ASIA SILK HOLDINGS LIMITED (Incorporated in the Republic of Singapore under Registration No: 200401894D) Full Year Financial Statements And Dividend Announcement for the Financial Year Ended 31 December 2011 This Announcement and its contents have been reviewed by the Company s Sponsor, CIMB Bank Berhad, Singapore Branch (the "Sponsor"), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Mr Eric Wong (Director, Corporate Finance), CIMB Bank Berhad, Singapore Branch, 50 Raff les Place, #09-01 Singapore Land Tower, Singapore 048623, telephone (65) 6337 5115. The figures presented below for the current year have not been audited. PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1(a)(i) A consolidated statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 * Increase / (decrease) RMB 000 RMB 000 % Continuing Operations Revenue - - - Cost of sales - - - Gross profit - - - Administrative expenses (4,556) (1,551) NM Loss before tax (4,556) (1,551) NM Income tax - - - Loss from continuing operations, net of tax (4,556) (1,551) NM Discontinued Operations Loss from discontinued operation, net of tax (5,010) (4,492) 12 Loss for the financial year (9,566) (6,043) 58 Other comprehensive (loss)/income, net of tax: Currency translation differences on consolidation (159) 53 NM Total comprehensive loss for the financial year (9,725) (5,990) 62 Attributable to Equity holders of the Company: Loss from continuing operations (4,556) (1,551) NM Loss from discontinued operations (5,010) (4,492) 12 Loss for the financial year attributable to equity holders of the Company (9,566) (6,043) 58 Attributable to Equity holders of the Company: Total comprehensive loss from continuing operations, net of tax (4,715) (1,498) NM Total comprehensive loss from discontinued operations, net of tax (5,010) (4,492) 12 Total comprehensive loss for the financial year attributable to equity holders of the Company (9,725) (5,990) 62 *The comparative figures for the financial year ended 31 December 2010 relating to the Disposal (as defined herein) have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. 1
1(a)(ii) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). Notes to the Consolidated Statement of Comprehensive Income:- i. An analysis of the results of the Disposal (please refer to paragraphs 8 and 10) is as follows: Increase / * (decrease) RMB 000 RMB 000 % Revenue 74,722 86,736 (14) Expenses (79,732) (91,228) (13) Loss before income tax from Disposal (5,010) (4,492) 12 Income tax - - NM Loss after income tax from Disposal (5,010) (4,492) 12 *The comparative figures for the year ended 31 December 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. ii. Loss for the financial year is arrived at after charging/(crediting): ---------- Continuing operations ---------- ---------- Discontinued operations ------- Increase/ Increase/ * (decrease) * (decrease) % % Amortisation of land use rights - - - 42 84 (50) Cost of inventories included in cost of sales - - - 45,308 54,326 (17) Depreciation of property, plant and equipment - - - 1,412 3,374 (58) Operating lease expenses - Land - - - 914 881 4 - Office - - - 473 368 29 - Others - - - 118 224 (47) Reversal of inventories written down - - - (354) (3,722) (90) Directors remuneration 401 273 47 126 399 (68) Interest income from banks - - - (31) (141) (78) Impairment loss on trade receivables - - - 6,003 2,642 NM Foreign exchange (gain)/loss (34) 396 NM (182) 396 NM Interest expenses - bank loans - - - 944 730 29 Loss on disposal of property, plant and equipment - - - 52 - NM Property, plant and equipment written off - - - - 125 (100) Impairment loss on property, plant and equipment - - - - 2,256 (100) Write back of impairment loss on property, plant and equipment - - - (3,038) - NM *The comparative figures for the financial year ended 31 December 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. 2
1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Company ASSETS Non-current assets Property, plant and equipment - 17,272 - - Long-term land use rights - 752 - - - 18,024 - - Current assets Inventories - 11,854 - - Trade receivables - 38,666 - - Transferable notes receivables - 2,600 - - Other receivables 961 475 961 - Amounts due from related parties (trade) - 255 - - Amount due from a subsidiary (non-trade) - - - 1,022 Pledged term deposits - 2,000 - - Bank and cash balances 1,446 4,254 1,446 2 2,407 60,104 2,407 1,024 Assets directly associated with Disposal classified as held for sale 63,943-8,635-66,350 60,104 11,042 1,024 Total assets 66,350 78,128 11,042 1,024 Current liabilities Trade payables - 15,812 - - Transferable notes payables - 4,000 - - Other payables 5,664 6,070 5,664 804 Amounts due to related parties (non-trade) - 26,790 - - Interest-bearing bank loans - 12,200 - - 5,664 64,872 5,664 804 Liabilities directly associated with Disposal classified as held for sale 55,308 - - - Total liabilities 60,972 64,872 5,664 804 Net assets 5,378 13,256 5,378 220 EQUITY Share capital 430 69,274 430 69,274 Reserves 61,774 (56,018) 4,948 (69,054) 62,204 13,256 5,378 220 Reserve of Disposal classified as held for sale (56,826) - - - Total equity: Capital and reserves attributable to the Company equity holders 5,378 13,256 5,378 220 3
1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year (Cont d). Details of the assets/liabilities associated with Disposal classified as held for sale are as follows: Current Assets Property, plant and equipment 18,887 Long-term land use rights 710 Inventories 11,020 Trade receivables 20,383 Transferable notes receivables 3,660 Other receivables 1,101 Amounts due from related parties (trade) 126 Pledged term deposits 1,500 Bank and cash balances 6,556 Assets directly associated with Disposal classified as held for sale 63,943 Current liabilities Trade payables 17,260 Interest-bearing bank loans 15,200 Other payables 6,722 Transferable notes payable 3,000 Amounts due to related parties (non-trade) 13,126 Liabilities directly associated with Disposal classified as held for sale Net assets directly associated with Disposal classified as held for sale 55,308 8,635 1(b)(ii) In relation to the aggregate amount of the group's borrowings and debt securities, specify the following as at the end of the current financial period reported on with comparative figures as at the end of the immediately preceding financial year: Amount repayable in one year or less, or on demand 31 December 2011 31 December 2010 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB 000 - - 12,200 - See Note (a) Amount repayable after one year 31 December 2011 31 December 2010 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB 000 - - - - Note (a): The continuing operations of the had no borrowings and debt securities as at 31 December 2011. The comparative figures as at 31 December 2010 represented the borrowings of the Disposal which have been classified as liabilities directly associated with disposal group classified as held for sale in the statement of financial position as at 31 December 2011. Included in the liabilities directly associated with disposal group classified as held for sale in the statement of 4
financial position as at 31 December 2011 was secured borrowings of the Disposal of RMB15,200,000. Please refer to paragraph 8 on the details of the secured borrowings. 1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Cash flows from operating activities Loss before tax from continuing operations (4,556) (1,551) Loss before tax from discontinued operations (5,010) (4,492) Total loss before tax (9,566) (6,043) Adjustments for : Depreciation of property, plant and equipment 1,412 3,374 Amortisation of land use rights 42 84 Interest income (31) (141) Interest expenses 944 730 Reversal of inventories written down (354) (3,722) Impairment of doubtful receivables - trade 6,003 2,642 - non-trade - 66 Loss on disposal of property, plant and equipment 52 - Impairment loss on property, plant and equipment written back (3,038) - Impairment loss on property, plant and equipment - 2,256 Property, plant and equipment written off - 125 Operating cash flows before working capital changes (4,536) (629) Inventories 1,188 2,929 Trade receivables and other receivables 9,633 3,776 Trade payables and other payables 4,206 (15,721) Amounts due from related parties 129 (81) Amounts due to related parties (13,664) 593 Cash used in operations (3,044) (9,133) Interest received 31 141 Net cash used in operating activities (3,013) (8,992) Cash flows from investing activities Purchase of property, plant and equipment (66) (686) Deposit received on sale of Disposal 2,399 - Proceed from disposal of property, plant and equipment 25 - Net cash generated from/(used in) investing activities 2,358 (686) Cash flows from financing activities Proceeds from bank loans 3,000 26,100 Proceeds from issuance of shares 1,925 - Repayment of bank loans - (29,100) Share issuance expenses (78) - Decrease in term deposits pledged to banks for banking facilities 500 7,700 Interest paid (944) (730) Net cash generated from financing activities 4,403 3,970 Net increase/(decrease) in cash and cash equivalents 3,748 (5,708) Cash and cash equivalents at beginning of financial year 4,254 9,962 Cash and cash equivalents at end of financial year 8,002* 4,254 *Cash and cash equivalents at the end of the current financial year in the cash flow statement included approximately RMB6,556,000 which belonged to the Disposal. 5
1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). The impact of the Disposal on the cash flows of the is as follows: Cash flows used in operating activities 201 (7,408) Cash flows used in investing activities (41) (686) Cash flows from financing activities 2,556 3,970 Total cash inflow/(outflow) 2,716 (4,124) 6
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. --------------------- Attributable to equity holders of the Company ------------------ Share capital # Foreign currency translation reserve Statutory reserve Revenue reserve Total reserves Reserve of Disposal classified as held for sale Total equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January 2011 69,274 383 3,761 (60,162) (56,018) - 13,256 Issuance of share capital 1,925 - - - - - 1,925 Share issuance expenses (78) - - - - - (78) Capital reduction (70,691) - - 70,691 70,691 - - Total loss for the financial year - - - (4,556) (4,556) (5,010) (9,566) Other comprehensive income Currency translation differences - (159) - - (159) - (159) Total comprehensive loss for the financial year - (159) - (4,556) (4,715) (5,010) (9,725) Reserve attributable to disposal group classified as held for sale - - (3,761) 55,577 51,816 (51,816) - Balance at 31 December 2011 430 224-61,550 61,774 (56,826) 5,378 Balance at 1 January 2010 69,274 330 3,761 (54,119) (50,028) 19,246 Total loss for the financial year (6,043) (6,043) (6,043) Other comprehensive income Currency translation differences 53 53 53 Total comprehensive income/ (loss) for the financial year 53 (6,043) (5,990) (5,990) Balance at 31 December 2010 69,274 383 3,761 (60,162) (56,018) 13,256 # Please refer to paragraph 1(d)(ii) on the changes in the Company s share capital during the financial year. 7
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). Share capital # Foreign currency translation reserve Revenue reserve Total reserves Total equity Company RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 2011 Balance at 1 January 2011 69,274 1,637 (70,691) (69,054) 220 Issuance of share capital 1,925 - - - 1,925 Share issuance expenses (78) - - - (78) Capital reduction (70,691) - 70,691 70,691 - Total profit for the financial year - - 3,470 3,470 3,470 Other comprehensive loss Currency translation differences - (159) - (159) (159) Total comprehensive profit/( loss) for the financial year - (159) 3,470 3,311 3,311 Balance at 31 December 2011 430 1,478 3,470 4,948 5,378 Balance at 1 January 2010 69,274 1,584 (69,140) (67,556) 1,718 Total loss for the financial year (1,551) (1,551) (1,551) Other comprehensive income Currency translation differences 53 53 53 Total comprehensive income/(loss) for the financial year 53 (1,551) (1,498) (1,498) Balance at 31 December 2010 69,274 1,637 (70,691) (69,054) 220 # Please refer to paragraph 1(d)(ii) on the changes in the Company s share capital during the financial year. 8
1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Details of the Company s share capital as at 31 December 2011 are as follows: Number of shares Share Capital S$ 000 RMB 000 Balance as at 31 December 2010 125,000,000 14,305 69,274 Issue of shares during the financial year 12,000,000 369 1,925 Share issue expense - (15) (78) Capital reduction - (14,262) (70,691) Balance as at 31 December 2011 137,000,000 397 430 On 9 March 2011, the Company entered into 2 conditional subscription agreements with two (2) individuals to allot and issue 12,000,000 new ordinary shares ( Subscription Shares ) in the capital of the Company at an issue price of S$0.0308 per Subscription Share, amounting to an aggregate consideration of S$369,600 (RMB 1,925,000) for general working capital purposes. The Subscription Shares have been issued, listed and quoted for trading on the official list of the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 13 April 2011. The Company announced on 27 September 2011 that the net proceeds from the issuance of the Subscription Shares had been fully utilised. At the Extraordinary General Meeting held on 29 June 2011, the Shareholders of the Company approved a Capital Reduction Exercise ( Capital Reduction ) pursuant to Section 78A read together with Section 78C of the Singapore Companies Act (Cap. 50) (the Act ), through the cancellation of the issued share capital of the Company which had been lost or was unrepresented by available assets to the extent of S$14,262,135 (approximately RMB70,691,144) and an amount equal to S$14,262,135 (approximately RMB70,691,144), being the credit arising from the cancellation of the issued share capital of the Company, were applied to write off in its entirety the accumulated losses of the Company of S$14,262,135 (approximately RMB70,691,144) as at 31 December 2010 ( Accumulated Losses ). After the Capital Reduction, the Company has an issued and paid-up share capital of $396,882. On 15 August 2011, the Company announced that the Capital Reduction had taken effect with the Company s compliance with all the requirements of the Act and the lodgment of the relevant documents containing the reduction information with the Accounting and Corporate Regulatory Authority of Singapore. There was no change in the total number of issued shares in the Company held by Shareholders immediately after the Capital Reduction, nor did the Capital Reduction involve the payment to any Shareholders of any paid-up share capital of the Company. Convertible Securities There are no shares that may be issued on conversion of any outstanding convertibles as at the end of the current financial year and as at the end of the immediately preceding financial year. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. Total number of issued shares (excluding treasury shares) 137,000,000 125,000,000 The Company has no treasury shares as at 31 December 2011 and 31 December 2010. 1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the Company s auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 9
4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The adopted the same accounting policies and methods of computation in the financial statements for the current reporting year as compared to the most recently audited financial statements for the financial year ended 31 December 2010 except for the adoption of revised Financial Reporting Standards (FRS) and Interpretations to FRS ( INT FRS ) that are effective for annual periods beginning on or after 1 January 2011. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The adoption of the revised FRS and INT FRS as discussed in paragraph 4 is not expected to result in any significant changes to the s accounting policies and methods of computation. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Continuing operations Discontinued operations Total * * * Loss for the financial year attributable to equity holders of the Company (RMB 000) (4,556) (1,551) (5,010) (4,492) (9,566) (6,043) Weighted average number of ordinary shares on issue ( 000) 133,647 125,000 133,647 125,000 133,647 125,000 a. Basic loss per share based on the weighted average number of ordinary shares on issue (in RMB fen) (3.41) (1.24) (3.75) (3.59) (7.16) (4.83) b. On a diluted basis (in RMB fen) (3.41) (1.24) (3.75) (3.59) (7.16) (4.83) *The comparative figures for the financial year ended 31 December 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). Basic and diluted loss per share for financial year ended 31 December 2011 and 31 December 2010 were calculated by dividing the net loss for the financial year attributable to equity shareholders of the Company by the weighted average number of ordinary shares. 7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:- (a) current financial period reported on; and (b) immediately preceding financial year. Company Net assets attributable to the shareholders (RMB 000) 5,378 13,256 5,378 220 Net asset value per ordinary share (RMB fen) 3.93 10.60 3.93 0.18 Net asset value per ordinary share of the and Company was calculated by dividing the net asset value attributable to equity shareholders of the Company by the number of ordinary shares of the Company as at 31 December 2011 of 137,000,000 (31 December 2010: 125,000,000). 10
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. At the Extraordinary General Meeting held on 29 June 2011, the Shareholders of the Company approved the disposal of the Company s entire legal and beneficial interests in Wuxi Dingqiu Silk Co., Ltd. ( Wuxi Dingqiu ), which included the subsidiaries of Wuxi Dingqiu ( Disposal ). The Disposal was completed on 9 January 2012 as announced by the Company on the same date (please refer to the Company s circular dated 7 June 2011 and announcement dated 9 January 2012. Please also refer to paragraph 10 for further details on the Disposal). In compliance with FRS105 on Non-current Assets Held-for-sale and Discontinued Operations, the assets and liabilities related to Wuxi Dingqiu have been presented as the Company s Disposal under disposal group classified as held-for-sale ( Disposal ) on the statement of financial position as at 31 December 2011 and the results from the Disposal are presented separately on the statement of comprehensive income as Discontinued operations for the financial year ended 31 December 2011. The comparative figures in the consolidated statement of comprehensive income for the corresponding financial year ended 31 December 2010 relating to the discontinued operations have been re-presented. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (For the purpose of this review, FY2011 refers to the results of the during the financial year ended 31 December 2011 and FY 2010 refers to the comparative financial year ended 31 December 2010.) Continuing operations The does not have business or operations other than the Disposal. Loss for FY2011 from continuing operations arose from administrative expenses incurred by the, which had increased by RMB3,005,000 from RMB1,551,000 in FY2010 to RMB4,556,000 in FY2011. These expenses were mainly legal and professional fees incurred on the various corporate exercises undertaken by the Company during FY2011. The continuing operations are carried out in Singapore. Discontinued operations Loss from Disposal was RMB5,010,000, which included a write back of impairment loss on property, plant and equipment of RMB3,038,000. Excluding the write back, the Disposal would have reported a loss of RMB8,048,000. The dismay performance was within the Company s anticipation of challenges faced by the Disposal based in the Peoples Republic of China which formed the basis of the Disposal which was completed on 9 January 2012 (please also refer to paragraph 10). CONSOLIDATED STATEMENT OF FINANCIAL POSITION Current Assets The s current assets including those of Disposal amounted to RMB66,350,000 as at 31 December 2011. This was an increase of RMB6,246,000 from RMB60,104,000 as at 31 December 2010 due mainly to classification of the Disposal s noncurrent assets which comprised property, plant and equipment and long-term land use rights as current assets and increase in bank and cash balances and transferable notes receivables; partially offset by decrease in inventories with an impairment loss adjustment made, decrease in trade and other receivables as a result of receipts from receivables and impairment allowance for receivables no longer collectible and repayments from related parties. Current Liabilities The s current liabilities including those of Disposal amounted to RMB60,972,000 as at 31 December 2011. This was a decrease of RMB3,900,000 from RMB64,872,000 as at 31 December 2010 due mainly to repayments of transferrable notes payables; partially offset by additional bank loans, higher trade payables and accruals for higher legal and professional fees as a result of the corporate exercises undertaken by the Company in FY2011. The bank loans of the Disposal which were repayable within twelve months were secured by the following: (i) Pledge of property of Wuxi Dingqiu Silk Co., Ltd, a subsidiary; (ii) Pledge of properties and land use rights of Jiangsu Hunting Garment Co., Ltd, a related party; (iii) Pledge of property and land use rights of Jiangsu Xindingqiu Silk Spinning Science & Technology Co., Ltd ( Jiangsu Xindingqiu ), a related party; and (iv) Corporate guarantee by Jiangsu Xindingqiu. Shareholders Equity Shareholders equity of the was RMB5,378,000 as at 31 December 2011. This was a decrease of RMB7,878,000 from RMB13,256,000 as at 31 December 2010 due mainly to loss attributable to shareholders and currency translation differences during FY2011 partially offset by proceeds from the issuance of the Subscription Shares. 11
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on (Cont d). CONSOLIDATED STATEMENT OF CASH FLOWS The had cash and cash equivalents of RMB8,002,000 as at 31 December 2011, an increase of RMB3,748,000 from RMB4,254,000 as at 31 December 2010. The increase was due to net cash generated from investing activities of RMB2,358,000 and net cash generated from financing activities of RMB4,403,000, partially offset by net cash used in operations of RMB3,013,000. Net cash generated from investing activities arose from deposit received on the sale of the Disposal (please refer to paragraph 10) and proceed from disposal of property, plant and equipment less cash utilised for the purchase of property, plant and equipment by the Disposal. Net cash generated from financing activities was contributed by net proceeds from bank loans, proceeds from issuance of Subscription Shares net of share issuance expenses and release of term deposit previously pledged to bank for banking facilit ies partially offset by interest paid on bank loans. Net cash used in operations was due mainly to operating loss for FY2011. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. No forecast or prospect statement has been issued for the current reporting period. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. (i) Completion of the Proposed Disposal of the Company s entire legal and beneficial interests in Wuxi Dingqiu Silk Co., Ltd. ( Disposal ) (Please refer to the Company s circular dated 7 June 2011 and announcement dated 9 January 2012). On 9 January 2012, the Company announced the completion of the Disposal. (ii) Compliance with Rule 1017 of the Listing Manual Section B: Rules of Catalist of the SGX-ST on continued trading of the Company s shares after the Company becomes a Cash Company (please refer to the Company s announcements dated 9 January 2012 and 13 January 2012). On 13 January 2012, the Company announced that it had placed 90% of its cash and short-dated securities (including existing cash balance and the Consideration) with DBS Bank Ltd (please refer to the Company s announcement dated 13 January 2012). The amount placed in the escrow account cannot be drawn down until the completion of the proposed acquisition of the entire issued and paid-up capital of Chaswood Resources Sdn. Bhd. contained in the Circular to the shareholders of the Company dated 30 December 2011 (the Circular ). The Company has provided an undertaking to SGX-ST that in compliance with Rule 1017(1) of the Catalist Rules, it will provide monthly valuation of its assets and utilization of cash, and quarterly updates of milestones in the Proposed Acquisition to the market via SGXNET (please refer to the announcement dated 1 February 2012 on the valuation of the Company s net assets as at 31 January 2012). SGX-ST reserves the right to (A) suspend trading of the Shares should the Company fail to comply with Rule 1017(1) of the Catalist Rules; and (B) amend/vary the Trading Confirmation as it deems fit, and the Trading Confirmation is subject to changes in the SGX-ST s policies. 12
10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. (Cont d) (iii) At the Extraordinary General Meeting held on 1 February 2012, the Shareholders of the Company had approved all the following resolutions which were contained in the Circular. a. Proposed acquisition of the entire issued share capital of Chaswood Resources Sdn. Bhd. for a purchase consideration of S$60,785,347 (equivalent to approximately RM150,000,000 which shall be satisfied in full by the allotment and issue of 2,026,178,233 new ordinary shares in the capital of the Company (prior to the Proposed Share Consolidation (as defined below)) (the Consideration Shares ) to the Vendors at an issue price of S$0.03 per Consideration Share. b. Proposed issue and allotment of 2,026,178,233 Consideration Shares at the Issue Price of S$0.03 to the Vendors in satisfaction of the purchase consideration for the Proposed Acquisition. c. Proposed Post-Acquisition Consolidation of every ten (10) Shares into one (1) Share. Following the completion of the Proposed Acquisition and the implementation of the Proposed Post-Acquisition Consolidation, the Company will have an issued paid up capital of S$61,182,229 comprising 216,317,822 Consolidated Shares, fractional Consolidated Share being disregarded. d. Proposed Whitewash Resolution. The Securities Industry Council ( SIC ) had on 26 September 2011 granted the Vendors and their concert parties a waiver of the requirements to make a general offer for the Company subject to certain conditions. e. Proposed issue and allotment of 10,500,000 New Compliance Shares pursuant to the Proposed Compliance Placement, for the purpose of meeting the shareholding distribution requirements of the Catalist Rules. In addition, 10,500,000 Participating Vendor Shares will be sold to investors in connection with Proposed Compliance Placement. f. Proposed change of auditors. RSM Chio Lim LLP have agreed and consented to act as auditors of the Company in place of the present auditors, Baker Tilly TFW LLP,upon completion of the Proposed Acquisition. g. Proposed change of name of the Company from Asia Silk Holdings Limited to Chaswood Resources Holdings Ltd. to reflect the new business structure and ownership of the Company. All defined terms in this section, unless defined otherwise, shall bear the same meaning ascribed to them in the Circular. The Company shall be making a separate announcement relating to the completion of the Proposed Acquisition as and when appropriate. (iv) Receipt of Listing and Quotation Notice (please refer to the Company s announcement on 28 February 2012). On 28 February 2012, SGX-ST issued a listing and quotation notice ( L&Q Notice ) in respect of the listing and quotation of 226,817,822 Consolidated Shares. The L&Q Notice is subject to, inter alia, compliance with the Catalist Rules and the completion of the Proposed Acquisition. 13
11. Dividend (a) Current Financial Period Reported On Any dividend declared/recommended for the current financial period reported on? No ordinary dividend has been recommended or declared. (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared/recommended for the current financial period reported on? No ordinary dividend was recommended or declared. (c) Date payable Not applicable. (d) Books closure date Not applicable. 12. If no dividend has been declared/recommended, a statement to that effect. No dividend has been recommended or declared for the current financial year. 13. If the group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. The Company has not obtained a general mandate from shareholders for interested person transactions. 14. Segmental revenue and results for operating segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year Business segments The currently operates in two main business segments: i) Investment holding; and ii) Spun silk and garment segment The spun silk and garment segment has been classified as a discontinued operation during the financial year. Information about reportable segments Continuing operation Investment holding Discontinued operation Spun silk and garment Consolidated RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Segment Results Segment revenue 74,722 86,736 74,722 86,736 Segment loss (4,556) (1,551) (5,010) (4,492) (9,566) (6,043) Loss before tax (9,566) (6,043) Tax expense Total loss for the financial year (9,566) (6,043) RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 assets and liabilities Segment assets 2,407 2 63,943 78,126 66,350 78,128 Segment liabilities 5,664 804 55,308 64,068 60,972 64,872 14
14. Segmental revenue and results for operating segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year (Cont d) Continuing operation Investment holding Discontinued operation Spun silk and garment Consolidated RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Other segment information Capital expenditure - - 66 686 66 686 Depreciation and amortisation - - 1,454 3,458 1,454 3,458 Reversal of inventories written down - - (354) (3,722) (354) (3,722) Impairment loss of property, plant and equipment - - - 2,256-2,256 Impairment of trade receivables - - 6,003 2,642 6,003 2,642 Write back of impairment loss on property, plant and equipment - - (3,038) - (3,038) - Geographical segment PRC* Overseas** Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Segment revenue Discontinued operation Sales to external customers 39,821 43,237 34,901 43,499 74,722 86,736 * Excludes Hong Kong. ** Overseas countries comprise United States of America and Hong Kong. Singapore PRC # Consolidated RMB 000 RMB 000 RMB 000 RMB 000 Segment assets 2,407 1,024 63,943 77,104 66,350 78,128 Capital expenditure RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 - property, plant and equipment - - 66 686 66 686 Reversal of inventories written down - - (354) (3,722) (354) (3,722) Impairment loss of property, plant and equipment - - - 2,256-2,256 Impairment of trade receivables - - 6,003 2,642 6,003 2,642 Write back of impairment loss on property, plant and equipment - - (3,038) - (3,038) - # Discontinued operation 15. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. Please refer to paragraph 8. 15
16. A breakdown of sales as follows: Continuing operation Discontinued operation Total * * RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 * RMB 000 Revenue reported for the first half year - - 35,890 45,039 35,890 45,039 Operating loss after tax for the first half year (2,304) (1,066) (5,339) (2,210) (7,643) (3,276) Revenue reported for the second half year - - 38,832 41,697 38,832 41,697 Operating (loss)/profit after tax for the second half year (2,252) (485) 329 (2,282) (1,923) (2,767) *The comparative figures for the financial year ended 31 December 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). 17. A breakdown of the total annual dividend (in dollar value) for the issuer s latest full year and its previous full year. (a) Ordinary: Not Applicable (b) Preference: Not Applicable (c) Total : Not Applicable 18. Disclosure of person occupying a managerial position in the issuer or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(10). If there are no such persons, the issuer must make an appropriate negative statement. Pursuant to Rule 704 (10) of the Listing Manual of the SGX-ST, the Company confirms that there is no person occupying managerial position in the Company or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the Company. BY ORDER OF THE BOARD ASIA SILK HOLDINGS LIMITED 29 February 2012 16