Annual Report 2011 Gearing Up - Innovalues Limited€¦ · 14 Performance Summary ... Lexmark,...
Transcript of Annual Report 2011 Gearing Up - Innovalues Limited€¦ · 14 Performance Summary ... Lexmark,...
OurMission StatementTo provide our customers with products and services of the highest quality and to deliver the necessary operating and financial performance to enhance shareholder value. To achieve these goals, INNOValues will continue its focus on delivering excellence in performance, flexibility and technology, and exceeding customers’ expectations in quality, delivery and services.
OurVisionTo be the preferred global partner in precision engineering.
Contents01 Corporate Profile
02 Chairman’s Statement
04 Operations Review
06 Directors’ Profile
08 Key Management Profile
09 Corporate Data
10 Corporate Information
11 Financial Highlights
14 Performance Summary
16 Corporate Structure
17 Financial Contents
CorporateProfile
Capable of high volume and high precisiontolerance manufacturingand surface treatmentservices
Innovalues specializes in the manufacturing of customized precision machined parts and components, assembly of printer rollers, rubber compounding and rubber moulding. The Group also provides surface treatment services such as electroless nickel plating, zinc phosphating and hard anodizing. These products are mainly used in office automation equipment, hard disk drives, automotive, oil and gas industries. Innovalues aims to be the preferred global partner in precision engineering providing full range of value chain processes. The Group’s capabilities include the manufacturing of ultra-high precision parts with high volume manufacturing capacity and a sound team of engineers who are able to work closely with customers from design to mass production phase.
Established in 1997 by founder Mr. Goh Leng Tse, Innovalues has grown aggressively through customer and products diversification and regionalization. From its humble beginnings, the Group has become a major supplier of high-precision parts and components, and is listed on the Mainboard of the Stock Exchange of Singapore. Our major customers include multi-national corporations such as Sensata Technology, Hilite International, Hewlett-Packard, Flextronics, Samsung, Lexmark, Xerox and Foxconn.
Headquartered in Singapore, the Group has operations in Malaysia, Thailand and China. Today, our total staff strength exceeds 1,800 and we occupy manufacturing space of approximately 56,600 sqm. For more information, please visit our website at www.innovalues.com.
01Innovalues
Limited
While restoring profitability will be one
of the primary objectives in FY2012, we also intend
to position ourselves for future growth in
terms of new product development.
Dear Valued Shareholders,
This year’s report comes at a time when the Group braces itself for
unprecedented tough challenges. Although the Group’s 3Q2011
results (reported a net profit of S$724,000 for the 3 months ended
30 September 2011) saw nascent signs of business recovery
and turnaround, severe and unanticipated floods in Thailand in
October 2011 had adversely affected the Group’s performance
for FY2011. As a result, the Group reported a net loss attributable
to shareholders of S$14.2 million in FY2011 (FY2010: net profit of
S$1.3 million).
To mitigate the impact of the flood to our business, we are leveraging
on our Malaysia and China operations to offset the temporary loss
of capacity in Thailand. This is to sustain the supply chains for our
valued customers, thereby minimizing unnecessary disruptions
to their productions. Pertaining to insurance coverage, the
Group’s property, plant and equipment, inventories and business
interruption in Thailand are insured. However, as the insurer’s
assessment is still ongoing, the eventual recoverable amount has
yet to be finalized. The insurance proceeds will be used to fund
the restoration and repair activities which are currently in progress
at our Thailand plant. How our Thailand plant, which has been
a major contributor to Group’s performance, can recover from
impact of the flood, will feature in the Group’s financial performance
in FY2012.
02Annual Report2011
Chairman’s Statement
03Innovalues
Limited
Chairman’s Statement
We are bolstered by the commendable growth of 10.8% year-
on-year in our Automotive segment (“AU”), which contributed
about 53.0% of total revenue in FY2011. In line with the increasing
demand in global markets for components with features such as
“Safety”, “Energy Saving” and “Environment Protection”, we expect
our AU segment to grow and lead the Group’s revenue in FY2012.
On the other hand, the substantial decline in our Office Automation
(“OA”) in FY2011 was not unexpected as our customers constantly
restructure their supply chains. This trend is expected to continue
in FY2012. In view of this, more of the existing machinery used
for the production of OA will be re-deployed to meet the growing
production capacity of our AU operations.
While restoring profitability will be one of the primary objectives
in FY2012, we also intend to position ourselves for future growth
in terms of new product development. Innovations in gearbox
and engine platforms from our Automotive business segment will
be the new products in the pipeline. Commercial production for
these new products will commence in FY2012 and this will in turn
contribute to our revenue growth.
In China, increasing labour costs as well as monetary and fiscal
policy adjustments to curb inflation, continue to pose growing
challenges to our bottom line. As such, we are actively aligning
our strengths and core competencies to achieve greater level of
efficiency and effectiveness in the deployment and utilization of
our resources. We are cognizant of the uncertain and challenging
global business environment and thus, will continue to exercise
financial prudence which has served us well. .
In 2Q2011, the Board had declared an interim dividend of 0.6
cents per ordinary share. This is to reward our shareholders for
their unwavering support. Despite the dividend payment of S$1.9
million, the Group maintained a healthy cash balance of S$10.7
million as at the end of FY2011.
On behalf of the Board of Directors, I wish to take this opportunity
to record our appreciation to our shareholders, bankers, customers
and suppliers for their continued support and confidence in
Innovalues. To the Board, I thank all my fellow Directors for their
invaluable advice, counsel and support. I wish to acknowledge and
commend our staff and management for their perseverance in the
execution of their respective functions amidst a very challenging
year. In the new financial year, we have our tasks all lined up and I
am sure that together we will weather the difficulties ahead.
Mr. Goh Leng Tse
Chairman and Chief Executive Officer
The unprecedented flooding in Thailand had
adversely affected the Group’s performance in
FY2011. As a result, the Group recorded a net
loss attributable to shareholders of approximately
S$14.2 million in FY2011 (FY2010: net profit of
S$1.3 million).
The temporary halt of operations in our Thailand
plant in the fourth quarter of 2011 had brought
a loss of revenue as well as other flood-related
impairment and restoration charges. As the
insurer’s assessment is ongoing and the eventual
recoverable amount has yet to be finalised,
the Group has not recognised any insurance
claim amounts for the financial year ended 31
December 2011. As of to date, S$4.1 million of
interim insurance proceeds had been received
subsequent to the financial year ended 31
December 2011, which will be recognised in
FY2012.
BUSINESS SEGMENT PERFORMANCE
The Group’s revenue in FY2011 was S$87.7 million
which represents a decrease of approximately
S$12.8 million or 12.7% as compared to
S$100.5 million in FY2010. This was mainly due
to the reduced sales orders from our customers
in the OA segment, coupled with the impact of
the temporary halt of operations in our Thailand
plant for the fourth quarter of 2011 as a result of
the severe flood.
Automotive (“AU”) segment continues to grow
steadily in FY2011 and overtook our traditionally
strongest revenue contributor, the OA segment,
contributing about 53.0% of total revenue in FY
2011. Growth in our PRC market drove our AU
revenue to S$46.5 million, an increase of S$4.5
million or 10.8% from S$42.0 million in FY2010.
Revenue contribution from Office Automation
(“OA”) segment decreased by approximately
S$16.7 million or 30.6% to S$37.8 million as
compared to S$54.5 million in the previous
financial year. This was mainly attributable to our
customers from the PRC and Malaysian markets
as they are restructuring their supply chains.
BALANCE SHEET HIGHLIGHTS
Net asset value of the Group in FY2011 stood at
S$40.6 million, a 27.9% decrease from S$56.3
million in FY2010. This was mainly due to the
substantial loss incurred by the Group in FY2011,
predominantly caused by the negative impact of
the flood in Thailand. As a result, net asset value
per ordinary share was 12.74 cents (FY2010:
17.69 cents) as at 31 December 2011.
04Annual Report2011
OperationsReview
05Innovalues
Limited
OperationsReview
Property, plant and equipment decreased by
approximately S$17.9 million from S$51.7 million
as at 31 December 2010 to S$33.8 million as at 31
December 2011 mainly due to depreciation charges
and impairment charge of the Thailand’s plant and
equipment during the year.
Inventories decreased by approximately S$3.7 million from S$18.0 million as at 31 December 2010 to S$14.3 million as at 31 December 2011. The decrease was mainly due to impairment charge of the Thailand’s inventories during the year.
Trade and other receivables decreased by approximately S$0.7 million from S$17.0 million as at 31 December 2010 to S$16.3 million as at 31 December 2011. The decrease in trade receivables was mainly due to lower revenue achieved in the fourth quarter of 2011 and debt collections continued to remain efficient.
CASH FLOW HIGHLIGHTS
Cash and cash equivalents at the end of FY2011 stood at S$10.5 million, which represents a decrease of S$1.4 million as compared to S$11.9 million in FY2010. The decrease in net cash flows was mainly attributable to net cash outflows from investing and financing activities but was cushioned by net cash inflows from operating activities.
Net cash flows used in financing activities was mainly due to net repayments of interest-bearing loans and borrowing and distribution of dividends in September 2011.
Sustaining the emphasis to improve the Group’s gearing, approximately S$7.6 million was used to repay outstanding interest-bearing loans and borrowings in FY2011 as agreed and planned with the bankers. As a result, the Group’s net interest-bearing borrowings had reduced significantly by S$28.3 million from S$54.2 million as at FY2008 to S$25.9 million as at FY2011.
Despite the loss and flood-related charges incurred by the Thailand plant in FY 2011, the Group is able to meet all its financial obligations and will continue to place emphasis on financial prudence.
Directors’ Profile
MR. GOH LENG TSEChairman and Chief Executive OfficerMr. Goh Leng Tse is the Chairman of the Board, a member of the Audit Committee, Remuneration Committee and Nominating Committee of the Company. Mr. Goh founded Innovalues Ltd in April 1997 and was appointed director on 25 April 1997.
He has more than 20 years’ experience in the precision turned-parts industry and has worked for NMB Singapore Pte Ltd and TNH Metal Pte Ltd. Mr. Goh holds a Diploma in Business Management from the Singapore Institute of Management.
MR. PUNG TONG SENGExecutive DirectorMr. Pung Tong Seng was appointed director on 7 June 2008. Mr. Pung joined Innovalues Limited in June 2000 and is responsible for the Group’s marketing and business development functions.
He holds an MSc in Total Quality Management from the Sheffield Hallam University. Mr. Pung has about 20 years experience working with MNC such as Micropolis (S) Ltd and Iomega Pacific Pte Ltd in the electronics and hard disk drives industries prior to taking up his responsibilities in Innovalues.
Mr. Pung was last re-elected as a director at the Annual General Meeting on 27 April 2011.
MR. ONG TIAK BENGNon-executive DirectorMr. Ong Tiak Beng was appointed as Non-Executive Director on 20 May 1997. He holds a Bachelor of Science in Industrial Engineering and Management.
Mr. Ong has more than 19 years’ experience in the precision engineering industry. He provides valuable support, insights and business contacts to the Group.
Mr. Ong was last re-elected as a director at the Annual General Meeting on 28 April 2010.
MR. ONG SIM HOLead Independent DirectorMr. Ong Sim Ho is our lead Independent Director and a member of the Audit Committee, Remuneration Committee and Nominating Committee of the Company. Mr. Ong was appointed as an Independent Director on 9 February 2001. Mr. Ong is a Director at Drew & Napier LLC where he heads the Tax & Private Client Services Group. He is the Non-Executive Chairman of Tokio Marine Life Insurance Singapore Ltd and a member of the Board of Emirates National Oil Company (Singapore) Pte Ltd, Eucon Holding Limited, Sunningdale Tech Limited and Tokio Marine Insurance Singapore Ltd. Mr. Ong also serves as an Advisory Board Member of the School of Accountancy at the Singapore Management University. He is an Advocate and Solicitor of the Supreme Court of Singapore, a Barrister-at-Law of Lincoln’s Inn, a Fellow of the Institute of Certified Public Accountants in Singapore and a member of the Singapore Institute of Directors.
Mr. Ong was last re-elected as a director at the Annual General Meeting on 28 April 2009.
06Annual Report2011
Directors’ Profile
MR. CHOW KOK KEEIndependent Director
Mr. Chow Kok Kee is the Chairman of the Audit and the Remuneration Committees and a member of the Nominating Committee of the Company. Mr. Chow was appointed as an Independent Director on 9 February 2001. Mr. Chow is the Managing Director of ACTA Investment & Services Pte Ltd, a provider of business and financial related services to companies. Mr. Chow is also a director of other Singapore-listed companies namely, Chosen Holdings Ltd, Meiban Group Ltd, Tuan Sing Holdings Ltd, Valuetronics Holdings Ltd and M1 Limited as well as one private company, Transwater Services Pte Ltd.
Mr. Chow worked in the government administrative service for 6 years from 1976, holding management positions in the Ministries of Defence and Education, before joining DBS Bank in 1982. He has 15 years of extensive experience in the financial services industry. A Colombo Plan scholar, he holds a first class honours Bachelor of Engineering degree and a Bachelor of Commerce degree from the University of Newcastle, Australia, and an MBA from the National University of Singapore. Mr. Chow is a Member of the Institute of Engineers, Australia; an Associate of the Institute of Chartered Secretaries and Administrators, United Kingdom, and a Fellow of the Singapore Institute of Directors.
Mr. Chow was last re-elected as a director at the Annual General Meeting on 27 April 2011.
MR. ANTHONY TEO SOON CHYEIndependent Director
Mr. Anthony Teo Soon Chye is the Chairman of the Nominating Committee and a member of the Audit Committee and Remuneration Committee of the Company. Mr. Teo was appointed as an Independent Director on 1 June 2005.
Up to August 2010, he was the Secretary to the University, Nanyang Technological University and concurrently an exofficio member of the Senate and a member of the University Cabinet. Additionally, he is a member of the Management Board of the Middle East Institute and member of the Endowment Fund Committee of the Singapore Symphony Orchestra. In 2010, he was awarded the Chevalier of the French Oder of the Palmes Academiques and in 2009 Visiting Fellow at Wolfson College, Cambridge University.
He was Vice Chairman of the Singapore Chamber of Commerce in Hong Kong and an Emeritus Board of the global Harvard Business School Alumni Board of Governors based in Boston. A graduate from Harvard Business School, his career spans banking, consulting, higher education and own business.
Mr. Teo was last re-elected as a director at the Annual General Meeting on 28 April 2010.
ADVISOR TO THE BOARD OF DIRECTORSMR. KOH BOON HWEEAdvisor
Mr. Koh Boon Hwee is the Advisor to our Board of Directors. Mr. Koh was appointed as Advisor to our Board on 1 June 2005 after he retired as non-executive director on 25 April 2005.
07Innovalues
Limited
Key ManagementProfile
MR. SOO KING TENG
Group Financial Controller
Mr. Soo King Teng is our Group Financial Controller and Company Secretary. He joined the Group in April 2009 as Group Finance Manager and was subsequently promoted as Group Financial Controller in Dec 2011. He has more than 15 years of accounting and finance experience in auditing, trading and manufacturing industries. He is responsible for overseeing the financial and accounting functions of the Group.
He holds a professional accountancy qualification from The Association of Chartered Certified Accountants, UK and is a Certified Public Accountant of the Institute of Certified Public Accountants of Singapore.
MR. ONG KIN HOCK
Director and General Manager, Malaysia operations
Mr. Ong Kin Hock joined the Group in April 2000 and is credited for establishing our manufacturing facilities in Kluang which he has been managing since the start of operation. Mr. Ong Kim Hock was subsequently appointed as plant General Manager for our operation in Pasir Gudang, Malaysia in Nov 2010 where he also responsible in Innovalues Precision Sdn Bhd, including subsidiaries in Innovalues Microtech Sdn Bhd and Nissohatsu Elastomer (M) Sdn Bhd.
Mr. Ong has more than 19 years’ experience in the precision engineering industry. Prior to joining us, he was the Operations Manager of Superpro Precision Engineering in Malaysia, where he worked from 1988 to 1998. He worked for 2 years with Okida Enterprise Sdn Bhd prior to joining Innovalues Group.
MR. TEO KIM POO
General Manager, China operations
Mr. Teo Kim Poo joined Innovalues in March 2004 and is responsible for the Group’s operations in China. He has more than 21 years’ experience in the metal industry and is considered a specialist in plating and surface finishing technology. Besides holding a Diploma in Mechanical Engineering from Singapore Polytechnic, Mr. Teo has to his credits, Professional Certificates in Advance Surface Finishing Technology, Advance Plastic Mould Design and Sheet Metal Forming/ Stamping. He started his career in 1984 with Chartered Industries of Singapore as Senior Engineer heading several projects which included the hard chroming plating line for 5.56mm to 20mm gun barrel and the aluminium anodizing and manganese phosphate plating plant. He left Chartered in 1994 to start SinAsia Technologies Pte Ltd from 1994 to 1997. Prior to joining Innovalues, Mr. Teo was the Business Development Consultant with Jackson Automation (S) Pte Ltd (1997 to1999), Managing Director of MediaMac Pte Ltd and MediaMacPhilippines (1999 to 2002) and Managing Director of Miyoshi Technologies Philippines, Inc. (2002 to 2004).
08Annual Report2011
Corporate Data
ESTABLISHED
April 1997
PRODUCT & SERVICES
Manufacturer of High-precision Turned Parts and Components, Metal Components Machining, EN Plating Services, Assembly of Printer Rollers and Mechanical devices, Rubber Moulding and Compounding
MANUFACTURING PROCESSES
CNC Autolathes, Machining Centres, Centreless Grinding, EN Plating, Super Finishing and Rubber Grinding, Molding and Compounding
CAPABILITIES
Ultra High-precision Manufacturing (+/-0.001mm tolerance). High Volume Manufacturing Facilities
MANUFACTURING SITES
Malaysia:Innovalues Precision Sdn BhdArea: 11,000 sqmInnovalues Precision (Kluang) Sdn BhdArea: 14,457 sqmInnovalues Precision Microtech Sdn BhdArea: 7,950 sqmNissohatsu Elastomer (M) Sdn BhdArea: 3,900 sqm
09Innovalues
Limited
China:Innovalues Industry (Shanghai) Co., LtdArea: 5,000 sqmInnovalues Technology (Shanghai) Co., LtdArea: 400 sqmInnovalues Auto Precision (Shanghai) Co., LtdArea: 3,500 sqm
Thailand:Innovalues Precision (Thailand) LtdArea: 10,400 sqm
INDUSTRIES SUPPORTED
Automotive, Office Automation (printers, copiers, photographic imaging, plotters), Hard Disk Drives, Oil & Gas, Process Industry, Home Appliances and Infrastructure
QUALITY ACCREDITATIONS
• TS16949• ISO9001/2000• ISO14001
ACCOLADES
• FORBES GLOBAL Best Under A Billion 200 Companies for 2002• SMART INVESTOR Most Admired SESDAQ Companies 2002• FASTEST GROWING 50 Companies in Singapore 2004• Singapore 1000 company 2006 & 2008
Corporate Information
BOARD OF DIRECTORS
Mr. Goh Leng Tse Chairman and Chief Executive Officer
Mr. Pung Tong Seng Executive Director
Mr. Ong Tiak BengNon-Executive Director
Mr. Ong Sim HoLead Independent Director
Mr. Chow Kok KeeIndependent Director
Mr. Anthony Teo Soon ChyeIndependent Director
AUDIT COMMITTEE
Mr. Chow Kok KeeChairman
Mr. Anthony Teo Soon Chye
Mr. Goh Leng Tse
Mr. Ong Sim Ho
NOMINATING COMMITTEE
Mr. Anthony Teo Soon Chye Chairman
Mr. Chow Kok Kee
Mr. Ong Sim Ho
Mr. Goh Leng Tse
Mr. Ong Tiak Beng
REMUNERATION COMMITTEE
Mr. Chow Kok Kee Chairman
Mr. Anthony Teo Soon Chye
Mr. Goh Leng Tse
Mr. Ong Sim Ho
Mr. Ong Tiak Beng
COMPANY SECRETARY
Mr. Soo King Teng CPA (Singapore)
REGISTERED OFFICE
Blk 9 Kallang Place #07-08/09Singapore 339154Tel : (65) 6298-2374Fax : (65) 6298-2375Website : http:// www.innovalues.comRegistration No.199702822E
SHARE REGISTRAR
Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01Singapore Land TowerSingapore 048623
AUDITORS
RSM Chio Lim LLPCertified Public Accountants8 Wilkie Road,#04-08, Wilkie EdgeSingapore 228095
Audit Partner-in-chargeMr. Peter JacobPartner-in-charge since financial year ended 31 December 2007
PRINCIPAL BANKERS
The Development Bank of Singapore LtdUnited Overseas Bank LimitedOversea-Chinese Banking Corporation LimitedMalayan Banking BerhadCitibank, N.A., Singapore Branch
10Annual Report2011
FinancialHighlights
11Innovalues
Limited
Consolidated Statement of Comprehensive Income (S$ ’000)
For financial year ended 31 December
2007 2008 2009 2010 2011
Revenue 121,984 122,554 96,153 100,458 87,746
Finance costs 2,292 2,559 2,034 1,453 1,145
Earnings Before Interests, Tax, Depreciation andAmortisation (EBITDA) 16,757 13,884 8,823 13,327 (3,348)
Profit/(Loss) before tax and non-controlling Interests 3,546 866 (3,824) 1,741 (13,871)
Profit/(Loss) net of tax and non-controlling Interests 2,519 1,418 (4,266) 1,317 (14,222)
Statements of Financial Position (S$ ’000)
As at 31 December
Cash and cash equivalents 10,922 12,680 18,567 12,054 10,688
Current assets 61,445 71,615 59,604 50,015 44,473
Total Assets 133,173 140,660 118,879 101,685 78,278
Current liabilities 62,037 64,206 48,432 37,566 33,395
Total liabilities 72,094 80,900 63,488 45,411 37,722
Total borrowings 51,437 54,228 42,695 33,840 26,193
Total equity 61,079 59,760 55,391 56,274 40,556
Number of Shares – Issued and fully paid (’000) 318,194 318,194 318,194 318,194 318,214
Number of Shares – Basic (’000) 318,026 318,194 318,194 318,194 318,214
Number of Shares – Fully Diluted (’000) 318,474 318,194 318,194 319,154 318,214
Financial Ratios
ROE (%) 4.1% 2.4% (7.7%) 2.3% (35.1%)
ROA (%) 1.9% 1.0% (3.6%) 1.3% (18.2%)
Dividend paid per share (cents) 2.50 − − − 0.6
EPS (Basic) (cents) 0.81 0.46 (1.34) 0.41 (4.47)
EPS (Diluted) (cents) 0.80 0.46 (1.34) 0.41 (4.47)
NAV per share (cents) 19.20 18.78 17.40 17.69 12.74
Current ratio (times) 0.99 1.12 1.23 1.33 1.33
Quick ratio (times) 0.60 0.59 0.93 0.85 0.90
Net debt/Equity (%) 66.3% 69.5% 43.6% 38.7% 38.2%
EBITDA/Interest Cover (times) 7.31 5.43 4.34 9.17 (2.92)
FinancialHighlights
Current ratio (times)
EPS (cents) - fully diluted
Interest cover (times)
NAV per share (cents)
Net debt to equity (%)
LIQUIDITY & LEVERAGE
10
8
6
4
2
0
-2
-4
20
15
10
5
0
-5
80
60
40
20
0
EPS & NAV
2007
0.99
0.810.46 0.41
(1.34)(4.47)
1.12 1.23 1.33 1.33
7.31
19.20 18.7817.40 17.69
12.74
66.3% 69.5%
43.6%
38.7% 38.2%5.43
4.34
9.17
(2.92)
2007
2008
2008
2009
2009
2010
2010
2011
2011
12Annual Report2011
FinancialHighlights
REVENUE BY BUSINESS SEGMENT
REVENUE BY YEAR In (S$ ’000)
REVENUE BY GEOGRAPHICAL SEGMENT
150,000
120,000
90,000
60,000
30,000
0
2007
87,746
121,984 122,554
96,153 100,458
2008 2009 2010 2011
PRC
Others
Singapore
Mexico
Malaysia
Brazil
Thailand
USA2007 2008
2009 2010 2011
43% 40%
48% 55% 59%
36% 28%
4%
4%
27%
3%
19%17%
2% 1%
2% 5%9% 5%
1% 3% 3% 2% 3%1% 2%
3% 2%2%
6% 1%
17%
12%
3%
16% 16%
Automotive
Others
Hard Disk Drive
Office Automation
2007 2008
2009 2010 2011
70% 68%
71% 54%
53%
23% 26%
25% 42%
43%
5% 3%
3% 3% 4%
2% 3%
1% 1%
13Innovalues
Limited
14Annual Report2011
PerformanceSummary Consolidated Statement of Comprehensive Income
For Year Ended 31 December
Decrease was mainly due to the reduced sales orders from customers in the OA segment, coupled with the impact of the temporary halt of operations in our Thailand plant for the fourth quarter of 2011 as a result of the severe flood.
Lower gross profit margin was mainly due to lower factory orders from our OA customers and impact of severe flood in Thailand which had resulted in the loss of revenue for 4Q11.
Increase was mainly due to bad debts recoverable in respect of other receivables that was written off in FY2010.
Decrease was mainly due to lower delivery costs in line with lower sales activities in FY2011.
Decrease was mainly due to lower payroll-related cost incurred during the year.
This was due to flood-related charges totalling S$13.6 million, which comprised plant and equipment impairment of S$8.3 million, inventories written off of S$5.0 million and repair and restoration expenses of S$0.3 million.
Decrease was mainly due to decrease in current tax expense but offset by the absence of non-recurring over provision of deferred tax expense in respect of prior years.
Decrease was mainly due to lower interest rates and reduction of term loans.
2011 2010
S$’000 S$’000
Revenue 87,746 100,458
Cost of Sales (76,537) (86,315)
Gross Profit 11,209 14,143
Other Items of Income
Interest Income 23 45
Other Credits 1,495 1,376
Other Items of Expense
Marketing and Distribution Costs (2,461) (2,865)
Administrative Expenses (9,189) (9,213)
Finance Costs (1,145) (1,453)
Other Charges (217) (292)
(Loss)/Profit Before the Under Mentioned (285) 1,741
Other Charges - Expenses Due to Floods (13,586) –in Thailand
(Loss)/Profit Before Tax from (13,871) 1,741 Continuing Operations
Income Tax Expense (351) (424)
(Loss)/Profit Net of Tax (14,222) 1,317
Other Comprehensive Income:
Exchange Differences on Translating 240 (605)Foreign Operations, Net of Tax
Other Comprehensive Income/(Loss) for the Year, 240 (605)Net of Tax
Total Comprehensive (Loss)/Income (13,982) 712
15Innovalues
Limited
PerformanceSummaryConsolidated Statement of Comprehensive Income
For Year Ended 31 DecemberStatements of Financial PositionAs At 31 December
Decrease was mainly due to depreciation charges and impairment charge of the Thailand’s plant and equipment during the year.
Decrease was mainly due to impairment charge of the Thailand’s inventories during the year.
Decrease was mainly due to lower revenue achieved in 4Q11 as compared to 4Q10 and debt collections continued to remain healthy.
The decrease was mainly attributable to net cash outflows from investing and financing activities but was cushioned by net cash inflows from operating activities.
Decrease was mainly due to scheduled repayments of term loans during the year.
Decrease was mainly due to lower level of procurement in line with the reduced revenue in 4Q11 as compared to 4Q10.
2010 2011
S$’000 S$’000
ASSETS
Non-current assets
Properties, plant and equipment 51,670 33,805
51,670 33,805
Current assets
Inventories 17,969 14,300
Trade and other receivables 17,026 16,275
Other assets 2,966 3,210
Cash and cash equivalents 12,054 10,688
50,015 44,473
TOTAL ASSETS 101,685 78,278
EQUITY AND LIABILITIES
Equity
Share capital 11,357 11,358
Retained earnings 43,311 27,052
Other reserves 1,606 2,146
Total Equity, Attributable to Owners of 56,274 40,556
the Parent
Non-current liabilities
Deferred tax liabilities 69 117
Other financial liabilities 7,517 4,050
Finance leases 259 160
7,845 4,327
Current liabilities
Trade and other payables 11,502 11,412
Other financial liabilities 25,914 21,853
Finance leases 150 130
37,566 33,395
Total liabilities 45,411 37,722
TOTAL EQUITY AND LIABILITIES 101,685 78,278
Innovalues Precision Sdn Bhd
Innovalues Precision (Kluang)
Sdn Bhd
Innovalues Precision Microtech
Sdn Bhd
Innovalues Technologies
Sdn Bhd
Nissohatsu Elastomer (M)
Sdn Bhd
Innovalues Precision (Thailand) Ltd
Innovalues Industry (Shanghai) Co., Ltd
Innovalues Technology (Shanghai) Co., Ltd
Innovalues Auto Precision (Shanghai) Co., Ltd
Innovalues Precision (Shanghai) Co., Ltd
Shenzhen Innovalues Precision Co., Ltd
Malaysia Thailand China
CorporateStructure
16Annual Report2011
FinancialContents18 Corporate Governance Report
32 Risk Factors
35 Directors’ Report
43 Statement by Directors
44 Independent Auditors’ Report
46 Consolidated Statement of Comprehensive Income
47 Statements of Financial Position
48 Statements of Changes in Equity
50 Consolidated Statement of Cash Flows
51 Notes to the Financial Statements
104 Information on Shareholdings
106 Notice of Annual General Meeting
111 Proxy Form
18
Annual Report
2011
CorporateGovernance Report
The Board of Directors (the “Board”) and its Management are committed to maintaining high standards of corporate conduct,
and place overriding importance on its Corporate Governance practices and systems, so as to ensure transparency and
protection of shareholders interests. The Board adheres to the principles and guidelines set out in the Code of Corporate
Governance 2005 (the “Code”). Where there are deviations from the Code, appropriate explanations are provided.
A. BOARD MATTERS
The Board’s Conduct of its Affairs
Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board
is collectively responsible for the success of the company. The Board works with Management to
achieve this and the Management remains accountable to the Board.
The Company has adopted internal guidelines setting forth matters, such as annual budget and transactions relating to
investment, fi nancing, and legal and corporate secretarial matters which require the Board’s approval. The Board oversees
the processes for evaluating the adequacy of internal controls, risk management, fi nancial reporting and compliance. It also
approves broad policies, group strategies and fi nancial objectives of the Company. Major acquisitions were also approved at
Board level.
The Board is entrusted with the responsibility of the overall management of the Company. The principal role of the Board is to:
(a) Provide entrepreneurial leadership, set strategic aims, and ensure that the necessary fi nancial and human resources
are in place for the company to meet its objectives;
(b) Establish a framework of prudent and effective controls, and oversee the processes of evaluating the adequacy of
internal controls, risk management, fi nancial reporting and compliance;
(c) Approve nominations of Board directors, committee members and key personnel;
(d) Review management performance, approve annual budgets, funding requirements, expansion programs, capital
investment and major acquisitions and divestments proposals;
(e) Set the company’s values and standards, and ensure that the obligations to shareholders and others are understood
and met.
There is an objective decision-making process, which allows each Director to engage in constructive discussion and make
decision in the best interests of the Company. To assist in the execution of its responsibilities, the Board has established three
Board Committees: the Nominating Committee (“NC”), the Remuneration Committee (“RC”) and the Audit Committee (“AC”).
To facilitate effective management, certain functions have been delegated by the Board to various Board Committees. The
Board Committees operate under clearly defi ned terms of reference. Minutes of all Board Committee meetings held are made
available to the Board members.
A schedule of Board and Board Committee meetings to be held for the calendar year is usually provided to the directors in
advance. Besides the scheduled meetings, the Board meets on an ad-hoc basis as warranted by particular circumstance or
as deemed appropriate by the Board members. The Company’s Articles of Association permits meetings of the Directors to be
conducted by telephone or other methods of simultaneous communication by electronic means.
CorporateGovernance Report
19
Innovalues
Limited
A record of the Directors’ attendances at Board and Board Committee meetings during the fi nancial year ended 31 December
2011 is disclosed as follows:
Name of Directors
Board
Audit
Committee
Nominating
Committee
Remuneration
Committee
No. of
meetings Attendance
No. of
meetings Attendance
No. of
meetings Attendance
No. of
meetings Attendance
Mr. Goh Leng Tse 4 4 5 5 1 1 1 1
Mr. Pung Tong Seng
4 4 Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Mr. Ong Tiak Beng 4 4 Not
applicable
Not
applicable
1 1 1 1
Mr. Ong Sim Ho 4 2 5 3 1 0 1 0
Mr. Chow Kok Kee 4 4 5 5 1 1 1 1
Mr. Anthony Teo Soon Chye 4 4 5 5 1 1 1 1
At meetings and as and when necessary, the Directors are provided with regular updates on changes in the relevant laws and
regulations to enable them to make well-informed decisions. Where possible and when opportunity arises, the Directors will be
invited to locations within the Group’s operating businesses to enable them to obtain a better perspective of the business and
enhance their understanding of the Group’s operations. The Company will consider formulating training programmes, if the
need arises.
Newly appointed Directors undergo an orientation session, which include presentation by Management to familiarize them on
the Group’s businesses, operations and strategic directions. Company will also provide newly appointed directors with a formal
letter setting out the duties and obligations of a director.
Board Composition and Guidance
Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective
judgement on corporate affairs independently, in particular, from Management. No individual or small
group of individuals should be allowed to dominate the Board’s decision making.
The Company endeavors to maintain a strong and independent element on the Board. As at the date of this report, three out
of the six Board members are independent directors, making up more than one-third of the Board. The Board comprises the
following members:
Executive Directors
Mr. Goh Leng Tse (Chairman and Chief Executive Officer)Mr. Pung Tong Seng
Non-Executive Directors
Mr. Ong Tiak Beng
Mr. Ong Sim Ho (Independent)Mr. Chow Kok Kee (Independent)Mr. Anthony Teo Soon Chye (Independent)
20
Annual Report
2011
CorporateGovernance Report
The independent directors have confi rmed that they do not have any relationship with the Company or its related companies or
its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business
judgment with a view to the best interests of the Company. The Nominating Committee (“NC”) reviews the independence
of each director at the time of appointment and annually. The NC has reviewed and determined that the said directors are
independent.
The Board is of the opinion that its current size of six Board members is both effective and efficient. The Board’s structure, size
and composition is reviewed annually by the Nominating Committee who is of the view that the current size of the Board is
appropriate, taking into account the nature and scope of the Group’s operations, to facilitate effective decision making.
Together, the Board members possess a balanced fi eld of core competencies such as accounting and fi nance, legal, business
and management experience and the requisite industry knowledge to lead the Company. Details of the Board members’
qualifi cations and experience are presented in this Annual Report under the heading “Board of Directors”.
Chairman and Chief Executive Officer
Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the
Board and the executive responsibility of the company’s business – which will ensure a balance of
power and authority, such that no one individual represents a considerable concentration of power.
The Chairman and Chief Executive Officer (“CEO”) of the Company is Mr. Goh Leng Tse. The Board, after careful
consideration, is of the opinion that the need to separate the roles of the Chairman and CEO is not necessary for the time
being. The presence of a strong independent element and the participation of the non-executive as well as independent
directors ensure that Mr. Goh Leng Tse does not have unfettered powers of decision. This has been refl ected in Board and
Committee meetings where the independent Directors and non-executive Director have participated actively in the decision-
making process. The Board has in February 2006 appointed Mr. Ong Sim Ho as the Lead Independent Director to be an
alternative source for shareholders and other directors to raise their concerns which contact through the normal channels of
the Chairman has failed to resolve.
The Chairman’s duties and responsibilities includes:-
(a) Leading the Board to ensure it is effective in its role;
(b) Setting directions and agendas for the Company and scheduling of meetings to enable the Board to perform its duties
responsibly;
(c) Ensuring the proper conduct of meetings and accurate documentation of the proceedings;
(d) Ensuring the smooth and timely fl ow of information between the Board and Management;
(e) Ensuring compliance with internal polices and guidelines of the Company and high standards of corporate governance;
(f) Ensuring effective communication with shareholders through investors’ relationship channels and timely announcements
of Company’s development;
(g) Encouraging constructive relations between the Board and Management as well as between all directors.
In addition to the above duties, the Chairman will assume duties and responsibilities as may be required from time to time.
CorporateGovernance Report
21
Innovalues
Limited
Board Membership
Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.
The Nominating Committee (“NC”) is established for the purposes of ensuring that there is a formal and transparent process
for all Board appointments. The NC comprises the following fi ve members, majority of whom, including the Chairman, are
independent directors:-
Mr. Anthony Teo Soon Chye (Chairman)Mr. Chow Kok Kee (Member)Mr. Goh Leng Tse (Member)Mr. Ong Sim Ho (Member)Mr. Ong Tiak Beng (Member)
The NC has adopted written terms of reference defi ning its membership, administration and duties. Some of the duties and
responsibilities of the NC include:
(a) to make recommendations to the Board on all Board appointments, including development of a set of criteria for director
appointments, which includes qualifi cations of director; ability to exercise sound business judgments, relevance to the
Company and the industry and appropriate personal qualities;
(b) to re-nominate directors having regard to the director’s contribution and performance (e.g. attendance, participation and
critical assessment of issues deliberated upon by the Board) including, if applicable, as an independent director;
(c) to determine annually whether or not a director is independent;
(d) to decide how the Board’s performance may be evaluated and propose objective performance criteria, such as return
on equity (“ROE”), revenue and profi t growth, share price performance of the Company as well as making comparison
with industry peers to the Board; and
(e) to assess the effectiveness of the Board as a whole.
Each member of our NC shall abstain from voting on any resolution in respect of his re-nomination as a director.
The search and nomination process for new directors, if any, will be through search companies, contacts and recommendations.
The NC will review and assess candidates before making recommendation to the Board. In recommending new directors to
the Board, the NC takes into consideration the skills and experience required to support the Group’s business activities or
strategies, the current composition and seize of the Board, and strives to ensure that the Board has an appropriate balance of
independent directors as well as directors with the right profi le of expertise, skills, attributes and ability.
The Articles of Association of the Company currently require one-third of the directors to retire and subject themselves to re-
election by the shareholders in every Annual General Meeting (“AGM”). In addition, all directors of the Company (other than
the CEO) shall retire from office at least once every three years. Taking into consideration that the CEO is instrumental to the
Group’s operations, the Company has not adopted the guideline for the retirement of the CEO once in every three years.
The NC has reviewed and is satisfi ed that notwithstanding their multiple board directorships, Mr. Chow Kok Kee and Mr. Ong
Sim Ho have been able to adequately discharge their duties as directors of the Company.
22
Annual Report
2011
CorporateGovernance Report
The details of the Board members’ directorship including the year of initial appointment and election are disclosed as follows:
Name of Directors Appointment
Date of Initial
Appointment
Date of Last
Re-election
Directorship in
Listed Companies
Goh Leng Tse Executive 25 April 1997 Not applicable Innovalues Limited
Pung Tong Seng Executive 7 June 2008 27 April 2011 Innovalues Limited
Ong Tiak Beng Non-executive/
Non-independent
20 May 1997 28 April 2010 Innovalues Limited
Ong Sim Ho Independent 9 February 2001 28 April 2009 Innovalues Limited
Eucon Holdings Limited
Sunningdale Tech Ltd
Chow Kok Kee Independent 9 February 2001 27 April 2011 Innovalues Limited
Chosen Holdings Ltd
Meiban Group Ltd
M1 Limited
Tuan Sing Holdings Ltd
Valuetronics Holdings Ltd
Anthony Teo Soon Chye Independent 1 June 2005 28 April 2010 Innovalues Limited
Board Performance
Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the
contribution by each Director to the effectiveness of the Board.
The NC has adopted a process for assessing the performance of the Board as a whole instead of individual assessment. The
performance appraisal includes qualitative and quantitative factors including board structure, conduct of meetings, corporate
strategy and planning, risk management and internal control.
Although the Code proposes certain fi nancial indicators as performance criteria, such as the Company’s share price
performance, the Board is of the opinion that the performance criteria should be geared toward evaluating the Board’s
performance in discharging its principal responsibilities, upholding high standards of corporate governance and strategic
oversight of the Company’s business rather than the specifi c performance of its share price and other fi nancial indicators.
For the fi nancial year ended 31 December 2011, the directors had been requested to complete a Board evaluation
questionnaire. The questionnaire is designed to seek each Director’s views on various aspects of the Board’s performance.
The responses are reviewed by NC and discussed with Board members for determining areas of improvement.
The Board and the NC have endeavoured to ensure that Directors appointed to the Board possess the experience, knowledge
and expertise critical to the Group’s business.
CorporateGovernance Report
23
Innovalues
Limited
Access to Information
Principle 6: In order to fulfi ll their responsibilities, Board members should be provided with complete, adequate
and timely information prior to Board meetings and on an on-going basis.
The Board is furnished with Board papers prior to any Board meeting. These papers are issued in sufficient time to enable
the Directors to obtain additional information or explanations from the Management, if necessary. The Board papers include
minutes of the previous meeting, reports relating to investment proposals, budgets, fi nancial results announcements and
reports from committees, internal and external auditors.
The directors receive monthly management fi nancial statements and annual budgets to enable them to oversee the Group’s
operational and fi nancial performance. The directors are also informed of any signifi cant developments or events relating to
the Group.
The Directors may communicate directly with the Management team and the Company Secretary on all matters whenever they
deem necessary. The Company Secretary attends all Board meetings and is responsible for recording of the proceedings.
The Company currently does not have a formal procedure for Directors to seek independent professional advice for the
furtherance of their duties. However, directors may, on a case-to-case basis, propose to the Board for such independent
professional advice, the cost of which may be borne by the Company.
The Company has a transparent policy wherein directors are welcomed to request further information or informal discussions
and make recommendations on any aspects of the Company’s operations or business issues.
B. REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration
and for fi xing the remuneration packages of individual directors. No director should be involved in
deciding his own remuneration.
The Remuneration Committee (“RC”) is established for the purposes of ensuring that there is a formal and transparent
process for developing policy and fi xing the remuneration packages of individual directors. The RC comprises the following fi ve
members, majority of whom, including the Chairman, are independent directors:-
Mr. Chow Kok Kee (Chairman)Mr. Anthony Teo Soon Chye (Member)Mr. Goh Leng Tse (Member)Mr. Ong Sim Ho (Member)Mr. Ong Tiak Beng (Member)
Mr. Chow Kok Kee has human resource experience and is knowledgeable in the fi eld of executive compensation. In addition,
the RC may seek professional advice where necessary.
24
Annual Report
2011
CorporateGovernance Report
The Board recognises that the composition of the RC is not in accordance with the Code’s guidelines that RC should comprise
of entirely non-executive directors. However, the Board is of the view that the membership of Mr. Goh Leng Tse is necessary
to facilitate a more effective discussion on the remuneration packages of the Group’s key executives. Apart from Mr. Goh
Leng Tse, three of the members (including Chairman) are non-executive independent directors while the remaining member
is a non-executive non-independent director. The presence of a strong independent element ensure that no individual has
unfettered powers of decision.
The RC has adopted written terms of reference defi ning its membership, administration and duties. The duties of the RC are as
follows:
(a) to review and recommend to the Board in consultation with senior management a framework of remuneration for
executive directors, CEO and senior management staff;
(b) to review the remuneration packages of all managerial staff that are related to any of the executive directors or CEO;
and
(c) to recommend to the Board in consultation with senior management and the Chairman of the Board, the Executive’s
and Employees’ Share Option Schemes or any long term incentive scheme.
No Director shall participate in decisions on his own remuneration.
Level and Mix of Remuneration
Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed
to run the company successfully but the company should avoid paying more for this purpose. A
signifi cant proportion of executive directors’ remuneration should be structured so as to link rewards
to corporate and individual performance.
The Company has approved the remuneration framework for Executive Director and senior management staff on
recommendation by the RC. The framework will cover directors’ fees, basic salaries, allowances, bonuses, stock options and
benefi ts in kind. In developing the framework, the RC has taken into consideration factors, such as the Company’s performance,
the economic scenario, market practices and the individual’s contributions to the Company.
The RC has adopted a framework to remunerate the non-executive Directors based on their appointments, roles in respective
committees and contributions to the Board and Company. The remuneration packages of non-executive Directors comprise a
basic director retainer fee and additional fees for appointment to Board Committees. While the remuneration frameworks are not
subject to shareholders’ approval, the directors’ fees for non-executive directors will be subject to the approval of shareholders
at AGMs.
The RC has reviewed existing service agreement made between the Company and the executive director.
Additional information is disclosed under principle 9 of this report.
CorporateGovernance Report
25
Innovalues
Limited
Disclosure on Remuneration
Principle 9: Each Company should provide clear disclosure of its remuneration policy, level and mix of
remuneration, and the procedure for setting remuneration in the company’s annual report. It should
provide disclosure in relation to its remuneration policies to enable investors to understand the link
between remuneration paid to directors and key executives, and performance.
A breakdown showing the level and mix of each individual director’s remuneration for the fi nancial year ended 31 December
2011 is disclosed in the table below:
Name of Directors
Remuneration
band
(S$)
Salary#
(%)
Variable
Bonus
(%)
Allowance
(%)
Director’s
Fees
(%)
Other
Benefi ts
(%)
Total
(%)
Mr. Goh Leng Tse 600,000 to
699,999
96 0 2 0 2 100
Mr. Pung Tong Seng
300,000 to
399,999
99 0 0 0 1 100
Mr. Ong Tiak Beng
50,000 to
69,999
0 0 0 100 0 100
Mr. Ong Sim Ho 0 0 0 100 0 100
Mr. Chow Kok Kee 0 0 0 100 0 100
Mr. Anthony Teo Soon Chye 0 0 0 100 0 100
Details of share options granted to the directors are set out in the Directors’ Report on page 39 of this annual report.
The Company had entered into a Service Agreement with Mr. Goh Leng Tse on 9 February 2001, which was renewed
automatically in January 2003 pursuant to the terms of the Agreement. The Agreement shall continue for an indefi nite period
unless terminated in writing by either party.
Amongst other clauses in the Service Agreement, Mr. Goh Leng Tse shall be paid a fi xed monthly salary, an annual wage
supplement of an amount equal to 1 month of the last drawn salary and an incentive bonus. In addition to his Service
Agreement with the Company, Mr. Goh Leng Tse is also paid a monthly allowance of RM2,000 (Malaysian Ringgits) by
Innovalues Precision Sdn Bhd for services rendered. The incentive bonus shall be payable if the audited consolidated profi t
before tax of the Group excluding incentive bonus and extraordinary items but after minority interests for the preceding year
exceeds S$2 million.
26
Annual Report
2011
CorporateGovernance Report
A breakdown showing the level and mix of each key executive’s remuneration for the fi nancial year ended 31 December 2011
is disclosed in the table below:
Name of key executive
Remuneration
band (S$)
Salary#
(%)
Variable
Bonus (%)
Other
Benefi ts (%)
Total
(%)
Mr. Leow Quek Kien^100,000 to
199,999
100 0 0 100
Mr. Teo Kim Poo 95 0 5 100
Mr. Ong Kin Hock0 to
99,999
100 0 0 100
Mr. Soo King Teng* 100 0 0 100
Notes:
(#) includes annual wage supplement and employer’s CPF.
(^) Mr Leow Quek Kien resigned as Chief Financial Officer (“CFO”) of the Company on 9 December 2011. His remuneration shown in the
above table refl ects the total remuneration received from 1 January 2011 to 9 December 2011.
(*) Mr. Soo King Teng was remunerated as a key executive with effect from 9 December 2011. His remuneration shown in the above table
refl ects the total remuneration received from 1 January 2011 to 31 December 2011.
For the fi nancial year ended 31 December 2011, there was no employee who is an immediate family member of a director or
the CEO whose remuneration exceeded S$150,000 during the fi nancial year.
The Board is of the opinion that the information as disclosed above would be sufficient for shareholders to have an adequate
appreciation of the Company’s compensation policies and practices and therefore does not intend to issue a separate
remuneration report, the contents of which would be largely similar.
The Company had a previous share option scheme known as the “Innovalues Group Share Option Scheme 2001” (the “2001
Scheme”) which expired on 8 February 2011. In view that the said 2001 Scheme had expired, the Company has adopted a new
share option scheme known as the “Innovalues Group Share Option Scheme 2011” (the “Scheme”) on 15 August 2011. The
Scheme, which forms an integral component of the Company’s compensation plan, is designed to reward and retain eligible
participants whose services are vital to the Group’s well-being and success.
The Company recognizes the commitment, support and services of its employees and Directors. The rationale for allowing
participation by the executive director is to encourage loyalty and contribution towards future growth and the development of
the Company.
Under the rules of the Scheme, Executive and Non-Executive Directors and employees of the Group are eligible to participate.
Controlling shareholders or their associates are also eligible to participate in the Scheme subject to the approval of independent
shareholders’ in the form of a separate resolution for each participant. Further, independent shareholders’ approval will also
be required in the form of a separate resolution for each grant of options and the terms thereof to each participant who is a
controlling shareholder or an associate of a controlling shareholder.
The total number of shares over which options may be granted pursuant to the Scheme shall not exceed 15% of the issued
shares of the Company at any time and from time to time during the existence of the Scheme. Based on the total number of
issued shares as at 31 December 2011, 15% of the issued shares of the Company would amount to 47,732,100 shares.
CorporateGovernance Report
27
Innovalues
Limited
The exercise price of options granted is fi xed at the price (“Market Price”) equal to the average of the last dealt price for a
share on the SGX-ST for the period of 5 consecutive market days immediately prior to the relevant date of grant. The Company
has the discretion to either set the exercise price for options granted at the Market Price or set the exercise price for options
granted at a discount not exceeding 20% of the Market Price.
Options granted with the exercise price set at Market Price shall only be exercisable by a grantee after the fi rst anniversary
of the date of grant of the options in accordance with the terms and vesting period as enumerated in Clause 11 (“Exercise
Period”) of the Scheme.
The schedule below shows options granted by the Company and outstanding as at 31 December 2011.
Offer Date Options Granted Exercise Price Options Outstanding Remarks
11/06/2007 4,000,000 S$0.7200 2,600,000 Exercise price set at Market Price
29/10/2007 3,000,000 S$0.4500 3,000,000 Exercise price set at Market Price
01/06/2009 2,240,000 S$0.0800 1,620,000 Exercise price set at Market Price
03/08/2010 2,270,000 S$0.1660 1,860,000 Exercise price set at Market Price
15/08/2011 3,750,000 S$0.1000 3,750,000 Exercise price set at Market Price
With the adoption of FRS 102, the compensation expenses relating to both share options and performance shares are taken to
the profi t and loss account over the vesting periods of the grants. The compensation expenses are based on the respective fair
values of shares options computed using Black-Scholes Valuation Model.
C. ACCOUNTABILITY AND AUDIT
Accountability
Principle 10: The Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
One of the Board’s principal duties is to protect and enhance the long-term value and returns to the shareholders of the
Company. The accountability of the Board to the shareholders is demonstrated through the presentation of the periodic fi nancial
statements as well as timely announcements and news releases of signifi cant corporate developments and activities so that
the shareholders can have a detailed explanation and balanced assessment of the Group’s fi nancial position and prospects.
The Board ensures that the Management maintains a sound system of internal control to safeguard the shareholders’
investment and the Group’s assets. Board papers are given prior to any Board meeting to facilitate effective discussion and
decision making.
The Management presents to the Audit Committee the interim and full-year results. The Audit Committee reviews the results
and recommends them to the Board for approval. The Board approves the results and authorizes the release of the results to
the SGX-ST and the public via SGXNET as required by the SGX-ST Listing Manual.
28
Annual Report
2011
CorporateGovernance Report
Audit Committee
Principle 11: The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly
set out its authority and duties.
The AC comprises the following four members, majority of whom, including the Chairman, are independent directors:-
Mr. Chow Kok Kee (Chairman)Mr. Anthony Teo Soon Chye (Member)Mr. Goh Leng Tse (Member)Mr. Ong Sim Ho (Member)
The profi le of each member of the AC is set out on pages 6 and 7 of this report. Mr. Chow Kok Kee, Chairman of the AC,
has many years of experience in fi nancial services. Other members of the AC posses experience in fi nance, legal and
business management. At least three members have the appropriate accounting or related fi nancial management experience
or expertise. The Board is of the view that the members of the AC are appropriately qualifi ed, having accounting or related
fi nancial management expertise or experience as the Board interprets such qualifi cation, to discharge their responsibilities.
The Board recognises that the composition of the AC is not in accordance with the Code’s guidelines that the AC should be
made up of entirely non-executive directors. However, for the same reasons stated under Principle 3 of this report, the Board
is of the view that independence is not comprised as majority of the members of the AC, which had exceeded the minimum as
guided under this Principle of the Code, are independent.
As a sub-committee of the Board of Directors, AC assist the Board in discharging their responsibility to safeguard the Group’s
assets, maintain adequate accounting records, and develop and maintain effective systems of internal control, with the overall
objective of ensuring that our management creates and maintains an effective control environment in the Group. The AC also
reviews and supervises the internal audit functions of the Group.
AC provides a channel of communication between the Board, Management and the external auditors on matters relating to
audit.
AC has adopted written terms of reference defi ning its membership, administration and duties. Duties and responsibilities of the
AC include:
(a) discuss with the external auditors, prior to the commencement of audit, the audit plan which states the nature and
scope of the audit;
(b) review with external auditors, their evaluation of the system of internal controls, the Management Letter and
Management’s response thereon;
(c) discuss problems and concerns, if any, arising from the interim and fi nal audits and any matters that the external
auditors may wish to discuss with the AC in the absence of the Management;
(d) review of the independence and objectivity of the external auditors and nomination of their re-appointment as auditors of
the Company) The review of the adequacy of the Company’s internal controls, and the effectiveness of the Company’s
internal audit function, the internal audit program including the scope and results of the internal audit;
CorporateGovernance Report
29
Innovalues
Limited
(e) review of interested person transactions (as defi ned in the Chapter 9 of the Listing Manual of SGX-ST);
(f) review of interim and full year fi nancial results, including review of the signifi cant fi nancial reporting issues and
judgements so as to ensure the integrity of the fi nancial statements of the Company and any formal announcements
relating to the Company’s fi nancial performance; and
(g) any other functions that are requested by the Board, as may be required by statute or the Listing Manual. In discharging
the above duties, the AC confi rms that it has full access to and co-operation from Management and is given full
discretion to invite any Director or executive Director to attend its meetings. In addition, the AC has also been given
reasonable resources to enable it to perform its functions properly.
The AC has conducted an annual review of the volume of non-audit services provided by the external auditors to satisfy it that
the nature and extent of such services will not prejudice the independence and objectivity of the auditors before recommending
their re-nomination to the Board.
During the year, the AC has met at least once with the internal and external auditors, without the presence of Management, in
order to have free and unfettered access to unfi ltered information and feedback.
In the event that any Director has a personal material interest in any contract or proposed contract or arrangement, he will
abstain from reviewing that particular transaction or voting on the particular resolution.
Apart from the duties listed above, the AC shall commission and review the fi ndings of internal investigations into matters
where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or
regulation which has or is likely to have a material impact on our Company’s operating results and/or fi nancial position.
In performing its functions, the AC has explicit authority to investigate any matter within its terms of reference, having full
access to and co-operation by management and full discretion to invite any director or executive officer to attend meetings, and
reasonable resources to enable it to discharge its function properly.
In accordance with the Code, the Company has in place whistle-blowing procedures and arrangements by which staff may, in
confi dence, raise concerns about possible corporate improprieties in matters of fi nancial reporting or other matters to the CEO
or Chairman of the AC.
Internal Controls
Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to
safeguard the shareholders’ investments and the company’s assets.
The Board ensures that Management maintains a sound system of internal controls to safeguard shareholders’ interest and the
Group’s assets, and to manage risks. The Board also acknowledges that no cost effective internal control system will preclude
all errors and irregularities. A system is designed to manage rather than eliminate the risk of failure to achieve business
objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.
With the assistance of the Internal Auditors and through the Audit Committee, the Board reviews the effectiveness of the
key internal controls, provides its perspective on management control and ensures that the necessary corrective actions
are taken on a timely basis. There are procedures in place for both the internal and external auditors to report independent
conclusions and recommendations to Management and the Audit Committee. Based on the reports submitted by external and
internal auditors, the Board with the concurrence of the Audit Committee, is satisfi ed that the internal control system provides
reasonable assurance that assets are safeguarded and that proper accounting records are maintained.
30
Annual Report
2011
CorporateGovernance Report
The Board believes that risk management forms an integral part of business management. On an on-going basis, the Board
has considered the key risks faced by the Company in the review of the Company’s internal controls. The Board has also
appointed the internal auditors to assist with the formulation of a risk management framework for the Company. Upon
fi nalization of the framework, the Board will develop and implement appropriate risk management procedures to address the
key risks identifi ed.
Internal Audit
Principle 13: The Company should establish an internal audit function that is independent of the activities it
audits.
The Audit Committee is aware that internal audit function is essential to assist in obtaining the assurance it requires regarding
the effectiveness of the system of internal control. Accordingly, the Company has outsourced its internal audit function to an
internationally reputable public accounting fi rm to cover the various geographical locations in which the Group is presently
operating.
The internal auditors are able to meet the standards set by nationally or internationally recognized bodies, including the
Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.
The internal auditors report directly to the Chairman of the Audit Committee although they will also report administratively to
the CEO. The main function of the internal auditors is to review the effectiveness and quality of the systems of control of the
Company and this review is performed with impartiality, profi ciency and due professional care. The internal audit function is
independent of the activities or operations of the Company.
Prior to the commencement of the internal audit, the Audit Committee will discuss with the internal auditors as to the scope of
the internal audit, including deliverables expected by the Audit Committee. This is to ensure that major areas of weakness are
identifi ed and addressed.
Since the implementation of the internal audit, the Audit Committee is satisfi ed that the internal audit on systems and controls
are adequate in view of the current nature and scope of operations of the Company. The AC will continue to assess the
adequacy of internal audit function annually.
Communication with Shareholders
Principle 14: Companies should engage in regular, effective and fair communication with shareholders.
The Company endeavours to communicate regularly, effectively and fairly with its shareholders. Timely, as well as, detailed
disclosure is made to the public in compliance with SGX-ST guidelines. The Company does not practice selective disclosure.
All price sensitive information is announced on the SGXNET on a timely basis.
Shareholders are kept informed of developments and performance of the Group through announcements published via
SGXNET and the press when necessary as well as in the annual report. Other announcements are also made on an ad-hoc
basis where applicable as soon as possible to ensure timely dissemination of the information to shareholders.
CorporateGovernance Report
31
Innovalues
Limited
Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the
opportunity to communicate their views on various matters affecting the Company.
All shareholders of the company receive the annual report of the company and notice of AGM within the mandatory period.
The notice is also published in the local newspaper and made available on the SGXNET. Participation of shareholders is
encouraged at the company’s general meetings. Each item of special business included in the notice of meeting will be
accompanied by the relevant explanatory notes. This is to enable the shareholders to understand the nature and effect of the
proposed resolutions.
To facilitate voting by shareholders, the Company’s Articles of Association allows shareholders to appoint not more than two
proxies to attend and vote at the same general meeting. The Board of Directors (including the Chairman of the respective
Board committees), Management, as well as the external auditors will attend the Company’s AGM to address any questions
that shareholders may have.
D. DEALINGS IN SECURITIES
The Company has devised and adopted its own internal Code of Conduct on dealing in the securities of the Company. Under
the Code, dealing in the Company’s shares are prohibited during the period commencing two weeks prior to the announcement
of the Company’s quarterly results and the period commencing one month prior to the announcement of the Company’s full-
year results.
The Company has complied with the Code for the fi nancial year ended 31 December 2011.
E. INTERESTED PERSON TRANSACTIONS
The Company has adopted internal guidelines in respect of any transactions with interested persons and has set out the
procedures for review and approval of the Company’s interested person transactions. The main objective is to ensure that all
interested person transactions are conducted on arm’s length basis and on normal commercial terms.
The Board had reviewed all interested person transactions for the fi nancial year ended 31 December 2011 and was satisfi ed
that there is no such transaction conducted during the fi nancial year.
F. MATERIAL CONTRACTS
Pursuant to Rule 1207(8) of the Listing Manual, the company confi rms that there was no material contract entered into between
the company and its subsidiaries which involved the interests of any director or controlling shareholder, either still subsisting at
the end of the fi nancial year or if not then subsisting, which was entered into since the end of the previous fi nancial year.
G. AUDITORS
The Company has complied with Rules 712, 715 and 716 of the Listing Manual issued by Singapore Exchange Securities
Trading Limited in relation to its auditors.
H. ADDITIONAL DISCLOSURE
The Company has undertaken to disclose the total remuneration paid to the controlling shareholders and their associates in
its Prospectus dated 21st February 2001. Total remuneration paid to these controlling shareholders for the year under review
amounted to S$684,523.
RiskFactors
32
Annual Report
2011
1. Natural disasters in certain regions could adversely affect our operations
Our operations are subject to natural disasters and other events beyond our control, such as fl oods, earthquakes and
tsunamis. Such events of nature disasters, could cause severe destruction or interruption to our operations and as a
result, adversely affect our operating results and fi nancial condition. During the year, our Thailand plant incurred loss of
revenue as well as other fl ood-related impairment and restoration charges.
To mitigate the impact of natural disasters, we are leveraging our existing production facilities in multiple countries by
reallocating orders in the country where operations are affected by the natural disaster to the plants in other countries.
This will enable us to minimise disruptions to our supply chain, enable us to meet customer demand.
2. Dependence on major customers and their contract manufacturers
We derive a signifi cant portion of our revenue from our major customers, Sensata and its manufacturer (Sen&CM)
and HP and its contract manufacturers (HP&CM). Our revenue from Sen&CM and HP&CM in FY2011 accounted for
approximately 40.5% (FY2010: 29.6%) and 26.3% (FY2010: 33.3%) respectively. The Group has managed to gradually
bring the dependence on HP down over the years and this trend is expected to continue.
We expect our revenue from other automotive customers will continue to grow, thus reducing the reliance on sales to
Sen&CM. Although we have and will continue to diversify our customer base, any signifi cant reduction in orders from
any of our key customers will have a material adverse impact on our earnings.
3. Our operations may be affected should we fail to comply with the conditions stipulated in
permits and/or licenses
We are required to obtain the relevant permits and licenses from the Malaysian, Thai and Chinese government
authorities to operate our respective subsidiaries in these countries. All these permits and licenses stipulate certain
conditions which we are required to comply with.
As such, we will also have to continuously monitor and ensure compliance with all these conditions. The non-renewal or
revocation of the relevant permits due to failure to comply with the conditions will have a material adverse impact on our
operations.
4. We are exposed to foreign currency exchange risk
Our foreign currency exchange risks arise mainly because sales are transacted predominantly in US Dollars while our
overhead expenses and some level of purchases are transacted in the local currencies of the respective countries of
operations. In addition, the Group also has borrowings denominated in US Dollars. Any fl uctuation in the exchange rate
of the United States Dollar against the Singapore Dollar, Malaysian Ringgit, Thai Baht and PRC Renminbi may have an
adverse effect on the Group’s fi nancial performance.
5. Any signifi cant increase in raw material prices may have an adverse impact on our earnings
Steel products such as free cutting steel and stainless steel are used in the manufacturing of our products. We are
therefore vulnerable to the risk of rising steel prices as affected by the global supply and demand conditions.
Any signifi cant increase in the price of steel products that cannot be passed on to our customers on a timely basis will
have a material adverse effect on our fi nancial results.
RiskFactors
33
Innovalues
Limited
6. We are exposed to interest rate risk
The Company obtains additional fi nancing through bank borrowings and leasing arrangements. Surplus funds are
placed with reputable banks and/or fi nancial institutions. The Company policy is to manage its exposure to interest rate
risk using a mix of fi xed and variable rate debts.
7. Liquidity risk
The Company’s exposure to liquidity risk arises in the general funding of the Company’s business activities on a timely
basis. Liquidity risk is managed by matching the payment and receipts cycle. The Company has sufficient cash from
operations and credit lines from fi nancial institutions to fund its capital investments and working capital requirements.
8. We are subject to credit risks of our customers
From time to time, some of our customers may default on their payments. Although we regularly review our credit
exposure to our customers, including but not limited to, through the application of credit approvals, credit limits and
monitoring procedures, credit risks will nevertheless arise from unanticipated events or circumstances that have an
impact on our customers’ ability to make timely payment such as economic downturn or signifi cant fl uctuations in foreign
currency exchange rates. As a result of our customers defaulting on their payments, we would have to make allowances
for doubtful debts or incur write-offs, which may have an adverse impact on our profi tability.
In certain jurisdictions in which we do business, the laws relating to enforcement of judgements may differ from those
we are familiar with. In addition, the period of time required to realise any order of a court of competent jurisdiction in
relation to the collection of payments may be different to what is generally expected in Singapore.
9. Our business may be affected by global economic downturn or regional political, social
and economic conditions
Our manufacturing facilities are located mainly in Malaysia, Thailand and China. Any unfavourable change in the
political, social, legal, regulatory and economic conditions in these countries or globally such as changes in customs
and import tariffs, restrictions on currency conversions and remittances, devaluation of currencies, etc. may disrupt our
operations or affect our fi nancial performance.
10. We may be exposed to the risk of inventory obsolescence
As part of the supply chain of our end-customers, we often have to maintain certain level of inventory to satisfy the
demand of these end-customers and reduce our response time in relation to customer orders. This will expose us to the
risk of unanticipated decreases in demand for certain fi nished goods we manufactured for end-customers arising from,
inter alia, products upgrades, changes in the specifi cations of products and end of a product life. In the event that we
are unable to anticipate changes in the demand for our products accurately, we may be exposed to the risk of inventory
obsolescence and this will adversely affect our results of operations and fi nancial position.
RiskFactors
34
Annual Report
2011
11. Our operations will be adversely affected if our banking facilities are withdrawn or are not
renewed
Our Group relies mainly on banking facilities such as term loan, revolving credit facilities and bills payable facilities to
fi nance our operations. If all or a substantial portion of our banking facilities are withdrawn or are not renewed, the
working capital required to fi nance our operations will be adversely affected.
These banking facilities also contain certain covenants and restrictions. These covenants and restrictions may in turn
affect our Group corporate actions, including but not limited to, our ability to declare dividends. In addition, fi nance
charges for these facilities are mainly on a fl oating basis. Given that we rely on these banking facilities to fi nance our
business operations, any increase in interest rates on the facilities extended to us will have an adverse impact on our
profi tability.
12. Our operations may be adversely affected by the current fi nancial crisis
Our Group’s business activities like others in many countries in the region and elsewhere, including Singapore, are
experiencing severe economic difficulties as a consequence of the current turmoil in the world’s fi nancial markets. This
has resulted in fl uctuations in foreign currency exchange rates, volatile stock and commodity markets, uncertainty of the
availability of bank fi nance to suppliers and customers and a slowdown in growth.
The current fi nancial crisis may signifi cantly affect, and may continue to have an adverse impact on the Group’s
business, financial condition, results of operations, cash flows and prospects for the foreseeable future. The
recoverability of the Group’s assets and the ability of the Group to maintain or pay its debts as they mature are
dependent to a large extent on the efficacy of the fi scal and other measures undertaken by these countries to achieve
economic recovery. These measures are beyond the Group’s control.
34
Annual Report
2011
Directors’Report
35
Innovalues
Limited
The directors of the company are pleased to present their report together with the audited fi nancial statements of the company
and of the group for the reporting year ended 31 December 2011.
1. Directors at Date of Report
The directors of the company in office at the date of this report are:
Goh Leng Tse
Pung Tong Seng
Ong Tiak Beng
Chow Kok Kee
Ong Sim Ho
Anthony Teo Soon Chye
2. Arrangements to Enable Directors to Acquire Benefi ts by Means of the Acquisition of
Shares and Debentures
Neither at the end of the reporting year nor at any time during the reporting year did there subsist any arrangement
whose object is to enable the directors of the company to acquire benefi ts by means of the acquisition of shares or
debentures in the company or any other body corporate except for the options rights mentioned below.
3. Directors' Interests in Shares and Debentures
The directors of the company holding office at the end of the reporting year had no interests in the share capital and
options of the company and related corporations as recorded in the register of directors’ shareholdings kept by the
company under section 164 of the Companies Act, Chapter 50 except as follows:
Direct interest Deemed interest
Name of directors and
companies in which
interests are held
At
beginning
of the year
At end
of the year
At
21 January
2012
At
beginning
of the year
At end
of the year
At
21 January
2012
Innovalues Limited Number of shares of no par value (’000)
Goh Leng Tse 54,200 62,200 62,200 10,080 2,080 2,080
Ong Tiak Beng 28,127 28,127 28,127 – – –
Chow Kok Kee 560 560 560 – – –
Ong Sim Ho 60 60 60 340 340 340
Pung Tong Seng 642 642 642 1,797 1,797 1,797
By virtue of section 7 of the Companies Act, Chapter 50, Goh Leng Tse is deemed to have an interest in the company
and in all the related corporations of the company.
Directors’Report
36
Annual Report
2011
4. Contractual Benefi ts of Directors
Since the beginning of the reporting year, no director of the company has received or become entitled to receive
a benefi t which is required to be disclosed under section 201(8) of the Companies Act, Chapter 50, by reason of a
contract made by the company or a related corporation with the director or with a fi rm of which he is a member, or with
a company in which he has a substantial fi nancial interest except as disclosed in the fi nancial statements.
5. Options to Take Up Unissued Shares
During the reporting year, no option to take up unissued shares of the company or any corporation in the group was
granted except as follows:
The company has two employee share option schemes. They are the “Innovalues Group Share Option Scheme 2001”
and “Innovalues Group Share Option Scheme 2011” (known collectively as the “Scheme”). With the expiry of the
Innovalues Group Share Option Scheme 2001 on 8 February 2011, the company has adopted the Innovalues Group
Share Option Scheme 2011 on 15 August 2011. The Scheme, which forms an integral component of its compensation
plan, is designed to reward and retain eligible participants whose services are vital to its well being and success. It
provides eligible participants who have contributed to the success and development of the company with an opportunity
to participate and also increase the dedication and loyalty of these participants and motivate them to perform better.
Under the rules of the Scheme, all directors and employees of the company are eligible to participate in the Scheme.
Controlling shareholders or their associates are also eligible to participate in the Scheme subject to the approval of
independent shareholders in the form of separate resolutions for each participant. Further, independent shareholders’
approval is also required in the form of separate resolutions for each grant of options and the terms thereof, to each
participant who is a controlling shareholder or his associate.
The total number of shares over which options may be granted shall not exceed 15% of the issued share capital of the
company at any time.
The Remuneration Committee is charged with the administration of the Scheme in accordance with the rules of the
Scheme. The Remuneration Committee consists of 5 directors appointed by the board of directors of the company.
They are Goh Leng Tse, Chow Kok Kee, Ong Sim Ho, Ong Tiak Beng and Anthony Teo Soon Chye. The number
of options to be offered to a participant shall be determined at the discretion of the Remuneration Committee who
shall take into account criteria such as the rank, performance, seniority, potential for future development and length of
service of the participant. The Innovalues Group Share Option Scheme 2001 provides that: - (a) the total number of
shares which may be offered to any participant during the entire operation of the Scheme (including adjustments under
the rules) shall not exceed 25% of the shares in respect of which the company may grant options; (b) the aggregate
number of shares which may be offered to participants who are controlling shareholders and their associates during the
entire operation of the Scheme (including adjustments under the rules) shall not exceed 25% of the shares in respect of
which the company may grant options; and (c) the number of shares which may be offered to each participant who is a
controlling shareholder or his associate during the entire operation of the Scheme shall not exceed 10% of the shares
in respect of which the company may grant options. The Innovalues Group Share Option Scheme 2011 provides that,
the aggregate number of shares over which the Committee may offer to grant options to the controlling shareholders
and their associates under the option scheme, shall not exceed 25% of the shares available under the option scheme,
provided always that the number of shares available to each controlling shareholder or each of his associates shall not
exceed 10% of the shares available under the option scheme.
Directors’Report
37
Innovalues
Limited
5. Options to Take Up Unissued Shares (Cont’d)
The exercise price for each share in respect of which an option is exercisable shall be determined by the Remuneration
Committee at its absolute discretion and fi xed by the Committee at: - (a) where the options are offered to a grantee
prior to the date of the listing and quotation of the shares, a price equal to the price per share offered to the public at
the initial public offering of the shares, that is $0.35; (b) where the options are offered after the listing date (i) a price
(the “Market Price”) equal to the average of the last dealt prices for a share on the SGX-ST for the period of fi ve (5)
consecutive Market Days immediately prior to the relevant offer date; or (ii) a price which is set at a discount to the
Market Price, provided that the maximum discount shall not exceed 20 per cent of the Market Price.
Options must be exercised before the expiry of 6 and 5 years for the Innovalues Group Share Option Scheme 2001 and
the Innovalues Group Share Option Scheme 2011 respectively, from the date of the offer or such earlier date as may
be determined by the Remuneration Committee. There are special provisions dealing with the lapsing or permitting the
earlier exercise of options under certain circumstances including termination, bankruptcy, and death of the participant.
The outstanding number of options at the end of the year was:
Date of grant
Balance as
at
01.01.2011
Granted/
(exercised)
Options
lapsed/
cancelled
Balance as
at
31.12.2011
Exercise
price
Exercise
period
11.06.2007 2,600,000 – – 2,600,000 $0.720 12.06.2008 to
11.06.2013
29.10.2007 3,000,000 – – 3,000,000 $0.450 30.10.2008 to
29.10.2013
01.06.2009 2,240,000 (20,000) (600,000) 1,620,000 $0.080 02.06.2010 to
01.06.2015
03.08.2010 2,180,000 – (320,000) 1,860,000 $0.166 04.08.2011 to
03.08.2016
15.08.2011 – 3,750,000 – 3,750,000 $0.100 16.08.2012 to
15.08.2016
Directors’Report
38
Annual Report
2011
5. Options to Take Up Unissued Shares (Cont’d)
The table below summarises the number of options that were outstanding, their weighted average exercise price as at
the end of the year as well as the movements during the year.
Total share options
Weighted average
exercise price
2011
No:’000
2010
No:’000
2011 2010
Balance at 1 January 10,020 8,320 $0.376 $0.427
Granted 3,750 2,270 $0.029 $0.036
Exercised (20) – – –
Expired/Cancelled (920) (570) $0.080 $0.287
Balance at 31 December 12,830 10,020 $0.315 $0.376
During the year, 920,000 (2010: 570,000) share options granted to employees that had not yet vested were cancelled.
The grant date fair value of the options as originally priced and not yet charged to the income statement has been taken
immediately to the income statement.
During the year no option was granted at a discount.
Directors’Report
39
Innovalues
Limited
5. Options to Take Up Unissued Shares (Cont’d)
The following table summarises information about directors’ share options outstanding at 31 December 2011:
Participants
Directors and controlling
shareholders of the company
Grants in
2011
No:’000
Grants from
start of
Scheme to
end of
2011
No:’000
Exercised/
lapsed from
start of
Scheme to
end of
2011
No:’000
Balance at
31.12.2011
No:’000
Goh Leng Tse – 3,000 – 3,000(a)
– 360(e) (360) –
1,500 1,500 – 1,500(g)
Sub-total 1,500 4,860 (360) 4,500
Directors of the company
Ong Tiak Beng – 300 – 300(b)
– 720(e) (720) –
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Chow Kok Kee – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Ong Sim Ho – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Anthony Teo Soon Chye – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Pung Tong Seng – 376(f) (376) –
– 1,000 – 1,000(b)
– 200 – 200(c)
– 300 – 300(d)
750 750 – 750(g)
Total 2,850 11,206 (1,456) 9,750
(a) Exercise price of $0.450. Exercise period from 30 October 2008 to 29 October 2013
(b) Exercise price of $0.720. Exercise period from 12 June 2008 to 11 June 2013
(c) Exercise price of $0.080. Exercise period from 2 June 2010 to 1 June 2015
(d) Exercise price of $0.166. Exercise period from 4 August 2011 to 3 August 2016
(e) Exercise price of $0.217. Exercise period from 6 June 2003 to 4 June 2008
(f) Exercise price of $0.435. Exercise period from 22 October 2004 to 20 October 2009
(g) Exercise price of $0.100. Exercise period from 16 August 2012 to 15 August 2016
Directors’Report
40
Annual Report
2011
5. Options to Take Up Unissued Shares (Cont’d)
No participant has received 5% or more of the total number of the options available under the Scheme.
The following table summarises information about share options outstanding at 31 December 2011:
Exercise price
Number
outstanding
No:’000
Number
exercisable
No:’000
Remaining
life (years)
$0.450 3,000 2,625 1.83
$0.720 2,600 2,600 1.50
$0.080 1,620 800 3.50
$0.166 1,860 232 4.67
$0.100 3,750 – 4.67
12,830 6,257
During the reporting year, there were no shares of the company or any corporation in the group issued by virtue of the
exercise of an option to take up unissued shares except as disclosed above.
At the end of the reporting year, there were no unissued shares of the company or any subsidiary under option except
for those disclosed above.
6. Independent Auditors
The independent auditors, RSM Chio Lim LLP, have expressed their willingness to accept re-appointment.
7. Audit Committee
The members of the audit committee at the date of this report are as follows:
Chow Kok Kee – Chairman of Audit Committee and Independent Director
Goh Leng Tse – Executive Director
Ong Sim Ho – Independent Director
Anthony Teo Soon Chye – Independent Director
Directors’Report
41
Innovalues
Limited
7. Audit Committee (Cont’d)
The audit committee performs the functions specifi ed by section 201B(5) of the Companies Act. Among others, it
performed the following functions:
Reviewed with the independent external auditors their audit plan;
Reviewed with the independent external auditors their evaluation of the company’s internal accounting control,
and their report on the fi nancial statements and the assistance given by the company’s officers to them;
Reviewed with the internal auditors the scope and results of the internal audit procedures;
Reviewed the fi nancial statements of the group and the company prior to their submission to the directors of the
company for adoption; and
Reviewed the interested person transactions (as defi ned in Chapter 9 of the Listing Manual of SGX).
Other functions performed by the audit committee are described in the report on corporate governance included in the
annual report. It also includes an explanation of how independent auditor objectivity and independence is safeguarded
where the independent auditors provide non-audit services.
The audit committee has recommended to the board of directors that the independent auditors, RSM Chio Lim LLP, be
nominated for re-appointment as independent auditors at the next annual general meeting of the company.
Directors’Report
42
Annual Report
2011
8. Subsequent Developments
There are no signifi cant developments subsequent to the release of the group’s and the company’s preliminary fi nancial
statements, as announced on 29 February 2012, which would materially affect the group’s and the company’s operating
and fi nancial performance as of the date of this report.
On Behalf of The Directors
....................................................... .......................................................
Goh Leng Tse Ong Tiak Beng
Director Director
12 March 2012
42
Annual Report
2011
Statement byDirectors
43
Innovalues
Limited
In the opinion of the directors,
(a) the accompanying consolidated statement of comprehensive income, statements of fi nancial position, statements of
changes in equity, consolidated statement of cash fl ows, and notes thereto are drawn up so as to give a true and fair
view of the state of affairs of the company and of the group as at 31 December 2011 and of the results and cash fl ows
of the group and changes in equity of the company and of the group for the reporting year then ended; and
(b) at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as
and when they fall due.
The board of directors approved and authorised these fi nancial statements for issue on 12 March 2012.
On Behalf of The Directors
....................................................... .......................................................
Goh Leng Tse Ong Tiak Beng
Director Director
12 March 2012
Independent Auditors’Reportto the Members of INNOVALUES LIMITED
(Registration No: 199702822E)
44
Annual Report
2011
Report on the Financial Statements
We have audited the accompanying fi nancial statements of Innovalues Limited (the company) and its subsidiaries (the
group), which comprise the statements of fi nancial position of the group and the company as at 31 December 2011, and the
consolidated statement of comprehensive income, statement of changes in equity and statement of cash fl ows of the group,
and statement of changes in equity of the company for the reporting year then ended, and a summary of signifi cant accounting
policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of the fi nancial statements that give a true and fair view in accordance with
the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets
are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they
are recorded as necessary to permit the preparation of true and fair statement of comprehensive income and statements of
fi nancial position and to maintain accountability of assets.
Auditor’s Responsibility
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of fi nancial 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
fi nancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independent Auditors’Report
to the Members of INNOVALUES LIMITED
(Registration No: 199702822E)
45
Innovalues
Limited
Opinion
In our opinion, the consolidated fi nancial statements of the group and the statement of fi nancial position 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 31
December 2011 and the results, changes in equity and cash fl ows of the group and the changes in equity of the company for
the reporting year ended on that date.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the Act to be kept by the company have been properly kept in
accordance with the provisions of the Act.
RSM Chio Lim LLP
Public Accountants and
Certifi ed Public Accountants
Singapore
12 March 2012
Partner in charge of audit: Peter Jacob
Effective from year ended 31 December 2007
The accompanying notes form an integral part of these fi nancial statements.
Consolidated Statement ofComprehensive IncomeYear Ended 31 December 2011
46
Annual Report
2011
Notes
Group
2011
$’000
2010
$’000
Revenue 5 87,746 100,458
Cost of Sales (76,537) (86,315)
Gross Profi t 11,209 14,143
Other Items of Income
Interest Income 23 45
Other Credits 6 1,495 1,376
Other Items of Expense
Marketing and Distribution Costs (2,461) (2,865)
Administrative Expenses 8A (9,189) (9,213)
Finance Costs 7 (1,145) (1,453)
Other Charges 6 (217) (292)
(Loss)/Profi t Before the Under Mentioned (285) 1,741
Other Charges - Expenses Due to Floods in Thailand 6 (13,586) –
(Loss)/Profi t Before Tax from Continuing Operations (13,871) 1,741
Income Tax Expense 9 (351) (424)
(Loss)/Profi t Net of Tax (14,222) 1,317
Other Comprehensive Income:
Exchange Differences on Translating Foreign Operations, Net of Tax 240 (605)
Other Comprehensive Income/(Loss) for the Year, Net of Tax 240 (605)
Total Comprehensive (Loss)/Income (13,982) 712
(Loss)/Earnings Per Share
(Loss)/Earnings per Share Currency Unit Cents Cents
Basic 11 (4.47) 0.41
Diluted 11 (4.47) 0.41
46
Annual Report
2011
The accompanying notes form an integral part of these fi nancial statements.
Statements ofFinancial Position
As at 31 December 2011
47
Innovalues
Limited
Group Company
Notes 2011 2010 2011 2010
$’000 $’000 $’000 $’000
ASSETS
Non-Current Assets
Properties, Plant and Equipment 12 33,805 51,670 148 213
Investments in Subsidiaries 13 – – 31,385 31,385
Total Non-Current Assets 33,805 51,670 31,533 31,598
Current Assets
Inventories 14 14,300 17,969 163 321
Trade and Other Receivables 15 16,275 17,026 15,632 15,946
Other Assets 16 3,210 2,966 63 61
Cash and Cash Equivalents 17 10,688 12,054 4,197 3,783
Total Current Assets 44,473 50,015 20,055 20,111
Total Assets 78,278 101,685 51,588 51,709
EQUITY AND LIABILITIES
Equity
Share Capital 18 11,358 11,357 11,358 11,357
Retained Earnings 27,052 43,311 4,356 1,432
Other Reserves 20 2,146 1,606 1,687 1,515
Total Equity, Attributable to Owners of
the Parent 40,556 56,274 17,401 14,304
Non-Current Liabilities
Deferred Tax Liabilities 9 117 69 – –
Other Financial Liabilities 21 4,050 7,517 3,508 6,311
Finance Leases 22 160 259 128 232
Total Non-Current Liabilities 4,327 7,845 3,636 6,543
Current Liabilities
Trade and Other Payables 23 11,412 11,502 15,034 12,054
Other Financial Liabilities 21 21,853 25,914 15,400 18,667
Finance Leases 22 130 150 117 141
Total Current Liabilities 33,395 37,566 30,551 30,862
Total Liabilities 37,722 45,411 34,187 37,405
Total Equity and Liabilities 78,278 101,685 51,588 51,709
The accompanying notes form an integral part of these fi nancial statements.
Statements ofChanges in EquityYear Ended 31 December 2011
48
Annual Report
2011
Group
Total
Equity
$’000
Attributable
to Parent
Sub-total
$’000
Share
Capital
$’000
Capital
Reserve
$’000
Share
Option
Reserve
$’000
Translation
Reserve
$’000
Statutory
Reserve
$’000
Retained
Earnings
$’000
Current Year:
Opening Balance at 1 January 2011 56,274 56,274 11,357 1,212 1,515 (2,403) 1,282 43,311
Movements in Equity:
Share-Based Payments (Note 19C) 172 172 – – 172 – – –
Total Comprehensive (Loss)/Income
for the Year (13,982) (13,982) – – – 240 – (14,222)
Equity Shares Issued 1 1 1 – – – – –
Dividends Paid (Note 28) (1,909) (1,909) – – – – – (1,909)
Statutory Reserve (Note 20) – – – – – – 128 (128)
Closing Balance at 31 December 2011 40,556 40,556 11,358 1,212 1,687 (2,163) 1,410 27,052
Previous Year:
Opening Balance at 1 January 2010 55,391 55,391 11,357 1,212 1,344 (1,798) 1,225 42,051
Movements in Equity:
Share-Based Payments (Note 19C) 171 171 – – 171 – – –
Total Comprehensive Income/(Loss)
for the Year 712 712 – – – (605) – 1,317
Statutory Reserve (Note 20) – – – – – – 57 (57)
Closing Balance at 31 December 2010 56,274 56,274 11,357 1,212 1,515 (2,403) 1,282 43,311
The accompanying notes form an integral part of these fi nancial statements.
Statements ofChanges in Equity
Year Ended 31 December 2011
49
Innovalues
Limited
Company
Total
Equity
$’000
Share
Capital
$’000
Share
Option
Reserve
$’000
Retained
earnings
$’000
Current Year:
Opening Balance at 1 January 2011 14,304 11,357 1,515 1,432
Movements in Equity:
Share-Based Payments (Note 19C) 172 – 172 –
Total Comprehensive Income for the Year 4,833 – – 4,833
Equity Shares Issued 1 1 – –
Dividends Paid (Note 28) (1,909) – – (1,909)
Closing Balance at 31 December 2011 17,401 11,358 1,687 4,356
Previous Year:
Opening Balance at 1 January 2010 16,485 11,357 1,344 3,784
Movements in Equity:
Share-Based Payments (Note 19C) 171 – 171 –
Total Comprehensive Loss for the Year (2,352) – – (2,352)
Closing Balance at 31 December 2010 14,304 11,357 1,515 1,432
The accompanying notes form an integral part of these fi nancial statements.
Consolidated Statement ofCash FlowsYear Ended 31 December 2011
50
Annual Report
2011
Group
2011
$’000
2010
$’000
Cash Flows From Operating Activities
(Loss)/Profi t Before Tax (13,871) 1,741
Interest Income (23) (45)
Interest Expense 1,145 1,453
Depreciation of Properties, Plant and Equipment 9,378 10,133
Gain on Disposal of Plant and Equipment (7) (18)
Plant and Equipment Written Off 68 13
Share-Based Payments 172 171
Impairment Loss on Plant and Equipment 8,320 –
Net Effect of Exchange Rate Changes in Consolidating Subsidiaries 884 (1,562)
Operating Cash Flows before Changes in Working Capital 6,066 11,886
Inventories 3,669 (3,435)
Trade and Other Receivables 942 7,740
Other Assets (244) (1,424)
Trade and Other Payables 391 (9,226)
Net Cash Flows From Operations Before Interest and Tax 10,824 5,541
Income Tax Paid (224) (227)
Net Cash Flows From Operating Activities 10,600 5,314
Cash Flows From Investing Activities
Disposal of Plant and Equipment 179 88
Purchase of Plant and Equipment (Note 17B) (1,167) (2,396)
Interest Received 23 45
Net Cash Flows Used in Investing Activities (965) (2,263)
Cash Flows From Financing Activities
Decrease In Cash Restricted in Use 5 158
Decrease in Borrowings (7,612) (7,983)
Finance Leases Repayments (336) (128)
Interest Paid (1,145) (1,453)
Dividends Paid (1,909) –
Equity Shares Issued 1 –
Net Cash Flows Used in Financing Activities (10,996) (9,406)
Net Decrease in Cash and Cash Equivalents (1,361) (6,355)
Cash and Cash Equivalents, Statement of Cash Flow, Beginning Balance 11,878 18,233
Cash and Cash Equivalents, Statement of Cash Flow, Ending Balance (Note 17A) 10,517 11,878
50
Annual Report
2011
Notes to the FinancialStatements
31 December 2011
51
Innovalues
Limited
1. General
The company is incorporated in Singapore with limited liability. The fi nancial statements are presented in Singapore
dollars and they cover the parent and the group’s subsidiaries.
The board of directors approved and authorised these fi nancial statements for issue on 12 March 2012.
The company’s principal activities are those of manufacturing, assembly, sub-assembly of precision turned machining
parts, components and electronic and mechanical devices.
The subsidiaries’ principal activities are disclosed in Note 13 to the fi nancial statements.
The company is listed on the Main Board of the Singapore Exchange Securities Trading Limited.
The registered office address of the company is 9 Kallang Place #07-08/09 Singapore 339154. The company is situated
in Singapore.
2. Summary of Signifi cant Accounting Policies
Accounting Convention
The fi nancial statements have been prepared in accordance with the Singapore Financial Reporting Standards (“FRS”)
and the related Interpretations to FRS (“INT FRS”) as issued by the Singapore Accounting Standards Council and the
Companies Act, Chapter 50. The fi nancial statements are prepared on a going concern basis under the historical cost
convention except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate
in these fi nancial statements.
Basis of Presentation
The consolidation accounting method is used for the consolidated fi nancial statements that include the fi nancial
statements made up to the end of the reporting year of the company and all of its directly and indirectly controlled
subsidiaries. Consolidated fi nancial statements are the fi nancial statements of the group presented as those of a
single economic entity. The consolidated fi nancial statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances. All signifi cant intragroup balances and transactions, including
profi t or loss items and dividends are eliminated in full on consolidation. The results of the investees acquired or
disposed of during the reporting year are accounted for from the respective dates of acquisition or up to the dates of
disposal which is the date on which effective control is obtained of the acquired business until that control ceases.
Changes in the group’s ownership interest in a subsidiary that do not result in the loss of control are accounted for
within equity. When the group loses control of a subsidiary it derecognises the assets and liabilities and related
equity components of the former subsidiary. Any gain or loss is recognised in profi t or loss. Any investment retained
in the former subsidiary is measured at its fair value at the date when control is lost and is subsequently accounted as
available-for-sale fi nancial assets in accordance with FRS 39.
The company's fi nancial statements have been prepared on the same basis, and as permitted by the Companies Act,
Chapter 50, no statement of comprehensive income is presented for the company.
Notes to the FinancialStatements31 December 2011
52
Annual Report
2011
2. Summary of Signifi cant Accounting Policies (Cont’d)
Basis of Preparation of Financial Statements
The preparation of fi nancial statements in conformity with generally accepted accounting principles requires the
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of
revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates
and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made
judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most
difficult, subjective or complex judgements, or areas where assumptions and estimates are signifi cant to the fi nancial
statements, are disclosed at the end of this footnote, where applicable.
Revenue Recognition
The revenue amount is the fair value of the consideration received or receivable from the gross infl ow of economic
benefi ts during the reporting year arising from the course of the activities of the entity and it is shown net of sales
tax, estimated returns, discounts and volume rebates. Revenue from the sale of goods is recognised when signifi cant
risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the
costs incurred or to be incurred in respect of the transaction can be measured reliably. Interest is recognised using the
effective interest method.
Employee Benefi ts
Contributions to defi ned contribution retirement benefi t plans are recorded as an expense as they fall due. The entity's
legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund
which is the Central Provident Fund in Singapore (a government managed retirement benefi t plan). For employee leave
entitlement the expected cost of short-term employee benefi ts in the form of compensated absences is recognised in
the case of accumulating compensated absences, when the employees render service that increases their entitlement
to future compensated absences; and in the case of non-accumulating compensated absences, when the absences
occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive
obligation based on past practice.
Share-Based Compensation
For the equity-settled share-based compensation transactions, the fair value of the employee services received in
exchange for the grant of the options is recognised as an expense. The total amount to be expensed on a straight-line
basis over the vesting period is determined by reference to the fair value of the options granted excluding the effect
of non-market conditions such as profi tability and sales growth targets. Non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable. The fair value is measured using
the Black-Scholes Pricing Model. The expected lives used in the model are adjusted, based on management’s best
estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. At each end of
the reporting year, a revision is made of the number of options that are expected to become exercisable. It recognises
the impact of the revision of original estimates, if any, in the profi t or loss, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital when the options
are exercised. Cancellations of grants of equity instruments during the vesting period (other than a grant cancelled by
forfeiture when the vesting conditions are not satisfi ed) are accounted for as an acceleration of vesting, therefore the
unrecognised remaining amount is recognised immediately in the profi t or loss.
Notes to the FinancialStatements
31 December 2011
53
Innovalues
Limited
2. Summary of Signifi cant Accounting Policies (Cont’d)
Income Tax
The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or
refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have
been recognised in the fi nancial statements or tax returns. The measurements of current and deferred tax liabilities and
assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax
laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax.
Current and deferred income taxes are recognised as income or as an expense in profi t or loss unless the tax relates to
items that are recognised in the same or a different period outside profi t or loss. For such items recognised outside profi t
or loss the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item
recognised in other comprehensive income and (b) directly in equity if the tax is related to an item recognised directly
in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax
authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if
necessary, by the amount of any tax benefi ts that, based on available evidence, are not expected to be realised. A
deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial
recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the
transaction, affects neither accounting profi t nor taxable profi t (tax loss). A deferred tax liability or asset is recognised
for all taxable temporary differences associated with investments in subsidiaries except where the reporting entity is
able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary
difference will not reverse in the foreseeable future or for deductible temporary differences, they will not reverse in the
foreseeable future and they cannot be utilised against taxable profi ts.
Foreign Currency Transactions
The functional currency is the Singapore dollar as it refl ects the primary economic environment in which the entity
operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the
transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that
are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair
value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in profi t or
loss except when recognised in other comprehensive income and if applicable deferred in equity such as for qualifying
cash fl ow hedges. The presentation is in the functional currency.
Translation of Financial Statements Foreign Entities
Each entity in the group determines the appropriate functional currency as it reflects the primary economic
environment in which the entity operates. In translating the fi nancial statements of such an entity for incorporation
in the consolidated fi nancial statements in the presentation currency the assets and liabilities denominated in other
currencies are translated at end of the reporting year rates of exchange and the profi t and loss items are translated at
average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other
comprehensive income and accumulated in a separate component of equity until the disposal of that relevant entity.
Notes to the FinancialStatements31 December 2011
54
Annual Report
2011
2. Summary of Signifi cant Accounting Policies (Cont’d)
Borrowing Costs
All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly
attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period
of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all
the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Other borrowing costs
are recognised as an expense in the period in which they are incurred. The interest expense is calculated using the
effective interest rate method.
Properties, Plant and Equipment
Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual
values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as
follows:
Freehold land – Not depreciated
Construction in progress – Not depreciated
Leasehold land and buildings – Over the remaining lease period of 20 to 21 years
Plant and equipment – 10% – 331/3 %
An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle.
Fully depreciated assets still in use are retained in the fi nancial statements.
Properties, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any
accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of
an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and
the carrying amount of the item and is recognised in profi t or loss. The residual value and the useful life of an asset is
reviewed at least at each end of the reporting year and, if expectations differ signifi cantly from previous estimates, the
changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and
future periods are adjusted.
Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset
or component to the location and condition necessary for it to be capable of operating in the manner intended by
management. Subsequent costs are recognised as an asset only when it is probable that future economic benefi ts
associated with the item will fl ow to the entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profi t or loss when they are incurred.
Notes to the FinancialStatements
31 December 2011
55
Innovalues
Limited
2. Summary of Signifi cant Accounting Policies (Cont’d)
Leases
Whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date,
that is, whether (a) fulfi lment of the arrangement is dependent on the use of a specifi c asset or assets (the asset);
and (b) the arrangement conveys a right to use the asset. Leases are classifi ed as fi nance leases if substantially all
the risks and rewards of ownership are transferred to the lessee. All other leases are classifi ed as operating leases. At
the commencement of the lease term, a fi nance lease is recognised as an asset and as a liability in the statement of
fi nancial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease. The discount rate used in calculating the present
value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the
lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised
as an asset. The excess of the lease payments over the recorded lease liability are treated as fi nance charges which
are allocated to each reporting year during the lease term so as to produce a constant periodic rate of interest on
the remaining balance of the liability. Contingent rents are charged as expenses in the reporting years in which they
are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains
substantially all the risks and benefi ts of ownership of the leased assets are classifi ed as operating leases. For
operating leases, lease payments are recognised as an expense in profi t or loss on a straight-line basis over the term of
the relevant lease unless another systematic basis is representative of the time pattern of the user's benefi t, even if the
payments are not on that basis. Lease incentives received are recognised in profi t or loss as an integral part of the total
lease expense. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying
amount of the leased asset and recognised on a straight-line basis over the lease term.
Segment Reporting
The group discloses fi nancial and descriptive information about its reportable segments. Reportable segments are
operating segments or aggregations of operating segments that meet specifi ed criteria. Operating segments are
components about which separate fi nancial information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. Generally, fi nancial information
is reported on the same basis as is used internally for evaluating operating segment performance and deciding how to
allocate resources to operating segments.
Subsidiaries
A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group. Control
is the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities
accompanying a shareholding of more than one half of the voting rights or the ability to appoint or remove the
majority of the members of the board of directors or to cast the majority of votes at meetings of the board of directors.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the group controls another entity.
In the company’s own separate fi nancial statements, an investment in a subsidiary is stated at cost less any allowance
for impairment in value adjusted for any changes in contingent consideration. Impairment loss recognised in profi t
or loss for a subsidiary 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. The net book value of a subsidiary is not necessarily
indicative of the amounts that would be realised in a current market.
Notes to the FinancialStatements31 December 2011
56
Annual Report
2011
2. Summary of Signifi cant Accounting Policies (Cont’d)
Business Combinations
Business combinations are accounted for by applying the acquisition method. There were none during the reporting
year.
Non-controlling Interests
The non-controlling interests in the net assets and net results of a consolidated subsidiary are shown separately
in the appropriate components of the consolidated fi nancial statements. For each business combination, any non-
controlling interest in the acquiree (subsidiary) is initially measured either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s identifi able net assets. Where the non-controlling interest is measured
at fair value, the valuation techniques and key model inputs used are disclosed in the relevant note. Profi t or loss and
each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling
interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even
if this results in the non-controlling interests having a defi cit balance.
Inventories
Inventories are measured at the lower of cost (fi rst in fi rst out method and standard cost which approximates actual
cost) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the sale. A write down on cost is
made where the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case
of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal
operating capacity.
Impairment of Non-Financial Assets
Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time
every year on an intangible asset with an indefi nite useful life or an intangible asset not yet available for use. The
carrying amount of other non-fi nancial assets is reviewed at each end of the reporting year for indications of impairment
and where an asset is impaired, it is written down through profi t or loss to its estimated recoverable amount. The
impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in profi t or loss
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation
decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell
and its value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value
using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c
to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifi able cash fl ows (cash-generating units). At each end of the reporting year non-fi nancial assets other
than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Notes to the FinancialStatements
31 December 2011
57
Innovalues
Limited
2. Summary of Signifi cant Accounting Policies (Cont’d)
Financial Assets
Initial recognition and measurement and derecognition of fi nancial assets:
A fi nancial asset is recognised on the statement of fi nancial position when, and only when, the entity becomes a
party to the contractual provisions of the instrument. The initial recognition of fi nancial assets is at fair value normally
represented by the transaction price. The transaction price for fi nancial asset not classifi ed at fair value through profi t
or loss includes the transaction costs that are directly attributable to the acquisition or issue of the fi nancial asset.
Transaction costs incurred on the acquisition or issue of fi nancial assets classifi ed at fair value through profi t or loss are
expensed immediately. The transactions are recorded at the trade date.
Irrespective of the legal form of the transactions performed, fi nancial assets are derecognised when they pass the
“substance over form” based on the derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards
of ownership and the transfer of control.
Subsequent measurement:
Subsequent measurement based on the classifi cation of the fi nancial assets in one of the following four categories
under FRS 39 is as follows:
1. Financial assets at fair value through profi t or loss: As at end of the reporting year date there were no fi nancial
assets classifi ed in this category.
2. Loans and receivables: Loans and receivables are non-derivative fi nancial assets with fi xed or determinable
payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are
not classifi ed in this category. These assets are carried at amortised costs using the effective interest method
(except that short-duration receivables with no stated interest rate are normally measured at original invoice
amount unless the effect of imputing interest would be signifi cant) minus any reduction (directly or through the
use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there
is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash fl ows of the fi nancial asset or group of fi nancial assets that can be reliably estimated. The
methodology ensures that an impairment loss is not recognised on the initial recognition of an asset. Losses
expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying
amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in
profi t or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after
the impairment loss was recognised. Typically the trade and other receivables are classifi ed in this category.
3. Held-to-maturity fi nancial assets: As at end of the reporting year date there were no fi nancial assets classifi ed in
this category.
4. Available-for-sale fi nancial assets: As at end of the reporting year date there were no fi nancial assets classifi ed in
this category.
Notes to the FinancialStatements31 December 2011
58
Annual Report
2011
2. Summary of Signifi cant Accounting Policies (Cont’d)
Cash and Cash Equivalents
Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt instruments
purchased with an original maturity of three months or less. For the statement of cash fl ows the item includes cash and
cash equivalents less cash subject to restriction and bank overdrafts payable on demand that form an integral part of
cash management.
Financial Liabilities
Initial recognition and measurement:
A fi nancial liability is recognised on the statement of fi nancial position when, and only when, the entity becomes a
party to the contractual provisions of the instrument and it is derecognised when the obligation specifi ed in the contract
is discharged or cancelled or expires. The initial recognition of fi nancial liability is at fair value normally represented
by the transaction price. The transaction price for fi nancial liability not classifi ed at fair value through profi t or loss
includes the transaction costs that are directly attributable to the acquisition or issue of the fi nancial liability. Transaction
costs incurred on the acquisition or issue of fi nancial liability classifi ed at fair value through profi t or loss are expensed
immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings
are classifi ed as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting year.
Subsequent measurement:
Subsequent measurement based on the classifi cation of the fi nancial liabilities in one of the following two categories
under FRS 39 is as follows:
1. Liabilities at fair value through profi t or loss: As at end of the reporting year date there were no fi nancial liabilities
classifi ed in this category.
2. Other fi nancial liabilities: All liabilities, which have not been classifi ed as in the previous category fall into this
residual category. These liabilities are carried at amortised cost using the effective interest method. Trade and
other payables and borrowings are usually classifi ed in this category. Items classifi ed within current trade and
other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty
and settlement is short-term.
Financial Guarantees
A fi nancial guarantee contract requires that the issuer makes specifi ed payments to reimburse the holder for a loss
when a specifi ed debtor fails to make payment when due. Financial guarantee contracts are initially recognised at fair
value and are subsequently measured at the greater of (a) the amount determined in accordance with FRS 37 and (b)
the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with FRS 18.
Notes to the FinancialStatements
31 December 2011
59
Innovalues
Limited
2. Summary of Signifi cant Accounting Policies (Cont’d)
Fair Value of Financial Instruments
The carrying values of current fi nancial instruments approximate their fair values due to the short-term maturity of
these instruments. Disclosures of fair value are not made when the carrying amount of current fi nancial instruments
is a reasonable approximation of fair value. The fair values of non-current fi nancial instruments may not be disclosed
separately unless there are signifi cant differences at the end of the reporting year and in the event the fair values
are disclosed in the relevant notes. The maximum exposure to credit risk is the fair value of the fi nancial instruments
at the end of the reporting year. The fair value of a fi nancial instrument is derived from an active market or by using
an acceptable valuation technique. The appropriate quoted market price for an asset held or liability to be issued is
usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal
and, for an asset to be acquired or for liability held, the asking price. If there is no market, or the markets available
are not active, the fair value is established by using an acceptable valuation technique. The fair value measurements
are classifi ed using a fair value hierarchy of 3 levels that refl ects the signifi cance of the inputs used in making the
measurements, that is, Level 1 for the use of quoted prices (unadjusted) in active markets for identical assets or
liabilities; Level 2 for the use of 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 for the use of inputs for the
asset or liability that are not based on observable market data (unobservable inputs). The level is determined on the
basis of the lowest level input that is signifi cant to the fair value measurement in its entirety. Where observable inputs
that require signifi cant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Equity
Equity instruments are contracts that give a residual interest in the net assets of the company. Ordinary shares are
classifi ed as equity. Equity instruments are recognised at the amount of proceeds received net of incremental costs
directly attributable to the transaction. Dividends on equity are recognised as liabilities when they are declared. Interim
dividends are recognised when declared by the directors.
Provisions
A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event,
it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Provisions are made using best estimates of the amount
required in settlement and where the effect of the time value of money is material, the amount recognised is the present
value of the expenditures expected to be required to settle the obligation using a pre-tax rate that refl ects current market
assessments of the time value of money and the risks specifi c to the obligation. The increase in the provision due to
passage of time is recognised as interest expense. Changes in estimates are refl ected in profi t or loss in the reporting
year they occur.
Notes to the FinancialStatements31 December 2011
60
Annual Report
2011
2. Summary of Signifi cant Accounting Policies (Cont’d)
Critical Judgements, Assumptions and Estimation Uncertainties
The critical judgements made in the process of applying the accounting policies that have the most signifi cant effect
on the amounts recognised in the fi nancial statements and the key assumptions concerning the future, and other key
sources of estimation uncertainty at the end of the reporting year, that have a signifi cant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next reporting year are discussed below. These
estimates and assumptions are periodically monitored to ensure they incorporate all relevant information available at the
date when fi nancial statements are prepared. However, this does not prevent actual fi gures differing from estimates.
Allowance for doubtful trade accounts:
An allowance is made for doubtful trade accounts for estimated losses resulting from the subsequent inability of the
customers to make required payments. If the fi nancial conditions of the customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required in future periods. Management
generally analyses trade receivables and analyses historical bad debts, customer concentrations, customer
creditworthiness, and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful
trade receivables. To the extent that it is feasible impairment and uncollectibility is determined individually for each
item. In cases where that process is not feasible, a collective evaluation of impairment is performed. At the end of
the reporting year, the trade receivables carrying amount approximates the fair value and the carrying amounts might
change materially within the next reporting year but these changes would not arise from assumptions or other sources
of estimation uncertainty at the end of the reporting year.
Net realisable value of inventories:
A review is made periodically on inventory for excess inventory and declines in net realisable value below cost and
an allowance is recorded against the inventory balance for any such declines. The review requires management to
consider the future demand for the products. In any case the realisable value represents the best estimate of the
recoverable amount and is based on the acceptable evidence available at the end of the reporting year and inherently
involves estimates regarding the future expected realisable value. The usual considerations for determining the amount
of allowance or write-down include ageing analysis, technical assessment and subsequent events. In general, such an
evaluation process requires signifi cant judgement and materially affects the carrying amount of inventories at the end of
the reporting year. Possible changes in these estimates could result in revisions to the stated value of the inventories.
The carrying amount of inventories at the end of the reporting year was $14,300,000.
Income tax expense:
The entity recognises tax liabilities and assets tax based on an estimation of the likely taxes due, which requires
signifi cant judgement as to the ultimate tax determination of certain items. Where the actual amount arising from these
issues differs from these estimates, such differences will have an impact on income tax and deferred tax amounts in the
period when such determination is made.
Notes to the FinancialStatements
31 December 2011
61
Innovalues
Limited
2. Summary of Signifi cant Accounting Policies (Cont’d)
Critical Judgements, Assumptions and Estimation Uncertainties (Cont’d)
Deferred tax asset estimation:
Management judgement is required in determining the amount of current and deferred tax recognised as income or
expense and the extent to which deferred tax assets can be recognised. A deferred tax asset is recognised if it is more
likely than not that sufficient taxable income will be available in the future against which the temporary differences and
unused tax losses can be utilised. Management also considers future taxable income and tax planning strategies in
assessing whether deferred tax assets should be recognised in order to refl ect changed circumstances as well as
tax regulations. As a result, due to their inherent nature, it is likely that deferred tax calculation relates to complex fact
patterns for which assessments of likelihood are judgemental and not susceptible to precise determination.
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 infl uences 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.
Useful lives of plant and equipment:
The estimates for the useful lives and related depreciation charges for plant and equipment is based on commercial and
other factors which could change signifi cantly as a result of innovations and competitor actions in response to market
conditions. The depreciation charge is increased where useful lives are less than previously estimated lives, or the
carrying amounts written off or written down for technically obsolete items or assets that have been abandoned or sold.
It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge,
that outcomes within the next reporting year that are different from assumptions could require a material adjustment to
the carrying amount of the balances affected. The carrying amount of the specifi c asset (or class of assets) at the end
of the reporting year affected by the assumption is $23,349,000.
Estimated impairment of subsidiary or associate:
Where a subsidiary or associate is in net equity defi cit and has suffered losses a test is made whether the investment in
the investee has suffered any impairment, in accordance with the stated accounting policy. This determination requires
signifi cant judgement. An estimate is made of the future profi tability of the investee, and the fi nancial health of and near-
term business outlook for the investee, including factors such as industry and sector performance, and operational and
fi nancing cash fl ow. The amount of the relevant investment is $9,779,000 at the end of the reporting year.
Notes to the FinancialStatements31 December 2011
62
Annual Report
2011
3. Related Party Relationships and Transactions
FRS 24 defi nes a related party as a person or entity that is related to the reporting entity and it includes (a) A person
or a close member of that person’s family if that person: (i) has control or joint control over the reporting entity; (ii) has
signifi cant infl uence over the reporting entity; or (iii) is a member of the key management personnel of the reporting
entity or of a parent of the reporting entity. (b) An entity is related to the reporting entity if any of the following conditions
apply: (i) The entity and the reporting entity are members of the same group. (ii) One entity is an associate or joint
venture of the other entity. (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture
of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefi t plan
for the benefi t of employees of either the reporting entity or an entity related to the reporting entity. (vi) The entity is
controlled or jointly controlled by a person identifi ed in (a). (vii) A person identifi ed in (a)(i) has signifi cant infl uence over
the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
3.1 Related companies:
Related companies in these fi nancial statements include the members of the company’s group of companies.
There are transactions and arrangements between the reporting entity and members of the group and the effect
of these on the basis determined between the parties are refl ected in these fi nancial statements. The current
intercompany balances are unsecured without fi xed repayment terms and interest unless stated otherwise.
Intragroup transactions and balances that have been eliminated in these consolidated fi nancial statements are
not disclosed as related party transactions and balances.
3.2 Key management compensation:
2011
$’000
2010
$’000
Salaries and other short-term employee benefi ts 1,486 1,475
Directors’ fees 225 225
Share-based payments 172 171
The above amounts are included under employee benefi ts expense. Included in the above amounts are the
following items:
2011
$’000
2010
$’000
Remuneration of directors of the company 998 985
Remuneration of directors of the subsidiaries 274 276
Fees to directors of the company 225 225
Notes to the FinancialStatements
31 December 2011
63
Innovalues
Limited
3. Related Party Relationships and Transactions (Cont’d)
3.2 Key management compensation (Cont’d):
Further information about the remuneration of individual directors is provided in the report on corporate
governance.
Key management personnel are directors and those persons having authority and responsibility for planning,
directing and controlling the activities of the company, directly or indirectly. The above amounts for key
management compensation are for all the directors and other key management personnel.
3.3 Other receivables from and other payables to related parties:
The trade transactions and the trade receivables and payables balances arising from sales and purchases of
goods and services are disclosed elsewhere in the notes to the fi nancial statements.
4. Financial Information by Segments
4A. Information about Reportable Segment Profi t or Loss, Assets and Liabilities
The group discloses fi nancial and descriptive information about its reportable segments. Reportable segments
are operating segments or aggregations of operating segments that meet specifi ed criteria. Operating segments
are components about which separate fi nancial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing performance. Generally,
fi nancial information is reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.
For management purposes, the group is currently organised into four major strategic operating segments that
offer different products and services:
Office automation (“OA”): Shafts and rollers for various types of printers;
Hard disk drive (“HDD”): Components for hard disk drives;
Automotive (“AU”): Precision machined parts and components for vehicles;
Others: Components for other industries.
It represents the basis on which the management reports the primary segment information. They are managed
separately because each business requires different strategies.
Inter-segment sales are measured on the basis that the entity actually used to price the transfers. Internal
transfer pricing policies of the group are as far as practicable based on market prices. The accounting policies of
the operating segments are the same as those described in the summary of signifi cant accounting policies.
Unallocated assets and liabilities are analysed below. Unallocated profi t or loss items comprise interest income,
fi nance costs, marketing and distribution costs, administrative expenses, other credits/(charges) and income
tax expense. The information to allocate these amounts by business segments is not available and the cost to
develop it would be excessive.
Notes to the FinancialStatements31 December 2011
64
Annual Report
2011
4. Financial Information by Segments (Cont’d)
4B. Profi t or Loss from Continuing Operations and Reconciliations
These segments are the basis on which the group reports its primary segment information. Segment information
about these businesses is presented below:
OA HDD AU Others Group Total
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Revenue by segment
External Revenue 37,833 54,478 261 1,004 46,502 41,958 3,150 3,018 87,746 100,458
Results:
Segment Result 2,745 8,750 (363) (644) 8,584 5,869 243 168 11,209 14,143
Interest Income 23 45
Finance Costs (1,145) (1,453)
Other Credits 1,495 1,376
Marketing and
Distribution Costs (2,461) (2,865)
Administrative Expenses (9,189) (9,213)
Other Charges (217) (292)
(Loss)/Profit Before the
Under Mentioned (285) 1,741
Other Charges - Expenses
Due to Floods in
Thailand (13,586) –
(Loss)/Profit Before Tax
from Continuing
Operations (13,871) 1,741
Income Tax Expense (351) (424)
(Loss)/Profit Net of Tax (14,222) 1,317
Notes to the FinancialStatements
31 December 2011
65
Innovalues
Limited
4. Financial Information by Segments (Cont’d)
4C. Assets and Reconciliations
OA
$’000
HDD
$’000
AU
$’000
Others
$’000
Unallocated
$’000
Group
Total
$’000
2011
Total assets for reportable
segments 28,106 2 29,147 3,930 – 61,185
Unallocated:
Properties, plant and equipment – – – – 8,336 8,336
Trade and other receivables – – – – 489 489
Other assets – – – – 2,327 2,327
Cash and cash equivalents – – – – 5,941 5,941
Total group assets 28,106 2 29,147 3,930 17,093 78,278
2010
Total assets for reportable
segments 39,660 3,573 37,631 4,029 – 84,893
Unallocated:
Properties, plant and equipment – – – – 10,735 10,735
Trade and other receivables – – – – 342 342
Other assets – – – – 861 861
Cash and cash equivalents – – – – 4,854 4,854
Total group assets 39,660 3,573 37,631 4,029 16,792 101,685
Notes to the FinancialStatements31 December 2011
66
Annual Report
2011
4. Financial Information by Segments (Cont’d)
4D. Liabilities and Reconciliations
OA
$’000
HDD
$’000
AU
$’000
Others
$’000
Unallocated
$’000
Group
Total
$’000
2011
Total liabilities for reportable
segments – – – – – –
Unallocated:
Deferred and current tax
liabilities – – – – 117 117
Income tax payable – – – – 93 93
Other fi nancial liabilities – – – – 25,903 25,903
Finance leases – – – – 290 290
Trade and other payables – – – – 11,319 11,319
Total group liabilities – – – – 37,722 37,722
2010
Total liabilities for reportable
segments – – – – – –
Unallocated:
Deferred and current tax
liabilities – – – – 69 69
Income tax payable – – – – 14 14
Other fi nancial liabilities – – – – 33,431 33,431
Finance leases – – – – 409 409
Trade and other payables – – – – 11,488 11,488
Total group liabilities – – – – 45,411 45,411
4E. Other Material Items and Reconciliations
OA
$’000
HDD
$’000
AU
$’000
Others
$’000
Unallocated
$’000
Group
Total
$’000
Capital expenditure:
2011 469 – 1,619 8 220 2,316
2010 952 22 1,222 32 209 2,437
Depreciation:
2011 3,368 604 3,857 587 962 9,378
2010 3,771 674 3,960 678 1,050 10,133
Impairment loss on plant and
equipment:
2011 219 1,954 5,167 590 390 8,320
2010 – – – – – –
Inventories written off:
2011 20 600 4,239 126 – 4,985
2010 – – – – – –
Notes to the FinancialStatements
31 December 2011
67
Innovalues
Limited
4. Financial Information by Segments (Cont’d)
4F. Geographical Information
The group’s operations are located in Singapore, Malaysia, Thailand and People’s Republic of China (PRC).
The following table provides an analysis of the revenue by geographical market, irrespective of the origin of the
goods:
Revenue by
geographical segments
2011
$’000
2010
$’000
Singapore 1,325 1,917
Malaysia 15,000 18,904
Thailand 499 2,185
PRC 51,564 55,650
USA 14,418 15,955
Brazil 1,355 568
Mexico 2,522 2,343
Others 1,063 2,936
Total 87,746 100,458
The following is an analysis of the carrying amount of segment assets, and additions to properties, plant and
equipment, analysed by the geographical area in which the assets are located:
Carrying amount of
segment assets
Additions to properties,
plant and equipment
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Singapore 15,902 17,318 19 43
Malaysia 24,500 27,165 486 139
Thailand 10,068 23,812 1,560 917
PRC 27,808 33,390 251 1,338
Total 78,278 101,685 2,316 2,437
4G. Information About Major Customers
2011
$’000
2010
$’000
Revenue:
Top 1 customer in AU segment 18,281 15,743
Top 2 customers in AU and OA segments 28,515 27,202
Top 3 customers in AU and OA segments 38,345 37,013
Notes to the FinancialStatements31 December 2011
68
Annual Report
2011
5. Revenue
Group
2011
$’000
2010
$’000
Sale of goods 87,746 100,458
6. Other Credits and (Charges)
Group
2011
$’000
2010
$’000
Allowance for impairment on trade receivables – (10)
Bad debts written off (2) –
Expenses due to fl oods in Thailand (*)
- Impairment loss on plant and equipment (8,320) –
- Inventories written off (4,985) –
- Accruals for fl ood related repair and restoration (281) –
Foreign exchange adjustment losses (147) (269)
Plant and equipment written off (68) (13)
Bad debts recovered 116 –
Gain on disposal of plant and equipment 7 18
Sale of waste materials 1,335 1,314
Other income 37 44
Net (12,308) 1,084
Presented in profi t or loss as:
Other Credits 1,495 1,376
Other Charges (217) (292)
Other Charges - expenses due to fl oods in Thailand (13,586) –
(12,308) 1,084
(*) No insurance recoverable amount has been recognised in the current year as the insurer’s assessment is ongoing and the
eventual recoverable amount has yet to be fi nalised.
7. Finance Costs
Group
2011
$’000
2010
$’000
Interest expense 1,145 1,453
Notes to the FinancialStatements
31 December 2011
69
Innovalues
Limited
8A. Administrative Expenses
The major components include the following:
Group
2011
$’000
2010
$’000
Employee benefi ts expense 5,635 5,965
Rental – office and equipment 161 136
Depreciation expense 1,201 477
8B. Employee Benefi ts Expense
Group
2011
$’000
2010
$’000
Employee benefi ts expense 17,052 19,704
Contributions to defi ned contribution plan 2,241 2,378
Share-based payments 172 171
Other benefi ts 99 74
Total employee benefi ts expense 19,564 22,327
Notes to the FinancialStatements31 December 2011
70
Annual Report
2011
9. Income Tax
9A. Components of tax expense recognised in profi t or loss include:
Group
2011
$’000
2010
$’000
Current tax expenses
Current tax expenses 341 434
Over adjustments of current tax in respect of prior periods (38) –
Subtotal 303 434
Deferred tax expense
Deferred tax 47 80
Under/(Over) adjustment of prior years’ unutilised tax credits 1 (90)
Subtotal 48 (10)
Total income tax expense 351 424
The reconciliation of income taxes below is determined by applying the Singapore corporate tax rate where the
parent is domiciled. The income tax in profi t or loss varied from the amount of income tax determined by applying
the Singapore income tax rate of 17% (2010: 17%) to profi t or loss before income tax as a result of the following
differences:
Group
2011
$’000
2010
$’000
(Loss)/Profi t before tax (13,871) 1,741
Income tax (income)/expense at the above rate (2,358) 296
Non-deductible items 579 111
Income not subject to tax (937) (36)
Deferred tax assets unrecognised 5,124 29
Effect of different tax rates in different countries (1,983) 227
Tax exemptions (a) (37) (142)
Overprovision of tax in respect of previous periods (37) (90)
Other items less than 3% each – 29
Total income tax expense 351 424
(a) Tax exemptions relate to tax incentives granted by the relevant authorities on subsidiaries’ profi ts. The
Board of Investment of Thailand has granted the subsidiary, Innovalues Precision (Thailand) Limited,
promotional privileges under the Promotion Investment Act, BE2520. With these incentives, Innovalues
Precision (Thailand) Limited enjoys a tax exemption for a period of 7-8 years.
Innovalues Technology (Shanghai) Co., Ltd and Innovalues Auto Precision (Shanghai) Co., Ltd have been
granted income tax exemption for the two years commencing from the fi rst profi table year (after deducting
losses carried forward) in 2007 and a 50% tax reduction for the succeeding three years.
Notes to the FinancialStatements
31 December 2011
71
Innovalues
Limited
9. Income Tax (Cont’d)
9B. Deferred tax expense/(income) recognised in profi t or loss include:
2011
$’000
2010
$’000
Excess of net book value of plant and equipment over tax values (232) (252)
Excess of tax values over net book value of plant and equipment (13) 417
Tax loss carryforwards (5,379) (235)
Unutilised tax credits 558 31
Other temporary differences (15) 38
Provisions 5 (38)
Deferred tax unrecognised 5,124 29
Total deferred income tax (income)/expense recognised in profi t or loss 48 (10)
9C. Deferred tax balance in the statement of fi nancial position:
2011
$’000
2010
$’000
Deferred tax assets/(liabilities) recognised in profi t or loss:
Excess of net book value of plant and equipment over tax values (1,936) (2,168)
Excess of tax values over net book value of plant and equipment 13 –
Tax loss carryforwards 7,225 1,846
Unutilised tax credits 3,190 3,748
Other temporary differences (23) (38)
Provisions – 5
Deferred tax unrecognised (8,586) (3,462)
Total (117) (69)
Presented in the statement of fi nancial position as follows:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Deferred tax liabilities (117) (69) – –
Deferred tax assets – – – –
Net balance (117) (69) – –
It is impractical to estimate the amount expected to be settled or used within one year.
The realisation of the future income tax benefi ts from tax loss carryforwards and temporary differences from
capital allowances is available for an unlimited future period subject to the conditions imposed by law including
the retention of majority shareholders as defi ned.
There are no income tax consequences of dividends to shareholders of the company.
Temporary differences arising in connection with interests in subsidiaries are insignifi cant.
Notes to the FinancialStatements31 December 2011
72
Annual Report
2011
10. Items In the Statement of Comprehensive Income
In addition to the charges and credits disclosed elsewhere in the notes to the fi nancial statements, the profi t or loss
includes the following charges:
Group
2011
$’000
2010
$’000
Audit fees to independent auditors included under administrative expenses:
- Company’s auditors 77 70
- Other auditors 107 99
Other fees to independent auditors included under administrative expenses:
- Company’s auditors 38 39
- Other auditors 35 37
11. Earnings/(Loss) Per Share
The following table illustrates the numerators and denominators used to calculate basic and diluted (loss)/earnings per
share of no par value:
2011
$’000
2010
$’000
A. Numerators: (loss)/earnings attributable to equity:
Continuing operations: attributable to owners (14,222) 1,317
2011
No:’000
2010
No:’000
B. Denominators: weighted average number of equity shares
Basic 318,214 318,194
The weighted average number of equity shares refers to shares in circulation during the period.
The basic earnings per share ratio is based on the weighted average number of ordinary shares outstanding during
each reporting year. The diluted earnings per share is based on the weighted average number of ordinary shares and
dilutive ordinary share equivalents outstanding during each reporting year. The ordinary share equivalents included in
these calculations are ordinary shares issuable upon assumed exercise of share options which would have a dilutive
effect. There is no dilutive effect in respect of the share options during the year.
Notes to the FinancialStatements
31 December 2011
73
Innovalues
Limited
12. Properties, Plant and Equipment
Group
Freehold
land
$’000
Leasehold
land
$’000
Leasehold
properties
$’000
Plant and
equipment
$’000
Construction
in progress
$’000
Total
$’000
Cost:
At 1 January 2010 3,420 692 8,887 94,068 4 107,071
Exchange adjustments (22) 16 247 27 – 268
Additions – – – 2,437 – 2,437
Disposals – – – (392) – (392)
Written off – – – (115) – (115)
Transfer from/(to) – – – 4 (4) –
At 31 December 2010 3,398 708 9,134 96,029 – 109,269
Exchange adjustments (126) (17) (291) (591) – (1,025)
Additions – – 131 2,185 – 2,316
Disposals – – – (2,381) – (2,381)
Written off – – – (27,608) – (27,608)
At 31 December 2011 3,272 691 8,974 67,634 – 80,571
Accumulated depreciation:
At 1 January 2010 – 216 1,384 46,196 – 47,796
Exchange adjustments – 5 25 64 – 94
Depreciation for the year – 34 430 9,669 – 10,133
Disposals – – – (322) – (322)
Written off – – – (102) – (102)
At 31 December 2010 – 255 1,839 55,505 – 57,599
Exchange adjustments – (6) (56) (400) – (462)
Depreciation for the year – 33 416 8,929 – 9,378
Disposals – – – (529) – (529)
Written off – – – (19,220) – (19,220)
At 31 December 2011 – 282 2,199 44,285 – 46,766
Net book value:
At 1 January 2010 3,420 476 7,503 47,872 4 59,275
At 31 December 2010 3,398 453 7,295 40,524 – 51,670
At 31 December 2011 3,272 409 6,775 23,349 – 33,805
Notes to the FinancialStatements31 December 2011
74
Annual Report
2011
12. Properties, Plant and Equipment (Cont’d)
Company
Plant and
equipment
$’000
Cost:
At 1 January 2010 1,612
Additions 43
Disposals (81)
Written off (65)
At 1 January 2011 1,509
Additions 19
Disposals (109)
Written off (108)
At 31 December 2011 1,311
Accumulated depreciation:
At 1 January 2010 1,328
Depreciation for the year 91
Disposals (58)
Written off (65)
At 1 January 2011 1,296
Depreciation for the year 79
Disposals (104)
Written off (108)
At 31 December 2011 1,163
Net book value:
At 1 January 2010 284
At 31 December 2010 213
At 31 December 2011 148
Notes to the FinancialStatements
31 December 2011
75
Innovalues
Limited
12. Properties, Plant and Equipment (Cont’d)
The depreciation expense is charged as follows:
Group
2011
$’000
2010
$’000
Cost of sales 8,177 9,656
Administrative expenses 1,201 477
9,378 10,133
Certain items are under fi nance lease agreements (see Note 22).
Freehold land and leasehold property of the Thailand subsidiary at a net book value of Thai Baht 170,438,000 (or
S$7,012,000 equivalent) (2010: Thai Baht 454,158,456 (or S$19,432,000 equivalent) are subject to a negative pledge for
bank facilities (see Note 21).
Details of properties owned by the group are as follows:
Description/Location Total gross land
and/or fl oor area
Tenure of land/last
valuation date
Thailand:
83 Moo 2, Hi-Tech Industrial Estate, Bannlen,
Bangpa-In, Ayutthaya
47,200 sqm Freehold property.
Not revalued.
Malaysia:
No. 22A, Jalan 18, Taman Sri Kluang, Kluang, Johor
4,413 sqm Freehold property.
Not revalued.
PLO 505, Jalan Keluli 3, Pasir Gudang Ind Estate,
Johor
18,220 sqm Leasehold property 21 years from
2 October 2003. Not revalued.
Notes to the FinancialStatements31 December 2011
76
Annual Report
2011
13. Investments in Subsidiaries
Company
2011
$’000
2010
$’000
Unquoted shares at cost 31,957 31,957
Less allowance for impairment (572) (572)
Total at cost 31,385 31,385
Net book value of subsidiaries 54,843 73,668
Analysis of above amount denominated in non-functional currency:
Malaysian Ringgit 2,118 2,118
Thai Baht 8,885 8,885
United States Dollar 20,954 20,954
Movements in allowance for impairment:
Balance at beginning of the year 572 572
Charged to profi t or loss included under other charges – –
Balance at end of the year 572 572
The subsidiaries held by the company are listed below:
Name of Subsidiaries, Country of Incorporation,
Place of Operations and Principal Activities and
(Independent Auditors)
Cost in Books of
Company
Effective Percentage
of Equity held
by the Company
2011 2010 2011 2010
$’000 $’000 % %
Innovalues Precision Sdn Bhd (1)
Malaysia
Manufacture and sale of precision machined parts, components
and sub-assemblies
(Crowe Horwath)
211 211 100 100
Innovalues Microtech Sdn Bhd (1)
Malaysia
Electroless plating
(Crowe Horwath)
730 730 100 100
Innovalues Precision (Kluang) Sdn Bhd (1)
Malaysia
Manufacture and sale of precision machined parts, components
and sub-assemblies
(Crowe Horwath)
214 214 100 100
Notes to the FinancialStatements
31 December 2011
77
Innovalues
Limited
13. Investments in Subsidiaries (Cont’d)
Name of Subsidiaries, Country of Incorporation,
Place of Operations and Principal Activities and
(Independent Auditors)
Cost in Books of
Company
Effective Percentage
of Equity held
by the Company
2011 2010 2011 2010
$’000 $’000 % %
Innovalues Technologies Sdn Bhd (1)
Malaysia
Assembly of rollers
(Crowe Horwath)
46 46 100 100
Nissohatsu Elastomer (Malaysia) Sdn Bhd (1)
Malaysia
Rubber compounding, moulding and other rubber-related
products
(Crowe Horwath)
917 917 100 100
Innovalues Precision (Thailand) Limited (1)
Thailand
Manufacture and sale of precision machined parts,
components and sub-assemblies
(Ernst & Young Office Limited)
8,885 8,885 100 100
Innovalues Precision (Shanghai) Co., Ltd (1)
People’s Republic of China (“PRC”)
Manufacture and sale of precision machined parts,
components and sub-assemblies
(BDO China Shu Lun Pan CPA)
894 894 100 100
Innovalues Industry (Shanghai) Co., Ltd (1)
People’s Republic of China (“PRC”)
Precision engineering and manufacture of turned parts
(BDO China Shu Lun Pan CPA)
7,292 7,292 100 100
Innovalues Technology (Shanghai) Co., Ltd (1)
People’s Republic of China (“PRC”)
Precision engineering and manufacture of turned parts
(BDO China Shu Lun Pan CPA)
1,394 1,394 100 100
Innovalues Auto Precision (Shanghai) Co., Ltd (1)
People’s Republic of China (“PRC”)
Precision engineering and manufacture of turned parts
(BDO China Shu Lun Pan CPA)
11,374 11,374 100 100
Notes to the FinancialStatements31 December 2011
78
Annual Report
2011
13. Investments in Subsidiaries (Cont’d)
The subsidiary held by a subsidiary company is listed below
Name of Subsidiaries, Country of Incorporation,
Place of Operations and Principal Activities
Cost in Books of
Group
Effective Percentage
of Equity held
by the Group
2011 2010 2011 2010
RMB’000 RMB’000 % %
Innovalues Industry (Shanghai) Co., Ltd
Shenzhen Innovalues Precision Co., Ltd (1)
People’s Republic of China (“PRC”)
Precision engineering, manufacturing and sale of precision
engineered turned parts and machinery
(BDO China Shu Lun Pan CPA)
1,000 1,000 100 100
(1) Other independent auditors. Audited by fi rms of accountants other than member fi rms of RSM International of which RSM Chio
Lim LLP in Singapore is a member. Their names are indicated above.
As is required by Rule 716 of the Listing Manual of The Singapore Exchange Securities Trading Limited, the audit
committee and the board of directors of the company have satisfi ed themselves that the appointment of different
auditors for its overseas subsidiaries would not compromise the standard and effectiveness of the audit of the group.
14. Inventories
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Finished goods and goods for resale 6,683 6,826 – 11
Work in progress 3,288 5,185 – –
Raw materials and consumables 4,329 5,958 163 310
14,300 17,969 163 321
Inventories are stated after allowance.
Movements in allowance:
Balance at beginning of the year 334 427 10 10
(Reversed)/charged to profi t or loss included
in cost of sales (34) (93) 29 –
Balance at end of the year 300 334 39 10
Notes to the FinancialStatements
31 December 2011
79
Innovalues
Limited
14. Inventories (Cont’d)
The reversal of the allowance is for goods with estimated increases in net realisable value.
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
The write-downs of inventories (reversed)/charged
to profi t or loss included in cost of sales (34) (93) 29 –
Changes in inventories of fi nished goods and work
in progress decrease/(increase) 2,040 (3,938) 11 4
Raw materials and consumables used 41,331 47,380 – –
There are no inventories pledged as security for liabilities.
15. Trade and Other Receivables
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade receivables:
Outside parties 15,619 16,937 11,352 12,993
Less allowance for impairment (70) (109) – (38)
Subsidiaries (Note 3) – – 4,007 2,727
Subtotal 15,549 16,828 15,359 15,682
Other receivables:
Other receivables 726 198 – –
Subsidiaries (Note 3) – – 273 264
Subtotal 726 198 273 264
Trade and other receivables 16,275 17,026 15,632 15,946
Movements in the above allowance:
Balance at beginning of the year (109) (244) (38) (38)
Charged for trade receivables to income
statement included in other charges – (10) – –
Used 38 144 38 –
Foreign exchange adjustment 1 1 – –
Balance at end of the year (70) (109) – (38)
The allowance is based on individual accounts that are determined to be impaired at the year end date. These are not
secured.
Included in trade and other receivables are factored receivables of $1,637,000 (2010: $3,294,000). Since those
receivables did not meet the FRS39 derecognition requirements, they were recognised as receivables even though
they were legally sold without recourse. Amongst other clauses there is a deferred purchase price clause, under which
a portion of transferred receivables are paid to the company only upon full collection of the receivables. This resulted in
substantial risks and rewards not being transferred to the transferee and therefore the FRS39 derecognition criteria was
not met.
Notes to the FinancialStatements31 December 2011
80
Annual Report
2011
16. Other Assets
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Deposits to secure services 2,175 1,755 14 14
Prepayments 807 958 49 47
Income tax recoverable 228 253 – –
3,210 2,966 63 61
17. Cash and Cash Equivalents
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Not restricted in use 10,517 11,878 4,197 3,783
Restricted in use (a) 171 176 – –
Cash at end of year 10,688 12,054 4,197 3,783
Interest earning balances 171 176 – –
(a) Bank balances held by banks to cover bank facilities issued.
The rate of interest for the cash on interest earning balances was between 0.05% and 1.40% (2010: 0.04% and 1.30%)
per annum.
17A. Cash and Cash Equivalents in the Statement of Cash Flows:
Group
2011
$’000
2010
$’000
As shown above 10,688 12,054
Cash restricted in use over 3 months (171) (176)
Cash and cash equivalents for statement of cash fl ows purposes at end of
the year 10,517 11,878
17B. Non-Cash Transactions:
During 2011 there were acquisitions of plant and equipment with a total cost of $1,149,000 (2010: $41,000)
acquired by means of fi nance leases.
Notes to the FinancialStatements
31 December 2011
81
Innovalues
Limited
18. Share Capital
Number of
share
No:’000
Share
capital
$’000
Balance at beginning of the year 1 January 2010 318,194 11,357
Balance at end of the year 31 December 2010 318,194 11,357
Employee share option scheme – proceeds from share issue 20 1
Balance at end of the year 31 December 2011 318,214 11,358
During the year, 20,000 ordinary shares with an exercise price of $0.080 were issued under the “Innovalues Group
Share Option Scheme 2001”. The new shares rank pari passu in all respects with the existing shares of the company.
The ordinary shares of no par value carry no right to fi xed income and are fully paid.
Capital management:
The objectives when managing capital are: to safeguard the reporting entity’s ability to continue as a going concern,
so that it can continue to provide returns for owners and benefi ts for other stakeholders, and to provide an adequate
return to owners by pricing the sales commensurately with the level of risk. The management sets the amount of capital
to meet its requirements and the risk taken. There were no changes in the approach to capital management during
the reporting year. The management manages the capital structure and makes adjustments to it where necessary or
possible in the light of changes in conditions and the risk characteristics of the underlying assets. In order to maintain
or adjust the capital structure, the management may adjust the amount of dividends paid to owners, return capital to
owners, issue new shares, or sell assets to reduce debt.
The only externally imposed capital requirement is that, for the company to maintain its listing on the Singapore Stock
Exchange, it has to have share capital with at least a free fl oat of 10% of the shares. The company met the capital
requirement on its initial listing and the rules limiting treasury share purchases mean it will automatically continue to
satisfy that requirement, as it did throughout the year. Management receives a report from the registrars monthly on
substantial share interests showing the non-free fl oat and it demonstrated continuing compliance with the 10% limit
throughout the year.
The management does not set a target level of gearing but uses capital opportunistically to add value for shareholders.
The key discipline adopted is to widen the margin between the return on capital employed and the cost of that capital.
Notes to the FinancialStatements31 December 2011
82
Annual Report
2011
18. Share Capital (Cont’d)
The management monitors the capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net
debt/adjusted capital. Net debt is calculated as total borrowings (as shown in the statement of fi nancial position) less
cash and cash equivalents. Adjusted capital comprises all components of equity (i.e. share capital, other reserves and
retained earnings).
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Net debt:
All current and non-current other fi nancial
liabilities including fi nance leases 26,193 33,840 19,153 25,351
Less cash and cash equivalents (10,688) (12,054) (4,197) (3,783)
Net debt 15,505 21,786 14,956 21,568
Adjusted capital:
Equity 40,556 56,274 17,401 14,304
Debt-to-adjusted capital ratio 38.23% 38.71% 85.95% 150.78%
The group’s debt-to-adjusted capital ratio remained relatively constant.
19. Share-Based Payments
19A. Share Options – The Scheme:
During the reporting year, no option to take up unissued shares of the company or any corporation in the group
was granted except as follows:
The company has two employee share option schemes. They are the “Innovalues Group Share Option Scheme
2001” and “Innovalues Group Share Option Scheme 2011” (known collectively as the “Scheme”). With the
expiry of the Innovalues Group Share Option Scheme 2001 on 8 February 2011, the company has adopted
the Innovalues Group Share Option Scheme 2011 on 15 August 2011. The Scheme, which forms an integral
component of its compensation plan, is designed to reward and retain eligible participants whose services are
vital to its well being and success. It provides eligible participants who have contributed to the success and
development of the company with an opportunity to participate and also increase the dedication and loyalty of
these participants and motivate them to perform better.
Under the rules of the Scheme, all directors and employees of the company are eligible to participate in the
Scheme. Controlling shareholders or their associates are also eligible to participate in the Scheme subject
to the approval of independent shareholders in the form of separate resolutions for each participant. Further,
independent shareholders’ approval is also required in the form of separate resolutions for each grant of options
and the terms thereof, to each participant who is a controlling shareholder or his associate.
The total number of shares over which options may be granted shall not exceed 15% of the issued share capital
of the company at any time.
Notes to the FinancialStatements
31 December 2011
83
Innovalues
Limited
19. Share-Based Payments (Cont’d)
19A. Share Options – The Scheme (Cont’d):
The Remuneration Committee is charged with the administration of the Scheme in accordance with the rules
of the Scheme. The Remuneration Committee consists of 5 directors appointed by the board of directors of the
company. They are Goh Leng Tse, Chow Kok Kee, Ong Sim Ho, Ong Tiak Beng and Anthony Teo Soon Chye.
The number of options to be offered to a participant shall be determined at the discretion of the Remuneration
Committee who shall take into account criteria such as the rank, performance, seniority, potential for future
development and length of service of the participant. The Innovalues Group Share Option Scheme 2001 provides
that: - (a) the total number of shares which may be offered to any participant during the entire operation of the
Scheme (including adjustments under the rules) shall not exceed 25% of the shares in respect of which the
company may grant options; (b) the aggregate number of shares which may be offered to participants who are
controlling shareholders and their associates during the entire operation of the Scheme (including adjustments
under the rules) shall not exceed 25% of the shares in respect of which the company may grant options; and (c)
the number of shares which may be offered to each participant who is a controlling shareholder or his associate
during the entire operation of the Scheme shall not exceed 10% of the shares in respect of which the company
may grant options. The Innovalues Group Share Option Scheme 2011 provides that, the aggregate number of
shares over which the Committee may offer to grant options to the controlling shareholders and their associates
under the option scheme, shall not exceed 25% of the shares available under the option scheme, provided
always that the number of shares available to each controlling shareholder or each of his associates shall not
exceed 10% of the shares available under the option scheme.
The exercise price for each share in respect of which an option is exercisable shall be determined by the
Remuneration Committee at its absolute discretion and fi xed by the Committee at:- (a) where the options are
offered to a grantee prior to the date of the listing and quotation of the shares, a price equal to the price per
share offered to the public at the initial public offering of the shares, that is $0.35; (b) where the options are
offered after the listing date (i) a price (the “Market Price”) equal to the average of the last dealt prices for a share
on the SGX-ST for the period of fi ve (5) consecutive Market Days immediately prior to the relevant offer date but;
or (ii) a price which is set at a discount to the Market Price, provided that the maximum discount shall not exceed
20% of the Market Price.
Options must be exercised before the expiry of 6 and 5 years for the Innovalues Group Share Option Scheme
2001 and the Innovalues Group Share Option Scheme 2011 respectively, from the date of the offer or such
earlier date as may be determined by the Remuneration Committee. There are special provisions dealing with
the lapsing or permitting the earlier exercise of options under certain circumstances including termination,
bankruptcy, and death of the participant.
Notes to the FinancialStatements31 December 2011
84
Annual Report
2011
19. Share-Based Payments (Cont’d)
19B. Activities under the Share Option Scheme:
The outstanding number of options at the end of the year was:
Date of grant
Balance as
at
01.01.2011
Granted/
(exercised)
Options
lapsed/
cancelled
Balance as
at
31.12.2011
Exercise
price
Exercise
period
11.06.2007 2,600,000 – – 2,600,000 $0.720 12.06.2008 to
11.06.2013
29.10.2007 3,000,000 – – 3,000,000 $0.450 30.10.2008 to
29.10.2013
01.06.2009 2,240,000 (20,000) (600,000) 1,620,000 $0.080 02.06.2010 to
01.06.2015
03.08.2010 2,180,000 – (320,000) 1,860,000 $0.166 04.08.2011 to
03.08.2016
15.08.2011 – 3,750,000 – 3,750,000 $0.100 16.08.2012 to
15.08.2016
The table below summarises the number of options that were outstanding, their weighted average exercise price
as at the end of the year as well as the movements during the year.
Total share options
Weighted average
exercise price
2011
No:’000
2010
No:’000
2011 2010
Balance at 1 January 10,020 8,320 $0.376 $0.427
Granted 3,750 2,270 $0.029 $0.036
Exercised (20) – – –
Expired/Cancelled (920) (570) $0.080 $0.287
Balance at 31 December 12,830 10,020 $0.315 $0.376
During the year, 920,000 (2010: 570,000) shares options granted to employees that had not yet vested were
forfeited. The grant date fair value of the options as originally priced and not yet charged to the income statement
has been taken immediately to the income statement.
During the year no option was granted at a discount.
Notes to the FinancialStatements
31 December 2011
85
Innovalues
Limited
19. Share-Based Payments (Cont’d)
19B. Activities under the Share Option Scheme (Cont’d):
The following table summarises information about directors’ share options outstanding at 31 December 2011:
Participants
Directors and controlling
shareholders of the company
Grants in
2011
No:’000
Grants from
start of
Scheme to
end of
2011
No:’000
Exercised/
lapsed from
start of
Scheme to
end of
2011
No:’000
Balance at
31.12.2011
No:’000
Goh Leng Tse – 3,000 – 3,000(a)
– 360(e) (360) –
1,500 1,500 – 1,500(g)
Sub-total 1,500 4,860 (360) 4,500
Directors of the company
Ong Tiak Beng – 300 – 300(b)
– 720(e) (720) –
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Chow Kok Kee – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Ong Sim Ho – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Anthony Teo Soon Chye – 300 – 300(b)
– 200 – 200(c)
– 100 – 100(d)
150 150 – 150(g)
Pung Tong Seng – 376(f) (376) –
– 1,000 – 1,000(b)
– 200 – 200(c)
– 300 – 300(d)
750 750 – 750(g)
Total 2,850 11,206 (1,456) 9,750
(a) Exercise price of $0.450. Exercise period from 30 October 2008 to 29 October 2013
(b) Exercise price of $0.720. Exercise period from 12 June 2008 to 11 June 2013
(c) Exercise price of $0.080. Exercise period from 2 June 2010 to 1 June 2015
(d) Exercise price of $0.166. Exercise period from 4 August 2011 to 3 August 2016
(e) Exercise price of $0.217. Exercise period from 6 June 2003 to 4 June 2008
(f) Exercise price of $0.435. Exercise period from 22 October 2004 to 20 October 2009
(g) Exercise price of $0.100. Exercise period from 16 August 2012 to 15 August 2016
No participant has received 5% or more of the total number of the options available under the Scheme.
Notes to the FinancialStatements31 December 2011
86
Annual Report
2011
19. Share-Based Payments (Cont’d)
19C. Accounting for the Share Options:
The company has an employee share option scheme (the “Scheme”) more fully disclosed in Note 19A above.
Activities under the Scheme are summarised in Note 19B above.
The following table summarises information about employee and director stock options outstanding at 31
December 2011:
Exercise price
Number
outstanding
No:’000
Number
exercisable
No:’000
Remaining
life (years)
$0.450 3,000 2,625 1.83
$0.720 2,600 2,600 1.50
$0.080 1,620 800 3.50
$0.166 1,860 232 4.67
$0.100 3,750 – 4.67
12,830 6,257
Group and company
2011
$’000
2010
$’000
Share option reserve:
At beginning of the year 1,515 1,344
Expense recognised in profi t or loss 172 171
At end of the year 1,687 1,515
The expense for the year is allocated in the profi t or loss as follows:
Administrative expenses 172 171
During 2011 the total charge to profi t or loss amounted to $172,000 (2010: $171,000). Included in 2011’s amount
was $30,000 (2010: $7,000) recorded in the profi t or loss immediately because of the forfeiture of share options
(See Note 19B).
These expensed amounts are also disclosed in employee benefi ts expense (Note 8B).
The estimate of the grant date fair value of each option issued is based on the Black-Scholes Pricing Model.
In order to approximate the expectations that would be refl ected in a current market or negotiated exchange
price for these options, the calculation takes into consideration factors like behavioural considerations and non-
transferability of the options granted.
Notes to the FinancialStatements
31 December 2011
87
Innovalues
Limited
19. Share-Based Payments (Cont’d)
19C. Accounting for the Share Options (Cont’d):
Inputs to the model for options granted in 2011 included:
2011 2010
Share price # $0.098 $0.165
Exercise price * $0.100 $0.166
Dividend yield expected – –
Risk-free annual interest rates 1.125% 1.375%
Volatility expected - determined by calculating the historical volatility of the
company’s share price over the previous 4 years 58.58% 63.16%
Expected option term of years, based on management’s best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations 5 5
# Market price (last done price) of shares on date of grant.
* The exercise price of the options granted is equal to the average of the last dealt prices for a share of the company on
the Singapore Exchange Securities Limited (SGX-ST) for the period of fi ve consecutive market days immediately prior to
the date of grant.
20. Other Reserves
Other reserves classifi ed on the face of the statement of fi nancial position include the capital reserve, share option
reserve, translation reserve and statutory reserve.
(a) The capital reserve represents retained earnings of Innovalues Industry (Shanghai) Co., Ltd amounting to RMB
6,077,214 (or S$1,212,000 equivalent) which were capitalised as part of the paid up capital of this subsidiary.
(b) The share option reserve represents the equity-settled options granted to employees (Note 19). The reserve
is made up of the cumulative value of services received from employees recorded over the vesting period
commencing from the grant date of equity-settled share options, and is reduced by the expiry, forfeiture or
exercise of the share options.
(c) The currency translation reserve accumulates all foreign exchange differences on translating the results and net
assets of foreign operations during the year that the group controls.
Notes to the FinancialStatements31 December 2011
88
Annual Report
2011
20. Other Reserves (Cont’d)
(d) The statutory reserve comprises the following:
(i) Under section 102 of the Thai Civic and Commercial code, 1,250,000 Thai Baht (or S$50,700 equivalent)
is not distributable as dividends and cannot be used to offset against defi cits.
(ii) The subsidiaries incorporated in the PRC are required by the relevant PRC regulations and the articles
of association to appropriate, where applicable, a certain percentage of profi t after tax (after offsetting
all recognised tax losses carried forward from previous fi nancial years) arrived at in accordance with
the PRC GAAP each year to statutory reserves. The appropriation to statutory reserves must be made
before distribution of dividends to shareholders. Subject to certain restrictions, part of the reserve may
be converted to increase share capital. These statutory reserves are not distributable in the form of cash
dividends. The amount of retained earnings under restriction amounts to RMB 6,760,072 (or S$1,358,800
equivalent).
All reserves classifi ed on the face of the statement of fi nancial position as retained earnings represents past
accumulated earnings and are distributable. The other reserves are not available for cash dividends unless realised.
The movements in the other reserves are disclosed in the statement of changes in equity.
21. Other Financial Liabilities
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Non-current:
Bank loans (Note 21B) 4,050 7,517 3,508 6,311
Non-current, total 4,050 7,517 3,508 6,311
Current:
Bank loans (Note 21B) 15,125 19,285 10,618 14,375
Bills payable to banks (Note 21A) 6,728 6,629 4,782 4,292
Current, total 21,853 25,914 15,400 18,667
Total 25,903 33,431 18,908 24,978
The non-current portion is repayable as follows:
Due within 2 to 5 years 4,050 7,517 3,508 6,311
Total non-current portion 4,050 7,517 3,508 6,311
All the amounts are at fl oating interest rates except
the following that are on fi xed interest rates:
Bank loans 5,939 11,020 5,939 11,020
Notes to the FinancialStatements
31 December 2011
89
Innovalues
Limited
21. Other Financial Liabilities (Cont’d)
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
The range of fl oating rate interest rates paid were
as follows:
Bank loans 2.03% to
5.25%
2.03% to
5.25%
2.03% to
3.28%
2.03% to
3.72%
Bills payable to banks 1.73% to
2.72%
1.80% to
2.50%
1.73% to
2.72%
1.80% to
2.25%
The range of fi xed rate interest rates paid were
as follows:
Bank loans 3.73% to
5.25%
3.73% to
5.00%
3.73% to
5.00%
3.73% to
5.00%
The carrying amounts of the current and non-current portions are assumed to be a reasonable approximation of fair
values.
21A. Bank Overdrafts and Bills Payable to Banks
The bank overdrafts and other credit facilities of the subsidiaries are covered by corporate guarantees given by
the company (Note 27) and the negative pledge on freehold land and leasehold property of a subsidiary (Note
12).
Notes to the FinancialStatements31 December 2011
90
Annual Report
2011
21. Other Financial Liabilities (Cont’d)
21B. Bank Loans
The bank loans of subsidiaries are covered by a corporate guarantee from the company (Note 27) and the
negative pledge on freehold land and leasehold property of a subsidiary (Note 12).
The bank loans are listed as follows:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
(a) 6-year bank loan of Thai Baht
100,000,000 repayable by 60 equal
monthly instalments commencing June
2008
1,366 2,064 – –
(b) 3-year bank loan of SGD 5,000,000
repayable by 20 quarterly instalments
commencing March 2008
1,250 2,250 1,250 2,250
(c) 3-year bank loan of USD 5,000,000
repayable by 20 quarterly instalments
commencing March 2008
1,625 2,898 1,625 2,898
(d) 3-year bank loan of SGD 5,000,000
repayable by 20 quarterly instalments
commencing November 2008
2,000 3,000 2,000 3,000
(e) 3-year bank loan of SGD 2,500,000
repayable by 36 quarterly instalments
commencing May 2009
– 1,100 – 1,100
(f) 4-year bank loan of SGD 2,500,000
repayable by 42 quarterly instalments
commencing December 2009
1,064 1,772 1,064 1,772
(g) 3-year bank loan of SGD 1,600,000
repayable by 36 quarterly instalments
commencing April 2009
133 666 133 666
(h) 3-year bank loan of SGD 2,000,000
repayable by 36 quarterly instalments
commencing February 2011
1,389 – 1,389 –
(i) 30-month bank loan of SGD 2,000,000
repayable by 30 equal monthly
instalments commencing August 2011
1,665 – 1,665 –
(j) Other short-term bank loans 8,683 13,052 5,000 9,000
Total 19,175 26,802 14,126 20,686
Notes to the FinancialStatements
31 December 2011
91
Innovalues
Limited
22. Finance Leases Liabilities
Group Company
Minimum
payments
$’000
Finance
charges
$’000
Present
value
$’000
Minimum
payments
$’000
Finance
charges
$’000
Present
value
$’000
2011
Minimum lease payments payable:
Due within one year 148 (18) 130 133 (16) 117
Due within 2 to 5 years 181 (21) 160 146 (18) 128
Total 329 (39) 290 279 (34) 245
Net book value of plant and
equipment under fi nance leases 369 64
Minimum
payments
$’000
Finance
charges
$’000
Present
value
$’000
Minimum
payments
$’000
Finance
charges
$’000
Present
value
$’000
2010
Minimum lease payments payable:
Due within one year 171 (21) 150 161 (20) 141
Due within 2 to 5 years 296 (37) 259 265 (33) 232
Total 467 (58) 409 426 (53) 373
Net book value of plant and
equipment under fi nance leases 423 82
It is the group’s policy to lease certain of its plant and equipment under fi nance leases. The average lease term is 3-7
years. The rate of interest for fi nance leases is between 3.58% to 6.01% (2010: 3.58% to 6.01%) during the year. There
is an exposure to fair value interest risk because the interest rates are fi xed at the contract date. All leases are on a
fi xed repayment basis and no arrangements have been entered into for contingent rental payments. Lease obligations
are denominated in Singapore dollars and Japanese Yen. The obligations under fi nance leases are secured by the
lessor’s charge over the leased assets.
The fair value of the lease liabilities approximates the carrying amounts.
Notes to the FinancialStatements31 December 2011
92
Annual Report
2011
23. Trade and Other Payables
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade payables:
Outside parties and accrued liabilities 10,252 10,134 1,979 3,299
Subsidiaries (Note 3) – – 12,821 8,605
Subtotal 10,252 10,134 14,800 11,904
Other payables:
Other payables 1,067 1,354 234 102
Subsidiaries (Note 3) – – – 48
Income tax payable 93 14 – –
Subtotal 1,160 1,368 234 150
Trade and other payables 11,412 11,502 15,034 12,054
24. Financial Instruments: Information on Financial Risks
24A. Classifi cation of Financial Assets and Liabilities
The following table summarises the carrying amount of fi nancial assets and liabilities recorded at the end of the
year by FRS 39 categories:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Financial assets:
Cash and cash equivalents 10,688 12,054 4,197 3,783
Loans and receivables 16,275 17,026 15,632 15,946
At end of the year 26,963 29,080 19,829 19,729
Financial liabilities:
Measured at amortised cost:
- Other fi nancial liabilities and
fi nance leases 26,193 33,840 19,153 25,351
- Trade and other payables 11,319 11,488 15,034 12,054
At end of the year 37,512 45,328 34,187 37,405
Further quantitative disclosures are included throughout these fi nancial statements.
There are no signifi cant fair value measurements recognised in the statements of fi nancial position.
Notes to the FinancialStatements
31 December 2011
93
Innovalues
Limited
24. Financial Instruments: Information on Financial Risks (Cont’d)
24B. Financial Risk Management
The main purpose for holding or issuing fi nancial instruments is to raise and manage the fi nances for the entity’s
operating, investing and fi nancing activities. The main risks arising from the entity’s fi nancial instruments are
credit risk, interest risk, liquidity risk, foreign currency risk and market price risk comprising interest rate and
currency risk exposures. The management has certain practices for the management of fi nancial risks. The
guidelines set up the short and long term objectives and action to be taken in order to manage the fi nancial
risks. The major guidelines are the following:
1. Minimise interest rate, currency, credit and market risk for all kinds of transactions.
2. Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and
costs and payables and receivables denominated in the same currency and therefore put in place hedging
strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk.
3. Enter into derivatives or any other similar instruments solely for hedging purposes.
4. All fi nancial risk management activities are carried out and monitored by senior management staff.
5. All fi nancial risk management activities are carried out following good market practices.
6. May consider investing in shares or similar instruments.
The group fi nancial controller who monitors the procedures reports to the board of directors.
24C. Credit Risk on Financial Assets
Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to
discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash
equivalents and receivables. The maximum exposure to credit risk is: the total of the fair value of the fi nancial
instruments; the maximum amount the entity could have to pay if the guarantee is called on; and the full amount
of any loan payable commitment at the end of the reporting year. Credit risk on cash balances is limited because
the counter-parties are banks with acceptable credit ratings. For credit risk on receivables an ongoing credit
evaluation is performed of the debtors’ fi nancial condition and a loss from impairment is recognised in profi t or
loss. The exposure to credit risk is controlled by setting limits on the exposure to individual customers and these
are disseminated to the relevant persons concerned and compliance is monitored by management. There is
no signifi cant concentration of credit risk, as the exposure is spread over a large number of counter-parties and
customers unless otherwise disclosed in the notes to the fi nancial statements.
Cash and cash equivalents represent short-term deposits with less than 90 days maturity except for cash
restricted in use (Note 17).
Notes to the FinancialStatements31 December 2011
94
Annual Report
2011
24. Financial Instruments: Information on Financial Risks (Cont’d)
24C. Credit Risk on Financial Assets (Cont’d)
The credit period generally granted to non-related trade receivable customers is about 30 days to 60 days (2010:
30 days to 60 days). But some customers take a longer period to settle the amounts.
(a) The table below illustrates the ageing analysis:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade receivables:
Less than 30 days 7,275 7,682 5,446 6,290
31-60 days 5,971 6,439 4,153 4,809
61-90 days 2,095 2,264 1,606 1,871
91-120 days 278 185 147 23
Over 120 days – 367 – –
At end of the year 15,619 16,937 11,352 12,993
(b) Ageing analysis of the age of trade receivables amounts that are past due as at the end of reporting year
but not impaired:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade receivables:
31-60 days 212 395 207 246
61-90 days 2,216 2,404 1,706 2,025
Over 90 days 57 388 – 51
At end of the year 2,485 3,187 1,913 2,322
Notes to the FinancialStatements
31 December 2011
95
Innovalues
Limited
24. Financial Instruments: Information on Financial Risks (Cont’d)
24C. Credit Risk on Financial Assets (Cont’d)
(c) Ageing analysis as at the end of reporting year of trade receivables amounts that are impaired:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade receivables:
Over 90 days 70 109 – 38
At end of the year 70 109 – 38
The allowances which are disclosed in the note on trade receivables are based on individual accounts
totalling $70,000 (2010: $109,000) and $ nil (2010: $38,000) for the group and company respectively that
are determined to be impaired at the end of the reporting year. These are not secured.
Other receivables are normally with no fi xed terms and therefore there is no maturity.
Concentration of trade receivable customers:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Top 1 customer 2,187 2,156 2,187 2,156
Top 2 customers 4,273 3,996 3,239 3,996
Top 3 customers 5,326 5,393 4,289 5,393
Notes to the FinancialStatements31 December 2011
96
Annual Report
2011
24. Financial Instruments: Information on Financial Risks (Cont’d)
24D. Liquidity Risk
The following table analyses the non-derivative fi nancial liabilities by remaining contractual maturity (contractual
and undiscounted cash fl ows):
Less than 1 year
$’000
1 – 3 years
$’000
Total
$’000
Non-derivative fi nancial liabilities:
Group
2011:
Other fi nancial liabilities and fi nance leases 22,875 4,358 27,233
Trade and other payables 11,319 – 11,319
At end of the year 34,194 4,358 38,552
Non-derivative fi nancial liabilities:
Group
2010:
Other fi nancial liabilities and fi nance leases 27,301 8,195 35,496
Trade and other payables 11,488 – 11,488
At end of the year 38,789 8,195 46,984
Less than 1 year
$’000
1 – 3 years
$’000
Total
$’000
Non-derivative fi nancial liabilities:
Company
2011:
Other fi nancial liabilities and fi nance leases 16,117 3,754 19,871
Trade and other payables 15,034 – 15,034
At end of the year 31,151 3,754 34,905
Non-derivative fi nancial liabilities:
Company
2010:
Other fi nancial liabilities and fi nance leases 19,694 6,925 26,619
Trade and other payables 12,054 – 12,054
At end of the year 31,748 6,925 38,673
Notes to the FinancialStatements
31 December 2011
97
Innovalues
Limited
24. Financial Instruments: Information on Financial Risks (Cont’d)
24D. Liquidity Risk (Cont’d)
The above amounts disclosed in the maturity analysis are the contractual undiscounted cash fl ows and such
undiscounted cash fl ows differ from the amount included in the statement of fi nancial position. When the
counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on
which it can be required to pay.
Financial guarantee contracts – For fi nancial guarantee contracts the maximum earliest period in which the
guarantee could be called is used. At the end of the reporting year no claims on the fi nancial guarantees are
expected. The following table shows the maturity analysis of the contingent liabilities:
Less than 1 year
$’000
1 – 3 years
$’000
Total
$’000
Company
2011:
Financial guarantee contracts
– in favour of subsidiaries’ banking facilities 5,895 1,366 7,261
Financial guarantee contracts
– in favour of subsidiaries’ tenancy agreements 188 256 444
At end of the year 6,083 1,622 7,705
Company
2010:
Financial guarantee contracts
– in favour of subsidiaries’ banking facilities 7,247 1,206 8,453
Financial guarantee contracts
– in favour of subsidiaries’ tenancy agreements 21 – 21
At end of the year 7,268 1,206 8,474
The liquidity risk is managed on the basis of expected maturity dates of the fi nancial liabilities. The average
credit period taken to settle non-related trade payables is about 90 days (2010: 90 days). The other payables are
with short-term durations. The classifi cation of the fi nancial assets is shown in the statement of fi nancial position
as they may be available to meet liquidity needs and no further analysis is deemed necessary.
The liquidity risk refers to the difficulty in meeting obligations associated with fi nancial liabilities that are settled
by delivering cash or another fi nancial asset. It is expected that all the liabilities will be paid at their contractual
maturity. In order to meet such cash commitments the operating activity is expected to generate sufficient cash
infl ows.
Notes to the FinancialStatements31 December 2011
98
Annual Report
2011
24. Financial Instruments: Information on Financial Risks (Cont’d)
24D. Liquidity Risk (Cont’d)
Bank facilities:
2011
$’000
2010
$’000
Undrawn borrowing facilities 16,649 14,671
Unused bank guarantees 735 752
The undrawn borrowing facilities are available for operating activities and to settle other commitments. Borrowing
facilities are maintained to ensure funds are available for the operations. A monthly schedule showing the
maturity of fi nancial liabilities and unused borrowing facilities is provided to the directors to assist them in
monitoring the liquidity risk.
24E. Interest Rate Risk
The interest rate risk exposure is mainly from changes in fi xed rate and fl oating interest rates. The interest from
fi nancial assets including cash balances is not signifi cant. The following table analyses the breakdown of the
fi nancial liabilities (excluding derivatives) by type of interest rate:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Financial liabilities:
Fixed rate 6,229 11,429 6,184 11,393
Floating rate 19,964 22,411 12,969 13,958
At end of the year 26,193 33,840 19,153 25,351
The fl oating rate debt obligations are with interest rates that are re-set regularly at one, three or six month
intervals. The interest rates are disclosed in the respective notes.
Notes to the FinancialStatements
31 December 2011
99
Innovalues
Limited
24. Financial Instruments: Information on Financial Risks (Cont’d)
24E. Interest Rate Risk (Cont’d)
Sensitivity analysis:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Financial liabilities:
A hypothetical variance in interest rates by
50 basis points with all other variables held
constant, would have an increase/decrease
in pre-tax profi t/(loss) for the year by 100 112 65 70
The analysis has been performed separately for fi xed interest rate liabilities and fl oating interest rate fi nancial
liabilities. The impact of a change in interest rates on fi xed interest rate fi nancial instruments has been assessed
in terms of changing of their fair value. The impact of a change in interest rates on fl oating interest rate fi nancial
instruments has been assessed in terms of changing of their cash fl ows and therefore in terms of the impact on
net expenses. The hypothetical changes in basis points are not based on observable market data (unobservable
inputs).
Notes to the FinancialStatements31 December 2011
100
Annual Report
2011
24. Financial Instruments: Information on Financial Risks (Cont’d)
24F. Foreign Currency Risks
Analysis of amounts denominated in non-functional currency:
2011 2010
Group
Financial assets:
Cash
$’000
Receivables
$’000
Total
$’000
Cash
$’000
Receivables
$’000
Total
$’000
At 31 December:
US dollars 5,948 14,389 20,337 7,231 16,364 23,595
China Renminbi 1,512 1,225 2,737 2,602 454 3,056
Malaysian Ringgit 1,704 71 1,775 742 52 794
Thai Baht 662 544 1,206 500 81 581
Euro – 3 3 – 55 55
9,826 16,232 26,058 11,075 17,006 28,081
2011 2010
Group
Financial liabilities:
Borrowings
$’000
Payables
$’000
Total
$’000
Borrowings
$’000
Payables
$’000
Total
$’000
At 31 December:
US dollars 11,411 3,772 15,183 12,937 3,790 16,727
China Renminbi – 1,841 1,841 – 2,351 2,351
Malaysian Ringgit – 1,982 1,982 – 2,000 2,000
Thai Baht 1,991 2,495 4,486 2,743 2,213 4,956
Japanese Yen 210 – 210 290 – 290
Euro – 9 9 – 22 22
13,612 10,099 23,711 15,970 10,376 26,346
2011 2010
Company
Financial assets:
Cash
$’000
Receivables
$’000
Total
$’000
Cash
$’000
Receivables
$’000
Total
$’000
At 31 December:
US dollars 3,359 12,917 16,276 2,810 14,083 16,893
Euro – – – – 31 31
3,359 12,917 16,276 2,810 14,114 16,924
2011 2010
Company
Financial liabilities:
Borrowings
$’000
Payables
$’000
Total
$’000
Borrowings
$’000
Payables
$’000
Total
$’000
At 31 December:
US dollars 6,406 9,365 15,771 7,190 5,179 12,369
Japanese Yen 210 – 210 290 – 290
Euro – 9 9 – 21 21
6,616 9,374 15,990 7,480 5,200 12,680
Notes to the FinancialStatements
31 December 2011
101
Innovalues
Limited
24. Financial Instruments: Information on Financial Risks (Cont’d)
24F. Foreign Currency Risks (Cont’d)
There is exposure to foreign currency risk as part of its normal business. In particular, there is signifi cant
exposure to US$ currency risk due to the large value of sales made in this currency.
Sensitivity analysis for signifi cant items:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
A hypothetical 10% depreciation in the
exchange rate of the functional currency
against the US$ would have a favourable/
(adverse) effect on profi t/(loss) before tax of 515 687 51 452
A hypothetical 10% depreciation in the
exchange rate of the functional currency
against the China Renminbi would have a
favourable/(adverse) effect on profi t/(loss)
before tax of 90 71 – –
A hypothetical 10% depreciation in the
exchange rate of the functional currency
against the Malaysian Ringgit would have
a favourable/(adverse) effect on profi t/(loss)
before tax of (21) (121) – –
A hypothetical 10% depreciation in the
exchange rate of the functional currency
against the Thai Baht would have a
favourable/(adverse) effect on profi t/(loss)
before tax of (328) (438) – –
The analysis above has been carried out on the basis that there are no hedged transactions.
In management’s opinion, the above sensitivity analysis is unrepresentative of the inherent foreign exchange
risks as the year end exposures do not refl ect the exposures during the year.
Notes to the FinancialStatements31 December 2011
102
Annual Report
2011
25. Capital Commitments
Estimated amounts committed at the end of the reporting year for future capital expenditure but not recognised in the
fi nancial statements are as follows:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Commitments to purchase property, plant and
equipment 10,081 514 – –
26. Operating Lease Payments Commitments
At the end of the reporting year the total of future minimum lease payments under non-cancellable operating leases are
as follows:
Group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Not later than one year 10,081 746 91 117
Later than one year and not later than fi ve years 419 580 45 135
Rental expense for the year 1,085 1,334 117 117
Operating lease payments represent rentals payable for certain of its rented factory properties, and plant and equipment.
The lease rental terms are negotiated for an average term of three years and rentals are subject to an escalation clause
but the amount of the rent increase is not to exceed a certain percentage.
27. Contingent Liabilities
Company
2011
$’000
2010
$’000
Guarantees in favour of subsidiaries’ banking facilities 7,261 8,453
Guarantees in favour of subsidiaries’ tenancy agreements 444 21
28. Dividend
Group and company
2011
$’000
2010
$’000
Interim exempt (1-tier) dividend paid of 0.6 cents 1,909 –
Notes to the FinancialStatements
31 December 2011
103
Innovalues
Limited
29. Changes and Adoption of Financial Reporting Standards
For the reporting year ended 31 December 2011 the following new or revised Singapore Financial Reporting Standards
were adopted. The new or revised standards did not require any material modifi cation of the measurement methods or
the presentation in the fi nancial statements.
FRS No. Title
FRS 1 Presentation of Financial Statements Disclosures (Amendments to)
FRS 24 Related Party Disclosures (revised)
FRS 27 Consolidated and Separate Financial Statements (Amendments to)
FRS 32 Classifi cation Of Rights Issues (Amendments to) (*)
FRS 34 Interim Financial Reporting (Amendments to)
FRS 103 Business Combinations (Amendments to)
FRS 107 Financial Instruments: Disclosures (Amendments to)
FRS 107 Financial Instruments: Disclosures (Amendments to) - Transfers of Financial Assets (*)
INT FRS 113 Customer Loyalty Programmes (Amendments to) (*)
INT FRS 114 Prepayments of a Minimum Funding Requirement (revised) (*)
INT FRS 115 Agreements for the Construction of Real Estate (*)
INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments (*)
(*) Not relevant to the entity.
30. Future Changes in Financial Reporting Standards
The following new or revised Singapore Financial Reporting Standards that have been issued will be effective in future.
The transfer to the new or revised standards from the effective dates is not expected to result in material adjustments to
the fi nancial position, results of operations, or cash fl ows for the following year.
FRS No. Title
Effective date for
periods beginning on
or after
FRS 1 Amendments to FRS 1 – Presentation of Items of Other Comprehensive
Income
1 Jul 2012
FRS 12 Deferred Tax (Amendments to ) – Recovery of Underlying Assets (*) 1 Jan 2012
FRS 19 Employee Benefi ts 1 Jan 2013
FRS 27 Consolidated and Separate Financial Statements (Amendments to) 1 Jul 2011
FRS 27 Separate Financial Statements 1 Jan 2013
FRS 28 Investments in Associates and Joint Ventures (*) 1 Jan 2013
FRS 107 Financial Instruments: Disclosures (Amendments to) - Transfers of Financial
Assets (*)
1 Jul 2011
FRS 110 Consolidated Financial Statements 1 Jan 2013
FRS 111 Joint Arrangements (*) 1 Jan 2013
FRS 112 Disclosure of Interests in Other Entitles 1 Jan 2013
FRS 113 Fair Value Measurements 1 Jan 2013
(*) Not relevant to the entity.
Information onShareholdingsAs at 23 March 2012
104
Annual Report
2011
Issued and fully paid capital : SGD11,358,184
Number of shares : 318,214,000
Class of shares : ordinary shares
Voting rights : one vote per share
Distribution of shareholdings
Size of Shareholdings Shareholders % No. of Shares %
1 – 999 1 0.05 480 0.00
1,000 – 10,000 702 32.53 5,042,120 1.59
10,001 – 1,000,000 1,430 66.26 107,241,400 33.70
1,000,001 and above 25 1.16 205,930,000 64.71
TOTAL: 2,158 100.00 318,214,000 100.00
Shareholding held by the public
Based on the information available to the Company as at 23 March 2012, approximately 54.59% of the issued ordinary shares
of the Company is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange
Securities Trading Limited is complied with.
Substantial shareholders
Direct Interest Deemed Interest
Name of shareholders No. of shares % of shares No. of shares % of shares
Atlantis Capital Holdings Limited – – 24,925,000 7.83
Goh Leng Tse 62,200,000 19.55 2,080,000(1) 0.65
Ong Tiak Beng 28,127,000 8.84 – –
Koh Boon Hwee 22,000,000 6.91 – –
Note:
(1) The deemed interest of Mr Goh Leng Tse arises from shares held by his nominee and spouse.
Information onShareholdings
As at 23 March 2012
105
Innovalues
Limited
Top twenty shareholders
No. Name No. of Shares %
1 Goh Leng Tse 62,200,000 19.55
2 Ong Tiak Beng 28,127,000 8.84
3 Koh Boon Hwee 22,000,000 6.91
4 DBS Nominees Pte Ltd 17,616,000 5.54
5 Citibank Nominees Singapore Pte Ltd 13,671,000 4.30
6 United Overseas Bank Nominees Pte Ltd 7,027,000 2.21
7 Tan Hock Heng 6,598,000 2.07
8 DBS Vickers Securities (Singapore) Pte Ltd 4,980,000 1.56
9 Hia Cher Bee 4,689,000 1.47
10 HSBC (Singapore) Nomineess Pte Ltd 4,564,000 1.43
11 Robin Ng Zhi Peng 3,830,000 1.20
12 OCBC Nominees Singapore Pte Ltd 3,465,000 1.09
13 Loo Tian Sze Melvin 3,000,000 0.94
14 Maybank Kim Eng Securities Pte Ltd 2,957,000 0.93
15 Lee Kwang Hwee 2,598,000 0.82
16 Tan Thiam Beng 2,550,000 0.80
17 Phillip Securities Pte Ltd 2,278,000 0.72
18 Teo Siew Ngor 2,218,000 0.70
19 Koh Beow Ko 2,112,000 0.66
20 Bank Of Singapore Nominees Pte Ltd 2,062,000 0.65
TOTAL: 198,542,000 62.39
Notice ofAnnual General Meeting
106
Annual Report
2011
NOTICE IS HEREBY GIVEN that the 2012 Annual General Meeting of the shareholders of the Company will be held at 8 Wilkie
Road #03-01 Wilkie Edge Singapore 228095 on 19 April 2012 at 3.00 p.m. to transact the following businesses:
AS ORDINARY BUSINESS
1. To receive and consider the audited fi nancial statements of the Company and Reports of the
Directors and Auditors for the year ended 31 December 2011.
2. To re-elect the following Director retiring pursuant to the Company’s Articles of Association:
Mr Ong Sim Ho (Article 106)
[Note: Mr Ong Sim Ho shall, upon re-election as Director of the Company, remain as members
of the Audit, Remuneration and Nominating Committees. Mr Ong Sim Ho shall be considered
independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange
Securities Trading Limited.]
3. To re-elect the following Director retiring pursuant to the Company’s Articles of Association:
Mr Ong Tiak Beng (Article 106)
4. To approve the Directors’ fees of S$225,000 for the year ended 31 December 2011.
5. To re-appoint RSM Chio Lim LLP as the Company’s Auditors and to authorise the Directors to fi x
their remuneration.
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Notice ofAnnual General Meeting
107
Innovalues
Limited
AS SPECIAL BUSINESS
To consider and, if thought fi t, to pass the following Resolutions as Ordinary Resolutions, with or without amendments:
6. Proposed Share Issue Mandate
“That pursuant to Section 161 of the Companies Act, Cap. 50. and Rule 806 of the Listing Manual
of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be
authorized and empowered to:
(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise;
and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or
would require shares to be issued, including but not limited to the creation and issue
of (as well as adjustments to) options, warrants, debentures or other instruments
convertible into shares,
at any time and upon such terms and conditions and for such purposes and to such persons
as the Directors of the Company may in their absolute discretion deem fi t; and
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in
force) issue shares in pursuance of any Instrument made or granted by the Directors of the
Company while this Resolution was in force,
provided that:
(1) the aggregate number of shares (including shares to be issued in pursuance of the
Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this
Resolution shall not exceed fi fty per centum (50%) of the total number of issued shares
(excluding treasury shares) in the capital of the Company (as calculated in accordance with
sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be
issued other than on a pro rata basis to existing shareholders of the Company shall not
exceed twenty per centum (20%) of the total number of issued shares (excluding treasury
shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2)
below);
(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of
determining the aggregate number of shares that may be issued under sub-paragraph (1)
above, the total number of issued shares (excluding treasury shares) shall be based on the
total number of issued shares (excluding treasury shares) in the capital of the Company at
the time of the passing of this Resolution, after adjusting for:
(a) new shares arising from the conversion or exercise of any convertible securities;
Resolution 6
Notice ofAnnual General Meeting
108
Annual Report
2011
(b) new shares arising from exercising share options or vesting of share awards which
are outstanding or subsisting at the time of the passing of this Resolution; and
(c) any subsequent bonus issue, consolidation or subdivision of shares;
(3) in exercising the authority conferred by this Resolution, the Company shall comply with
the provisions of the Listing Manual of the SGX-ST for the time being in force (unless
such compliance has been waived by the SGX-ST) and the Articles of Association of the
Company; and
(4) unless revoked or varied by the Company in a general meeting, such authority shall continue
in force until the conclusion of the next Annual General Meeting of the Company or the date
by which the next Annual General Meeting of the Company is required by law to be held
whichever is earlier.”
[See Explanatory Note (i)]
7. Authority to offer and grant options and issue shares in accordance with the Innovalues
Group Share Option Scheme 2011
“That approval be and is hereby given to the Directors of the Company to offer and grant options in
accordance with the provisions of the Innovalues Group Share Option Scheme 2011 (“the Scheme”),
and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time
such number of ordinary shares in the Company as may be required to be issued pursuant to the
exercise of the options under the Scheme provided always that the aggregate number of ordinary
shares to be issued pursuant to the Scheme shall not exceed 15 per cent of the total issued shares
excluding treasury shares of the Company at any time and from time to time.”
[See Explanatory Note (ii)]
Resolution 7
Notice ofAnnual General Meeting
109
Innovalues
Limited
8. And to transact any other business which may be properly transacted at an Annual General
Meeting.
Explanatory Notes:
(i) The proposed Resolution 6 above, if passed, will empower the Directors of the Company,
effective until the conclusion of the next Annual General Meeting of the Company, or the
date by which the next Annual General Meeting of the Company is required by law to be
held or such authority is varied or revoked by the Company in a general meeting, whichever
is the earlier, to issue shares, make or grant instruments convertible into shares and to issue
shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total
number of issued shares (excluding treasury shares) in the capital of the Company, of which
up to 20% may be issued other than on a pro-rata basis to shareholders.
(ii) The Ordinary Resolution proposed in item 7 above, if passed, will empower the Directors
of the Company to offer and grant options under the Scheme and to allot and issue shares
pursuant to the exercise of options under the Scheme, subject to the terms of the resolution.
BY ORDER OF THE BOARD
Soo King Teng
Company Secretary
Date: 3 April 2012
Notes:
(a) A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company.
(b) If a proxy is to be appointed, the form must be deposited at the registered office of the Company at 9 Kallang Place #07-08/09 Singapore
339154 not less than 48 hours before the meeting.
(c) The form of proxy must be signed by the appointor or his attorney duly authorised in writing.
(d) In the case of joint shareholders, all holders must sign the form of proxy.
INNOVALUES LIMITED Registration No. 199702822E
(Incorporated in Singapore)
PROXY FORM
I/We
of
being a member(s) of INNOVALUES LIMITED (the “Company”), hereby appoint:
Name Address
NRIC/Passport
Number
Proportion of
Shareholdings
and/or (delete as appropriate)
Name Address
NRIC/Passport
Number
Proportion of
Shareholdings
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll at the 2012 Annual
General Meeting of the Company to be held at 8 Wilkie Road #03-01 Wilkie Edge Singapore 228095 on Thursday, 19 April
2012 at 3.00 p.m. and at any adjournment thereof.
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as
set out in the Notice of Annual General Meeting. In the absence of specifi c directions, the proxy/proxies will vote or abstain as
he/they may think fi t, as he/they will on any other matter arising at the Annual General Meeting.)
No. Resolutions For Against
1 Directors’ Report and Audited Accounts for the year ended 31 December 2011
2 To re-elect Mr Ong Sim Ho as Director
3 To re-elect Mr Ong Tiak Beng as Director
4 To approve Directors’ fees for the year ended 31 December 2011
5 To re-appoint RSM Chio Lim LLP as Auditors and authorise the Directors to fi x their
remuneration
6 To authorise the Directors to allot and issue shares and convertible securities
7 To authorise the Directors to offer and grant options and issue shares in accordance
with the Innovalues Group Share Option Scheme 2011
Dated this day of 2012
Signature(s) of member(s) or common seal
IMPORTANT: PLEASE READ NOTES OVERLEAF
IMPORTANT
1. This Annual Report is also forwarded to investors who have used their CPF monies to buy shares in the Company at the request of their CPF Approved Nominees, and is sent solely for their information only.
2. The Proxy form is, therefore, not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
Total number of Shares held
1st fold here
2nd fold here
Company SecretaryInnovalues Limited Block 9, #07-08/09
Kallang PlaceSingapore 339154
NOTES:
1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defi ned in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.
2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.
3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. 4. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the
instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or duly authorised officer.
5. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50.
6. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certifi ed copy thereof, must be deposited at the registered office of the Company at Block 9 Kallang Place #07-08/09 Singapore 339154 not later than 48 hours before the time set for the Annual General Meeting.
7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register at 48 hours before the time appointed for holding the Annual General Meeting as certifi ed by The Central Depository (Pte) Limited to the Company.
Affix
Postage
Stamp