HLN AR2011 finalsinjialand.listedcompany.com/misc/ar2011.pdf · corporate Profi le mission We aim...

HLN TECHNOLOGIES LIMITED

A N N U A L R E P O RT

2011

PROPERTY

NeW AVeNUe

Vision

A New Icon Integrating Business in Beijing and Tianjin

Our vision is to be a preferred GLOBAL One-Stop Solutions Provider for Integrated Mechanical Components.

contents01 Corporate Profi le | 02 Message to Shareholders | 04 Business and Financial Review | 09 Group Structure10 Board of Directors | 12 Key Management Staff | 14 Corporate Information | 15 Organisation Chart16 Corporate Addresses | 17 Corporate Governance Report

core Values We aim to be a SOCIALLY-RESPONSIBLE CORPORATION by REDUCING, RECYCLING and RE-USING relevant resources to minimise our impact on the environment.

We aim to be a PEOPLE DEVELOPER by inculcating a sense of affi liation and belonging amongst the management and workers.

We value PEOPLE AS ASSETS and provide opportunities for continual learning and personal upgrading.

corporate Profi le

mission

We aim to be a LONG-TERM partner to our

customers. We strive to deliver QUALITY products

at COMPETITIVE pricing, ensure ON-TIME delivery

and RESPONSIVE service through continuous

investment in technology and active involvement in

customers’ product development.

HLN Technologies Limited (“HLN”) is an integrated group of companies that manufactures and supplies a wide range of customised precision metallic, elastomeric and polymeric components to a variety of industries, principally the offi ce automation, consumer electronics and automotive industries in the fast growing countries of Asia.

To achieve its vision of becoming a global one-stop solutions provider for integrated mechanical components, HLN has developed strong production capabilities, including inhouse material formulation and compounding, to produce key raw materials, precision molding of elastomeric components, polymeric die-cutting, as well as customised sawing of metallic material.

The Group supports its broad base of customers in the region through its operating subsidiaries located in Singapore, Indonesia (Batam), Malaysia (Johor) and the People’s Republic of China or PRC (Suzhou).

HLN has been continually exploring opportunities to broaden and diversify the Group’s business portfolio. In line with this strategy, the Group currently has a 15.16% effective interest in Tianjin Swan Lake Real Estate Development Co., Ltd, the developer of Jing Jin Business Centre, which is a grade 5A offi ce building in Tianjin, PRC.

The Group was incorporated in Singapore on 26 February 2004. It was listed on the SGX-ST CATALIST (formerly “SESDAQ”) on 25 November 2005 and subsequently upgraded to the SGX-ST Main Board on 22 January 2008.

message to shareholders

While the Group witnessed a challenging business environment during the year, HLN successfully completed two strategic transactions that should have a strong bearing on the Group’s business direction and fi nancial performance in the coming years.

In May 2011, the Group completed the acquisition of an effective 15.16% stake in Tianjin Swan Lake Real Estate Development Co., Ltd (“Tianjin Swan Lake”). Tianjin Swan Lake is currently developing the twin-tower Jing Jin Business Centre which is the fi rst Grade 5A offi ce building in the Wuqing Development Zone of Tianjin, the People’s Republic of China (“PRC”).

In November 2011, the Group also completed the disposal of its metallic business through the sale of a 99% interest in HLN Metal Centre Pte. Ltd. which operates in the PRC through two wholly-owned subsidiaries, HLN Metal (Shenzhen) Co., Ltd. and HLN Metal (Suzhou) Co., Ltd., known as HLN Metal Centre Group (“HMCG”).

Both these deals are in line with HLN’s current strategy to enhance long term shareholder value by reorganising our existing businesses and seeking new business avenues to support the Group’s future growth. Indeed, the fi nancial benefi ts of these two transactions were refl ected in the Group’s fi nancial performance for FY2011.

Profi tability maintained in FY2011In FY2011, the Group’s consolidated profi t attributable to owners of the Company totaled $1.02 million, relatively unchanged from $1.03 million from the previous fi nancial year. The operating landscape for the metallic business in the PRC has become increasingly competitive, which resulted in a loss of $$0.83 million for HMCG in FY2011, compared to its net profi t of $0.39 million in the previous fi nancial year.

If not for the loss from the discontinued operations of its metallic business, the Group would have recorded a better fi nancial performance in FY2011 as our continuing operations registered an increase of 189.7% in net profi t to $1.85 million, compared to $0.64 million in FY2010. We believe this reaffi rms the Group’s decision to exit the metallic business in the PRC.

In addition, the Group’s net profi t from continuing operations in FY2011 was lifted by the receipt of profi t guarantee of $1.9 million in relation to our 15.16% effective interest in Tianjin Swan Lake. This is in accordance with the terms and conditions which the Group had negotiated in the Sale and Purchase Agreement dated 19 January 2011 (“SPA”) relating to the acquisition, with the aim of minimising the Group’s risks and protecting the interests of all our shareholders.

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present HLN Technologies Limited’s (“HLN”) annual report for the 12 months ended 31 December 2011 (“FY2011”). During the year, global economic conditions remained clouded by uncertainties caused by the Euro zone debt crisis, political turmoil in the Middle East and weakness in the USA economy.

Mr Li AnhuaNon-Executive Chairman

Mr Cheong Weixiong, JeffGroup Chief Executive Offi cer

02 | HLN TecHNoLogies LimiTed | AnnuAl report 2011

To-date, Tianjin Swan Lake’s development of the Jing Jin Business Centre has been making good progress. The development has a total gross fl oor area of around 74,488 sq m., including underground car park spaces. The developer has already garnered positive responses at the South Tower, which has an estimated saleable fl oor area of 24,420 sq m, from a number of major PRC banks and large corporations in 2011. This can be attributed to Wuqing district’s strategic position and established transport infrastructure links to Tianjin city centre and Beijing city. The South Tower has been completed in 2010 while construction of the North Tower is still in progress.

outlook still cautiousLooking ahead, the global economy remains vulnerable to a host of uncertainties, from the ongoing Euro zone debt crisis and Middle East’s political problems, to growing concerns of a slowing PRC economy. All these factors will continue to weigh down the fragile macroeconomic recovery.

The Group envisages that until a resolution is reached on Europe’s debt problem, the overall business environment will continue to be

sluggish. The weak business sentiment and a potential decline in business activities will have an adverse impact on key customers of our Offi ce Automation and Lifestyle Products business segments and hence on the Group’s performance. As such, the Board of Directors is maintaining a cautious view of the Group’s performance for FY2012, particularly for our manufacturing business.

In the PRC, the direction of the property market in the near term continues to be uncertain. Concerns about the global economy and weak consumer sentiment as a result of austerity measures introduced by the central government, have continued to weigh on the PRC real estate sector. However, these measures are mainly targeted at cooling the residential property segment. The Jing Jin Business Centre is a commercial property development.

Based on the profi t guarantees in the SPA, the Group has already received a return on its investment in Tianjin Swan Lake for FY2011 and expects to obtain a similar return for FY2012. As such, HLN is realising its aim to build a new source of earnings and diversify from its existing manufacturing business.

Mr Li AnhuaNon-Executive Chairman

Mr Cheong Weixiong, JeffGroup Chief Executive Offi cer

Meanwhile, we will be seeking to further enhance long term shareholder value by continuing to explore other business opportunities. These include geographical expansion, mergers and acquisitions, divestment and partnerships with long term strategic investor(s) who can add depth and breadth to the Group’s existing business portfolio.

AppreciationIn closing, we would like to thank our Board of Directors for their invaluable guidance and contributions over the years. On behalf of the Board, we would also like to express our appreciation to the management and staff of HLN for their contributions and commitment to the Group. Last but not least, we would also like to thank our shareholders, valued customers and business associates for their continuous support of HLN.

AnnuAl report 2011 | HLN TecHNoLogies LimiTed | 03

The developer has already garnered positive responses at the South Tower of Jing Jin Business Centre from a number of PRC banks and large corporations in 2011, while the North Tower is still under construction.

Business Review

HLN Technologies Limited, together with its subsidiaries, is an integrated group of companies that manufactures and supplies mechanical components to a variety of industries, principally in the office automation, consumer electronics and automotive industries located mainly in the fast growing countries of Asia.

The Group offers an array of quality customized precision products such as bumper foots, pads, ink absorbers, seals and gaskets, adhesives and high grade aluminum plates and rods to multinational corporations and blue chip manufacturing enterprises. These parts are used in printers and copiers, vacuum cleaners and consumer appliances, automobiles, semiconductor equipment and other information technology and telecommunication devices.

HLN supports its wide base of customers through ten operating subsidiaries located in four countries,

namely, Singapore, Indonesia (Batam), Malaysia (Johor) and China (Shenzhen and Suzhou). These operating subsidiaries are organized into three business units - elastomeric, polymeric and metallic.

For management reporting and control purposes, the Group classifies its revenue into four operating segments based on their products and services. These segments are Office Automation (“OA”), Lifestyle Products (“LP”), Industrial Application (“IA”) and Investment Holding (“IH”).

The OA segment manufactures and distributes polymeric components, polymeric die-cutting services and precision turned parts for office automation end products such as printers, copiers, electronic devices, computers, note books and peripheral accessories.

The LP segment manufactures and distributes compound rubber and precision molded rubber parts and

components for consumer and lifestyle products such as household electrical appliances, consumer electronic devices, vibration control components and peripheral accessories.

The IH segment is involved in corporate services, treasury functions and investments. This segment derives its income mainly from inter-company transactions and investment activities.

The IA segment manufactures and distributes metallic products and aluminum plates, rods and sheets for customers in the semiconductor, military, medical instruments, precision engineering, aviation and transport, and food and beverage industries.

In November 2011, the Group exited the metallic business by divesting HLN Metal Centre Group (“HMCG”). Hence, the Group is no longer involved in the IA segment. In accordance with the FRS, the results of the Disposed Group are presented separately as “Discontinued Operations”.

Indonesia10.8%

Singapore 40.4%

Malaysia31.8%

China17.0%

Revenue (Continuing Operations) by Operating segments

Revenue (Continuing Operations) by Geographical segments

Office Automation35.1%

Lifestyle Products64.9%

Business and Financial Review


FinAnCiAL Review

Discontinued OperationThe Group disposed its entire 99%

interest in HMCG in November 2011

for cash consideration of $2.15 million.

For FY2011, a loss of $0.83 million

was recorded for the discontinued

operations, compared to a net profit of

$0.39 million in the previous financial

year.

Continuing OperationsThe Group’s revenue grew 5.4% to

$24.85 million in FY2011, from $23.58

million in FY2010. The elastomeric

business unit was a key driver of the

Group’s revenue, generating higher

sales due mainly to a turnaround of

the Indonesian operations and strong

performance in Johor, Malaysia. This

more than offset the revenue decline

of the polymeric business unit which

was caused by delays in the project

launches of a key customer.

The Group’s gross profit declined

by $0.60 million or 6.5% to $8.51

million in FY2011, from $9.11 million

in FY2010, mainly attributable to rising

costs of materials and labour for the

two business units. Consequently,

gross profit margin was lower at 34.3%

in FY2011 compared to 38.6% for

FY2010.

Distribution costs and administrative

expenses increased marginally by 2.4%

to $7.68 million in FY2011 from $7.50

million in FY2010. This was mainly due

to the increase in cost for internal audit

fees and legal expenses in relation to the Group’s acquisition of a 15.16% effective

interest in Tianjin Swan Lake Real Estate Development Co., Ltd (“Tianjin Swan Lake”),

which is a property developer in Tianjin, the PRC.

Finance costs increased by 9.1% or $2,000 to $24,000 in FY2011 from $22,000

in FY2010 due to the new hire purchase for motor vehicle in FY2011. The Group

recorded other charges, which comprised mainly of foreign exchange difference,

impairment losses and accounting provisions, of $0.35 million in FY2011. The lower of

other charges recorded was due to lower foreign exchange translation loss as a result

of the appreciation of the US Dollar against the Singapore Dollar in FY2011.

Other credits in FY2011 increased substantially to $2.02 million, compared to $0.21

million in FY2010. The higher amount was mainly due to the receipt of profit guarantee

of $1.9 million for FY2011 in accordance with the Sale and Purchase Agreement dated

19 January 2011 (“SPA”) relating to the Group’s acquisition of a 15.16% effective

interest in Tianjin Swan Lake.

As a result, the Group’s continuing operations posted a 83.2% increase in profit before

income tax to $2.47 million for FY2011, from $1.35 million in FY2010. After accounting

for taxation, the Group recorded profit from continuing operations of $1.85 million in

FY2011, an increase of 189.7% from $0.64 million in FY2010.

On a consolidated basis, profit attributable to owners of the Company amounted to

$1.02 million in FY2011, compared to $1.03 million in FY2010.

As at 31 December 2011, the Group remained in a sound financial position.

Shareholders’ equity stood at $32.46 million, compared to $30.50 million at the end of

FY2010. The Group also had cash and cash equivalents of $8.35 million and minimal

borrowings of $440,000 as at 31 December 2011.

Operating Results from Continuing Operations 2011 2010

Revenue ($ m) 24.8 23.6

Gross Profit ($ m) 8.5 9.1

Recurring EBITDA ($ m) * 2.0 2.9

EBITDA margin (%) 8.0 12.3

Net Profit Attributable to Shareholders ($ m) 1.8 0.6

Earnings per share (cents) 1.2 0.5

* Recurring EBITDA refers to net profit before interest expense, tax, depreciation, amortization, impairment losses and other charges.


Financial Position 2011 2010

Total Assets ($ m) 37.6 37.1

Shareholders’ Equity ($ m) 32.5 30.5

Current Ratio (Times) 4.4 4.2

Gross Gearing Ratio (%) 1.4 7.7

Net Gearing Ratio (%) Net Cash Net Cash

Net Asset Value Per Share (Cents) 21.60 20.58

Cash Value Per Share (Cents) 5.56 8.18

Total Issued Shares (Excluding Treasury Shares) 150,272,920 148,060,920

PROsPeCTs FOR FY2012

The global economy remains vulnerable to political uncertainties in the Middle East while ongoing fears

over the Euro zone debt crisis have further clouded the macroeconomic outlook. The Group envisages

that until a resolution is reached on Europe’s debt problem, the overall business environment will

continue to be sluggish.

The weak business sentiment and a potential decline in business activities will have an adverse impact

on the Group’s key customers. Hence, the Directors are maintaining a cautious view of the Group’s

performance for FY2012, particularly for its manufacturing business.

The direction of the property market in the PRC remains uncertain at present. However, the measures

that have been introduced by the government are mainly targeted at cooling the residential property

segment. The Group has effective interest of 15.16% in Tianjin Swan Lake which is developing Jing Jin

Business Centre. This is a grade 5A twin-tower office building in the Wuqing District of Tianjin.

To protect the interests of shareholders, the Group has also obtained profit guarantees for FY2011 and

FY2012 under the SPA. Based on these guarantees, the Group has already received a return on its

investment for FY2011 and expects to obtain a similar return for FY2012. As such, the Group’s entry

into the PRC property sector through Tianjin Swan Lake is providing the Group with a new source of

earnings and increased diversification from its existing manufacturing business.

Meanwhile, the Group will be seeking to further enhance long term shareholder value by continuing to

explore other business opportunities. These include geographical expansion, mergers and acquisitions,

divestment and partnerships with long term strategic investor(s) who can add depth and breadth to the

Group’s existing business portfolio.

Business and Financial Review



(Completed South Tower of Jing Jin Business Centre in Wuqing Development Zone)

HLN made it foray into the prC’s property market through

the acquisition of a 15.16% stake in a top-end property

developer in tianjin.

(The Wuqing Development Zone is known as the corridor between Beijing and Tianjin)

HLN has successfully embarked on the first step of our strategy to build new and diversified earnings streams and enhance long-term shareholder value.

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group structure


Board of directors

Mr Li AnhuaNon-Executive ChairmanIndependent Director

Mr Cheong Weixiong, JeffGroup Chief Executive Offi cerExecutive Director

Mr Ng Khoon SengDeputy Chief Operating Offi cerExecutive Director

mr Li Anhua was appointed as an Independent Director of our Company on 13 August 2009 and became our Non-Executive Chairman on 9 September 2009. He was last re-elected on 30 April 2010.

Mr Li has accumulated approximately 30 years of experience in the senior administration of fi nancial institutions and was the Vice-Chairman of the Board of Directors of Hainan Dadonghai Co., which is listed on the Shenzhen Exchange. Mr Li holds a Bachelor’s degree in Finance from the Jilin Finance and Trade School.

mr cheong Weixiong, Jeff was appointed as an Executive Director and Group Chief Executive Offi cer of our Company on 4 August 2009 and was last re-elected on 30 April 2010. As our Group CEO, Mr Cheong is responsible for the overall management of the Group as well as overseeing the Group’s Corporate Strategy and Human Resources functions.

Mr Cheong has more than 6 years of experience in the investment advisory industry. His growing reputation in the investment advisory industry led him to join Kim Eng Securities Pte Ltd as Senior Vice President in 2007. He handled professional securities brokerage and provided investment advisory services to institutions, corporations and high net worth investors.

mr Ng Khoon seng has been an Executive Director of our Company since its incorporation on 26 February 2004 and was last re-elected on 30 April 2009. He was also the Group’s Executive Chairman and Group Chief Operating Offi cer until 4 August 2009 when he was re-designated as our Group’s Deputy Chief Operating Offi cer.

Mr Ng is responsible for the management of the Polymeric Group’s business and operating activities as well as overseeing the corporate operations and engineering functions.

Mr Ng has more than 30 years of experience in the stamping and die-cutting industry, making signifi cant progress in his career beginning as a technician and senior supervisor in the 1980s and founded his own business in 1989. He is a Non-Executive Director of Pro-stamping Industrial, a company engaged in providing Drilling and Stamping of printed circuit boards, which he founded in 1989 together with his family members. Mr Ng holds a Diploma in Business Effi ciency and Productivity (Production Management) from the NPB Institute for Productivity Training.


Mr Tang Chi LoongNon-ExecutiveIndependent Director

Mr Lee Jim Teck, EdwardNon-ExecutiveIndependent Director

mr Tang chi Loong was appointed as an Independent Director and Non-Executive Director of our Company on 14 September 2006 and was last re-elected on 30 April 2010.

Mr Tang is currently a partner with Hin Tat Augustine and Partners, a Singapore law fi rm. He started his legal career at Choo & Soh in 1995 and was promoted to partner in 1998. In 2003, Choo & Soh merged with Hin Tat & Partners to form Hin Tat Augustine and Partners.

He also sits on the board of Novo Group Limited. Mr Tang holds a Bachelor of Law (Honours) degree from the National University of Singapore.

mr Lee Jim Teck, edward was appointed as an Independent and Non-Executive Director of our Company on 22 July 2011.

Mr Lee has served as the Chief Financial Offi cer and Financial Controller for a number of multi-national Companies. He has over 30 years of experience in fi nance, accounting, and auditing, human resource and information technology. He was Financial Controller and Director for a number of US Fortune 500 companies, including EDS International, Applied Materials, Delphi Automotive Systems and Bayshore Group of Companies.

The industries Edward served included consulting and auditing, banking, property development, IT, computer services and high technology electronic manufacturing.

Edward had acquired wide global exposure through his responsibilities, which required him to travel extensively and station in locations such as Shanghai, Beijing, Hsinchu in Taiwan, Hong Kong, Malaysia, Thailand and the Silicon Valley in California.

He is a member of the Institute of the Certifi ed Public Accountants of Singapore, ICPAS and having sat on the Board of Directors of a number of companies; he is a Full Member of the Singapore Institute of Directors, SID. Edward holds a Bachelor of Accountancy degree from the National University of Singapore.

He also volunteers his services in a number of not-for-profi t organisations and charities.


Key management staff

mr Wa Kok Liang, Leslie has been the Group Chief Executive Officer and Executive Director since its incorporation on 26 February 2004. Mr Wa was re-designated as our Group Chief Operating Officer on 4 August 2009.

Mr Wa joined the Company in 1995 and has been responsible for managing the Elastomeric Division that includes strategic planning, sales and marketing functions. Mr Wa holds a MBA (International Management) degree and a Bachelor of Business in Business Administration degree from the RMIT University, Australia. He was a Finalist for Rotary-ASME Entrepreneur of the Year Award 2006. Mr Wa also holds an Executive Certificate in Directorship conducted by Singapore Institute of Directors in conjunction with Singapore Management University in 2009.

mr Peter Tan is our Group Chief Financial Officer. He joined our Group on 3 January 2011. He is responsible for the Group’s financial management, internal controls, treasury and banking, and mergers and acquisitions. Mr Tan has more than 30 years experience in corporate accounting and management in Australia, Singapore and Indonesia. He has worked in various companies involved in manufacturing, venture capital, sand mining, telecommunications, and oil and gas support services. Prior to joining our Group, he was the Chief Financial Officer of another SGX-ST listed Company from March 2001 to February 2010. Mr Tan holds a Bachelor of Commerce degree majoring in Accounting and Management from the University of Western Australia. He is a member of the Australian Institute of Management, a Fellow Certified Public Accountant of Singapore (non-practising) and a non-practising member of CPA Australia.

mr Ng Koon chuan, Francis is the Vice-President of our Polymeric Group (Commercial). He is also the Operations Director of Process Innovation Technology Pte Ltd (“PIT”) and Director of Process Innovation Technology (Suzhou) Co., Ltd (“PIL”). Mr Ng is responsible for the general and operational management of the two subsidiaries of our Polymeric Group and his responsibilities include materials sourcing and planning, sales, customer relationship management, public relations and inventory management. After completing his secondary level education, Mr Ng served in the Singapore Armed Forces and Ministry of Defence and later worked as a shipbroker in several local shipbroking companies.

mr chua Lai Heng, michael is the General Manager (Operations) of our Elastomeric Group in South East Asia. He is responsible for the operational management of HLN Rubber Industries Sdn Bhd (“HRI”) and PT HLN Batam (“PTH”). Mr Chua joined our Group on 5 July 2004 as Project Engineer and was promoted to Deputy General Manager of HRI on 1 January 2008. Mr Chua was promoted to his current position on 1 January 2010. Prior to joining our Group, he served in the Republic of Singapore Air Force from October 1997 to July 2004. Mr Chua holds a Diploma in Mechanical Engineering from Ngee Ann Polytechnic.

mr Tan chye Thiam, Kelvin is the General Manager (Operations) of our Elastomeric Group in China. He is responsible for the operational management of HLN (Suzhou) Rubber Products Co., Ltd. (“HSR”) Mr Tan joined our Group on 12 February 2007 as a Deputy General Manager and was promoted to General Manager of

Elastomeric SBU on 1 September 2007. He was re-designated to his current position on 1 January 2010. Mr Tan has more than 13 years of experience in Plant Management for the rubber industry. Prior to joining our Group, Mr Tan was Assistant Plant Manager of Hi-Tech Polymer Limited from 2000 to 2007, and worked as Production Manager for various manufacturers between 1991 to 2000. Mr Tan holds a Diploma in Chemical Process Technology from Singapore Polytechnic.

ms chow Bei Tze, Joey is the Deputy General Manager (Sales), S.E.A. She is accountable for the Group’s regional sales development of the Elastomeric Group. Ms Chow joined the Group on 13 December 2004 as a Management Trainee. Her designation was revised to Project Development Executive cum Private Secretary to the CEO & subsequently as Corporate Sales Account Manager in 2 May 2006. She left us on 5 March 2007 & later rejoined as a Personal Assistant to Directors on 24 April 2007. Her duties were realigned to assume the position of Assistant Personnel Manager / Corporate Communications Manager on 1 October 2007. On 1 July 2010, she was promoted to her current position. Ms Chow holds a Bachelor of Business in Business Administration from RMIT University.

mr Narayanasamy senthil Kumar is the Deputy General Manager of our Elastomeric Group in Batam, Indonesia. He is responsible for general and operational management of PTH, including resources planning, production and inventory management. Mr Kumar joined the Group on 1 December 1997 as a Compounding and Molding Operator and was promoted to Production Supervisor in 1999 and


Quality Assurance Manager in 2001. Due to his in-depth knowledge in rubber chemistry and his leadership skills, he was promoted to his current post on 12 August 2004. During his long career, Mr Kumar has built up strong knowledge in rubber formulations and manufacturing competency.

mr sim gim Hwee, melvin is the Deputy General Manager for Corporate Engineering. He is responsible for the group engineering matters related to tools, materials, quality and processes. Mr Sim joined HLN Rubber Products Pte Ltd on 8 May 2011. Prior to joining the Group, he was the Product Manager of Polytech Component Pte Ltd in Singapore office where he specialised in various aspects of keypad related productions and was responsible for the key accounts of various overseas customers in Europe, UK and USA. He also served as a technical consultant to its operation in China. Mr Sim has more than 18 years of experience in keypad industry serving the consumer electronics, mobile devices, automotive, audio and video industries. Mr Sim holds a Diploma in Manufacturing from Singapore Polytechnic.

mr Toh Ah Tee, donald is the Deputy General Manager (Sales and Marketing) of our Elastomeric Group in China. He is responsible for sales, customer relationship management and sales development of HSR. Mr Toh joined the Group as Senior Corporate Sales Manager on 1 February 2007 and was promoted to Deputy General Manger (Sales) of our Elastomeric Group on 1 January 2009. He was re-designated to his current position on 1 January 2010. Mr Toh brings with him 13 years of experience in the rubber industry. He was stationed in China for

more than 4 years and has established wide and extensive customers’ network in China.

mr Yap Poh Hwa, Alan is the Deputy General Manager (Marketing) of our Elastomeric Group in South East Asia. He is responsible for sales, customer relationship management and business development. Mr Yap joined the Group as Deputy General Manager of the Polymeric S-SBU and was transferred to the Elastomeric SBU on 6 July 2009 as Senior Corporate Sales Manager. He was promoted to his current position on 1 January 2010. Mr Yap has more than 11 years of experience working in the Electronics industry and has built up extensive clientele base. Mr Yap holds a Diploma in Business Administration from The Association of Business Executives

ms chan saw Yee, Joyce is our Group Accountant. She joined the Group on 1 November 2006 as Assistant Finance Manager of our Metallic SBU and was promoted to Assistant Group Accountant on 1 January 2009. She was later promoted to Group Accountant on 1 January 2010. Ms Chan is responsible for overall financial and management reporting of HLN Technologies Limited and its subsidiaries. Ms Chan also oversees the internal and external audit of the whole Group. Prior to joining our Group, she has worked with a company in the manufacturing industry as Senior Accounts Executive, overseeing the accounts of its China subsidiary. Ms Chan holds a Bachelor of Arts with 2nd Class Honors in Accounting and Finance from Oxford Brookes University (in association with Nilai College, Malaysia).

ms Ng Lian Hong, elsie is the Finance, HR and Administration Manager of PIT and Director of PIL. She is responsible for human resources, purchasing and general administration of Polymeric Group as well as finance activities for the two subsidiaries of our Polymeric Group. Ms Ng is currently also a Non-Executive Director of Pro-stamping Industrial Pte Ltd, which she formed in March 1992 together with her family members including our Executive Director, Mr Ng Khoon Seng. Ms Ng holds a Higher Accounting and Business Statistics Certificate from the London Chamber of Commerce and Industry.

ms Ling How siong, Lindy is the Deputy General Manager of PIT. She joined the Polymeric Group on 2 January 2004. She is responsible for materials sourcing, purchasing, sales, QA, inventory and operation management. Before joining PIT, she was a Production Engineer in Prostamping Pte Ltd. Prior to that she was with Hitachi Chemical Asia-Pacific from 1987 to 2000, with the initial 9 years in the QC/QA division before she was promoted to Production Supervisor where she stayed for another 4 years.


corporate information

Board of directors Li AnhuaNon-Executive Chairman and Independent Director

Cheong Weixiong, JeffGroup Chief Executive Officer/ Executive Director

Ng Khoon SengGroup Deputy Chief Operating Officer/ Executive Director

Tang Chi LoongNon-Executive and Independent Director

Lee Jim Teck, EdwardNon-Executive and Independent Director

Nominating committeeLi AnhuaChairman

Tang Chi Loong Member

Lee Jim Teck, Edward Member

Remuneration committee Tang Chi LoongChairman

Li AnhuaMember

Lee Jim Teck, EdwardMember

Audit committee Li AnhuaChairman

Tang Chi Loong Member

Lee Jim Teck, EdwardMember

company secretary Seah Kim Swee

Registered office74A Tras StreetSingapore 079013

share RegistrarBoardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place#32-01 Singapore Land TowerSingapore 048623

AuditorsRSM Chio Lim LLP 8, Wilkie Road#04-08, Wilkie Edge Singapore 228095

Partner-in-chargeLee Mong SheongEffective From Year Ended 31 December 2010


organisation chart

Companies:

PITG - Polymeric GroupPIT - Process Innovation Technology Pte LtdPIL - Process Innovation Technology (Suzhou) Co., LtdELMG - Elastomeric GroupHRP - HLN Rubber Products Pte LtdPTH - PT HLN BatamHSR - HLN (Suzhou) Rubber Products Co., LtdHRI - HLN Rubber Industries Sdn Bhd

BOARD OF DIRECTORS

GROUP CEO

GROUP COO

ELASTOMERIC GROUP

GROUP DEPUTY COO

POLYMERIC GROUP

VICE-PRESIDENT(COMMERCIAL)

PITDGM

PILDGM

HRIDGM

PTHDGM

HRPDGM

OPERATIONS – S.E.A

SALES & MARKETING

CORPORATE ENGINEERING

(S.E.A) DGM

(CHINA) DGM

GENERAL MANAGER

GENERAL MANAGER

GENERAL MANAGER

GROUP CFO

PITGFM

ELMGFM

GROUPACCOUNTANT

GROUP HR MANAGER

Abbreviation in the Organisation Chart:

Positions:

Group CEO - Group Chief Executive OfficerGroup COO - Group Chief Operating OfficerGroup Deputy COO - Group Deputy Chief Operating OfficerGroup CFO - Group Chief Financial OfficerDGM - Deputy General ManagerFM - Finance Manager

OPERATIONS – CHINA


corporate Addresses

HLN Technologies Limited74A Tras Street, Singapore 079013Telephone : (65) 6224 7320Facsimile : (65) 6224 7231

elastomeric Business Unit

HLN (Suzhou) Rubber Products Co., LtdNo. 28 Zhensheng Road, Suzhou Industrial Park, Suzhou 215126,People’s Republic of ChinaTelephone : (86) 512 6762 1526 / 1528Facsimile : (86) 512 6762 1527

Polymeric Business Unit

Process Innovation Technology Pte Ltd37 Kallang Pudding Road, Block B,Tong Lee Building #01-03/05/06,Singapore 349315Telephone : (65) 6226 1051Facsimile : (65) 6841 9279

Process Innovation Technology (Suzhou) Co., LtdNo. 30 Dongzhuang Road, Luzhi Town,Wuzhong District, Suzhou 215127,People’s Republic of ChinaTelephone : (86) 512 6601 8928Facsimile : (86) 512 6601 8918

HLN Rubber Industries Sdn BhdNo. 19A Jalan Padu,Tampoi Industrial Estate,80350 Johor Bahru, Johor, MalaysiaTelephone : (60) 7 238 6743Facsimile : (60) 7 238 6784

PT HLN BatamLot 307 / 308, Jalan Angsana,Batamindo Industrial Park, Muka Kuning, Batam Island 29433,IndonesiaTelephone : (62) 770 612 008Facsimile : (62) 770 612 886

HLN Rubber Products Pte LtdBlock 16 Kallang Place, #01-16/18Kallang Basin Industrial Estate,Singapore 339156Telephone : (65) 6746 1366Facsimile : (65) 6295 6080


Corporate Governance Report

Principle Page CompliancePrinciple 1 - Board’s Conduct of its Affairs 17 √Principle 2 - Board Composition and Balance 19 √Principle 3 - Chairman and Chief Executive Officer 19 √Principle 4 - Board Membership 19 √Principle 5 - Board Performance 20 √Principle 6 - Access to Information 20 √Principle 7 - Procedures for Developing Remuneration Policies 21 √Principle 8 - Level and Mix of Remuneration 21 √Principle 9 - Disclosure of Remuneration 22 √Principle 10 - Accountability 23 √Principle 11 - Audit Committee 23 √Principle 12 - Internal Controls 25 √Principle 13 - Internal Audit 25 √Principle 14 - Communication with Shareholders 25 √Principle 15 - Greater Shareholder Participation 25 √

The Board of Directors and Management are committed to ensuring high standards of corporate governance for the protection of shareholders’ interests and value and to promote investors’ confidence. We have taken steps, as far as practicable, towards the compliance of the recommendations in the Code of Corporate Governance (“the Code”). Deviation from the Code, if any, is explained.

BOARD MATTERS

The Board’s Conduct of Its Affairs

Principle 1: An effective Board to lead and control the Company

As at the date of this report, the Board comprises two executive directors, three non-executive and independent directors. Together, these directors bring a wide range of business, legal and financial experience relevant to the Group.

Li Anhua Non-Executive Chairman and Independent DirectorCheong Weixiong, Jeff Chief Executive Officer and Executive DirectorNg Khoon Seng Deputy Chief Operating Officer and Executive DirectorTang Chi Loong Non-Executive and Independent DirectorLee Jim Teck, Edward Non-Executive and Independent Director

The Board provides leadership to the Group through setting overall strategic aims, establishing framework of controls, reviewing management performance and approving important decisions affecting the Group.

The Board meets at least every quarter and as warranted by particular circumstances. Matters requiring the Board’s approval include:

a) Approving corporate objectives, plans, strategies, policies and financial objectives of the Group and monitoring the performance of Management;

b) Overseeing the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance;

ANNUAL REPORT 2011 | HLN TECHNOLOGIES LIMITED | 17

c) Approving nominations and appointments of Board directors, committee members and key executives; and

d) Approving annual budgets, investments, capital expenditures, major acquisitions and divestments proposals.

The Company has adopted internal guidelines on matters such as annual budgets and transactions relating to investment, financing, treasury, legal and corporate secretarial and the parameters of such matters which require the Board’s approval. The Board will review the guidelines on a periodic basis to ensure their relevance to the operations of the Company.

The Board also constituted various Board Committees such as the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”) to allow in-depth review and discussion before the Board makes a decision. These committees function within clearly defined terms of reference and they meet regularly to review relevant matters which are then referred to the Board for approval. The attendance of the directors at meetings of the Board and the Board Committees, and the frequency of such meetings, is disclosed below.

DIRECTORS’ ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS(for the financial year ended 31 December 2011)

BoardAudit

CommitteeRemuneration

CommitteeNominating Committee

No. of meetings __5__ __5__ __3__ __1__Li Anhua(Non-Executive Chairman and Independent Director)

5 5 2 1

Cheong Weixiong, Jeff(Group CEO/Executive Director)

5 NA NA NA

Wa Kok Liang, Leslie (3) (Group COO/Executive Director)

4 NA NA NA

Ng Khoon Seng(Group Deputy COO/Executive Director)

5 NA 2 1

Tang Chi Loong(Non-Executive and Independent Director)

5 5 3 1

Lim Chye Huat @ Bobby Lim Chye Huat (1)

(Non-Executive and Non-Independent Director)2 2 NA NA

Lee Jim Teck, Edward (2)

(Non-Executive and Independent Director)2 2 1 Nil

1 Mr Bobby Lim Chye Huat retired on 29 April 2011.2 Mr Lee Jim Teck, Edward was appointed on 22 July 2011.3 Mr Wa Kok Liang, Leslie resigned as a Director on 12 August 2011.

Newly appointed directors are acquainted with the Company’s operations and governance practices through a customized induction program for directors. In addition, first-time directors attended Listed Company Directors course conducted by the Singapore Institute of Directors. A letter is sent to all new directors setting out their duties and obligations.

The Company also encourages the directors to attend seminars and receive training to improve themselves in the discharge of their duties as directors. The Company works closely with external professionals to update its directors with changes to relevant laws, regulations and accounting standards.


18 | HLN TECHNOLOGIES LIMITED | ANNUAL REPORT 2011 ANNUAL REPORT 2011 | HLN TECHNOLOGIES LIMITED | 19

Board Composition and Balance

Principle 2: Independent Board

Independent directors make up the majority of the Board, with three out of the five Board members being non-executive and independent directors. Specifically, the Company adopts the definition of independence as defined in the Code in all aspects. The NC has reviewed and determined that the said directors are independent. The independence of each director is reviewed annually by the NC.

The Board is of the opinion that its current size of five directors is both effective and efficient for decision making given the nature and size of the Company’s operations as well as the background and competence of all the directors acting collectively. Together, the Board members possess a balanced field of core competencies to lead the Company.

The independent directors participated actively in all Board discussions and made constructive and positive contribution in areas including strategy formulation, policies, management performance appraisal and monitoring of the Company’s financial performance and financial position regularly. In addition, all the Chairmanships of the Board Committees are held by the independent directors.

The directors are appointed on the strength of their ability and experience. Details of all the directors’ qualifications and experience are presented in this Annual Report under the heading “Board of Directors” on pages 10 to 11.

Chairman and Chief Executive Officer

Principle 3: Chairman and Chief Executive Officer

The Chairman and Group Chief Executive Officer (“Group CEO”) are two separate persons and they are not related to each other.

In their separate capacities, the Chairman is primarily responsible for the functioning of the Board and the Group CEO is charged with steering the business of the Group. All important decisions are made by the Board collectively.

Assisted by the Company Secretary, the Chairman’s role is to schedule Board meetings and set the agenda. He ensures that all directors receive accurate, timely and clear information prior to the Board meetings, encourages constructive relations between the Board and Management and between executive, non-executive and independent directors. He also facilitates the effective contribution of non-executive and independent directors and ensures effective communication with shareholders. The Chairman also leads in promoting high standards of corporate governance in the Company.

The Group CEO has full executive responsibilities over the running of the Group’s businesses, the business direction and operational decisions of the Group. The Group CEO leads the Management and he reports to and is accountable to the Board.

Board Membership

Principle 4: A formal and transparent process for the appointment of new directors

The Company has established the NC which comprises of three members, all of whom are non-executive and independent directors.

Chairman Li AnhuaMember Tang Chi LoongMember Lee Jim Teck, Edward



The Chairman of the NC is not associated in any way with the substantial shareholders of the Company. The NC is established for the purposes of ensuring that there is a formal and transparent process in the selection and appointment of new Board members as well as their subsequent re-nomination/re-election.

Taking into consideration the time spent through attendance at meetings and attention to the affairs of the Company, the NC is of the view that all the directors have adequately discharged their duties effectively.

The duties of the NC are as follows:

a) Annual review of the terms of reference of NC, the composition of NC, the size of the Board with a view to determining the impact of the number upon effectiveness, and make recommendation to the Board on the appropriate size for the Board to facilitate effective decision making, the required expertise of the directors as a group to ensure that they as a group have adequate relevant core competencies of the directors to discharge the functions of an effective and balanced Board;

b) Annual assessment of the effectiveness of the Board as a whole and of individual directors;

c) Evaluation of the Board’s performance;

d) Review and make recommendations on all nomination of appointments and re-nomination/re-election; and

e) Annual determination of directors’ independence.

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. In addition, all directors of the Company (including the Group CEO) shall retire from office at least once every three years.

The dates of initial appointment and last re-election of each director, together with their directorship in other listed companies are presented in this Annual Report under the heading “Board of Directors”.

Board Performance

Principle 5: A formal assessment of the effectiveness of the Board and the contribution of each director

The NC has established a performance appraisal process to assess the effectiveness of the Board. The performance appraisal includes qualitative and quantitative factors including Board structure, conduct of meetings, corporate strategy and planning, risk management and internal control, as well as appraisal of contribution of individual director.

The NC undertakes the Board performance appraisal annually. The appraisal results are reviewed by the NC and discussed with the Board members for determining areas for improvement and enhancement of the Board effectiveness. Although the Code proposes certain financial 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 and the directors’ performance in discharging its principal responsibilities, upholding high standards of corporate governance and strategic oversight of the Company’s business rather than the specific performance of its share price and other financial indicators.

Access to Information

Principle 6: Access to complete, adequate and timely information

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, financial results announcements, and reports from Board committees and internal and external auditors.



The directors may communicate directly with the Management team and the Company Secretary on all matters whenever they deem necessary to ensure there is separate and independent access to them. The Company Secretary attends Board meetings and is responsible for recording of the proceedings as well as oversees all processes and practices relating to company secretarial matters.

The Company currently does not have a formal procedure for the directors to seek independent and professional advice for the furtherance of their duties. However, directors may, on a case-to-case basis, propose to the Board for such independent and professional advice, the cost of which will 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.

REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7: A formal and transparent procedure for fixing the remuneration packages of individual directors

The Company has established the RC which comprises of three members, all of whom are non-executive and independent directors.

Chairman Tang Chi LoongMember Li AnhuaMember Lee Jim Teck, Edward

The Board is of the opinion that the composition of the RC, comprising entirely of non-executive and independent directors as required by the Code, has appropriate checks and balances to minimise potential conflict of interest.

The RC is established for the purpose of ensuring that there is a formal and transparent framework for determination of appropriate remuneration packages of individual directors and key executives. No director is involved in deciding his own remuneration. The overriding principle is to ensure that the level of remuneration should be appropriate to attract, retain and motivate the directors and key executives needed to run the Company successfully and ensure that they are fairly rewarded for their individual contributions to overall performance. The RC will also work within the principle that the remuneration should be structured so as to link rewards to corporate and individual performance. It has adopted written terms of reference that defines its membership, roles, functions and administration. The RC will seek professional advice when necessary in discharging its duties and responsibilities.

The duties of the RC are as follows:

a) To review and make recommendations to the Board a framework of remuneration and the specific remuneration packages of each director (executive and non-executive) and Group CEO;

b) To review and make recommendations to the Board the Company’s compensation policies, structures and service contracts, based on proposal by the Group CEO; and

c) To review and make recommendations to the Board the Company’s compensation policies, structures and service contracts as proposed by the Company’s Group CEO, for relatives of a director and/or a substantial shareholder who are employed in managerial positions by the Company, or any of its subsidiaries.

Level and Mix of Remuneration

Principle 8: An appropriate remuneration policy to attract, retain and motivate

The Company adopts a remuneration policy for staff comprising a fixed component and a variable component. The fixed component is in the form of a base salary which reflects market worth. The variable component comprises both short-term incentive and longer-term incentives.



Non-executive directors will be paid a fee for their board services and appointment to board committees and performance shares pursuant to the Company’s Performance share plan approved by shareholders on 15 May 2008. Directors’ fees for non-executive directors are subject to the approval of shareholders at AGMs.

Executive directors are not paid directors’ fee. The Company has entered into a service agreement with each of the two executive directors on a fixed term. The remuneration of the executive directors comprises a basic salary component and an annual incentive bonus which is pegged to the Group’s financial performance.

The HLN Technologies Limited Performance Share Plan (“HLN PSP”) was approved by shareholders at an Extraordinary General Meeting held on 15 May 2008 and is administered by the RC. The HLN PSP replaces the HLN Technologies Limited Employee Share Option Scheme (“HLN ESOS”) which was implemented in September 2005. Persons eligible to participate in the HLN PSP are selected employees of the Group (including Executive Directors, Non-Executive Directors and Independent Directors as well as Controlling Shareholders of the Company and their Associates). The HLN PSP contemplates the award of fully paid shares, their equivalent cash value or combinations thereof, free of charge, when or after prescribed performance targets and service conditions are achieved and/or when due recognition should be given to any good work performance and/or any significant contribution to the Company.

The Company has terminated the HLN ESOS since all unexercised Options granted have already been exercised during FY2009.

Disclosure on Remuneration

Principle 9: Clear disclosure of its remuneration policy, level and mix of remuneration

Remuneration of Directors of the Company

A breakdown, showing the level and mix of each individual director’s remuneration payable for the financial year ended 31 December 2011, is as follows:-

Remuneration Band & Name of Directors Fee (1)Salary & fixed allowance (2)

Bonus & incentives (2)

Long term incentives (3) Total

S$500,000 to S$749,999Cheong Weixiong, Jeff Nil 91% 9% Nil 100%

S$250,000 to S$499,999Ng Khoon Seng Nil 87% 13% Nil 100%Wa Kok Liang, Leslie (4) Nil 89% 11% Nil 100%

S$0 to S$249,999Li Anhua 97% 3% Nil Nil 100%Tang Chi Loong 97% 3% Nil Nil 100%Lee Jim Teck, Edward (5) 96% 4% Nil Nil 100%Lim Chye Huat @ Bobby Lim Chye Huat (6) 93% 7% Nil Nil 100%

(1) Director fees are payable in 2012 after approval by shareholders in the AGM.(2) Salary & fixed allowance and bonus & incentives shown are inclusive of employer CPF. The non-executive directors are paid S$300.00 meeting

allowance for each Board meeting.(3) Long term incentives include performance shares. No performance share was awarded during the year. (4) Mr Wa Kok Liang, Leslie resigned as a Director on 12 August 2011.(5) Mr Lee Jim Teck, Edward was appointed on 22 July 2011.(6) Mr Bobby Lim Chye Huat retired on 29 April 2011.



Remuneration of Top 5 Executives of the Company

A breakdown, showing the level and mix of each of the Top 5 executives’ remuneration payable for the financial year ended 31 December 2011, is as follows:-

Salary & fixed allowance (1)

Bonus & incentives (1)

Long term incentives (2) Total

S$0 to S$249,999Wa Kok Liang, Leslie (4) 85% 15% Nil 100%Ng Koon Chuan, Francis (3) 90% 10% Nil 100%Peter Tan 81% 19% Nil 100%Toh Ah Tee, Donald 100% Nil Nil 100%Tan Chye Thiam, Kelvin 100% Nil Nil 100%

(1) Salary & fixed allowance and bonus & incentives shown are inclusive of employer CPF.(2) Long term incentives includes performance shares. No performance share was awarded during the year.(3) Mr Ng Koon Chuan, Francis is the brother of our Executive Director, Mr Ng Khoon Seng.(4) Mr Wa Kok Liang, Leslie resigned as director on 12 August 2011 but has remained as director of a subsidiary.

For the reporting year ended 31 December 2011, other than Mr Ng Koon Chuan, Francis as disclosed above, there is no employee in the Group, being an immediate family member of a director or the Group CEO, whose annual remuneration exceeded S$150,000.

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.

ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: Board to present a balanced and understandable assessment of the Company’s performance, position and prospects

Management provides monthly management accounts to the Board and the Board updates shareholders regularly on the financial performance, position and prospects of the Company through the SGXNET announcement released to SGX-ST every half-yearly and annually as well as through the Annual Report to the shareholders.

Audit Committee

Principle 11: Establishment of the AC with written terms of reference

The Company has established the AC which comprises of three members, all of whom are non-executive and independent directors.

Chairman Li AnhuaMember Tang Chi LoongMember Lee Jim Teck, Edward

The Chairman, Mr Li Anhua has many years of experience in the finance industry. Together with the other members, the AC possesses experience in accounting, legal, business and financial management.

The Board is of the opinion that the members of the AC have sufficient financial management expertise and experience in discharging their duties.



The role of the AC is to assist the Board with discharging its responsibility to safeguard the Company’s assets, maintain adequate accounting records and develop and maintain effective systems of internal controls.

In accordance with the terms of reference adopted by the AC, the AC shall review, appraise and report to the Board on:

a) The discussion with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of the audit;

b) The review with external auditors, their evaluation of the system of internal controls, the management letter and Management’s response thereto;

c) The discussion of problems and concerns, if any, arising from the interim and final audits and any matters that the external auditors may wish to discuss with the AC in the absence of the Management;

d) The review of the independence of the external auditors and nomination of their re-appointment as external auditors of the Company;

e) The review of the internal audit program including the scope and results of the internal audit;

f) The review of interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX-ST);

g) The review of interim and full year financial results and recommendation to the Board for release to the SGX-ST via SGXNET; and

h) Any other functions that are requested by the Board, as may be required by statutes or the Listing Manual.

In discharging the above duties, the AC confirms that it has full access to and co-operation from Management and is given full discretion to invite any 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 to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before recommending their re-nomination to the Board.

The AC has met once with the external auditors, and with the internal auditors, without the presence of Management during the year.

Whistle Blowing

The AC has approved a Whistle Blowing Policy to provide employees of the Group with an independent and confidential channel to our independent internal auditor to report suspected fraud, corruption, dishonest practices or irregularities involving the Company and its subsidiaries. The policy encourages the reporting of such matters by employees with confidence that the reporting made in good faith will be handled on a confidential and anonymous basis in compliance with applicable laws and the employees will not be penalized. The Whistle Blowing Policy has been implemented since 1 May 2008 and disseminated to all employees of the Group.



Internal Controls and Internal Audit

Principle 12: A sound system of internal controls

Principle 13: Establishing an internal audit function

The Board recognises its responsibilities for maintaining a system of internal control processes to safeguard shareholders’ investments and the Group’s assets.

The AC has approved key risk management policies and processes for the Group and fine tune them over the years and engaged a professional internal audit firm since 2006 to carry out internal audit review(s) every year covering the key operating subsidiaries of the Company over a multi-year period. The internal audit firm reports directly to the Chairman of the AC.

The internal auditors report its findings directly to the Audit Committee after the conclusion of the audit every year. Internal auditors had carried out a new cycle of internal audit review(s) of key operating subsidiaries commencing from FY2011.

Based on the annual internal auditors’ report, the Board is satisfied that the internal control of the Group is reasonably adequate.

Risk Management

The primary responsibility for identifying business risks lies with Management, who then tables and recommends processes to the Board for their deliberations and for formulating policies and procedures to deal with the risks. The Board also approves the recommended processes and procedures for managing risks, which could include review of key management personnel, hedging and establishing internal controls.

Communication with Shareholders

Principle 14: Regular, effective and fair communication with shareholders

The Company endeavours to communicate regularly, effectively and fairly with its shareholders.

The Company does not practice selective disclosure. The Board’s policy is that all shareholders should be equally informed of all major developments impacting the Company.

The Company releases its half yearly and full year results, corporate announcements and press releases via the SGXNET on a timely basis.

Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the mandatory period and are available on the Company’s website. Notices of shareholders’ meetings are also published in the local newspapers and announced via SGXNET.

The Company communicates with its shareholders through its corporate website http://www.hlntech.com. In addition, the Company has engaged an investor relations firm to assist in its communication with shareholders.

Principle 15: Greater shareholder participation at AGMs

Annual reports and notices of AGM are sent to all shareholders. The notice is also published in the local newspaper and made available on the SGXNET. At the AGM, the shareholders are given the opportunity to express their views and raise any queries regarding the Company.

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 have total transparency in the voting process, the Company has adopted the poll voting at general meeting of shareholders from November 2011. Hence, voting of all resolutions shall be conducted by poll and the results showing the number of votes cast for and against each resolution and the respective percentage will be released via SGXNET announcement.

In addition, the Chairmen of the respective committees and the external auditors will be present at the AGM to address any queries from the shareholders.

SECURITIES TRADING CODE

The Company has devised and adopted its own internal Code of Conduct on dealing in the securities of the Company (the “Code”). The Code was modeled on the best practices on dealings in securities in the Listing Manual of the SGX-ST. This Code provides guidance to the Group’s directors and employees on their dealings in its securities. Officers of the Group are required to confirm their compliance with the Code of Best Practices annually.

The Company has complied with the internal Code of Conduct in the reporting year ended 31 December 2011.

INTERESTED PERSON TRANSACTIONS

The Company has adopted internal guidelines in respect of any transaction with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions as disclosed in the Prospectus dated 15 November 2005. The main objective is to ensure that all interested person transactions are conducted on arm’s length basis and on normal commercial terms and will not be prejudicial to our shareholders.

The Company monitors all its interested person transactions closely and all interested person transactions are subject to review by the AC on a quarterly basis.

There were no interested person transactions exceeding $100,000 as at 31 December 2011.

MATERIAL CONTRACTS

There is no other material contract entered into between the Company and any of its subsidiaries with the Group CEO or any director or controlling shareholder at the end of the reporting year ended 31 December 2011.

APPOINTMENT OF AUDITORS

The Group has complied with Rules 712, 715 and 716 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited in relation to its auditors.



The directors of the company are pleased to present their report together with the audited financial 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:

Li Anhua Cheong Weixiong, Jeff Ng Khoon Seng Tang Chi Loong Lee Jim Teck, Edward (appointed on 22 July 2011)

2. Arrangements to Enable Directors to Acquire Benefits 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 benefits by means of the acquisition of shares or debentures in the company or any other body corporate.

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 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 InterestName of directors and companies inwhich interest are held

At beginning of the

reporting year

At endof the

reporting year

At beginning of the

reporting year

At endof the

reporting year

The company Number of shares of no par value

Cheong Weixiong, Jeff – – – 1,500,000Ng Khoon Seng 234,540 1,234,540 4,000,000 4,000,000Tang Chi Loong 30,000 30,000 – –

The directors’ interests as at 21 January 2012 were the same as those at the end of the reporting year.

4. Contractual Benefits of Directors

Since the beginning of the reporting year, no director of the company has received or become entitled to receive a benefit 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 firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in the financial statements.

There were certain transactions (shown in the financial statements under related party transactions) with corporations in which certain directors have an interest.

Directors’ Report


Directors’ Report

5. Shares Options

During the reporting year, no option to take up unissued shares of the company or any subsidiary was granted.

During the reporting year, there were no shares of the company or any subsidiary issued by virtue of the exercise of an option to take up unissued shares.

At the end of the reporting year, there were no unissued shares of the company or any subsidiary under option.

6. HLN Technologies Limited Performance Share Plan (“HLN PSP”)

The HLN PSP was approved by the shareholders of the company at an Extraordinary General Meeting held on 13 May 2008 to replace the HLN Technologies Employee Share Option Scheme (“HLN ESOS”).

Under the HLN PSP, it is contemplated that the award of fully paid ordinary shares of the company, their equivalent cash value or combinations thereof, issued free of charge to eligible participants would incentivise the participants to excel in their performance and encourage greater dedication and loyalty to the group. The company is able to recognise and reward past contributions and services and motivate the participants to continue to strive for the group’s long-term prosperity. The HLN PSP will further strengthen and enhance the company’s competitiveness in attracting and retaining employees with suitable talents. In addition the HLN PSP aims to foster an ownership culture within the group which aligns the interests of the key executives and employees with the interests of the shareholders. The HLN PSP contemplates the award of fully paid ordinary shares of the company when or after pre-determined performance or service conditions are accomplished and/or when due recognition should be given to any good work performance and/or any significant contribution to the group upon expiry of prescribed vesting periods.

The HLN PSP is administered by the Remuneration Committee (“Committee”) whose members are:

Li AnhuaTang Chi LoongNg Khoon Seng

Members of the Committee were not and shall not be involved in the Committee’s deliberations in respect of performance shares granted to them.

Under the rules of the HLN PSP, any employee (including Executive Directors and Independent Directors of the company) who holds such rank as may be designated by the Committee from time to time, who has attained the age of 21 years on the date of grant of the award and is not an undischarged bankrupt and has not entered into composition with their respective creditors and who has contributed or will contribute to the success of the group shall be eligible to participate in the HLN PSP. However, any grant of awards to the Independent Directors pursuant to the HLN PSP is subject to and shall comply with the provisions of section 76 of the Companies Act, Chapter 50.

Controlling shareholders or their associates who meet the eligible criteria above and who have contributed to the success and development of the group are eligible to participate in the HLN PSP provided that the participation by each such controlling shareholder or associate and each grant of awards to any one of them may be effected only with the specific prior approval of shareholders at a general meeting in separate resolutions. The company will at such time seek the specific prior approval of shareholders at a general meeting in separate resolutions for any proposal to grant the controlling shareholders or their associates any awards.


Directors’ Report

6. HLN Technologies Limited Performance Share Plan (“HLN PSP”) (Cont’d)

There shall be no restriction on the eligibility of any of the eligible participants to participate in any other share option or share incentive schemes implemented or to be implemented by the group.

The granting of awards will be made by the Committee at any time during the period when HLN PSP is in force.

The awards granted under the HLN PSP are performance-based, and such awards entitle eligible participants to be allotted fully paid shares upon satisfactory achievement of pre-determined performance targets. The awards given are determined at the discretion of the Committee, who will take into account factors such as the eligible participants’ capability, scope of responsibility and skill. The Committee also set specific performance-based criteria such as profitability, growth, asset efficiency, return on capital employed, and other financial indicators, penetration into new markets, increasing market share and market ranking, management skills and succession planning. In addition to the achievement of any pre-determined performance targets or service conditions, awards may also be granted upon the Committee’s post-event determination that any eligible participants has performed well and/or made a significant contribution to the group.

Awards are vested and the shares comprised in the awards are issued at the end of the performance and/or service period once the Committee is, at its sole discretion, satisfied that the prescribed performance targets and/or service conditions have been achieved. The Committee may also grant an award where in its opinion an eligible participant’s performance and/or contribution to the group warrants it.

Eligible participants are not required to pay for the grant of the awards. All taxes (including income tax) arising from the exercise of any awards granted to any eligible participants under the HLN PSP shall be borne by the participants.

The total number of new shares issued or issuable pursuant to awards granted under HLN PSP, when added to the number of new shares issued and issuable in respect of:

(a) all awards granted thereunder;(b) all options granted under the Scheme; and(c) all shares or awards granted under any other share option or share incentive schemes of the company then in

force,

shall not exceed 15% of the number of issued shares of the company on the day preceeding the relevant date of award.

The total number of new shares issued or issuable under the HLN PSP is subject to the maximum limit of 15% of the company’s total issued share capital from time to time.

In addition, the total number of new shares issued or issuable under the HLN PSP available to:

(a) all controlling shareholders and their associates must not exceed 25% of the shares available under HLN PSP.

(b) each of the controlling shareholders and their associates must not exceed 10% of the shares available under HLN PSP.

No performance share was granted and issued for the years ending 31 December 2010 and 2011.


7. Audit Committee

The members of the audit committee at the date of this report are as follows:

Li Anhua (Chairman of Audit Committee and Independent Director)Tang Chi Loong (Non-Executive Director and Independent Director)Lee Jim Teck, Edward (Non-Executive Director and Independent Director)

The audit committee performs the functions specified by section 201B(5) of the Companies Act. Among other functions, it performed the following:

• Reviewed with the independent external auditors their audit plan, their evaluation of the company’s internal accounting control, their report on the financial 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 financial 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 defined 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.

8. Subsequent Developments

The auditors has highlighted that management has experienced difficulties with the FY2011 audit of its associate, Tianjin Swan Lake Real Estate Development Co., Ltd. (“Tianjin Swan Lake”). Although management has significant influence with its 15.16% interest, it has no control over the day to day management of its associate and fulfillment of audit requirements. The difficulties highlighted have resulted in the associate’s financial statements being subjected to a disclaimer by the auditors, Messrs BDO China Shu Lun Pan CPAs Limited for the reporting year ended 31 December 2011.

Accordingly, the Board would like to draw attention to Note 17 to the financial statements, which discusses the following:

1) The profit compensation amount of $1.9 million in relation to the investment in an associate as a credit item in profit or loss;

2) Impairment on the investment in associate.

On the above issues highlighted and as part of the FY2011 audit, the Board has sought legal advice in February 2012 on the matters raised above upon discussion with its auditors.

1) Profit Guarantee

The pertinent clause: Under clause 7.3 of the SPA (refer to SGXNET announcement dated 20 January 2011, under the heading the Profit Guarantee), the vendor covenants with and undertakes to HLN that:

(a) if the audited net operating profit after tax of TJSL (the “NPAT”) for financial year 2011 (the “2011 NPAT”) is less than 30% of the total audited operating revenues of TJSL (the “Revenues”) for financial year 2011 (the “2011 Revenues”), the vendor shall pay to HLN an amount equivalent to 15.16% of the actual amount by which the 2011 NPAT has fallen below 30% of the 2011 Revenues in SGD equivalent;

Directors’ Report


(b) if the NPAT for financial year 2012 (the “2012 NPAT”) is less than 30% of the Revenues for financial year 2012 (the “2012 Revenues”), the vendor shall pay to HLN an amount equivalent to 15.16% of the actual amount by which the 2012 NPAT has fallen below 30% of the 2012 Revenues in SGD equivalent; and

(c) if (i) the 2011 NPAT is less than 23% of the 2011 Revenues or (ii) the 2012 NPAT is less than 23% of the 2012

Revenues, HLN may elect to exercise a put option to require the vendor to buy back all the shares in Greatly Holdings Investment Limited held by HLN.

Based on the legal advice, the Board is of the view that clause 7.3 of the SPA is legally binding and enforceable. The profit guarantee compensation of $1.9 million is in line with the conditions in the guarantee and term sheet that formed the basis for clause 7.3 of the SPA. In addition, the Company has already received cash of $1.2 million from the vendor in relation to the profit guarantee as at the date of this report. The Company’s auditors had suggested that in addition to the legal opinion it further sought confirmation from its legal advisor that there is no claw-back on the 2011 profit guarantee in the event the put option is exercised after the payment of profit guarantee. Based on the confirmation, the Board is of the view that the accounting treatment of the profit guarantee in the accounts is appropriate.

2) Impairment

The legal opinion obtained, has confirmed that the agreements that were entered into and mechanisms were intended to protect the Company’s interests. The profit guarantee, the put option and the guarantee for the purchase consideration for the acquisition were for the benefit and safeguard of the Company. The Board has taken the legal advice and mechanisms into consideration when considering the issue of possible impairment. The opinion sought has indicated that these clauses and mechanisms are legally binding and enforceable.

In view of the above and on the grounds that the vendor has so far been honouring the terms and conditions of the SPA and has met its obligations under the profit guarantee, the Board is of the view that an impairment of the investment in TJSL is not required at this time.

On Behalf of the Directors

……………………………………….Cheong Weixiong, JeffDirector

……………………………………….Ng Khoon SengDirector

5 April 2012

Directors’ Report


In the opinion of the directors,

(a) the accompanying consolidated statement of comprehensive income, statements of financial position, statements of changes in equity, consolidated statement of cash flows, 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 flows 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 financial statements for issue.

On Behalf of the Directors

……………………………………….Cheong Weixiong, JeffDirector

……………………………………….Ng Khoon SengDirector

5 April 2012

Statement by Directors


Report on the Financial Statements

We have audited the accompanying financial statements of HLN Technologies Limited (the “company”) and its subsidiaries (the group), which comprise the consolidated statement of financial position of the group and the statement of financial position of the company as at 31 December 2011, and the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows of the group, and statement of changes in equity of the company for the reporting year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of the financial 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 financial position and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ Report to the Members of HLN Technologies Limited (Registration No: 200402180C)


Opinion

In our opinion, the consolidated financial statements of the group and the statement of financial 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 of the results, changes in equity and cash flows of the group and the changes in equity of the company for the reporting year ended on that date.

Emphasis of Matter

We draw attention to Note 17 to the financial statements which describes the following matters:

a) During the current reporting year, the group recognised a profit compensation amount of $1.9 million in relation to the investment in an associate as a credit item in profit or loss, for the reasons more fully disclosed in Note 17. There is also no equity accounting of the associate’s results in the group’s financial statements for the current reporting year.

b) Notwithstanding the presence of certain indicators of impairment, tests for impairment were not performed by management nor was provision for impairment in the group’s investment in associate made in respect of the current reporting year for the reasons more fully disclosed in Note 17. The recoverability of the investment in associate assumes that in the event the company were to exercise the put option in accordance to the conditions stated in the said sales and purchase agreement, the vendor has the ability to repay the amount and if not, General Nice Resources (HK) Limited has the ability to meet its obligations under the deed of guarantee. The outcome of the above assumption is uncertain and there is no assurance that it will be successful. If this assumption is inappropriate, material adjustments may have to be made to write down the carrying value of the investment in associate.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

RSM Chio Lim LLPPublic Accountants andCertified Public AccountantsSingapore

5 April 2012

Partner-in-charge of audit: Lee Mong SheongEffective from year ended 31 December 2010

Independent Auditors’ Report to the Members of HLN Technologies Limited (Registration No: 200402180C)


GroupNotes 2011 2010

$’000 $’000

Revenue 5 24,847 23,579Cost of Sales (16,335) (14,472)Gross Profit 8,512 9,107Other Items of IncomeInterest Income 6 9 15Dividend Income from Quoted Corporations 5 5Other Credits 7 2,008 205Other Items of ExpenseMarketing and Distribution Costs (2,056) (2,018)Administrative Expenses 8 (5,629) (5,485)Other Charges 7 (352) (457)Finance Costs 9 (24) (22)Profit Before Tax from Continuing Operations 2,473 1,350Income Tax Expense 11 (625) (712)Profit from Continuing Operations, Net of Tax 1,848 638(Loss) Profit from Discontinued Operations, Net of Tax 32 (833) 388Profit Net of Tax 1,015 1,026

Other Comprehensive Income (Loss)Exchange Differences on Translating Foreign Operations, Net of Tax 301 (348)Fair Value Gains on Available-for-Sale Financial Assets, Net of Tax – 3Other Comprehensive Income (Loss) for the Year, Net of Tax 301 (345)Total Comprehensive Income for the Year 1,316 681

Profit Attributable to Owners of the Parent, Net of Tax 1,015 1,029Loss Attributable to Non-Controlling Interests, Net of Tax – (3)Profit Net of Tax 1,015 1,026

Total Comprehensive Income Attributable to Owners of the Parent, Net of Tax 1,315 693Total Comprehensive Income (Loss) Attributable to Non-Controlling Interests, Net of Tax 1 (12)Total Comprehensive Income for the Year 1,316 681

Earnings Per ShareEarnings Per Share Currency Unit 13 Cents Cents

Basic and DilutedContinuing Operations 1.24 0.50Discontinued Operations (0.56) 0.30Total 0.68 0.80

The accompanying notes form an integral part of these financial statements.

Consolidated Statement of Comprehensive Income Year Ended 31 December 2011


Group CompanyNotes 2011 2010 2011 2010

ASSETS $’000 $’000 $’000 $’000Non-Current AssetsPlant and Equipment 15 4,881 5,425 85 62Investments in Subsidiaries 16 – – 23,516 11,395Investment in Associate 17 12,121 – – – Other Financial Assets, Non-Current 18 – 105 – 105Other Assets, Non-Current 22 – 5,928 – 5,928Total Non-Current Assets 17,002 11,458 23,601 17,490

Current AssetsInventories 19 2,445 4,950 – – Trade and Other Receivables 20 9,014 7,719 1,620 2,524Other Assets, Current 22 819 889 53 97Cash and Cash Equivalents 23 8,350 12,115 2,760 5,116Total Current Assets 20,628 25,673 4,433 7,737Total Assets 37,630 37,131 28,034 25,227

EQUITY AND LIABILITIES Equity Attributable to Owners of the ParentShare Capital 24 22,403 21,782 22,403 21,782Retained Earnings 10,061 9,298 4,935 2,345Other Reserves 26 (2) (606) – 5Equity Attributable to Owners of the Parent 32,462 30,474 27,338 24,132Non–Controlling Interests – 29 – – Total Equity 32,462 30,503 27,338 24,132

Non-Current LiabilitiesDeferred Tax Liabilities 11 399 453 – 15Provisions 27 43 32 – – Finance Lease Liabilities, Non-Current 28 24 – – – Total Non-Current Liabilities 466 485 – 15

Current LiabilitiesIncome Tax Payable 152 252 – – Trade and Other Payables 29 4,134 3,557 696 1,080Finance Lease Liabilities, Current 28 7 2 – – Other Financial Liabilities 28 409 2,332 – – Total Current Liabilities 4,702 6,143 696 1,080

Total Liabilities 5,168 6,628 696 1,095Total Equity and Liabilities 37,630 37,131 28,034 25,227


Statements of Financial Position As at 31 December 2011


Attributable to Parent Non-

Group Total Share Retained Other ControllingEquity Sub-Total Capital Earnings Reserves Interests$’000 $’000 $’000 $’000 $’000 $’000

Current Year:Opening Balance at 1 January 2011 30,503 30,474 21,782 9,298 (606) 29Movements in Equity:Total Comprehensive Income for the Year 1,316 1,315 – 1,015 300 1Reclassification Adjustment for Gain Included in Profit or Loss - Realised on Disposal (5) (5) – – (5) –Issue of Treasury Shares for the Acquisition of a Subsidiary (Note 31) 621 621 621 – – –Transfer to Statutory Reserve (Note 26) – – – (252) 252 –Disposal of Subsidiaries (Note 32) 27 57 – – 57 (30)Closing Balance at 31 December 2011 32,462 32,462 22,403 10,061 (2) –

Previous Year:Opening Balance at 1 January 2010 24,347 23,860 15,706 8,424 (270) 487Movements in Equity:Total Comprehensive Income (Loss) for the Year 681 693 – 1,029 (336) (12)Issue of Share Capital (Note 24) 6,076 6,076 6,076 – – – Acquisition of a Non-Controlling Interest Without a Change in Control (Note 16c) (380) 66 – 66 – (446)Dividends Paid (Note 14) (221) (221) – (221) – – Closing Balance at 31 December 2010 30,503 30,474 21,782 9,298 (606) 29


Statements of Changes in Equity Year Ended 31 December 2011


Company Total Share Retained OtherEquity Capital Earnings Reserves$’000 $’000 $’000 $’000

Current Year:Opening Balance at 1 January 2011 24,132 21,782 2,345 5Movements in Equity:Total Comprehensive Income for the Year 2,590 – 2,590 –Reclassification Adjustment for Gain Included in Profit or Loss - Realised on Disposal (5) – – (5)Issue of Treasury Shares for the Acquisition of a Subsidiary (Note 31) 621 621 – –Closing Balance at 31 December 2011 27,338 22,403 4,935 –

Previous Year:Opening Balance at 1 January 2010 18,646 15,706 2,938 2Movements in Equity:Total Comprehensive (Loss) Income for the Year (369) – (372) 3Issue of Share Capital (Note 24) 6,076 6,076 – –Dividends Paid (Note 14) (221) – (221) –Closing Balance at 31 December 2010 24,132 21,782 2,345 5


Statements of Changes in Equity Year Ended 31 December 2011


Group 2011 2010

$’000 $’000Cash Flows From Operating ActivitiesProfit (Loss) Before Tax- From Continuing Operations 2,473 1,350- From Discontinued Operations (781) 482

1,692 1,832Adjustments for:Dividend Income (5) (5)Interest Income (11) (17)Interest Expense 65 55Depreciation of Plant and Equipment 1,180 1,332(Gain) Loss on Disposal of Plant and Equipment (9) 3Fair Value Loss on Financial Assets Held for Trading − 50Loss on Disposal of Subsidiaries 787 −Gain on Disposal of Other Financial Assets – (147)Gain on Financial Assets Reclassified from Equity to Profit or Loss - Realised on Disposal (5) –Net Effect of Exchange Rate Changes in Consolidating Foreign Operations 242 (268)Operating Cash Flows Before Changes in Working Capital 3,936 2,835Inventories (273) (1,442)Trade and Other Receivables (2,267) (24)Other Financial Assets − 565Other Assets 31 (97)Trade and Other Payables and Provisions 1,121 (396)Net Cash Flows From Operations 2,548 1,441Income Taxes Paid (826) (869)Net Cash Flows From Operating Activities 1,722 572

Cash Flows From Investing ActivitiesPurchase of Plant and Equipment (Note 23B) (925) (790)Disposal of Plant and Equipment 108 154Disposal of Other Financial Assets 105 −Disposal of Subsidiaries (Net of Cash Inflow) (Note 32) 1,748 −Investment in Associate (Note 17) (5,572) −Deposit Paid for Acquisition of a Subsidiary (Note 31) − (5,928)Interest Received 11 17Dividends Received 5 5Net Cash Flows Used in Investing Activities (4,520) (6,542)

Cash Flows From Financing ActivitiesIssue of Shares − 6,076Cash Restricted in Use – (642)Finance Lease Repayments (7) (8)Increase from New Borrowings 1,888 1,915Borrowings Repayments (2,788) (200)Acquisition of Additional Shares from Non-Controlling Interests (Note 16c) − (380)Dividends Paid to Equity Owners − (221)Interest Paid (65) (55)Net Cash Flows (Used in) From Financing Activities (972) 6,485

Net (Decrease) Increase in Cash and Cash Equivalents (3,770) 515Cash and Cash Equivalents, Consolidated Statement of Cash Flows, Beginning Balance 11,473 10,958Cash and Cash Equivalents, Consolidated Statement of Cash Flows, Ending Balance (Note 23A) 7,703 11,473


Consolidated Statement of Cash Flows Year Ended 31 December 2011


1. General

The company is incorporated in Singapore with limited liability. The financial statements are presented in Singapore dollars and they cover the company (referred to as “parent”) and the subsidiaries.

The board of directors approved and authorised these financial statements for issue on the date of the statement of directors.

The company is an investment holding company. It is listed on the Singapore Exchange Securities Trading Limited.

The principal activities of the subsidiaries are described in Note 16 to the financial statements.

The registered office is: 74A Tras Street, Singapore 079013. The company is situated in Singapore.

2. Summary of Significant Accounting Policies

Accounting Convention

The financial 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 financial 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 financial statements.

Basis of Presentation

The consolidated financial statements include the financial statements made up to the end of the reporting year of the company and all of its directly and indirectly controlled subsidiaries. Consolidated financial statements are the financial statements of the group presented as those of a single economic entity. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including profit or loss items and other comprehensive income items and dividends are eliminated on consolidation. The results of any subsidiary 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 profit 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 financial assets in accordance with FRS 39.

The company’s financial 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.

On disposal the attributable amount of goodwill if any is included in the determination of the gain or loss on disposal. The equity accounting method is used for associates in the group financial statements.

Notes to the Financial Statements 31 December 2011



2. Summary of Significant Accounting Policies (Cont’d)

Basis of Preparation of the Financial Statements

The preparation of financial 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 financial 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 significant to the financial 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 inflow of economic benefits during the reporting year arising from the course of the activities of the entity and it is shown net of any related sales taxes, estimated returns and rebates. Revenue from the sale of goods is recognised when significant 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. Revenue from rendering of services that are of short duration is recognised when the services are completed. Interest income is recognised using the effective interest method. Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established.

Employee Benefits

Certain subsidiaries operate a defined contribution provident fund scheme, in which employees are entitled to join upon fulfilling certain conditions. The assets of the fund are held separately from those of the entity in an independently administered fund. The entity contributes an amount equal to a fixed percentage of the salary of each participating employee. Contributions are charged to profit or loss in the period to which they relate. This plan is in addition to the contributions to government managed retirement benefit plans such as the Central Provident Fund in Singapore which specifies the employer’s obligations which are dealt with as defined contribution retirement benefit plans. For employee leave entitlement the expected cost of short-term employee benefits 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.

Short-term benefits are recognised at an undiscounted amount where employees have rendered their services to the group during the accounting periods. Post employment benefits are recognised at discounted amounts when the employees have rendered their services to the group during the accounting periods. Liabilities and expenses are measured using actuarial techniques which include constructive obligations that arise from the group’s common practices. In calculating the liabilities, the benefits are discounted by using the projected unit credit method. Termination benefits are recognised when, and only when, the group is committed to either; (a) terminate the employment of an employee or group of employees before the normal retirement date; or (b) provide termination benefits as a result of an offer made in order to encourage voluntary redundancy.




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 financial 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 profit or loss unless the tax relates to items that are recognised in the same or a different period outside profit or loss. For such items recognised outside profit 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 benefits 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 profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries and associate 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 profits.

Foreign Currency Transactions

The functional currency of the company is the Singapore dollar as it reflects 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 profit or loss except when recognised in other comprehensive income and if applicable deferred in equity such as for qualifying cash flow hedges. The presentation is in the functional currency.

Translation of Financial Statements of Other Entities

Each entity in the group determines the appropriate functional currency as it reflects the primary economic environment in which the relevant reporting entity operates. In translating the financial statements of such an entity for incorporation in the consolidated financial 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 income and expense items for each statement presenting profit or loss and other comprehensive income 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.




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.

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:

Plant and equipment – 10% to 331/3%Leasehold improvements – 10%

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 financial statements.

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 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 profit 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 significantly 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 benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss when they are incurred.

Leases

Whether an arrangement is, or contains, a lease, it is based on the substance of the arrangement at the inception date, that is, whether (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the statement of financial 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 finance 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 benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in profit 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 benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense.




Segment Reporting

The group discloses financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial 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 financial and operating policies of an entity so as to obtain benefits 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 financial statements, the investment in a subsidiary is accounted for at cost less any allowance for impairment in value. Impairment loss recognised in profit 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 the investment in a subsidiary is not necessarily indicative of the amounts that would be realised in a current market exchange.

Associates

An associate is an entity including an unincorporated entity in which the reporting entity has a substantial financial interest (usually not less than 20% of the voting power), significant influence and that is neither a subsidiary nor a joint venture of the investor. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The accounting for investments in an associate is on the equity method. Under equity accounting, the investment in an associate is carried in the statement of financial position at cost plus post-acquisition changes in the share of net assets of the associate, less any impairment in value. The profit or loss reflects the reporting entity’s share of the results of operations of the associate. Losses of an associate in excess of the reporting entity’s interest in the relevant associate are not recognised except to the extent that the reporting entity has an obligation. An investment in an associate includes goodwill on acquisition, which is accounted for in accordance with FRS 103 Business Combinations. However the entire carrying amount of the investment is tested under FRS 36 for impairment, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, whenever application of the requirements in FRS 39 indicates that the investment may be impaired. Profits and losses resulting from transactions between the reporting entity and an associate are recognised in the financial statements only to the extent of unrelated reporting entity’s interests in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are changed where necessary to ensure consistency with the policies adopted by the reporting entity. The net book value of the investment in the associate is not necessarily indicative of the amounts that would be realised in a current market exchange.

The reporting entity discontinues the use of the equity method from the date that it ceases to have significant influence over the associate and accounts for the investment in accordance with FRS 39 from that date. Any gain or loss is recognised in profit or loss. Any investment retained in the former associate is measured at its fair value at the date that it ceases to be an associate.

In the company’s own separate financial statements, an investment in an associate is accounted for at cost less any allowance for impairment in value. Impairment loss recognised in profit or loss for an associate 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 an investment in the associate is not necessarily indicative of the amounts that would be realised in a current market exchange.




Business Combinations

A business combination is transaction or other event which requires that the assets acquired and liabilities assumed constitute a business. It is accounted for by applying the acquisition method of accounting. The cost of a business combination includes the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received except for any costs to issue debt or equity securities are recognised in accordance with FRS 32 and FRS 39. As of the acquisition date, the acquirer recognises, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree measured at acquisition-date fair values as defined in and that meet the conditions for recognition under FRS 103. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. If the acquirer has made a gain from a bargain purchase that gain is recognised in profit or loss. If there is gain on bargain purchase, for the gain on bargain purchase a reassessment is made of the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination and any excess remaining after this reassessment is recognised immediately in profit or loss.

There was no gain on bargain purchase during the reporting year.

Goodwill and fair value adjustments resulting from the application of purchase accounting at the date of acquisition are treated as assets and liabilities of the foreign entity and are recorded at the exchange rates prevailing at the acquisition date and are subsequently translated at the period end exchange rate.

Where the fair values are estimated on a provisional basis they are finalised within one year from the acquisition date with consequent retrospective changes to the amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date.

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 financial 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 identifiable 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. Profit 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 deficit balance.

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 indefinite useful life or an intangible asset not yet available for use. The carrying amount of other non-financial 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 profit 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 profit or loss. 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. When the fair value less costs to sell method is used, any available recent market transactions are taken into consideration. When the value in use method is adopted, in assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each end of the reporting year non-financial 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.




Inventories

Inventories are measured at the lower of cost (first-in-first-out method) 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 for 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.

Financial Assets

Initial recognition, measurement and derecognition:

A financial asset is recognised on the statement of financial position when, and only when, the entity becomes a party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally represented by the transaction price. The transaction price for financial asset not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date.

Irrespective of the legal form of the transactions performed, financial 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 classification of the financial assets in one of the following four categories under FRS 39 is as follows:

1. Financial assets at fair value through profit or loss: As at end of the reporting year, there were no financial assets classified in this category.

2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classified 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 significant) 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 flows of the financial asset or group of financial 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 profit 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 classified in this category.

3. Held-to-maturity financial assets: As at end of the reporting year, there were no financial assets classified in this category.




Financial Assets (Cont’d)

4. Available-for-sale financial assets: These are non-derivative financial assets that are designated as available-for-sale on initial recognition or are not classified in one of the previous categories. These assets are carried at fair value by reference to the transaction price or current bid prices in an active market. If such market prices are not reliably determinable, management establishes fair value by using valuation techniques. Changes in fair value of available-for-sale financial assets (other than those relating to foreign exchange translation differences on monetary investments) are recognised in other comprehensive income and accumulated in a separate component of equity under the heading revaluation reserves. Such reserves are reclassified to profit or loss when realised through disposal. Impairments below cost are recognised in profit or loss. When there is objective evidence that the asset is impaired, the cumulative loss is reclassified from equity to profit or loss as a reclassification adjustment. If, in a subsequent period, the fair value of an equity instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss, it is reversed against revaluation reserves and is not subsequently reversed through profit or loss. However for debt instruments classified as available-for-sale impairment losses recognised in profit or loss are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. The weighted average method is used when determining the cost basis of publicly listed equities being disposed of. For non-equity instruments classified as available-for-sale the reversal of impairment is recognised in profit or loss. These financial assets are classified as non-current assets unless management intends to dispose of the investments within 12 months of the end of the reporting year. Usually non-current investments in equity shares and debt securities are classified in this category but it does not include subsidiaries, joint ventures, or associates. Unquoted investments are stated at cost less allowance for impairment in value where there are no market prices, and management is unable to establish fair value by using valuation techniques except that where management can establish fair value by using valuation techniques the relevant unquoted investments are stated at fair value. For unquoted equity instruments impairment losses are not reversed.

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 consolidated statement of cash flows 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, measurement and derecognition:

A financial liability is recognised on the statement of financial position when, and only when, the entity becomes a party to the contractual provisions of the instrument and it is derecognised when the obligation specified in the contract is discharged or cancelled or expires. The initial recognition of financial liability is at fair value normally represented by the transaction price. The transaction price for financial liability not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings, if any, are classified 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.



2. Summary of Significant Accounting Policies (Cont’d) Financial Liabilities (Cont’d)

Subsequent measurement:

Subsequent measurement based on the classification of the financial liabilities in one of the following two categories under FRS 39 is as follows:

1. Liabilities at fair value through profit or loss: As at end of the reporting year, there were no financial liabilities classified in this category.

2. Other financial liabilities: All liabilities, which have not been classified 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 classified in this category. Items classified 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 financial guarantee contract requires that the issuer makes specified payments to reimburse the holder for a loss when a specified 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.

Fair Value of Financial Instruments

The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of fair value. The fair values of non-current financial instruments may not be disclosed separately unless there are significant 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 total of the fair value of the financial assets and other financial instruments: the maximum amount the entity could have to pay if the guarantee is called on; and the full amount of any commitments on borrowings at the end of the reporting year. The fair value of a financial 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 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 classified using a fair value hierarchy of 3 levels that reflects the significance 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 significant to the fair value measurement in its entirety. Where observable inputs that require significant 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 classified 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 directors.




Treasury Shares

Where the company reacquires its own equity instruments as treasury shares, the consideration paid, including any directly attributable incremental cost is deducted from equity attributable to the company’s owners until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s owners and no gain or loss is recognised in profit or loss.

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 outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are 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 reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in profit or loss in the reporting year they occur.

Government Grants

A government grant is recognised at fair value when there is reasonable assurance that the conditions attaching to it will be complied with and that the grant will be received. A grant in recognition of specific expenses is recognised as income over the periods necessary to match them with the related costs that they are intended to compensate, on a systematic basis.

Critical Judgements, Assumptions and Estimation Uncertainties

The critical judgements made in the process of applying the accounting policies that have the most significant effect on the amounts recognised in the financial 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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities currently or 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 financial statements are prepared. However, this does not prevent actual figures differing from estimates.

Amount receivable from profit guarantee:Judgement was applied for including the amount receivable from profit guarantee in profit or loss (see Note 17).

Determination of functional currency:The group measures foreign currency transactions in the respective functional currencies of the company and its subsidiaries. In determining the functional currencies of the entities in the group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currency 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 significantly as a result of innovations and 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. 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 plant and equipment of the group and the company at the end of the reporting year affected by the assumption were $4,881,000 and $85,000 respectively.




Critical Judgements, Assumptions and Estimation Uncertainties (Cont’d)

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 financial 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 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 significant judgment 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 of the group at the end of the reporting year was $2,445,000.

Estimated impairment on subsidiary of the company and associate of the group:Where a subsidiary or associate is in net equity deficit and or 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 significant judgement. 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 asset affected. The carrying amount of the specific asset at the end of the reporting year affected by the assumption is $12,121,000.

3. Related Party Relationships and Transactions

FRS 24 defines 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 significant influence 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 applies: (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 benefit plan for the benefit 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 identified in (a). (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).



3. Related Party Relationships and Transactions (Cont’d)

3.1. Related companies:

Related companies in these financial statements refer to subsidiaries of the company.

There are transactions and arrangements between the reporting entity and members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For non-current balances if significant an interest is imputed unless stated otherwise.

Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below.

3.2. Other related parties:

There are transactions and arrangements between the reporting entity and related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The current related party balances are unsecured without fixed repayment terms and interest unless stated otherwise.

For financial guarantees an amount is imputed and is recognised accordingly if significant where no charge is payable.

Significant related party transactions:

In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following:

Related partiesGroup 2011

$’0002010$’000

Sale of goods(a) 27 28Rental expenses(b) (99) (86)Technical and advisory fees expense (c) (5) (55)Legal and professional expenses(d) − (3)

(a) The group sold goods to W&W Plastic and Polymer, whose shareholder is the brother of Wa Kok Liang, Leslie (Leslie had resigned as a director of the company during the current reporting year but has remained as director of a subsidiary).

(b) Rental expenses were paid to (i) Pro-Stamping Industrial Pte Ltd, a company where a director, Ng Khoon Seng has a direct interest in shares, and (ii) Wa Kok Liang, Leslie.

(c) The technical and advisory fees were paid to the sister of Wa Kok Liang, Leslie.

(d) The legal and professional expenses were paid to a firm in which a director, Tang Chi Loong is a member.



3. Related Party Relationships and Transactions (Cont’d)

3.3. Key management compensation:

Group Company2011$’000

2010$’000

2011$’000

2010$’000

Salaries and other short-term employee benefits 2,941 3,281 1,469 1,906Directors’ fees 136 110 136 110

The above amounts are included under employee benefits expense. Included in the above amounts are the following items:

Group Company

2011$’000

2010$’000

2011$’000

2010$’000

Directors’ remuneration:

Salaries and other short-term employee benefits 1,311 1,587 1,122 1,587Fees to directors of the company 136 110 136 110

Key management personnel are the 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.

Further information about the remuneration of individual directors is provided in the report on corporate governance.

4. Financial Information by Operating Segments

4A. Information about Reportable Segment Profit or Loss, Assets and Liabilities

Disclosure of information about operating segments, products and services, the geographical areas, and the major customers are made as required by FRS 108 Operating Segments. This disclosure standard has no impact on the reported results or financial position of the group.

For management purposes, the group is organised into controlling business units (“CBU”) based on their products and services. Such a structural organisation is determined by the nature of risks and returns associated with each business segment and defines the management structure as well as the internal reporting system. It represents the basis on which the management reports the primary segment information. They are managed separately because each business requires different strategies.

The segments and the types of products and services are as follows:

(1) The Office Automation (“OA”) segment manufactures and distributes polymeric components, polymeric die-cutting services and precision turned parts for the office automation end products including printers, copiers, electronic devices, computers, note books and peripheral accessories.

(2) The Lifestyle Products (“LP”) segment manufactures and distributes compound rubber and precision molded rubber parts and components for the consumer and lifestyle products including household electrical appliances, consumer electronic devices, vibration control components and peripheral accessories.

(3) The Corporate (“IH”) segment is involved in group level corporate services, treasury functions and investments. It derives its income substantially from inter-company transactions.



4. Financial Information by Operating Segments (Cont’d)

4A. Information about Reportable Segment Profit or Loss, Assets and Liabilities (Cont’d)

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 significant accounting policies.

The discontinued operations relate to the disposal of the Industrial Application (“IA”) segment the manufacturers and distributes metallic products and aluminium plates, rods and sheets for various customers in the semiconductor, military, medical instruments, precision engineering, aviation and transport, and food and beverage industries (see Note 32).

The management reporting system evaluates performances based on a number of factors. However the primary profitability measurement to evaluate segment’s operating results comprises two major financial indicators: (1) earnings from operations before depreciation, amortisation, interests and income taxes and other items (called “Recurring EBITDA”) and (2) operating result before interests and income taxes and other items (called “ORBIT”).

The following tables illustrate the information about the reportable segment profit or loss, assets and liabilities.

4B. Profit or Loss from Continuing Operations and Reconciliations

OA LP IH Group 2011 $’000 $’000 $’000 $’000Revenue by segment:Total revenue 8,753 16,125 – 24,878Inter-segment sales (30) (1) – (31)Total revenue 8,723 16,124 – 24,847

Recurring EBITDA 1,536 2,096 (1,663) 1,969Depreciation (298) (808) (22) (1,128)ORBIT 1,238 1,288 (1,685) 841Finance costs (3) (22) 1 (24)Other items (53) (142) 1,851 1,656Profit before tax from continuing operations 2,473Income tax expense (625)Profit from continuing operations 1,848

2010Revenue by segment:Total revenue 9,028 14,570 – 23,598Inter-segment sales (18) (1) – (19)Total revenue 9,010 14,569 – 23,579

Recurring EBITDA 2,055 2,638 (1,800) 2,893Depreciation (294) (891) (84) (1,269)ORBIT 1,761 1,747 (1,884) 1,624Finance costs (3) (19) – (22)Other items (147) (137) 32 (252)Profit before tax from continuing operations 1,350Income tax expense (712)Profit from continuing operations 638




4C. Assets and Reconciliations

OA LP IH Unallocated Group

$’000 $’000 $’000 $’000 $’000

2011Total assets for reportable segments 5,114 9,475 14,691 – 29,280

Unallocated:Cash and cash equivalents – – – 8,350 8,350Total group assets 5,114 9,475 14,691 8,350 37,630

OA LP IA IH Unallocated Group$’000 $’000 $’000 $’000 $’000 $’000

2010Total assets for reportable segments 5,230 9,117 3,927 6,742 – 25,016

Unallocated:Cash and cash equivalents – – – – 12,115 12,115Total group assets 5,230 9,117 3,927 6,742 12,115 37,131

4D. Liabilities and Reconciliations

OA LP IH Unallocated Group

$’000 $’000 $’000 $’000 $’000

2011Total liabilities for reportable segments 835 2,642 700 – 4,177

Unallocated:Deferred and current tax liabilities – – – 551 551Other financial liabilities – – – 409 409Finance lease liabilities – – – 31 31Total group liabilities 835 2,642 700 991 5,168

OA LP IA IH Unallocated Group$’000 $’000 $’000 $’000 $’000 $’000

2010Total liabilities for reportable segments 618 1,755 161 1,055 – 3,589

Unallocated:Deferred and current tax liabilities – – – – 705 705Other financial liabilities – – – – 2,332 2,332Finance lease liabilities – – – – 2 2Total group liabilities 618 1,755 161 1,055 3,039 6,628

54 | HLN TeCHNOLOgIeS LImITeD | AnnuAl report 2011 AnnuAl report 2011 | HLN TeCHNOLOgIeS LImITeD | 55



4E. Geographical Information

Revenue Non-Current Assets 2011 2010 2011 2010

$’000 $’000 $’000 $’000

Singapore 10,033 10,607 12,861 6,751China 4,218 5,225 1,774 1,992Malaysia 7,904 5,987 1,924 2,330Indonesia 2,692 1,760 443 385Total continuing operations 24,847 23,579 17,002 11,458

Revenues are attributed to countries on the basis of the customer’s location, irrespective of the origin of the goods and services. The non-current assets are analysed by the geographical area in which the assets are located. The non-current assets exclude any financial instruments and deferred tax assets.

4F. Information About Major Customers

Sales

Group2011$’000

2010$’000

Top 1 customer 2,171 2,861Top 2 customers 4,203 5,495Top 3 customers 6,064 7,825

5. Revenue

Group 2011$’000

2010$’000

Sale of goods 24,827 23,569Sundry income 20 10

24,847 23,579

6. Interest Income

Group 2011$’000

2010$’000

Interest income from banks 9 15



7. Other Credits and (Other Charges)

Group 2011$’000

2010$’000

Allowance for impairment on trade and other receivables – reversal (loss) 45 (12)Bad debts (written-off) recovered – trade receivables (17) 6Consultancy income 39 30Fair value loss on financial assets held for trading – (50)Foreign exchange adjustment losses (152) (389)Gain on disposal of plant and equipment 9 1Gain on disposal of other financial assets – 147Gain on financial assets reclassified from equity to profit or loss - realised on disposal 5 –Government grant income from Job Credit Scheme – 21Government grant income 13 – Inventories written down (19) (6)Others (164) – Profit guarantee compensation (Note 17) 1,897 – Net 1,656 (252)

Presented in profit or loss as:Other credits 2,008 205Other charges (352) (457)Net 1,656 (252)

8. Administrative Expenses

Group 2011$’000

2010$’000

The major components include the following:Employee benefits expense (Note 10) 3,337 3,550Depreciation expense of plant and equipment 288 406

9. Finance Costs

Group 2011$’000

2010$’000

Interest expense 24 22



10. Employee Benefits Expense

Group2011$’000

2010$’000

Employee benefits expense including directors:Salaries and other short-term employees benefits 7,809 8,208Contributions to defined benefit plan (Note 27) 14 (43)Contributions to defined contribution plan 537 443Fees to directors of the company 136 110Total employee benefits expense 8,496 8,718

Employee benefits expenses included in:Cost of sales 3,642 3,581Marketing & distribution costs 1,272 1,208Administrative expenses 3,337 3,550Discontinued operations 245 379

8,496 8,718

11. Income Tax

11A. Components of tax expense (income) recognised in profit or loss include:

Group

2011$’000

2010$’000

Current tax expense

Current tax expense 637 690

Under (over) adjustments to current tax in respect of prior periods 42 (42)

Subtotal 679 648

Deferred tax (income) expense:

Deferred tax (income) expense (30) 57

(Over) under adjustments to deferred tax in respect of prior periods (24) 7

Subtotal (54) 64

Total income tax expense 625 712

The following table illustrates the details of the tax charged to profit or loss on discontinued operations:

Group

2011$’000

2010$’000

Tax charge on discontinued operations:

Current 52 94

Total income taxes on discontinued operations (Note 32) 52 94



11. Income Tax (Cont’d)

11A. Components of tax expense (income) recognised in profit or loss include (Cont’d):

The reconciliation of income taxes below is determined by applying the corporate tax rate where the parent is situated. The income tax in profit or loss varied from the amount of income tax amount determined by applying the Singapore income tax rate of 17% (2010: 17%) to profit before tax as a result of the following differences:

Group2011$’000

2010$’000

Profit before tax 2,473 1,350

Income tax expense at the above rate 420 229(Not liable to tax) not deductible items (116) 263Effect of different tax rates in different countries 216 259Tax exemptions and relief (42) (75)Deferred tax assets unrecognised 103 79Under (over) adjustment to tax in respect of prior periods 18 (35)Other minor items less than 3% each 26 (8)Total income tax expense 625 712

There are no income tax consequences of dividends to owners of the company.

11B. Deferred tax expense (income) recognised in profit or loss includes:

Group2011$’000

2010$’000

Excess of tax values over net book value of plant and equipment (16) –Excess of net book value of plant and equipment over tax values (102) 112Tax loss carryforwards (29) (114)Deferred tax assets unrecognised 103 79Provisions (4) (19)Others (6) 6Total deferred income tax (income) expense recognised in profit or loss (54) 64



11. Income Tax (Cont’d)

11C. Deferred tax balance in the statements of financial position:

Group Company2011

$’0002010$’000

2011$’000

2010$’000

Deferred tax assets (liabilities) recognised in profit or loss:Excess of net book value of plant and equipment over tax values (399) (501) – (15)Excess of tax values over net book value of plant and equipment 16 – 16 –Tax loss carryforwards 1,143 1,114 324 –Provisions 23 19 13 –Others – (6) – –Deferred tax assets unrecognised (1,182) (1,079) (353) –Total (399) (453) – (15)

Presented in the statements of financial position as follows:Deferred tax liabilities (399) (453) – (15)

It is impracticable to estimate the amount expected to be settled or used within one year.

Temporary differences arising in connection with interests in subsidiaries are insignificant.

No deferred tax asset has been recognised in respect of the tax loss carryforwards as the future profit streams are not probable.

For the Singapore and Malaysia companies, the realisation of the future income tax benefits 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 defined.

12. Items in Profit or Loss

In addition to the charges and credits disclosed elsewhere in the notes to the financial statements, this item includes the following charges:

Group2011$’000

2010$’000

Audit fees to the independent auditors of the company 92 85Audit fees to the other independent auditors 29 41Other fees to the independent auditors of the company 36 36Other fees to the other independent auditors 27 27



13. Earnings Per Share

The following table illustrates the numerators and denominators used to calculate basic and diluted earnings per share of no par value:

Group2011$’000

2010$’000

Numerators: earnings attributable to equityContinuing operations: Profit for the year attributable to equity holders 1,848 638Discontinuing operations: (Loss) profit for the year attributable to equity holders (833) 388Total profit for the year attributable to equity holders 1,015 1,026

’000 ’000Denominators: weighted average number of equity sharesBasic 149,473 127,977

The weighted average number of equity shares refers to shares in circulation during the reporting period. It is after the neutralisation of the treasury shares.

There is no dilution of earnings per share as there are presently no dilutive shares outstanding as at the end of the reporting year. The denominators used are the same as those detailed above for both basic and diluted earnings per share.

14. Dividends on Equity Shares

Rate per share-cents Group and Company 2011 2010 2011

$’0002010$’000

Final tax exempt (1-tier) dividends paid – 0.18 – 221



15. Plant and Equipment

GroupLeasehold

improvementsPlant and equipment Total

$’000 $’000 $’000Cost:At 1 January 2010 1,407 11,176 12,583Foreign exchange adjustments (42) (100) (142)Additions 500 290 790Disposals – (206) (206)At 31 December 2010 1,865 11,160 13,025Foreign exchange adjustments 40 53 93Additions 240 721 961Disposals (28) (299) (327)Disposal of subsidiaries (Note 32) (414) (110) (524)At 31 December 2011 1,703 11,525 13,228

Accumulated depreciation and impairment:At 1 January 2010 569 5,810 6,379Foreign exchange adjustments (18) (44) (62)Depreciation for the year 176 1,156 1,332Disposals – (49) (49)At 31 December 2010 727 6,873 7,600Foreign exchange adjustments 36 (5) 31Depreciation for the year 463 717 1,180Disposals (16) (212) (228)Disposal of subsidiaries (Note 32) (134) (102) (236)At 31 December 2011 1,076 7,271 8,347

Net book value:At 1 January 2010 838 5,366 6,204At 31 December 2010 1,138 4,287 5,425At 31 December 2011 627 4,254 4,881



15. Plant and Equipment (Cont’d)

CompanyPlant and equipment

$’000Cost:At 1 January 2010 516Additions 48Disposals (10)At 31 December 2010 554Additions 54Disposals (36)At 31 December 2011 572

Accumulated depreciation and impairment:At 1 January 2010 415Depreciation for the year 84Disposals (7)At 31 December 2010 492Depreciation for the year 22Disposals (27)At 31 December 2011 487

Net book value:At 1 January 2010 101At 31 December 2010 62At 31 December 2011 85

The depreciation expense for the group is charged as follows:

Group 2011$’000

2010$’000

Cost of sales 826 854Marketing and distribution costs 14 9Administrative expenses 288 406Discontinued operations 52 63Total 1,180 1,332

Certain items are under finance lease agreements (see Note 28C).



16. Investments in Subsidiaries ‘

Company2011$’000

2010$’000

Unquoted shares at cost: Cost at beginning of the year 11,395 15,395Additions 12,121 − Less: allowance for impairment − (4,000)Cost at end of the year 23,516 11,395

Net book value of subsidiaries 13,250 14,639

Total cost comprising:Unquoted equity shares at cost 27,516 15,395Less: allowance for impairment (4,000) (4,000)Total at cost 23,516 11,395

Movements in allowance for impairment:Balance at beginning and end of the year (4,000) (4,000)

The subsidiaries held by the company and the subsidiaries are listed below:

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities (and Independent Auditors) Cost

Effective Equity

Held by Group2011$’000

2010$’000

2011%

2010%

HLN Rubber Products Pte Ltd (a) 6,500 6,500 100 100SingaporePrecision elastomeric moulding of rubber components

Process Innovation Technology Pte Ltd (a) 4,895 4,895 100 100SingaporePrecision polymeric die-cutting of foams and other materials

HLN Micron Pte Ltd (a) 4,000 4,000 100 100SingaporeInvestment holding company

Greatly Holdings Investments Limited (b)(Acquired on 13 May 2011)

12,121 – 50.54 –

British Virgin IslandsInvestment holding company

Held through HLN Rubber Products Pte LtdPT HLN Batam (e) 910 910 100 100IndonesiaPrecision elastomeric moulding of rubber components (Jamaludin, Aria, Sukimto & Rekan, Indonesia)



16. Investments in Subsidiaries (Cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities (and Independent Auditors) Cost

Effective Equity

Held by Group2011$’000

2010$’000

2011%

2010%

Held through HLN Rubber Products Pte LtdHLN (Suzhou) Rubber Products Co., Ltd (e) 1,587 1,587 100 100People’s Republic of ChinaPrecision elastomeric moulding of rubber components (BDO China Shu Lun Pan CPAs Limited, People’s Republic of China)

HLN Rubber Industries Sdn Bhd (e) 1,064 1,064 100 100MalaysiaPrecision elastomeric moulding of rubber components (SQ Morison, Malaysia)

Held through Process Innovation Technology Pte LtdProcess Innovation Technology (Suzhou) Co., Ltd (e) 1,016 1,016 100 100People’s Republic of ChinaDie-cutting, fabricating and converting of polymeric products(BDO China Shu Lun Pan CPAs Limited, People’s Republic of China)

Held through HLN Micron Pte LtdHLN Technologies Sdn Bhd (e) 2,450 2,450 100 100MalaysiaPrecision turning of metallic components(SQ Morison, Malaysia)

HLN Metal Centre Pte Ltd (a) (c) (d) − 3,088 − 99(Disposed on 17 November 2011)SingaporePrecision machining and slitting of aluminium products

Held through HLN Metal Centre Pte LtdHLN Metal (Shenzhen) Co., Ltd (d) (e) − 769 − 99(Disposed on 17 November 2011)People’s Republic of ChinaPrecision machining and slitting of aluminium products(Shu Lun Pan Yangcheng CPA Co., Ltd, People’s Republic of China)

HLN Metal (Suzhou) Co., Ltd (d) (e) − 746 − 99(Disposed on 17 November 2011)People’s Republic of China Precision machining and slitting of aluminium products(BDO China Shu Lun Pan CPAs Limited, People’s Republic of China)



16. Investments in Subsidiaries (Cont’d)

(a) Audited by RSM Chio Lim LLP, Singapore.

(b) Greatly Holdings Investment Limited (“Greatly Holdings”) became a subsidiary on 13 May 2011 (see Note 31). Greatly Holdings is an investment holding company and its only investment is a 30% equity stake in Tianjin Swan Lake Real Estate Development Co Ltd. whose financial statements for the reporting year ended 31 December 2011 was audited by BDO China Shu Lun Pan CPAs Limited for the purpose of the audit of the group.

(c) On 8 April 2010, HLN Micron Pte Ltd (“HLN Micron”) executed a share sale agreement to acquire 17.65% interest from Mr Tay Pooi Hwa (a non-controlling interest) in the share capital of HLN Metal Centre Pte Ltd (“HLN Metal”) for a purchase consideration of $380,000. HLN Micron increased its interest in HLN Metal from 81.35% to 99.0%. This transaction was completed on 16 April 2010. The difference between the purchase consideration and the non-controlling interest acquired had been accounted as a movement in equity.

(d) The subsidiaries were disposed during the reporting year (Note 32).

(e) Audited by firms of accountants other than member firms 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 satisfied themselves that the appointment of different auditors for certain of its overseas subsidiaries would not compromise the standard and effectiveness of the audit of the group.

17. Investment in Associate


2010$’000

2011$’000

2010$’000

Unquoted equity shares at costAt beginning of the reporting year – – – –Arising from acquisition of subsidiary (Note 31) 12,121 – – –At end of the reporting year 12,121 – – –

Share of net book value of associate 10,730 – – –

Analysis of above amount denominated in non-functional currency:

Chinese Renminbi 11,500 – – –

The associate held by the group is listed below:

Name of associate, country of incorporation, place of operations and principal activities (and independent auditors)

Effective percentage of equityheld by the Group

2011%

2010%

Held through Greatly Holdings Investment LimitedTianjin Swan Lake Real Estate Development Co Ltd. 15.16 –People’s Republic of ChinaProperty Developer(BDO China Shu Lun Pan CPAs Limited, People’s Republic of China)



17. Investment in Associate (Cont’d)

The summarised financial information of the associate (unaudited) not adjusted for the percentage ownership held by the group, is as follows:

Group2011$’000

2010$’000

Assets 78,755 –Liabilities (7,976) –Revenues 3,523 –Loss for the year (274) –

Pursuant to a sale and purchase agreement (“SPA”) for the acquisition of Greatly Holdings, which in turn holds a 30% equity stake in the associate, Tianjin Swan Lake Real Estate Development Co Ltd (“Tianjin Swan Lake”), the vendor has provided a guarantee that Tianjin Swan Lake’s audited net operating profit after tax (“NPAT”) will be at least 30% of revenue for the financial years ending 31 December 2011 (FY2011) and 31 December 2012 (FY2012) respectively. In the event Tianjin Swan Lake NPAT margin is below 30% in any of these two years, the vendor shall pay the company an amount equivalent to 15.16% of the shortfall in Singapore dollar equivalent. For the reporting year ended 31 December 2011, the vendor has agreed in writing to compensate the group for an amount of RMB9,096,000 (S$1,897,000 equivalent). The compensation has been included in profit or loss and reported as other credit for the reporting year 2011, notwithstanding RMB3,096,000 (S$646,000) of the compensation remains outstanding as at the date of this report. Pursuant to the SPA, the vendor has also provided an undertaking that in the event the NPAT margin of Tianjin Swan Lake is less than 23% in any of FY2011 or FY2012, the company may elect to exercise a put option that requires the vendor to buyback the company’s stake in Tianjin Swan Lake at a price equal to the aggregate of all payments made by the company in relation to the above acquisition. Management has obtained legal advice to confirm that in the event that the company were to exercise the put option, it is able to retain the compensation received under the profit guarantee for FY2011, in addition to the aggregate of the considerations paid in relation to the acquisition.

Based on the financial statements of Tianjin Swan Lake, the associate incurred a loss of $274,000 (RMB1,398,000 equivalent) for the reporting year ended 31 December 2011. The financial statements of Tianjin Swan Lake for the reporting year ended 31 December 2011 were subjected a disclaimer audit opinion by the auditors, Messrs BDO China Shu Lun Pan CPAs Limited for the following reasons:

- The auditors were unable to obtain confirmations from major suppliers and supporting evidence for the estimated costs incurred for the development project, and hence unable to assess the reasonableness of the costs incurred in relation to the sales from units for the reporting year 2011;

- Tianjin Swan Lake extended significant amount of loans to its related parties in the reporting year 2011. The loans are partly funded by proceeds from capital contributions made by the shareholders of Tianjin Swan Lake during the year. As its auditors were unable to obtain its audited financial statements or management accounts of the related parties for the reporting year 2011, its auditors were unable to obtain sufficient appropriate evidence to determine the collectability of the amounts due from the related parties.

In view of the above, management has opted not to equity account the associate’s results for the current reporting year. It has also not performed test for impairment as it is impractical to do so given the lack of sufficient information with respect to the financial performance of the associate.



17. Investment in Associate (Cont’d)

Notwithstanding the above, management is of the view that no provision for impairment is necessary for the following reasons:

- The company has the option to recover in full the gross considerations paid, subject to fluctuation in exchange rate.

- In addition, the company has also obtained a deed of guarantee whereby General Nice Resources (HK) Limited (“General Nice”, a related party to the other shareholders of Tianjin Swan Lake) guarantees to and covenants with the company the due and punctual performance by vendor of the obligations under the SPA.

- Based on a recent credit search performed on the guarantor, the guarantor credit rating has been graded as:

o Moderate credit status, comparable to high yield rated securities.

o Adequate financial capabilities to meet normal commitments. However, adverse changes in economic condition could lead to doubtfulness in the ability to pay.

o Default credit frequency 1.0% to less than 3.0%

However it may be noted that the settlement of a guarantee, if being called upon, would not normally be considered as “normal commitment”. The recoverability of the investment in Tianjin Swan Lake assumes that in the event the company were to exercise the put option in accordance to the conditions stated in the SPA, the vendor has the ability to repay the amount and if not, General Nice has the ability to meet its obligations under the deed of guarantee. The outcome of the above assumption is uncertain and there is no assurance that it will be successful. If this assumption is inappropriate, material adjustments may have to be made to write down the carrying value of the investment in associate.

18. Other Financial Assets, Non-Current

Group and Company2011$’000

2010$’000

Quoted equity shares in corporations as available-for-sale at fair value through other comprehensive income − 105

Movements during the year:Fair value at beginning of the year 105 102Disposals of investments (105) −Increase in fair value through other comprehensive income − 3Fair value at end of the year – 105

The investments in quoted equity securities are held primarily for long-term growth potential. The fair value of these investments at the end of the reporting year, based on current bid prices in an active market, is shown above.

A cumulated gain of $5,000 on remeasuring available-for-sale assets to fair value was recognized in other comprehensive income in prior years. It was recycled from equity to profit or loss upon the disposal of the investment in the current reporting year.



19. Inventories

Group2011$’000

2010$’000

Finished goods and goods for resale 839 881Work-in-progress 131 442Raw materials and consumables 1,475 3,627

2,445 4,950

Inventories are stated after allowance. Movements in allowance:Balance at beginning of the year 244 296Allowance to profit or loss included in other charges 19 6Allowance (reversal) to profit or loss under discontinued operations 13 (58)Disposal of subsidiaries (Note 32) (195) –Balance at end of the year 81 244

The reversal of the allowance is for goods with an estimated increase in net realisable value.

Group

Continuing operations:2011$’000

2010$’000

Changes in inventories of finished goods and work-in-progress included in cost of sales – decrease (increase) 353 (250)Raw materials and consumables used included in cost of sales 2,759 5,159The amount of inventories included in cost of sales 16,335 14,472

There are no inventories pledged as security for liabilities.



20. Trade and Other Receivables


2010$’000

2011$’000

2010$’000

Trade receivables:Outside parties 6,373 7,218 – –Less: allowance for impairment (48) (141) – –Subtotal 6,325 7,077 – –

Other receivables:Staff loans and advances 584 17 – –Subsidiaries (Note 3) – – 2,992 5,075Less: allowance for impairment – – (1,372) (3,100)Other receivables 208 625 – 549Profit guarantee receivable (Note 17) 1,897 – – –Subtotal 2,689 642 1,620 2,524Total trade and other receivables 9,014 7,719 1,620 2,524

Movements in above allowance: Balance at beginning of the year 141 154 3,100 3,100Foreign exchange adjustments (2) (5) – –(Reversed) allowance for trade receivables to profit or loss included in (other credits) and other charges (45) 12 (1,728) –Bad debts written-off (30) (6) – –Reversal for trade receivables to profit or loss included in discontinued operations (7) (14) – –Disposal of subsidiaries (Note 32) (9) – – –Balance at end of the year 48 141 1,372 3,100

21. Other Financial Assets, Current

Group and Company2011$’000

2010$’000

Quoted equity shares in corporations at fair value through profit or loss classified as held for trading – –

Movements during the year:Fair value at beginning of the year – 468Disposals – (418)Decrease in fair value through profit or loss – (50)Fair value at end of the year – –

The fair value of these securities approximates to current bid prices in an active market.



22. Other Assets

Group Company2011

$’0002010$’000

2011$’000

2010$’000

Non-current:Deposit paid for acquisition of a subsidiary (Note 31) – 5,928 – 5,928

Current:Deposits to secure services 657 385 21 41Prepayments 162 504 32 56Subtotal 819 889 53 97Total 819 6,817 53 6,025

23. Cash and Cash Equivalents


2010$’000

2011$’000

2010$’000

Not restricted in use 7,703 11,473 2,113 4,474Cash pledged for bank facilities #a 647 642 647 642Cash at end of the year 8,350 12,115 2,760 5,116

Interest earning balances 8,339 6,649 2,760 4,642

#a These were fixed deposits that have been pledged to a bank for credit facilities granted to certain subsidiaries (see Note 28B).

The rate of interest for the cash on interest earning balances was between 0.05% and 0.21% (2010: 0.1875% and 0.3000%) per annum.

23A. Cash and Cash Equivalents in the Consolidated Statement of Cash Flows

Group2011$’000

2010$’000

Amount as shown above 8,350 12,115Cash pledged for bank facilities (647) (642)Cash and cash equivalents for consolidated statement of cash flows purposes at end of the year 7,703 11,473

23B. Non-Cash Transactions

(a) 2,212,000 of the company’s treasury shares amounting to $621,000 were transferred to an individual during the current reporting year as part of the consideration to acquire a subsidiary (Note 31).

(b) There were acquisitions of plant and equipment with a total cost of $36,000 (2010: Nil) acquired by means of finance leases.



24. Share Capital

Group and company Number of

shares issuedSharecapital

Treasury shares Total

$’000 $’000 $’000Ordinary shares of no par value:Balance at 1 January 2010 123,460,920 16,648 (942) 15,706Issue of share capital (a) 24,600,000 6,076 – 6,076Balance at 31 December 2010 148,060,920 22,724 (942) 21,782Issue of treasury shares for the acquisition of a subsidiary (b) 2,212,000 290 331 621Balance at 31 December 2011 150,272,920 23,014 (611) 22,403

The ordinary shares of no par value which are fully paid carry no right to fixed income. The company is not subject to any externally imposed capital requirements.

(a) On 25 October 2010, the company issued 24,600,000 ordinary shares at $0.261 per share pursuant to a share placement exercise. The share issue expenses incurred amounted to $344,000 and it was capitalised at the end of the reporting year.

(b) On 13 May 2011, the company issued 2,212,000 treasury shares as partial consideration for the acquisition of a 50.54% shareholding interest in a subsidiary, Greatly Holdings Investment Limited (Note 31).

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 benefits 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.

In order to maintain its listing on the Singapore Stock Exchange it has to have share capital with a free float of at least 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 reporting year. Management receives a report from the registrars frequently on substantial share interests showing the non-free float to ensure continuing compliance with the 10% limit throughout the reporting year.

The primary objective for capital management is to ensure a strong credit rating and healthy capital ratios to support its business and maximise shareholder value. The management does not set a target level of gearing but uses capital opportunistically to support its business and 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.

The management monitors the capital on the basis of the debt-to-adjusted capital ratio.

The group and company have insignificant external borrowings. The debt-to-adjusted capital ratio does not provide a meaningful indicator of the risk of borrowings.



25. Share-Based Payments

HLN PSP

The HLN PSP was approved by the shareholders of the company at an Extraordinary General Meeting held on 13 May 2008 to replace the HLN Employee Share Option Scheme (“HLN ESOS”).

Under the HLN PSP, it is contemplated that the award of fully paid ordinary shares of the company, their equivalent cash value or combinations thereof, issued free of charge to eligible participants would incentivise the participants to excel in their performance and encourage greater dedication and loyalty to the group. The company is able to recognise and reward past contributions and services and motivate the participants to continue to strive for the group’s long-term prosperity. The HLN PSP will further strengthen and enhance the company’s competitiveness in attracting and retaining employees with suitable talents. In addition the HLN PSP aims to foster an ownership culture within the group which aligns the interests of the key executives and employees with the interests of the shareholders.

The HLN PSP contemplates the award of fully paid ordinary shares of the company when or after pre-determined performance or service conditions are accomplished and/or when due recognition should be given to any good work performance and/or any significant contribution to the group upon expiry of prescribed vesting periods.

The HLN PSP is administered by the Remuneration Committee (“Committee”) whose members are:

Li AnhuaTang Chi LoongNg Khoon Seng

Members of the Committee were not and shall not be involved in the Committee’s deliberations in respect of performance shares granted to them.

Under the rules of the HLN PSP, any employee (including Executive Directors and Independent Directors of the company) who holds such rank as may be designated by the Committee from time to time, who has attained the age of 21 years on the date of grant of the award and is not an undischarged bankrupt and has not entered into composition with their respective creditors and who has contributed or will contribute to the success of the group shall be eligible to participate in the HLN PSP. However, any grant of awards to the Independent Directors pursuant to the HLN PSP is subject to and shall comply with the provisions of section 76 of the Companies Act, Chapter 50.

Controlling shareholders or their associates who meet the eligible criteria above and who have contributed to the success and development of the group are eligible to participate in the HLN PSP provided that the participation by each such controlling shareholder or associate and each grant of awards to any one of them may be effected only with the specific prior approval of shareholders at a general meeting in separate resolutions. The company will at such time seek the specific prior approval of shareholders at a general meeting in separate resolutions for any proposal to grant the controlling shareholders or their associates any awards.

There shall be no restriction on the eligibility of any of the eligible participants to participate in any other share option or share incentive schemes implemented or to be implemented by the group.

The granting of awards will be made by the Committee at any time during the period when HLN PSP is in force.



25. Share-Based Payments (Cont’d)

HLN PSP (Cont’d)

The awards granted under the HLN PSP are performance-based, and such awards entitle eligible participants to be allotted fully paid shares upon satisfactory achievement of pre-determined performance targets. The awards given are determined at the discretion of the Committee, who will take into account factors such as the eligible participants’ capability, scope of responsibility and skill. The Committee also set specific performance-based criteria such as profitability, growth, asset efficiency, return on capital employed, and other financial indicators, penetration into new markets, increasing market share and market ranking, management skills and succession planning. In addition to the achievement of any pre-determined performance targets or service conditions, awards may also be granted upon the Committee’s post-event determination that any eligible participants has performed well and/or made a significant contribution to the group.

Awards are vested and the shares comprised in the awards are issued at the end of the performance and/or service period once the Committee is, at its sole discretion, satisfied that the prescribed performance targets and/or service conditions have been achieved. The Committee may also grant an award where in its opinion an eligible participant’s performance and/or contribution to the group warrants it.

Eligible participants are not required to pay for the grant of the awards. All taxes (including income tax) arising from the exercise of any awards granted to any eligible participants under the HLN PSP shall be borne by the participants.

The total number of new shares issued or issuable pursuant to awards granted under HLN PSP, when added to the number of new shares issued and issuable in respect of:

(a) all awards granted thereunder;(b) all options granted under the Scheme; and(c) all shares or awards granted under any other share option or share incentive schemes of the company then in

force,

shall not exceed 15% of the number of issued shares of the company on the day preceeding the relevant date of award.

The total number of new shares issued or issuable under the HLN PSP is subject to the maximum limit of 15% of the company’s total issued share capital from time to time.

In addition, the total number of new shares issued or issuable under the HLN PSP available to:

(a) all controlling shareholders and their associates must not exceed 25% of the shares available under HLN PSP.

(b) each of the controlling shareholders and their associates must not exceed 10% of the shares available under HLN PSP.

No performance share was granted in 2010 and 2011.

There are no outstanding employee and director performance shares as at 31 December 2011 and 2010.



26. Other Reserves

Group

Foreign currency

translationreserve

Statutory reserve (a)

Revaluation reserve Total

$’000 $’000 $’000 $’000Current year:At beginning of the year 1 January 2011 (611) − 5 (606)Foreign exchange adjustments 300 − − 300Reclassification adjustment for gain included in profit or loss – realised on disposal − − (5) (5)Statutory reserve − 252 − 252Disposal of subsidiaries (Note 32) 57 – – 57At end of the year 31 December 2011 (254) 252 – (2)

Previous year:At beginning of the year 1 January 2010 (272) − 2 (270)Foreign exchange adjustments (339) − − (339)Available-for-sale investments: Valuation gain taken to other comprehensive income (Note 18) − − 3 3At end of the year 31 December 2010 (611) – 5 (606)

CompanyRevaluation

reserve Total$’000 $’000

Current year:At beginning of the year 1 January 2011 5 5Reclassification adjustment for gain included in profit or loss – realised on disposal (5) (5)At end of the year 31 December 2011 – –

Previous year:At beginning of the year 1 January 2010 2 2Available-for-sale investments: Valuation gain taken to other comprehensive income (Note 18) 3 3At end of the year 31 December 2010 5 5

The currency translation reserve accumulates all foreign exchange differences.

All reserves classified on the face of the statements of financial position as retained earnings represents past accumulated earnings and are distributable as cash dividends. The other reserves are not available for cash dividends unless realised.

(a) The subsidiaries incorporated in the People’s Republic of China (“PRC”) are required by the relevant PRC regulations and the articles of association to appropriate, where applicable, a certain percentage of profit after tax (after offsetting all recognised tax losses carried forward from previous financial 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.



27. Provisions

Group2011$’000

2010$’000

Retirement benefit obligations 43 32

Defined benefit plan:

The group operates defined benefit retirement plans for all qualifying employees of its divisions in Indonesia. The assets of the schemes are held separately from those of the group in funds under the control of trustees. Where there are employees who leave the scheme prior to vesting fully in the contributions, the contributions payable by the group are reduced by the amount of forfeited contributions.

The principal actuarial assumptions used for the purpose of the actuarial valuation of the defined benefit retirement plans at each end of the reporting year were as follows:

2011 2010

Discount rate 9% 8.5%Salary growth rate 10% 10%Mortality rate TMI 1999 TMI 1999Disability rate 10% of TMI 1999 10% of TMI 1999Withdrawal rate 1.2 up to 6% 1.2 up to 6%

The assumptions relating to longevity used to compute the defined benefit obligation liabilities are based on published mortality tables commonly used by the actuarial profession in each territory concerned.

The amount recognised in profit or loss is as follows:

Group2011$’000

2010$’000

Current service cost 12 35Net recognised actuarial gain (loss) 2 (20)Past services cost – vested − −(1)

Provision charged to profit or loss included in cost of sales 14 15Overprovision of retirement benefit in prior year − (58)

14 (43)

The following table analyses the amounts recognised in the statements of financial position:

Group2011$’000

2010$’000

Present value of the defined benefit obligation 67 58Unrecognised actuarial loss (23) (25)Unrecognised past service cost – non vested (1) (1)Balance at end of the year 43 32



27. Provisions (Cont’d)

The following table analyses the movements in retirement benefit obligations:

Group2011$’000

2010$’000

Present value of defined benefit obligations (wholly or partly funded):Current service cost 12 35Net recognised actuarial gain (loss) 2 (20)Past services cost – vested − −(1)

Benefit paid (3) (8)Overprovision of retirement benefit in prior year − (58)Exchange adjustments − (1)Increase (decrease) during the year 11 (52)At beginning of the year 32 84Balance at end of the year 43 32

(1) Less than $1,000.

28. Other Financial Liabilities

Group2011$’000

2010$’000

Non-current:Finance lease liabilities (Note 28C) 24 −

Current:Bank loan (Note 28A) 409 417Trust receipts (Note 28B) − 1,915Subtotal 409 2,332Finance lease liabilities (Note 28C) 7 2Current, total 416 2,334Total 440 2,334

All the amounts except for finance lease liabilities are at floating interest rates.

The range of annual floating interest rates paid were as follows:

Group2011 2010

Bank loan 6.30% 7.30% to 8.05%Trust receipts – 5.56% to 8.69%

28A. Bank Loans

Bank loan relates to revolving money market loans each with maturity of not less than 3 months and not exceeding 6 months with rollovers. These short-term borrowings are covered by a corporate guarantee from a subsidiary. It is payable within a year.

76 | HLN TeCHNOLOgIeS LImITeD | AnnuAl report 2011 AnnuAl report 2011 | HLN TeCHNOLOgIeS LImITeD | 77


28. Other Financial Liabilities (Cont’d)

28B. Trust Receipts

The trust receipts were covered by a corporate guarantee and fixed deposit (Note 23) from the company.

28C. Finance Lease Liabilities

GroupMinimumpayments

Financecharges

Present value

2011 $’000 $’000 $’000Minimum lease payments payable:Due within one year 8 (1) 7Due within 2 to 5 years 26 (2) 24Total 34 (3) 31

Net book value of plant and equipment under finance lease liabilities 62

Minimumpayments

Financecharges

Present value

2010 $’000 $’000 $’000Minimum lease payments payable:Due within one year 2 −(1) 2

Net book value of plant and equipment under finance lease liabilities 3

(1) Less than $1,000

There are leases for certain of its plant and equipment under finance leases. The average lease term is 5 years (2010: 5 years). The interest rate for finance leases are fixed at 2.70% (2010: 3.50%) per annum. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The obligations under finance leases are secured by the lessor’s charge over the leased assets.

The finance leases are guaranteed by a director of a subsidiary.

29. Trade and Other Payables


2010$’000

2011$’000

2010$’000

Trade payables:Outside parties and accrued liabilities 4,030 3,451 640 970Subsidiaries (Note 3) – – – 25Subtotal 4,030 3,451 640 995

Other payables:Other payables 104 106 56 85Total trade and other payables 4,134 3,557 696 1,080



30. Financial Instruments: Information on Financial Risks

30A. Classification of Financial Assets and Liabilities

The following table summarises the carrying value of financial assets and liabilities recorded at the end of the reporting year by FRS 39 categories:


2010$’000

2011$’000

2010$’000

Financial assets:Available-for-sale financial assets – 105 – 105Cash and bank balances 8,350 12,115 2,760 5,116Loans and receivables 9,014 7,719 1,620 2,524At end of the year 17,364 19,939 4,380 7,745

Financial liabilities:Trade and other payables measured at amortised cost 4,134 3,557 696 1,080Other financial liabilities measured at amortised cost 440 2,334 – – At end of the year 4,574 5,891 696 1,080

Further quantitative disclosures are included throughout these financial statements.

30B. Financial Risk Management

The main purpose for holding or issuing financial instruments is to raise and manage the finances for the entity’s operating, investing and financing activities. The main risks arising from the entity’s financial instruments are credit risk, interest risk, liquidity risk, foreign currency risk and market price risk comprising interest rate and currency risk exposures. Management has certain practices for the management of financial risks. The guidelines set up the short and long term objectives and action to be taken in order to manage the financial risks.

The guidelines include 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, All financial risk management activities are carried out and monitored by senior management staff.4. All financial risk management activities are carried out following good market practices.5. When appropriate consideration is given to investing in shares or similar instruments.6. When appropriate consideration is given to entering into derivatives or any other similar instruments solely for

hedging purposes.

There has been no changes to the exposures to risk; the objectives, policies and processes for managing the risk and the methods used to measure the risk.

The management committee who monitors the procedures reports to the board and ensures that the policies and procedures are followed in practice.

The company is exposed to currency and interest rate risks. There are no arrangements to reduce such risk exposures through derivatives and other hedging instruments.



30. Financial Instruments: Information on Financial Risks (Cont’d)

30C. Fair Value of Financial Instruments

30.C.1. Fair value of financial instruments stated at amortised cost in the statements of financial position

The financial assets and financial liabilities at amortised cost are at a carrying amount that is a reasonable approximation of fair value.

30.C.2. Fair value measurements recognised in the statements of financial position

The fair value measurements are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The levels are: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Balances recognised at fair value in the statements of financial position included quoted equity shares in corporations of NIL (2010: $105,000). They were measured at level 1 of the fair value hierarchy.

30D. 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, receivables, and other financial assets. The maximum exposure to credit risk is: the total of the fair value of the financial 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 with banks and any financial instruments is limited because the counter-parties are entities with acceptable credit ratings. Credit risk on other financial assets is limited because the other parties are entities with acceptable credit ratings.

For credit risk on receivables an ongoing credit evaluation is performed on the financial condition of the debtors and a loss from impairment is recognised in profit 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.

Note 23 discloses the maturity of the cash and cash equivalents balances.

As part of the process of setting customer credit limits, different credit terms are used. The average credit period generally granted to trade receivable customers is about 30 – 90 days (2010: 30 – 90 days). But some customers take a longer period to settle the amounts.

(a) Ageing analysis of the age of trade receivable amounts that are past due as at the end of reporting year but not impaired:

Group

2011$’000

2010$’000

Trade receivables:

91- 120 days 235 592

121- 150 days 78 93

151- 180 days – 3

Over 180 days 1 −

At end of the year 314 688




30D. Credit Risk on Financial Assets (Cont’d)

(b) Ageing analysis as at the end of reporting year of trade receivable amounts that are impaired:

Group

2011$’000

2010$’000

Trade receivables:

Over 180 days 48 141

The allowance which is disclosed in Note 20 on trade receivables is based on individual accounts totalling $48,000 (2010: $141,000) that are determined to be impaired at the end of reporting year. These are not secured.

Other receivables are normally with no fixed terms and therefore there is no maturity. Also see Note 17.

Concentration of trade receivable customers at the end of the reporting year:

Group

2011$’000

2010$’000

Top 1 customer 710 902Top 2 customers 1,365 1,489Top 3 customers 1,905 2,073

Available for sale investments represent equity shares and therefore there is no maturity.

30E. Liquidity Risk

The following table analyses the non-derivative financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows):

Less than1 year

1 – 5years Total

Group $’000 $’000 $’0002011Gross borrowing commitments 435 – 435Gross finance lease liabilities 8 26 34Trade and other payables 4,134 – 4,134

4,577 26 4,603

2010Gross borrowing commitments 2,500 – 2,500Gross finance lease liabilities 2 – 2Trade and other payables 3,557 – 3,557

6,059 – 6,059




30E. Liquidity Risk (Cont’d)

Less than1 year

Company $’0002011Trade and other payables 696

2010Trade and other payables 1,080

The above amounts disclosed in the maturity analysis are the contractual undiscounted cash flows and such undiscounted cash flows differ from the amount included in the statements of financial 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.

The undiscounted amounts on the borrowings with fixed and floating interest rates are determined by reference to the conditions existing at the reporting date.

Financial guarantee contracts – For financial 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 financial guarantees are expected. The following table shows the maturity analysis of the contingent liabilities:

Less than1 year

Company $’0002011Financial guarantee contracts – in favour of subsidiaries –

2010Financial guarantee contracts – in favour of subsidiaries 2,566

The liquidity risk refers to the difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. It is expected that all the liabilities will be paid at their contractual maturity. The average credit period taken to settle trade payables is about 30 – 90 days (2010: 30 – 90 days). The other payables are with short-term durations. The classification of the financial assets is shown in the statements of financial position as they may be available to meet liquidity needs and no further analysis is deemed necessary.

Group2011$’000

2010$’000

Bank facilities:Undrawn borrowing facilities 1,918 2,065

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 financial liabilities and unused bank facilities is provided to management to assist them in monitoring the liquidity risk.




30F. Interest Rate Risk

The interest rate risk exposure is mainly from changes in fixed rate and floating interest rates. The interest from financial assets including cash balances is not significant.

Sensitivity analysis: The effect on pre-tax profit is not significant.

30G. Foreign Currency Risks

Analysis of amounts denominated in non-functional currencies:

GroupFinancial assets:

Cashand cash

equivalents

Tradeand other

receivables Total$’000 $’000 $’000

2011Singapore dollars 616 816 1,432US dollars 2,950 2,814 5,764Euro 29 – 29Renminbi – 1,897 1,897

3,595 5,527 9,122

2010Singapore dollars 139 362 501US dollars 1,528 2,334 3,862Euro 17 − 17Hong Kong dollars − 82 82

1,684 2,778 4,462

Group Borrowings

Tradeand other payables Total

Financial liabilities: $’000 $’000 $’000

2011

Singapore dollars – 751 751US dollars – 738 738

– 1,489 1,489

2010

Singapore dollars − 211 211US dollars 557 608 1,165

557 819 1,376




30G. Foreign Currency Risks (Cont’d)

Net financial assets (liabilities) at end of the reporting year: Group2011$’000

2010$’000

Singapore dollars 681 290US dollars 5,026 2,697Euro 29 17Renminbi 1,897 –Hong Kong dollars – 82

The amount of financial assets and financial liabilities of the company denominated in foreign currencies at the end of the reporting year 2011 and 2010 are not significant.

There is exposure to foreign currency risk as part of its normal business.

Sensitivity analysis:

Group2011$’000

2010$’000

A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the US$ with all other variables held constant would have an adverse effect on post-tax profit of 503 270

A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the Euro with all other variables held constant would have an adverse effect on post-tax profit of 3 2

A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the HKD with all other variables held constant would have an adverse effect on post-tax profit of – 8

A hypothetical 10% strengthening in the exchange rate of the functional currency $ against the RMB with all other variables held constant would have an adverse effect on post-tax profit of 190 –

The above table shows sensitivity to a hypothetical 10% variation in the functional currency against the relevant foreign currencies. The sensitivity rate used is the reasonably possible change in foreign exchange rates. For similar rate weakening of the functional currency against the relevant foreign currencies above, there would be comparable impacts in the opposite direction on the profit or loss.

The hypothetical changes in exchange rates are not based on observable market data (unobservable inputs). The sensitivity analysis is disclosed for each currency to which the entity has significant exposure at end of the reporting year. 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 foreign currency risks as the historical exposure does not reflect the exposure in future.



31. Acquisition of Subsidiary

Pursuant to the signing of a term sheet on 19 December 2010, the company has on 19 January 2011 entered into a conditional sales and purchase agreement (“SPA”) with Messrs Tan Jian You (the “vendor”) to purchase from the vendor a 50.54% shareholding interest in Greatly Holdings Investments Limited (“Greatly Holdings”). A deposit of $5,928,000 (RMB 30 million equivalent) was paid to the vendor and was accounted under other assets as at 31 December 2010 (Note 22).

On 13 May 2011, the company completed the above acquisition. Greatly Holdings became a subsidiary of the company. The transaction was accounted for by the acquisition method of accounting.

Greatly Holdings is an investment holding company and its only investment is a 30% equity stake in Tianjin Swan Lake Real Estate Development Co. Ltd (“Tianjin Swan Lake”), which owns a commercial development project in Wuqing District, Tianjin, known as the Jing Jin Business Centre.

The acquisition of a controlling stake of 50.54% in Greatly Holdings is to acquire its 30% stake in Tianjin Swan Lake. Tianjin Swan Lake is an associate of the group. Management has performed a purchase price allocation exercise and identified the fair value of Greatly Holdings at date of acquisition.

The consideration transferred is as follows:

2011$’000

Cash 11,5002,212,000 treasury shares issued 621Total consideration transferred 12,121

The only asset of Greatly Holdings is the associate. Also see Note 17.

32. Disposal of Subsidiaries

HLN Metal Centre Group, the metallic business unit, was sold on 17 November 2011.

The losses for the reporting year from the disposal of the subsidiaries and the results for the previous year and for the period from the beginning of the reporting year to the date of the disposal, which have been included in the consolidated financial statements, were as follows:

GroupPeriod to the

date of disposal

Year ended 31/12/2010

$’000 $’000

Revenue 3,439 6,536Expenses (3,433) (6,054)Profit before tax 6 482Income tax expense (52) (94)(Loss) profit after tax before disposal loss (46) 388Loss on disposal of subsidiaries (730) –Realised foreign exchange translation reserve reclassified to profit or loss (57) –Total (loss) profit on discontinued operations (833) 388

A loss of $833,000 arose on the disposal of HLN Metal Centre Group, being the consideration receivable on disposal less the carrying amount of the subsidiary’s net assets, inclusive of other comprehensive income. No tax charge or credit arose from the transaction.



32. Disposal of Subsidiaries (Cont’d)

The following table summarises the carrying amounts of the assets and liabilities of the discontinued operations (HLN Metal Centre Group) that were sold on 17 November 2011:

GroupDate of

disposal in 2011

End of last year2010

$’000 $’000

Plant and equipment 288 311Inventories 2,778 2,173Trade and other receivables 972 1,447Other assets, current 39 22Cash and equivalents 402 1,124Other reserves 57 92Non-controlling interest (30) (4)Deferred tax assets 6 6Income tax payables (4) (38)Trade and other payables (533) (210)Other finance liabilities (1,038) (1,915)Net assets disposed of 2,937 3,008Loss on disposal (730)Realised foreign exchange translation reserve reclassified to profit or loss (57)Total consideration 2,150

Net cash inflow on disposal:Cash consideration 2,150Cash balance disposed of (402)Net cash inflow 1,748

The cash flows of the discontinued operations for the previous year and for the period from the beginning of the reporting year to the date of disposal, which have been included in the consolidated financial statements, were as follows:

GroupPeriod to the

date of disposal

Year ended 31/12/2010

$’000 $’000

Operating cash flows 243 (1,052)Investing activities (24) (4)Financing activities (941) 1,674Total cash flows (722) 618



33. Operating Lease Payment Commitments

At the end of the reporting year the total of future minimum lease payment commitments under non-cancellable operating leases are as follows:

Group2011$’000

2010$’000

Not later than one year 756 821Later than one year and not later than five years 593 721Rental expense for the year 996 1,080

Operating lease payments represent rentals payable for office and factory premises. The lease rental terms are negotiated for average terms of two to five years and rentals are subject to review and revision from time to time.

34. 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 modification of the measurement methods or the presentation in the financial 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 Classification 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 AssetsINT 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.



35. 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 financial position, results of operations, or cash flows 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 2012FRS 19 Employee Benefits 1 Jan 2013FRS 27 Consolidated and Separate Financial Statements (Amendments to) 1 Jul 2011FRS 27 Separate Financial Statements 1 Jan 2013FRS 28 Investments in Associates and Joint Ventures 1 Jan 2013FRS 107 Financial Instruments: Disclosures (Amendments to) - Transfers of Financial

Assets1 Jul 2011

FRS 110 Consolidated Financial Statements 1 Jan 2013FRS 111 Joint Arrangements (*) 1 Jan 2013FRS 112 Disclosure of Interests in Other Entities 1 Jan 2013FRS 113 Fair Value Measurements 1 Jan 2013

(*) Not relevant to the entity.


Issued and fully paid capital : $23,384,418Number of issued shares (excluding treasury shares) : 150,272,920Number of treasury shares : 5,365,000 (4.0%) Class of shares : ordinary sharesVoting rights : one vote per share

DISTRIBUTION OF SHAREHOLDINGS

NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % NO. OF SHARES %

1 - 999 4 0.33 2,460 0.001,000 - 10,000 593 48.21 3,898,040 2.59

10,001 - 1,000,000 612 49.76 33,172,120 22.081,000,001 AND ABOVE 21 1.70 113,200,300 75.33TOTAL 1,230 100.00 150,272,920 100.00

Shareholding held by the public

Based on the information available to the Company as at 15 March 2012, approximately 51.10% of the issued ordinary shares of the Company are 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 INTERESTNAME OF SHAREHOLDERS NO. OF SHARES % OF SHARES DEEMED INTEREST % OF SHARES

China Infrastructures Global – – 36,000,000 23.96Investment Capital Limited (1)

Wa Kok Liang, Leslie (2) 18,984,720 12.63 4,135,000 2.75

Notes :-

(1) The deemed interest of China Infrastructures Global Investment Capital Limited arises from shares held in the name of nominee.

(2) The deemed interest of Mr Wa Kok Liang, Leslie arises from shares held by his spouse.

Statistics of Shareholdings As At 15 March 2012


Statistics of Shareholdings As At 15 March 2012

TWENTY LARGEST SHAREHOLDERS

NAME NO. OF SHARES %

1. MAYBANK KIM ENG SECURITIES PTE LTD 47,301,000 31.482. WA KOK LIANG 18,984,720 12.633. OCBC SECURITIES PRIVATE LTD 6,398,000 4.264. PHILLIP SECURITIES PTE LTD 4,561,000 3.045. LIM & TAN SECURITIES PTE LTD 4,353,000 2.906. KOH MUI KIOW (XU HUIJIAO) 4,135,000 2.757. BANK OF SINGAPORE NOMINEES PTE LTD 4,000,000 2.668. WA SWEE BEE 3,409,940 2.279. DMG & PARTNERS SECURITIES PTE LTD 2,400,000 1.60

10. TAN JIANYOU 2,212,000 1.4711. UOB KAY HIAN PTE LTD 1,963,000 1.3112. CIMB SECURITIES (SINGAPORE) PTE LTD 1,708,000 1.1413. DBS NOMINEES PTE LTD 1,679,000 1.1214. CITIBANK NOMINEES SINGAPORE PTE LTD 1,520,000 1.0115. MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 1,500,000 1.0016. DBS VICKERS SECURITIES (S) PTE LTD 1,295,000 0.8617. TEO YONG PING (ZHANG RONGBIN) 1,250,000 0.8318. NG KHOON SENG 1,234,540 0.8219. WA SOCK YIN 1,185,120 0.7920. LOO TIAN SZE MELVIN 1,091,480 0.73

TOTAL 112,180,800 74.67


NOTICE IS HEREBY GIVEN that the 2012 Annual General Meeting of the members of the Company will be held at the Seminar Room, Keppel Club, Bukit Chermin Road, Singapore 109918 on 30 April 2012 at 11.00 a.m. to transact the following businesses:

AS ORDINARY BUSINESS

1. To receive and adopt the audited financial statements of the Company and the Reports of the Directors and Auditors for the year ended 31 December 2011.

Resolution 1

2. To re-elect Mr Lee Jim Teck, who was appointed on 27 July 2011 in accordance with Article 119 of the Company’s Articles of Association, as Director of the Company.

Resolution 2

[Note: Mr Lee Jim Teck shall, upon re-election as Director of the Company, remain as a member of the Audit Committee, Nominating Committee and Remuneration Committee. Mr Lee Jim Teck 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 Mr Li Anhua, who is retiring in accordance with Article 115 of the Company’s Articles of Association, as Director of the Company.

Resolution 3

[Note: Mr Li Anhua shall, upon re-election as Director of the Company, remain as Chairman of the Audit Committee and Nominating Committee and as a member of the Remuneration Committee. Mr Li Anhua shall be considered independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.]

4. To re-elect Mr Ng Khoon Seng, who is retiring in accordance with Article 115 of the Company’s Articles of Association, as Director of the Company.

Resolution 4

5. To approve the Directors’ fees of $136,458 for the year ended 31 December 2011. Resolution 5

6. To re-appoint RSM Chio Lim LLP as the Auditors for the ensuing year and to authorise the Directors to fix their remuneration.

Resolution 6

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Resolutions as Ordinary Resolutions, with or without amendments:

7. 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 fit; and

Resolution 7

Notice of Annual General Meeting



(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 fifty 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;

(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)]

8. And to transact any other business which may be properly transacted at an Annual General Meeting.


Explanatory Notes:

(i) The proposed Resolution 7, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities, which the Directors may allot and issue under this Resolution shall not exceed 50% of the total number of issued shares excluding treasury shares of the Company at the time of passing this Resolution. For allotment and issue of shares and convertible securities other than on a pro-rata basis to all shareholders of the Company, the aggregate number of shares and convertible securities to be allotted and issued shall not exceed 20% of the total number of issued shares excluding treasury shares of the Company. This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual General Meeting.

By Order of the Board

SEAH KIM SWEESecretary

Date : 13 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 74A Tras Street Singapore 079013 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.


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PROXY FORM I/We

of

being a member(s) of HLN TECHNOLOGIES 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 at the 2012 Annual General Meeting of the Company to be held at the Seminar Room, Keppel Club, Bukit Chermin Road, Singapore 109918 on 30 April 2012 at 11:00 a.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 specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

1 Directors’ Report and Audited Accounts for the year ended 31 December 2011

2 Re-election of Mr Lee Jim Teck, Edward as Director

3 Re-election of Mr Li Anhua as Director

4 Re-election of Mr Ng Khoon Seng as Director

5 Approval of Directors’ fees for the year ended 31 December 2011

6 Re-appointment of RSM Chio Lim LLP as Auditors and authorise the directors to fix their remuneration

7 Proposed Share Issue Mandate

Dated this _________ day of ______________ 2012

Total number of Shares held

________________________________________Signature(s) of member(s) or common seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

HLN TECHNOLOGIES LIMITEDIncorporated in Singapore on 26 February 2004 (Registration Number: 200402180C)

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.

92 | HLN TECHNOLOGIES LIMITED | ANNUAL REPORT 2011

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 defined 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 fit 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 certified copy thereof, must be deposited at the registered office of the Company at 74A Tras Street Singapore 079013 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 specified 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 certified by The Central Depository (Pte) Limited to the Company.

HLN TecHNoLogies LimiTed(Company Registration No. 200402180C)

74A tras StreetSingapore 079013tel : (65) 6224 7320Fax : (65) 6224 7231

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