an acquisition, including additional revenue, operational synergies and economies of scale. The Group s failure to realise the anticipated benefits of acquisitions could adversely affect its business and operating results. The Group may also divest its member companies from time to time and there can be no assurance that such divestment will not adversely affect its business, financial performance and operating results. The Group is subject to risks inherent in joint venture structures The Group has, and expects in the future to have, interests in joint venture entities in connection with its business. Disagreements may occur between the Group and its joint venture partners regarding the business and operations of the joint ventures which may not be resolved amicably. In addition, the Group s joint venture partners may (i) have economic or business interests or goals that are inconsistent with that of the Group; (ii) take actions contrary to the Group s instructions, requests, policies or objectives; (iii) be unable or unwilling to fulfil their obligations; (iv) have financial difficulties; or (v) have disputes with the Group as to the scope of their responsibilities and obligations. Joint venture partners are not restricted from competing with the Group in other business areas. Although the Group does not believe that it has experienced any significant problems with respect to its partners to date, should such problems occur in the future they could have a material adverse effect on the businesses and prospects of the Group. 53

56 Additionally, in light of the current economic climate, the Group s joint venture partners (i) may not be able to fulfil their contractual obligations with the Group (for example they may default in making payments during future capital calls or capital raising exercises); or (ii) may experience a decline in their creditworthiness. The occurrence of any of these events may materially and adversely affect the performance of the Group s joint ventures, and/or may result in the Group making additional funding or capital contributions to the Group s joint ventures, which in turn may materially and adversely affect the Group s financial condition and results of operations. Acquisitions, expansions or infrastructure investments may require the Group to increase its level of indebtedness or issue additional equity Should the Group desire to consummate significant additional acquisition opportunities, undertake significant additional expansion activities or make substantial investments in its infrastructure, its capital needs would increase and it may need to increase available borrowings under its credit facilities or access public or private debt and equity markets. There can be no assurance, however, that the Group will be successful in raising additional debt or equity on terms that it would consider acceptable or at all. An increase in the level of the Group s indebtedness could, among other things: make it difficult for it to obtain financing in the future for acquisitions, working capital, capital expenditures, debt service requirements or other purposes; limit its flexibility in planning for or reacting to changes in its business; affect its ability to pay dividends; make it more vulnerable in the event of a downturn in its business; and affect certain financial covenants that it must comply with in connection with its credit facilities. An adverse change in the interest rates for the Group s borrowings could adversely affect its financial condition The Group pays interest on outstanding borrowings under some of its credit facilities at interest rates that fluctuate based upon changes in the Singapore Interbank Offered Rate ( SIBOR ), the London Interbank Offered Rate ( LIBOR ) and other benchmark rates. An adverse change in SIBOR, LIBOR or such other benchmark rates could have a material adverse effect on its financial position, results of operations, cash flows and ability to borrow money in the future. The Group enters into interest rate swaps to hedge some of this risk. If the duration of its interest rate swaps exceeds one month, it will have to mark-to-market the value of such swaps which could cause it to recognise losses in its accounts. The Group s credit facility contains restrictive covenants that may impair its ability to conduct its business The Group has entered into credit facilities provided by Standard Chartered Bank, DBS and other lenders. The credit facilities may contain financial and operating covenants that limit the Group s management s discretion with respect to certain business matters. Among other things, these covenants include restrictions on the Group s ability and its subsidiaries ability to incur additional debt, change the nature of its business, sell or otherwise dispose of assets, make acquisitions, and merge or consolidate with other entities. Failure to comply with such restrictive covenants may lead to default and acceleration under the Group s credit facility and may impair its ability to conduct its business. The Group may experience work-related accidents that may expose it to liability claims Due to the nature of the Group s operations, it is subject to the risks of its employees being exposed to industrial-related accidents at its premises. The Group has incurred certain non-material expenses in connection with such accidents, including the payment of healthcare costs and compensation to the employee. If such accidents occur in the future, the Group may be required to pay compensation and may also suffer reputational harm. Under such circumstances, its business and financial performance will be adversely affected. 54

57 If the Group s manufacturing processes and services do not comply with applicable statutory and regulatory requirements, or if it manufactures products containing design or manufacturing defects, demand for its services may decline and it may be subject to liability claims The Group manufactures and designs products to its customers specifications, and, in some cases, its designs, manufacturing processes and facilities may need to comply with applicable statutory and regulatory requirements. For example, products that are bound for Europe will have to comply with the Restriction of Hazardous Substances Directive (the RoHS Directive ), which restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment. The Group may also have the responsibility to ensure that products it designs satisfy safety and regulatory standards (including those applicable to its customers) and to obtain any necessary certifications. In addition, its customers products and the manufacturing processes that it uses to produce them are often highly complex. As a result, products that the Group manufactures may at times contain manufacturing or design defects, and its manufacturing processes may be subject to errors or not be in compliance with applicable statutory and regulatory requirements or demands of its customers. Defects in the products it manufactures or designs, whether caused by a design, manufacturing or component failure or error, or deficiencies in its manufacturing processes, may result in delayed shipments to customers, replacement costs or reduced or cancelled customer orders. The failure of the products that it manufactures or the failure of its manufacturing processes and facilities to comply with applicable statutory and regulatory requirements may subject the Group to legal fines or penalties and, in some cases, require it to shut down or incur considerable expense to correct a manufacturing process or facility. Even if the Group s customers are responsible for the defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose the Group to additional liability claims. Compliance or the failure to comply with regulations and governmental policies could cause the Group to incur significant expense The Group is subject to a variety of local and foreign laws and regulations including those relating to labour and health and safety concerns and import/export duties and customs. Such laws may require the Group to pay mandated compensation in the event of workplace accidents and penalties in the event of incorrect payments of duties or customs. Additionally, the Group may need to obtain and maintain licences and permits to conduct business in various jurisdictions. If the Group or the businesses or companies it acquires have failed or fail in the future to comply with such laws and regulations, then it could incur liabilities and fines and its operations could be suspended. Such laws and regulations could also restrict the Group s ability to modify or expand its facilities, could require it to acquire costly equipment, or could impose other significant expenditures. The Group s failure to comply with environmental laws could adversely affect its business and financial condition The Group is subject to various federal, state, local and foreign environmental laws and regulations, including regulations governing the use, storage, discharge and disposal of hazardous substances used in its manufacturing processes. Failure to obtain the requisite approvals or permits could lead to fines being imposed or, in certain cases, the shutting down of the Group s factories. If this were to happen, the Group cannot be certain that the impact of such failure would not have a more significant adverse effect on its business, operations and financial conditions than currently expected. The Group is also subject to laws and regulations governing the recyclability of products, the materials that may be included in products, and its obligations to dispose of these products after end-users have finished with them. The Group may also be required to procure permits in order to provide certain types of finishings it may seek to offer, which could take substantial time to obtain. Additionally, the Group may be exposed to liability to its customers relating to the materials that may be included in the components that it procures for its customers products. Any violation or alleged violation by the Group of environmental laws could subject it to significant costs, fines or other penalties. The Group is also required to comply with an increasing number of product environmental compliance regulations focused on the restriction of certain hazardous substances. For example, the electronics industry became subject to the EU s Restrictions on Hazardous Substances, Waste Electrical and Electronic Equipment directives beginning in 2005 and 2006 ( WEEE ), the regulation EC 1907/2006 EU Directive REACH (Regulation, Evaluation, Authorisation, and restriction of Chemicals), and the equivalent RoHS Directive of the PRC. Similar legislation has been or may be enacted in other jurisdictions, including 55

58 in the United States. The RoHS Directive and other similar legislation prohibits the use of lead, mercury and certain other specified substances in electronics products and WEEE requires EU importers and producers to assume responsibility for the collection, recycling and management of waste electronic products and components. Non-compliance could result in significant costs and penalties. In addition, increasing governmental focus on global warming may result in new environmental regulations that may negatively affect the Group, its suppliers and its customers by requiring it to incur additional direct costs to comply with new environmental regulations, as well as additional indirect costs as a result of its customers or suppliers passing on additional compliance costs to it. These costs may adversely affect the Group s operations and financial condition. The Group is or may be required to obtain and maintain quality or product certifications for certain markets In some countries, the Group s customers require or prefer that it obtains certain certifications for its products and testing facilities with regard to specifications/quality standards. For example, the Group is required to maintain ISO/TS for its automotive products. Consequently, the Group needs to obtain and maintain the relevant certifications so that its customers are able to sell their products, which are manufactured by it, in these countries. If the Group is unable to meet and maintain the requirements needed to secure or renew such certifications, it may not be able to sell its products to certain customers and its financial results may be adversely affected. The Group is exposed to foreign exchange control regimes in countries in which it has operations The subsidiaries within the Group are subject to the applicable foreign exchange control regimes in their respective jurisdictions, such as the PRC, Malaysia and Vietnam. For example, the PRC subsidiaries are subject to the PRC rules and regulations on currency conversion. In the PRC, the State Administration for Foreign Exchange ( SAFE ) regulates the conversion of the Renminbi into foreign currencies. Currently, foreign investment enterprises ( FIEs ) are required to apply to SAFE for Foreign Exchange Registration Certificates for FIEs. All of the PRC subsidiaries are FIEs. With such registration certifications (which need to be renewed annually), FIEs are allowed to open foreign currency accounts including the basic account and capital account. Currently, translation within the scope of the basic account (e.g. remittance of foreign currencies for payment of dividends, etc.) can be effected without requiring the approval of SAFE. However, conversion of currency in the capital account (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE. There can be no assurance that the current foreign exchange regulations will not be changed to the Group s detriment or that it will be able to continue to satisfy its foreign exchange requirements should such foreign exchange regulations be changed. Natural disasters, epidemics and other events outside the Group s control, and the ineffective management of such events, may harm its business Some of the Group s facilities are located in areas that may be affected by natural disasters such as hurricanes, earthquakes, water shortages, tsunamis and floods. All facilities are subject to other natural or man-made disasters such as fires, acts of terrorism, failures of utilities and epidemics. If such an event were to occur, the Group s business could be harmed due to the event itself or due to its inability to effectively manage the effects of the particular event. Potential harms include the loss of business continuity, the loss of business data, and damage to infrastructure. The Group s production could be severely affected if its employees, or the regions in which its facilities are located, are affected by a significant outbreak of any disease or epidemic. For example, a facility could be closed by government authorities for a sustained period of time, some or all of the Group s workforce could be unavailable due to quarantine, fear of catching the disease or other factors, and local, national or international transportation or other infrastructure could be affected, leading to delays or loss of production. In addition, the Group s suppliers and customers are subject to similar risks, which could lead to a shortage of components or a reduction in its customers demand for its services. 56

59 The Group relies on a variety of common carriers to transport its materials from its suppliers to it, and to transport its products from it to its customers. Problems suffered by any of these common carriers, whether due to a natural disaster, labour problem, act of terrorism, increased energy prices or some other issue, could result in shipping delays, increased costs, or some other supply chain disruption, and could therefore have a material adverse effect on its operations. In addition, some of the Group s facilities possess certifications necessary to work on specialised products that its other locations lack. If work is disrupted at one of these facilities, it may not be practicable or feasible to transfer such specialised work to another facility without significant costs and delays. Thus, any disruption in operations at a facility possessing specialised certifications could adversely affect the Group s ability to provide products and services to its customers, and thus negatively affect its relationships and financial results. Acts of terrorism and other political and economic developments could adversely affect the Group s business Increased international political instability and social unrest, evidenced by the threat or occurrence of terrorist attacks, enhanced national security measures and the related decline in consumer confidence may hinder the Group s ability to do business. For instance, the ongoing dispute between the PRC and Japan over the Diaoyu islands caused a slowdown in the Group s sales in certain industry sectors in the first half of FY2013. Any escalation in these events or similar future events may disrupt its operations or those of its customers and suppliers and could affect the availability of raw materials and components needed to manufacture its products or the means to transport those materials to manufacturing facilities and finished products to customers. These events have had and may continue to have an adverse effect on the world economy in general and consumer confidence and spending in particular, which in turn could adversely affect the Group s revenue and operating results. The effect of these events on the volatility of the world financial markets could in future lead to volatility of the market price of its shares and may limit the capital resources available to the Group, its customers and suppliers. The Group has operations in many countries and such operations may be subject to a number of risks specific to these countries The Group s international operations across many different jurisdictions may be subject to a number of risks specific to these countries, including: less flexible employee relationships which can be difficult and expensive to terminate; labour unrest; political and economic instability (including acts of terrorism and outbreaks of war); inadequate infrastructure for its operations (i.e. water, transportation and raw materials); lack of adequate power supplies (e.g. power rationing in the PRC during the summer months has previously affected the Group s manufacturing capacity); health concerns and related government actions; risk of governmental expropriation of its property; less favourable, or relatively undefined, intellectual property laws; unexpected changes in regulatory requirements and laws; (in the case of certain regions such as Europe) longer customer payment cycles and difficulty in collecting trade accounts receivable; export duties, import controls and trade barriers (including quotas); adverse trade policies, and adverse changes to any of the policies of either the U.S. or any of the foreign jurisdictions in which it operates; 57

60 adverse changes in tax rates; legal or political constraints on its ability to maintain or increase prices; burdens of complying with a wide variety of labour practices and foreign laws, including those relating to export and import duties, environmental policies and privacy issues; inability to utilise net operating losses incurred by its foreign operations against future income in the same jurisdiction; and economies that are emerging or developing, that may be subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange and other risks. These factors may harm the Group s results of operations, and any measures that it may implement to reduce the effect of volatile currencies and other risks of its international operations may not be effective. In the Group s experience, entry into new international markets requires considerable management time as well as start-up expenses for market development, hiring and establishing office facilities before any significant revenue is generated. As a result, initial operations in a new market may operate at low margins or may be unprofitable. The Group enters into interested person transactions and conflicts of interest may arise between certain of the Group s controlling shareholders, Directors and the Group Standard Chartered Private Equity Limited ( SCB Private Equity ), a related company of Standard Chartered Bank ( SCB ), currently owns 162,566,673 Shares in the Issuer constituting approximately 29.83% of the total number of Shares in issue and Metcomp Group Holdings ( Metcomp ), a company wholly-owned by CVC Capital Partners Asia Pacific II L.P. and CVC Capital Partners Asia Pacific II Parallel Fund A, L.P. (together, CVC Asia Pacific Fund II ), currently owns 153,566,673 Shares in the Issuer constituting approximately % of the total number of Shares in issue. As a result, the overall interests of SCB Private Equity and/or Metcomp may influence the strategy and activities of the Issuer. The Group also has on-going contractual arrangements with SCB. Such transactions are entered into on normal commercial terms and in accordance with the laws and regulations of the regulatory authorities in the jurisdiction to which the parties to such transactions are subject. Transactions with interested persons may give rise to conflicts of interest, which could lead to transactions being entered into and decisions made which are based on factors other than commercial factors. There can be no assurance that conflicts of interest will not arise between certain of the Group s controlling shareholders, certain of its Directors and the Group, or that such conflicts can be resolved. RISKS RELATING TO NOTES ISSUED UNDER THE PROGRAMME The Notes may not be a suitable investment for all investors Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Information Memorandum or any applicable amendment or supplement to this Information Memorandum; have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio; have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor s currency; understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any relevant indices and financial markets; and 58

61 be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. The Notes are complex financial instruments. Sophisticated investors generally do not purchase complex financial instruments as standalone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured and appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Notes unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor s overall investment portfolio. RISKS RELATED TO THE STRUCTURE OF A PARTICULAR ISSUE OF NOTES A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of certain such features: Notes subject to optional redemption by the Issuer An optional redemption feature may limit the market value of Notes containing such a feature. During any period when the Issuer may elect to redeem Notes, the market value of such Notes may not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period. The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate that is as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time. The Group may not fully hedge the currency risks associated with Notes denominated in foreign currencies The majority of the Group s sales is generally denominated in US dollars and the majority of the Group s cost of sales is generally incurred in US dollars as well. As Notes issued under the Programme can be denominated in currencies other than US dollars, the Group may be affected by fluctuations between the US dollar and such foreign currencies in meeting the payment obligations under such Notes and there is no assurance that the Group may be able to fully hedge the currency risks associated with such Notes denominated in foreign currencies. Variable Rate Notes with a multiplier or other leverage factor Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include those features. Notes issued at a substantial discount or premium The market value of securities issued at a substantial discount or premium from their principal amount may fluctuate more in relation to general changes in interest rates than do prices for conventional interestbearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities. RISKS RELATED TO NOTES GENERALLY Set out below is a brief description of certain risks relating to the Notes generally: Modification and waiver The terms and conditions of the Notes, which are governed by Singapore law, contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. 59

62 Change of law The terms and conditions of the Notes are based on Singapore law in effect as at the date of this Information Memorandum. No assurance can be given as to the impact of any possible judicial decision or change to Singapore law or administrative practice after the date of this Information Memorandum. Performance of contractual obligations by the Issuer may be dependent on other parties The ability of the Issuer to make payments in respect of the Notes may depend upon the due performance by the other parties to the transaction documents of their obligations thereunder including the performance by the Trustee, the Issuing and Paying Agent and/or the Agent Bank of their respective obligations. Whilst the non-performance of any relevant party will not relieve the Issuer of its obligations to make payments in respect of the Notes, the Issuer may not, in such circumstances, be able to fulfil its obligations to the Noteholders and/or the Couponholders. Noteholders are exposed to financial risk Interest payment, where applicable, and principal repayment for debts occur at specified periods regardless of the performance of the Issuer. The Issuer may be unable to make interest payments, where applicable, or principal repayments, under a series of Notes should the Issuer suffer a serious decline in net operating cash flows. Risk of structural subordination of the Notes The Notes are structurally subordinated to the indebtedness of the Issuer s subsidiaries (other than the Issuer). Generally, claims of creditors, including trade creditors, and other claims of preferred shareholders, if any, of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of the Issuer and its creditors. Where the Global Notes are held by or on behalf of Euroclear, Clearstream, Luxembourg and/or CDP, investors will have to rely on their procedures for transfer, payment and communication with the Issuer Notes issued under the Programme may be represented by one or more Global Notes. Such Global Note(s) will be deposited with (i) a common depositary for Euroclear and Clearstream, Luxembourg and/or (ii) CDP. Except in the circumstances described in the relevant Global Note, investors will not be entitled to receive definitive Notes. Euroclear, Clearstream, Luxembourg or CDP (as the case may be) will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through Euroclear, Clearstream, Luxembourg or CDP (as the case may be). While the Notes are represented by one or more Global Notes, the Issuer will discharge its payment obligations under the Notes by making payments to or to the order of (i) the common depositary for Euroclear and Clearstream, Luxembourg and/or (ii) CDP (as the case may be) for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear, Clearstream, Luxembourg or CDP (as the case may be) to receive payments under the relevant Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes. Holders of beneficial interests in a Global Note deposited with a common depositary for Euroclear and Clearstream, Luxembourg will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear or Clearstream, Luxembourg (as the case may be) to appoint appropriate proxies. Singapore taxation risk The Notes to be issued from time to time under the Programme during the period from the date of this Information Memorandum to 31 December 2013 are intended to be qualifying debt securities for the purposes of the Income Tax Act, Chapter 134 of Singapore ( ITA ), subject to the fulfillment of certain conditions more particularly described in the section Singapore Taxation. However, there is no assurance that such Notes will continue to enjoy the tax concessions should the relevant tax laws be amended or revoked at any time. 60

63 The Qualifying Debt Securities Plus Scheme ( QDS Plus Scheme ) has also been introduced as an enhancement of the Qualifying Debt Securities Scheme. Under the QDS Plus Scheme, subject to certain qualifications and conditions, income tax exemption is granted on interest, discount income (excluding discount income from secondary trading), prepayment fee, redemption premium and break cost (as such terms are defined in the ITA) derived by any investor from qualifying debt securities (excluding Singapore Government Securities) which: (a) are issued during the period from 16 February 2008 to 31 December 2013; (b) (c) (d) have an original maturity of not less than 10 years; cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date. With respect to any tranche of the Notes issued with an original maturity of at least 10 years and which are qualifying debt securities, there is no assurance that holders of such Notes would enjoy any tax exemption under the QDS Plus Scheme as it is currently unclear how the above requirements would be applicable in the context of certain events occurring within 10 years from the date of issue of such Notes. In the Singapore Budget Statement 2013, it has been announced that the Qualifying Debt Securities Scheme will be extended for 5 years to debt securities issued during the period of 1 January 2014 to 31 December 2018, subject to certain amendments to be announced by the MAS. The QDS Plus Scheme will also be extended for 5 years to debt securities issued during the period of 1 January 2014 to 31 December 2018 and refined to allow debt securities with standard early termination clauses to qualify, subject to certain conditions to be announced by the MAS. Details of the changes are expected to be released by the MAS by the end of June The above Budget 2013 proposals have not been legislated. RISKS RELATED TO THE MARKET GENERALLY Limited Liquidity of the Notes issued under the Programme There can be no assurance regarding the future development of the market for the Notes issued under the Programme, or the ability of the Noteholders, or the price at which the Noteholders may be able, to sell their Notes. Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have an adverse effect on the market value of Notes. In addition, although the issue of additional Notes may increase the liquidity of the Notes, there can be no assurance that the price of such Notes will not be adversely affected by the issue in the market of such additional Notes. Exchange rate risks and exchange controls The Issuer will pay principal and interest on the Notes. This presents certain risks relating to currency conversions if an investor s financial activities are denominated principally in a currency or currency unit (the Investor s Currency ) other than the currency in which the Issuer pays principal and interest (the Specified Currency ). These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. 61

64 An appreciation in the value of the Investor s Currency relative to the Specified Currency would decrease (1) the Investor s Currency-equivalent yield on the Notes, (2) the Investor s Currency-equivalent value of the principal payable on the Notes and (3) the Investor s Currency-equivalent market value of the Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Interest rate risk Noteholders may suffer unforeseen losses due to fluctuation in interest rates. Generally, a rise in interest rates may cause a fall in the price of the Notes, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, the price of the Notes may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower prevailing interest rates. Inflation risk Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders would have an anticipated rate of return based on expected inflation rates on the purchase of the Notes. An unexpected increase in inflation could reduce actual returns. Fluctuation of market value of Notes issued under the Programme The value of the Notes may fluctuate as a result of various factors, including the business, financial condition, results of operations and/or prospects of the Issuer and/or the Group, the market for similar securities, economic, political, financial and any other factors that can affect capital markets, the industry, the Issuer and/or its subsidiaries and/or associated companies generally. Adverse economic developments, acts of war and health hazards in Singapore as well as countries in which the Issuer and/ or its subsidiaries and/or associated companies operate or have business dealings, could have a material adverse effect on Singapore economy as well as the business, results of operation, the financial condition and/or prospects of the Issuer and/or its subsidiaries and/or associated companies. Global financial turmoil has led to volatility in international capital markets which may adversely affect the market price of any Series of Notes Global financial turmoil has resulted in substantial and continuing volatility in international capital markets. Any further deterioration in global financial conditions could have a material adverse effect on worldwide financial markets, which may adversely affect the market price of Notes. Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should seek independent legal advice to determine whether and to what extent (1) Notes are legal investments for the potential investor, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules. 62

65 THE ISSUER 1. HISTORY AND BACKGROUND The Issuer commenced providing precision engineering services in 1970 as Metaltek Engineering Pte Ltd. Pursuant to a subsequent restructuring, the business of Metaltek Engineering Pte Ltd was transferred to Amtek Engineering Pte Ltd, a company incorporated with limited liability in Singapore under the Companies Act on 22 October Amtek Engineering Pte Ltd was subsequently converted to a public company and renamed Amtek Engineering Ltd on 14 July On 12 August 1987, the Issuer was listed on the secondary board of the Stock Exchange of Singapore (now known as the SGX-ST) as Amtek Engineering Ltd and was upgraded to Main Board of the Stock Exchange of Singapore (now known as the SGX-ST) on 5 November In 2007, the Issuer was acquired by a consortium, including affiliates of Standard Chartered Private Equity Limited and Metcomp Group Holdings, and the Issuer s current management and subsequently de-listed from the Main Board of the SGX-ST. Following the acquisition, the current management was put in place and a number of operational, strategic and organisational changes were implemented. These included (a) expanding the Group s capabilities to provide end-to-end solutions, (b) increasing its focus on cross-selling to its existing customers, (c) streamlining its organisation to offer a one-stop manufacturing solution, (d) increasing its presence in growing Asian markets and product sectors, (e) optimising its manufacturing footprint and (f) enhancing its operational and financial flexibility and discipline. The Issuer was again listed on the Main Board of the SGX-ST on 1 December The Group s core expertise is in manufacturing highly complex precision metal, plastic and rubber components, supported by comprehensive tool and die and mould making capabilities. It has evolved and expanded to provide end-to-end design and manufacturing solutions for precision components, casing and enclosures. The Group offers its customers the ability to simplify their global product development and manufacturing process, enabling them to achieve shorter time to market and cost savings. With a history of over 40 years, the Group has built long-term, strategic relationships with its customers, which consist of over 100 companies spread across a wide range of product sectors including servers and networking equipment, mass storage, consumer electronics, automotive, electrical and electronic components and imaging and printing. The Group s customers include major multinational companies such as Autoliv, Canon, Dell, Faurecia, Hewlett-Packard, Hitachi, Juniper, Konica Minolta, Legrand, Philips, Schneider, Shin-Etsu, Sony and ThyssenKrupp. Headquartered in Singapore, the Group has manufacturing facilities in Singapore, Malaysia, Indonesia, Thailand, Vietnam, the PRC, France and Czech Republic and its own in-house tool and mould making capabilities. The Group returned a net profit after tax and non-controlling interests of US$33.6 million for FY2012 and its revenue for FY2012 was US$675.1 million. As at the Latest Practicable Date, the Issuer has a market capitalisation of approximately S$ 277,911,

66 2. CORPORATE STRUCTURE The Issuer has 32 subsidiaries and an associated company. The details of each subsidiary and associated company as of the date of the Information Memorandum are as follows: Name Date and Country of Incorporation/ Establishment Principal Business Activities Principal Place of Business Effective Percentage of Ownership Held by the Group Subsidiaries Huizhou Amtek Technology Ltd. 3 December 1999 PRC Manufacture of precision metal parts and toolings PRC 92.5% (through Amtek Technology Pte Ltd and Amtek (Huizhou) Industries Ltd.) PT Amtek Precision Components Batam 14 December 2004 Indonesia Manufacture of high precision metal parts Indonesia 100.0% (through Amtek Technology Pte Ltd) Amtek (Huizhou) Industries Ltd. 21 October 1993 PRC Manufacture of precision metal parts and toolings PRC 75.0% Amtek Precision Technology Pte. Ltd. 4 December 2007 Singapore Manufacture of precision metal parts and toolings Singapore 100.0% Amtek Precision Engineering (Shanghai) Co., Ltd. 26 December 1996 PRC Dormant PRC 100.0% Amtek Metalforming (Shanghai) Co., Ltd. 17 June 2004 PRC Manufacture of precision metal parts and toolings PRC 100.0% Amtek (Suzhou) Precision Engineering Co., Ltd. 22 December 1995 PRC Manufacture of precision metal parts and toolings PRC 100.0% AE Technology Sdn. Bhd. 11 March 1989 Malaysia Manufacture of precision metal parts and toolings Malaysia 100.0% PT Amtek Engineering Batam 30 March 2000 Indonesia Manufacture of precision metal parts Indonesia 100.0% Amtek Precision Engineering Czech Republic s.r.o. 10 November 2000 Czech Republic Manufacture of precision metal parts Czech Republic 100.0% (through Amtek Engineering Ltd and Amtek Europe Development SA) Amtek Technology Pte Ltd 17 November 1979 Singapore Investment Holding Singapore 100.0% 64

67 Name Date and Country of Incorporation/ Establishment Principal Business Activities Principal Place of Business Effective Percentage of Ownership Held by the Group Amtek Technology (H.K.) Limited 20 December 1999 Hong Kong Trading of precision metal parts and toolings Hong Kong 92.5% (through Amtek Technology Pte Ltd and Amtek Huizhou (H.K.) Industries Limited) Amlab Services Pte. Ltd. 8 October 2004 Singapore Provision of environmental, chemical and microcontamination analysis services and equipment calibration Singapore 100.0% (through Amtek Technology Pte Ltd) Amtek Huizhou (H.K.) Industries Limited 27 July 1995 Hong Kong Trading of precision metal stamping parts and toolings Hong Kong 75.0% Amtek Europe Development SA 23 August 2000 France Investment holding France 100.0% Amtek Precision Engineering France 24 August 2000 France Manufacture of precision metal parts France 100.0% (through Amtek Europe Development SA) Amtek Precision Technology (India) Private Limited 2 March 2007 India Dormant India 100.0% Amtek Precision Technology (Hanoi) Co Ltd 6 March 2008 Vietnam Manufacture of precision metal parts Vietnam 100.0% Amtek (USA) Enterprises Inc 27 April 1999 United States Provision of customer service United States 100.0% Amtek Plastic Industries Pte Ltd 15 July 1982 Singapore Manufacture of plastic components Singapore 100.0% PT Amtek Plastic Batam 19 September 2003 Indonesia Manufacture of precision plastics injection moulding products Indonesia 100.0% (through Amtek Plastic Industries Pte Ltd) Lian Jun Industrial (H.K.) Limited 26 April 2000 Hong Kong Investment holding Hong Kong 100.0% (through Amtek Plastic Industries Pte Ltd) 65

68 Name Date and Country of Incorporation/ Establishment Principal Business Activities Principal Place of Business Effective Percentage of Ownership Held by the Group Lian Jun (Shenzhen) Technology Ltd. 28 February 2003 PRC Dormant PRC 100.0% (through Lian Jun Industrial (H.K.) Limited) Amtek Plastic (Shenzhen) Ltd 17 June 2011 PRC Manufacture of precision mould and plastic parts PRC 100.0% (through Lian Jun Industrial (H.K.) Limited) Amtek (Zhongshan) Industries Ltd 28 April 2006 PRC Manufacture of precision mould and plastic parts PRC 100.0% (through Amtek Plastic Industries Pte Ltd) Amtek Plastic Technology Pte Ltd 8 July 1989 Singapore Dormant Singapore 100.0% (through Amtek Plastic Industries Pte Ltd)) Amtek International Pte Ltd 23 December 1993 Singapore Investment holding Singapore 100.0% Amtek Hungary ZRT 16 June 1997 Hungary Dormant Hungary 100.0% (through Amtek Europe Development SA) Amtek Investments Pte Ltd 27 July 1989 Singapore Investment holding Singapore 100.0% AE Rubber Sdn. Bhd. 17 October 1991 Malaysia Manufacture of precision rubber components Malaysia 66.3% AE Polymer Sdn. Bhd. 23 June 2003 Malaysia Manufacture of rubber compounding materials and other related products Malaysia 66.3% (through AE Rubber Sdn. Bhd.) Rising Effort Sdn. Bhd. 12 January 2005 Malaysia Dormant Malaysia 66.3% (through AE Rubber Sdn. Bhd.) Associated Companies Cheval Electronic Enclosures Co., Ltd 11 March 1987 Thailand Manufacture of standard and customised information technology racks Thailand 50.0% 66

69 3. BUSINESS The Group provides a range of end-to-end manufacturing solutions to its customers, enabling them to outsource to the Group all or parts of their manufacturing supply chain functions. The Group s core offerings consist of prototyping, tool and die and mould making, precision metal stamping, plastic and rubber moulding, machining, welding, finishing, and electro-mechanical product assembly. Since 2008, the Group has also offered industrial design services to complement its core manufacturing services. The chart below illustrates the Group s complete suite of services: Industrial and Product Design Prototyping Tool and Die and Mould Making Precision Metal Stamping Plastic and Rubber Moulding Machining, Welding and Finishing Electro-Mechanical Product Assembly Delivery/Shipping Industrial and Product Design As part of the Group s end-to-end offering, the Group provides industrial and product design services for components and systems to several of its customers. However, the Group does not provide these services on a stand-alone basis. The Group s design engineers first work closely with its customers to understand their desired specifications and marketing and manufacturing requirements, and subsequently either work from a prototype or create an original design. The Group believes that its early involvement in the design process enables it to help customers minimise cost, ensure on-time delivery and optimise functionality and quality. The Group primarily uses the design to cost approach in its original design manufacturing process. This approach allows the Group to design products with certain specifications at a set cost. To meet its customer s requirements for product specifications and cost, the Group conducts preliminary design activities concurrently with an estimate on cost before proceeding with more detailed production plans. Once the Group develops a design that meets the customer s requirements in relation to cost and product specifications, it refines the design in the prototype stage, before further developing the process in the manufacturing stage. There are three distinct stages in original design manufacturing: At the pre-concept and concept stage, the Group identifies customer requirements and creates three-dimensional ( 3-D ) prototypes and mock-ups to solidify the final concept (including a simulation of functionality). 67

70 At the design operation stage, the Group addresses electrical, mechanical, assembly, packaging and cost efficiency issues. Potential issues include the selection of materials and components and testing of prototypes to confirm their ability to meet the customer s requirements. The Group incorporates the design for manufacturing and quality validation checks into the design cycle, which also addresses problems that can arise when a product is being manufactured, including optimising the manufacturing processes from the perspective of efficiency and practicability. This helps to shorten the product design cycle and to improve product quality and reliability. The Group s design function uses a variety of specialised software, including 3-D computer aided design for each element of the design process. It also uses other procedures such as finite element analysis (a computer aided virtual simulation technology that uses mathematical models to help predict the performance of a design (virtual product) under stipulated conditions), engineering simulation, tolerance analysis and ISO quality documentation and procedures to offer greater efficiency through the development process from concept to production. Using these tools and methods during the product design process allows the Group to simulate and detect potential problems before proceeding with production. Additionally, this technology is supported by the Group s extensive database, which includes physical and mechanical properties of numerous metals based on actual observations of the manufacturing process. The Group s design services are currently used by key customers in the United States, Europe, Singapore and other parts of Asia. Many of these customers are long-term customers for whom it has been manufacturing complex precision metal components for many years. The Group has designed products for customers in the automotive, computer and computer peripheral, consumer electronics, industrial products, mass storage and medical industries. Products for which the Group s design capabilities have been used include an electric toothbrush, an all-in-one ironing system, networking and server enclosures and medical carts. Prototyping The Group s prototyping and low-volume-high-mix ( LVHM ) production capabilities produce quality prototypes for product design verification and early market research. The benefits of prototyping and LVHM production include quick turnaround, flexibility in making changes and low upfront costs. The Group uses advanced machines for prototyping, including: computerised numerical controlled ( CNC ) laser cutting and turret punching presses with a comprehensive range of standard tools and dies to punch, form and bend sheet metal; and CNC press brake machines to bend sheet metal in various angles and multiple bends. With state-of-the-art CNC laser and turret presses located in the PRC, Malaysia and Thailand, the Group is well equipped with a comprehensive range of standard toolings. Supported by soft-tool capabilities and relevant secondary operations (staking, welding and spot-welding, spinning and tapping), parts can be produced to meet the stringent requirements of customers. Tool and die and mould making To support the Group s offering, the Group builds: tools and dies, which are assemblies of specially designed and machined steel plates, tool parts and components used to mass produce customised metal parts on a press machine; and moulds, which are assemblies of specially designed and machined metal cores, cavities and other mould parts and components used to mass produce customised plastic and rubber parts on a moulding machine. 68

71 Die and mould making is a crucial first step in the manufacturing process and the Group believes its capabilities give it an edge in its component operations by enabling greater control of the manufacturing process. The Group has the capacity to make over 1,000 dies and moulds annually. Its expertise in manufacturing metal components and in-depth understanding of mechanical properties and characteristics of various types of metal gives it an advantage in die and mould making. Through intensive research and development ( R&D ) and the use of simulation software and finite element analysis, the Group provides accurate operating parameters that help define the choice and application of methods employed. These unique capabilities enable the Group to better service its customers in the form of shorter lead-time, less material waste and fewer costly debuggings. After the design phase, the Group uses a variety of CNC machines (which includes high-speed machining and wire-cut electrical discharge machining) to create precision die and mould parts out of hardened steels. Its metal stamping dies can last up to four million strokes with regular servicing and maintenance. The Group has strategically positioned its tool rooms across its network of facilities and is in the process of consolidating its metal and plastic tool rooms, with the design and R&D activities, into a single technical competency centre to better utilise its talents and resources. Precision metal stamping The largest segment of the Group s business is precision metal stamping. Metal stamping involves creating a multi-dimensional shape out of a metal sheet by cutting, bending or forming the metal with a die in a press machine. The Group has adopted a variety of innovations allowing it to produce intricate parts that can maintain a high degree of rigidity and stability while minimising waste in operations. The Group offers a wide range of metal stamping processes which can be applied individually or in combination with other processes. The table below illustrates the processes: Process Description Key Benefits Precision Progressive Cold Forge Stamping Horizontal and Vertical Cold Forming Creates customised metal parts by subjecting the raw metal strip through a series of high-deformation cold forging processes, with each station modifying the shape and geometry from the preceding stations to achieve the final parts at the output end of the die. The forming of metal billets by horizontal or vertical motion. Capable of producing intricate 3-D net shaped parts as an alternative to diecasting, sintering and metal injection moulding. Progressive cold forged products have superior strength and uniform grain flow that provide a higher degree of structural integrity. The progressive cold-forge die has high output capability with superior dimensional accuracy which eliminates or reduces the need for secondary processes like machining. This in turn results in significant cost savings. Eliminates or reduces the need for secondary processes like machining (to remove excess material), heat induced forming such as sintering, die-casting and metal injection moulding, and assembly processes. With fewer processes, horizontal and vertical cold forming reduces manufacturing lead-time and results in cost savings. Additionally, by avoiding heat induced forming, cold forming produces less pollution and is more environmentally friendly. 69

72 Process Description Key Benefits Progressive Stamping Multi-slide Forming Creates customised metal parts by progressively advancing the coil strip metal in tandem with press stroke through specially designed dies that will produce a component with each progressive stroke. Uses machines that employ a combination of sliding mechanisms to create three-dimensional parts from metal coils or strips. This is often chosen for its speed, quality and consistency. It is considered to be the most efficient and flexible stamping process that operates fully automated for both small and large parts with speeds ranging from 30 to 800 strokes per minute. Can create unique three-dimensional shapes in a shorter number of steps, allowing for a faster, more efficient production process. The set-up is able to integrate other ancillary labour saving processes such as stacking, tapping and contact welding. The Group s manufacturing facilities are equipped with various stamping presses (manual, progressive or robotic lines) that can produce parts with loading ranging between 40 to 800 tons and with stamping press bed sizes of up to 4.9 metres in length. To maximise the efficiency of resources, high-volume orders are filled through dedicated production lines. These are integrated with additional value-added services such as machining, welding, cleaning and manufacturing in a clean room environment. The Group also provides LVHM solutions using advanced CNC automated machines. This offering is targeted at customers that place low volume orders where an investment in tools and dies may not be feasible given low production volumes. Plastic and rubber moulding The Group s plastic and rubber capabilities include plastic injection moulding, rubber moulding and rubber compound formulation. It can also produce integrated metal and plastic components. Plastic The Group s plastic moulding capabilities allow it to create plastic shapes in accordance with its customers specifications. These are often integrated with its metal components and are used in a variety of products, such as computer accessories, water filtration devices and automotive products such as brake pedals and light bulbs housings. The Group has a wide range of fabrication equipment for all the steps of the plastic moulding process. Its computerised injection moulding machines (which operate in its facilities in Shanghai, Shenzhen, Zhongshan and Batam) have a clamping force ranging from 30 to 650 tons. It also designs and builds moulds for moulding machines that have a clamping force of up to 850 tons. These include high-speed, electric, vertical and two-shot moulding machines which can combine two colours or materials. In addition to the Group s moulding operations, it offers various secondary processes for plastics. These include ultrasonic welding and heat staking, laser marking, robotic spray painting and assembling. Integrating these processes reduces manufacturing time and costs for its customers. Rubber The Group s rubber capabilities extend from material formulation to moulding and testing. It has specialised knowledge in compound formulation with silicone, neoprene, butyl, acrylonitrile butadiene rubber, styrene butadiene rubber and ethylene propylene rubber. The Group mixes raw materials using a roll mill to attain consistent quality in composition. Then, it creates shapes by applying 80 to 300 tons of pressure from automatic hot presses with vacuum installations. The Group can also perform rubber metal bonding if required. The Group has created rubber components for the computer, automobile, electrical and electronic industries, as well as printer rollers. 70

73 Machining, welding and finishing In order to complement the Group s core capabilities in metal stamping, the Group also offers value-added services in machining, welding and finishing. Machining is the process of removing material with powerdriven equipment to achieve desired shapes and symmetry. It has a suite of state-of-the-art, computercontrolled machining equipment to achieve high levels of quality. Its capabilities include traditional methods such as drilling, turning (a machining technique that uses a moving cutter/form tools to work a revolving work piece to the desired shape and size), milling (a machining technique in which material from a work piece is removed by feeding toward the direction of a rotating cutter), tapping (a process to form or machine screw threads on sheet metal) and deionised water and hydro carbon washing lines to clean and degrease products before finishing. The Group believes its diverse welding processes allow it to provide quality, efficiency, precision and consistency by tailoring its services to customer demands and materials requirements. Its welding processes include a vast array of high-tech welding techniques such as robotic welding and laser welding. These various processes are aided by custom-made jigs and fixtures to hold work pieces in place, which ensures that accuracy is controlled during welding. The Group provides various surface finishing processes for both metal and plastic, which serve functional and aesthetic purposes. These include powder coating, electroless nickel plating, anodising and wet painting lines. In order to offer a one-stop solution to its customers, the Group offers assistance and guidance about suitable finishing types, packaging and testing protocols. The Group believes its ability to offer finishing processes in combination with its manufacturing processes differentiates it from its competitors. Electro-mechanical product assembly The Group provides electro-mechanical assembly and final product build services. However, its focus is on providing electro-mechanical assembly, which it believes is increasingly being outsourced and for which competition (relative to electronics assembly) is more limited. It can provide its customers with dedicated as well as flexible lines. In addition, it can provide final product packaging and testing before products are sent for shipping. The Group s assembly services cover a wide range of products in a variety of industries. For servers and networking equipment, it offers a full suite of assembly solutions for global manufacturing supply chain management. In consumer electronics, the products it assembles include thermostat modules, drive train modules for electric toothbrushes and an integrated ironing system. It also assembles vehicle steering column jackets. The Group aims to provide more assembly services in the future as part of its integrated design and manufacturing solutions. 4. COMPETITIVE STRENGTHS The Group believes that it is well positioned to benefit from the increasing trend towards outsourcing all or part of the manufacturing supply chain functions in the end markets in which it operates or targets due to the following key strengths: Provision of end-to-end manufacturing solutions to customers The Group has expanded its offerings to provide a full range of design and manufacturing solutions to its customers, including product design, engineering, manufacturing, finishing and sub-assembly. The Group believes that its commitment to work closely with its customers from the early stages of design and product development to engineering and manufacturing enables it to understand its customers and their requirements better and provide value-added services through each stage of its customers manufacturing process. In particular, the Group believes that its extensive mechanical design expertise complemented by its experience in electronics design has helped some of its clients improve the quality and cost effectiveness of their products and manufacturing processes. Over the years, the Group believes that it has become an integral part of many of its customers manufacturing supply chains, offering not only product manufacturing, but also innovations and solutions that help its customers meet their needs. The Group s complete suite of capabilities creates opportunities for it to cross-sell additional products 71

74 and services through the manufacturing value chain by providing integrated solutions that enhance the Group s involvement and strengthen relationships with customers. This enables the Group to grow its business and increase its profitability. Comprehensive range of processes for complex precision metal manufacturing The Group provides its customers with a full range of complex precision metal manufacturing processes, including precision stamping, progressive cold forging and laser welding which it believes are more cost-efficient and provide a higher degree of precision and quality than other manufacturing processes. Examples of products manufactured with such processes include voice coil motor plates for hard disk drives, pinion gears for seat belts and laser welded steering column modules for cars. The Group is also able to integrate materials such as plastic and rubber in its manufacturing processes, which allows it to provide its customers with a more comprehensive product offering and eliminates the need for them to source from separate metal and plastic/rubber manufacturers. The Group believes its capabilities provide it with a competitive advantage with its existing and prospective customers, who increasingly seek to outsource complex manufacturing parts including metal and plastic combinations and processes to reliable commercial partners. Diversified and loyal customer base across a variety of industries The Group s customers are active in a variety of industries including automotive, consumer electronics, electrical and electronic components, imaging and printing, mass storage and servers and networking equipment. For FY2012, the Group s largest product sector, casings and enclosures, accounted for 25.2% of its revenue and its largest customer accounted for 10.8% of its revenue. In addition, the Group has developed long-term relationships with many major multinational companies. The diagram below illustrates the valued relationships that the Group has forged with its customers: The Group s breadth of industry coverage means its addressable market is large and, together with its strong relationships with its customers, the Group believes this provides opportunities to expand its cross-selling efforts and help mitigate specific downturns in any one industry and any potential adverse conditions in an economic downturn. 72

75 Global network The Group s operations include manufacturing facilities in eight countries across Asia and Europe that are globally-coordinated and offer customers the flexibility to choose from different manufacturing locations. The Group s facilities are often located in close proximity to its customers facilities or strategic distribution centres, which, among other benefits, shorten time to market and reduce transportation costs for its customers. Most of its manufacturing facilities have adopted a mirror concept, which aims for each facility to have the capability to seamlessly manufacture products from a different facility. The Group believes its multiple locations increase its scalability as it can transfer products across plants and manufacture simultaneously in different locations using replicates of the tool and dies. Since many of the Group s customers are multinational companies, its global capabilities will allow it to meet their outsourcing needs across various geographic locations. Strong and experienced management team The Group benefits from a strong management team with extensive experience in design, precision engineering and manufacturing. Several members of the Group s senior management have strong track records in optimising operations, executing strategic changes and creating shareholder value, and also have experience in managing publicly listed companies with international operations. The Group s management team has effected a number of operational, strategic and organisational changes that have helped strengthen its competitive positioning and financial performance. 5. STRATEGY The Group s goal is to leverage its strengths to maintain and build on its existing customer relationships as well as to cultivate new customer relationships and thereby continue to position itself as a leading provider of end-to-end manufacturing solutions. The Group is committed to utilising the following strategies to achieve its goal: Expand offerings to be the manufacturer of choice for clients The Group constantly seeks new technologies and processes to improve its manufacturing capabilities. The Group believes that its expertise and ability to design and manufacture complex parts, modules, and end-to-end solutions will help it maintain and strengthen its competitive advantage, increase its customer loyalty and allow it to retain and enhance its position as the manufacturer of choice with its clients. The Group expects to continue to expand its offerings through continuous efforts to improve its capabilities and processes, the implementation of new technologies and potential acquisitions. Recent developments in line with this strategy include the acquisition of shares held by minority shareholders in Amtek Plastic Industries Pte Ltd (formerly known as Lian Jun Industrial Pte Ltd) ( Amtek Plastic ) in October Amtek Plastic currently holds the Group s plastics operations in Shenzhen, Zhongshan and Batam. The acquisition enabled the Group to further expand its integrated plastics and metal offerings. Leverage offerings and relationships to cross-sell additional solutions to existing customers As the Group expands its capabilities, it intends to continue to leverage its existing customer relationships to generate additional revenues by offering complementary services and solutions, by engaging its customers globally and by cross-selling additional services across its customers other product sectors. The Group seeks to implement its strategy with a continued focus on sales and marketing and by providing integrated solutions to customers and adding new services to its existing network of globallycoordinated manufacturing facilities. The Group intends to do this while maintaining the diversity of its customers and end markets. Increase the number of customers using end-to-end solutions The Group aims to grow its customer base using its end-to-end solutions by offering value-added services such as design and product development and by increasing its marketing efforts to acquire new customers. The Group believes end-to-end solutions give it more control over the manufacturing process and facilitate its early involvement, which allows it to better understand its customers needs and deliver more customised solutions leading to a more cost-efficient and higher-quality product. The Group believes its ability to deliver greater value-added services will help to strengthen its customer relationships and increase customer loyalty, which it expects will have a positive impact on its margins and profitability. 73

76 Enhance customer and end markets diversity by developing new offerings and expanding into new industries The Group has a diverse set of customers that operate in a wide variety of industries and it is able to develop tailored solutions for specific industries. Over the past few years, the Group s multiple skills have allowed it to expand its solutions to customers in end markets such as automotive and personal healthcare and it intends to continue expanding customer and end market diversity. The Group aims to further increase its customer base and develop solutions for other end markets where the outsourcing of manufacturing has been more limited, such as medical equipment and renewable energy, by leveraging its existing capabilities or through acquisitions, if opportunities arise. The Group believes industry diversification will allow it to further diversify its revenue sources, and create more opportunities to crosssell its value-added design and engineering solutions and in turn broaden its expertise. This strategy of supporting diversified industry segments has served the Group well. Notwithstanding the challenging business and macro-economic conditions in FY2012, healthy growth from some of the Group s product sectors, such as imaging and printing, automotive as well as electrical and electronic product sectors helped mitigate the impact of softer market demand from the casing and enclosure, consumer electronics and mass storage sectors. The diagram below shows the revenue by industry segment for FY2011 and FY2012. REVENUE BY INDUSTRY SEGMENT INDUSTRY SEGMENT FY2012 (US$m) FY2011 (US$m) Automotive Casing and Enclosures Consumer Electronics Electrical and Electronic Component Products Imaging and Printing Mass Storage Others Mass Storage 15% Others 8% FY2012 Automotive 16% Mass Storage 17% Others 9% FY2011 Automotive 14% Imaging and Printing 9% Electrical and Electronic Component Products 13% Consumer Electronics 14% Casing and Enclosures 25% Imaging and Printing 8% Electrical and Electronic Component Products 12% Consumer Electronics 15% Casing and Enclosures 25% In FY2013, the Group will continue to work on developing new market segments, new customers and product sectors in industries such as life sciences and industrial products. It will also be investing in a technical competence centre in Suzhou, which will house all the Group s design engineers and technicians under one roof. This concentration of technical skills and state-of-the-art equipment in one location will allow the Group to take on more challenging projects and further develop its technical skills and capabilities beyond the product sectors that it presently serves. This will put the Group in a position to diversify into new product sectors and meet new demands of the marketplace. 74

77 Automation of operations The Group continually seeks to improve productivity at its manufacturing facilities by increasing the use of automation technology in its operations. The Issuer believes that such automation serves to increase the Group s competitive advantage in the manufacturing industry by lowering its labour costs and improving production capacity utilisation, turnaround times and the quality of its finished products. 6. MANAGEMENT Board of Directors Information on the business and working experience of each of the directors of the Issuer is set out below: Mr Daniel Yeong Bou Wai Chairman and Chief Executive Officer Mr Yeong joined the Group in 2007 as an executive director. He oversees the direction and strategy, and financial management, marketing and operations of the Group. From 1996 to 2007, he was the chief executive officer and managing director of GES International Ltd ( GES ) where he was responsible for the strategic planning, overall marketing, financial management and operations of GES and its group companies. He oversaw a restructuring of GES before it was sold to Venture Corp Ltd. Before his promotion to the position of chief executive officer and managing director of GES, he was the international sales manager of GES where he managed the company s global portfolio of customers from 1986 to Mr Yeong graduated from Ngee Ann Technical College, Singapore in 1979 with a Diploma in Mechanical Engineering. Ms Sheila Ng Won Lein Executive Director, Deputy Chief Executive Officer and Chief Financial Officer Ms Ng joined the Group in 2007 and oversees all the financial reporting and treasury functions of the Group. She is also involved in its human resource and administration functions. Prior to this, Ms Ng served as chief financial officer of GES from 2000 to 2007, where she took charge of financial reporting and treasury matters of GES, including investor relations, human resources and mergers and acquisitions. Her experience spans various industries: from 1997 to 2000, she was the financial controller of RSP Architects & Planners; from 1995 to 1997, the financial controller of SMP Investment Pte Ltd and from 1990 to 1995, the vice president, finance, of Superior Metal Printing Limited. Ms Ng was responsible for overseeing the financial reporting and treasury obligations and merger and acquisition activities of each of these companies. Ms Ng began her career in audit, and was an auditor with KPMG, Malaysia from 1988 to Ms Ng graduated from the University of Kent at Canterbury, United Kingdom in 1987 with a Bachelor of Arts (Honours) degree in Accounting. Mr Ang Tong Huat Executive Director and Group Chief Operating Officer, Precision Engineering Division Mr Ang joined the Group in 2008 as President, Europe operations. He was promoted to the position of Group Chief Operating Officer on 1 July 2012 and as Group Chief Operating Officer, he covers the operational matters of the Precision Engineering Division and helps oversee the execution of the strategic directions of the division. Prior to joining the Group, Mr Ang was at GES from 2003 to 2008 as country general manager and vice-president of the Group s PRC operations. From 1998 to 2003, he was the division manager of manufacturing operations. Mr Ang worked in the field of quality assurance in Elbiru Electronics Pte Ltd from 1997 to 1998, SCI Manufacturing (S) Pte Ltd from 1992 to 1997 and Tri-M Technologies Pte Ltd from 1990 to He started his career as a quality assurance supervisor with Seagate International from 1988 to Mr Ang graduated from Ngee Ann Polytechnic, Singapore in 1985 with a Technician Diploma in Shipbuilding and Repair Technology. He also obtained a diploma in Business Efficiency & Productivity (Production Management) from the NPB Institute for Productivity Training in Mr Ang attended the Advanced Diploma in Business Administration programme from PSB Academy from 1996 to

78 Mr William Edward Alastair Morrison Non-Executive Director Mr Morrison joined the Board of Directors in 2008 and is currently the managing director and global cohead of the private equity arm of Standard Chartered Bank. He joined Standard Chartered Bank in April 2002 after more than 20 years at 3i Group plc (the 3i Group ), a European private equity investment house listed on the London Stock Exchange. Mr Morrison joined the 3i Group in 1981 and established the 3i Group Asia business in Singapore in Mr Morrison has investment experience across a wide range of industries in Europe and Asia. Mr Morrison holds a Bachelor of Arts (Honours) degree in Politics, Philosophy and Economics from Oriel College, University of Oxford, which he obtained in He also graduated with a Masters of Philosophy degree in Management Studies from University of Oxford in Mr Sigit Prasetya Non-Executive Director Mr Prasetya joined the Board of Directors in August He is currently Managing Partner of CVC Asia Pacific (Singapore) Pte Ltd, responsible for Southeast Asia. Prior to joining CVC Asia Pacific in March 2007, Mr Prasetya was the senior principal and head of Southeast Asia for Henderson Private Capital, the private equity arm of Henderson Global Investors. Previously, he was an executive director with Morgan Stanley Investment Banking between 1999 and Prior to that, he had worked with Booz Allen Hamilton, a management consulting firm (1996 to 1999), Peregrine Sewu Securities (1995 to 1996) and Citibank N.A. (1991 to 1992). Mr Prasetya graduated with a Master of Business Administration degree (Distinction) from the University of New South Wales, Australia, in Mr Low Seow Juan Lead Independent Director and Remuneration Committee Chairman Mr Low is the chairman of Pinetree Capital Partners Pte Ltd which is a private equity fund specialising in pre-initial public offering investments. He has acted as a consultant to various companies such as Broadven Pte Ltd (2005 to 2009), Lee & Lee (2004 to present) and PrimePartners Corporate Finance Pte Ltd (2004 to 2005). Prior to these engagements, he was a partner of Harry Elias Partnership (1998 to 2003) and a partner of Drew & Napier LLC (1984 to 1993). In between his involvements as partners of the two law firms, Mr Low was self-employed from 1993 to 1998 and he managed various joint venture investments during that period. Before his legal career, he was an assistant manager in the banking and corporate finance department of Morgan Grenfell (Asia) Limited from 1982 to Upon graduation, Mr Low worked with the Singapore Economic Development Board and headed the Optical, Aerospace and Medical Division when he left about six years later. Mr Low completed his first degree in 1974, obtaining a Bachelor of Electrical Engineering (Honours) from Monash University, Australia. He later enrolled and graduated from the University of London, United Kingdom in 1979 with a Bachelor of Laws (Honours) degree and obtained a Master of Business Administration degree from the National University of Singapore in Mr Steven Lim Kok Hoong Independent Director and Audit Committee Chairman Mr Lim is a director of a number of publicly listed companies in Singapore. He is an independent director and chairman of the Audit Committee at Global Logistic Properties Limited and Genting Singapore PLC. He is also chairman of the board of directors and member of the Audit Committee at Parkway Trust Management Limited (manager of Parkway Life Real Estate Investment Trust) and Sabana Real Estate Investment Management Pte Ltd (manager of Sabana Shari ah Compliant Real Estate Investment Trust). From 2002 to 2003, he was a senior partner with Ernst & Young Singapore. Before joining Ernst & Young Singapore, he was a regional managing partner of Arthur Andersen ASEAN from 2000 to 2002 and the managing partner of Arthur Andersen Singapore until he left the firm in From 1999 to 2000, he was the area managing partner of Arthur Andersen Asia Pacific, Assurance & Business Advisory Business. 76

79 Mr Lim is a member of the Institute of Certified Public Accountants of Singapore and the Institute of Chartered Accountants in Australia. He graduated from the University of Western Australia, Australia in 1971 with a Bachelor of Commerce degree. Mr Leong Horn Kee Independent Director and Nominating Committee Chairman Mr Leong is currently the chairman of CapitalCorp Partners Private Limited. He has been a member of the Securities Industry Council since From 1993 to 2008, he was an executive director and chief operating officer of Far East Organization. He was concurrently the chief executive officer of Yeo Hiap Seng Ltd from 1999 to 2002 and the chief executive officer of Orchard Parade Holdings Limited from 1993 to Mr Leong was a director of NM Rothschilds & Sons (Singapore) Pte Ltd from 1989 to 1992 where he was head of corporate finance. Prior to that, he was a vice president of Transtech Ventures Pte Ltd, an assistant director at the Ministry of Finance, and a deputy director at the Ministry of Trade and Industry. Mr Leong was a Member of Parliament from 1984 to 2006.He was Singapore s non-resident ambassador to Mexico from September 2006 to February Mr Leong obtained a Bachelor of Technology degree in Production Engineering and Management from Loughborough University, United Kingdom; a Bachelor of Science degree in Economics from University of London, United Kingdom; a Bachelor of Arts degree in Chinese Language and Literature from Beijing Normal University, PRC; a Master of Business Administration degree from the European Institute of Business Administration (INSEAD), France; and a Master of Business Research degree from University of Western Australia, Australia. Senior Management Information on each of the experience and expertise of each of the key executive officers of the Group is set out below: Mr Daniel Yeong Bou Wai Chairman and Chief Executive Officer Please refer to the section Management - Board of Directors Mr Daniel Yeong Bou Wai for a description of Mr Daniel Yeong Bou Wai s experience and expertise. Ms Sheila Ng Won Lein Executive Director, Deputy Chief Executive Officer and Chief Financial Officer Please refer to the section Management - Board of Directors Ms Sheila Ng Won Lein for a description of Ms Sheila Ng Won Lein s experience and expertise. Mr Ang Tong Huat Executive Director and Group Chief Operating Officer, Precision Engineering Division Please refer to the section Management - Board of Directors Mr Ang Tong Huat for a description of Mr Ang Tong Huat s experience and expertise. Mr Chan Yew Weng Group Chief Operating Officer, Plastics Division Mr Chan is responsible for the operation of the Plastics Division. He also oversees the business development and execution of the Plastics Division s strategic and annual business plans. Mr Chan joined the Group in May 2000 from Hewlett Packard Company where he held various managerial positions in the Engineering Department. Mr Chan started his career as Sales Engineer in Yip Chieng Engineering Works from January 1991 to September Mr Chan graduated from the University of Strathclyde, United Kingdom in 1993 with a First Class Honours in Engineering (Mechanical Engineering). Mr Chan also holds a Diploma in Mechanical and Manufacturing Engineering from Singapore Polytechnic in

80 Mr Adrian Teo Guan How Regional Chief Operating Officer, South Asia Operations Mr Teo joined the Group in 2008 and is responsible for the business development and operations of its businesses in South and Southeast Asia. Previously, he was the Group s Human Resource Director. Prior to joining the Group, Mr Teo was the Director, Worldwide Sourcing Quality Assurance network at Thomson Asia Pacific Pte Ltd, where he started as Manager, Sourcing Quality Assurance Asia. Before that, he held various managerial positions at several multinational corporations in Corporate Quality and Manufacturing Support (1994 to 1999), Senior R&D Engineering (1986 to 1987), Product Introduction & Engineering Services (1987 to 1988), Production Control & Material Logistics (1988 to 1990) and Quality (1990 to 1993). Mr Teo started his career in 1985 as an R&D Engineer at Motorola Electronics Pte Ltd. Mr Teo graduated from University of Strathclyde, United Kingdom in 1984 with a Master degree (Research) in Mechanics of Materials. He also holds a Bachelor Degree (Honours) in Mechanical Engineering (1983) from the same University. Mr Bay Lim Thiam Regional Chief Operating Officer, PRC Operations Mr Bay has been with the Group since He is responsible for the Group s operations in the PRC and oversees the execution of the Group s PRC strategic and annual business plans. Before being appointed to his present position, Mr Bay had served in various managerial capacities within the Group. Prior to joining the Group, Mr. Bay held various managerial positions in E M Tools Pte Ltd from 1986 to 1989 as the overall in-charge of tool manufacturing. Mr Bay obtained a Diploma in Production Technology from the German-Singapore Institute, Singapore in Ms Jocelin Soon Swee Har Deputy Chief Financial Officer Ms Soon is the Deputy Chief Financial Officer of the Group, where she is responsible for the overall financial reporting, treasury, human resources and management information systems functions of the Group. Prior to joining the Issuer in 2010, Ms Soon served in similar capacity as Group Finance Manager at Banyan Tree Holdings Limited. Prior to working for Banyan Tree Holdings Limited, Ms. Soon was an audit manager with Ernst & Young LLP, Singapore. Ms Soon graduated from the Nanyang Technological University of Singapore in 2004 with a Bachelor of Accountancy (Honours). She is a member of the Institute of Certified Public Accountants of Singapore. Mr Liew Tau Yee Regional Chief Operating Officer, Europe Operations Mr Liew started his career with the Group in He responsible for its Europe operations and oversees the execution of Europe s strategic and annual business plans. Mr Liew has held various positions with the Group. Prior to joining the Group, Mr Liew was Engineering Assistant at E M Tools Pte Ltd. Mr Liew graduated with a Diploma in Business Management from the Management Development Institute of Singapore in Mr Ling Ka Yew Chief Technology Officer Mr Ling oversees technical and tooling matters and is also in charge of research and development since He joined the Group in 2004 from Kris Components Bhd and was the head of corporate technical of the Group from 2007 to Between 1983 and 2004, Mr Ling worked in Kris Components Bhd in various positions; chief operating officer (1999 to 2008), general manager (1994 to 1999), factory manager (1990 to 1994), technical manager (1989 to 1990), senior executive (1988 to 1989) and various tooling executive positions (1983 to 1988). Mr Ling obtained a Diploma from the Technical Training Institute, Kuala Lumpur in

81 Mr Quek Pek Chuan Chief Design and Development Officer Mr Quek joined the Group in 2008 and is responsible for the overall management of the research and development function. Prior to joining the Group, Mr Quek was the Vice-President (R&D) of GES from 1993 to In that position, he undertook research and development work relating to the design and manufacturing of information technology and industrial products. Mr Quek worked as a System Engineer at SIS Technologies in 1990, where he was involved in building, testing and repairing information technology products. Before that, Mr Quek worked in SAFT Singapore Pte Ltd from 1987 to Mr Quek graduated with a Technical Diploma (Electrical & Electronic Engineering) from Ngee Ann Polytechnic, Singapore in 1985 and with a Bachelor of Electrical Engineering (Honours) degree from the Nanyang Technological University of Singapore in Mr Yuen Yeng Kwong Chief Supply Chain Officer Mr Yuen joined the Group in 2008 and is responsible for the overall management of its supply chain. Prior to joining the Group, Mr Yuen worked in GES from 1997 to 2008, where he started out as a procurement manager before he became the vice president of the materials department in Between 1986 and 1996, Mr Yuen worked in Seagate Technology, where he started out as a buyer and planner before he became the procurement engineer with its sourcing department in Mr Yuen graduated from the University of London, United Kingdom in 1996 with a Bachelor of Science degree in Economics and Management Studies. 7. SUMMARY FINANCIAL INFORMATION The following tables set out the selected consolidated financial information for the Group as at and for FY2011, FY2012, 1HFY2012 and 1HFY2013. This selected financial information has been derived from, and should be read in conjunction with, the Group s audited consolidated financial statements for FY2011 and FY2012, the unaudited financial information of the Group for 1HFY2012 and 1HFY2013, including the notes thereto, which appear in Appendices II, III and IV of this Information Memorandum. Consolidated Balance Sheet As at 30 June June December 2012 ASSETS US$ 000 US$ 000 US$ 000 (Audited) (Audited) (Unaudited) Non-current assets Property, plant and equipment 116, , ,801 Intangible assets 42 Investment in associate 7,821 8,404 9,565 Other investments 4,083 3,697 3,871 Other receivables and deposits Prepaid expenses 2,185 2,304 2,366 Deferred tax assets 2,589 2,199 2,398 Fixed deposits 11, , , ,261 79

82 As at 30 June June December 2012 US$ 000 US$ 000 US$ 000 (Audited) (Audited) (Unaudited) Current assets Inventories 57,463 56,929 53,084 Trade receivables 152, , ,707 Other receivables and deposits 19,788 22,870 27,653 Prepaid expenses 4,410 5,744 4,841 Fixed deposits 10,102 3,395 4,065 Cash and bank balances 108, ,944 81, , , ,490 TOTAL ASSETS 498, , ,751 EQUITY AND LIABILITIES Current liabilities Trade payables 122, , ,674 Other payables and accrued expenses 41,563 43,896 40,588 Finance lease obligations Loans and borrowings 59,733 69,381 83,383 Provision for taxation 9,242 5,377 4,806 Derivatives 1,569 1,930 1, , , ,383 NET CURRENT ASSETS 117,308 96,091 73,107 Non-current liabilities Finance lease obligation Loans and borrowing 81,950 58,547 46,847 Deferred tax liabilities 5,346 5,773 4,773 88,086 64,778 52,034 TOTAL LIABILITIES 323, , ,417 NET ASSETS 174, , ,334 Equity attributable to equity holders of the Issuer Share capital 36,482 37,424 38,218 Other reserves 33,241 30,648 31,525 Revenue reserve 86,568 83,340 84, , , ,054 Non-controlling interests 18,253 12,251 11,280 Total equity 174, , ,334 TOTAL EQUITY AND LIABILITIES 498, , ,751 80

83 Consolidated Income Statement (1HFY2013 vs 1HFY2012) 1HFY2012 1HFY2013 US$ 000 US$ 000 % (Unaudited) (Unaudited) Change Revenue 337, ,461-6% Cost of sales (281,709) (267,849) -5% Gross profit 55,641 49,612-11% Less: Operating (expense)/income Other operating income 1,362 1,272-7% General and administrative expenses (31,713) (33,653) 6% Foreign exchange loss (127) (516) n.m. Fair value (loss)/gain on derivatives (358) 206 n.m. Finance income % Finance costs (3,432) (2,920) -15% Other items 1, % Profit before taxation and share of results of associates 22,813 15,114-34% Share of results of associate % Profit before taxation 23,808 15,923-33% Taxation (4,988) (3,494) -30% Profit for the period 18,820 12,429-34% Attributable to: Owners of the Issuer 17,081 11,888-30% Non-controlling interests 1, % 18,820 12,429-34% 81

84 Consolidated Income Statement (FY2012 vs FY2011) FY2011 FY2012 US$ 000 US$ 000 % (Audited) (Audited) Change Revenue 681, ,079-1% Cost of sales (560,870) (564,635) 1% 120, ,444-9% Gross profit Add/(Less): Other operating income 4,826 1,732-64% General and administrative expenses (57,833) (63,518) 10% Impairment loss on available-for-sale investments (1,060) (205) -81% Foreign exchange gain/(loss) 3,026 (194) n.m. Fair value loss on derivatives (2,050) (350) -83% Finance income % Finance costs (7,726) (6,676) -14% Other items (1,334) 805 n.m. Profit before taxation and share of results of associates 59,336 42,555-28% Share of results of associate 336 1,599 n.m. Profit before taxation 59,672 44,154-26% Taxation (11,629) (8,113) -30% Profit for the year 48,043 36,041-25% Attributable to: Owners of the Issuer 45,234 33,600-26% Non-controlling interests 2,809 2,441-13% 48,043 36,041-25% Review of Performance 1HFY2013 vs 1HFY2012 The table below shows a summary of the Group s performance in 1HFY2013, as compared to 1HFY HFY2012 1HFY2013 Revenue (US$ million) Gross Profit (US$ million) Gross Profit Margin 16.5% 15.6% Profit Before Tax (US$ million) Profit Before Tax Margin 7.1% 5.0% Profit After Tax (US$ million) Profit After Tax Margin 5.6% 3.9% 82

85 (i) Revenue Review Revenue for 1HFY2013 was mainly affected by the challenging business conditions faced during 1QFY2013. The Group s businesses were affected by the sovereign debt crisis in Europe as well as the slowdown in demand experienced by some of the Group s Japanese customers in the PRC following the outbreak of Anti-Japanese protests over Diaoyu Islands. As a result, the Group s revenue declined 6% to US$317.5 million. The table below shows the revenue breakdown by industry segment for 1HFY2013 and 1HFY2012. Revenue Breakdown by Industry Segment 1HFY2012 (US$ million) 1HFY2013 (US$ million) % Change Casings and Enclosures % Mass Storage % Consumer Electronics % Automotive % Electrical and Electronic Components % Imaging and Printing % Others % (ii) Profit before Taxation and Operating Expenses Review The Group s profit before taxation for 1HFY2013 declined 33% to US$15.9 million, compared to US$23.8 million for 1HFY2012. (iii) Profit after Taxation and Non-controlling interests The Group s profit after taxation declined 34% to US$12.4 million in 1HFY2013, compared to US$18.8 million in 1HFY2012. (iv) Non-controlling interests For 1HFY2013, the Group s profits attributable to owners of the Issuer declined 30% to US$11.9 million. FY2012 vs FY2011 The Group recorded revenue of US$675.1 million for FY2012 which is comparable to that achieved in FY2011. Profit after taxation for FY2012 was US$36.0 million, US$12.0 million (-25%) lower than that reported for FY2011. The table below shows a summary of the Group s performance in FY2012, as compared to FY2011. FY2011 FY2012 Revenue (US$ million) Gross Profit (US$ million) Gross Profit Margin 17.7% 16.4% Profit Before Tax (US$ million) Profit Before Tax Margin 8.8% 6.5% Profit After Tax (US$ million) Profit After Tax Margin 7.0% 5.3% (i) Revenue Review Notwithstanding the almost flat consolidated revenue, certain revenue sectors saw growth due to: a 14% increase in Imaging and Printing segment to US$61.1 million, due mainly to increased sales of office automation products arising from gains in market share; a 4% increase in the Electrical and Electronic Component product sector revenue to US$86.8 million. This was due to the increase in sales of industrial products to customers in the energy and power industries, despite a slow-down in demand from Europe since 2QFY2012; and 83

86 a 7% increase in Automotive product sector revenue to US$104.1 million, due mainly to growth in demand from automotive customers in the PRC which was partially offset by a slow-down in demand for automotive product sales in Europe. The increase in Group revenue was partially offset by: a 7% decline in Consumer and Electronics product sector revenue to US$95.3 million, due to lower sales of certain home entertainment, tuner and vacuum cleaner products, which were partially offset by stronger demand for other home appliances products; a 9% decline in Mass Storage product sector revenue to US$103.3 million, due mainly to supply chain disruption arising from the floods in Thailand during 2QFY2012 which caused a drag on FY2012 revenue from this sector; and a 12% decrease in the Others product sector to US$54.2 million, which includes revenue from telecommunication, personal healthcare and medical equipment products as well as life sciences products, which was offset by higher tooling sales in FY2012. In addition, growth in demand in the Casing and Enclosure product sector was offset by weaker demand from certain customers which caused the sector s revenue to remain flat compared to the previous financial year at US$170.3 million in FY2012. The following table shows the revenue breakdown by industry segment for FY2012 and FY2011. Revenue Breakdown by Industry Segment FY2011 (US$ million) FY2012 (US$ million) % Change Casings and Enclosures % Mass Storage % Consumer Electronics % Automotive % Electrical and Electronic Components % Imaging and Printing % Others % Accordingly, the Group s revenue from its Precision Engineering segment declined 2% year on year in FY2012 to US$624.7 million. Driven by strong demand for its Consumer Electronic products, predominantly for domestic appliances as well as power supply connectors, the Group s Plastics and Rubber segment revenue to external customers grew 13% year on year to US$50.3 million in FY2012 from US$44.5 million in FY2011. Geographically, the Group s revenue growth was driven by stronger sales in the PRC which grew by 8% in FY2012. This was due to higher growth in demand for export as well as domestic sales across most product sectors in the PRC. However, the growth contribution from the PRC were offset a decline of 11% in Southeast Asia in FY2012. This was due mainly to lower sales of Mass Storage, Casing and Enclosure as well as certain Consumer Electronics products. Revenue from Europe registered a marginal decline of 3% year on year due to the challenging economic environment there. (ii) Profit before Tax and Operating Expenses Review The Group reported profit before taxation of US$44.2 million for FY2012 compared to US$59.7 million for FY2011. Operating profit was arrived at after taking into consideration the following: cost of goods sold of US$564.6 million or 83.6% of revenue (FY2011: US$560.9 million or 82.3% of revenue), due to significantly higher tooling sales in FY2012 which were strategically sold at cost; higher general and administrative expenses of US$63.5 million (FY2011: US$57.8 million) due to higher staff costs and utility costs largely due to increased utility rates across many of regions in which the Group operates; 84

87 lower net financial expenses of US$6.7 million (FY2011: US$7.7 million), due repayment of term loans as well as one-off term loan repayment of US$25.0 million loan from net proceeds from the Group s initial public offering in December 2010; an impairment loss on an available-for-sale investment amounting to US$0.2 million (FY2011:US$1.0 million), due to the mark-to-market revaluation of the Group s investment in Fischer Tech Ltd; lower fair value adjustment of US$0.4 million (FY2011: US$2.0 million) due to mark-to-market revaluation of the interest rates swaps on its term loan; foreign exchange loss for the period of US$0.2 million (FY2011: gains of US$3.0 million) due the strengthening of the U.S. Dollar against several of the Group s local operating currencies against the Group s reporting currency; lower Other Operating Income of U$1.7 million (FY2011: US$4.8 million), which includes gains on disposal of the Group s property, plant and equipment; gains in Other items of US$0.8 million which is mainly attributable to the Group s gain on disposal of its Indonesian subsidiary, PT Amtek Engineering Jakarta, in December 2011 (FY2011: US$1.3 million charge relating to IPO expenses and provisions for costs relating to the closure of the Group s Jakarta plant); and higher share of profits from the Group s associated company, Cheval Electronic Enclosures Co., Ltd. (iii) Profit after taxation for the period & non-controlling interests Accordingly, the Group s profit after taxation was US$36.0 million for FY2012, compared to US$48.0 million for FY2011. In arriving at the provision for taxation for FY2012, the Group took into account the prevailing rate of tax at each tax jurisdiction and any over/under provision for tax in respect of prior years as well as applicable tax concessions granted, including newly awarded tax concessions to two of the Group s PRC subsidiaries in the second half of FY2012. (iv) Non-controlling interests Due to the completion of the acquisition of the remaining 45% non-controlling interest in Amtek Plastic in October 2011, profits attributable to non-controlling interests decreased by US$0.4 million to US$2.4 million in FY2012. The Group achieved profit attributable to owners of the Issuer of US$33.6 million in FY2012. (v) Working Capital, assets and liabilities review As at the end of FY2012, the Group s inventory and trade receivable balances stood at US$56.9 million and US$146.0 million, representing a decrease of US$0.5 million and US$6.1 million from that of FY2011 respectively. Continuous efforts in working capital management resulted in inventory and trade receivable days being maintained at 48 and 81 days respectively as at the end of FY2012. Trade payable balances increased by US$2.0 million, representing 105 days. As a result, the Group s net working capital days improved to 24 days as at 30 June 2012 from 25 days as at the end of FY2011. In FY2012, the Group also made net repayment of US$14.4 million in loans and borrowings. As a result, the Group s long-term bank borrowings declined by US$23.7 million whilst its short-term bank borrowings increased by US$9.6 million. During FY2012, the Issuer paid a first and final dividend in respect of FY2011 amounting to US$24.0 million and an interim dividend in respect of FY2012 of US$10.0 million. This amounted to US$34.0 million paid as dividends during FY2012. The Group s cash and cash equivalents stood at US$110.3 million as at the end of FY

88 PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS The net proceeds arising from the issue of the Notes under the Programme (after deducting issue expenses) will be used for the purpose of financing general corporate purposes of the Group, including to finance potential acquisitions, strategic expansions, general working capital, capital expenditure and investments of the Group and to refinance existing borrowings of the Group or as otherwise specified in the Pricing Supplement. 86

89 CLEARING AND SETTLEMENT Clearance and Settlement under the Depository System In respect of Notes which are accepted for clearance by CDP in Singapore, clearance will be effected through an electronic book-entry clearance and settlement system for the trading of debt securities ( Depository System ) maintained by CDP. Notes that are to be listed on the SGX-ST may be cleared through CDP. CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its accountholders and facilitates the clearance and settlement of securities transactions between accountholders through electronic book-entry changes in the securities accounts maintained by such accountholders with CDP. In respect of Notes which are accepted for clearance by CDP, the entire issue of the Notes is to be held by CDP in the form of a Global Note for persons holding the Notes in securities accounts with CDP ( Depositors ). Delivery and transfer of Notes between Depositors is by electronic book-entries in the records of CDP only, as reflected in the securities accounts of Depositors. Although CDP encourages settlement on the third business day following the trade date of debt securities, market participants may mutually agree on a different settlement period if necessary. Settlement of over-the-counter trades in the Notes through the Depository System may only be effected through certain corporate depositors ( Depository Agents ) approved by CDP under the Companies Act to maintain securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves and their clients. Accordingly, Notes for which trade settlement is to be effected through the Depository System must be held in securities sub-accounts with Depository Agents. Depositors holding the Notes in direct securities accounts with CDP, and who wish to trade Notes through the Depository System, must transfer the Notes to be traded from such direct securities accounts to a securities sub-account with a Depository Agent for trade settlement. CDP is not involved in money settlement between Depository Agents (or any other persons) as CDP is not a counter-party in the settlement of trades of debt securities. However, CDP will make payment of interest and repayment of principal on behalf of issuers of debt securities. Although CDP has established procedures to facilitate transfer of interests in the Notes in global form among Depositors, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Issuing and Paying Agent or any other agent will have the responsibility for the performance by CDP of its obligations under the rules and procedures governing its operations. Clearance and Settlement under Euroclear and/or Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each holds securities for participating organisations and facilitates the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in the accounts of such participants, thereby eliminating the need for physical movements of certificates and any risks from lack of simultaneous transfer. Euroclear and Clearstream, Luxembourg provide to their respective participants, among other things, services for safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg each also deals with domestic securities markets in several countries through established deposit ary and custodial relationships. The respective systems of Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems which enables their respective participants to settle trades with one another. Euroclear and Clearstream, Luxembourg participants are financial institutions throughout the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to other financial institutions, such as banks, brokers, dealers and trust companies which clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg participant, either directly or indirectly. 87

90 A participant s overall contractual relations with either Euroclear or Clearstream, Luxembourg are governed by the respective rules and operating procedures of Euroclear or Clearstream, Luxembourg and any applicable laws. Both Euroclear and Clearstream, Luxembourg act under those rules and operating procedures only on behalf of their respective participants, and have no record of, or relationship with, persons holding any interests through their respective participants. Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the relevant paying agent, to the cash accounts of the relevant Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system s rules and procedures. 88

91 SINGAPORE TAXATION The statements below are general in nature and are based on certain aspects of current tax laws in Singapore and administrative guidelines issued by the Inland Revenue Authority of Singapore (the IRAS ) and the MAS in force as at the date of this Information Memorandum and are subject to any changes in such laws or administrative guidelines, or the interpretation of those laws or guidelines, occurring after such date, which changes could be made on a retroactive basis. Neither these statements nor any other statements in this Information Memorandum are intended or are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The statements made herein do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive tax incentive(s)) may be subject to special rules or tax rates. Prospective holders of the Notes are advised to consult their own professional tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of the Notes, including the effect of any foreign, state or local tax laws to which they are subject. It is emphasised that none of Issuer, the Arrangers or any other persons involved in the Programme accept responsibility for any tax effects or liabilities resulting from the subscription, purchase, holding or disposal of the Notes. 1. Interest and Similar Payments Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments are deemed to be derived from Singapore: (a) (b) any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or any income derived from loans where the funds provided by such loans are brought into or used in Singapore. Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore unless all the conditions for tax exemption are met. Currently, the rate under Singapore income tax law at which tax is to be withheld for such payments (other than those subject to the 15% final withholding tax described below) to non-resident persons (other than non-resident individuals) is 17%. The applicable rate for non-resident individuals is 20%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15%. The rate of 15% may be reduced by applicable tax treaties. With effect from 29 December 2009, the said deeming provisions of Section 12(6) of the ITA shall not apply to any payment for (a) any arrangement, management or service relating to any loan or indebtedness, where such arrangement, management or service is performed outside Singapore for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a non-resident person who-- (i) in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and 89

92 (ii) in any event (A) (B) does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the arrangement, management or service is not performed through that business carried on in Singapore or that permanent establishment; and. (b) any guarantee relating to any loan or indebtedness, where the guarantee is provided for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a guarantor who is a non-resident person who (i) in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and (ii) in any event (A) (B) does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the giving of the guarantee is not effectively connected with that business carried on in Singapore or that permanent establishment; Certain Singapore-sourced investment income derived by individuals from financial instruments is exempt from tax, including: (a) interest from debt securities derived on or after 1 January 2004; (b) (c) discount income (not including discount income arising from secondary trading) from debt securities derived on or after 17 February 2006; and prepayment fee 1, redemption premium 1 or break cost 1 from debt securities derived on or after 15 February 2007, except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession. In addition, as the Programme as a whole is arranged by DBS Bank Ltd. and Standard Chartered Bank, Singapore Branch, both of which are Financial Sector Incentive (Bond Market) Companies (as defined in the ITA), any tranche of the Notes issued during the period from the date of this Information Memorandum to 31 December 2013 (the Relevant Notes ) should be qualifying debt securities for the purposes of the ITA, to which the following treatments shall apply: 1 The terms break cost, prepayment fee and redemption premium are defined in the ITA as follows: break cost, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by any loss or liability incurred by the holder of the securities in connection with such redemption; prepayment fee, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by the terms of the issuance of the securities; and redemption premium, in relation to debt securities and qualifying debt securities, means any premium payable by the issuer of the securities on the redemption of the securities upon their maturity. References to break cost, prepayment fee and redemption premium in this Singapore tax disclosure have the same meaning as defined in the ITA. 90

93 (i) (ii) (iii) subject to certain prescribed conditions having been fulfilled (including the furnishing by the Issuer, or such other person as the Comptroller of Income Tax in Singapore (the Comptroller ) may direct, of a return on debt securities for the Relevant Notes within such period as the Comptroller may specify to the Comptroller and the MAS and such other particulars in connection with the Relevant Notes as the Comptroller may require and the inclusion by the Issuer in all offering documents relating to the Relevant Notes of a statement to the effect that where interest, discount income, prepayment fee, redemption premium or break cost from the Relevant Notes is derived by a person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person acquires the Relevant Notes using funds from that person s Singapore operations), interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost (collectively, the Specified Income ) from the Relevant Notes, derived by a holder who is not resident in Singapore and (aa) who does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire the Relevant Notes are not obtained from the Singapore operations, are exempt from Singapore tax; subject to certain conditions having been fulfilled (including the furnishing by the Issuer, or such other person as the Comptroller may direct, of a return on debt securities for the Relevant Notes within such period as the Comptroller may specify and such other particulars in connection with the Relevant Notes as the Comptroller may require to the Comptroller and the MAS), Specified Income from the Relevant Notes derived by any company or body of persons (as defined in the ITA) in Singapore is subject to tax at a concessionary rate of 10% or 12% (for financial institutions with the Financial Sector Incentive Standard Tier award); and subject to: (aa) the Issuer including in all offering documents relating to the Relevant Notes a statement to the effect that any person whose interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Specified Income) derived from the Relevant Notes is not exempt from tax shall include such income in a return of income made under the ITA; and (bb) the Issuer, or such other person as the Comptroller may direct, furnishing to the Comptroller and the MAS a return on debt securities for the Relevant Notes within such period as the Comptroller may specify and such other particulars in connection with the Relevant Notes as the Comptroller may require, Specified Income derived from the Relevant Notes is not subject to withholding of tax by the Issuer. However, notwithstanding the foregoing: (A) (B) if during the primary launch of any Tranche of Relevant Notes, the Relevant Notes of such Tranche are issued to fewer than four (4) persons and 50% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such Relevant Notes would not qualify as qualifying debt securities ; and even though a particular Tranche of Relevant Notes are qualifying debt securities, if, at any time during the tenure of such Tranche of Relevant Notes, 50% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by any related party(ies) of the Issuer, Specified Income derived from such Relevant Notes held by: (i) (ii) any related party of the Issuer; or any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer, 91

94 shall not be eligible for the tax exemption or concessionary rate of tax as described above. The term related party, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person. Notwithstanding that the Issuer is permitted to make payments of Specified Income in respect of the Relevant Notes without deduction or withholding for tax under Section 45 or Section 45A of the ITA, any person whose Specified Income (whether it is interest, discount income, prepayment fee, redemption premium or break cost) derived from the Relevant Notes is not exempt from tax is required to include such income in a return of income made under the ITA. There is an enhancement to the Qualifying Debt Securities Scheme known as the Qualifying Debt Securities Plus Scheme ( QDS Plus Scheme ). Under the QDS Plus Scheme, subject to certain conditions having been fulfilled (including the furnishing by the Issuer or such other person as the Comptroller may direct, of a return on debt securities in respect of the qualifying debt securities within such period as the Comptroller may specify to the Comptroller and the MAS, and such other particulars in connection with the qualifying debt securities as the Comptroller may require), income tax exemption is granted on Specified Income derived by any investor from qualifying debt securities (excluding Singapore Government Securities) which: (a) are issued during the period from 16 February 2008 to 31 December 2013; (b) (c) (d) have an original maturity date of not less than 10 years; cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date. In determining an investor s income that is to be exempted from tax under the QDS Plus Scheme, prescribed conditions apply in relation to how the investor s losses, expenses, capital allowances and donations which are attributable to exempt income are to be treated. However, even if a particular Tranche of the Relevant Notes are qualifying debt securities which qualify under the QDS Plus Scheme, if, at any time during the tenure of such Tranche of Relevant Notes, 50% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by any related party(ies) of the Issuer, Specified Income from such Relevant Notes derived by: (aa) any related party of the Issuer; or (bb) any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer, shall not be eligible for the tax exemption under the QDS Plus Scheme as described above. In the Singapore Budget Statement 2013, it has been announced that the Qualifying Debt Securities Scheme will be extended for 5 years to debt securities issued during the period of 1 January 2014 to 31 December 2018, subject to certain amendments to be announced by the MAS. The QDS Plus Scheme will also be extended for 5 years to debt securities issued during the period of 1 January 2014 to 31 December 2018 and refined to allow debt securities with standard early termination clauses to qualify, subject to certain conditions to be announced by the MAS. Details of the changes are expected to be released by the MAS by the end of June The above Budget 2013 proposals have not been legislated. 92

95 2. Capital Gains Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable in Singapore. However, any gains derived by any person from the sale of the Notes which are gains from any trade, business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be taxable if such gains are considered revenue in nature. Holders of the Notes who are adopting Singapore Financial Reporting Standard 39 Financial Instruments: Recognition and Measurement ( FRS 39 ), may for Singapore income tax purposes be required to recognise unrealized mark to market gains or losses (not being gains or losses in the nature of capital) on the Notes, irrespective of disposal. Please see the section below on Adoption of FRS 39 treatment for Singapore income tax purposes. 3. Adoption of FRS 39 treatment for Singapore income tax purposes The IRAS has issued a circular entitled Income Tax Implications arising from the adoption of FRS 39 - Financial Instruments: Recognition & Measurement (the FRS 39 Circular ). Legislative amendments to give effect to the FRS 39 Circular have been enacted in Section 34A of the ITA. The FRS 39 Circular and Section 34A of the ITA generally apply, subject to certain opt-out provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes. According to the FRS 39 Circular, for financial assets on revenue account classified as: (a) (b) (c) fair value through profit or loss, gains or losses recognised in the profit and loss account will be taxed or allowed as a deduction even though they are unrealised; available-for-sale, only the cumulative gains or losses (which had been recognised in the equity account on the Balance Sheet) that are transferred to the profit and loss account upon derecognition will be taxed or allowed as a deduction; and held-to-maturity and loans, the interest income based on the amount shown in the accounts, which is calculated under the effective interest method under FRS 39, will be taxed. The FRS 39 Circular refers to the definition of the effective interest method under FRS 39 and states that the effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period and the effective interest rate is the rate that exactly discounts estimated future cash payments of receipts through the expected life of the financial instruments. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. However, for debt securities which are on capital account, the FRS 39 Circular indicates that interest income reflected in the profit and loss account under FRS 39 will be adjusted to that based on the coupon/contractual rate and that based on the provisions of Section 10(12) of the ITA respectively. In this regard, Section 34A of the ITA provides that where interest from debt securities is chargeable to tax under Section 10(1)(d) of the ITA (i.e. as passive income rather than as income from a trade or business), such interest will be computed based on the contractual interest rate and not the effective interest rate. In this section, contractual interest rate in relation to any financial instrument means the interest rate specified in the financial instrument. A gain from discounts or premiums on debt securities, being a gain chargeable to tax under Section 10(1)(d) of the ITA, shall be deemed to accrue only on the maturity or redemption of the debt securities and to be equal to the difference between the amount received on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued. Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Notes. 93

96 4. Estate Duty Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February

97 SUBSCRIPTION, PURCHASE AND DISTRIBUTION The Programme Agreement provides for Notes to be offered from time to time through one or more Dealers. The price at which a Series or Tranche will be issued will be determined prior to its issue between the Issuer and the relevant Dealer(s). The obligations of the Dealers under the Programme Agreement will be subject to certain conditions set out in the Programme Agreement. Each Dealer (acting as principal) will subscribe or procure subscribers for Notes from the Issuer pursuant to the Programme Agreement. United States The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act ( Regulation S ). The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder. Each Dealer has agreed that, and each further Dealer appointed under the Programme will be required to agree that, except as permitted by the Programme Agreement, it will not offer, sell or deliver the Notes of any identifiable Tranche (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of such Tranche, as determined and certified to the Issuer by the Issuing and Paying Agent, by such Dealer (or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager), of all Notes of the Tranche of which such Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons, and it will have sent to each dealer to which it sells Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S. In addition, until 40 days after the commencement of the offering of any identifiable Tranche of Notes, an offer or sale of Notes within the United States by a dealer that is not participating in the offering may violate the registration requirements of the Securities Act. Hong Kong Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that: (a) (b) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (i) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a prospectus as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. Singapore Each Dealer has acknowledged that this Information Memorandum has not been registered as a prospectus with the MAS. Accordingly, each Dealer has represented, warranted and agreed that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription 95

98 or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and it has not circulated or distributed, and will not circulate or distribute, this Information Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore other than (a) to an institutional investor under Section 274 of the SFA, (b) to a relevant person pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. General No action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of this Information Memorandum or any other document or any Pricing Supplement, in any country or jurisdiction where action for that purpose is required. Each Dealer has agreed that it will comply with all relevant laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers Notes or any interest therein or rights in respect thereof or has in its possession or distributes, this Information Memorandum or any Pricing Supplement or any other document. Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the Notes or any interest therein or rights in respect thereof and the consequences arising from a contravention thereof should consult his own professional advisers and should make his own inquiries as to the laws, regulations and directives in force or applicable in any particular jurisdiction at any relevant time. 96

99 APPENDIX I GENERAL AND OTHER INFORMATION INFORMATION ON DIRECTORS 1. As at the date of this Information Memorandum, no option to subscribe for shares in, or debentures of, the Issuer has been granted to, or was exercised by, any Director. SHARE CAPITAL 2. As at the date of this Information Memorandum, there is only one class of ordinary shares in the Issuer. The rights and privileges attached to the shares are stated in the Articles of Association of the Issuer. 3. Save as disclosed in Appendices II, III, IV and V to this Information Memorandum, no shares in, or debentures of, the Issuer have been issued or are proposed to be issued, as fully or partly paid up, for cash or for a consideration other than cash, within the two years preceding the date of this Information Memorandum. 4. The issued share capital of the Issuer as of the Latest Practicable Date is as follows: Share Designation Issued Share(s) Issued Share Capital ( S$) Ordinary shares 544,925,133 75,517,588 BORROWINGS 5. Save as disclosed in Appendix V to this Information Memorandum, the Group had, as at the Latest Practicable Date, no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments, guarantees or material contingent liabilities, save that as at the Latest Practicable Date, approximately US$140,200,000 was outstanding under various credit facilities. WORKING CAPITAL 6. The Issuer is of the opinion that, after taking into account the present banking facilities, the Issuer will have adequate working capital for its present requirements. CHANGES IN ACCOUNTING POLICIES 7. Save as disclosed in Appendix V, there have been no significant changes in the accounting policies of the Issuer since its audited consolidated financial statements for FY2012. LITIGATION 8. There are no legal or arbitration proceedings pending or, so far as the Issuer is aware, threatened against the Issuer or any of its subsidiaries the outcome of which, in the opinion of the Issuer, may have or have had during the 12 months prior to the date of this Information Memorandum a material adverse effect on the financial position of the Group. MATERIAL ADVERSE CHANGE 9. There has been no material adverse change in the financial condition or business of the Issuer or the Group since 31 December

100 AUDITOR S CONSENT 10. Ernst & Young LLP has given and has not withdrawn its written consent to the issue of this Information Memorandum with the references herein to its name and, where applicable, reports in the form and context in which they appear in this Information Memorandum. DOCUMENTS AVAILABLE FOR INSPECTION 11. Copies of the following documents may be inspected at the registered office of the Issuer at 35 Pioneer Road North, Singapore during normal business hours for a period of six months from the date of this Information Memorandum: (a) (b) (c) (d) (e) (f) the Memorandum and Articles of Association of the Issuer; the Trust Deed; the letter of consent referred to in paragraph 10 above; the audited financial statements of the Issuer and its subsidiaries for each of FY2011 and FY2012; the announcement of unaudited results of the Issuer and its subsidiaries for the half year ended 31 December 2012 and the announcement of unaudited results of the Issuer and its subsidiaries for the third quarter ended 31 March FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE 12. The functions, rights and obligations of the Trustee are set out in the Trust Deed. 98

101 APPENDIX II AUDITED FINANCIAL STATEMENTS OF AMTEK ENGINEERING LTD AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 The information in this Appendix II has been extracted and reproduced from the annual report of the Issuer for the financial year ended 30 June 2011 and has not been specifically prepared for inclusion in this Information Memorandum. References to the page numbers herein are to those as reproduced from the annual report for the financial year ended 30 June

102 INDEPENDENT AUDITORS REPORT For the year ended 30 June 2011 To the Members of Amtek Engineering Ltd Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Amtek Engineering Ltd (the Company ) and its subsidiaries (collectively, the Group ) set out on pages 29 to 82, which comprise the balance sheets of the Group and the Company as at 30 June 2011, the statements of changes in equity of the Group and the Company, and the consolidated income statement, consolidated statement of comprehensive income, and consolidated cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the consolidated financial statements Management is responsible for the preparation of consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date. Report on other legal and regulatory requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 30 September AMTEK ENGINEERING LTD 100

103 CONSOLIDATED INCOME STATEMENT For the year ended 30 June 2011 Note US$'000 US$'000 Revenue 3 681, ,000 Cost of sales (560,870) (531,864) Gross profit 120, ,136 Add/(Less): Other operating income 4,826 2,631 General and administrative expenses (57,833) (48,578) Loss on classification of associate to available-for-sale investments (882) Impairment loss on available-for-sale investments (1,060) Foreign exchange gain/(loss) 3,026 (2,623) Fair value loss on derivatives (2,050) (2,977) Finance income Finance costs 5 (7,726) (10,293) Other items 6 (1,334) (6,500) Profit before taxation and share of results of associates 59,336 37,636 Share of results of associates Profit before taxation 7 59,672 38,446 Taxation 9 (11,629) (16,165) Profit for the year 48,043 22,281 Attributable to: Owners of the Company 45,234 21,682 Non-controlling interests 2, ,043 22,281 Earnings per share attributable to owners of the Company (in USD cents) Basic Diluted The accompanying accounting policies and explanatory notes form an integral part of the financial statements. ANNUAL REPORT

104 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2011 Note US$'000 US$'000 Profit for the year 48,043 22,281 Other comprehensive income: Exchange differences arising from consolidation of foreign operations 4,597 2,791 Share of associate s other comprehensive income (316) Capital reserves attributed to a former associate deemed realised (2,780) Other comprehensive income attributed to a former associate deemed realised 316 Other comprehensive income for the financial year 4, Total comprehensive income for the financial year 52,640 22,292 Total comprehensive income attributable to: Owners of the Company 49,312 21,418 Non-controlling interests 3, ,640 22,292 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 30 AMTEK ENGINEERING LTD 102

105 BALANCE SHEETS As at 30 June 2011 Group Company Note US$'000 US$'000 US$'000 US$'000 ASSETS Non-current assets Property, plant and equipment , , Investment in subsidiaries , ,321 Investment in associate 13 7,821 7,830 2,369 2,369 Other investments 14 4,083 5, Other receivables and deposits Prepaid expenses 1,654 1,672 Amounts due from former holding company 16 52,668 52,668 Amounts due from subsidiaries 17 3,805 3,220 Deferred tax assets 18 2,589 1,694 Fixed deposits 19 11,952 12, , , , ,354 Current assets Inventories 20 57,463 48,584 Trade receivables , ,189 Other receivables and deposits 15 19,788 22, Prepaid expenses 4,410 3, Amounts due from subsidiaries 17 10,499 22,119 Fixed deposits 19 10,102 1, Cash and bank balances ,882 81,443 9,820 3, , ,839 20,969 26,661 TOTAL ASSETS 498, , , ,015 EQUITY AND LIABILITIES Current liabilities Trade payables , ,339 Other payables and accrued expenses 25 41,563 45, ,424 Finance lease obligations Amounts due to subsidiaries 27 50,996 65,906 Loans and borrowings 28 59,733 64,000 4,290 14,700 Provision for taxation 9,242 9,372 2,603 2,932 Derivatives 22 1,569 2, , , ,551 58,739 86,187 NET CURRENT ASSETS/(LIABILITIES) 117,308 57,288 (37,770) (59,526) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. ANNUAL REPORT

106 BALANCE SHEETS As at 30 June 2011 Group Company Note US$'000 US$'000 US$'000 US$'000 Non-current liabilities Finance lease obligations Loans and borrowings 28 81, ,000 15,024 63,700 Deferred tax liabilities 18 5,346 6, , ,806 15,091 64,547 Total liabilities 323, ,357 73, ,734 Equity attributable to equity holders of the Company Share capital 29 36,482 36,482 36,482 36,482 Other reserves 30 33,241 26, Revenue reserve 86,568 43,790 48,886 6, , ,438 85,909 43,281 Non-controlling interests 18,253 16,248 Total equity 174, ,686 85,909 43,281 TOTAL EQUITY AND LIABILITIES 498, , , ,015 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 32 AMTEK ENGINEERING LTD 104

107 STATEMENTS OF CHANGES IN EQUITY For the year ended 30 June 2011 Group Share capital Statutory reserve fund Capital reserve Foreign currency translation reserve Sharebased payment reserve Other reserves, Revenue total reserve Equity attributable to owners of the Company, total Noncontrolling interests Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 1 July ,482 12,801 5,678 5,157 23,636 24,902 85,020 16, ,894 Profit for the year 21,682 21, ,281 Other comprehensive (loss)/income for the financial year (2,780) 2,516 (264) (264) Total comprehensive (loss)/income for the financial year (2,780) 2,516 (264) 21,682 21, ,292 Dividends paid to noncontrolling interests (1,500) (1,500) Transfer to statutory reserve fund 2,794 2,794 (2,794) Balance at 30 June 2010 and 1 July ,482 15,595 2,898 7,673 26,166 43, ,438 16, ,686 Profit for the year 45,234 45,234 2,809 48,043 Other comprehensive income for the financial year 4,078 4,078 4, ,597 Total comprehensive income for the financial year 4,078 4,078 45,234 49,312 3,328 52,640 Share-based payment expense Dividends paid to noncontrolling interests (1,323) (1,323) Transfer to statutory reserve fund 2,456 2,456 (2,456) Balance at 30 June ,482 18,051 2,898 11, ,241 86, ,291 18, ,544 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. ANNUAL REPORT

108 STATEMENTS OF CHANGES IN EQUITY For the year ended 30 June 2011 Share capital Share-based payment reserve Revenue reserve Total US$'000 US$'000 US$'000 US$'000 Company Balance at 1 July ,482 5,982 42,464 Profit for the year Total comprehensive income for the financial year Balance at 30 June 2010 and 1 July ,482 6,799 43,281 Profit for the year 42,087 42,087 Total comprehensive income for the financial year 42,087 42,087 Share-based payment expense Balance at 30 June , ,886 85,909 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 34 AMTEK ENGINEERING LTD 106

109 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2011 Cash flows from operating activities Note US$'000 US$'000 Profit before taxation 59,672 38,446 Adjustments for: Loss on classification of associate to available-for-sale investments 882 Impairment loss on available-for-sale investments 1,060 Fair value loss on derivatives 2,050 2,977 Allowance for inventory obsolescence, net (Write back of)/allowance for doubtful debts, net 7 (525) 385 Bad debts recovered trade 7 (498) Depreciation of property, plant and equipment 7 21,675 22,995 Impairment of property, plant and equipment 6 2,865 Share-based payments 541 Finance income 4 (756) (722) Finance costs 5 7,726 10,293 Gain on disposal of property, plant and equipment 7 (3,919) (1,657) Property, plant and equipment written off Share of results of associates (336) (810) Operating profit before working capital changes 87,684 76,498 Increase in inventories (9,313) (1,805) Increase in receivables and prepaid expenses (6,477) (41,018) (Decrease)/Increase in payables and accrued expenses (4,305) 41,660 Cash generated from operations 67,589 75,335 Finance income received Finance cost paid (7,376) (10,293) Income tax paid, net (13,377) (16,675) Net cash generated from operating activities 47,592 49,089 Cash flows from investing activities Purchases of property, plant and equipment (a) (17,573) (15,743) Proceeds from disposal of property, plant and equipment 7,923 5,251 Acquisition of non-controlling interests (b) (2,921) Dividend received from associates Net cash used in investing activities (9,130) (12,815) Cash flows from financing activities Repayment of loans and borrowings (193,167) (16,000) Repayment of finance lease obligations (124) (245) Proceeds from loans and borrowings 143,500 Payment of upfront fee (3,000) Settlement of derivative (2,980) Payment from former holding company 52,668 Dividends paid to non-controlling interests (1,323) (1,500) Movement in restricted fixed deposits 189 (82) Net cash used in financing activities (4,237) (17,827) Net effect of exchange rate changes 1,770 3,116 Net increase in cash and cash equivalents 35,995 21,563 Cash and cash equivalents at beginning of the year 82,989 61,426 Cash and cash equivalents at end of the year (c) 118,984 82,989 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. ANNUAL REPORT

110 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2011 Notes: (a) This represents the cash outflow excluding plant and equipment acquired under finance lease arrangements, amounting to US$581,000 (2010: US$82,000). In prior year, there is an amount of US$1,396,000 being excluded from the purchase of property, plant and equipment in 2010 as it pertains to prepayment for capital expenditure in 2009 being capitalised as property, plant and equipment in (b) (c) The consideration on acquisition of non-controlling interests in year 2008, amounting to US$13,094,000 was paid in three tranches of US$2,921,000, US$2,782,000 and US$7,391,000 in the financial years ended 30 June 2010, 2009 and 2008, respectively. Cash and cash equivalents included in the consolidated cash flow statement comprise the following balance sheet amounts: Note US$'000 US$'000 Fixed deposits with financial institutions current portion 19 10,102 1,546 Cash and bank balances ,882 81, ,984 82,989 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 36 AMTEK ENGINEERING LTD 108

111 NOTES TO THE FINANCIAL STATEMENTS 30 June Corporate information Amtek Engineering Ltd (the Company ) is a limited liability company incorporated and domiciled in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST) since 1 December The former immediate holding company is Metcomp Co (Singapore) Pte. Ltd, a company incorporated in Singapore and the former ultimate holding company is Metcomp Holdings, a company incorporated in Cayman Islands. The registered office and principal place of business is located at 1 Kian Teck Drive, Singapore The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries are set out in Note 13 to the financial statements. 2. Summary of significant accounting policies 2.1 Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies. The financial statements are presented in United States Dollars (USD or US$) and all values are rounded to the nearest thousand (US$ 000) as indicated. 2.2 Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 July The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company. 2.3 Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Description Effective for annual periods beginning on or after Revised FRS 24 Related Party Disclosures 1 January 2011 Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement 1 January 2011 INT FRS 115 Agreements for the Construction of Real Estate 1 January 2011 Amendments to FRS 107 Disclosures Transfers of Financial Assets 1 July 2011 Amendments to FRS 12 Deferred Tax Recovery of Underlying Assets 1 January 2012 Improvements to FRSs January 2011, unless otherwise stated ANNUAL REPORT

112 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.3 Standards issued but not yet effective (cont d) 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 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any noncontrolling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition costs incurred are expensed. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit and loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured until it is finally settled within equity. Goodwill is initially measured at cost being the excess of the consideration transferred over the Group s net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. 38 AMTEK ENGINEERING LTD 110

113 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.4 Basis of consolidation (cont d) After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note Transactions with non-controlling interests Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 2.6 Foreign currencies The Group s consolidated financial statements are presented in United States Dollars (USD or US$), which is also the Company s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. 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 balance sheet date. 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 the income statement 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 income statement of the Group on disposal of the foreign operations. ANNUAL REPORT

114 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.6 Foreign currencies (cont d) For consolidation purposes, the assets and liabilities of foreign operations are translated into United States Dollars (USD or US$) at the rate of exchange ruling at the balance sheet date and their statement of comprehensive income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in the income statement. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate. 2.7 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The cost comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Subsequent to recognition, all items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred. The carrying values of property, plant and equipment are reviewed for impairment, when events or changes in circumstances indicate that the carrying value may not be recoverable. 2.8 Depreciation Depreciation is not provided for freehold land due to its unlimited useful life. Works in progress are not depreciated until they are completed and put into use. Assets held under finance leases are depreciated over their estimated useful lives or the lease terms, whichever is shorter, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Depreciation is calculated on a straight-line basis over the expected useful lives of the assets as follows: Freehold and leasehold properties - 20 to 99 years Equipment and machinery - 2 to 10 years Furniture and fittings - 2 to 10 years Motor vehicles - 4 to 10 years Office equipment - 2 to 5 years Computer software - 3 to 5 years The useful life, residual value and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. 40 AMTEK ENGINEERING LTD 112

115 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.8 Depreciation (cont d) Fully depreciated assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the income statement in the year the asset is derecognised. 2.9 Impairment of non-financial assets The Group assesses at each balance sheet date whether there is 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 the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. 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, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses are recognised in the income statement 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. 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. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the income statement unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase Subsidiaries A subsidiary is a company over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. This is usually when the Group, directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. In the Company s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. ANNUAL REPORT

116 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.11 Associates An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Group s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the balance sheet at cost plus post-acquisition changes in the Group s share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment. Any excess of the Group s share of the net fair value of the associate s identifiable asset, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Group s share of results of the associate in the period in which the investment is acquired. The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates. The Group s share of the profit or loss of its associates is shown on the face of profit or loss after tax and noncontrolling interests in the subsidiaries of associates. When the Group s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group s investment in its associates. The Group determines at the end of each balance sheet date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement. The financial statements of the associates are prepared as of the same reporting date as the Company. When the financial statements of an associate used in applying the equity method are prepared as of a different reporting date from the Company, adjustments are made for the effects of significant transactions or events that occur between that date and the reporting date of the Company, where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss Financial assets Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through the income statement, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end. 42 AMTEK ENGINEERING LTD 114

117 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.12 Financial assets (cont d) A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised in other comprehensive income is recognised in the income statement. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. (i) Financial assets at fair value through profit or loss Financial assets at fair value include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit and loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 39. Any gains or losses arising from changes in fair value of the financial assets are recognised in the income statement. (ii) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method. Gains and losses are recognised in income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process. (iii) Available-for-sale financial assets Available-for-sale financial assets are those financial assets that are designated as available-for-sale or are not classified in any of the above categories. After initial recognition, available-for-sale financial assets are measured at fair value with gains or losses from changes in fair value of the financial asset being recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement as a reclassification adjustment when the financial asset is derecognised. The fair value of investments that are actively traded in organised financial markets is determined by reference to the relevant Exchange s quoted market bid prices at the close of business on the end of the reporting period. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm s length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis and option pricing models. Where the fair value cannot be reliably determined, the investment will be carried at cost less impairment loss. ANNUAL REPORT

118 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.13 Impairment of financial assets The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. (a) Assets carried at amortised cost If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in the income statement. 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. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. (b) 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 a financial asset 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. (c) Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to the income statement. Reversals of impairment loss in respect of equity instruments are not recognised in the income statement. Reversals of impairment losses on debt instruments are reversed through the income statement, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in the income statement. 44 AMTEK ENGINEERING LTD 116

119 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.14 Inventories Raw materials, consumables, finished goods and work-in-progress are stated at the lower of cost and net realisable value. Cost is primarily determined on a weighted average basis and includes all costs in bringing the inventories to their present location and condition. In the case of manufactured products, cost includes all direct expenditure and production overheads based on the normal level of activity. Net realisable value is the estimated selling price in the normal course of business less estimated costs of completion and the estimated costs necessary to make the sale. Allowance is made, where necessary, for obsolete, slow-moving and defective stocks Cash and short-term deposits Cash and short-term deposits in the consolidated balance sheets comprise cash at banks and on hand and shortterm deposits with an original maturity of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and shortterm deposits as defined above, net of outstanding bank overdrafts Financial liabilities Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable to transaction costs. Subsequent to initial recognition, derivatives are measured at fair value. Other financial liabilities (except for financial guarantee) are measured at amortised cost using the effective interest method. For financial liabilities other than derivatives, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the income statement. Net gains or losses on derivatives include exchange differences. A financial liability is derecognised when the obligation under the liability is extinguished. 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 income statement Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made on the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. ANNUAL REPORT

120 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.18 Financial guarantee A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due. Financial guarantees are recognised initially at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in the income statement over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the income statement 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. Revenue from the sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer. 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. Revenue from its test and technical services is recognised when the services are rendered. Interest income is recognised using the effective interest rate method. Dividend income is recorded when the Group s right to receive payment is established Income taxes Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period. Current taxes are recognised in the income statement except to the extent that the tax relates to items recognised outside the income statement, either in other comprehensive income or directly in equity. Deferred tax Deferred income tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period. Deferred tax liabilities are recognised for all temporary differences, except: Where the deferred income tax liabilities arise from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affect neither the accounting profit nor taxable profit or loss. 46 AMTEK ENGINEERING LTD 118

121 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.20 Income taxes (cont d) Deferred tax (cont d) In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax losses and unused tax credits can be utilised except: Where the deferred income tax assets relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred income tax assets are recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised. Deferred income tax relating to items recognised outside the income statement is recognised outside the income statement. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same tax authority. Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except: - Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and - Receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. ANNUAL REPORT

122 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.21 Borrowing costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred Employee benefits (i) Defined contribution plans As required by law, the Company and certain subsidiaries make contributions to the national pension schemes in their respective countries. Such national pension schemes are defined contribution pension schemes which are recognised as an expense in the same period in which the related service is performed. (ii) Employee leave entitlements Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period. (iii) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after balance sheet date are discounted to present value. (iv) Share-based payments The Restricted Share Plan (the RSP ) and Performance Share Plan (the PSP ) are accounted using either equity-settled and cash-settled share-based payments. The cost of equity-settled share-based payment transactions is measured at fair value at the date of grant. This cost is recognised in the consolidated income statement, with a corresponding increase in the sharebased payment reserve, on a straight-line basis over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group s best estimate of the number of awards that will ultimately vest. At every balance sheet date, the Group revises its estimates of the number of RSP and PSP shares that are expected to vest on vesting date. Any revision of this estimate is included in the consolidated income statement and a corresponding adjustment to equity over the remaining vesting date. The charge or credit to the consolidated income statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. 48 AMTEK ENGINEERING LTD 120

123 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.22 Employee benefits (cont d) (iv) Share-based payments (cont d) 2.23 Leases The share-based payment reserve is transferred to accumulated profits reserve upon expiry of the plan. Where shares are issued under the RSP or PSP, the share-based payment reserve is transferred to share capital if new shares are issued, or to treasury shares if the plan is satisfied by the reissuance of treasury shares. The cost of cash-settled share-based payment transaction is measured initially at fair value at the grant date. This fair value is recognised in profit or loss over the vesting period with recognition of a corresponding liability. Until the liability is settled, it is remeasured at each reporting date with changes in fair value recognised in profit or loss. The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. Finance leases Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised, at the inception of the lease, at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. Finance charges are charged directly to the income statement. Capitalised lease assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. Gains or losses arising from sale and operating leaseback of property are determined based on fair values. Differences between sales proceeds and fair values are taken to the statement of financial position as deferred gain on sale and leaseback transactions, included under deferred account and amortised over the minimum lease terms. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. ANNUAL REPORT

124 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.24 Contingent liabilities A contingent liability is: (a) (b) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation that arises from past events but is not recognised because: (i) (ii) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment information Related parties A party is considered to be related to the Group if: (a) The party, directly or indirectly through one or more intermediaries, (i) (ii) (iii) controls, is controlled by, or is under common control with, the Group; has an interest in the Group that gives it significant influence over the Group; or has joint control over the Group; (b) (c) (d) (e) The party is an associate; The party is 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) or (d); or 50 AMTEK ENGINEERING LTD 122

125 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.26 Related parties (cont d) (f) (g) 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 in (d) or (e); 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 Significant accounting estimates and judgements The preparation of the Group s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future. Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Useful lives of property, plant and equipment The cost of property, plant and equipment is depreciated on a straight-line basis over the assets useful lives. Management estimates the useful lives of these assets to be within 2 to 99 years. The carrying amounts of the Company s and Group s property, plant and equipment as at 30 June 2011 was US$672,000 (2010: US$722,000) and US$116,237,000 (2010: US$120,743,000) respectively. A 5% difference in the expected useful lives of these assets from management s estimates would result in approximately 2%, or US$1,084,000 (2010: 3% or US$1,150,000) variance in the Group s profit before taxation. (ii) Deferred tax assets Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets at 30 June 2011 was US$2,589,000 (2010: US$1,694,000). (iii) Impairment of loans and receivables The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group s loans and receivables at the balance sheet date is disclosed in the related notes to the financial statements. The Group has fully impaired loans and receivables identified as doubtful. Accordingly, the change in present value of estimated cash flows on receivables is not expected to have an impact on the impairment allowance in income statement. ANNUAL REPORT

126 NOTES TO THE FINANCIAL STATEMENTS 30 June Summary of significant accounting policies (cont d) 2.27 Significant accounting estimates and judgements (cont d) Critical judgements made in applying accounting policies In the process of applying the Group s accounting policies, management has made certain judgements, apart from those involving estimations, which have significant effect on the amounts recognised in the financial statements. (i) Income taxes The Group operates in various countries and is subject to different tax jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Company s and the Group s provision for taxation as at 30 June 2011 was US$2,603,000 (2010: US$2,932,000) and US$9,242,000 (2010: US$9,372,000) respectively. The carrying amounts of the Company s and Group s deferred tax liabilities as at 30 June 2011 was US$67,000 (2010: US$847,000) and US$5,346,000 (2010: US$6,343,000) respectively. (ii) Determination of functional currency The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management s assessment of the economic environment in which the entities operate and the entities process of determining sales prices. (iii) Fair value of financial statements Where the fair values of financial instruments recorded on the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgement is required to establish fair values. The judgements include considerations of liquidity and model inputs regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates. The valuation of financial instruments is described in more detail in Note 35. (iv) Provisions Provisions are recognised in accordance with the accounting policy in Note To determine whether it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made, the Group takes into consideration factors such as the existence of legal/contractual agreements, past historical experience, external advisors assessments and other available information. 3. Revenue Group US$'000 US$'000 Sale of goods 680, ,384 Rendering of services , , AMTEK ENGINEERING LTD 124

127 NOTES TO THE FINANCIAL STATEMENTS 30 June Finance income Group US$'000 US$'000 Interest earned from fixed deposits Other interest income Finance costs Group US$'000 US$'000 Interest on loans and borrowings 6,687 9,872 Interest on finance lease obligations Interest - others ,726 10, Other items Group US$'000 US$'000 Restructuring costs 764 4,243 Listing expenses 703 Impairment of property, plant and equipment 2,865 Insurance claim recovered (200) (608) Others 67 1,334 6, Profit before taxation Other than those disclosed elsewhere in the financial statements, this is determined after charging/(crediting) the following: Group Note US$'000 US$'000 Allowance for inventory obsolescence, net (Write back of)/allowance for doubtful debts, net 21 (525) 385 Bad debts recovered - trade (498) Gain on disposal of property, plant and equipment (3,919) (1,657) Property, plant and equipment written off Depreciation expense 11 21,675 22,995 Operating lease expense 6,346 6,653 Government grants (180) (803) Staff costs 8 125, ,978 ANNUAL REPORT

128 NOTES TO THE FINANCIAL STATEMENTS 30 June Staff costs Group US$'000 US$'000 Salaries, bonus and other benefits 115, ,690 Contributions to state provident funds 8,787 8,288 Share-based payments , ,978 Staff costs represent total employee costs and are allocated into cost of sales and general and administrative expenses according to where the employees are deployed. 9. Taxation Income statement Group Note US$'000 US$'000 Current income tax: Current income taxation 12,018 13,774 Over-provision in prior years (315) (638) 11,703 13,136 Deferred tax: 18 Origination and reversal of temporary differences (1,562) (1,701) Deferred taxation related to undistributed profits of an associate Deferred taxation related to undistributed profits of subsidiaries 485 1,594 Over-provision in prior years (698) - (1,712) (50) Foreign tax 1,638 3,079 11,629 16,165 The income tax expense on the results of the Group differs from the amount of tax determined by applying the Singapore statutory tax rate to the profit before taxation due to the following factors: Profit before taxation 59,672 38,446 Taxation at statutory tax rate of 17% (2010: 17%) 10,144 6,536 Adjustments: Non-deductible expenses 2,241 7,686 Income not subject to tax (2,383) (779) Effects of differences in tax rates of subsidiaries 763 (350) Tax exemption and incentive (49) Foreign tax 1,638 3,079 Deferred tax related to undistributed profit of an associate Deferred tax related to undistributed profit of subsidiaries 485 1,594 Deferred tax assets not recognised Others (708) (1,411) 12,642 16,803 Over-provision in prior years (1,013) (638) 11,629 16, AMTEK ENGINEERING LTD 126

129 NOTES TO THE FINANCIAL STATEMENTS 30 June Taxation (cont d) As at 30 June 2011, the Group has estimated unabsorbed tax losses and unutilised wear and tear allowances amounting to US$24.0 million (2010: US$25.1 million) for which deferred tax benefits have not been recognised in the financial statements because it may not be certain that future taxable profit will be available against which the respective subsidiaries can utilise the benefits. However, the unabsorbed losses and unutilised wear and tear allowances are available for offsetting against future taxable income subject to the provisions of the income tax regulations in the respective countries in which the Group operates. 10. Earnings per share On 4 November 2010, the Company s shareholders approved and executed a sub-division of each of the Company s 10 ordinary shares into 25 ordinary shares ( share split ). All ordinary shares and per share amounts presented in the accompanying consolidated financial statements have been revised on a retroactive basis to give effect to the share split. Basic earnings per share amounts are calculated by dividing the profit after tax attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year, which have been adjusted retrospectively to reflect the share split. The following table reflects the income statement and share data used in the computation of basic and diluted earnings per share for the years ended 30 June 2011 and 2010: Group US$'000 US$'000 Net profit attributable to owners of the Company 45,234 21,682 Weighted average number of ordinary shares for basic earnings and loss per share computation ( 000) 543, ,213 Effects of dilution: Contingently issuable shares under Employee Share Plan 2,708 Weighted average number of ordinary shares for diluted earnings and loss per share computation ( 000) 545, ,213 Earnings per share (cents) Basic Diluted ANNUAL REPORT

130 NOTES TO THE FINANCIAL STATEMENTS 30 June Property, plant and equipment Group Equipment Furniture Freehold properties Leasehold properties Work in progress and machinery and fixtures Motor vehicles Office equipment Computer software Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Cost: At 1 July ,038 75, ,998 3,243 3,087 12, ,966 Reclassification 2,048 (19) (2,060) (904) 935 Additions 49 1, , ,606 17,221 Disposals/write-off (3,761) (279) (2,856) (223) (409) (1,042) (8,570) Currency realignment (49) 781 (93) ,232 At 30 June 2010 and 1 July ,183 75, ,305 2,037 3,383 13,423 4, ,849 Reclassification (29) 806 (140) (2,420) 1,783 Additions 2, , , ,154 Disposals/write-off (2,454) (2,565) (63) (167) (275) (1) (5,525) Currency realignment 24 2, (971) (388) 1,730 At 30 June ,207 77, ,025 2,285 3,550 10,934 6, ,208 Accumulated depreciation and impairment: At 1 July , ,844 2,315 2,495 9, ,426 Reclassification 964 (982) (613) 631 Charge for the year 12 3,586 17, , ,995 Impairment 306 2, ,865 Disposals/write-off (402) (2,730) (102) (286) (1,007) (4,527) Currency realignment , ,347 At 30 June 2010 and 1 July , ,392 1,878 2,520 10, ,106 Reclassification 722 (105) (1,581) 964 Charge for the year 14 3,444 15, , ,675 Disposals/write-off (435) (568) (44) (166) (245) (1) (1,459) Currency realignment (1,103) 6 26 (775) 318 (1,351) At 30 June , ,270 1,887 2,633 8,924 2, ,971 Net carrying value: At 30 June ,020 46, , ,055 4, ,743 At 30 June ,019 45, , ,010 3, , AMTEK ENGINEERING LTD 128

131 NOTES TO THE FINANCIAL STATEMENTS 30 June Property, plant and equipment (cont d) Company Leasehold Motor properties vehicles Total US$'000 US$'000 US$'000 Cost: At 1 July ,301 Disposals (214) (214) At 30 June 2010 and 1 July ,087 Disposals (100) (100) At 30 June Accumulated depreciation: At 1 July Charge for the year Disposals (93) (93) At 30 June 2010 and 1 July Charge for the year Disposals (100) (100) At 30 June Net carrying value: At 30 June At 30 June Assets with net carrying values of US$1,270,000 (2010: US$1,554,000) of the Group were acquired under finance lease arrangements. The details are as follows: Group US$'000 US$'000 Leasehold properties 434 Equipment and machinery 1,175 1,011 Motor vehicles ,270 1,554 The leased assets are pledged as security for the related finance lease liabilities. 12. Investment in subsidiaries Company US$'000 US$'000 Unquoted equity shares, at cost 111,155 89,478 Less: Impairment loss (12,592) (12,592) 98,563 76,886 Quasi-equity advances to subsidiaries 33,158 31, , ,321 The quasi-equity advances to subsidiaries are unsecured and is not expected to be repaid by the subsidiary within the next 12 months. ANNUAL REPORT

132 NOTES TO THE FINANCIAL STATEMENTS 30 June Investment in subsidiaries (cont d) The Group assesses at year-end whether there is an indication that the investment may be impaired. If any indication exists, the Group makes an estimate of the recoverable amounts. The recoverable amounts of the investment in subsidiaries are determined based on value-in-use calculations using discounted cash flow projections based on financial budget approved by management covering a five-year period. Details of the subsidiaries are as follows: Name of company (Country of incorporation) (1) Amtek Precision Technology Pte. Ltd. (Singapore) (3) Amtek Investments Pte Ltd (Singapore) (3) Amtek International Pte Ltd (Singapore) Principal activities (Place of business) Manufacture of precision metal parts and toolings (Singapore) Investment holding (Singapore) Investment holding (Singapore) Effective percentage of equity held by the Group % % (1) Amtek Technology Pte Ltd (Singapore) # Amtek Industries Pte. Ltd. (Singapore) (1) Lian Jun Industrial Pte Ltd (Singapore) (3) AE Rubber Sdn. Bhd. (Malaysia) (3) AE Technology Sdn. Bhd. (Malaysia) * AE Components Sdn. Bhd. (Malaysia) (2) PT Amtek Engineering Batam (Indonesia) (2) PT Amtek Engineering Jakarta (Indonesia) (2) Amtek Huizhou (H.K.) Industries Limited (Hong Kong) (2) Amtek (Huizhou) Industries Ltd. (People's Republic of China) (2) Amtek (Suzhou) Precision Engineering Co., Ltd. (People's Republic of China) Investment holding (Singapore) Dormant (Singapore) Manufacture of plastic components (Singapore) Manufacture of precision rubber components (Malaysia) Manufacture of precision metal parts and toolings (Malaysia) In the Process of Voluntary Liquidation (Malaysia) Manufacture of precision metal parts (Indonesia) Dormant (Indonesia) Trading of precision metal stamping parts and toolings (Hong Kong) Manufacture of precision metal parts and toolings (People's Republic of China) Manufacture of precision metal parts and toolings (People's Republic of China) AMTEK ENGINEERING LTD 130

133 NOTES TO THE FINANCIAL STATEMENTS 30 June Investment in subsidiaries (cont d) Name of company (Country of incorporation) Principal activities (Place of business) Effective percentage of equity held by the Group % % (2) Amtek Precision Engineering (Shanghai) Co., Ltd. (People's Republic of China) (2) Amtek Metalforming (Shanghai) Co., Ltd. (People's Republic of China) (2) Amtek Precision Technology (Hanoi) Co Ltd (Vietnam) # Amtek (USA) Enterprises Inc (United States of America) (3) Amtek Europe Development SA (France) (3) Amtek Precision Technology (India) Private Limited (India) Trading of precision metal parts (People's Republic of China) Manufacture of precision metal parts and toolings (People's Republic of China) Manufacture of precision metal parts (Vietnam) Provision of customers service (United States of America) Investment holding (France) Provision of design services (India) Details of the subsidiaries of Lian Jun Industrial Pte Ltd are as follows: (3) Lian Jun Plastic Technology Pte. Ltd. (Singapore) (2) Lian Jun Industrial (H.K.) Limited (Hong Kong) (2) PT Amtek Plastic Batam (Indonesia) Dormant (Singapore) Manufacture of precision plastic injection moulded parts (Hong Kong) Manufacture of precision plastics injection moulding products (Indonesia) Details of the subsidiary held through Lian Jun Industrial (H.K.) Limited are as follows: (2) Lian Jun (Shenzhen) Technology Ltd. (People's Republic of China) (2)@ Amtek Plastic (Shenzhen) Ltd (People's Republic of China) Manufacture of precision mould and plastic parts (People's Republic of China) Manufacture of precision mould and plastic parts (People's Republic of China) Details of the subsidiaries held through Amtek Technology Pte Ltd are as follows: (2) PT Amtek Precision Components Batam (Indonesia) (1) Amlab Services Pte. Ltd. (Singapore) Manufacture of high precision metal parts (Indonesia) Provision of environmental, chemical and micro-contamination analysis services and equipment calibration (Singapore) ANNUAL REPORT

134 NOTES TO THE FINANCIAL STATEMENTS 30 June Investment in subsidiaries (cont d) Name of company (Country of incorporation) Principal activities (Place of business) Effective percentage of equity held by the Group % % Details of the subsidiaries held through AE Rubber Sdn. Bhd. are as follows: (3) AE Polymer Sdn. Bhd. (Malaysia) (3) Rising Effort Sdn. Bhd. (Malaysia) Manufacture of rubber compounding materials and other related products (Malaysia) Dormant (Malaysia) Details of the subsidiaries of Amtek Europe Development SA are as follows: (3) Amtek Precision Engineering France (France) (3) Amtek Hungary ZRT (Hungary) * Amtek Poland Sp.Z.o.o (Poland) Manufacture of precision metal parts (France) Dormant (Hungary) In the Process of Voluntary Liquidation (Poland) Details of the subsidiary held through Amtek Engineering Ltd and Amtek Europe Development SA are as follows: (3) Amtek Precision Engineering Czech Republic s.r.o. (Czech Republic) Manufacture of precision metal parts (Czech Republic) Details of the subsidiary of Amtek Huizhou (H.K.) Industries Limited are as follows: (2) Amtek (Zhongshan) Industries Ltd (People's Republic of China) Dormant (People's Republic of China) Details of the subsidiary held through Amtek Technology Pte Ltd and Amtek Huizhou (H.K.) Industries Limited are as follows: (2) Amtek Technology (H.K.) Limited (Hong Kong) Trading of precision metal parts and toolings (Hong Kong) Details of the subsidiary held through Amtek Technology Pte Ltd and Amtek (Huizhou) Industries Ltd are as follows: (2) Huizhou Amtek Technology Ltd. (People's Republic of China) (1) Audited by Ernst & Young LLP, Singapore. Manufacture of precision metal parts and toolings (People's Republic of China) (2) Audited by member firms of Ernst & Young Global in the respective countries. (3) Audited by audit firms other than member firms of Ernst & Young Global. # Not required to be audited in the country of incorporation. * The subsidiaries have been placed under Voluntary Newly incorporated during the year. 60 AMTEK ENGINEERING LTD 132

135 NOTES TO THE FINANCIAL STATEMENTS 30 June Investment in associate Group Company US$'000 US$'000 US$'000 US$'000 Unquoted equity shares, at cost 2,369 2,369 2,369 2,369 Share of post acquisition reserves 5,068 5,252 Exchange differences ,821 7,830 2,369 2,369 The summarised financial information of associates, not adjusted for the proportion of ownership interest held by the Group is as follows: Group US$'000 US$'000 Assets and liabilities: Current assets 10,972 10,927 Non-current assets 10,268 10,831 Total assets 21,240 21,758 Current liabilities 4,322 4,966 Non-current liabilities 324 1,550 Total liabilities 4,646 6,516 Results: Revenue 27, ,189 Profit for the year 668 2,069 Name of company (Country of incorporation) Principal activities (Place of business) Percentage of equity held by the Group % % Details of the associated company held by Amtek Engineering Ltd are as follows: (1) Cheval Electronic Enclosures Co., Ltd (Thailand) Manufacturing of standard and customised I.T. racks (Thailand) (1) Audited by audit firm other than member firms of Ernst & Young Global. 14. Other investments Group Company US$'000 US$'000 US$'000 US$'000 Quoted equity shares, at fair value 4,029 5,089 Unquoted equity shares, at cost ,083 5, ANNUAL REPORT

136 NOTES TO THE FINANCIAL STATEMENTS 30 June Other receivables and deposits Group Company Note US$'000 US$'000 US$'000 US$'000 Due after one year: Staff loans (a) Other receivables Due within one year: Staff loans (a) 1, Other receivables (b) 16,481 17, Deposits Tax recoverable 1,216 3,379 19,788 22, Total other receivables and deposits 20,774 22, (a) (b) Staff loans comprise advances to staff for the purchase of motor vehicles, which are held as collateral until full repayment of the loans. The loans bear effective interest at 2% per annum and are repayable over periods between four and eight years. Other receivables include primarily of tooling cost recoverables and indirect tax receivables. 16. Amounts due from former holding company Amounts due from former holding company were unsecured and interest free as of 30 June All the amounts due have been repaid during the year. 17. Amounts due from subsidiaries Company US$'000 US$'000 Due after one year: Non-trade bears interest at rates ranging from 4.5% to 6.0% (2010: 4.5% to 6.0%) per annum 3,805 3,220 Due within one year: Trade 2,148 5,406 Non-trade 13,873 25,563 16,021 30,969 Less: Allowance for doubtful debts (5,522) (8,850) 10,499 22,119 Total amounts due from subsidiaries 14,304 25,339 The amounts due from subsidiaries are unsecured and repayable on demand. The amounts are interest-free except for a non-trade amount of US$2,697,000 (2010: US$1,639,000) which bears interest ranging from 4.5% to 6.0% (2010: 4.5% to 6.0%) per annum. 62 AMTEK ENGINEERING LTD 134

137 NOTES TO THE FINANCIAL STATEMENTS 30 June Deferred taxation Recognised deferred tax assets and liabilities, determined after appropriate offsetting, are attributable to the following: Group Company US$'000 US$'000 US$'000 US$'000 Deferred tax assets Unutilised capital allowances 68 Provisions and other temporary differences 2,589 1,626 2,589 1,694 Deferred tax liabilities Excess of net book values over tax written down values of property, plant and equipment (1,851) (3,300) Undistributed profits of an associate (580) (517) Undistributed profits of foreign subsidiaries (2,079) (1,594) Other temporary differences (836) (932) (67) (847) (5,346) (6,343) (67) (847) Deferred tax assets and liabilities are netted off when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. Movements in deferred tax assets and liabilities of the Group and of the Company are analysed as follows: Group Company Note US$'000 US$'000 US$'000 US$'000 Deferred tax assets Balance at 1 July 1,694 1,488 Transfer (to)/from the income statement Unutilised capital allowances (68) 3 Provisions and other temporary differences Exchange differences Balance at 30 June 2,589 1,694 Deferred tax liabilities Balance at 1 July (6,343) (6,143) (847) (2,273) Transfer from/(to) the income statement Excess of net book values over tax written down values of property, plant and equipment 1,566 1,535 Undistributed profits of an associate (63) (57) Undistributed profits of foreign subsidiaries (485) (1,594) Other temporary differences (92) (31) 780 1,426 Exchange differences 71 (53) Balance at 30 June (5,346) (6,343) (67) (847) Net deferred taxation credited to income statement 9 1, ,426 ANNUAL REPORT

138 NOTES TO THE FINANCIAL STATEMENTS 30 June Fixed deposits The fixed deposits are placed with financial institutions and mature on varying periods within one year from the end of the respective financial year. The effective interest rates for the financial year ended 30 June 2011 range from 0.4% to 4.1% per annum (2010: 0.4% to 4.1% per annum). Included in fixed deposits are: Group Company US$'000 US$'000 US$'000 US$'000 Total fixed deposits 22,054 13, Less: Restricted non-current fixed deposits (11,952) (12,141) Fixed deposits - current portion 10,102 1, The non-current fixed deposits are pledged as security under the obligations under a lease arrangement for a subsidiary in People s Republic of China ( PRC ). 20. Inventories Group Company US$'000 US$'000 US$'000 US$'000 Raw materials 20,872 18,449 Work-in-progress 10,326 8,940 Finished goods 25,855 20,677 Consumables Total inventories at lower of cost and net realisable value 57,463 48,584 Inventories are stated after deducting allowance for obsolescence amounting to 1,492 1,804 Income statement: Inventories recognised as an expense in cost of sales 559, ,208 Inclusive of the following charge: - Inventories written down Trade receivables Group Company US$'000 US$'000 US$'000 US$'000 Trade receivables 152, ,189 Trade receivables of the Group are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. 64 AMTEK ENGINEERING LTD 136

139 NOTES TO THE FINANCIAL STATEMENTS 30 June Trade receivables (cont d) Receivables that are past due but not impaired The Group has trade receivables amounting to US$24,316,000 (2010: US$28,209,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows: Group US$'000 US$'000 Trade receivables past due but not impaired: Lesser than 30 days 19,350 19, to 60 days 3,666 4, to 90 days 717 1, to 120 days More than 120 days 472 1,248 24,316 28,209 Receivables that are impaired The Group s trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows: Group Collectively impaired Individually impaired US$'000 US$'000 US$'000 US$'000 Trade receivables nominal amounts Less: Allowance for impairment (662) (544) (646) Movement in allowance accounts: At 1 July (Write back of)/charge for the year (662) Written off (337) (82) Exchange differences (53) 98 (14) At 30 June Trade receivables of the Group that are individually determined to be impaired at the balance sheet date relate to customers that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. ANNUAL REPORT

140 NOTES TO THE FINANCIAL STATEMENTS 30 June Derivatives Contract/ Notional Amount Liability recognised Contract/ Notional amount Liability recognised US$'000 US$'000 US$'000 US$'000 Group Interest rate swap 108,000 (1,569) 144,000 (2,499) Company Interest rate swap 19,800 (288) 70,560 (1,225) The Group and Company have entered into interest rate swaps to hedge the exposure to interest rate on its borrowings. The interest rate swaps entitle the Group and Company to receive interest at floating rates on notional principal amounts and oblige the Group and the Company to pay interest at fixed rates on the same notional principal amounts. The Group and Company have designated the interest rate swap contracts as derivative under financial assets at fair value through profit or loss. The Group and Company do not apply hedge accounting. 23. Cash and bank balances Cash at banks for the Group and Company earns interest at daily bank deposit rates. The cash and bank balances, including current portion of fixed deposits (Note 19), of the Group denominated in Renminbi ( RMB ) amounted to US$29,221,000 (2010: US$18,912,000) as at 30 June The RMB is not freely convertible into other currencies. However, under Mainland China s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business. 24. Trade payables Trade payables of the Group are non-interest bearing. These amounts are normally settled on 30 to 120 days terms. 25. Other payables and accrued expenses Group Company US$'000 US$'000 US$'000 US$'000 Advances 1, Advance billings Other payables 14,490 16, Accrued expenses 25,345 27, ,070 41,563 45, ,424 Other payables of the Group and Company are non-interest bearing. These amounts are normally settled on 30 to 180 days terms. 66 AMTEK ENGINEERING LTD 138

141 NOTES TO THE FINANCIAL STATEMENTS 30 June Finance lease obligations Group Minimum lease payments Minimum lease payments Present value of payments Present value of payments US$'000 US$'000 US$'000 US$'000 Not later than one year Later than one year but not later than five years Later than five years Total minimum lease payments 1,255 1, Less: Amounts representing finance charges (168) (109) Present value of minimum lease payments 1,087 1, The effective interest rates for the Group range between 3.0% and 7.1% (2010: 3.0% and 5.2%) per annum. 27. Amounts due to subsidiaries Amounts due to subsidiaries are trade-related, unsecured, interest-free, and repayable on demand. 28. Loans and borrowings Group Company Note US$'000 US$'000 US$'000 US$'000 Due within one year: Unsecured: Other short-term loans (a) 16,333 14,000 Current portion of term loan (b) 23,400 4,290 Revolving facility loan (c) 20,000 Secured: Current portion of term loan (d) 30,000 14,700 Revolving facility loan (d) 20,000 59,733 64,000 4,290 14,700 Due after one year: Unsecured term loan (b) 81,950 15,024 Secured term loan (d) 130,000 63,700 81, ,000 15,024 63, , ,000 19,314 78,400 (a) The short-term loans are repayable upon demand and bear interest ranging from 2.41% to 2.80% (2010: 2.95% to 3.35%) per annum. ANNUAL REPORT

142 NOTES TO THE FINANCIAL STATEMENTS 30 June Loans and borrowings (cont d) (b) The unsecured term loan has been drawn down under a US$120 million syndicated loan facility with a tenure of 60 months from 10 December The interest rate payable on the term loan, within twelve (12) months from 10 December 2010, was LIBOR plus 2.50% per annum. The unsecured term loan is repayable at pre-determined instalments spread over 53 months from the end of 30 June 2011 (2010: Nil), as follows: Group Company US$'000 US$'000 US$'000 US$'000 Not later than one year 23,400 4,290 Later than one year but not later than five years 81,950 15, ,350 19,314 (c) (d) The revolving credit is repayable upon demand and bear interest ranging from 2.70% to 2.80% (2010: Nil) per annum. The term loan was drawn down under a US$245 million syndicated loan facility comprising US$200 million term loan facility and US$45 million revolving credit facility with a tenure of 80 months from 31 March The interest rate payable on the term loan and revolving credit facility, within twelve (12) months from 31 March 2008, was LIBOR plus 2.65% per annum. Thereafter, the interest rate payable equals LIBOR plus a margin which is dependent upon the ratio of the Group s consolidated net debt to earnings before interest, taxes, depreciation and amortisation ( EBITDA ), ranging from 1.75% to 2.5%. The term loan and revolving credit facility were secured on the assets of the Company and the shares in the subsidiaries held by the Group. The term loan has been fully repaid in the current year and the securities have been discharged accordingly. 29. Share capital Group and Company US$'000 US$'000 Issued and fully paid ordinary shares: At the beginning and end of year 543,213,028 (2010: 543,213,028) ordinary shares 36,482 36,482 The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value. All ordinary shares and per share amounts presented in the accompanying consolidated financial statements have been revised on a retroactive basis to give effect to the share split, following the share-split exercise as mentioned in Note AMTEK ENGINEERING LTD 140

143 NOTES TO THE FINANCIAL STATEMENTS 30 June Other reserves Group Company Note US$'000 US$'000 US$'000 US$'000 Statutory reserve fund (a) 18,051 15,595 Capital reserve (b) 2,898 2,898 Foreign currency translation reserve (c) 11,751 7,673 Share-based payment reserve (d) ,241 26, (a) Statutory reserve fund In accordance with the Foreign Enterprise Law applicable to the subsidiaries in the PRC, these subsidiaries are required to make appropriation to a Statutory Reserve Fund ( SRF ). At least 10% of the statutory after tax profit as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiaries. The SRF is not available for dividend distribution to shareholders. (b) Capital reserve The capital reserve represents issuance of bonus shares in the subsidiaries by way of capitalising its retained profit in the prior years. (c) Foreign currency translation reserve The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Company s presentation currency. (d) Share-based payment reserve The share-based payment reserve represents the equity-settled share grants granted to Directors and employees (Note 31). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share grants. 31. Share-based payments On 4 November 2010, our shareholders approved the Restricted Share Plan (the RSP ) and Performance Share Plan (the PSP ), (collectively the Share Plans ). At the date of this report, the Share Plan is administered by the Remuneration Committee which comprises Low Seow Juan and Leong Horn Kee, both of whom are Independent Directors of the Company (appointed on 4 November 2010). The objectives of the Share Plans are to reward and retain staff whose contributions are essential to the well-being and prosperity of the Group, to give recognition to outstanding employees and executive directors who have contributed to the growth of the Group and to strengthen the Group s competitiveness in attracting and retaining talented key senior management and employees. The Share Plans will give participants an opportunity to have a personal equity interest in the Company. ANNUAL REPORT

144 NOTES TO THE FINANCIAL STATEMENTS 30 June Share-based payments (cont d) Shares under the RSP are awarded to Directors and employees of the Group, taking into consideration the vesting schedule and conditions set and approved by the Remuneration Committee administering the RSP at the grant date. The conditions include (but not limited to) the Group s financial performance, as well as the employee s rank, job performance, years of service and potential for future development and contribution to the success and development of the Group. The award of restricted shares to Non-Executive Directors will be determined based on their contribution to the success and development of the Group. Employees and directors of associated companies will not be eligible to participate in the Share Plans. Pursuant to the terms of the RSP, the restricted shares are to be released over a specified number of years from the grant date. Shares under the PSP will be awarded to Directors and employees of the Group, taking into consideration the extent of effort and difficulty with which the performance condition(s) may be achieved within the performance period. Under the PSP, the shares will be released dependent on the achievement of pre-determined targets over a specified performance period. No shares will be released if the threshold targets are not met at the end of the performance period. There is no further vesting period for shares released under the PSP at the end of the performance period. As at 30 June 2011, there are no share awards under the PSP. The fair value of the RSP share awards is determined at grant date taking into consideration the share price of the Company s shares at grant date, adjusted for estimated dividend yield. The awards granted under the RSP during the financial year ended 30 June 2011 are as follows: Shares granted during financial year RSP Balance as at 30 June 2011 Estimated fair value at grant date Grant date 1 December 2010 Chairman and Executive Director (Daniel Yeong Bou Wai) 2,884,615 2,884,615 S$1.30 Executive Director (Sheila Ng Won Lein) 540, ,750 S$1.30 Executive Director (Peter Ho Kheong Chun) 257, ,692 S$1.30 Other Participants 978, ,877 S$1.30 4,661,934 4,661,934 As at 30 June 2011, there was no vesting or cancellation of these awards. 32. Significant related party transactions For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence, related parties may be individuals or other entities. 70 AMTEK ENGINEERING LTD 142

145 NOTES TO THE FINANCIAL STATEMENTS 30 June Significant related party transactions (cont d) Compensation of key management personnel Group US$'000 US$'000 Short-term employee benefits 4,978 4,007 Staff provident fund Share-based payments expenses 541 5,634 4,103 Comprise amounts paid to: - Directors of the Company 3,232 2,151 - Other key management personnel 2,402 1,952 5,634 4, Commitments (a) Capital commitments Capital expenditure contracted for as at the end of the respective financial years ended 30 June 2011 and 2010 but not recognised in the financial statements are as follows: Group US$'000 US$'000 Purchase of toolings and property, plant and equipment 5,229 6,374 (b) Operating lease commitments as a lessee The Group has entered into commercial leases principally for land rent, office, warehouse and production floor with lease term of between 30 years to 99 years (2010: 30 years to 99 years) with no renewal option or contingent rent provision included in the contracts. Operating lease expenses for the Group during the financial years ended 30 June 2011 amounted to US$6,346,000 (2010: US$6,653,000). Future lease payments under non-cancellable operating leases at the end of the reporting period are as follows: Group Company US$'000 US$'000 US$'000 US$'000 Within one year 3,988 5,023 Later than one year but not later than five years 7,136 14,164 Later than five years 10,043 7,103 21,167 26,290 Lease terms do not contain restrictions on the Group s activities concerning dividends, additional debts or future leasing. ANNUAL REPORT

146 NOTES TO THE FINANCIAL STATEMENTS 30 June Contingent liabilities Contingent liabilities of the Company are as follows: (a) (b) The Company has given undertakings to finance a subsidiary to enable it to meet its liabilities as and when they fall due. The Company has given corporate guarantees amounting to US$800,000 (2010: US$800,000) to bankers for facilities granted to its subsidiary. 35. Fair value of financial instruments A. Fair values of financial instruments that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: Quoted prices in active markets for identical instruments (Level 1) Significant other observable inputs (Level 2) Significant unobservable (Level 3) Group Note Total US$ 000 US$ 000 US$ 000 US$ 000 Financial assets: Available-for-sale financial assets - Equity instrument (quoted) 14 4,029 4,029 Financial liabilities: Derivatives - Interest rate swaps 22 (1,569) (1,569) At 30 June ,029 (1,569) 2,460 Financial assets: Available-for-sale financial assets - Equity instrument (quoted) 14 5,089 5,089 Financial liabilities: Derivatives - Interest rate swaps 22 (2,499) (2,499) At 30 June ,089 (2,499) 2, AMTEK ENGINEERING LTD 144

147 NOTES TO THE FINANCIAL STATEMENTS 30 June Fair value of financial instruments (cont d) A. Fair values of financial instruments that are carried at fair value (cont d) Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Derivatives (Note 22): The interest rate swap contracts are classified within Level 2 as the fair value of these interest rate swap contracts are obtained from reputable financial institution by reference to current interest rates for contracts with similar maturity profiles. The interest rate swap contracts have a maturity date of 10 December 2015 (2010: 31 May 2013). During the years ended 30 June 2010 and 2011, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3. B. Fair values of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The carrying values of trade receivables, current portion of other receivables and deposits, fixed deposits, cash and bank balances, trade payables, current portion of other payables and accrued expenses and current portion finance lease obligations, based on their notional amounts, reasonably approximate their fair values as a result of the short term nature. Loans and borrowings reasonably approximate their fair values because they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. C. Fair values of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximations of fair value are as follows: Other investments (Note 14) Unquoted equity shares are stated at cost and have no market prices and the fair value cannot be reliably measured using valuation techniques. The unquoted equity shares represent ordinary shares in companies that are not quoted on any markets and do not have comparable industry peer that is listed. Non-current portion finance lease obligations (Note 26) The fair values disclosed in Note 26 are estimated by discounting expected future cash flows at market incremental lending rate for similar types of leasing arrangements at balance sheet date. ANNUAL REPORT

148 NOTES TO THE FINANCIAL STATEMENTS 30 June Fair value of financial instruments (cont d) Financial assets and liabilities The carrying amount by category of financial assets and liabilities are as follows: Group Company Note US$'000 US$'000 US$'000 US$'000 Available-for-sale: Other investments 14 4,083 5, Loans and receivables: Trade receivables , ,189 Other receivables and deposits 15 20,774 22, Amounts due from former holding company 16 52,668 52,668 Amounts due from subsidiaries 17 14,304 25,339 Fixed deposits and cash and bank balances 19,23 130,936 95,130 9,873 3, , ,254 24,854 82,549 Financial at fair value through profit and loss: Derivatives 22 (1,569) (2,499) (288) (1,225) Financial liabilities carried at amortised cost: Trade payables , ,339 Other payables and accrued expenses 25 39,835 44, ,359 Amounts due to subsidiaries 27 50,996 65,906 Finance lease obligations 26 1, Loans and borrowings , ,000 19,314 78, , ,062 70, , Financial risk management objectives and policies The Group operates in an environment that is exposed to changing business and market conditions, thus creating a need for the implementation of risk management policies. These policies seek to minimise the potential adverse effects caused by fluctuations in the financial markets on the profitability of the underlying businesses and thus, the financial performance of the Group. In establishing its risk management policies, management ensures that an acceptable balance is made between the cost of risks occurring and the cost of managing the risk. In addition, the management has established procedures to monitor and control financial risks in a timely and effective manner. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk. It is the Group s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Group s and Company s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. 74 AMTEK ENGINEERING LTD 146

149 NOTES TO THE FINANCIAL STATEMENTS 30 June Financial risk management objectives and policies (cont d) (a) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group s exposure to credit risk arises primarily from trade and other receivables. The Company does not have significant credit risks from other receivables. For other financial assets (including fixed deposits, cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and credit worthy third parties. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Head of Credit Control. Exposure to credit risk At the end of each reporting periods, the Group s and the Company s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets as disclosed in Note 35. Information regarding credit profiles for trade and other receivables is disclosed below. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the profile of its trade receivables based on the country where the receivables are recognised and industry sector, on an on-going basis. The credit risk concentration profile of the Group s trade receivables at the balance sheet date is as follows: Group US$'000 % of total US$'000 % of total By country: Singapore 37,639 25% 38,489 26% People's Republic of China 77,776 51% 76,612 53% Europe 21,241 14% 14,932 10% Malaysia 8,066 5% 8,770 6% Vietnam 2,295 2% 1,192 1% Other countries 5,045 3% 5,194 4% 152, % 145, % By industry sectors: Precision engineering 139,386 92% 135,269 93% Rubber/plastics 12,676 8% 9,920 7% 152, % 145, % At the balance sheet date, approximately 36% (2010: 36%) of the Group s trade receivables were due from 5 major customers who are multi-national conglomerates. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are credit worthy receivables with good payment record with the Group. Cash and cash equivalents, investment securities and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default. ANNUAL REPORT

150 NOTES TO THE FINANCIAL STATEMENTS 30 June Financial risk management objectives and policies (cont d) (a) Credit risk (cont d) Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 21. (b) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s objective is to maintain a balance between the continuity of funding and flexibility through the use of stand-by credit facilities. The Group s and the Company s liquidity risk management policy is to maintain sufficient liquid financial assets and stand-by credit facilities with the banks. At the balance sheet date, approximately 42% (2010: 34%) and 22% (2010: 19%) of the loans and borrowings (Note 28) of Group and Company, respectively, will mature in less than one year based on the carrying amount reflected in the financial statements, excluding discontinued operation. The table below summarises the maturity profile of the Group s and the Company s financial liabilities at the balance sheet date based on contractual undiscounted payments. Contractual cashflows (including interest payments) 1 year or less 1 to 5 years Over 5 years Total Carrying amount Group US$'000 US$'000 US$'000 US$'000 US$' Financial liabilities Trade payables 122, , ,995 Other payables and accrued expenses 39,835 39,835 39,835 Finance lease obligations ,255 1,087 Loans and borrowings 60,275 88, , ,683 Derivatives net settled 285 1,284 1,569 1,569 Total undiscounted financial liabilities 223,756 91, , , Financial liabilities Trade payables 123, , ,339 Other payables and accrued expenses 44,093 44,093 44,093 Finance lease obligations Loans and borrowings 68, , , ,000 Derivatives net settled 833 1,666 2,499 2,499 Total undiscounted financial liabilities 237, , , , AMTEK ENGINEERING LTD 148

151 NOTES TO THE FINANCIAL STATEMENTS 30 June Financial risk management objectives and policies (cont d) (b) Liquidity risk (cont d) Contractual cashflows (including interest payments) 1 year or less 1 to 5 years Over 5 years Total Carrying amount Company US$'000 US$'000 US$'000 US$'000 US$' Financial liabilities Other payables and accrued expenses Loans and borrowings 4,776 15,874 20,650 19,314 Derivatives net settled Total undiscounted financial liabilities 5,325 16,110 21,435 20, Financial liabilities Other payables and accrued expenses 1,359 1,359 1,359 Loans and borrowings 16,868 66,721 83,589 78,400 Derivatives net settled ,225 1,225 Total undiscounted financial liabilities 18,635 67,538 86,173 80,984 (c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. The Group s and the Company s exposure to interest rate risk arises primarily from their loans and borrowings and interest-bearing loans given to related parties. The Group s and the Company s financial assets and liabilities at floating rates are re-priced at intervals of less than 12 months (2010: 12 months) from the balance sheet date. The Group s policy is to manage interest cost using a mix of fixed and floating rate debts. To manage this mix in a cost-efficient manner, the Group enters into interest rate swaps. At the balance sheet date, after taking into account the effect of an interest rate swap, approximately US$140,437,000 (2010: US$144,000,000) of the Group s borrowings are at fixed rates of interest. Sensitivity analysis for interest rate risk For variable rate financial assets and liabilities, a change of 100 basis point in interest rate at the reporting date would increase/(decrease) losses by the amounts shown. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. ANNUAL REPORT

152 NOTES TO THE FINANCIAL STATEMENTS 30 June Financial risk management objectives and policies (cont d) (c) Interest rate risk (cont d) Profit net of tax US$'000 US$'000 Group Increase/decrease in basis points +/ ,498 (d) Foreign currency risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily Singapore Dollar (SGD), Malaysian Ringgit (RM), Indonesian Rupiah (IDR), Euro and RMB. Approximately 36% (2010: 38%) of the Group s sales are denominated in foreign currencies whilst 36% (2010: 24%) of costs are denominated in the foreign currencies. The Group s trade receivables and trade payables balances at the end of the reporting period have similar exposures. The Group and the Company also hold cash and bank balances denominated in foreign currencies for working capital purposes. The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia, PRC, Europe, Indonesia and Vietnam. The Group s investment in its foreign subsidiaries are not hedged as currency positions in RM, Euro, IDR, Vietnamese Dong and RMB are considered to be long-term in nature. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group s profit net of tax to a reasonably possible change in the SGD, Euro, RM and RMB exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Profit net of tax US$'000 US$'000 SGD - strengthened 3% (2010: 2%) weakened 3% (2010: 2%) (341) (9) Euro - strengthened 1% (2010: 6%) weakened 1% (2010: 6%) (102) (17) RM - strengthened 3% (2010: 1%) weakened 3% (2010: 1%) (122) (98) RMB - strengthened 1% (2010: 1%) weakened 1% (2010: 1%) (364) (150) 78 AMTEK ENGINEERING LTD 150

153 NOTES TO THE FINANCIAL STATEMENTS 30 June Capital management The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 June 2011 and 30 June The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group s policy is to keep the gearing ratio below 150%. The Group includes within net debt, loans and borrowings, less cash and cash equivalents. Capital includes equity attributable to the equity holders of the parent less the fair value adjustment reserve and the abovementioned restricted statutory reserve fund. Group Note US$'000 US$'000 Loans and borrowings , ,000 Finance lease obligations 26 1, Less: Cash and bank balances and short-term fixed deposits (118,984) (82,989) Net debt 23, ,641 Equity attributable to the owners of the Company 156, ,438 Less: Statutory reserve fund 30 (18,051) (15,595) Total capital 138,240 90,843 Capital and net debt 162, ,484 Gearing ratio 15% 55% 38. Segment information For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows: I. The precision engineering segment has principal business activities of stamping, machining and progressive cold forging of metal components, secondary processes such as finishing and bonding, assembly of metal enclosures and chassis, and manufacturing of tools and dies. II. III. The rubber and plastic segment is in the business of manufacturing precision plastic and rubber components and mould. This reportable segment has been formed by aggregating the rubber and plastic operating segments which are regarded by management to exhibit similar economic characteristics. The others segment includes investment holdings and other investment activities. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arm s length basis in a manner similar to transactions with third parties. ANNUAL REPORT

154 NOTES TO THE FINANCIAL STATEMENTS 30 June Segment information (cont d) Per Precision engineering Rubber/ plastics Others Adjustments and eliminations Notes consolidated financial statements US$'000 US$'000 US$'000 US$'000 US$' Revenue: External customers 637,133 44, ,601 Inter-segment - 2,901 - (2,901) A - Total revenue 637,133 47,369 - (2,901) 681,601 Results: Interest income Depreciation (19,522) (2,103) (50) - (21,675) Share of results of associate Impairment of available-for-sale investments - - (1,060) - (1,060) Restructuring cost (764) (764) Other non-cash items (2,606) (92) B (2,379) Segment profit/(loss) 55,343 4,581 (4,491) (7,390) C 48,043 Assets: Investment in associate - - 7,821-7,821 Additions to non-current assets 17, D 18,154 Segment assets 438,020 36,385 15,803 7,821 E 498,029 Segment liabilities 164,395 10,035 6, ,770 F 323, Revenue: External customers 608,322 29, ,000 Inter-segment 3,229 (3,229) A Total revenue 608,322 32,907 (3,229) 638,000 Results: Interest income Loss on reclassification of associate to available-for-sale investments (882) (882) Depreciation (20,798) (2,114) (83) (22,995) Share of results of associates Impairment of property, plant and equipment (2,865) (2,865) Restructuring cost (4,243) (4,243) Other non-cash items (2,381) (166) (2) B (2,549) Segment profit/(loss) 25,358 (447) 6,853 (9,483) C 22,281 Assets: Investment in associate 7,830 7,830 Additions to non-current assets 16, D 17,221 Segment assets 395,508 30,765 69,940 7,830 E 504,043 Segment liabilities 167,125 8,739 10, ,630 F 381, AMTEK ENGINEERING LTD 152

155 NOTES TO THE FINANCIAL STATEMENTS 30 June Segment information (cont d) Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements: A B C Inter-segment revenues are eliminated on consolidation. Other non-cash items consist of allowance for stock obsolescence, allowance for doubtful debts, gain or loss on disposal of plant, property and equipment, property, plant and equipment written off, and fair value gain or loss on derivatives and available-for-sale investments as presented in the respective notes to the financial statements. The following items are added to/(deducted from) segment profit to arrive at Profit for the year presented in the consolidated income statement: Group US$'000 US$'000 Share of results of associates Finance costs (7,726) (10,293) (7,390) (9,483) D E Additions to non-current assets consist of additions to property, plant and equipment. The following item is added to segment assets to arrive at total assets reported in the consolidated balance sheet: Group US$'000 US$'000 Investment in associate 7,821 7,830 F The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated balance sheet: Group US$'000 US$'000 Loans and borrowings 141, ,000 Finance lease obligations 1, , ,630 Geographical information Revenue and non-current assets information based on the geographical location of the selling entity and assets respectively are as follows: Group US$'000 US$'000 Revenue People's Republic of China 339, ,512 Southeast Asia 262, ,024 Europe 79,658 72, , ,000 ANNUAL REPORT

156 NOTES TO THE FINANCIAL STATEMENTS 30 June Segment information (cont d) Geographical information (cont d) Group US$'000 US$'000 Non-current assets People's Republic of China 66,693 72,653 Southeast Asia 66, ,147 Europe 12,385 9, , ,204 Non-current assets information presented above consist of property, plant and equipment, investment in associates, other investments, other receivables and deposits, prepaid expenses, deferred tax assets and fixed deposits as presented in the consolidated balance sheets. Information on major customers In 2010, the revenue from two major customers amounted to US$77,352,000 and US$69,154,000 respectively, arising from the sales by the precision engineering and rubber/plastic segments. In 2011, the revenue from two major customers amounted to US$69,817,000 and US$68,171,000 respectively, arising from the sales by the precision engineering and rubber/plastic segments. 39. Dividends proposed The directors proposed that a final tax exempt (one-tier) dividend of 5.5 Singapore cents per share (2010: nil) amounting to approximately US$24.7 million (2010: nil) be paid for the financial year ended 30 June Subsequent event On 25 August 2011, the Company entered into separate conditional sale and purchase agreements (collectively, the SPAs ) with Lian Jun Industrial Pte Ltd ( Lian Jun ), a subsidiary of the Company, and each of Mr. Tse Sek Lee, Mr. Ho Che Wai and Mr. Law Wai Kin (collectively, the Vendors ), pursuant to which the Company agreed to purchase an aggregate of 2,150,000 ordinary shares (the Sale Shares ) in the issued capital of Lian Jun held by the Vendors, representing approximately 45% of the issued capital of Lian Jun (the Proposed Acquisition ). The total consideration is approximately US$7.5 million, subject to adjustments (if any) when the Lian Jun Group FY11 audited accounts are available. The completion of the Proposed Acquisition is expected to take place on or prior to 31 October Upon completion, Lian Jun will become a wholly-owned subsidiary of the Company. The Proposed Acquisition is not expected to have a material impact on the consolidated net tangible assets or earnings per share of the Amtek group for the financial year ending 30 June Authorisation of financial statements for issue The financial statements for the year ended 30 June 2011 were authorised for issue in accordance with a resolution of the Directors on 30 September AMTEK ENGINEERING LTD 154

157 APPENDIX III AUDITED FINANCIAL STATEMENTS OF AMTEK ENGINEERING LTD AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012 The information in this Appendix III has been extracted and reproduced from the annual report of the Issuer for the financial year ended 30 June 2012 and has not been specifically prepared for inclusion in this Information Memorandum. References to the page numbers herein are to those as reproduced from the annual report for the financial year ended 30 June

158 156

159 157

160 158

161 159

162 160

163 161

164 162

165 163

166 164

167 165

168 166

169 167

170 168

171 169

172 170

173 171

174 172

175 173

176 174

177 175

178 176

179 177

180 178

181 179

182 180

183 181

184 182

185 183

186 184

187 185

188 186

189 187

190 188

191 189

192 190

193 191

194 192

195 193

196 194

197 195

198 196

199 197

200 198

201 199

202 200

203 201

204 202

205 203

206 204

207 205

208 206

209 207

210 208

211 209

212 210

213 211

214 212

215 213

216 214

217 UNAUDITED RESULTS OF THE ISSUER AND ITS SUBSIDIARIES FOR THE HALF YEAR ENDED 31 DECEMBER 2012 APPENDIX IV The information in this Appendix IV has been extracted and reproduced from the unaudited results of the Issuer and its subsidiaries for the half year ended 31 December 2012 and has not been specifically prepared for inclusion in this Information Memorandum. 215

218 216

219 217

220 218

221 219

222 220

223 221

224 222

225 223

226 224

227 225

228 226

229 227

230 228

231 229

232 230

233 231

234 232

235 UNAUDITED RESULTS OF THE ISSUER AND ITS SUBSIDIARIES FOR THE THIRD QUARTER ENDED 31 MARCH 2013 APPENDIX V The information in this Appendix V has been extracted and reproduced from the unaudited results of the Issuer and its subsidiaries for the third quarter ended 31 March 2013 and has not been specifically prepared for inclusion in this Information Memorandum. 233

236 234