JK Yaming International Holdings Ltd

CIRCULAR DATED 3 JUNE 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ ITCAREFULLY.

If you are in any doubt in relation to this Circular or as to the course of action you should take,you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or otherprofessional adviser immediately.

The Singapore Exchange Securities Trading Limited (“SGX-ST”) assumes no responsibility for thecorrectness of any of the statements made, reports contained or opinions expressed in this Circular.

If you have sold or transferred all your shares in the capital of JK Yaming International Holdings Ltd (“JKYaming” or “Company”), you should immediately forward this Circular to the purchaser or transferee or tothe bank, stockbroker or agent through whom the sale was effected for onward transmission to thepurchaser or transferee.

This Circular shall not be construed as, and may not be used for the purpose of, and does not constitutea notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in anycircumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation isunlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal oradvertisement or an offer or invitation or solicitation.

JK Yaming International Holdings Ltd(Incorporated in the Republic of Singapore)(Company Registration No. 199906353N)

CIRCULAR TO SHAREHOLDERS

in relation to the

VOLUNTARY UNCONDITIONAL CASH OFFER

by

CIMB Bank Berhad (13491-P)

Singapore Branch(Incorporated in Malaysia)

for and on behalf of

Luma Investments Limited(Incorporated in the Cayman Islands)

Company Registration No. 252630

to acquire all the issued and paid-up ordinary shares in the capital of the Company

Independent Financial Adviser to the Independent Directors

AmFraser Securities Pte. Ltd.

SHAREHOLDERS SHOULD NOTE THAT THE OFFER DOCUMENT STATES THAT THE OFFERWILL CLOSE AT 5.30 P.M. ON 20 JUNE 2011 OR SUCH LATER DATE(S) AS MAY BEANNOUNCED FROM TIME TO TIME BY OR ON BEHALF OF THE OFFEROR.

Table of Contents

CORPORATE INFORMATION............................................................................................................ 2

DEFINITIONS ...................................................................................................................................... 3

SUMMARY TIMETABLE .................................................................................................................... 7

LETTER TO SHAREHOLDERS.......................................................................................................... 8

1. INTRODUCTION ...................................................................................................................... 8

2. THE OFFER.............................................................................................................................. 9

3. NO CONDITION TO THE OFFER ............................................................................................ 10

4. INFORMATION ON THE OFFEROR AND CONSORTIUM ...................................................... 10

5. RATIONALE FOR THE OFFER ................................................................................................ 14

6. OFFEROR’S INTENTION FOR THE COMPANY...................................................................... 14

7. FINANCIAL EVALUATION OF THE OFFER ............................................................................ 15

8. NO COMPETING OFFER RECEIVED .................................................................................... 16

9. DISCLOSURES ........................................................................................................................ 16

10. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS.................................... 17

11. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATIONS ........................................ 18

12. RECOMMENDATION OF THE INDEPENDENT DIRECTORS ................................................ 18

13. OVERSEAS SHAREHOLDERS................................................................................................ 22

14. INFORMATION PERTAINING TO CPFIS INVESTORS............................................................ 23

15. ACTION TO BE TAKEN BY SHAREHOLDERS........................................................................ 23

16. DIRECTORS’ RESPONSIBILITY STATEMENT ........................................................................ 23

17. ADDITIONAL INFORMATION .................................................................................................. 23

APPENDIX I: LETTER FROM AmFRASER SECURITIES PTE. LTD. TO THE INDEPENDENTDIRECTORS ............................................................................................................ 24

APPENDIX II: GENERAL INFORMATION ON THE GROUP ........................................................ 49

APPENDIX III: RELEVANT EXCERPTS FROM THE COMPANY’S ARTICLES OF ASSOCIATION ........................................................................................................ 57

APPENDIX IV: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2010 .................................................................................................................... 65

APPENDIX V: UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 1Q11 ................ 121

APPENDIX VI: STATEMENT OF PROSPECTS .............................................................................. 132

APPENDIX VII: REPORT OF THE AUDITORS ON THE STATEMENT OF PROSPECTS .............. 133

APPENDIX VIII: LETTER FROM AmFRASER SECURITIES PTE. LTD. IN RELATION TO THESTATEMENT OF PROSPECTS .............................................................................. 134

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CORPORATE INFORMATION

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Board of Directors : Ang Chiong Chai (Executive Chairman): Chen Min (Executive Director): Tan Boon Kiat @Tan Ka Seng (Executive Director): Lee Poo Sik (Non-Executive Director): Dato Ng Kim Poh (Non-Executive Director): Chen Chiu-Chin Rolla (Non-Executive Director): Yu Swee Sing (Independent Director) : Seow Seng Wei (Independent Director): Lee Ah Fong James (Independent Director)

Company Secretary : Chua Sin @ Zen Chua Hsin

Registered Office : 160 Paya Lebar Road, #08-03Orion Industrial BuildingSingapore 409022

Share Registrar : Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place #32-01Singapore Land TowerSingapore 048623

Independent Financial Adviser : AmFraser Securities Pte. Ltd.to the Independent Directors in (A member of AmInvestment Bank Group)relation to the Offer 4 Shenton Way

#13-01 SGX Centre 2Singapore 068807

Legal Adviser to the Company in : Shook Lin & Bok LLPrelation to the Offer 1 Robinson Road

#18-00 AIA TowerSingapore 048542

Auditors of the Company and its : LTC LLPsubsidiaries Certified Public Accountants

1 Raffles Place#20-02 One Raffles PlaceSingapore 048616

DEFINITIONS

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In this Circular, the following definitions apply throughout unless otherwise stated:

“Board” : The Board of Directors of the Company as at the LatestPracticable Date

“CDP” : The Central Depository (Pte) Limited

“Circular” : This circular to Shareholders in relation to the Offer (includingthe Letter from the IFA to the Independent Directors atAppendix I of this Circular and the other Appendices) and anyother document which may be issued by or on behalf of theCompany to amend, revise, supplement or update this circularfrom time to time

“CIMB” : CIMB Bank Berhad, Singapore Branch

“Closing Date” : 5.30 p.m. (Singapore time) on 20 June 2011 or such laterdate(s) as may be announced from time to time by or on behalfof the Offeror, such date being the last date and time for thelodgement of acceptances of the Offer

“Code” : The Singapore Code on Take-overs and Mergers

“Companies Act” : The Companies Act, Chapter 50 of Singapore

“Consortium” : Shall have the meaning ascribed to it in Section 7.3 of theLetter to Shareholders in the Offer Document

“Consortium Agreement” : Shall have the meaning ascribed to it in Section 7.4(a) of theLetter to Shareholders in the Offer Document

“Consortium Irrevocable : Shall have the meaning ascribed to it in Section 7.4(b) of the Acceptance Undertakings” Letter to Shareholders in the Offer Document

“Consortium Irrevocable : Shall have the meaning ascribed to it in Section 7.4(c) of theInstruction Undertakings” Letter to Shareholders in the Offer Document

“Consortium Shares” : Shall have the meaning ascribed to it in Section 7.4(b) of theLetter to Shareholders in the Offer Document

“CPF” : The Central Provident Fund

“CPF Agent Banks” : Agent banks included under the CPFIS

“CPFIS” : Central Provident Fund Investment Scheme

“CPFIS Investors” : Investors who have purchased Shares using their CPFcontributions under the CPFIS

“Directors” : The directors of the Company as at the Latest Practicable Date

“Encumbered Consortium : Shall have the meaning ascribed to it in Section 7.4(c) of theShares” Letter to Shareholders in the Offer Document

“FAA” : Form of Acceptance and Authorisation in respect of the Offer,applicable to Depositors, which forms part of the OfferDocument

DEFINITIONS

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“FAT” : Form of Acceptance and Transfer in respect of the Offer,applicable to Shareholders whose Shares are held in scripform, which forms part of the Offer Document

“FY” : Financial year ending or ended 31 December

“FY2010 Final Dividend” : The first and final dividend of S$0.006 for each Share in respectof FY2010 declared by the board of directors of JK Yaming on22 February 2011 and approved by Shareholders at the annualgeneral meeting of JK Yaming held on 28 April 2011

“Group” : JK Yaming and its subsidiaries

“IFA” or “AmFraser” : AmFraser Securities Pte. Ltd., the independent financial adviserto the Independent Directors in relation to the Offer

“IFA Letter” : The letter from AmFraser dated 3 June 2011 to theIndependent Directors in relation to the Offer as set out inAppendix I to this Circular

“Independent Directors” : The directors of JK Yaming who are considered to beindependent for the purposes of the Offer namely Tan Boon Kiat@ Tan Ka Seng, Lee Poo Sik, Chen Chiu-Chin Rolla, Yu SweeSing, Seow Seng Wei and Lee Ah Fong James

“JK Yaming” or the “Company” : JK Yaming International Holdings Ltd

“Latest Practicable Date” : 25 May 2011, being the latest practicable date prior to theprinting of this Circular

“Listing Manual” : The Listing Manual of the SGX-ST, as amended up to theLatest Practicable Date

“Market Day” : A day on which the SGX-ST is open for trading of securities

“Offer” : The voluntary unconditional cash offer made by CIMB, for andon behalf of the Offeror, to acquire all the Shares on the termsand subject to the conditions set out in the Offer Document, theFAA and the FAT, as such offer may be amended, extended andrevised from time to time by or on behalf of the Offeror

“Offer Announcement” : The announcement relating to the Offer released by CIMB, forand on behalf of the Offeror, on the Offer Announcement Date

“Offer Announcement Date” : 4 May 2011, being the date of the Offer Announcement

“Offer Document” : The offer document dated 23 May 2011 containing the formalterms of the Offer and any other document(s) which may beissued by CIMB, for and on behalf of the Offeror, to amend,revise, supplement or update the offer document from time totime

“Offer Price” : S$0.55 for each Share

“Offeror” : Luma Investments Limited

DEFINITIONS

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“Overseas Shareholder” : Shall have the meaning ascribed to it in Section 12.1 of theLetter to Shareholders in this Circular

“PRC” : People’s Republic of China

“Register” : The register of Shareholders, as maintained by the Registrar

“Registrar” : Boardroom Corporate & Advisory Services Pte. Ltd.

“Relevant Acceptance Forms” : Shall have the meaning ascribed to it in Section 15.1 of theLetter to Shareholders in the Offer Document

“Securities Account” : A securities account maintained by a Depositor with CDP, butdoes not include a securities sub-account

“SFA” : The Securities and Futures Act, Chapter 289 of Singapore

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shareholders” : Persons who are registered as holders of Shares in theRegister and Depositors who have Shares entered against theirnames in the Depository Register

“Shares” : Ordinary shares in the capital of JK Yaming

“SIC” : The Securities Industry Council of Singapore

“VWAP” : Volume weighted average price

“RM” : Ringgit Malaysia, being the lawful currency of Malaysia

“S$” : Singapore dollars, being the lawful currency of Singapore

“US$” : United States dollars, being the lawful currency of the UnitedStates of America

“%” or “per cent.” : Percentage or per centum

“1Q11” : The three months ended 31 March 2011

Acting in Concert. The terms “acting in concert” shall have the meaning ascribed to it in the Code.

Depositors. The terms “Depositor”, “Depository Agent” and “Depository Register” shall have themeanings ascribed to them respectively in Section 130A of the Companies Act.

Genders. Words importing the singular shall, where applicable, include the plural and vice versa, andwords importing the masculine gender shall, where applicable, include the feminine and neuter genders.References to persons shall, where applicable, include corporations.

Headings. The headings in this Circular are inserted for convenience only and shall be ignored inconstruing this Circular.

Rounding. Any discrepancies in figures included in this Circular between the amounts listed and theiractual values are due to rounding. Accordingly, figures may have been adjusted to ensure that totals orsub-totals shown, as the case may be, reflect an arithmetic aggregation of the figures that precede them.

DEFINITIONS

Statutes. Any reference in this Circular to any enactment is a reference to that enactment as for the timebeing amended or re-enacted. Any word defined in the Companies Act, the Securities and Futures Act,the Code or the Listing Manual (or any statutory modification thereof) and used in this Circular shall,where applicable, have the meaning assigned to it under the Companies Act, the Securities and FuturesAct, the Code or the Listing Manual (or any statutory modification thereof), as the case may be, unlessthe context otherwise requires.

Subsidiary, Related Corporations and Associated Company. The expressions “subsidiary” and“related corporation” shall have the meanings ascribed to them in Sections 5 and 6 of the Companies Actrespectively. The expression “associated companies” in relation to the Group, shall mean a corporationin which the Group holds, directly or indirectly, at least 20 per cent. but not more than 50 per cent. of itsissued shares.

Time and Date. Any reference to a time of the day and date in this Circular shall be a reference toSingapore time and date respectively, unless otherwise stated.

Forward-looking Statements

All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as“seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” andsimilar expressions or future or conditional verbs such as “if”, “will”, “would”, “shall”, “should”, “can”,“could”, “may” and “might”. These statements reflect the Company’s current expectations, beliefs, hopes,intentions or strategies regarding the future and assumptions in light of currently available information.Such forward-looking statements are not guarantees of future performance or events and involve knownand unknown risks and uncertainties. Accordingly, actual results may differ materially from thosedescribed in such forward-looking statements. Shareholders and investors should not place unduereliance on such forward-looking statements, and neither the Company nor the IFA guarantees theperformance of such forward-looking statements or undertakes any obligation to update publicly or reviseany forward-looking statements, subject to compliance with all applicable laws and regulations and/orrules of the SGX-ST and/or any other regulatory or supervisory body or agency.

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SUMMARY TIMETABLE

Date of despatch of Offer Document : 23 May 2011

Date of despatch of this Circular : No later than 6 June 2011

Closing Date : 5.30 p.m. (Singapore time) on 20 June 2011 or suchlater date(s) as may be announced from time to timeby or on behalf of the Offeror

Date of settlement of consideration for : Within 10 days after the date of receipt of each valid the Shares tendered acceptance

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LETTER TO SHAREHOLDERS

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JK Yaming International Holdings Ltd(Incorporated in the Republic of Singapore)(Company Registration No. 199906353N)

Directors: Registered Office:

Ang Chiong Chai (Executive Chairman) 160 Paya Lebar Road, #08-03Chen Min (Executive Director) Orion Industrial BuildingTan Boon Kiat @Tan Ka Seng (Executive Director) Singapore 409022Lee Poo Sik (Non-Executive Director)Dato Ng Kim Poh (Non-Executive Director)Chen Chiu-Chin Rolla (Non-Executive Director)Yu Swee Sing (Independent Director) Seow Seng Wei (Independent Director)Lee Ah Fong James (Independent Director)

3 June 2011

To: The Shareholders of JK Yaming International Holdings Ltd

Dear Sir/Madam

VOLUNTARY UNCONDITIONAL CASH OFFER BY CIMB BANK BERHAD FOR AND ON BEHALF OFLUMA INVESTMENTS LIMITED TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARESIN THE CAPITAL OF THE COMPANY

1. INTRODUCTION

On 4 May 2011, CIMB, for and on behalf of the Offeror, announced that the Offeror intended tomake a voluntary unconditional cash offer for all the Shares. An announcement in relation to theOffer was then made by the Company on the next day following receipt of the OfferAnnouncement.

Shareholders should have by now received a copy of the Offer Document containing the formaloffer by CIMB, for and on behalf of the Offeror, and the Relevant Acceptance Forms. The principalterms of the Offer are set out in Section 2 of the Offer Document. Shareholders are advised toread the terms and conditions of the Offer set out in the Offer Document carefully.

AmFraser Securities Pte. Ltd., a member of AmInvestment Bank Group has been appointed as theIFA to the Independent Directors in relation to the Offer.

The purpose of this Circular is to provide relevant information to the Shareholders pertaining to theOffer and to set out the recommendation of the Independent Directors and the opinion of the IFA tothe Independent Directors in relation to the Offer.

Shareholders should consider carefully the recommendation of the Independent Directorsand the opinion of the IFA before deciding whether or not to accept the Offer.


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2. THE OFFER

Based on the information set out in the Offer Document, CIMB has, for and on behalf of theOfferor, made the Offer to acquire the Shares in accordance with Section 139 of the Securities andFutures Act and Rule 15 of the Code (unless otherwise exempted by the SIC), on the terms andsubject to the conditions set out in the Offer Document, the FAA and the FAT.

2.1 Offer Price

Based on Section 2.1 of the Offer Document, the Offer will be made on the following basis:

For each Share: S$0.55 in cash

2.2 Right to Revise Offer

Based on Section 2.2 of the Offer Document, the Offeror reserves its right to revise the terms ofthe Offer at such time and in such manner as it may consider appropriate. If the Offer Price isrevised, all Shareholders who have previously accepted the Offer will receive the revisedconsideration.

2.3 Offer Shares

The Offer is extended to all Shares, including any and all Shares owned, controlled or agreed to beacquired by any person acting or deemed to be acting in concert with the Offeror in connectionwith the Offer, including, without limitation, the Consortium Shares and the EncumberedConsortium Shares, in accordance with Section 139 of the SFA and the Code.

2.4 No Encumbrances

Based on the Offer Document, the Shares will be acquired:

(a) fully paid;

(b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption andany other third party rights or interests of any nature whatsoever; and

(c) together with all rights, benefits and entitlements attached thereto as at the OfferAnnouncement Date and thereafter attaching thereto, including the right to receive andretain the FY2010 Final Dividend, as well as all other dividends, rights and otherdistributions (if any) declared, paid or made by JK Yaming on or after the OfferAnnouncement Date.

As stated in the Offer Document, if the FY2010 Final Dividend is paid or made by JK Yaming,or any other dividend, rights or other distribution is announced, declared, paid or made byJK Yaming, on or after the Offer Announcement Date, the Offeror will reduce the Offer Priceby the amount of the FY2010 Final Dividend or such other dividend, rights or otherdistribution.

2.5 Warranty

As stated in Section 4 of the Offer Document, a Shareholder who tenders his Shares inacceptance of the Offer will be deemed to warrant that he sells such Shares as or on behalf of thebeneficial owner(s) thereof, (a) fully paid, (b) free from all liens, equities, mortgages, charges,encumbrances, rights of pre-emption and any other third party rights or interests of any naturewhatsoever and (c) together with all rights, benefits and entitlements attached thereto as of theOffer Announcement Date and thereafter attaching thereto, including the right to receive and retainthe FY2010 Final Dividend, as well as all other dividends, rights and other distributions (if any)declared, paid or made by JK Yaming on or after the Offer Announcement Date.


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2.6 Further Details of the Offer

Further details of the Offer are set out in Appendix 1 to the Offer Document, including details on,amongst other things, (i) the duration of the Offer; (ii) the settlement of the consideration for theOffer; (iii) the requirements relating to the announcement of the level of acceptances of the Offer;and (iv) the right of withdrawal of acceptances of the Offer.

Copies of the Offer Announcement and the Offer Document are available on the website of theSGX-ST at http://www.sgx.com.

2.7 Closing Date

As stated in the Offer Document, the Offer will remain open for acceptance until 5.30 p.m.(Singapore time) on 20 June 2011, or such later date(s) as may be announced from time to timeby or on behalf of the Offeror.

2.8 Procedures for Acceptance of the Offer

Details on the procedures for acceptance of the Offer are set out in Appendix 2 to the OfferDocument, the FAA and the FAT.

3. NO CONDITION TO THE OFFER

The Offer is not subject to any conditions and is unconditional in all respects.

4. INFORMATION ON THE OFFEROR AND CONSORTIUM

4.1 The following has been extracted from the Offer Document and is set out in italics below. Unlessotherwise defined, all terms and expressions used in the extract below shall have the samemeanings as those defined in the Offer Document. Shareholders are advised to read the extractbelow carefully:

“7. INFORMATION ON THE OFFEROR AND CONSORTIUM

7.1 Offeror. The Offeror is an investment holding company incorporated under the laws of theCayman Islands on 25 February 2011. The Offeror has not carried out any business since itsincorporation, except to enter into certain agreements in connection with the formation of theConsortium and to purchase Shares from the open market as set out in Appendix 5 to thisOffer Document. As at the Latest Practicable Date, the Offeror has an issued and paid-upshare capital of US$0.001 consisting of 100 ordinary shares of par value US$0.00001 each(“Offeror Shares”), which are all held by CVCIGP Luma Holdings. As at the LatestPracticable Date, the Directors are Mr Ji Hong Min, Mr Chick Leung Lam (Gordan Lam), MrTan Shao Ming, Mr Yiqiao Ren and Mr Yeo Khee Huat, Andrew.

Further information on the Offeror is set out in Appendix 3 to this Offer Document.

7.2 Offeror Group. The Offeror is a wholly-owned subsidiary of CVCIGP Luma Holdings.CVCIGP Luma Holdings is an investment holding company whose voting shares are heldentirely by CVCI GP and whose remaining equity interests are held by the CVCI Funds.Each of the CVCI Funds is a Cayman Islands exempted limited partnership. The generalpartner of the CVCI Funds is CVCI GP, a company incorporated with limited liability inJersey. The ultimate holding company of CVCI GP is Citigroup Inc.. CVCI GP is advised byCVCI Advisers in respect of its investments worldwide. CVCI Advisers is in turn advised byCVCI Asia, a Bahamian entity with operations in Hong Kong, in respect of investments inAsia Pacific.


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7.3 Consortium. The Offeror and CVCIGP Luma Holdings have formed a consortium(“Consortium”) with the Consortium Members to make the Offer. The senior management ofthe Company who have joined the Consortium are:

(a) ACC, the Executive Chairman of the Company;(b) CM, an Executive Director of the Company; and(c) ZQF, the General Manager of Fujian J.K. Wiring Systems Co., Ltd., a subsidiary of JK

Yaming.

7.4 Consortium Arrangements. The arrangements comprised in the Consortium include thefollowing:

(a) the Offeror and CVCIGP Luma Holdings have entered into an agreement (the“Consortium Agreement”) with the Consortium Members, pursuant to which:

(i) CVCIGP Luma Holdings has agreed to provide funding to the Offeror to satisfy,inter alia, full acceptances of the Offer (other than acceptances of the Offer inrespect of the aggregate Relevant Number of Consortium Shares);

(ii) each of the Roll-over Consortium Members has agreed to subscribe in cash forOfferor Shares and the obligation of each Roll-over Consortium Member to payfor the new Offeror Shares in cash will be set off against the obligation of theOfferor to pay the aggregate Offer Price to that Roll-over Consortium Memberfor the Relevant Number of Consortium Shares tendered in acceptance of theOffer pursuant to the Consortium Irrevocable Acceptance Undertakings; and

(iii) CVCIGP Luma Holdings and NTCP SPV have each agreed to subscribe incash for new Offeror Shares, with the obligation of CVCIGP Luma Holdings topay for its new Offeror Shares in cash being set off, to the extent applicable,against the funding it has provided to the Offeror in respect of the Offer;

(b) each of the Roll-over Consortium Members, ACC and JKPL has given irrevocableundertakings (the “Consortium Irrevocable Acceptance Undertakings”) in favour ofthe Offeror and CVCIGP Luma Holdings to accept the Offer in respect of anaggregate 81,166,170 Shares (the “Consortium Shares”), representingapproximately 39.99 per cent. of the Shares in issue as at the Latest Practicable Date;

(c) as ACC has granted charges over 36,130,000 Shares (“ACC EncumberedConsortium Shares”), representing approximately 17.80 per cent. of the Shares inissue as at the Latest Practicable Date, in favour of various financial institutions (the“Relevant Financial Institutions”) pursuant to the ACC Share Margin FinancingArrangements with such Relevant Financial Institutions, and JKHSB has grantedcharges over 7,000,000 Shares (“JKHSB Encumbered Consortium Shares”, andtogether with the ACC Encumbered Consortium Shares, the “EncumberedConsortium Shares”), representing approximately 3.45 per cent. of the Shares inissue as at the Latest Practicable Date, to Maybank as security in respect ofoutstanding loans made by Maybank to JKHSB’s subsidiaries (the “JKHSB MaybankLoans”), each of ACC and JKHSB has given irrevocable undertakings (“ConsortiumIrrevocable Instruction Undertakings”) in favour of the Offeror and CVCIGP LumaHoldings to instruct and/or procure the Relevant Financial Institutions and Maybank toaccept the Offer, subject to the agreement of such Relevant Financial Institutions andMaybank, in respect of the ACC Encumbered Consortium Shares and the JKHSBEncumbered Consortium Shares respectively. The Encumbered Consortium Sharesrepresent in aggregate approximately 21.25 per cent. of the Shares in issue as at theLatest Practicable Date; and


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(d) each of the Roll-over Consortium Members, ACC and JKPL has agreed to waive theirright to receive payment of the Offer Price in respect of the Consortium Shares withinthe timeline for settlement under the Code and has agreed to receive the payment ofthe aggregate Offer Price in the manner provided under the terms of the ConsortiumAgreement. Each of ACC and JKHSB has agreed with the Offeror and CVCIGP LumaHoldings that payment of the Offer Price in respect of the Encumbered ConsortiumShares will be settled within the timeline for settlement under the Code and will not bedeferred.”

Further information on the Consortium is found in Section 7.5 and 7.6 of the Offer Document.

4.2 Irrevocable Undertakings received by the Offeror. The following has been extracted from theOffer Document and is set out in italics below. Unless otherwise defined, all terms and expressionsused in the extract below shall have the same meanings as those defined in the Offer Document.Shareholders are advised to read the extract below carefully:

“8. IRREVOCABLE UNDERTAKINGS

8.1 Consortium Irrevocable Acceptance Undertakings. The following table sets out theConsortium Members who, as at the Latest Practicable Date, have provided the ConsortiumIrrevocable Acceptance Undertakings in respect of the Consortium Shares:

Percentage of Shares Consortium Member No. of Shares in issue (%)

ACC 6,040 0.003

JKHSB 41,322,225 20.36

JKPL 900,000 0.44

Nanping 17,024,750 8.39

Amko 21,913,155 10.80

Total 81,166,170 39.99

The Consortium Irrevocable Acceptance Undertakings will terminate on, inter alia, the dateon which the Offer lapses or is withdrawn.

8.2 Consortium Irrevocable Instruction Undertakings. As set out in Section 7.4(c) above,ACC has granted charges over the ACC Encumbered Consortium Shares in favour of theRelevant Financial Institutions pursuant to his share margin financing arrangements withsuch Relevant Financial Institutions (the “ACC Share Margin Financing Arrangements”).The Offeror understands that, pursuant to the terms of the various agreements entered intoby ACC with the Relevant Financial Institutions in connection with the ACC Share MarginFinancing Arrangements, ACC, inter alia, may not sell, attempt or agree to sell, transfer,assign, charge or otherwise dispose of or give any unconditional or conditional option,warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree,conditionally or unconditionally, to create) or have any outstanding security over the ACCEncumbered Consortium Shares (other than the charges over the ACC EncumberedConsortium Shares granted to the Relevant Financial Institutions). The Offeror understandsthat the aggregate amount outstanding under the ACC Share Margin FinancingArrangements is S$5,900,000.


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As also set out in Section 7.4(c) above, JKHSB has granted charges over the JKHSBEncumbered Consortium Shares in favour of Maybank as security in respect of the JKHSBMaybank Loans. The Offeror understands that the aggregate amount outstanding under theJKHSB Maybank Loans as at 13 May 2011 is approximately RM1,150,147 (equivalent toapproximately S$471,352 based on an exchange rate of S$1.00 : RM2.4401) and pursuantto the terms of the charges entered into by JKHSB as security for the JKHSB MaybankLoans, JKHSB, inter alia, may not (and may not agree, conditionally or unconditionally, to)sell, transfer, lend or otherwise dispose of or give any conditional or unconditional option,warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree,conditionally or unconditionally, to create) or have any outstanding security on or over theJKHSB Encumbered Consortium Shares (other than the charges granted to Maybank assecurity for the JKHSB Maybank Loans).

In view of the restrictions set out in the terms of the ACC Share Margin FinancingArrangements and the JKHSB Maybank Loans, ACC and JKHSB have therefore providedthe Consortium Irrevocable Instruction Undertakings in respect of the ACC EncumberedConsortium Shares and the JKHSB Encumbered Consortium Shares respectively. ACC andJKHSB have each confirmed to the Offeror that as at the Latest Practicable Date, he/it is infull compliance with, and he/it is not in default of and has not defaulted on, any of his/itsobligations under the ACC Share Margin Financing Arrangements or the JKHSB MaybankLoans (as the case may be), and nothing has occurred which is or would, directly orindirectly constitute an event of default or a similar event under the terms of any of the ACCShare Margin Financing Arrangements or the JKHSB Maybank Loans (as the case may be).The Consortium Irrevocable Instruction Undertakings will terminate on, inter alia, the date onwhich the Offer lapses or is withdrawn.

8.3 Phihong Irrevocable Undertaking. As at the Latest Practicable Date, the Offeror has alsoreceived an irrevocable undertaking (“Phihong Irrevocable Undertaking”) from anothersubstantial shareholder of JK Yaming, Phihong, to accept the Offer in respect of its38,511,000 Shares, representing approximately 18.98 per cent. of the Shares in issue as atthe Latest Practicable Date. For the avoidance of doubt, Phihong is not, and will not be, amember of the Consortium. The Phihong Irrevocable Undertaking will terminate on, interalia, the date on which the Offer lapses or is withdrawn.”

4.3 Based on publicly available information, as at the Latest Practicable Date, the aggregate number ofShares subject to the Consortium Irrevocable Acceptance Undertakings and the PhihongIrrevocable Undertaking amounts to 119,677,170 Shares, representing approximately 58.97 percent. of the Shares in issue. Assuming the Relevant Financial Institutions and Maybank agree toand, in accordance with each of ACC’s and JKHSB’s instructions, accept the Offer in respect of allof the Encumbered Consortium Shares, and taking into account the Shares subject to theConsortium Irrevocable Acceptance Undertakings and the Phihong Irrevocable Undertaking, theOfferor would obtain acceptances in respect of an aggregate 162,807,170 Shares, representingapproximately 80.22 per cent. of the Shares in issue as at the Latest Practicable Date.


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5. RATIONALE FOR THE OFFER

The following has been extracted from the Offer Document and is set out in italics below. Unlessotherwise defined, all terms and expressions used in the extract below shall have the samemeanings as those defined in the Offer Document. Shareholders are advised to read the extractbelow carefully:

“10. RATIONALE FOR THE OFFER

10.1 Opportunity for Shareholders to Realise their Investment. The Offer presentsShareholders with an opportunity to realise their investment in the Shares at a premium ofapproximately 4.7 per cent., 7.5 per cent., 10.7 per cent. and 14.9 per cent. over the one-month VWAP per Share on the SGX-ST of S$0.5251, three-month VWAP per Share on theSGX-ST of S$0.5115, six-month VWAP per Share on the SGX-ST of S$0.4966 and 12-month VWAP per Share on the SGX-ST of S$0.4785 respectively, in the period up to andincluding the Offer Announcement Date, without incurring brokerage and other trading costs.

10.2 Low Trading Liquidity of Shares. The trading liquidity of the Shares has also been low,with an average daily trading volume of approximately 72,758 Shares over the 12-monthperiod up to and including the Offer Announcement Date, representing approximately 0.04per cent. of the Shares in issue. The Offer will provide an exit opportunity for thoseShareholders who wish to realise their entire investment in the Shares but find it difficult todo so as the result of the low trading liquidity of the Shares.

10.3 Greater Management Flexibility. The Offeror believes that the privatisation of JK Yamingwill provide JK Yaming with greater management flexibility to manage and develop itsbusinesses, optimise the use of resources and facilitate the implementation of any strategicinitiatives and/or operation changes.”

6. OFFEROR’S INTENTION FOR THE COMPANY


“11.1 Future Plans. The Offeror has presently no intention to (a) introduce any major changes tothe business of JK Yaming, (b) re-deploy the fixed assets of JK Yaming or (c) discontinue theemployment of the employees of the JK Yaming Group. Following the close of the Offer, theOfferor will undertake a comprehensive review of the businesses and fixed assets of the JKYaming Group to determine the optimal business strategy for JK Yaming.

11.2 Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offerorreceives valid acceptances pursuant to the Offer or acquires Shares from the Despatch Dateotherwise than through valid acceptances of the Offer, in respect of not less than 90 percent. of the total number of Shares in issue as at the close of the Offer (other than thosealready held by the Offeror, its related corporations or their respective nominees as at theDespatch Date), the Offeror will be entitled to exercise its right to compulsorily acquire, atthe Offer Price, all the Shares held by Shareholders who have not accepted the Offer (“Non-Assenting Shareholders”).

In the event that the Offeror becomes entitled to exercise its right under Section215(1) of the Companies Act, the Offeror intends to exercise its right to compulsorilyacquire all the Shares not acquired under the Offer. The Offeror will then proceed todelist JK Yaming from the SGX-ST.


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Non-Assenting Shareholders have the right under and subject to Section 215(3) of theCompanies Act to require the Offeror to acquire their Shares in the event that the Offeror, itsrelated corporations or their respective nominees acquire, pursuant to the Offer or otherwise,such number of Shares which, together with the Shares held by the Offeror, its relatedcorporations or their respective nominees, comprise 90 per cent. or more of the total numberof Shares. Non-Assenting Shareholders who wish to exercise such right are advised to seektheir own independent advice.

11.3 Listing Status. Pursuant to Rule 1105 of the Listing Manual, in the event that the Offerorand parties acting in concert with it, as a result of the Offer or otherwise, own or controlmore than 90 per cent. of the Shares (excluding treasury shares), the SGX-ST may suspendthe trading of the Shares until such time when the SGX-ST is satisfied that at least 10 percent. of the Shares (excluding treasury shares) are held by at least 500 Shareholders whoare members of the public.

In addition, pursuant to Rule 724 of the Listing Manual, if the percentage of the Shares(excluding treasury shares) held in public hands falls below 10 per cent., JK Yaming must, assoon as practicable, announce that fact and the SGX-ST may suspend trading of all theShares. Rule 725 of the Listing Manual provides that the SGX-ST may allow JK Yaming aperiod of three months, or such longer period as the SGX-ST may agree, to raise thepercentage of Shares in public hands to at least 10 per cent., failing which JK Yaming maybe delisted.

The Offeror intends to make JK Yaming its wholly-owned subsidiary. It is therefore notthe intention of the Offeror to preserve the listing status of JK Yaming and the Offerordoes not intend to take any steps for any trading suspension in the Shares to be liftedin the event that, inter alia, less than 10 per cent. of the Shares (excluding treasuryshares) are held in public hands.”

7. FINANCIAL EVALUATION OF THE OFFER


“12. FINANCIAL EVALUATION OF THE OFFER

The Offer Price of S$0.55 for each Share represents1:

(a) a premium of approximately 4.8 per cent. to the last transacted price of S$0.5250 perShare as quoted on the SGX-ST on the Offer Announcement Date;

(b) a premium of approximately 4.7 per cent. to the VWAP of approximately S$0.5251 perShare on the SGX-ST for the one-month period up to and including the OfferAnnouncement Date;

(c) a premium of approximately 7.5 per cent. to the VWAP of approximately S$0.5115 perShare on the SGX-ST for the three-month period up to and including the OfferAnnouncement Date;

(d) a premium of approximately 10.7 per cent. to the VWAP of approximately S$0.4966per Share on the SGX-ST for the six-month period up to and including the OfferAnnouncement Date;

1 The Share prices in Sections 12(a) to 12(f) are based on data extracted from Bloomberg and the website of the SGX-ST.


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(e) a premium of approximately 14.9 per cent. to the VWAP of approximately S$0.4785per Share on the SGX-ST for the 12-month period up to and including the OfferAnnouncement Date; and

(f) the highest intra-day traded price achieved in the five years prior to the OfferAnnouncement Date.

The Offer Price of S$0.55 for each Share also represents2:

(i) an implied price to earnings ratio of approximately 9.63 times based on the latestannounced unaudited consolidated earnings per Share of approximately S$0.057 inthe 12-month period from 1 April 2010 to 31 March 2011; and

(ii) a premium of approximately 45.9 per cent. to the latest announced unauditedconsolidated net asset value per Share of approximately S$0.377 as at 31 March2011.”

8. NO COMPETING OFFER RECEIVED

As at the Latest Practicable Date, no competing offer has been received by the Company.

9. DISCLOSURES


“14. DISCLOSURES

14.1 Holdings and Dealings in Shares. As at the Latest Practicable Date, the Offeror andparties acting in concert with the Offeror own, control or have agreed to acquire anaggregate of 126,688,170 Shares, representing approximately 62.42 per cent. of the Sharesin issue as the Latest Practicable Date. Appendix 5 to this Offer Document sets out:

(a) the holdings of Shares of the Offeror, its Directors and parties acting in concert withthe Offeror as at the Latest Practicable Date; and

(b) the dealings in Shares by the Offeror, its Directors and parties acting in concert withthe Offeror during the period commencing three (3) months prior to the OfferAnnouncement Date and ending on the Latest Practicable Date (the “ReferencePeriod”).

14.2 No Other Holdings and Dealings. Save as disclosed in this Offer Document, based on thelatest information available to the Offeror and parties acting in concert with the Offeror:

(a) as at the Latest Practicable Date, none of the Offeror, its Directors and parties actingin concert with the Offeror, owns, controls or has agreed to acquire any (i) Shares, (ii)securities which carry voting rights in the Company, (iii) securities which areconvertible into Shares or securities which carry voting rights in the Company, or (iv)rights to subscribe for, or options in respect of, such Shares or securities (collectively,“JK Yaming Securities”); and

2 Based on the financial results of the JK Yaming Group for (a) the nine months from 1 April 2010 to 31 December 2010 asderived from the audited consolidated financial results of the JK Yaming Group for FY2010 but excluding the unauditedconsolidated financial results for the three months from 1 January 2010 to 31 March 2010 and (b) the three months ended 31March 2011 as derived from the unaudited consolidated financial results of the JK Yaming Group for the three months ended 31March 2011 announced by JK Yaming on 10 May 2011.


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(b) none of the Offeror, its Directors and parties acting in concert with the Offeror hasdealt for value in any JK Yaming Securities during the Reference Period.”

Further information on the relevant disclosures are found in Appendix 5 of the Offer Document.

10. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

The tables below set out the Directors’ and Substantial Shareholders’ interests in the Company asat the Latest Practicable Date, based on the information in the Register of Directors’ Shareholdingsand the Register of Substantial Shareholders, respectively:

Number of SharesDirect Deemed Total % of total

Director Interest Interest Interest Shares

Ang Chiong Chai 36,136,040 49,222,225(1) 85,358,265 40.06

Dato Ng Kim Poh 827,000 21,913,155(3) 22,740,155 11.20

Chen Min – 17,024,750(4) 17,024,750 8.39

Tan Boon Kiat @ Tan Ka Seng 5 – 5 0.0000024

Lee Poo Sik 100,000 48,322,225 48,422,225 23.86

Apart from the above, no other Director has any direct or deemed interest in the Shares.

Direct Interest Deemed InterestNo. of % of No. of % of

Substantial Shareholder Shares Shares Shares Shares

Ang Chiong Chai 36,136,040 17.80 49,222,225(1) 24.25

Juan Kuang Holdings Sdn Bhd 48,322,225 23.81 – –

Phihong International Corp 38,511,000 18.98 – –

Amko Industrial Co., Ltd 21,913,155 10.80 – –

Nanping Holdings Ltd 17,024,750 8.39 – –

Juan Kuang (Pte) Ltd 900,000 0.44 48,322,225(2) 23.81

Dato Ng Kim Poh 827,000 0.41 21,913,155(3) 10.80

Zheng Qingfa – – 17,024,750(4) 8.39

Chen Min – – 17,024,750(4) 8.39

Notes:

1. Deemed interest by virtue of his interests (direct of 5.5% and indirect through Juan Kuang (Pte) Ltd of 40.6%) in JuanKuang Holdings Sdn Bhd, and direct interest of 56.62% in Juan Kuang (Pte) Ltd.

2. Deemed interest by virtue of its direct interest of 40.6% in Juan Kuang Holdings Sdn Bhd.

3. Deemed interest by virtue of his direct interest of 96% in Amko Industrial Co., Ltd.

4. Deemed interest by virtue of their direct interest of 50% each, in Nanping Holdings Ltd.


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11. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATIONS

11.1 Non Independent Directors

Director Position within Company

Ang Chiong Chai Executive Chairman Chen Min Executive DirectorDato Ng Kim Poh Non-Executive Director

Ang Chiong Chai, Chen Min and Dato Ng Kim Poh are also members of the Consortium. Theytherefore consider themselves as having an irreconcilable conflict of interest in relation to therequirement for them to make any recommendation to Shareholders on the Offer.

The Company made an application to the SIC on 19 May 2011 to seek the SIC’s confirmation thatAng Chiong Chai, Chen Min and Dato Ng Kim Poh will be exempted from assuming anyresponsibilities for any recommendations on the Offer that the Board may make to theShareholders pursuant to Rule 8.3 of the Code.

In view of the positions of conflict of interest that Ang Chiong Chai, Chen Min and Dato Ng KimPoh are in as parties acting in concert with the Offeror, it would be inappropriate for Ang ChiongChai, Chen Min and Dato Ng Kim Poh to assume any responsibilities for making arecommendation on the Offer to Shareholders.

11.2 SIC Rulings

The SIC had ruled on 20 May 2011 that it exempted Ang Chiong Chai, Chen Min and Dato NgKim Poh from the requirement to make a recommendation on the Offer to Shareholders as theyface irreconcilable conflicts of interests in doing so as parties acting in concert with the Offeror.They must nonetheless, accept responsibility for the accuracy of facts stated and opinionsexpressed in documents issued by, or on behalf of, the Company to Shareholders in connectionwith the Offer.

12. RECOMMENDATION OF THE INDEPENDENT DIRECTORS

Shareholders should read and carefully consider the recommendation of the IndependentDirectors, AmFraser’s opinion to the Independent Directors on the Offer and the letter fromAmFraser in relation to the Statement of Prospects in their entirety before deciding whether or notto accept or reject the Offer. Shareholders are also advised to read the Offer Document.

12.1 IFA’s opinion and advice to the Independent Directors

Information relating to the advice of AmFraser to the Independent Directors in relation to the Offerand the key factors it has taken into consideration have been extracted and is set out in italicsbelow. Unless otherwise defined, all terms and expressions used in the extract below shall havethe same meanings as those defined in the IFA Letter. Shareholders are also advised to read thefollowing extract in conjunction with, and in the context of the full text of the IFA Letter:

“9. OUR ADVICEIn arriving at our advice in respect of the Offer, we have taken into account, the factors which weconsider to be relevant and to have a significant bearing on our assessment of the Offer. Thefactors we have considered in our evaluation are discussed in detail in the earlier sections of thisletter and which we have relied upon, are as follows:-

(a) an assessment of the market quotation and trading liquidity of the Shares as follows:

(i) in relation to the Share prices:

(aa) since 12 months prior to and including the Offer Announcement Date, thetransacted price of the Shares ranged between a low of S$0.400 and a high ofS$0.535;


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(bb) since 12 months prior to and including the Offer Announcement Date, theShares have not traded at or above the Net Offer Price;

(cc) the Net Offer Price represents premiums of approximately 13.69%, 9.54%,6.35% and 3.60% to the VWAPs for the 12 months, 6 months, 3 months and 1month periods prior to and including the Offer Announcement Date,respectively;

(dd) the Net Offer Price represents a premium of approximately 2.85% to the VWAPof the Shares of S$0.5289 on the last Market Day on the Offer AnnouncementDate;

(ee) the Net Offer Price represents a discount of 0.93% to the VWAP of S$0.5491for the period from the Market Day immediately after the Offer AnnouncementDate to the Latest Practicable Date; and

(ff) the Net Offer Price is lower than the last traded price of S$0.545 on 19 May2011, being the last trading day prior to the Latest Practicable Date.

(ii) in relation to the trading liquidity of the Shares:

(aa) the average daily traded volume of the Shares of the 12 months, 6 months, 3months and 1 month periods prior to and including the Offer AnnouncementDate represents 0.19%, 0.29%, 0.14% and 0.21% of the free float respectively;

(bb) during the period from the 12 months prior to the Offer Announcement Date,the Shares were traded on 129 Market Days out of the 252 Market Days (or51.19% of the total number of Market Days) with an average traded volume of72,758 Shares per Market Day;

(cc) during the period after the Offer Announcement Date and up to the LatestPracticable Date, the Shares were traded on 5 Market Days out of the 13Market Days (or 38.46% of the total number of Market Days) with an averagetraded volume of 302,222 Shares, representing approximately 0.77% of the freefloat; and

(dd) in general and other than during the periods around the Offer AnnouncementDate, liquidity in the market for the Shares have been low both in absoluteterms and relative to the free float of the Company.

(iii) in relation to the relative performance of the Shares versus the market index, we notethat over the 12 months period prior to the Offer Announcement Date and ending on19 May 2011, being the last trading day prior to the Latest Practicable Date, theShares have generally outperformed the FSSTI Index in relative terms.

(b) a comparison with the valuation statistics of the Comparable Companies as follows:

(i) We note that the P/E ratio of the Company implied by the Net Offer Price of 8.80times is within the range of the P/E ratios of the Comparable Companies, between0.25 times and 18.23 times, and is lower than the average P/E ratio of theComparable Companies being 10.12 times and median P/E ratio being 10.50 times.

(ii) We note that the P/NAV ratio of the Company implied by the Net Offer Price of 1.45times is within the range of the P/NAV ratios of the Comparable Companies, between0.30 times and 36.21 times, and is lower than the average but higher than the medianP/NAV ratio being 4.14 times and 0.80 times respectively.


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(iii) We note that the EV/EBITDA ratio of the Company implied by the Net Offer Price of4.81 times is within the range of the EV/EBITDA ratios of the Comparable Companies,between -87.06 times and 31.27 times, and is higher than the average EV/EBITDAratio of the Comparable Companies being 4.54 times but lower than the medianEV/EBITDA ratio being 9.33 times.

(c) an assessment of the reasonableness of the Net Offer Price compared to PrecedentTransactions as follows:

(i) the premium of 3.62% implied by the Net Offer Price against the last transacted priceof the Shares prior to the Offer Announcement Date is not within the range; and lowerthan the average and median premiums of the Precedent Transactions;

(ii) the premium of 3.60% implied by the Net Offer Price against the 1 month VWAP ofthe Shares prior to the Offer Announcement Date is not within the range and lowerthan the average and median premiums of the Precedent Transactions; and

(iii) the premium of 6.35% implied by the Net Offer Price against the 3 months VWAP ofthe Shares prior to the Offer Announcement Date is not within the range and lowerthan the average and median premiums of the Precedent Transactions.

(d) other relevant considerations in relation to the Offer such as:

(i) absence of alternative offer from other parties;

(ii) the Offer being unconditional in all respects;

(iii) the Offeror’s intentions for the Company as stated in the announcement of the Offerand the Offer Document;

(iv) the Offeror’s intentions to exercise compulsory acquisition and not to maintain thelisting status of the Company; and

(v) the Offeror having received the Consortium Irrevocable Acceptance Undertakings,Consortium Irrevocable Instruction Undertakings and the Phihong IrrevocableUndertaking to, inter alia, accept the Offer in respect of the respective Offer Shares.

Notwithstanding the low premium implied by the Net Offer Price against the VWAP of the Sharescompared to Precedent Transactions, we wish to highlight that the Net Offer Price represents apremium over the VWAPs of 12 months, 6 months, 3 months and 1 month periods prior to andincluding the Offer Announcement Date, and the last Market Day on the Offer Announcement Date.We also note that trading liquidity for the Shares over the last 12 months prior to and including theOffer Announcement Date has been low, being 129 out of the 252 Market Days (or 51.19%). Weare of the opinion that the Offer presents an exit opportunity for Shareholders who find it difficult tosell their Shares in the open market due to the low trading activity.

In addition, with the absence of an alternative offer from other parties and the Offeror and partiesacting in concert with it being in a position to exercise statutory control of the Company, the Offerorhas stated its intention not to maintain the listing status of the Company and does not intend totake steps for any trading suspension in the Shares to be lifted. In view of this, we are of theopinion that the Offer represents an opportunity for Shareholders to realize their investment in theCompany without incurring transaction costs.


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In summary, based on our analysis set out in this letter and after having consideredcarefully the information available to us and based on the market, economic and otherrelevant conditions prevailing as at the Latest Practicable Date, we are of the view that theOffer is, on balance, reasonable. Accordingly, we advise the Independent Directors torecommend that Shareholders ACCEPT THE OFFER.

Shareholders may wish to sell their Shares in the open market if they are able to obtain a pricehigher than the Offer Price net of related expenses (such as brokerage and trading expenses).Should the open market price of their Shares is lower than the Offer Price, Shareholders mayaccept the Offer.

The Independent Directors should note that we have arrived at our advice based on informationmade available to us as at the Latest Practicable Date. Our advice on the Offer cannot and doesnot take into account the future trading activity or patterns or price levels that may be establishedfor the Shares as these are governed by factors beyond the scope of our review, and would not fallwithin our terms of reference in connection with our evaluation of the Offer.

We have prepared this letter for use of the Independent Directors in connection with and for thepurpose of their consideration of the Offer, but any recommendation made by the IndependentDirectors in respect of the Offer shall remain the sole responsibility of the Independent Directors.

Whilst a copy of this letter may be reproduced in the Circular, no other person may reproduce,disseminate or quote this letter (or any part thereof) for any purpose (other than the intendedpurpose in relation to the Offer) at any time and in any manner, without the prior written consent ofAmFraser Securities Pte. Ltd. in each specific case. Further, the Independent Directors shouldadvise Shareholders that the opinion and advice of AmFraser Securities Pte. Ltd. should not berelied upon by any Shareholder as the sole basis for deciding whether or not to accept the Offer.

This letter is governed by, and construed in accordance with, the laws of Singapore, and is strictlylimited to the matters stated herein and does not apply by implication to any other matter. Nothingherein shall confer or be deemed or is intended to confer any right of benefit to any third party andthe Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore and any amendmentsthereto shall not apply.”

12.2 Recommendation of the Independent Directors

Having carefully considered the terms of the Offer, the IFA’s advice on the Offer and the letter fromthe IFA in relation to the Statement of Prospects, the Independent Directors concur with the IFAthat based on the market, economic and other relevant conditions prevailing as at the LatestPracticable Date, the Offer is, on balance, reasonable. Accordingly, the Independent Directorsrecommend the Shareholders to ACCEPT the Offer.

Shareholders should note that the opinion of the IFA and the Independent Directors should not berelied upon by any Shareholder as the sole basis for deciding whether or not to accept the Offer.

In making their recommendation, the IFA and the Independent Directors have not hadregard to the specific investment objectives, financial situation, tax position or uniqueneeds and constraints of any Shareholder or any specific group of Shareholders. Anyindividual Shareholder or group of Shareholders who may require specific advice in relationto his or their investment portfolio(s) should consult his or their legal, financial, tax or otherprofessional adviser.


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13. OVERSEAS SHAREHOLDERS

13.1 Overseas Shareholders

As stated in Section 15.1 of the Offer Document, the availability of the Offer to an OverseasShareholder may be affected by the laws of the relevant jurisdictions. Accordingly, all OverseasShareholders should observe any applicable requirements in their own jurisdictions. For theavoidance of doubt, the Offer Document states that the Offer is made to all Shareholders includingthose to whom the Offer Document, the Relevant Acceptance Forms and any related document(s)have not been, or will not be, sent, provided that the Offer Document, the Relevant AcceptanceForms and any related document(s) do not constitute an offer or a solicitation to any person in anyjurisdiction in which such offer or solicitation is unlawful and the Offer is not being made into anyjurisdiction in which the making or acceptance of the Offer would not be in compliance with thelaws of such jurisdiction.

13.2 Copies of Offer Document

As stated in Section 15.3 of the Offer Document, Shareholders (including Overseas Shareholders)may obtain copies of the Offer Document, the Relevant Acceptance Forms and any relateddocument(s), during normal business hours up to 5.30 p.m. (Singapore time) on the Closing Datefrom the Registrar, 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 or CDP, 4Shenton Way, #02-01 SGX Centre 2, Singapore 068807. Alternatively, Shareholders (includingOverseas Shareholders) may write to the Offeror at Luma Investments Limited c/o BoardroomCorporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower,Singapore 048623 to request for the Offer Document, the Relevant Acceptance Forms and anyrelated document(s) to be sent to an address in Singapore by ordinary post at his own risk, up tothree Market Days prior to the Closing Date.

13.3 Copies of this Circular

This Circular may not be sent to any Overseas Shareholder due to potential restrictions on sendingsuch documents to the relevant overseas jurisdictions. Any affected Overseas Shareholder may,nonetheless, obtain copies of this Circular during normal business hours and up to the ClosingDate, from the office of the Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 50Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, or make a request to theRegistrar for this Circular to be sent to an address in Singapore by ordinary post at his own risk.The last date for despatch in respect of such request shall be the date falling three Market Daysprior to the Closing Date.

13.4 Overseas Jurisdiction

As stated in Section 15.2 of the Offer Document, it is the responsibility of an OverseasShareholder who wishes to accept the Offer to satisfy himself as to the full observance of the lawsof the relevant jurisdiction in that connection, including the obtaining of any governmental or otherconsent which may be required, or compliance with other necessary formalities or legalrequirements.

If any Overseas Shareholder is in any doubt about his position, he should consult his professionaladviser in the relevant jurisdiction. All Overseas Shareholders should inform themselves about, andobserve any applicable legal requirements in their own jurisdictions.

13.5 Notice

As stated in Section 15.4 of the Offer Document, the Offeror and CIMB each reserves the right tonotify any matter, including the fact that the Offer has been made, to any or all Shareholders(including Overseas Shareholders) by announcement to the SGX-ST or paid advertisement in adaily newspaper published and circulated in Singapore, in which case, such notice shall bedeemed to have been sufficiently given notwithstanding any failure by any Shareholder to receiveor see such announcement or advertisement.


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14. INFORMATION PERTAINING TO CPFIS INVESTORS

As stated in Section 16 of the Offer Document, CPFIS Investors should receive or have receivedfurther information on how to accept the Offer from their CPF Agent Banks. CPFIS Investors areadvised to consult their respective CPF Agent Banks should they require further information, and ifthey are in any doubt as to the action they should take, CPFIS Investors should seek independentprofessional advice. CPFIS Investors who wish to accept the Offer are to reply to their respectiveCPF Agent Banks by the deadline stated in the letter from their respective CPF Agent Banks.

15. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who do not wish to accept the Offer should take no further action in respect of theOffer Document and the relevant forms of acceptance.

As stated in the Offer Document, Shareholders who wish to accept the Offer must do so no laterthan 5.30 p.m. (Singapore time) on 20 June 2011, or such later date(s) as may be announced fromtime to time by or on behalf of the Offeror, according to the procedures for acceptance as set out inAppendix 2 to the Offer Document and in the FAA and the FAT.

Acceptances should be completed and returned as soon as possible and, in any event, so as to bereceived by CDP (in respect of the FAA) or the share registrar of the Company (in respect of theFAT), as the case may be, not later than 5.30 p.m. (Singapore time) on 20 June 2011, or such laterdate(s) as may be announced from time to time by or on behalf of the Offeror.

16. DIRECTORS’ RESPONSIBILITY STATEMENT

The issue of this Circular has been approved by all the Directors (including those who may havedelegated detailed supervision of this Circular), who have taken all reasonable care to ensure that,to the best of their knowledge and belief, the facts stated and opinions expressed in this Circular(other than those relating to the Offeror, and in Appendix I and Appendix VIII to this Circular forwhich the IFA has taken responsibility, and in Appendix VII for which the Auditor has takenresponsibility) are fair and accurate in all material aspects and that no material facts have beenomitted which would make any statement in this Circular misleading in any material respect, andthey jointly and severally accept responsibility accordingly.

The recommendation of the Independent Directors to Shareholders set out in Section 12.2 aboveis the sole responsibility of the Independent Directors.

Where any information in this Circular (other than that relating to the Offeror, the parties acting inconcert with the Offeror, and in Appendix I and Appendix VIII to this Circular for which the IFA hastaken responsibility, and in Appendix VII for which the Auditor has taken responsibility) has beenextracted from published or publicly available sources or obtained from the Offeror, the soleresponsibility of the Directors has been to ensure through reasonable enquiries that suchinformation has been accurately and correctly extracted from such sources or, as the case may be,accurately reflected or reproduced in this Circular.

17. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices which form part ofthis Circular.

Yours faithfullyFor and on behalf of the Board of Directors ofJK YAMING INTERNATIONAL HOLDINGS LTD

Yu Swee SingIndependent Director 3 June 2011

APPENDIX I:LETTER FROM AmFRASER SECURITIES PTE. LTD. TO

THE INDEPENDENT DIRECTORS

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AmFraser Securities Pte. Ltd.(Incorporated in the Republic of Singapore)(Company Registration No. 195500144H)

4 Shenton Way#13-01 SGX Centre 2

Singapore 068807

3 June 2011

To: The Independent Directors

160 Paya Lebar Road, #08-03Orion Industrial BuildingSingapore 409022

Dear Sirs

VOLUNTARY UNCONDITIONAL CASH OFFER TO ACQUIRE ALL THE ISSUED AND PAID-UPORDINARY SHARES IN THE CAPITAL OF JK YAMING INTERNATIONAL HOLDINGS LTD

Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall havethe same meanings herein.

1. INTRODUCTION

We, AmFraser Securities Pte. Ltd. (“AmFraser”), a member of AmInvestment Bank Group, hasbeen appointed as the independent financial adviser (“IFA”) to the Directors who are consideredindependent for the purpose of making a recommendation to Shareholders in respect of the Offer(the “Independent Directors”) on their recommendation as to the actions to be taken byShareholders in respect of the Offer. This letter sets out our assessment of the financial terms ofthe Offer and our recommendation to the Independent Directors. It has been prepared for the useof the Independent Directors in connection with their consideration of the Offer and theirrecommendation as to the actions to be taken by the Shareholders in respect of the Offer.

2. TERMS OF REFERENCE

AmFraser has been appointed as the IFA to the Independent Directors in respect of theirrecommendation as to the actions to be taken by the Shareholders in respect of the Offer.

We were not privy to the negotiations in relation to the Offer or any other offers. We do not, by thisletter, make any representation or warrant the merits of the Offer. We have not been requested toexpress, and we do not express, an opinion on the relative merits of the Offer as compared to anyother alternative transactions. We have not been instructed or authorised to solicit, and we havenot solicited, any indications of interest from any third party with respect to the Shares. We havenot conducted a comprehensive independent review of the business, operations or financialcondition of the Group or the Offeror. Our evaluation is confined to the financial terms of the Offerand we have not evaluated the commercial rationale or merits of the Offer or the future growth

prospects or earnings potential of the Group after the completion of the Offer. Such evaluation shallremain the sole responsibility of the Directors, although we may draw upon their views (to theextent deemed necessary or appropriate by us) in arriving at our advice as set out in this letter.Accordingly, we do not express any view as to the prices at which the Shares may trade uponcompletion of the Offer or on the future financial performance of the Group.

In the course of our evaluation, we have held discussions with the Directors and the managementof the Group (the “Management”) and have relied on the information and representations, whetherwritten or verbal, provided to us by the Directors and the Management, including informationcontained in the Circular. We have not independently verified such information or representationsand accordingly cannot and do not warrant or accept responsibility for the accuracy, completenessor adequacy of these information or representations. We have, however, made such enquiries andexercised such judgement (as we deemed necessary) in assessing the information andrepresentations provided to us, and have found no reason to doubt the reliability of suchinformation or representations which we have relied on.

The Directors (including those who may have delegated detailed supervision of the Circular) haveconfirmed to us that, having made all reasonable enquiries and to the best of their knowledge andbelief, (a) all material information available to them in connection with the Offer has been disclosedin the Circular; (b) such information is true and accurate in all material respects; and (c) there is noother information or fact, the omission of which would cause any information disclosed to us or thefacts stated in the Circular to be inaccurate, incomplete or misleading in any material respect.Whilst care has been exercised in reviewing the information which we have relied on, we have notindependently verified the information but nonetheless have made such enquiries and exercisedsuch judgement as were deemed necessary and have found no reason to doubt the reliability ofthe information or facts. Accordingly, no representation or warranty, expressed or implied, is madeand no responsibility is accepted by us concerning the accuracy, completeness or adequacy ofsuch information or facts.

Our advice, as set out in this letter, is based on the market, economic, industry and otherapplicable conditions subsisting on, and the information made available to us as of, the LatestPracticable Date. Such conditions may change significantly over a relatively short period of timeand we assume no responsibility to update, revise or reaffirm our advice in the light of anysubsequent development after the Latest Practicable Date that may affect our advice containedherein.

In rendering our advice, we have not had regard to the specific investment objectives, financialsituation, tax position or unique needs and constraints of any Shareholder or any specific group ofShareholders. We recommend that any individual Shareholder or group of Shareholders who mayrequire specific advice in relation to his or their investment portfolio(s) should consult his or theirlegal, financial, tax or other professional adviser. The Independent Directors should adviseShareholders that the advice of AmFraser should not be relied on by any Shareholder as the solebasis for deciding whether to accept or reject the Offer.

Our advice in relation to the Offer should be considered in the context of the entirety of thisletter and the Circular.

The Group has been separately advised by its own advisers in the preparation of the Circular(other than this letter as set out in Appendix I and the IFA letter in relation to the Statement ofProspects as set out in Appendix VIII to the Circular). We have had no role or involvement andhave not provided any advice, financial or otherwise, in the preparation, review and verification ofthe Circular (other than this letter as set out in Appendix I and the IFA letter in relation to theStatement of Prospects as set out in Appendix VIII to the Circular). Accordingly, we take noresponsibility for and express no views, expressed or implied, on the contents of the Circular (otherthan this Ietter as set out in Appendix I and the IFA letter in relation to the Statement of Prospectsas set out in Appendix VIII to the Circular).



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3. THE OFFER

Based on the information set out in the Offer Document, CIMB has, for and on behalf of theOfferor, made the Offer to acquire the Shares in accordance with Section 139 of the Securities andFutures Act and Rule 15 of the Code (unless otherwise exempted by the SIC), on the terms andsubject to the conditions set out in the Offer Document, the FAA and the FAT.

3.1 Offer Price

Based on Section 2.1 of the Offer Document, the Offer Price for each Share is S$0.55 in cash.

Notwithstanding the above, we note that a first and final cash dividend of S$0.006 for each Sharein respect of FY2010 was declared by the Board of Directors on 22 February 2011 and approvedby Shareholders at the annual general meeting of the Company held on 28 April 2011 (“FY2010Final Dividend”). However, no announcement has been made in relation to the date payable andbooks closure date of the FY2010 Final Dividend.


Premised on the above, we will use the price of S$0.544, which is the Offer Price of S$0.55less the FY2010 Final Dividend (“Net Offer Price”), for the purpose of our assessment andadvice on the Offer.

Notwithstanding that the Net Offer Price is used for our assessment and advice of the Offer,each Shareholder will still receive S$0.55 in cash for each Share if the Offer is accepted.

3.2 Right to Revise Offer

Based on Section 2.2 of the Offer Document, the Offeror reserves its right to revise the terms ofthe Offer at such time and in such manner as it may consider appropriate. If the Offer Price isrevised, all Shareholders who have previously accepted the Offer will receive the revisedconsideration.

3.3 Offer Shares

The Offer is extended to all Shares, including any and all Shares owned, controlled or agreed to beacquired by any person acting or deemed to be acting in concert with the Offeror in connectionwith the Offer, including, without limitation, the Consortium Shares and the EncumberedConsortium Shares, in accordance with Section 139 of the SFA and the Code.

3.4 No Encumbrances

Based on the Offer Document, the Shares will be acquired:

(a) fully paid;

(b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption andany other third party rights or interests of any nature whatsoever; and

(c) together with all rights, benefits and entitlements attached thereto as at the OfferAnnouncement Date and thereafter attaching thereto, including the right to receive andretain the FY2010 Final Dividend, as well as all other dividends, rights and otherdistributions (if any) declared, paid or made by JK Yaming on or after the OfferAnnouncement Date.



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3.5 Warranty

As stated in Section 4 of the Offer Document, a Shareholder who tenders his Shares inacceptance of the Offer will be deemed to warrant that he sells such Shares as or on behalf of thebeneficial owner(s) thereof, (a) fully paid, (b) free from all liens, equities, mortgages, charges,encumbrances, rights of pre-emption and any other third party rights or interests of any naturewhatsoever and (c) together with all rights, benefits and entitlements attached thereto as of theOffer Announcement Date and thereafter attaching thereto, including the right to receive and retainthe FY2010 Final Dividend, as well as all other dividends, rights and other distributions (if any)declared, paid or made by JK Yaming on or after the Offer Announcement Date.

3.6 Further Details of the Offer

Further details of the Offer are set out in Appendix 1 to the Offer Document, including details on,amongst other things, (i) the duration of the Offer; (ii) the settlement of the consideration for theOffer; (iii) the requirements relating to the announcement of the level of acceptances of the Offer;and (iv) the right of withdrawal of acceptances of the Offer.

Copies of the Offer Announcement and the Offer Document are available on the website of theSGX-ST at http://www.sgx.com.

3.7 Closing Date

As stated in the Offer Document, the Offer will remain open for acceptance until 5.30 p.m.(Singapore time) on 20 June 2011, or such later date(s) as may be announced from time to timeby or on behalf of the Offeror.

3.8 Procedures for Acceptance of the Offer

Details on the procedures for acceptance of the Offer are set out in Appendix 2 to the OfferDocument, the FAA and the FAT.

4. NO CONDITION TO THE OFFER

The Offer is not subject to any conditions and is unconditional in all respects.

5. INFORMATION ON THE OFFEROR AND CONSORTIUM

5.1 The following has been extracted from the Offer Document and is set out in italics below. Unlessotherwise defined, all terms and expressions used in the extract below shall have the samemeanings as those defined in the Offer Document. Shareholders are advised to read the extractbelow carefully:

“7. INFORMATION ON THE OFFEROR AND CONSORTIUM

7.1 Offeror. The Offeror is an investment holding company incorporated under the laws of theCayman Islands on 25 February 2011. The Offeror has not carried out any business sinceits incorporation, except to enter into certain agreements in connection with the formationof the Consortium and to purchase Shares from the open market as set out in Appendix 5to this Offer Document. As at the Latest Practicable Date, the Offeror has an issued and



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paid-up share capital of US$0.001 consisting of 100 ordinary shares of par valueUS$0.00001 each (“Offeror Shares”), which are all held by CVCIGP Luma Holdings. As atthe Latest Practicable Date, the Directors are Mr Ji Hong Min, Mr Chick Leung Lam(Gordan Lam), Mr Tan Shao Ming, Mr Yiqiao Ren and Mr Yeo Khee Huat, Andrew.

Further information on the Offeror is set out in Appendix 3 to this Offer Document.

7.2 Offeror Group. The Offeror is a wholly-owned subsidiary of CVCIGP Luma Holdings.CVCIGP Luma Holdings is an investment holding company whose voting shares are heldentirely by CVCI GP and whose remaining equity interests are held by the CVCI Funds.Each of the CVCI Funds is a Cayman Islands exempted limited partnership. The generalpartner of the CVCI Funds is CVCI GP, a company incorporated with limited liability inJersey. The ultimate holding company of CVCI GP is Citigroup Inc.. CVCI GP is advised byCVCI Advisers in respect of its investments worldwide. CVCI Advisers is in turn advised byCVCI Asia, a Bahamian entity with operations in Hong Kong, in respect of investments inAsia Pacific.

7.3 Consortium. The Offeror and CVCIGP Luma Holdings have formed a consortium(“Consortium”) with the Consortium Members to make the Offer. The senior managementof the Company who have joined the Consortium are:

(a) ACC, the Executive Chairman of the Company;

(b) CM, an Executive Director of the Company; and

(c) ZQF, the General Manager of Fujian J.K. Wiring Systems Co., Ltd., a subsidiary ofJK Yaming.

7.4 Consortium Arrangements. The arrangements comprised in the Consortium include thefollowing:

(a) the Offeror and CVCIGP Luma Holdings have entered into an agreement (the“Consortium Agreement”) with the Consortium Members, pursuant to which:

(i) CVCIGP Luma Holdings has agreed to provide funding to the Offeror tosatisfy, inter alia, full acceptances of the Offer (other than acceptances of theOffer in respect of the aggregate Relevant Number of Consortium Shares);

(ii) each of the Roll-over Consortium Members has agreed to subscribe in cashfor Offeror Shares and the obligation of each Roll-over Consortium Member topay for the new Offeror Shares in cash will be set off against the obligation ofthe Offeror to pay the aggregate Offer Price to that Roll-over ConsortiumMember for the Relevant Number of Consortium Shares tendered inacceptance of the Offer pursuant to the Consortium Irrevocable AcceptanceUndertakings; and

(iii) CVCIGP Luma Holdings and NTCP SPV have each agreed to subscribe incash for new Offeror Shares, with the obligation of CVCIGP Luma Holdings topay for its new Offeror Shares in cash being set off, to the extent applicable,against the funding it has provided to the Offeror in respect of the Offer;



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(b) each of the Roll-over Consortium Members, ACC and JKPL has given irrevocableundertakings (the “Consortium Irrevocable Acceptance Undertakings”) in favourof the Offeror and CVCIGP Luma Holdings to accept the Offer in respect of anaggregate 81,166,170 Shares (the “Consortium Shares”), representingapproximately 39.99 per cent. of the Shares in issue as at the Latest PracticableDate;

(c) as ACC has granted charges over 36,130,000 Shares (“ACC EncumberedConsortium Shares”), representing approximately 17.80 per cent. of the Shares inissue as at the Latest Practicable Date, in favour of various financial institutions (the“Relevant Financial Institutions”) pursuant to the ACC Share Margin FinancingArrangements with such Relevant Financial Institutions, and JKHSB has grantedcharges over 7,000,000 Shares (“JKHSB Encumbered Consortium Shares”, andtogether with the ACC Encumbered Consortium Shares, the “EncumberedConsortium Shares”), representing approximately 3.45 per cent. of the Shares inissue as at the Latest Practicable Date, to Maybank as security in respect ofoutstanding loans made by Maybank to JKHSB’s subsidiaries (the “JKHSB MaybankLoans”), each of ACC and JKHSB has given irrevocable undertakings (“ConsortiumIrrevocable Instruction Undertakings”) in favour of the Offeror and CVCIGP LumaHoldings to instruct and/or procure the Relevant Financial Institutions and Maybankto accept the Offer, subject to the agreement of such Relevant Financial Institutionsand Maybank, in respect of the ACC Encumbered Consortium Shares and theJKHSB Encumbered Consortium Shares respectively. The Encumbered ConsortiumShares represent in aggregate approximately 21.25 per cent. of the Shares in issueas at the Latest Practicable Date; and

(d) each of the Roll-over Consortium Members, ACC and JKPL has agreed to waivetheir right to receive payment of the Offer Price in respect of the Consortium Shareswithin the timeline for settlement under the Code and has agreed to receive thepayment of the aggregate Offer Price in the manner provided under the terms of theConsortium Agreement. Each of ACC and JKHSB has agreed with the Offeror andCVCIGP Luma Holdings that payment of the Offer Price in respect of theEncumbered Consortium Shares will be settled within the timeline for settlementunder the Code and will not be deferred.”

Further information on the Consortium is found in Section 7.5 and 7.6 of the Offer Document.



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5.2 Irrevocable Undertakings received by the Offeror. The following has been extracted from theOffer Document and is set out in italics below. Unless otherwise defined, all terms and expressionsused in the extract below shall have the same meanings as those defined in the Offer Document.Shareholders are advised to read the extract below carefully:

“8. IRREVOCABLE UNDERTAKINGS

8.1 Consortium Irrevocable Acceptance Undertakings. The following table sets out theConsortium Members who, as at the Latest Practicable Date, have provided theConsortium Irrevocable Acceptance Undertakings in respect of the Consortium Shares:

Consortium Member No. of Shares Percentage of Sharesin issue (%)

ACC 6,040 0.003

JKHSB 41,322,225 20.36

JKPL 900,000 0.44

Nanping 17,024,750 8.39

Amko 21,913,155 10.80

Total 81,166,170 39.99

The Consortium Irrevocable Acceptance Undertakings will terminate on, inter alia, the dateon which the Offer lapses or is withdrawn.

8.2 Consortium Irrevocable Instruction Undertakings. As set out in Section 7.4(c) above,ACC has granted charges over the ACC Encumbered Consortium Shares in favour of theRelevant Financial Institutions pursuant to his share margin financing arrangements withsuch Relevant Financial Institutions (the “ACC Share Margin Financing Arrangements”).The Offeror understands that, pursuant to the terms of the various agreements entered intoby ACC with the Relevant Financial Institutions in connection with the ACC Share MarginFinancing Arrangements, ACC, inter alia, may not sell, attempt or agree to sell, transfer,assign, charge or otherwise dispose of or give any unconditional or conditional option,warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree,conditionally or unconditionally, to create) or have any outstanding security over the ACCEncumbered Consortium Shares (other than the charges over the ACC EncumberedConsortium Shares granted to the Relevant Financial Institutions). The Offeror understandsthat the aggregate amount outstanding under the ACC Share Margin FinancingArrangements is S$5,900,000.

As also set out in Section 7.4(c) above, JKHSB has granted charges over the JKHSBEncumbered Consortium Shares in favour of Maybank as security in respect of the JKHSBMaybank Loans. The Offeror understands that the aggregate amount outstanding under theJKHSB Maybank Loans as at 13 May 2011 is approximately RM1,150,147 (equivalent toapproximately S$471,352 based on an exchange rate of S$1.00 : RM2.4401) and pursuantto the terms of the charges entered into by JKHSB as security for the JKHSB MaybankLoans, JKHSB, inter alia, may not (and may not agree, conditionally or unconditionally, to)sell, transfer, lend or otherwise dispose of or give any conditional or unconditional option,warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree,conditionally or unconditionally, to create) or have any outstanding security on or over theJKHSB Encumbered Consortium Shares (other than the charges granted to Maybank assecurity for the JKHSB Maybank Loans).



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In view of the restrictions set out in the terms of the ACC Share Margin FinancingArrangements and the JKHSB Maybank Loans, ACC and JKHSB have therefore providedthe Consortium Irrevocable Instruction Undertakings in respect of the ACC EncumberedConsortium Shares and the JKHSB Encumbered Consortium Shares respectively. ACCand JKHSB have each confirmed to the Offeror that as at the Latest Practicable Date, he/itis in full compliance with, and he/it is not in default of and has not defaulted on, any ofhis/its obligations under the ACC Share Margin Financing Arrangements or the JKHSBMaybank Loans (as the case may be), and nothing has occurred which is or would, directlyor indirectly constitute an event of default or a similar event under the terms of any of theACC Share Margin Financing Arrangements or the JKHSB Maybank Loans (as the casemay be). The Consortium Irrevocable Instruction Undertakings will terminate on, inter alia,the date on which the Offer lapses or is withdrawn.

8.3 Phihong Irrevocable Undertaking. As at the Latest Practicable Date, the Offeror has alsoreceived an irrevocable undertaking (“Phihong Irrevocable Undertaking”) from anothersubstantial shareholder of JK Yaming, Phihong, to accept the Offer in respect of its38,511,000 Shares, representing approximately 18.98 per cent. of the Shares in issue as atthe Latest Practicable Date. For the avoidance of doubt, Phihong is not, and will not be, amember of the Consortium. The Phihong Irrevocable Undertaking will terminate on, interalia, the date on which the Offer lapses or is withdrawn.”

5.3 Based on publicly available information, as at the Latest Practicable Date, the aggregate number ofShares subject to the Consortium Irrevocable Acceptance Undertakings and the PhihongIrrevocable Undertaking amounts to 119,677,170 Shares, representing approximately 58.97 percent. of the Shares in issue as at the Latest Practicable Date. Assuming the Relevant FinancialInstitutions and Maybank agree to and, in accordance with each of ACC’s and JKHSB’sinstructions, accept the Offer in respect of all of the Encumbered Consortium Shares, and takinginto account the Shares subject to the Consortium Irrevocable Acceptance Undertakings and thePhihong Irrevocable Undertaking, the Offeror would obtain acceptances in respect of an aggregate162,807,170 Shares, representing approximately 80.22 per cent. of the Shares in issue as at theLatest Practicable Date.

6. RATIONALE FOR THE OFFER

The following has been extracted from the Offer Document. Unless otherwise defined, all termsand expressions used in the extract below shall have the same meanings as those defined in theOffer Document. Shareholders are advised to read the extract below carefully:

“10. RATIONALE FOR THE OFFER

10.1 Opportunity for Shareholders to Realise their Investment. The Offer presentsShareholders with an opportunity to realise their investment in the Shares at a premium ofapproximately 4.7 per cent., 7.5 per cent., 10.7 per cent. and 14.9 per cent. over the one-month VWAP per Share on the SGX-ST of S$0.5251, three-month VWAP per Share on theSGX-ST of S$0.5115, six-month VWAP per Share on the SGX-ST of S$0.4966 and 12-month VWAP per Share on the SGX-ST of S$0.4785 respectively, in the period up to andincluding the Offer Announcement Date, without incurring brokerage and other tradingcosts.

10.2 Low Trading Liquidity of Shares. The trading liquidity of the Shares has also been low,with an average daily trading volume of approximately 72,758 Shares over the 12-monthperiod up to and including the Offer Announcement Date, representing approximately 0.04per cent. of the Shares in issue. The Offer will provide an exit opportunity for thoseShareholders who wish to realise their entire investment in the Shares but find it difficult todo so as the result of the low trading liquidity of the Shares.



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10.3 Greater Management Flexibility. The Offeror believes that the privatisation of JK Yamingwill provide JK Yaming with greater management flexibility to manage and develop itsbusinesses, optimise the use of resources and facilitate the implementation of any strategicinitiatives and/or operation changes.”

7. OFFEROR’S INTENTION FOR THE COMPANY


“11.1 Future Plans. The Offeror has presently no intention to (a) introduce any major changes tothe business of JK Yaming, (b) re-deploy the fixed assets of JK Yaming or (c) discontinuethe employment of the employees of the JK Yaming Group. Following the close of the Offer,the Offeror will undertake a comprehensive review of the businesses and fixed assets ofthe JK Yaming Group to determine the optimal business strategy for JK Yaming.

11.2 Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offerorreceives valid acceptances pursuant to the Offer or acquires Shares from the DespatchDate otherwise than through valid acceptances of the Offer, in respect of not less than 90per cent. of the total number of Shares in issue as at the close of the Offer (other thanthose already held by the Offeror, its related corporations or their respective nominees asat the Despatch Date), the Offeror will be entitled to exercise its right to compulsorilyacquire, at the Offer Price, all the Shares held by Shareholders who have not accepted theOffer (“Non-Assenting Shareholders”).

In the event that the Offeror becomes entitled to exercise its right under Section215(1) of the Companies Act, the Offeror intends to exercise its right to compulsorilyacquire all the Shares not acquired under the Offer. The Offeror will then proceed todelist JK Yaming from the SGX-ST.

Non-Assenting Shareholders have the right under and subject to Section 215(3) of theCompanies Act to require the Offeror to acquire their Shares in the event that the Offeror,its related corporations or their respective nominees acquire, pursuant to the Offer orotherwise, such number of Shares which, together with the Shares held by the Offeror, itsrelated corporations or their respective nominees, comprise 90 per cent. or more of thetotal number of Shares. Non-Assenting Shareholders who wish to exercise such right areadvised to seek their own independent advice.

11.3 Listing Status. Pursuant to Rule 1105 of the Listing Manual, in the event that the Offerorand parties acting in concert with it, as a result of the Offer or otherwise, own or controlmore than 90 per cent. of the Shares (excluding treasury shares), the SGX-ST maysuspend the trading of the Shares until such time when the SGX-ST is satisfied that atleast 10 per cent. of the Shares (excluding treasury shares) are held by at least 500Shareholders who are members of the public.

In addition, pursuant to Rule 724 of the Listing Manual, if the percentage of the Shares(excluding treasury shares) held in public hands falls below 10 per cent., JK Yaming must,as soon as practicable, announce that fact and the SGX-ST may suspend trading of all theShares. Rule 725 of the Listing Manual provides that the SGX-ST may allow JK Yaming aperiod of three months, or such longer period as the SGX-ST may agree, to raise thepercentage of Shares in public hands to at least 10 per cent., failing which JK Yaming maybe delisted.



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The Offeror intends to make JK Yaming its wholly-owned subsidiary. It is thereforenot the intention of the Offeror to preserve the listing status of JK Yaming and theOfferor does not intend to take any steps for any trading suspension in the Shares tobe lifted in the event that, inter alia, less than 10 per cent. of the Shares (excludingtreasury shares) are held in public hands.”

8. ASSESSMENT OF THE FINANCIAL TERMS OF THE OFFER

In assessing the financial terms of the Offer, we have taken into account the following factors whichwe consider to have a significant bearing on our assessment:

(a) Market quotation and trading liquidity of the Shares;

(b) Comparison of valuation statistics of selected companies broadly comparable to the Group;

(c) Comparison with recent precedent transactions of SGX-ST listed companies; and

(d) Other relevant considerations.

8.1 Market Quotation and Trading Liquidity of the Shares

8.1.1 Share price performance

The trend of the daily closing prices and volume traded of the Shares for the period commencing12 months prior to the Offer Announcement Date and ending on 19 May 2011, being the lasttrading day prior to the Latest Practicable Date:-

Source: Bloomberg

A summary of selected announcements relating to the Group during the aforesaid period is set outbelow:

Date Event

10 May 2010 Announcement on the unaudited interim financial results for the3 months financial period ended 31 March 2010.

10 August 2010 Announcement on the unaudited interim financial results for the6 months financial period ended 30 June 2010.

Share P

rice (S$)

Volum

e



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Date Event

10 August 2010 Announcement on the cessation of Mr. Kuo Shaw-Jye as Non-Executive Director of the Company.

10 August 2010 Announcement on the appointment of Ms. Chen Chiu-Chin asNon-Executive Director of the Company.

24 September 2010 Announcement on the proposed transfer of the Company’sentire shareholding of 65% in the capital of Fujian Juan KuangMetal Industries Co., Ltd. to its subsidiary company, Fujian JuanKuang Yaming Electric Limited for a consideration of RMB6,060,000.

18 October 2010 Announcement that a Settlement Agreement and MutualGeneral Release was made and entered by the Company inrelation to a pending lawsuit.

9 November 2010 Announcement on the unaudited interim financial results for the9 months financial period ended 30 September 2010.

23 December 2010 Announcement on the acquisition by the Company’s coresubsidiary, Fujian Juan Kuang Yaming Electric Limited, for 100%stake in Hubei Juan Kuang Electric Technologies Limited, for apurchase consideration of RMB 11,060,000.

22 February 2011 Announcement on the unaudited financial results and dividendannouncement for FY2010.

4 May 2011 Announcement made by CIMB, on behalf of the Offeror, inrelation to the Offer to acquire all the issued and paid-upordinary shares in the capital of the Company.

5 May 2011 Announcement by the Company in relation to the OfferAnnouncement made by CIMB on 4 May 2011.

10 May 2011 Announcement on the unaudited interim financial results for the3 months financial period ended 31 March 2011.

11 May 2011 Announcement on the appointment of AmFraser Securities Pte.Ltd. as independent financial adviser to advise the IndependentDirectors in relation to the Offer, and Shook Lin & Bok LLP aslegal advisor in connection with the Offer.

16 May 2011 Announcement on the appointment of Mr. Xu Zhi Gang as theChief Operating Officer of the Company’s core subsidiary,Fujian Juan Kuang Yaming Electric Limited (newly createdposition).

Source: Announcements relating to the Group on the SGX-ST



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Additional information on the volume-weighted average prices (“VWAP”) of the Shares and othertrading statistics is set out below:

Premium/ Average(discount) Average daily trading

Lowest Highest of Net daily volume as a transacted transacted Offer Price traded percentage

price price VWAP to VWAP volume(1) of free float(2)

(S$) (S$) (S$) (%) (%)

Periods prior to the Offer Announcement (and including the Offer Announcement Date)

Last 12 months 0.4000 0.5350 0.4785 13.69 72,758 0.19

Last 6 months 0.4000 0.5350 0.4966 9.54 115,597 0.29

Last 3 months 0.4800 0.5350 0.5115 6.35 56,590 0.14

Last 1 month 0.5250 0.5350 0.5251 3.60 83,095 0.21

Last Market Day on the Offer Announcement Date(3) 0.5250 0.5350 0.5289 2.85 565,000 1.44

Periods after the Offer Announcement and up to the Latest Practicable Date

After the Offer Announcement date and up to the Latest Practicable Date 0.5450 0.5500 0.5491 (0.93) 302,222 0.77

Last trading day prior to the Latest Practicable Date 0.5450 0.5450 0.5450 (0.18) 86,000 0.22

Source: Bloomberg

Notes:-

(1) The average daily traded volume of the Shares is calculated based on the total volume of Shares traded divided bythe number of Market Days when there were trades.

(2) Free float refers to the Shares other than those held by the Directors, substantial Shareholders and their associates(as defined in the Listing Manual), which amounts to 39,314,010 Shares or equivalent to approximately 19.37% of thetotal issued share capital of the Company as at the Latest Practicable Date.

(3) This refers to the last Market Day on which the Shares were traded prior to the Offer Announcement, being 4 May2011.

We note the following with regard to the Share prices:-

(a) since 12 months prior to and including the Offer Announcement Date, the transacted price ofthe Shares ranged between a low of S$0.400 and a high of S$0.535;

(b) since 12 months prior to and including the Offer Announcement Date, the Shares have nottraded at or above the Net Offer Price;



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(c) the Net Offer Price represents premiums of approximately 13.69%, 9.54%, 6.35% and 3.60%to the VWAPs for the 12 months, 6 months, 3 months and 1 month periods prior to andincluding the Offer Announcement Date, respectively;

(d) the Net Offer Price represents a premium of approximately 2.85% to the VWAP of the Sharesof S$0.5289 on the last Market Day on the Offer Announcement Date;

(e) the Net Offer Price represents a discount of 0.93% to the VWAP of S$0.5491 for the periodfrom the Market Day immediately after the Offer Announcement Date to the Latest PracticableDate; and

(f) the Net Offer Price is lower than the last traded price of S$0.545 on 19 May 2011, being thelast trading day prior to the Latest Practicable Date.

We note the following with regard to the trading liquidity of the Shares:-

(a) the average daily traded volume of the Shares of the 12 months, 6 months, 3 months and 1month periods prior to and including the Offer Announcement Date represents 0.19%, 0.29%,0.14% and 0.21% of the free float respectively;

(b) during the period from the 12 months prior to and including the Offer Announcement Date,the Shares were traded on 129 Market Days out of the 252 Market Days (or 51.19% of thetotal number of Market Days) with an average traded volume of 72,758 Shares per MarketDay; and

(c) during the period after the Offer Announcement Date and up to the Latest Practicable Date,the Shares were traded on 5 Market Days out of the 13 Market Days (or 38.46% of the totalnumber of Market Days) with an average traded volume of 302,222 Shares, representingapproximately 0.77% of the free float.

(d) in general and other than during the periods around the Offer Announcement Date, liquidity inthe market for the Shares have been low both in absolute terms and relative to the free floatof the Company.

Shareholders should note that the past trading performance of the Shares should not, inany way, be relied upon as an indication or a promise of its future trading performance.There is no assurance that the price of the Shares will remain at current levels as and whenthe Offer completes.



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8.1.2 Relative performance of the Shares versus the market index

To gauge the market price performance of the Shares relative to the general share priceperformance of the stock market on the SGX-ST, we set out below the normalized market pricemovement of the Shares against the FTSE Straits Times Index (“FSSTI Index”) for the periodcommencing 12 months prior to the Offer Announcement Date and ending on 19 May 2011, beingthe last trading day prior to the Latest Practicable Date:-

Source: Bloomberg

We note that over the aforementioned period, the Shares have generally outperformed the FSSTIIndex in relative terms.

Shareholders should note that the past trading performance of the Shares should not, inany way, be relied upon as an indication or a promise of its future trading performance.There can be no assurance that the price of the Shares will continue to outperform theFSSTI Index as and when the Offer completes.

8.2 Comparison of Valuation Statistics of Selected Companies Broadly Comparable To theGroup

In considering what may be regarded as a reasonable range of valuation for the purposes ofassessing the financial terms of the Offer, we have referred to selected companies listed andtraded on the SGX-ST, Hong Kong Exchanges and Clearing Limited (“HKEX”), Bursa MalaysiaSecurities Berhad (“Bursa Malaysia”), and Taiwan Stock Exchange Corporation (“TWSE”) whichbusiness operations are broadly comparable with those of the Group (“Comparable Companies”),in order to give an indication of the current market expectations with regard to the perceivedvaluation of these businesses.

The Group principally manufactures and distributes electrical lighting products and wire harnesses.The Group also produces low voltage electrical accessories and devices used for infrastructure,industrial, commercial, and residential purposes.



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The Independent Directors and Shareholders should note that there is no company listed on anyrelevant stock exchange which may be considered identical to the Group in terms of businessactivities, market capitalisation, scale of operations, risk profile, geographical spread, operating andfinancial leverage, track record and future prospects. In addition, each of the ComparableCompanies may engage in other separate business activities which are not related to themanufacturing and distribution of electrical lighting products, wire harnesses and low voltageelectrical accessories and devices. As such, any comparison merely serves as an illustrative guideto Independent Directors and Shareholders and is by no means exhaustive.

In addition, we wish to highlight that there may be significant differences between valuations thatinvestors may accord to companies trading on the SGX-ST vis-à-vis Bursa Malaysia, HKEX andTWSE. Such cross border valuation statistics are subject to differing macroeconomic variables andhence may not be directly comparable to the Group.

A brief description of the Comparable Companies is as follows:-

Companies Exchange Key activities

Tai Sin Electric SGX-ST Tai Sin Electric Ltd. manufactures and markets electricalLtd (“Tai Sin”) wires and cables. The company also manufactures lamps

and lighting products, and electrical switchboards.

China Auto SGX-ST China Auto Electronics Group Limited researches, develops,Electronics manufactures, and sells automobile parts. The company’sGroup (“CAE”) main products are wire harnesses and connectors used in

automobiles. The group also manufactures and sellscrimping machines and molds.

GP Industries SGX-ST GP Industries Limited develops, manufactures, and marketsLimited (“GPI”) electronics, batteries and electrical installation products. The

company also manufactures and markets wire harness andcables, automotive electronics, specialty electronics, partsand components, and loudspeakers.

Solartech HKEX Solartech International Holdings Limited, through itsInternational subsidiaries, manufactures and sells cables, wires, copperHoldings Limited rods, connector, and terminal products. The company also(“Solartech”) manufactures and sells life-like plants.

Ta Win Holdings Bursa Ta Win Holdings Berhad is an investment holding company.Bhd (“Ta Win”) Malaysia The company, through its subsidiaries, manufactures,

markets, and sells enameled copper wire.

Success Bursa Success Transformer Corp Bhd, through its subsidiaries,Transformer Corp Malaysia manufactures and trades transformers and other products.Bhd (“STC”) The company’s other products include automatic voltage

stabilizers, power line conditioners, energy saving lumenregulators, control gears, and industrial lighting products.



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Companies Exchange Key activities

Grand-Tek TWSE Grand-Tek Technology Co Ltd. manufactures cableTechnology Co assemblies. The Company’s products include RF coaxial Ltd. (“GT”) cables, data cables, and other wire harness cable, outdoor

surge protection kits, and indoor and outdoor antennas.

Hong Tai Electric TWSE Hong Tai Electric Industrial Co., Ltd. manufactures andIndustrial Co., Ltd. markets electric cables, telecommunication cables, and(“Hong Tai”) copper wires.

Ta Ya Electric Wire TWSE Ta Ya Electric Wire & Cable Co., Ltd. manufactures electrical& Cable Co., Ltd. wires and cables. The company produces enameled wires,(“Ta Ya”) bare copper wires, cross-linked power electric (PE) cables,

telecommunication cables, as well as plastic wires andcables.

Walsin Lihwa Corp TWSE Walsin Lihwa Corp. manufactures and markets electric wires(“Walsin”) and cables. The company’s products include bare copper

cables, power cables, and aluminum alloy transmission lineconductors. Walsin Lihwa sells its products in Taiwan andexports to Southeast Asia, Hong Kong, China, Korea, andJapan.

China Electric TWSE China Electric Manufacturing Corp. manufactures andManufacturing markets lighting products. The company produces lighting (“CEM”) fixtures, lamps, as well as fluorescent light bulbs and tubes.

Source: Bloomberg



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In assessing the financial terms of the Offer, we have used the following valuation parameters inour analysis:

Valuation parameter Description

Price-to-earnings ratio P/E ratio or earnings multiple is the ratio of a company’s market(“P/E”) capitalisation divided by the historical consolidated net profit

attributable to shareholders.

The P/E ratio is an earnings-based valuation methodology and iscalculated based on the net earnings attributable to shareholders afterinterest, taxation, depreciation and amortisation expenses.

The P/E ratio illustrates the ratio of the market capitalisation of anentity in relation to the historical net profit attributable to itsshareholders.

The P/E ratio is affected by the capital structure of a company, its taxposition as well as its accounting policies relating to depreciation andintangible assets.

Price-to-NAV ratio NAV refers to consolidated net assets, which is the total assets of a(“P/NAV”) company less total liabilities.

P/NAV refers to the ratio of a company’s share price divided by NAVper share.

The P/NAV ratio represents an asset-based relative valuation whichtakes into consideration the book value or NAV backing of a company.

Enterprise value to EV refers to enterprise value which is the sum of a company’s marketEBITDA ratio capitalisation, preferred equity, minority interests, short-term and long-(“EV/EBITDA”) term debts (inclusive of finance leases), less its cash and cash

equivalents.

EBITDA refers to the historical consolidated earnings before interests,taxes, depreciation and amortisation.

The EV/EBITDA ratio illustrates the ratio of the market value of anentity’s business in relation to its historical pre-tax operating cashflowperformance. The EV/EBITDA multiple is an earnings-based valuationmethodology. The difference between EV/EBITDA and the P/E ratio(described above) is that it does not take into account the capitalstructure of a company as well as its interest, taxation, depreciationand amortisation charges.



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The valuation measures of the Comparable Companies set out below are based on theirrespective last transacted share prices as at the Latest Practicable Date.

Historical(2)

Market Enterprise Comparable Companies Capitalisation(1) P/E P/NAV Value-to-EBITDA

(million) (times) (times) (times)

Tai Sin S$80.51 12.20 0.81 7.26

CAE S$74.98 6.60 0.80 6.32

GPI S$273.54 8.92 0.70 31.27

Solartech HK$681.09 0.25 0.75 -87.06

Ta Win RM18.32 NA(3) 0.30 9.33

STC RM50.98 4.89 2.06 3.29

GT NT$353.68 16.29 1.62 6.43

Hong Tai NT$4,295.00 11.62 0.81 11.07

Ta Ya NT$5,204.39 12.76 0.72 28.96

Walsin NT$52,596.66 9.39 0.80 16.13

CEM NT$399.22 18.23 36.21 16.89

High 18.23 36.21 31.27Low 0.25 0.30 -87.06Average 10.12 4.14 4.54Median 10.50 0.80 9.33

JK Yaming (implied by the Net Offer Price) S$110.40 8.80 1.45 4.81

Source: Bloomberg

Notes:-

(1) Based on the local currency of the stock exchange on which the stock is listed and computed based on therespective last transacted share prices as at the Latest Practicable Date.

(2) Earnings per share, NAV, EBITDA are computed based on the most recently completed financial year.

(3) NA, as the company was in a net loss position.

Comparison of P/E ratios

We note that, as at the Latest Practicable Date, the range of P/E ratios among the ComparableCompanies is between 0.25 times and 18.23 times, with the average P/E ratio of the ComparableCompanies being 10.12 times and median P/E ratio being 10.50 times.

We note that the P/E ratio of the Company implied by the Net Offer Price of 8.80 times is within therange of the P/E ratios of the Comparable Companies, and is lower than the average and medianP/E ratios of the Comparable Companies.



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Comparison of P/NAV ratios

We note that, as at the Latest Practicable Date, the range of P/NAV ratios among the ComparableCompanies is between 0.30 times and 36.21 times, with the average P/NAV ratio of theComparable Companies being 4.14 times and median P/NAV ratio being 0.80 times.

We note that the P/NAV ratio of the Company implied by the Net Offer Price of 1.45 times is withinthe range of the P/NAV ratios of the Comparable Companies, lower than the average but higherthan the median P/NAV ratios of the Comparable Companies.

Comparison of EV/EBITDA ratios

We note that, as at the Latest Practicable Date, the range of EV/EBITDA ratios among theComparable Companies is between -87.06 times and 31.27 times, with the average EV/EBITDAratio of the Comparable Companies being 4.54 times and median EV/EBITDA ratio being 9.33times.

We note that the EV/EBITDA ratio of the Company implied by the Net Offer Price of 4.81 times iswithin the range of the EV/EBITDA ratios of the Comparable Companies, and is lower than theaverage and median EV/EBITDA ratios of the Comparable Companies.

8.3 Comparison with recent precedent transactions of SGX-ST listed Companies

We have also analysed the financial terms of the Offer with selected takeovers of companiesannounced during the period from 1 January 2010 up to the Offer Announcement Date(“Precedent Transactions”).

We wish to highlight the Precedent Transactions set out below are by no means exhaustive. Inaddition, as the Group is not directly comparable to the target companies involved in the PrecedentTransactions in terms of business activities, scale of operations, market capitalisation, geographicalspread, risk profile, accounting policies, financial performance, operating and financial leverage,track record and future prospects, the comparison merely serves as a general guide to provide anindication of the premium/discounts paid in connection with takeovers of companies listed on theSGX-ST. Each of the Precedent Transactions must be judged on its own commercial and financialmerits. Shareholders should also note that the premium (if any) to be paid by an offeror in atakeover transaction varies in different circumstances depending on, inter alia, the attractiveness ofthe underlying business to be acquired, the synergies to be gained from integration with an existingbusiness, the trading liquidity of the target company’s shares, prevailing market expectations andthe presence of competing bids. Accordingly, any comparison made herein is strictly limited inscope.



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A summary of the relevant financial terms of the Precedent Transactions is set out below.

Premium/(Discount) of offer price up to announcement date for

Last Date of Offer Transacted 1 month 3 months

Company Announcement Price Price VWAP VWAP(S$) (%) (%) (%)

Hongguo International 18 January 2010 0.439 37.20 31.40 35.50Holdings Limited

Parkway Holdings Limited 27 May 2010 3.950 30.80 20.40 23.10

Eng Kong Holdings Limited 02 June 2010 0.295 37.21 20.90 19.43

Pine Agritech Limited 16 August 2010 0.200 11.10 7.10 18.60

China Angel Food Limited 15 November 2010 0.170 13.33 21.34 30.57

Reyoung Pharmaceutical Holdings Limited 30 November 2010 0.530 23.26 20.18 25.89

Passion Holdings Limited 09 March 2011 0.260 23.80 28.10 27.40

Qualitas Medical Group Limited 15 March 2011 0.350 25.00 28.20 50.90

High 37.21 31.40 50.90Low 11.10 7.10 18.60Average 25.21 22.32 28.92Median 24.40 21.22 26.62

JK Yaming(1) 04 May 2011 0.544 3.62 3.60 6.35

Source: SGX-ST announcements and circulars to shareholders in relation to the respective takeovers.

Note:-

(1) The offer price used for comparison is the Net Offer Price of S$0.544.

We note that in respect of the Precedent Transactions as set out above:-

(a) the premium of 3.62% implied by the Net Offer Price against the last transacted price of theShares prior to the Offer Announcement Date is not within the range; and lower than theaverage and median premiums of the Precedent Transactions;

(b) the premium of 3.60% implied by the Net Offer Price against the 1 month VWAP of theShares prior to the Offer Announcement Date is not within the range and lower than theaverage and median premiums of the Precedent Transactions; and

(c) the premium of 6.35% implied by the Net Offer Price against the 3 months VWAP of theShares prior to the Offer Announcement Date is not within the range and lower than theaverage and median premiums of the Precedent Transactions.



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8.4 Other Relevant Considerations

8.4.1 Alternative Take-over Offer

As at the Latest Practicable Date, the Directors have confirmed that, apart from the Offer, theCompany has not received any other offer from any other party.

8.4.2 Offer being unconditional

As the Offer is not subject to any conditions and is unconditional in all respects, the Offeror andparties acting in concert with it collectively have a controlling interest in the Company and are in aposition to exercise statutory control of the Company. Statutory control will enable the Offeror andparties acting in concert with it to be able to pass all ordinary resolutions on matters in which theOfferor and parties acting in concert with it do not have an interest and which are tabled forShareholders’ approval at a general meeting. In addition, as the Offer is unconditional in allrespects, Shareholders who accept the Offer will be assured of receiving the Offer Price in respectof all their acceptances of the Offer with no transaction costs involved.

8.4.3 Offeror’s intentions for the Company

We note that the Offeror believes that the privatisation of JK Yaming will provide JK Yaming withgreater management flexibility to manage and develop its businesses, optimise the use ofresources and facilitate the implementation of any strategic initiatives and/or operation changes.

We also note that the Offeror has presently no intention to (a) introduce any major changes to thebusiness of JK Yaming, (b) re-deploy the fixed assets of JK Yaming or (c) discontinue theemployment of the employees of the JK Yaming Group. Following the close of the Offer, the Offerorwill undertake a comprehensive review of the businesses and fixed assets of the JK Yaming Groupto determine the optimal business strategy for JK Yaming.

The Offeror has also stated that the Offer presents Shareholders with an opportunity to realisetheir investment in the Shares at a premium over the market prices of the Shares prior to the OfferAnnouncement Date, without incurring brokerage and other trading costs. The Offer will provide anexit opportunity for those Shareholders who wish to realise their entire investment in the Sharesbut find it difficult to do so as the result of the low trading liquidity of the Shares.

We further note that the Offeror has not made any statement in relation to their view of theprospects of the Group nor in relation to any possible future relisting of the Shares on the SGX-STor any other stock exchange.

8.4.4 Compulsory Acquisition and Listing Status

We note that in the event that the Offeror becomes entitled to exercise its right under Section215(1) of the Companies Act, the Offeror intends to exercise its right to compulsorily acquire all theShares not acquired under the Offer. The Offeror will then proceed to delist JK Yaming from theSGX-ST.

We also note that the Offeror intends to make JK Yaming its wholly-owned subsidiary. It is thereforenot the intention of the Offeror to preserve the listing status of JK Yaming and the Offeror does notintend to take any steps for any trading suspension in the Shares to be lifted in the event that, interalia, less than 10 per cent. of the Shares (excluding treasury shares) are held in public hands.



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8.4.5 Irrevocable Undertakings

We note that as disclosed in the Offer Document, assuming the Relevant Financial Institutions andMaybank agree to and, in accordance with each of ACC’s and JKHSB’s instructions, accept theOffer in respect of all of the Encumbered Consortium Shares, and taking into account the Sharessubject to the Consortium Irrevocable Acceptance Undertakings and the Phihong IrrevocableUndertaking, the Offeror would obtain acceptances in respect of an aggregate 162,807,170Shares, representing approximately 80.22 per cent. of the Shares in issue as at the LatestPracticable Date.

9. OUR ADVICE

In arriving at our advice in respect of the Offer, we have taken into account, the factors which weconsider to be relevant and to have a significant bearing on our assessment of the Offer. Thefactors we have considered in our evaluation are discussed in detail in the earlier sections of thisletter and which we have relied upon, are as follows:-

(a) an assessment of the market quotation and trading liquidity of the Shares as follows:

(i) in relation to the Share prices:

(aa) since 12 months prior to and including the Offer Announcement Date, thetransacted price of the Shares ranged between a low of S$0.400 and a high ofS$0.535;

(bb) since 12 months prior to and including the Offer Announcement Date, theShares have not traded at or above the Net Offer Price;

(cc) the Net Offer Price represents premiums of approximately 13.69%, 9.54%,6.35% and 3.60% to the VWAPs for the 12 months, 6 months, 3 months and 1month periods prior to and including the Offer Announcement Date,respectively;

(dd) the Net Offer Price represents a premium of approximately 2.85% to theVWAP of the Shares of S$0.5289 on the last Market Day on the OfferAnnouncement Date;

(ee) the Net Offer Price represents a discount of 0.93% to the VWAP of S$0.5491for the period from the Market Day immediately after the Offer AnnouncementDate to the Latest Practicable Date; and

(ff) the Net Offer Price is lower than the last traded price of S$0.545 on 19 May2011, being the last trading day prior to the Latest Practicable Date.

(ii) in relation to the trading liquidity of the Shares:

(aa) the average daily traded volume of the Shares of the 12 months, 6 months, 3months and 1 month periods prior to and including the Offer AnnouncementDate represents 0.19%, 0.29%, 0.14% and 0.21% of the free floatrespectively;

(bb) during the period from the 12 months prior to the Offer Announcement Date,the Shares were traded on 129 Market Days out of the 252 Market Days (or51.19% of the total number of Market Days) with an average traded volume of72,758 Shares per Market Day;



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(cc) during the period after the Offer Announcement Date and up to the LatestPracticable Date, the Shares were traded on 5 Market Days out of the 13Market Days (or 38.46% of the total number of Market Days) with an averagetraded volume of 302,222 Shares, representing approximately 0.77% of thefree float; and

(dd) in general and other than during the periods around the Offer AnnouncementDate, liquidity in the market for the Shares have been low both in absoluteterms and relative to the free float of the Company.

(iii) in relation to the relative performance of the Shares versus the market index, wenote that over the 12 months period prior to the Offer Announcement Date andending on 19 May 2011, being the last trading day prior to the Latest PracticableDate, the Shares have generally outperformed the FSSTI Index in relative terms.

(b) a comparison with the valuation statistics of the Comparable Companies as follows:

(i) We note that the P/E ratio of the Company implied by the Net Offer Price of 8.80times is within the range of the P/E ratios of the Comparable Companies, between0.25 times and 18.23 times, and is lower than the average P/E ratio of theComparable Companies being 10.12 times and median P/E ratio being 10.50 times.

(ii) We note that the P/NAV ratio of the Company implied by the Net Offer Price of 1.45times is within the range of the P/NAV ratios of the Comparable Companies,between 0.30 times and 36.21 times, and is lower than the average but higher thanthe median P/NAV ratio being 4.14 times and 0.80 times respectively.

(iii) We note that the EV/EBITDA ratio of the Company implied by the Net Offer Price of4.81 times is within the range of the EV/EBITDA ratios of the ComparableCompanies, between -87.06 times and 31.27 times, and is higher than the averageEV/EBITDA ratio of the Comparable Companies being 4.54 times but lower than themedian EV/EBITDA ratio being 9.33 times.

(c) an assessment of the reasonableness of the Net Offer Price compared to PrecedentTransactions as follows:

(i) the premium of 3.62% implied by the Net Offer Price against the last transacted priceof the Shares prior to the Offer Announcement Date is not within the range; andlower than the average and median premiums of the Precedent Transactions;

(ii) the premium of 3.60% implied by the Net Offer Price against the 1 month VWAP ofthe Shares prior to the Offer Announcement Date is not within the range and lowerthan the average and median premiums of the Precedent Transactions; and

(iii) the premium of 6.35% implied by the Net Offer Price against the 3 months VWAP ofthe Shares prior to the Offer Announcement Date is not within the range and lowerthan the average and median premiums of the Precedent Transactions.

(d) other relevant considerations in relation to the Offer such as:

(i) absence of alternative offer from other parties;

(ii) the Offer being unconditional in all respects;



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(iii) the Offeror’s intentions for the Company as stated in the announcement of the Offerand the Offer Document;

(iv) the Offeror’s intentions to exercise compulsory acquisition and not to maintain thelisting status of the Company; and

(v) the Offeror having received the Consortium Irrevocable Acceptance Undertakings,Consortium Irrevocable Instruction Undertakings and the Phihong IrrevocableUndertaking to, inter alia, accept the Offer in respect of the respective Offer Shares.

Notwithstanding the low premium implied by the Net Offer Price against the VWAP of the Sharescompared to Precedent Transactions, we wish to highlight that the Net Offer Price represents apremium over the VWAPs of 12 months, 6 months, 3 months and 1 month periods prior to andincluding the Offer Announcement Date, and the last Market Day on the Offer Announcement Date.We also note that trading liquidity for the Shares over the last 12 months prior to and including theOffer Announcement Date has been low, being 129 out of the 252 Market Days (or 51.19%). Weare of the opinion that the Offer presents an exit opportunity for Shareholders who find it difficult tosell their Shares in the open market due to the low trading activity.

In addition, with the absence of an alternative offer from other parties and the Offeror and partiesacting in concert with it being in a position to exercise statutory control of the Company, the Offerorhas stated its intention not to maintain the listing status of the Company and does not intend totake steps for any trading suspension in the Shares to be lifted. In view of this, we are of theopinion that the Offer represents an opportunity for Shareholders to realize their investment in theCompany without incurring transaction costs.

In summary, based on our analysis set out in this letter and after having consideredcarefully the information available to us and based on the market, economic and otherrelevant conditions prevailing as at the Latest Practicable Date, we are of the view that theOffer is, on balance, reasonable. Accordingly, we advise the Independent Directors torecommend that Shareholders ACCEPT THE OFFER.

Shareholders may wish to sell their Shares in the open market if they are able to obtain a pricehigher than the Offer Price net of related expenses (such as brokerage and trading expenses).Should the open market price of their Shares is lower than the Offer Price, Shareholders mayaccept the Offer.

The Independent Directors should note that we have arrived at our advice based on informationmade available to us as at the Latest Practicable Date. Our advice on the Offer cannot and doesnot take into account the future trading activity or patterns or price levels that may be establishedfor the Shares as these are governed by factors beyond the scope of our review, and would not fallwithin our terms of reference in connection with our evaluation of the Offer.

We have prepared this letter for use of the Independent Directors in connection with and for thepurpose of their consideration of the Offer, but any recommendation made by the IndependentDirectors in respect of the Offer shall remain the sole responsibility of the Independent Directors.

Whilst a copy of this letter may be reproduced in the Circular, no other person may reproduce,disseminate or quote this letter (or any part thereof) for any purpose (other than the intendedpurpose in relation to the Offer) at any time and in any manner, without the prior written consent ofAmFraser Securities Pte. Ltd. in each specific case. Further, the Independent Directors shouldadvise Shareholders that the opinion and advice of AmFraser Securities Pte. Ltd. should not berelied upon by any Shareholder as the sole basis for deciding whether or not to accept the Offer.



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This letter is governed by, and construed in accordance with, the laws of Singapore, and is strictlylimited to the matters stated herein and does not apply by implication to any other matter. Nothingherein shall confer or be deemed or is intended to confer any right of benefit to any third party andthe Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore and any amendmentsthereto shall not apply.

Yours faithfully,For and on behalf ofAmFraser Securities Pte. Ltd.

Lim Tong Lee Tony Lee Beng YewDirector / Head of Corporate Finance Director – Corporate Finance



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APPENDIX II:GENERAL INFORMATION ON THE GROUP

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1. DIRECTORS

The names, addresses and designations of the Directors as at the Latest Practicable Date are setout below:

Name Address Designation

Ang Chiong Chai 85 Bodmin Drive Executive ChairmanSingapore 559684

Chen Min No. 132 Unit 601 Ren Min Road Executive Director Nanping CityFujian ProvincePRC

Tan Boon Kiat @Tan Ka Seng 2 Li Hwan Drive Executive Director Golden Hill EstateSingapore 557037

Lee Poo Sik 7 Jalan Kuning Muda 3 Non-Executive Director Taman Pelangi80400 Johor Bahru, JohorMalaysia

Dato Ng Kim Poh 10th Floor Non-Executive Director 288 Fushing North RoadTaipei, Taiwan

Chen Chiu-Chin Rolla 16F-2, No. 2, Danjin Road, Non-Executive DirectorDanshui TownshipTaipei County 251, Taiwan

Yu Swee Sing 30 Dover Rise #11-06 Independent Director Dover ParkviewSingapore 138687

Seow Seng Wei 17 Jalan Haji Salam Independent DirectorSingapore 468784

Lee Ah Fong James 635 Ang Mo Kio Avenue 6 Independent Director#10-5121Singapore 560635

2. PRINCIPAL ACTIVITIES

The Company was incorporated in Singapore on 16 October 1999 and was listed on theMainboard of the SGX-ST on 8 August 2001.

The principal activity of the Company is investment holding. The business of the Group is classifiedinto three segments, namely the electrical lightning segment, the wire harness segment and theothers segment. The principal activities of the Group are the manufacturing and sales of electricallighting products for infrastructure, industrial, commercial and residential projects as well as wireharness products for automotive manufacturers.

For the electrical lightning segment, the Group’s electrical lightning products are sold mainly to theNorth American market besides PRC domestic market. The Groups electrical lightning productsinclude induction lamps, electrical ballasts and lighting fixture products. The global greenmovement and the increasing acceptance of such lighting technology have positioned theCompany well to leverage on its strength in induction lamps.

Leveraging on its solid reputation and competencies, the Group’s auto wire harnessing segment iswell-placed to expand and capture value from this growing domestic mass market in China.

The other segment comprises of the ceramic heater division which produces ceramic heatingproducts.

3. SHARE CAPITAL

3.1 Number and Class of Shares

The Company has only one class of Shares, comprising ordinary shares. The Shares are quotedand listed on the Official List of the Mainboard of the SGX-ST.

As at the Latest Practicable Date, the issued and paid-up share capital of the Company isS$40,862,335 comprising 202,948,180 ordinary in the capital of the Company (excluding treasuryshares).

3.2 Rights of Shareholders in respect of capital, dividends and voting

The rights of Shareholders in respect of capital, dividends and voting are contained in theCompany’s Articles. For ease of reference, selected texts of the Articles relating to the rights ofShareholders in respect of capital, dividends and voting have been reproduced in Appendix III tothis Circular.

3.3 Number of Shares issued since the end of the last financial year

As at the Latest Practicable Date, there has been no issue of new Shares by the Company since31 December 2010, being the end of the last financial year.

3.4 Convertible Instruments

As at the Latest Practicable Date, there are no outstanding instruments convertible into, rights tosubscribe for, and options in respect of, securities being offered for or which carry voting rightsaffecting shares in the Company.


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4. SUMMARY OF FINANCIAL INFORMATION

4.1 Consolidated Income Statements

A summary of the audited consolidated income statements of the Group for FY2008, FY2009 andFY2010 is set out below:

Group 2010 2009 2008$’000 $’000 $’000

Continuing operations Re-presented* Re-presented*

Revenue 213,924 163,183 175,840Cost of sales (174,182) (131,920) (148,696)

Gross profit 39,742 31,263 27,144Other gains - (net) 1,923 3,273 1,596Expenses - Distribution and marketing (6,253) (4,985) (4,290)- Administrative (16,333) (13,318) (15,833)- Finance (260) (804) (1,835)Share of profit/(loss) of an associated company 51 235 (619)

Profit before income tax 18,870 15,664 6,163Income tax expense (3,780) (3,211) (2,559)

Profit from continuing operations 15,090 12,453 3,604Discontinued operations Loss from discontinued operations (565) (372) (505)

Total profit for the year 14,525 12,081 3,099

Other comprehensive income Translation differences relating to financial statements of foreign subsidiaries (4,204) (1,716) 4,479

Total comprehensive income 10,321 10,365 7,578

Profit attributable to:Equity holders of the Company 12,537 10,468 1,252Non-controlling interests 1,988 1,613 1,847

14,525 12,081 3,099

Total comprehensive income attributable to:Equity holders of the Company 9,260 9,264 4,622Non-controlling interests 1,061 1,101 2,956

10,321 10,365 7,578

This summary financial information should be read together with the audited consolidated financialstatements of the Group for the relevant years and related notes thereto, copies of which areavailable for inspection at Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place,#32-01 Singapore Land Tower, Singapore 048623, during normal business hours.


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4.2 Statements of Financial Position

A summary of the audited consolidated statements of financial position of the Group as at 31December 2009 and 31 December 2010 is set out below:

Group2010 2009$’000 $’000

(Restated)

ASSETS Current assets Cash and cash equivalents 14,267 15,869Trade and other receivables 42,322 41,406Inventories 29,633 28,207Other current assets 3,172 4,212

89,394 89,694

Non-current assetsInvestments in subsidiaries – –Investment in associated company 1,401 1,327Property, plant and equipment 41,573 42,158Land use rights 5,695 5,171Investment properties 7,299 7,478Intangible assets 1,529 1,578

57,497 57,712

Total assets 146,891 147,406

LIABILITIESCurrent liabilitiesTrade and other payables 38,935 34,895Bills payable 3,466 6,432Borrowings 10,923 19,186Current income tax liabilities 1,542 2,126Deferred tax liabilities 186 165

55,052 62,804

Non-current liabilityBorrowings 1,403 1,948

Total liabilities 56,455 64,752

NET ASSETS 90,436 82,654

EQUITYCapital and reserves attributable to equity holders of the CompanyShare capital 40,862 40,862Other reserves 1,379 4,656Statutory reserves 8,052 6,687Retained earnings 25,569 16,224

75,862 68,429Non-controlling interests 14,574 14,225

Total equity 90,436 82,654


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This summary financial information should be read together with the audited consolidated financialstatements of the Group for the relevant years and related notes thereto, copies of which areavailable for inspection at the registered office of the Company at Boardroom Corporate & AdvisoryServices Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 duringnormal business hours.

4.3 Significant Accounting Policies

As at the Latest Practicable Date, there are no significant accounting policies nor any points fromnotes of the accounts of the Group which are of major relevance for the interpretation of theaccounts of the Group referred to in this Circular.

4.4 Changes in Accounting Policies

As at the Latest Practicable Date, there is no change in the accounting policies of the Group whichwill cause the figures disclosed in this Appendix IV to be not comparable to a material extent.

5. MATERIAL CHANGES IN FINANCIAL POSITION

5.1 Financial Position

Save as disclosed in publicly available information on the Group (including but not limited toannouncements released by the Group in respect of its financial results) and the unaudited firstquarter financial statements ended 31 March 2011 (as announced on 10 May 2011), as at theLatest Practicable Date, there have been no material changes in the financial position of theCompany since 31 December 2010, being the date to which the Company’s last published auditedconsolidated financial statements were made up.

5.2 General

As at the Latest Practicable Date, there have been no material changes to the informationpreviously published by or on behalf of the Group since the Offer Announcement Date.

6. DISCLOSURE OF INTERESTS OF THE COMPANY AND THE DIRECTORS

6.1 Shareholdings

Save as disclosed in this Circular:

(a) As at the Latest Practicable Date, neither the Company nor its subsidiaries owns any sharesor other securities in the Offeror, whether directly or indirectly.

(b) Neither the Company nor its subsidiaries have dealt for value in the Offeror’s shares orconvertible securities during the period commencing six (6) months prior to the OfferAnnouncement Date and ending on the Latest Practicable Date.

(c) As at the Latest Practicable Date, none of the Directors has any direct or deemed interestsin the shares or other securities of the Offeror.

(d) None of the Directors has dealt for value in the Offeror’s shares or convertible securitiesduring the period commencing six months prior to the Offer Announcement Date and endingon the Latest Practicable Date.

(e) None of the Directors has any direct or indirect interest in the Shares as at the LatestPracticable Date.

(f) None of the Directors has dealt for value in the Shares during the period commencing sixmonths prior to the Offer Announcement Date, and ending on the Latest Practicable Date.


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6.2 Directors’ Service Contracts

There (i) are no service contracts between any Director or proposed director with the Company orany of its subsidiaries with more than 12 months to run, which the employing company cannot,within the next 12 months, terminate without payment of compensation; and (ii) were no servicecontracts entered into or amended between any of the Directors of proposed director and theCompany or any of its subsidiaries during the period between the start of the six monthsimmediately preceding the Offer Announcement Date and the Latest Practicable Date.

6.3 Arrangements Affecting Directors

(a) There are no payments or other benefits which will be made or given to any Director or anydirector of any corporation, which is by virtue of Section 6 of the Companies Act, deemed tobe related to the Company, as compensation for loss of office or otherwise in connectionwith the Offer.

(b) Save as disclosed in this Circular, other than the Consortium Irrevocable AcceptanceUndertakings, there are no agreements or arrangements made between any Director andany other person in connection with or conditional upon the outcome of the Offer.

(c) As at the Latest Practicable Date, none of the Directors has entered into any materialcontract with the Group in the period beginning three years before the Offer AnnouncementDate.

(d) Save as disclosed in this Circular, none of the Directors has any material personal interest,whether direct or indirect, in any material contract entered into by the Offeror.

7. DISCOSURE OF INTERESTS OF THE INDEPENDENT FINANCIAL ADVISER

Neither AmFraser nor any funds whose investments are managed by AmFraser on a discretionarybasis owns, controls or has agreed to acquire any (i) Shares, (ii) securities carrying voting rights inthe Company, or (iii) instruments convertible into or rights to subscribe for or options in respect of(i) or (ii) as at the Latest Practicable Date.

Neither AmFraser nor any funds whose investments are managed by AmFraser on a discretionarybasis owns, controls or has agreed to acquire any (i) Shares, (ii) securities carrying voting rights inthe Company, or (iii) instruments convertible into or rights to subscribe for or options in respect of(i) or (ii) during the period commencing six (6) months prior to the Offer Announcement Date andending on the Latest Practicable Date.

8. MATERIAL CONTRACTS WITH INTERESTED PERSONS

Save for the interested person transactions as disclosed in the Company’s 2010, 2009 and 2008annual report, neither the Company nor any of its subsidiaries has entered into any materialcontracts (other than those entered into in the ordinary course of business) with any interestedperson (as defined in the Note on Rule 23.12 of the Code) during the period commencing three (3)years prior to the Offer Announcement Date.


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9. MATERIAL LITIGATION

As at the Latest Practicable Date:

(a) neither the Company nor any of its subsidiaries is engaged in any material litigation orarbitration proceedings, as plaintiff or defendant, which might materially and adversely affectthe financial position of the Group; and

(b) the Directors are not aware of any litigation, claim or proceeding pending or threatenedagainst the Company or any of its subsidiaries or of any fact likely to give rise to anyproceeding which might materially and adversely affect the financial position of the Group.

10. GENERAL

10.1 No Restriction on Transfer of Shares

There is no restriction in the Memorandum and Articles of Association of the Company on the rightto transfer any Shares, which has the effect of requiring the holders of such Shares, beforetransferring them, to offer them for purchase to Shareholders or to any person.

10.2 Costs and Expenses

All expenses and costs incurred by the Company in relation to the Offer will be borne by theCompany.

10.3 Consent of IFA

AmFraser Securities Pte. Ltd. has given and has not withdrawn its written consent to the issue ofthis Circular with the inclusion of the IFA Letter, the letter from AmFraser Securities Pte. Ltd. inrelation to the Statement of Prospects in Appendix VIII to this Circular and all references to themand its name in the form and context in which they appear in this Circular.

10.4 Consent of LTC LLP

LTC LLP, the auditors appointed by the Company has given and has not withdrawn its writtenconsent to the issue of this Circular with the inclusion herein of the Report of the Auditors on theStatement of Prospects in Appendix VII to this Circular, and all references to its name in the formand context in which they appear in this Circular.

11. MARKET QUOTATION

The following table sets out the closing prices of the Shares on the SGX-ST as at the followingdates and the corresponding premia based on the Offer Price of S$0.55, as reproduced from theinformation as set out in paragraph 3 of Appendix 6 to the Offer Document.

Closing Price Premium (%) based on the Date (S$) Offer Price of S$0.55

30 November 2010 0.420 31.031 December 2010 0.515 6.831 January 2011 0.500 10.028 February 2011 0.490 12.231 March 2011 0.515 6.829 April 2011 0.530 3.83 May 2011 (the last Market Day immediately Preceding the Offer Announcement Date) 0.525 4.8

16 May 2011 (the Latest Practicable Date ofthe Offer Document) 0.550 –


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As stated in the Offer Document, during the period commencing 6 months up to and including 4May 2011 and ending on the Latest Practicable Date of the Offer Document:

(i) the highest closing price of the Shares on the SGX-ST, as reported by Bloomberg, wasS$0.550, which price was last transacted on 12 May 2011; and

(ii) the lowest closing price of the Shares on the SGX-ST, as reported by Bloomberg, wasS$0.400, which price was last transacted on 9 November 2010, 12 November 2010, 15November 2010, 18 November 2010, 19 November 2010, 23 November 2010, 24 November2010, and 26 November 2010 and the corresponding premia based on the Offer Price ofS$0.55, for this period was 37.5%.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of theCompany at 160 Paya Lebar Road, #08-03 Orion Industrial Building Singapore 409022 duringnormal business hours, for the period during which the Offer remains open for acceptance:

(a) the Memorandum & Articles of Association of the Company;

(b) the annual reports of the Company for FY2008, FY2009 and FY2010;

(c) the unaudited financial statements of the Group for the three months ended 31 March 2011(as announced by the Company on 10 May 2011);

(d) the letters of consent referred to in Section 10.3 and 10.4 of Appendix II of this Circularabove;

(e) the IFA Letter;

(f) the letter from the Auditors in relation to the Statement of Prospects; and

(g) the letter from the IFA in relation to the Statement of Prospects.


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The rights of Shareholders in respect of capital, voting and dividends are contained in the Articles ofAssociation of the Company, relevant provisions of which are set out below:

Rights of Shareholders in respect of capital

ISSUE OF SHARES

4. Subject to the Statutes, no shares may be issued by the Directors without the prior approval of theCompany in General Meeting but subject thereto and to Article 8, and to any special rightsattached to any shares for the time being issued, the Directors may allot or grant options over orotherwise dispose of the same to such persons on such terms and conditions and for suchconsideration and at such time and subject or not to the payment of any part of the amount thereofin cash as the Directors may think fit, and any shares may be issued with such preferential,deferred, qualified or special rights, privileges or conditions as the Directors may think fit, andpreference shares may be issued which are or at the option of the Company are liable to beredeemed, the terms and manner of redemption being determined by the Directors, Providedalways that:

(a) no shares shall be issued to transfer a controlling interest in the Company without the priorapproval of the members in a General Meeting;

(b) no shares shall be issued at a discount except in accordance with the Statutes;

(c) (subject to any direction to the contrary that may be given by the Company in a GeneralMeeting) any issue of shares for cash to members holding shares of any class shall beoffered to such members in proportion as nearly as may be to the number of shares of suchclass then held by them and the provisions of the second sentence of Article 8(a) with suchadaptations as are necessary shall apply; and

(d) the rights attaching to shares of a class other than ordinary shares shall be expressed in theresolution creating the same.

5. (a) In the event of preference shares being issued, the total nominal value of issued preferenceshares shall not at any time exceed the total nominal value of the issued ordinary sharesand preference shareholders shall have the same rights as ordinary shareholders as regardsreceiving of notices, reports and balance sheets and attending General Meetings of theCompany, and preference shareholders shall also have the right to vote at any meetingconvened for the purpose of reducing the capital or winding-up or sanctioning a sale of theundertaking of the Company or where the proposal to be submitted to the meeting directlyaffects their rights and privileges or when the dividend on the preference shares is morethan six months in arrear.

(b) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued.

VARIATION OF RIGHTS

6. (a) Whenever the share capital of the Company is divided into different classes of shares, thespecial rights attached to any class may, subject to the provisions of the Statutes, be variedor abrogated either with the consent in writing of the holders of three-quarters in nominalvalue of the issued shares of the class or with the sanction of a Special Resolution passedat a separate General Meeting of the holders of the shares of the class (but not otherwise)and may be so varied or abrogated either whilst the Company is a going concern or duringor in contemplation of a winding-up. To every such separate General Meeting, all the

APPENDIX III:RELEVANT EXCERPTS FROM THE COMPANY’S ARTICLES OF ASSOCIATION

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provisions of these presents relating to General Meetings of the Company and to theproceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall betwo persons at least holding or representing by proxy at least one-third in nominal value ofthe issued shares of the class and that any holder of shares of the class present in personor by proxy may demand a poll and that every such holder shall on a poll have one vote forevery share of the class held by him, Provided always that where the necessary majority forsuch a Special Resolution is not obtained at such General Meeting, consent in writing ifobtained from the holders of three-quarters in nominal value of the issued shares of theclass concerned within two months of such General Meeting shall be as valid and effectualas a Special Resolution carried at such General Meeting. The foregoing provisions of thisArticle shall apply to the variation or abrogation of the special rights attached to some onlyof the shares of any class as if each group of shares of the class differently treated formed aseparate class the special rights whereof are to be varied.

(b) The repayment of preference capital other than redeemable preference capital, or anyalteration of preference shareholders’ rights, may only be made pursuant to a SpecialResolution of the preference shareholders concerned Provided Always that where thenecessary majority for such a Special Resolution is not obtained at the General Meeting,consent in writing if obtained from the holders of three-fourths of the preference sharesconcerned within two months of the General Meeting, shall be as valid and effectual as aspecial resolution carried at the General Meeting.

(c) The special rights attached to any class of shares having preferential rights shall not, unlessotherwise expressly provided by the terms of issue thereof, be deemed to be varied by thecreation or issue of further shares ranking as regards participation in the profits or assets ofthe Company in some or all respects pari passu therewith but in no respect in prioritythereto.

ALTERATION OF SHARE CAPITAL

7. The Company may from time to time by Ordinary Resolution increase its capital by such sum to bedivided into shares of such amounts as the resolution shall prescribe.

8. (a) Subject to any direction to the contrary that may be given by the Company in a GeneralMeeting or except as permitted under the Singapore Exchange Securities Trading Limitedlisting rules, all new shares shall, before issue, be offered to such persons who as at thedate of the offer are entitled to receive notices from the Company of general meetings inproportion, as far as the circumstances admit, to the amount of the existing shares to whichthey are entitled. The offer shall be made by notice specifying the number of shares offered,and limiting a time within which the offer, if not accepted, will be deemed to be declined,and, after the expiration of that time, or on the receipt of an intimation from the person towhom the offer is made that he declines to accept the shares offered, the Directors maydispose of those shares in such manner as they think most beneficial to the Company. TheDirectors may likewise so dispose of any new shares which (by reason of the ratio which thenew shares bear to shares held by persons entitled to an offer of new shares) cannot, in theopinion of the Directors, be conveniently offered under this Article 8(a).

(b) Except so far as otherwise provided by the conditions of issue or by these presents, all newshares shall be subject to the provisions of the Statutes and of these presents with referenceto allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise.


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9. The Company may by Ordinary Resolution:

(a) consolidate and divide all or any of its share capital into shares of larger amount than itsexisting shares;

(b) cancel any shares which, at the date of the passing of the resolution, have not been taken oragreed to be taken, by any person and diminish the amount of its capital by the amount ofthe shares so cancelled;

(c) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by theMemorandum of Association (subject, nevertheless, to the provisions of the Statutes), andso that the resolution whereby any share is sub-divided may determine that, as between theholders of the shares resulting from such sub-division, one or more of the shares may, ascompared with the others, have any such preferred, deferred or other special rights, or besubject to any such restrictions, as the Company has power to attach to unissued or newshares; or

(d) subject to the provisions of the Statutes, convert any class of shares into any other class ofshares.

10. (a) The Company may reduce its share capital or any capital redemption reserve fund, sharepremium account or other undistributable reserve in any manner and with and subject to anyincident authorised and consent required by law.

(b) Subject to and in accordance with the provisions of the Act, the Company may authorise theDirectors in General Meeting to purchase or otherwise acquire ordinary shares issued by iton such terms as the Company may think fit and in the manner prescribed by the Act. Allshares purchased by the Company shall be cancelled. The amount of the Company’s issuedshare capital which is diminished on cancellation of the shares purchased shall betransferred to the Company’s capital redemption reserve.

Rights of Shareholders in respect of votes

VOTES OF MEMBERS

65. Subject and without prejudice to any special privileges or restrictions as to voting for the time beingattached to any special class of shares for the time being forming part of the capital of thecompany, each member entitled to vote may vote in person or by proxy. On a show of hands, everymember who is present in person or by proxy shall have one vote and on a poll, every memberwho is present in person or by proxy shall have one vote for every share which he holds orrepresents. For the purpose of determining the number of votes which a member, being aDepositor, or his proxy may cast at any General Meeting on a poll, the reference to shares held orrepresented shall, in relation to shares of that Depositor, be the number of shares entered againsthis name in the Depository Register as at forty-eight hours before the time of the relevant GeneralMeeting as certified by the Depository to the Company.

66. In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in personor by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for thispurpose, seniority shall be determined by the order in which the names stand in the Register ofMembers or (as the case may be) the Depository Register in respect of the share.


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67. Where in Singapore or elsewhere, a receiver or other person (by whatever name called) has beenappointed by any court claiming jurisdiction in that behalf to exercise powers with respect to theproperty or affairs of any member on the ground (however formulated) of mental disorder, theDirectors may in their absolute discretion, upon or subject to production of such evidence of theappointment as the Directors may require, permit such receiver or other person on behalf of suchmember to vote in person or by proxy at any General Meeting or to exercise any other rightconferred by membership in relation to meetings of the Company.

68. No member shall, unless the Directors otherwise determine, be entitled in respect of shares heldby him to vote at a General Meeting either personally or by proxy or to exercise any other rightconferred by membership in relation to meetings of the Company if any call or other sum presentlypayable by him to the Company in respect of such shares remains unpaid.

69. No objection shall be raised as to the admissibility of any vote except at the meeting or adjournedmeeting at which the vote objected to is or may be given or tendered and every vote not disallowedat such meeting shall be valid for all purposes. Any such objection shall be referred to thechairman of the meeting whose decision shall be final and conclusive.

70. On a poll, votes may be given personally or by proxy and a person entitled to more than one voteneed not use all his votes or cast all the votes he uses in the same way.

71. (a) A member may appoint not more than two proxies to attend and vote at the same GeneralMeeting Provided that if the member is a Depositor, the Company shall be entitled andbound:

(i) to reject any instrument of proxy lodged if the Depositor is not shown to have anyshares entered against his name in the Depository Register as at forty-eight hoursbefore the time of the relevant General Meeting as certified by the Depository to theCompany; and

(ii) to accept as the maximum number of votes which in aggregate the proxy or proxiesappointed by the Depositor is or are able to cast on a poll a number which is thenumber of shares entered against the name of that Depositor in the DepositoryRegister as at forty-eight hours before the time of the relevant General Meeting ascertified by the Depository to the Company, whether that number is greater or smallerthan the number specified in any instrument of proxy executed by or on behalf of thatDepositor.

(b) The Company shall be entitled and bound, in determining rights to vote and other matters inrespect of a completed instrument of proxy submitted to it, to have regard to the instructions(if any) given by and the notes (if any) set out in the instrument of proxy.

(c) In any case where a form of proxy appoints more than one proxy, the proportion of theshareholding concerned to be represented by each proxy shall be specified in the form ofproxy.

(d) A proxy need not be a member of the Company.

72. (a) An instrument appointing a proxy shall be in writing in any usual or common form or in anyother form which the Directors may approve and:

(i) in the case of an individual, shall be signed by the appointor or his attorney; and

(ii) in the case of a corporation, shall be either given under its common seal or signed onits behalf by an attorney or a duly authorised officer of the corporation.


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(b) The signature on such instrument need not be witnessed. Where an instrument appointing aproxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or aduly certified copy thereof must (failing previous registration with the Company) be lodgedwith the instrument of proxy pursuant to Article 73, failing which the instrument may betreated as invalid.

73. An instrument appointing a proxy must be left at such place or one of such places (if any) as maybe specified for that purpose in or by way of note to or in any document accompanying the noticeconvening the meeting (or, if no place is so specified, at the Office) not less than forty-eight hoursbefore the time appointed for the holding of the meeting or adjourned meeting or (in the case of apoll taken otherwise than at or on the same day as the meeting or adjourned meeting) for thetaking of the poll at which it is to be used, and in default shall not be treated as valid. Theinstrument shall, unless the contrary is stated thereon, be valid as well for any adjournment of themeeting as for the meeting to which it relates; Provided that an instrument of proxy relating to morethan one meeting (including any adjournment thereof) having once been so delivered for thepurposes of any meeting shall not be required again to be delivered for the purposes of anysubsequent meeting to which it relates.

74. An instrument appointing a proxy shall be deemed to include the right to demand or join indemanding a poll, to move any resolution or amendment thereto and to speak at the meeting.

75. A vote cast by proxy shall not be invalidated by the previous death or insanity of the principal or bythe revocation of the appointment of the proxy or of the authority under which the appointment wasmade Provided that no intimation in writing of such death, insanity or revocation shall have beenreceived by the Company at the Office at least one hour before the commencement of the meetingor adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as themeeting or adjourned meeting) the time appointed for the taking of the poll at which the vote iscast.

Rights of Shareholders in respect of dividends

DIVIDENDS

121. The Company may by Ordinary Resolution declare dividends but no such dividends shall exceedthe amount recommended by the Directors.

122. If and so far as in the opinion of the Directors the profits of the Company justify such payments, theDirectors may declare and pay the fixed dividends on any class of shares carrying a fixed dividendexpressed to be payable on fixed dates on the half-yearly or other dates prescribed for thepayment thereof and may also from time to time declare and pay interim dividends on shares ofany class of such amounts and on such dates and in respect of such periods as they think fit.

123. Unless and to the extent that the rights attached to any shares or the terms of issue thereofotherwise provide, all dividends shall (as regards any shares not fully paid throughout the period inrespect of which the dividend is paid) be apportioned and paid pro rata according to the amountspaid on the shares during any portion or portions of the period in respect of which the dividend ispaid. For the purposes of this Article, no amount paid on a share in advance of calls shall betreated as paid on the share.

124. No dividend shall be paid otherwise than out of profits available for distribution under the provisionsof the Statutes.


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125. No dividend or other moneys payable on or in respect of a share shall bear interest as against theCompany.

126. (a) The Directors may retain any dividend or other moneys payable on or in respect of a shareon which the Company has a lien and may apply the same in or towards satisfaction of thedebts, liabilities or engagements in respect of which the lien exists.

(b) The Directors may retain the dividends payable upon shares in respect of which any personis under the provisions as to the transmission of shares hereinbefore contained entitled tobecome a member, or which any person is under those provisions entitled to transfer, untilsuch person shall become a member in respect of such shares or shall transfer the same.

(c) The payment by the Directors of any unclaimed dividends or other moneys payable on or inrespect of a share into a separate account shall not constitute the Company a trustee inrespect thereof. All dividends unclaimed after being declared may be invested or otherwisemade use of by the Directors for the benefit of the Company and any dividend unclaimedafter a period of six (6) years from the date of declaration of such dividend may be forfeitedand if so shall revert to the Company but the Directors may at any time thereafter at theirabsolute discretion annul any such forfeiture and pay the dividend so forfeited to the personentitled thereto prior to the forfeiture.

127. The waiver in whole or in part of any dividend on any share by any document (whether or notunder seal) shall be effective only if such document is signed by the shareholder (or the personentitled to the share in consequence of the death or bankruptcy of the holder) and delivered to theCompany and if or to the extent that the same is accepted as such or acted upon by the Company.

128. The Company may upon the recommendation of the Directors by Ordinary Resolution directpayment of a dividend in whole or in part by the distribution of specific assets (and in particular ofpaid-up shares or debentures of any other company) and the Directors shall give effect to suchresolution. Where any difficulty arises in regard to such distribution, the Directors may settle thesame as they think expedient and in particular may issue fractional certificates, may fix the valuefor distribution of such specific assets or any part thereof, may determine that cash payments shallbe made to any members upon the footing of the value so fixed in order to adjust the rights of allparties and may vest any such specific assets in trustees as may seem expedient to the Directors.

129. (a) Whenever the Directors or the Company in General Meeting have resolved or proposed thata dividend (including an interim, final, special or other dividend) be paid or declared on theordinary share capital of the Company, the Directors may further resolve that membersentitled to such dividend be entitled to elect to receive an allotment of ordinary sharescredited as fully paid in lieu of cash in respect of the whole or such part of the dividend asthe Directors many think fit. In such case, the following provisions shall apply:

(i) the basis of any such allotment shall be determined by the Directors;

(ii) the Directors shall determine the manner in which members shall be entitled to electto receive an allotment of ordinary shares credited as fully paid in lieu of cash inrespect of the whole or such part of any dividend in respect of which the Directorsshall have passed such a resolution as aforesaid, and the Directors may make sucharrangements as to the giving of notice to members, providing for forms of election forcompletion by members (whether in respect of a particular dividend or dividends orgenerally), determining the procedure for making such elections or revoking the sameand the place at which and the latest date and time by which any forms of election orother documents by which elections are made or revoked must be lodged, andotherwise make all such arrangements and do all such things, as the Directorsconsider necessary or expedient in connection with the provisions of this Article;


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(iii) the right of election may be exercised in respect of the whole of that portion of thedividend in respect of which the right of election has been accorded provided that theDirectors may determine, either generally or in any specific case, that such right shallbe exercisable in respect of the whole or any part of that portion;

(iv) the dividend (or that part of the dividend in respect of which a right of election hasbeen accorded) shall not be payable in cash on ordinary shares in respect whereofthe share election has been duly exercised (the “elected ordinary shares”) and in lieuand in satisfaction thereof ordinary shares shall be allotted and credited as fully paidto the holders of the elected ordinary shares on the basis of allotment determined asaforesaid and for such purpose and notwithstanding the provisions of Article 133, theDirectors shall capitalise and apply the amount standing to the credit of theCompany’s reserve accounts as the Directors may determine, such sum as may berequired to pay up in full (to the nominal value thereof) the appropriate number ofordinary shares for allotment and distribution to and among the holders of the electedordinary shares on such basis.

(b) (i) The ordinary shares allotted pursuant to the provisions of paragraph (a) of this Articleshall rank pari passu in all respects with the ordinary shares then in issue save onlyas regards participation in the dividend which is the subject of the election referred toabove (including the right to make the election referred to above) or any otherdistributions, bonuses or rights paid, made, declared or announced prior to orcontemporaneous with the payment or declaration of the dividend which is the subjectof the election referred to above, unless the Directors shall otherwise specify.

(ii) The Directors may do all acts and things considered necessary or expedient to giveeffect to any capitalisation pursuant to the provisions of paragraph (a) of this Article,with full power to make such provisions as they think fit in the case of sharesbecoming distributable in fractions (including, notwithstanding any provision to thecontrary in these Articles, provisions whereby, in whole or in part, fractionalentitlements are disregarded or rounded up or down).

(c) The Directors may, on any occasion when they resolve as provided in paragraph (a) of thisArticle, determine that rights of election under that paragraph shall not be made available tothe persons who are registered as holders of ordinary shares in the Register or (as the casemaybe) in the Depository Register, or in respect of ordinary shares the transfer of which isregistered, after such date as the Directors may fix subject to such exceptions as theDirectors may think fit, and in such event the provisions of this Article shall be read andconstrued subject to such determination.

(d) The Directors may, on any occasion when they resolve as provided in paragraph (a) of thisArticle, further determine that no allotment of shares or rights of election for shares underthat paragraph shall be made available or made to members whose registered addressesentered in the Register or (as the case may be) the Depository Register is outsideSingapore or to such other members or class of members as the Directors may in their solediscretion decide and in such event the only entitlement of the members aforesaid shall beto receive in cash the relevant dividend resolved or proposed to be paid or declared.

(e) Notwithstanding the foregoing provisions of this Article, if at any time after the Directors’resolution to apply the provisions of paragraph (a) of this Article in relation to any dividendbut prior to the allotment of ordinary shares pursuant thereto, the Directors shall considerthat by reason of any event or circumstance (whether arising before or after such resolution)or by reason of any matter whatsoever it is no longer expedient or appropriate to implementthat proposal, the Directors may at their absolute discretion and without assigning anyreason therefor, cancel the proposed application of paragraph (a) of this Article.


63

130. Any dividend or other moneys payable in cash on or in respect of a share may be paid by chequeor warrant sent through the post to the registered address appearing in the Register of Members or(as the case may be) the Depository Register of a member or person entitled thereto (or, if two ormore persons are registered in the Register of Members or (as the case may be) entered in theDepository Register as joint holders of the share or are entitled thereto in consequence of thedeath or bankruptcy of the holder, to any one of such persons) or to such person at such addressas such member or person or persons may by writing direct. Every such cheque or warrant shallbe made payable to the order of the person to whom it is sent or to such person as the holder orjoint holders or person or persons entitled to the share in consequence of the death or bankruptcyof the holder may direct and payment of the cheque or warrant by the banker upon whom it isdrawn shall be a good discharge to the Company. Every such cheque or warrant shall be sent atthe risk of the person entitled to the money represented thereby. Notwithstanding the foregoingprovisions of this Article and the provisions of Article 132, the payment by the Company to theDepository of any dividend payable to a Depositor shall, to the extent of the payment made to theDepository, discharge the Company from any liability to the Depositor in respect of that payment.

131. If two or more persons are registered in the Register of Members or (as the case may be) theDepository Register as joint holders of any share, or are entitled jointly to a share in consequenceof the death or bankruptcy of the holder, any one of them may give effectual receipts for anydividend or other moneys payable or property distributable on or in respect of the share.

132. Any resolution declaring a dividend on shares of any class, whether a resolution of the Company ina General Meeting or a resolution of the Directors, may specify that the same shall be payable tothe persons registered as the holders of such shares in the Register of Members or (as the casemay be) the Depository Register at the close of business on a particular date and thereupon thedividend shall be payable to them in accordance with their respective holdings so registered, butwithout prejudice to the rights inter se in respect of such dividend of transferors and transferees ofany such shares.


64

APPENDIX IV:AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2010

65

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

The accounting policies and explanatory notes form an integral part of the consolidated financial statements.

Group GroupNoteNote 20102010 2009

$’000$’000 $’000

Re-presented*

Continuing operationsContinuing operationsRevenue 5 213,924213,924 163,183

Cost of sales (174,182)(174,182) (131,920)

Gross profit 39,74239,742 31,263

Other income - net 5 1,9231,923 3,273

Expenses

- Distribution and marketing (6,253)(6,253) (4,985)

- Administrative (16,333)(16,333) (13,318)

- Finance 7 (260)(260) (804)

Share of profit of an associated company 17 5151 235

Profit before income tax 18,87018,870 15,664

Income tax expense 9 (3,780)(3,780) (3,211)

Profit from continuing operationsProfit from continuing operations 15,09015,090 12,453

Discontinued operationsDiscontinued operationsLoss from discontinued operations 10 (565)(565) (372)

Total profit for the yearTotal profit for the year 14,52514,525 12,081

Other comprehensive incomeOther comprehensive incomeCurrency translation differences arising from consolidation (4,204) (4,204) (1,716)

Total comprehensive incomeTotal comprehensive income 10,32110,321 10,365

Profit attributable to:Profit attributable to:Equity holders of the Company 12,53712,537 10,468

Non-controlling interests 1,9881,988 1,613

14,52514,525 12,081

Total comprehensive income attributable to:Total comprehensive income attributable to:Equity holders of the Company 9,2609,260 9,264

Non-controlling interests 1,061 1,101

10,32110,321 10,365

Earnings per share for net profit attributable to equity holders of theEarnings per share for net profit attributable to equity holders of theCompany Company (expressed in cents per share)

– Basic and diluted 11 6.186.18 5.16

Basis and diluted profit/(loss) per share

Continuing operations (cents) 11 6.46 5.34

Discontinued operations (cents) 11 (0.28)(0.28) (0.18)

* See discontinued operations – Note 10

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2010


GroupGroup CompanyCompanyNote 20102010 2009 2008 20102010 2009

$’000 $’000 $’000 $’000$’000 $’000

(Restated) (Restated)

ASSETSASSETS Current assetsCurrent assetsCash and cash equivalents 12 14,26714,267 15,869 11,653 36 1

Trade and other receivables 13 42,32242,322 41,406 29,310 2,9902,990 6,059

Inventories 14 29,63329,633 28,207 30,753 – –

Other current assets 15 3,1723,172 4,212 1,992 6 7

89,39489,394 89,694 73,708 3,0323,032 6,067

Non-current assetsNon-current assetsInvestments in subsidiaries 16 – – – 43,88743,887 46,193

Investment in associated company 17 1,4011,401 1,327 1,248 1,1251,125 1,125

Property, plant and equipment 18 41,57341,573 42,158 42,174 1,2771,277 1,364

Land use rights 19 5,6955,695 5,171 5,385 – –

Investment properties 20 7,2997,299 7,478 7,682 – –

Intangible assets 21 1,529 1,578 758 – –

57,49757,497 57,712 57,247 46,28946,289 48,682

Total assetsTotal assets 146,891146,891 147,406 130,955 49,32149,321 54,749

LIABILITIESLIABILITIESCurrent liabilitiesCurrent liabilitiesTrade and other payables 22 38,93538,935 34,895 25,082 493493 382

Bills payable 3,4663,466 6,432 3,905 – –

Borrowings 23 10,92310,923 19,186 23,944 3,4813,481 3,387

Current income tax liabilities 9 1,542 2,126 1,715 – –

Deferred tax liabilities 25 186186 165 169 – –

55,05255,052 62,804 54,815 3,9743,974 3,769

Non-current liabilityNon-current liabilityBorrowings 23 1,403 1,948 1,457 1,4031,403 1,948

Total liabilitiesTotal liabilities 56,45556,455 64,752 56,272 5,3775,377 5,717

NET ASSETSNET ASSETS 90,43690,436 82,654 74,683 43,94443,944 49,032

EQUITYEQUITYCapital and reserves attributableCapital and reserves attributable

to equity holders of theto equity holders of theCompanyCompany

Share capital 26 40,86240,862 40,862 40,862 40,86240,862 40,862

Other reserves 27 1,3791,379 4,656 5,860 – –

Statutory reserves 28 8,0528,052 6,687 4,572 – –

Retained earnings 25,56925,569 16,224 7,871 3,0823,082 8,170

75,86275,862 68,429 59,165 43,94443,944 49,032

Non-controlling interestsNon-controlling interests 14,57414,574 14,225 15,518 – –

Total equityTotal equity 90,43690,436 82,654 74,683 43,94443,944 49,032


66

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


NoteNote

Attributable to equity holders of the CompanyAttributable to equity holders of the Company Non-Non-controllingcontrollinginterestsinterests

TotalTotalequityequity

ShareSharecapitalcapital

OtherOtherreservesreserves

StatutoryStatutoryreservesreserves

RetainedRetainedearningsearnings TotalTotal

$’000 $’000 $’000 $’000 $’000 $’000 $’000

GroupBalance at 1 January 2010Balance at 1 January 2010 40,86240,862 4,6564,656 6,6876,687 16,22416,224 68,42968,429 14,22514,225 82,65482,654Total comprehensive income for

the year –– (3,277)(3,277) –– 12,53712,537 9,2609,260 1,061 10,32110,321Transfer from retained earnings to

statutory reserves – –– 1,3651,365 (1,365)(1,365) –– – –Dividends paid 29 – – –– (1,827)(1,827) (1,827)(1,827) (712)(712) (2,539)(2,539)Balance at 31 December 2010Balance at 31 December 2010 40,86240,862 1,3791,379 8,0528,052 25,56925,569 75,86275,862 14,57414,574 90,43690,436

Balance at 1 January 2009 40,862 5,860 4,572 7,871 59,165 15,518 74,683

Total comprehensive income for

the year (1,204) – 10,468 9,264 1,101 10,365

Transfer from retained earnings to

statutory reserves – – 2,115 (2,115) – – –

Acquisition of additional interests

in a subsidiary – – – – – (1,412) (1,412)

Capital contribution from non-

controlling interests of a newly

incorporated subsidiary – – – – – 411 411

Dividends paid 29 – – – – – (1,393) (1,393)

Balance at 31 December 2009 40,862 4,656 6,687 16,224 68,429 14,225 82,654


67

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


GroupGroupNote 20102010 2009

$’000 $’000

Cash flows from operating activitiesCash flows from operating activitiesTotal profit 14,525 12,081

Adjustments for:

Income tax expense 3,7803,780 3,211

Depreciation of property, plant and equipment 5,5795,579 5,689

Amortisation of land use rights 84 85

Amortisation of intangible assets 100 82

Impairment loss on property, plant and equipment 1717 –

Interest expense 667667 1,122

Interest income (168) (304)

Fair value (gain)/loss on investment properties (184)(184) 15

Loss/(gain) on disposal of property, plant and equipment 1111 (7)

Share of profit of an associated company (51)(51) (235)

Unrealised currency translation losses (2,123)(2,123) (494)

22,23722,237 21,245

Change in working capital, net of effects from acquisition of subsidiary

- inventories (1,017)(1,017) 2,546

- trade and other receivables (659)(659) (12,096)

- other current assets 1,450 (2,220)

- trade and other payables 2,6802,680 9,813

Cash generated from operations 24,69124,691 19,288

Interest received 168168 304

Interest paid (667) (1,122)

Income tax paid (4,245)(4,245) (2,742)

Net cash generated from operating activitiesNet cash generated from operating activities 19,94719,947 15,728

Cash flows from investing activitiesCash flows from investing activitiesAcquisition of additional interests in a subsidiary – (2,235)

Capital contribution from non-controlling interests of a newly incorporated

subsidiary – 411

Disposal of property, plant and equipment 205205 129

Additions to property, plant and equipment (5,304)(5,304) (6,840)

Additions to land use rights (877)(877) –

Additions of intangible assets (127)(127) (124)

Acquisition of a subsidiary, net of cash acquired 35 (a) (1,595)(1,595) –

Net cash used in investing activitiesNet cash used in investing activities (7,698)(7,698) (8,659)

Cash flows from financing activitiesCash flows from fi nancing activitiesProceeds from borrowings 9,6739,673 27,847

(Repayment)/additions of bills payable (2,966)(2,966) 2,527

Repayment of borrowings (17,818)(17,818) (31,178)

Bank deposits pledged with bank 4,9924,992 (4,992)

Dividends paid to equity holders of the Company (1,827)(1,827) –

Dividends paid to non-controlling interests (712)(712) (1,393)

Net cash used in financing activitiesNet cash used in fi nancing activities (8,658)(8,658) (7,189)

Net increase/(decrease) in cash and cash equivalentsNet increase/(decrease) in cash and cash equivalents 3,591 (120)

Effects of currency translation changes on cash and cash equivalents (519)(519) (287)

Cash and cash equivalents at beginning of the financial year 10,84810,848 11,255

Cash and cash equivalents at end of the financial yearCash and cash equivalents at end of the fi nancial year 12 13,92013,920 10,848


68

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General

JK Yaming International Holdings Ltd (the “Company”) is listed on the Singapore Exchange and incorporated

and domiciled in Singapore. The address of its registered office is 160 Paya Lebar Road, #08-03 Orion Industrial

Building, Singapore 409022.

The principal activity of the Company is that of an investment holding company. The principal activities of the

Company’s subsidiaries and an associated company are set out in Notes 16 and 17 to the financial statements

respectively.

2. Basis of preparation and summary of significant accounting policies

(i) Basis of preparation

2.1 Basis of preparation

The financial statements have been prepared in accordance with Singapore Financial Reporting

Standards (“FRS”). The financial statements are expressed in Singapore Dollars and have been

prepared under the historical cost convention, except as disclosed in the accounting policies

below.

The preparation of financial statements in conformity with FRS requires management to exercise its

judgement in the process of applying the Group’s accounting policies. It also requires the use of

certain accounting estimates and assumptions. The areas involving a higher degree of judgement

or complexity, or areas where assumptions and estimates are significant to the financial statements

are disclosed in Note 4.

(ii) Summary of significant accounting policies

2.2 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods

in the ordinary course of the Group’s activities. Sales are presented net of value-added tax, rebates

and discounts, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably

measured, when it is probable that the collectability of the related receivables is reasonably

assured and when the specific criteria for each of the Group’s activities are met as follows:

(a) Sale of goods

Revenue from the sale of goods is recognised when a Group entity has delivered the

products to the customer, the customer has accepted the products and collectibility of the

related recoverable is reasonably assured.

(b) Interest income

Interest income is recognised using the effective interest method.

(c) Dividend income

Dividend income is recognised when the right to receive payment is established.


69


2. Basis of preparation and summary of significant accounting policies (cont’d)

(ii) Summary of significant accounting policies (cont’d)

2.2 Revenue recognition (cont’d)

(d) Rental income

Rental income from operating leases on investment properties is recognised on a straight-

line basis over the lease term.

(e) Subsidy income

Subsidy income from the government is recognised at fair value where there is reasonable

assurance that the subsidy will be received and all attaching conditions will be complied

with.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has

power to govern the financial and operating policies so as to obtain benefits from

its activities, generally accompanied by a shareholding giving rise to a majority of

the voting rights. The existence and effect of potential voting rights that are currently

exercisable or convertible are considered when assessing whether the Group

controls another entity. Subsidiaries are consolidated from the date on which control

is transferred to the Group. They are de-consolidated from the date on which control

ceases.

In preparing the consolidated financial statements, transactions, balances and

unrealised gains on transactions between group entities are eliminated. Unrealised

losses are also eliminated but are considered an impairment indicator of the asset

transferred. Accounting policies of subsidiaries have been changed where necessary

to ensure consistency with the policies adopted by the Group.

Non-controlling interests are that part of the net results of operations and of net

assets of a subsidiary attributable to the interests which are not owned directly or

indirectly by the equity holders of the Company. They are shown separately in the

consolidated statement of comprehensive income, statement of changes in equity

and statement of financial position. Total comprehensive income is attributed to the

non-controlling interests based on their respective interests in a subsidiary, even if

this results in the non-controlling interests having a deficit balance.

(ii) Acquisition of businesses

The acquisition method of accounting is used to account for business combinations

by the Group.

The consideration transferred for the acquisition of a subsidiary comprises the fair

value of the assets transferred, the liabilities incurred and the equity interests issued

by the Group. The consideration transferred also includes the fair value of any

contingent consideration arrangement and the fair value of any pre-existing equity

interest in the subsidiary.


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2.3 Group accounting (cont’d)

(a) Subsidiaries (cont’d)

(ii) Acquisition of businesses (cont’d)

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in

a business combination are, with limited exceptions, measured initially at their fair

values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling

interest in the acquiree at the date of acquisition either at fair value or at the non-

controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling

interest in the acquiree and the acquisition-date fair value of any previous equity

interest in the acquiree over the fair value of the net identifiable assets acquired is

recorded as goodwill. Please refer to the paragraph “Intangible assets - Goodwill” for

the subsequent accounting policy on goodwill.

(iii) Disposals of subsidiaries or businesses

When a change in the Company’s ownership interest in a subsidiary results in a loss

of control over the subsidiary, the assets and liabilities of the subsidiary including any

goodwill are derecognised. Amounts recognised in other comprehensive income in

respect of that entity are also reclassified to profit or loss or transferred directly to

retained earnings if required by a specific Standard.

Any retained interest in the entity is remeasured at fair value. The difference between

the carrying amount of the retained investment at the date when control is lost and

its fair value is recognised in profit or loss.

Please refer to Note 2.8 for the accounting policy on investments in subsidiaries in

the separate financial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss

of control over the subsidiary are accounted for as transactions with equity owners of the

Group. Any difference between the change in the carrying amounts of the non-controlling

interest and the fair value of the consideration paid or received is recognised in a separate

reserve within equity attributable to the equity holders of the Company.

(c) Associated companies

Associated companies are entities over which the Group has significant influence, but not

control, and generally accompanied by a shareholding giving rise to between and including

20% and 50% of the voting rights. Investments in associated companies are accounted

for in the consolidated financial statements using the equity method of accounting less

impairment losses, if any.


71




2.3 Group accounting (cont’d)

(c) Associated companies (cont’d)

Investments in associated companies are initially recognised at cost. The cost of an

acquisition is measured at the fair value of the assets given, equity instruments issued or

liabilities incurred or assumed at the date of exchange, plus costs directly attributable to

the acquisition. Goodwill on associated companies represents the excess of the cost of

acquisition of the associate over the Group’s share of the fair value of the identifiable net

assets of the associate and is included in the carrying amount of the investments.

In applying the equity method of accounting, the Group’s share of its associated

companies’ post-acquisition profits or losses are recognised in profit or loss and its share

of post-acquisition other comprehensive income is recognised in other comprehensive

income. These post-acquisition movements and distributions received from the associated

companies are adjusted against the carrying amount of the investment. When the Group’s

share of losses in an associated company equals or exceeds its interest in the associated

company, including any other unsecured non-current receivables, the Group does not

recognise further losses, unless it has obligations or has made payments on behalf of the

associated company.

Unrealised gains on transactions between the Group and its associated companies are

eliminated to the extent of the Group’s interest in the associated companies. Unrealised

losses are also eliminated unless the transaction provides evidence of an impairment of the

asset transferred. The accounting policies of associated companies have been changed

where necessary to ensure consistency with the accounting policies adopted by the Group.

Gains and losses arising from partial disposals or dilutions in investments in associated

companies are recognised in profit or loss.

Investments in associated companies are derecognised when the Group loses significant

influence. Any retained interest in the entity is remeasured at its fair value. The difference

between the carrying amount of the retained investment at the date when significant

influence is lost and its fair value is recognised in profit or loss.

Please refer to Note 2.8 for the accounting policy on investments in associated companies

in the separate financial statements of the Company.

2.4 Property, plant and equipment

(a) Measurement

All property, plant and equipment are initially recognised at cost and subsequently carried

at cost less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment initially recognised includes its

purchase price and any cost that is directly attributable to bringing the asset to the location

and condition necessary for it to be capable of operating in the manner intended by

management.


72




2.4 Property, plant and equipment (cont’d)

(b) Depreciation

Depreciation is calculated using a straight line method to allocate their depreciable amounts

over their estimated useful lives. The estimated useful lives are as follows:

Useful lives

Freehold building 50 years

Leasehold buildings 20 years

Plant and equipment 5 -10 years

Motor vehicles 5 years

Office equipment 3 to 10 years

The residual values, estimated useful lives and depreciation method of property, plant and

equipment are reviewed, and adjusted as appropriate, at each financial reporting date. The

effects at any revision are recognised in profit or loss when the changes arise.

Fully depreciated assets still in use are retained in the financial statements.

(c) Construction in progress

Construction in progress represents costs incurred in the construction of property, plant

and equipment. Cost comprises direct costs of construction incurred during the period of

construction, installation and testing.

Construction in progress is transferred to property, plant and equipment when it is ready for

its intended use. No depreciation is effected on construction in progress until the relevant

assets are completed and are ready for its intended use or put into use.

(d) Subsequent Expenditure

Subsequent expenditure relating to property, plant and equipment that has already been

recognised is added to the carrying amount of the asset only when it is probable that future

economic benefits associated with the item will flow to the Group and the cost of the item

can be measured reliably. All other repair and maintenance expenses are recognised in

profit or loss when incurred.

(e) Disposal

On disposal of an item of property, plant and equipment, the difference between the net

disposal proceeds and its carrying amount is recognised in profit or loss.

2.5 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are

measured at cost less accumulated amortisation and accumulated impairment losses. The land

use rights are amortised over the lease term of 50 years.


73




2.6 Investment properties

Investment properties of the Group are held for long-term rental yields and capital appreciation

and are not occupied by the Group. Investment properties are initially recognised at cost, plus

transaction costs.

Subsequently, investment properties are stated at fair value based on annual valuations by

independent professional valuers on the basis of open market value. Changes in fair values are

recognised in profit or loss.

Investment properties are subject to renovations or improvements at regular intervals. The cost

of major renovations and improvements is capitalised and the carrying amounts of the replaced

components are recognised in profit or loss. The cost of maintenance, repairs and minor

improvements is recognised in profit or loss when incurred.

On the disposal of an investment property, the difference between the disposal proceeds and the

carrying amount of the asset is recognised in profit or loss.

2.7 Intangible assets

(a) Goodwill on acquisitions

Goodwill on acquisitions of subsidiaries on or after 1 January 2010 represents the excess

of the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair

value of the net identifiable assets acquired.

Goodwill on acquisition of subsidiaries prior to 1 January 2010 and on acquisition of

associated companies represents the excess of the cost of the acquisition over the fair value

of the Group’s share of the net identifiable assets acquired.

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost

less accumulated impairment losses.

Goodwill on associated companies is included in the carrying amount of the investments.

Gains and losses on the disposal of subsidiaries, and associated companies include the

carrying amount of goodwill relating to the entity sold, except for goodwill arising from

acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained earnings

in the year of acquisition and not recognised in profit or loss on disposal.

(b) Patent rights

This represents costs incurred to obtain patent rights. They are stated at cost less

accumulated amortisation and accumulated impairment losses.

Amortisation is calculated using the straight-line method to allocate the cost of patent rights

over their estimated useful lives of 5 to 10 years.

The amortisation period and amortisation method of intangible assets other than goodwill

are reviewed at least at each financial reporting date. The effects of any revision are

recognised in the profit or loss when the changes arise.


74




2.8 Investments in subsidiaries and associated companies

Investments in subsidiaries and associated companies are stated at cost less accumulated

impairment losses in the Company’s statement of financial position.

On disposal of investments in subsidiaries and associated companies, the difference between

disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.9 Impairment of non – financial assets

(a) Goodwill

Goodwill recognised separately as an intangible asset is tested for impairment annually and

whenever there is indication that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the

Group’s cash-generating-units (“CGU”) expected to benefit from synergies arising from the

business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the

goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is

the higher of the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated first to reduce the carrying amount of

goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the

basis of the carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised as an expense and is not reversed in a

subsequent period.

(b) Intangible assets, property, plant and equipment, investments in subsidiaries and associated

companies

Intangible assets, property, plant and equipment and investments in subsidiaries and

associated companies are tested for impairment whenever there is any objective evidence

or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair

value less cost to sell and value-in-use) is determined on an individual asset basis unless

the asset does not generate cash flows that are largely independent of those from other

assets. If this is the case, the recoverable amount is determined for the CGU to which the

asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying

amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an

impairment loss in profit or loss.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has

been a change in the estimates used to determine the assets’ recoverable amount since the

last impairment loss was recognised. The carrying amount of an asset other than goodwill

is increased to its revised recoverable amount, provided that this amount does not exceed

the carrying amount that would have been determined (net of any accumulated amortisation

or depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss.


75




2.10 Financial assets

(a) Classification

The Group classifies its financial assets as loans and receivables. The classification

depends on the purpose for which the assets were acquired. Management determines the

classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They are presented as current assets,

except for those maturing later than 12 months after the end of the reporting period which

are presented as non-current assets. Loans and receivables are presented as “trade and

other receivables”, “other current assets” and “cash and cash equivalents” on the statement

of financial position.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised and derecognised on

trade-date – the date on which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial

assets have expired or have been transferred and the Group has transferred substantially all

risks and rewards of ownership. On disposal of a financial asset, the difference between the

carrying amount and the sale proceeds is recognised in profit or loss.

(c) Initial measurement

Loans and receivables are initially recognised at fair value plus transaction costs.

(d) Subsequent measurement

Loans and receivables are subsequently carried at amortised cost using the effective

interest method.

(e) Impairment of financial assets

The Group assesses at each financial reporting date whether there is objective evidence

that a financial asset or a group of financial assets is impaired and recognises an allowance

for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy,

and default or significant delay in payments are objective evidence that these financial

assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance

account which is calculated as the difference between the carrying amount and the present

value of estimated future cash flows, discounted at the original effective interest rate. When

the asset becomes uncollectible, it is written off against the allowance account. Subsequent

recoveries of amounts previously written off are recognised against the same line item in

profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a subsequent

period when the amount of impairment loss decreases and the related decrease can be

objectively measured. The carrying amount of the asset previously impaired is increased

to the extent that the new carrying amount does not exceed the amortised cost, had no

impairment been recognised in prior periods.


76




2.11 Research expense

Research expense is recognised as an expense as and when incurred.

2.12 Fair value estimation of financial assets and liabilities

The fair values of financial instruments that are not traded in an active market are determined

by using valuation techniques. The Group uses a variety of methods and makes assumptions

that are based on market conditions existing at each financial reporting date. Where appropriate,

quoted market prices or dealer quotes for similar instruments are used. Valuation techniques,

such as discounted cash flow analyses, are also used to determine the fair values of the financial

instruments.

The fair values of currency forwards are determined using actively quoted forward exchange rates.

The fair values of current financial assets and liabilities carried at amortised cost approximate their

carrying amounts.

2.13 Borrowings and bills payable

Borrowings and bills payable are presented as current liabilities unless the Group has an

unconditional right to defer settlement for at least 12 months after the end of the reporting period.

Borrowings and bills payable are recognised initially at fair value (net of transaction costs incurred)

and subsequently carried at amortised cost. Any difference between proceeds (net of transaction

costs) and the redemption value is recognised in profit or loss over the period of the borrowings

using the effective interest method.

2.14 Trade and other payables

Trade and other payables are initially measured at fair value, and subsequently carried at amortised

cost using the effective interest method.

2.15 Borrowing costs

Borrowing costs are recognised using the effective interest method.

2.16 Leases

When the Group is the lessee:

The Group leases certain property, plant and equipment under finance and operating leases from

non related parties.

Finance leases

Leases where the Group assumes substantially the risks and rewards incidental to ownership of

the leased assets are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance

leases are recognised on the statement of financial position as property, plant and equipment and

borrowings respectively, at the inception of the leases based on the lower of the fair value of the

leased assets and the present value of the minimum lease payments.


77




2.16 Leases (cont’d)

Each lease payment is apportioned between the finance expense and the reduction of the

outstanding lease liability. The finance expense is recognised in profit or loss and allocated to

each period during the lease term so as to achieve a constant periodic rate of interest on the

remaining balance of the finance lease liability.

Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained

by the lessor are classified as operating leases. Payments made under operating leases (net of

any incentives received from the lessor) are taken to profit or loss on a straight-line basis over the

period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required

to be made to the lessor by way of penalty is recognised as an expense in the period in which

termination takes place.

When the Group is the lessor:

Operating leases

Leases of investment properties where the Group retains substantially all risks and rewards

incidental to ownership are classified as operating leases. Rental income from operating leases

(net of any incentives given to the lessees) is recognised in profit or loss on a straight-line basis

over the lease term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added

to the carrying amount of the leased assets and recognised as an expense in profit or loss over

the lease term on the same basis as the lease income.

Contingent rents are recognised as income in profit or loss when earned.

2.17 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined on a

weighted average basis. The cost of finished goods and work in progress comprises raw materials,

direct labour, other direct costs and related production overheads (based on normal operating

capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the

ordinary course of business, less the costs of completion and selling expenses.

Allowance is made for deteriorated, damaged, obsolete and slow moving stocks.

2.18 Income taxes

Current income tax for current and prior periods is recognised at the amounts expected to be

paid to or recovered from the tax authorities, using the tax rates and tax laws that have been

enacted or substantially enacted by the end of the reporting period.

Deferred income tax is recognised for all temporary differences arising between the tax bases

of assets and liabilities and their carrying amounts in the financial statements except when the

deferred income tax arises from the initial recognition of goodwill or an asset or liability in a

transaction that is not a business combination and affects neither accounting nor taxable profit or

loss at the time of the transaction.


78




2.18 Income taxes (cont’d)

A deferred income tax liability is recognised on temporary differences arising on investments in

subsidiaries and associated companies, except where the Group is able to control the timing of the

reversal of the temporary difference and it is probable that the temporary difference will not reverse

in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit

will be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is

realised or the deferred income tax liability is settled, based on tax rates and tax laws that

have been enacted or substantially enacted by the end of the reporting period; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects,

at the end of the reporting period, to recover or settle the carrying amounts of its assets

and liabilities.

Current and deferred income taxes are recognised as income or expense in profit or loss, except

to the extent that the tax arises from a business combination or a transaction which is recognised

directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on

acquisition.

2.19 Provisions

Provisions for warranty and legal claims are recognised when the Group has a present legal

or constructive obligation as a result of past events, it is more likely than not that an outflow of

resources will be required to settle the obligation and the amount has been reliably estimated.

Provisions are not recognised for future operating losses.

The Group recognises the estimated liability to repair or replace products still under warranty at the

end of the reporting period. This provision is calculated based on historical experience of the level

of repairs and replacements.

Other provisions are measured at the present value of the expenditure expected to be required

to settle the obligation using a pre-tax discount rate that reflects the current market assessment

of the time value of money and the risks specific to the obligation. The increase in the provision

due to the passage of time is recognised in the statement of comprehensive income as finance

expense.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in

profit or loss when the changes arise.

2.20 Employee compensation

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an

asset.

Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual

is made for the estimated liability for annual leave and long-service leave as a result of services

rendered by employees up to the end of the reporting period.


79




2.20 Employee compensation (cont’d)

Defined contribution plan

Defined contribution plans are post-employment benefit plans under which the Group pays fixed

contributions into separate entities such as Central Provident Fund (“CPF”) and social security

bureaus in the People’s Republic of China (“PRC”) as described below, and will have no legal or

constructive obligation to pay further contributions if any of the funds do not hold sufficient assets

to pay all employee benefits relating to employee service in the current and preceding financial

year. The Group’s contribution to defined contribution plans are recognised in the financial year to

which they relate.

The Group participates in retirement insurance scheme organised by the social security bureau in

the PRC pursuant to the relevant provisions. The subsidiaries in PRC are required to make monthly

contributions in respect of the above insurance schemes to the PRC social security bureau based

on the monthly salaries of its employees. The Group has no further liabilities other than the above

defined contributions. The Group’s contributions under the schemes are recognised in the financial

year to which they relate.

2.21 Currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using

the currency of the primary economic environment in which the entity operates (“the

functional currency”). The financial statements are presented in Singapore Dollars, which is

the functional and presentation currency of the Company.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are

translated into the functional currency using the exchange rates at the dates of the

transactions. Currency translation differences resulting from the settlement of such

transactions and from the translation of monetary assets and liabilities denominated in

foreign currencies at the closing rates at the end of the reporting period are recognised in

profit or loss.

Non-monetary items that are measured at fair values in foreign currencies are translated

using the exchange rates at the date when the fair values are determined.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of

a hyperinflationary economy) that have a functional currency different from the presentation

currency are translated into the presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rate at the date of that

statement of financial position;

(ii) Income and expenses are translated at average exchange rates (unless this average

is not a reasonable approximation of the cumulative effect of the rates prevailing on

the transaction dates, in which case income and expenses are translated at the dates

of the transactions); and


80




2.21 Currency translation (cont’d)

(c) Translation of Group entities’ financial statements (cont’d)

(iii) All resulting currency translation differences are recognised in the currency translation

reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on

or after 1 January 2005 are treated as assets and liabilities of the foreign operations and

translated at the closing rates at the reporting date. For acquisitions prior to 1 January

2005, the exchange rates at the dates of acquisition are used.

2.22 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to

management who are responsible for allocating resources and assessing performance of the

operating segments.

2.23 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash

equivalents include cash on hand and deposits with financial institutions which are subject to

an insignificant risk of change in value and bank overdrafts. Bank overdrafts are presented as

borrowings in current liabilities on the statement of financial position.

2.24 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of

new ordinary shares are deducted against the share capital account.

2.25 Dividend

Dividends to the Company’s shareholders are recognised when the dividends are approved for

payment.

2.26 Derivative financial instruments

A derivative financial instrument is initially recognised at its fair value on the date the contract is

entered into and is subsequently carried at its fair value. Fair value changes on derivatives are

recognised in profit or loss when the changes arise. The fair value of a trading derivative is

presented as a current asset or liability.

2.27 Government grants

Grants from the government are recognised at their fair value when there is reasonable assurance

that the grant will be received and the Group will comply with all the attached conditions.


81


3. Adoption of new and revised Singapore Financial Reporting Standards

On 1 January 2010, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that

are mandatory for application from that date. Changes to the Group’s accounting policies have been made as

required, in accordance with the transitional provisions in the respective FRS and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group’s

and Company’s accounting policies and had no material effect on the amounts reported for the current or prior

financial years except as disclosed below:

(a) FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009)

Please refer to note 2.3(a)(ii) for the revised accounting policy on business combinations which the Group

has applied for its acquisition of Hubei Juan Kuang Electric Technologies Limited (“HBJK”) on 1 October

2010 (Note 35).

As the changes have been implemented prospectively, no adjustments were necessary to any of the

amounts previously recognised in the financial statements.

The following summarises the impact of adopting FRS 103 (revised) on the acquisition of HBJK:

Acquisition-related costs

Acquisition-related costs of $6,000 have been recognised in profit or loss. Previously, this cost would

have been included in goodwill.

(b) FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning

on or after 1 July 2009)

The revisions to FRS 27 principally change the accounting for transactions with non-controlling interests.

Please refer to the revised accounting policy for “Group accounting” on changes in ownership interest

that results in a lost of control and on changes in ownership interests that do not result in lost of control.

As the changes have been implemented prospectively, no adjustments were necessary to any of the

amounts previously recognised in the financial statements. The Group does not have any transactions

with non-controlling interests in the current financial year. Accordingly, these changes do not have any

impact on the financial statements for the current financial year.

(c) Amendment to FRS 7 Cash Flow Statements (effective for annual periods beginning on or after 1 January

2010)

Under the amendment, only expenditures that result in a recognised asset in the statement of financial

position can be classified as investing activities in the statement of cash flows. Previously, such

expenditure could be classified as investing activities in the statement of cash flows.

This change has been applied retrospectively. It had no material effect on the amounts presented in the

statement of cash flows for the current or prior year.


82


4. Critical accounting estimates and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience

and other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

Critical accounting estimates and assumptionsCritical accounting estimates and assumptions

Impairment and uncollectibility of trade receivables

The Group follows the guidance of FRS 39 in determining when trade receivables are impaired. This

determination requires significant judgment. The Group evaluates, among other factors, significant financial

difficulty of the debtor, adverse changes in the collection status and changes in industry conditions that affect

the debtor.

Future cash flows of trade receivables that are collectively evaluated for impairment are estimated on the basis

of historical loss experience for debts with similar credit risk characteristics. The methodology and assumptions

used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates

and actual loss experience.

Impairment loss for trade receivables amounted to approximately $2,054,000 (2009: $649,000) was made during

the year. The carrying amounts of trade receivables as at 31 December 2010 was approximately $38,795,000

(2009: $36,607,000)(Note 13).

Estimated impairment of non-financial assets

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired.

Intangible assets with finite life, property, plant and equipment and investments in subsidiaries and associated

companies are tested for impairment whenever there is any objective evidence or indication that these assets

may be impaired.

When value in use calculations are undertaken, management must estimate the expected future cash flow from

the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of

those cash flows. Further details of the key assumptions applied in the impairment assessment of goodwill, are

disclosed in Note 21 to the financial statements.

Income taxes

The Group has exposure to income taxes mainly in Singapore, and the People’s Republic of China. Significant

judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions

and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be

due. Where the final tax outcome of these matters is different from the amounts that were initially recognised,

such differences will impact the income tax and deferred tax provisions in the period in which such determination

is made.

Useful lives of property, plant and equipment

The cost of property, plant and equipment for the Group’s operations is depreciated on a straight line basis over

the useful lives of the property, plant and equipment. Management estimates the useful lives of these property,

plant and equipment to within 3 to 50 years. These are common life expectancies applied in the industry.

Changes in the expected levels of usage could impact the economic useful lives and the residual value of

these assets and accordingly, future depreciation charges could be revised. The carrying values of the Group’s

property, plant and equipment are as disclosed in Note 18.


83


5. Revenue and other income - net

ContinuingContinuingoperationsoperations

DiscontinuedDiscontinuedoperationsoperations GroupGroup

20102010 2009 20102010 2009 20102010 2009

$’000 $’000 $’000$’000 $’000 $’000 $’000

Sale of goods 213,924213,924 163,183 1,1671,167 1,594 215,091 164,777

Other income -net

- Subsidy income* 1,6611,661 934 – – 1,6611,661 934

- Interest income 168 304 – – 168168 304

- Reversal of allowance for doubtful

receivables (Note 13) 52 1,975 – – 52 1,975

- Gain/(loss) on disposal of

property, plant and equipment 7 7 (18)(18) – (11)(11) 7

- Rental income from investment

properties (Note 20) 184184 174 – – 184 174

- Fair value gain/(loss) on

investment properties (Note 20) 184184 (15) – – 184 (15)

- Currency translation loss - net (740) (652) (3)(3) (4) (743)(743) (656)

- Sale of materials 253 296 – – 253 296

- Others 154 250 5 – 159 250

Other income – net 1,9231,923 3,273 (16)(16) (4) 1,907 3,269

215,847215,847 166,456 1,1511,151 1,590 216,998216,998 168,046

* Subsidy income is cash grant from the government to the subsidiaries which are involved in the development of the tunnel

energy efficient LED and other technical innovation projects.


84


6. Expenses by nature


DiscontinuedDiscontinuedoperationsoperations Group Group

20102010 2009 20102010 2009 20102010 2009

$’000$’000 $’000 $’000 $’000 $’000 $’000

Purchases of raw materials, finished

goods and consumables 150,231150,231 112,227 319 788 150,550150,550 113,015

Amortisation of intangible assets

[Note 21(b)] 100 82 – – 100 82

Amortisation of land use rights (Note 19) 7979 85 5 – 84 85

Depreciation of property, plant and

equipment (Note 18) 5,3945,394 5,487 185185 202 5,5795,579 5,689

Auditor’s remuneration paid/payable to

- Auditor of the Company 168 160 – – 168168 160

- Other auditors 4747 23 1 1 48 24

Employee compensation (Note 8) 21,21221,212 15,458 265 391 21,47721,477 15,849

Impairment loss of trade receivables

(Note 13) 2,0432,043 649 1111 – 2,0542,054 649

Impairment loss of other receivables

(Note 13) 97 80 – – 97 80

Impairment loss of property, plant and

equipment (Note 18) 16 – 1 – 17 –

Prepayments to suppliers written off 60 105 97 – 157 105

Staff advances written off – 14 – – – 14

Legal expense 131 98 – – 131131 98

Rental on operating leases 115115 129 – 4 115115 133

Research expense 2,6152,615 2,172 – – 2,6152,615 2,172

Allowance for inventories write-down

(Note 14) 197 138 – – 197 138

Inventory written off – 86 – – – 86

Utilities expenses 2,1462,146 1,815 234234 86 2,3802,380 1,901

Travelling and transportation expense 2,481 2,398 41 89 2,5222,522 2,487

Sub-contracting charges 1,8651,865 1,937 – – 1,8651,865 1,937

Other expenses 9,5999,599 4,588 155 227 9,7549,754 4,815

Changes in inventories of raw materials,

work-in-progress and finished goods (1,828)(1,828) 2,492 402 54 (1,426)(1,426) 2,546

Total cost of sales, distribution and

marketing costs and administrative

expenses 196,768196,768 150,223 1,7161,716 1,842 198,484 152,065


85


7. Finance cost


DiscontinuedDiscontinuedoperationsoperations Group

20102010 2009 20102010 2009 20102010 2009

$’000 $’000 $’000 $’000 $’000 $’000

Interest expense on bank loans 663663 995 – 120 663663 1,115

Currency translation gain - net (407)(407) (198) – – (407)(407) (198)

Interest expense on finance leases 4 7 – – 4 7

260260 804 – 120 260260 924

8. Employee compensation


DiscontinuedDiscontinuedoperationsoperations Group

20102010 2009 2010 2009 20102010 2009

$’000 $’000 $’000 $’000 $’000$’000 $’000

Wages and salaries 17,80317,803 13,186 237 353 18,04018,040 13,539

Employer’s contribution to defined

contribution plan 3,4123,412 2,301 28 38 3,4403,440 2,339

Government grant – Jobs credit

scheme (3)(3) (29) – – (3)(3) (29)

21,21221,212 15,458 265 391 21,47721,477 15,849

The Jobs credit scheme is a cash grant introduced in Singapore Budget 2009 to help businesses preserve jobs

in the economic downturn. The amount an employer can receive depends on the fulfillment of certain conditions

under the scheme.

9. Income tax

(a) Income tax expense

GroupGroup20102010 2009

$’000 $’000

Tax expense attributable to profit is made up of:

From continuing operationsCurrent income tax 4,0334,033 3,169

(Over)/under provision in preceding financial years (283)(283) 42

3,7503,750 3,211

Deferred income tax 30 –

3,7803,780 3,211


86


9. Income tax (cont’d)

(a) Income tax expense (cont’d)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the

People’s Republic of China (“PRC”) standard rate of income tax as follows:


$’000 $’000

Profit before income tax from

- Continuing operations 18,87018,870 15,664

- Discontinued operations (565)(565) (372)

18,30518,305 15,292

Tax calculated at a tax rate of 25% (2009: 25%) 4,5764,576 3,823

Effect of preferential tax rate (1,526)(1,526) (1,335)

Expenses not deductible for tax purposes 810 601

Income not subject to tax (18)(18) (2)

Utilisation of previously unrecognised tax losses (15)(15) (76)

Deferred tax benefit not recognised 236236 158

(Over)/under provision in preceding financial years (283)(283) 42

Tax charge 3,7803,780 3,211

Pursuant to the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign

Enterprises and various local income tax laws (the “Income Tax Laws”), the subsidiary companies in PRC

are subject to statutory income tax rate of 25% (2009: 25%) unless the enterprise is located in specially

designated regions or cities for which more favorable effective tax rates apply.

Certain subsidiaries are qualified for the reduced concessionary tax rate of 15% applicable to the new/

high tech enterprises. In order to qualified as a new/high tech enterprise, an enterprise has to fulfil a set of

prescribed criteria and be subjected to assessment by the local tax authority.

(b) Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation

of the related tax benefits through future taxable profits is probable. The Group had unrecognised and

unutilised tax losses of approximately $1,989,000 (2009: $5,638,000) at end of the reporting period which

can be carried forward and used to set off against future taxable income subject to meeting certain

statutory requirements by those companies with unrecognised tax losses in their respective countries

of incorporation. For tax losses arising from a company incorporated in PRC, tax losses will expire 5

years after the company becomes profitable. During the financial year, approximately $4,533,000 of the

unutilised tax losses have expired.

Pursuant to the PRC Enterprise Income Tax Law which was promulgated on 22 February 2008, dividends

distributed by PRC entities for profits generated before 1 January 2008 are exempt from withholding tax.

Dividend paid in respect of profits generated on or after 1 January 2008 will be subject to a withholding

tax of 5%.

At the end of the reporting period, the aggregate amount of temporary differences associated with the

undistributed earnings of the subsidiaries for which deferred tax liabilities have not been recognised is

approximately $1,805,000 (RMB 8,869,000) [2009: $1,058,000 (RMB 4,990,000)]. No liability has been

recognised in respect of these differences because the Group is in a position to control the timing of

the reversal of the temporary differences and it is probable that such differences will not reverse in the

foreseeable future.


87


9. Income tax (cont’d)

(c) Movements in current income tax liabilities

GroupGroup CompanyCompany20102010 2009 20102010 2009

$’000 $’000 $’000 $’000

Balance at beginning of financial year 2,1262,126 1,715 – –

Currency translation differences (89)(89) (58) – –

Income tax paid (4,245)(4,245) (2,742) – –

Tax expense on profit for the current

financial year 3,7503,750 3,211 – –

Balance at end of financial year 1,542 2,126 – –

10. Discontinued operations

During the year, after considering all aspects relating to the commercial viability of the safe deposit box operation

business (which forms part of the Group’s other business segment) and better utilisation of the Group’s

resources, the Group had decided to discontinue the operations of the safe deposit box operation business. All

the assets and liabilities of the safe deposit box operation business except part of the plant and equipment were

sold to a non-related party. Other existing assets will be transferred to another subsidiary - ”FJKYM”. As this

business was not discontinued operations as of 31 December 2009, the comparative results for the year ended

31 December 2009 had been re-presented to show the discontinued operations separately in accordance with

FRS 105 Non-current Assets Held for Sale and Discontinued Operations.

(a) The results of the discontinued operations were as follows:

GroupGroup2010 2010 2009

$’000 $’000

Revenue 1,1671,167 1,594

Expenses (1,732)(1,732) (1,966)

Loss from discontinued operations (565)(565) (372)

Income tax expense – –

Net loss from discontinued operations (565)(565) (372)

Profit attributable to equity holders of the Company relates to:

- Profit from continuing operations 13,10213,102 10,840

- Loss from discontinued operations (565)(565) (372)

Total 12,53712,537 10,468

(b) The impact of the discontinued operations on the cash flows of the Group is as follows:

GroupGroup2010 2010 2009

$’000 $’000

Operating cash inflows 44 1,336

Investing cash outflows (103)(103) (1,266)

Financing cash inflows – –

Total cash (outflows)/inflows (59)(59) 70


88


11. Earnings per share

Earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the

weighted average number of ordinary shares outstanding during the financial year.


DiscontinuedDiscontinuedoperationsoperations Group Group

20102010 2009 20102010 2009 20102010 2009

Net profit/(loss) attributable to

equity holders of the

Company($’000) 13,10213,102 10,840 (565)(565) (372) 12,53712,537 10,468

Weighted average number of

ordinary shares in issue for basic

earnings per share(‘000) 202,948202,948 202,948 202,948202,948 202,948 202,948202,948 202,948

Basic and diluted earnings/(loss)

per share (cents) 6.46 5.34 (0.28)(0.28) (0.18) 6.186.18 5.16

There are no dilutive instruments in existence as at 31 December 2010 (2009: nil).

12. Cash and cash equivalents


$’000 $’000 $’000 $’000

Cash at bank and on hand 14,26714,267 15,869 3636 1

Cash and cash equivalents of approximately $14,218,000 as at 31 December 2010 (2009: $15,801,000) were

placed with banks in the PRC. The remittance of these funds out of the PRC is subject to the exchange

restrictions imposed by the PRC government.

For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash

equivalents comprise the following:


$’000 $’000

Cash at bank and on hand (as above) 14,26714,267 15,869

Less: Short term bank deposits pledged (Note 23) – (4,992)

Less: Bank overdraft (Note 23) (347)(347) (29)

13,92013,920 10,848


89


13. Trade and other receivables


$’000 $’000 $’000 $’000

Trade receivables

- related parties 15,35815,358 13,129 – –

- non-related parties 33,16433,164 31,673 – –

48,52248,522 44,802 – –

Less: Allowance for impairment (9,727)(9,727) (8,195) – –

Trade receivables – net 38,79538,795 36,607 – –

Other receivables

- related parties 304 172 – –

- non-related parties 1,8921,892 3,934 – –

Less: Allowance for impairment (213)(213) (212) – –

Other receivables – net 1,9831,983 3,894 – –

Amount due from subsidiaries - non-trade – – 3,1853,185 6,291

Less: Allowance for impairment – – (195)(195) (232)

Amount due from subsidiaries - non-trade - net – – 2,9902,990 6,059

Amount due from an associated company - non-

trade – – 8080 80

Less: Allowance for impairment – – (80)(80) (80)

Amount due from an associated company - non-

trade - net – – – –

Note receivables from banks 1,0971,097 721 – –

Tax recoverable 447447 184 – –

42,32242,322 41,406 2,9902,990 6,059

Included in other receivables of the Group is an amount receivable from a PRC government-linked entity of nil

(2009: $2,263,000).This arrangement is to facilitate the government-linked entity and its related party to act as a

guarantor for the borrowings of nil (2009:$4,320,000) by the Group with recourse.

The movement in the allowance for impairment of trade receivables is as follows:

Group

2010 2009

$’000 $’000

Balance at beginning of financial year 8,195 9,811

Current year charge 2,054 649

Reversal of allowance no longer required (52) (1,773)

Amount written off – (239)

Translation differences (470) (253)

Balance at end of financial year 9,727 8,195


90


13. Trade and other receivables (cont’d)

The movement in the allowance for impairment of other receivables is as follows:


$’000 $’000

Balance at beginning of financial year 212212 276

Current year charge 97 80

Reversal of allowance no longer required – (202)

Amount written off (79)(79) –

Translation differences (17)(17) 58

Balance at end of financial year 213 212

The movement in allowance for impairment of amount due from subsidiaries – non trade is as follows:

CompanyCompany20102010 2009

$’000 $’000


Reversal of allowance no longer required (37) –


The movement in allowance for impairment of amount due from an associated company – non trade is as

follows:


$’000 $’000

Balance at beginning and end of financial year 8080 80

Concentrations of credit risk with respect to trade receivables are inconsequential and mitigated in view of the

Group’s large number of customers with a variety of end markets in which they sell. As such, management

believes that there is no anticipated additional credit risk beyond the amount of allowance for impairment made

in the Group’s trade receivables.

Amounts due from subsidiaries and an associated company - non-trade are unsecured, interest-free and are

repayable on demand.


91


14. Inventories


$’000 $’000

Raw materials 18,10918,109 15,405

Work-in-progress 4,7844,784 4,070

Finished goods 7,1807,180 9,003

30,07330,073 28,478

Less: Allowance for inventories write down (440)(440) (271)

29,63329,633 28,207

The movement in allowance for inventories write down is as follows:


$’000 $’000


Current year charge 197197 138

Translation differences (28)(28) (8)


The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to $149,124,000 (2009:

$115,561,000).

15. Other current assets


$’000 $’000 $’000 $’000

Prepayments to suppliers 3,0693,069 4,103 – –

Prepaid expenses 103 103 109 6 7

3,1723,172 4,212 6 7


92


16. Investments in subsidiaries


$’000 $’000

Equity investments at cost 44,732 44,732 47,038

Impairment loss (845)(845) (845)

43,88743,887 46,193

The movement in the impairment loss in investments in subsidiaries is as follows:


$’000$’000 $’000


Current year charge – 579

Reversal of impairment loss – (384)


Details of the subsidiaries at the end of the financial year are as follows:

Name of companiesName of companies Principal activitiesPrincipal activities

Country ofCountry ofincorporation/incorporation/

businessbusiness

Percentage ofPercentage ofequity heldequity held

by the Groupby the Group20102010 2009

% %

Subsidiaries held by the Company

+ Fujian Juan Kuang Yaming

Electric Limited (“FJKYM”)

Manufacture and sale of ballast, ignitors,

capacitors, electrical lighting products,

fixtures and accessories

PRC 99.599.5 99.5

+ Shanghai Juan Kuang

Lighting Fixture Co. Ltd

Manufacture of electrical lighting

products, fixtures and accessories

PRC 99.999.9 99.9

+ Fujian Juan Kuang Metal

Industries Co., Ltd

Manufacture and sale of safe deposit

boxes

PRC – 99.8

# JKYM Trading Pte Ltd Sales and distribution of safe deposit

boxes

Singapore 100.0 100.0

Subsidiaries of FJKYM

+ Shanghai Juan Kuang

Lighting Co., Ltd Manufacture and sale of lighting products PRC 79.779.7 79.7

+ Shanghai JK & YM

International Trade Ltd

Trading of lighting products PRC 89.689.6 89.6

+ Fujian J.K. Wiring Systems

Co., Ltd.

Process and sale of wire harness

products

PRC 54.754.7 54.7

+ Fujian Min Hang Electronics

Co., Ltd

Manufacture, assemble and sales of

semi-conductors

PRC 57.157.1 57.1

+ Shanghai Yuan Ya Lighting

Engineering Co., Ltd

Design, consulting and sale of electrical

lighting products and accessories

PRC 99.599.5 99.5


93


16. Investments in subsidiaries (cont’d)

Name of companiesName of companies Principal activitiesPrincipal activities


businessbusiness



% %

+ Anhui Juan Kuang Electric

Co., Ltd

Manufacture and sale of capacitors and

related electrical lighting products

PRC 89.789.7 89.7

+ Anhui Juan Kuang Lighting

Fixture Co., Ltd

Manufacture and sale of capacitors and

related electrical lighting products

PRC 89.689.6 89.6

* ++ Hubei Juan Kuang Electric

Technologies Limited

Manufacture and sale of the related

electrical lighting products

PRC 99.599.5 –

+ Fujian Juan Kuang Metal

Industries Co., Ltd

Manufacture and sale of safe deposit

boxes

PRC 99.599.5 –

# Audited by LTC LLP, Singapore.

+ Audited by Lixin International, Singapore.

++ Audited by Local Auditor, PRC for local statutory reporting purposes. Agreed upon procedures are performed by East

Asia Sentinel Limited, Hong Kong for consolidation purposes.

* Newly acquired subsidiary during the year.

(i) In accordance with Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit

Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different

auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Company.

Transfer of entire interest of a subsidiary to another subsidiary

On 1 October 2010, the Company transferred its entire shareholding of 65% in Fujian Juan Kuang Metal

Industries Co., Ltd.(“JKMI”) to another of the Group’s subsidiary, Fujian Juan Kuang Yaming Electric Limited

(“FJKYM”) for a cash consideration of $1,193,000 (RMB 6,060,000). FJKYM held a 35% interest in JKMI prior to

1 October 2010. As a result of this transaction, JKMI became a wholly-owned subsidiary of FJKYM.

Acquisition of additional interests in a subsidiary

On 25 May 2009, the Company acquired an additional 2.58% equity interest in Fujian Juan Kuang

Yaming Electric Limited (“FJKYM”) from its non-controlling interest for cash consideration of $2,235,000

(RMB10,520,000). This acquisition increased the Company’s interest in FJKYM from 96.92% to 99.5%. On the

date of acquisition, the book value of the additional interest acquired was $1,412,000 (RMB 6,639,000), the

difference between the consideration and book value of the interest acquired of $823,000 (RMB 3,881,000) is

reflected as additional goodwill (Note 21) in the account as premium paid for acquisition from non-controlling

interest.


94


17. Investment in an associated company


$’000 $’000 $’000 $’000

Equity investment at cost 2,118 2,118 2,118

Impairment loss (993) (993) (993)

1,125 1,125 1,125

Balance at beginning of financial year 1,3271,327 1,248

Currency translation differences 23 (156)

Share of profit in an associated company 5151 235

Balance at end of financial year 1,401 1,401 1,327

The movement in the impairment loss in investment in an associated company is as follows:


$’000 $’000

Balance at beginning of financial year 993 1,109

Reversal of impairment loss – (116)


The summarised financial information of an associated company equity accounted for is as follows:

20102010 2009

$’000 $’000

Assets 7,628 6,951

Liabilities (2,724)(2,724) (1,950)

Net Assets 4,9044,904 5,001

Share of Group’s net assets of associated company 1,713 1,747

Revenue 9,1449,144 6,913

Net profit for the year 146146 664

Group share of associated company net profit 51 235

Details of the associated company at the end of the financial year are as follows:

Name of companyName of company Principal activityPrincipal activity


businessbusiness



% %

+ Fujian Juan Kuang

Wireharness Electric Limited

Manufacture and sale of wire harness

products

PRC 34.934.9 34.9

+ Audited by Local Auditor, PRC for local statutory reporting purposes.


95


18. Property, plant and equipment

LeaseholdLeaseholdbuildingsbuildings

FreeholdFreeholdbuildingbuilding

Plant andPlant andequipmentequipment

MotorMotorvehiclesvehicles

OfficeOffi ceequipmentequipment

ConstructionConstructionin progressin progress TotalTotal

$’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000

GroupGroup

Cost

As at 1 January 2010 29,256 1,260 29,687 3,080 11,220 1,780 76,283

Additions 175 – 2,241 191 535 2,162 5,304

Transfers 151 – 2,200 12 404 (2,767) –

Acquisition of subsidiary (Note 35a) – – 63 – 18 1,798 1,879

Disposals (92) – (398) (200) (119) – (809)

Translation differences (1,410) – (1,532) (132) (545) (79) (3,698)

As at 31 December 2010 28,080 1,260 32,261 2,951 11,513 2,894 78,959

Accumulated depreciation andAccumulated depreciation and accumulated impairment lossesaccumulated impairment losses

As at 1 January 2010 8,480 100 16,446 1,846 7,253 – 34,125

Depreciation charge 1,479 25 2,595 321 1,159 – 5,579

Impairment loss – – – – 1 16 17

Disposals (71) – (232) (183) (107) – (593)

Translation differences (444) – (852) (81) (365) – (1,742)

As at 31 December 2010 9,444 125 17,957 1,903 7,941 16 37,386

Net book valueNet book value

31 December 201031 December 2010 18,63618,636 1,1351,135 14,30414,304 1,0481,048 3,5723,572 2,8782,878 41,57341,573

CostCost

As at 1 January 2009 25,880 1,260 28,839 3,118 10,831 2,549 72,477

Additions 22 – 1,176 251 682 4,709 6,840

Transfers 4,134 – 848 15 443 (5,440) –

Disposals – – (409) (234) (454) – (1,097)

Translation differences (780) – (767) (70) (282) (38) (1,937)

As at 31 December 2009 29,256 1,260 29,687 3,080 11,220 1,780 76,283

Accumulated depreciation andAccumulated depreciation andaccumulated impairment lossesaccumulated impairment losses

As at 1 January 2009 7,263 75 14,529 1,775 6,661 – 30,303


Disposals – – (358) (207) (410) – (975)

Translation differences (228) – (438) (42) (184) – (892)

As at 31 December 2009 8,480 100 16,446 1,846 7,253 – 34,125

Net book value

31 December 2009 20,776 1,160 13,241 1,234 3,967 1,780 42,158

CostCost

As at 1 January 2008, as previously

reported 30,349 1,260 27,427 2,681 9,540 1,055 72,312

Prior year reclassification – Note 34 (5,268) – – – – – (5,268)

As at 1 January 2008, as restated 25,081 1,260 27,427 2,681 9,540 1,055 67,044

Additions 119 – 1,102 678 536 2,294 4,729

Transfers 233 – 10 172 507 (922) –

Disposals (1,133) – (65) (461) (160) – (1,819)

Deemed disposal of a subsidiary – – (1,317) (89) (199) – (1,605)

Translation differences 1,580 – 1,682 137 607 122 4,128

As at 31 December 2008 25,880 1,260 28,839 3,118 10,831 2,549 72,477


96


18. Property, plant and equipment (cont’d)

LeaseholdLeaseholdbuildingsbuildings


Plant andPlant andequipmentequipment


OfficeOffi ceequipmentequipment

ConstructionConstructionin progressin progress TotalTotal

$’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000

GroupGroup

Accumulated depreciation andAccumulated depreciation andaccumulated impairment losses accumulated impairment losses

As at 1 January 2008, as previously

reported 6,172 50 12,274 1,810 5,324 – 25,630

Prior year reclassification –Note 34 (281) – – – – – (281)

As at 1 January 2008, as restated 5,891 50 12,274 1,810 5,324 – 25,349


Disposals (465) – (26) (364) (140) – (995)

Deemed disposal of a subsidiary – – (888) (72) (129) – (1,089)

Translation differences 362 – 730 114 441 – 1,647

As at 31 December 2008 7,263 75 14,529 1,775 6,661 – 30,303

Net book valueNet book value

31 December 2008 18,617 1,185 14,310 1,343 4,170 2,549 42,174

(a) The carrying amount of motor vehicles held under finance leases at 31 December 2010 amounted to nil

(2009: $98,000) (Note 23).

(b) As at 31 December 2010, the Group has not obtained ownership certificates of property located at

Cangshan Zone of Fuzhou High-Tech Park, 1 Gaoshan Road, Cangsha District, Fuzhou, PRC with a net

book value of approximately $1,277,000 (RMB 6,521,000) [2009: $1,473,000 (RMB6,922,000) respectively].

The Group is still in the process of registering with the relevant authorities the ownership of this building.

(c) Bank borrowings are secured on properties of the Group with carrying amounts of approximately

$2,928,000 (RMB 14,948,000) [2009: $3,421,000 (RMB16,070,000) respectively] (Note 23).

(d) Bank overdraft and bank loans are secured on freehold building of the Group with carrying amount of

$1,135,000 (2009: $1,160,000) (Note 23).



OfficeOffi ceequipmentequipment TotalTotal

$’000 $’000 $’000 $’000

CompanyCompanyCostCostAt 1 January 2010 1,260 328 312 1,900

Additions – – – –

At 31 December 2010 1,260 328 312 1,900

Accumulated depreciationAccumulated depreciationAt 1 January 2010 100 230 206 536

Depreciation charge 25 32 30 87

At 31 December 2010 125 262 236 623

Net book valueNet book valueAt 31 December 2010At 31 December 2010 1,1351,135 66 76 1,2771,277


97


18. Property, plant and equipment (cont’d)



OfficeOffi ceequipmentequipment Total

$’000 $’000 $’000$’000 $’000$’000

CompanyCompanyCostCostAt 1 January 2009 1,260 328 323 1,911

Additions – – 1 1

Disposals – – (12) (12)

At 31 December 2009 1,260 328 312 1,900

Accumulated depreciationAccumulated depreciationAt 1 January 2009 75 197 187 459

Depreciation charge 25 33 31 89

Disposals – – (12) (12)

At 31 December 2009 100 230 206 536

Net book valueNet book valueAt 31 December 2009 1,160 98 106 1,364

(a) The freehold building of the Company with carrying amount of $1,135,000 (2009: $1,160,000) has been

pledged as security for bank overdraft and bank loans obtained. (Note 23).

(b) The carrying amount of motor vehicles held under finance leases at 31 December 2010 amounted to nil

(2009: $98,000) (Note 23).

19. Land use rights19. Land use rights

GroupGroup$’000

CostCostAs at 1 January 2008, as previously reported –

Prior year reclassification - Note 34 5,268

As at 1 January 2008, as restated 5,268

Additions 174

Translation differences 344

As at 31 December 2008 5,786

Translation differences (143)


Additions 877




98


19. Land use rights (cont’d)19. Land use rights (cont’d)

GroupGroup$’000

Accumulated amorisationAccumulated amorisationAs at 1 January 2008, as previously reported –

Prior year reclassification - Note 34 281

As at 1 January 2008, as restated 281

Amortisation charges for the year 99

Translation differences 21

As at 31 December 2008 401







Net carrying amountNet carrying amountAs at 31 December 2008 5,385


As at 31 December 2010As at 31 December 2010 5,6955,695

(a) Bank borrowings are secured on land use rights of the Group with carrying amounts of approximately

$1,141,000 (RMB 5,827,000) [2009: $1,268,000 (RMB 5,955,000) respectively] (Note 23).

(b) As at 31 December 2010, the Group has not obtained ownership certificates of piece of land at Cangshan

Zone of Fuzhou High-Tech Park, 1 Gaoshan Road, Cangsha District, Fuzhou, PRC with a net book value

of approximately $278,000 (RMB 1,422,000) [2009: $ 310,000 (RMB1,454,000) respectively].The Group is

still in the process of registering with the relevant authorities the ownership of this land.

20. Investment properties


$’000 $’000


Fair value gain/(loss) on investment properties (Note 5) 184184 (15)


Balance at end of financial year 7,2997,299 7,478

Investment properties are carried at fair values at the end of the reporting period as determined by independent

professional valuers. Valuations are made annually based on the open market value.

The Group’s revaluation gain/(loss) was included in “other income – net” in the consolidated statement of

comprehensive income.

Investment properties are leased to non-related parties under operating leases (Note 30).

These investment properties are located in PRC and the remittance of income and proceeds of disposal

from these investment properties out of the PRC, is subject to the exchange restrictions imposed by the PRC

government.


99


20. Investment properties (cont’d)(cont’d)

The following amounts are recognised in consolidated statement of comprehensive income:


$’000 $’000

Rental income (Note 5) 184184 174

Property tax and direct operating expenses arising from investment properties

that generated rental income (28) (26)

The details of the Group’s investment properties are as follows:

Investment PropertiesInvestment Properties DescriptionDescription Tenure of landTenure of landIndependentIndependent

ValuerValuer Valuation dateValuation date

(1) 47 shop units on

level 1 and 52 shop

units on level 2 of

Aofeng Gardens, 271

Paiwei Road, Taijiang

District, Fuzhou

Province, China.

(Note)

1-102,1-104,1-105,1-107,1-

109 to 1-112,

1-114,1-116 to 1-117,1-119

to 1-144,1-146 to 1-147 of

Tower Nos.1 & 2

1-201 to 1-252 of Tower

Nos. 1 & 2

2-102 to 2-103,2-109,

2-111 to 2-112,2-120,

2-129 to 2-130 of Tower

Nos. 3 & 4

of Aofeng Gardens, with

approximate gross floor

area of 3708 square

meters.

40 years lease

from 17 October

1995

DTZ

Debenham Tie

Leung Limited

24 January 2011

(2) 9C Kaixing Building.

No. 35 Ri Jing

Road, Waigaoqiao

Free Trade Zone,

Shanghai 200131,

China.

One unit of office space

with a gross area of 904

square meters.

55 years lease

from 21 May 1997

Shanghai

Xinda

Valuation Co.

Limited

8 January 2011

Note: The Group is still in the process of registering with the relevant authorities the ownership of the investment

properties shown as (1), according to legal opinions obtained by the Directors, the Group is the legal owner of

the property. The property can only be transferred or mortgaged when the Group has obtained the relevant

ownership certificates.

21. Intangible assets

Group20102010 2009

$’000 $’000

Goodwill arising on consolidation (a) 1,040 1,092

Patent rights (b) 489 486

1,5291,529 1,578


100


21. Intangible assets (cont’d)

(a) Goodwill arising on consolidation


$’000 $’000

CostBalance at beginning of financial year 1,0921,092 302

Acquisition of additional interests in a subsidiary (Note 16) – 823

Currency translation differences (52)(52) (33)

Balance at end of financial year 1,040 1,092

Net book valueNet book value 1,040 1,092

Impairment tests for goodwill

Goodwill is allocated to the Group’s CGUs identified according to countries of operation and business

segments.

A segment-level summary of the goodwill allocation is as follows:


ElectricElectric lightinglighting

productsproducts TotalTotal

Electric

lighting

products Total

$’000 $’000 $’000 $’000

People’s Republic of China (“PRC”) 1,040 1,040 1,092 1,092

The recoverable amount of a CGU was determined based on value-in-use. Cash flow projections

used in the value-in-use calculations were based on profit forecast determined by the management.

The projected cash flows has been determined using the estimated growth rate stated below over the

remaining economic useful lives of the CGU.

Key assumptions used for value-in-use calculations:

ElectricElectric lightinglighting

productsproductsPRCPRC

Growth rate (i) 3%

Infl ation rate (ii) 5%

Discount rate (iii) 5.5%

(i) Estimated annual growth rate

(ii) Inflation rate of the operation segment

(iii) Pre-tax discounted rate applied to the pre-tax cash flow projections

These assumptions were used for the analysis of each CGU within the operation and business segment.

Management estimated an annual growth rate relating to the operation and business segment and the

discount rate used were pre-tax and reflected specific risk relating to the business segment.

The management is of the view that no impairment on goodwill is required.


101


21. Intangible assets (cont’d)

(b) Patent rights

Group20102010 2009

$’000 $’000

CostCostBalance at beginning of financial year 927927 827

Acquired during the financial year 127127 124


Balance at end of financial year 1,006 927

Accumulated amortisationAccumulated amortisationBalance at beginning of financial year 441441 371

Amortisation charge (Note 6) 100 82



Net book valueNet book value 489 486

22. Trade and other payables


$’000 $’000 $’000 $’000

Trade payables to:

- Non-related parties 23,52223,522 19,221 – –

- Related parties 8,8998,899 8,822 – –

32,421 28,043

Advance from customers 1,1641,164 1,186 – –

Accruals for operating expenses 748 701 493493 382

Other payables

- Non-related parties (Note A) 3,8863,886 4,216 – –

- Related parties 254254 316

Staff bonus and welfare fund (Note B) 391391 433 – –

Provision for warranty (Note C) 71 – – –

38,935 38,935 34,895 493493 382

Trade payables are non-interest bearing and are generally on 30 to 90 days’ terms.

Note A: In year 2009, included in other payables is a derivative financial instrument of non-hedging instruments

- currency forwards with a fair value of $209,000 with a contract notional amount of $7,324,000.

Note B: Pursuant to the relevant laws and regulations in the PRC for foreign investment enterprises,

appropriations to staff bonus and welfare fund are made from subsidiaries’ profits after taxation as

reported in the PRC statutory accounts, which are determined in accordance with the PRC accounting

standards and regulations applicable to these subsidiaries and classified as part of reserves in the

books of the subsidiaries. Appropriations of this fund is determined at the discretion of the Board of

Directors of each subsidiary.


102


22. Trade and other payables (cont’d)

Note C: Provision for warranty

The Group give warranties for the period from 6 months to 60 months on certain products and undertake to

repair or replace items that fail to perform satisfactorily. A provision is recognised at the end of the reporting

date for expected warranty claims based on past experience of the level of repairs and returns. Movement in

provision for warranty is as follows:


$’000 $’000 $’000 $’000

Balance at beginning of financial year – – – –

Currency translation differences (2)(2) – – –

Provision made 73 – – –

Balance at end of financial year 71 – – –

23. Borrowings


$’000$’000 $’000 $’000 $’000

CurrentCurrentBank overdraft

– Secured by Group’s freehold building (Note 18d) 347347 29 347347 29

Bank loans

– Secured by Group’s properties and land use

rights (Note 18c &19a), freehold building (Note

18d) and short term bank deposits (Note 12) 2,9822,982 8,874 44 45

– Unsecured 7,5947,594 10,258 3,0903,090 3,288

Finance lease liabilities (Note a & 24) – 25 – 25

10,92310,923 19,186 3,4813,481 3,387

Non-currentNon-currentBank loans

– Secured by Group’s freehold building (Note 18d) 691691 733 691691 733

– Unsecured 712712 1,215 712712 1,215

1,403 1,948 1,403 1,948

12,326 12,326 21,134 4,8844,884 5,335

(a) Finance lease liabilities of the Group and the Company are secured by the rights to the leased motor

vehicles (Note 18a), which will revert to the lessor in the event of default by the Group and the Company.


103


23. Borrowings (cont’d)

(b) Maturity of non-current borrowings

Maturity of non-current borrowings is as follows:


$’000 $’000 $’000$’000 $’000

Between 2 and 5 years 887 1,394 887 1,394

Over 5 years 516 554 516 554

1,403 1,948 1,403 1,403 1,948

The fair value of the Group and the Company’s borrowings approximates its carrying value.

(c) Weighted average effective interest rate

The weighted average effective interest rates of total borrowings at the end of the reporting period are as

follows:

20102010 2009

SGD RMBRMB OthersOthers SGD RMB Others

Group

Bank overdraft 5.25%5.25% –– – 5.25% – –

Bank loans 4.28%4.28% 5.16% 3.67% 4.15% 5.21% 1.90%

Finance lease liabilities – – – 4.44% – –

Company

Bank overdraft 5.25%5.25% –– – 5.25% – –

Bank loans 4.28%4.28% –– 3.67%3.67% 4.15% – 3.60%

Finance lease liabilities – – – 4.44% – –

The exposure of borrowings to interest rate risks, categorised by the earlier of contractual repricing or

maturity date, are as follows:

GroupGroup

Variable ratesVariable rates Fixed ratesFixed ratesLess thanLess than6 months6 months

6 to 126 to 12monthsmonths

OverOver1 year1 year

Less thanLess than6 months6 months


OverOver1 year1 year TotalTotal

$’000$’000 $’000 $’000 $’000$’000 $’000$’000 $’000$’000 $’000$’000

At 31 December 2010At 31 December 2010 2,5862,586 2,9382,938 –– 347347 5,0525,052 1,4031,403 12,32612,326

At 31 December 2009 2,810 10,039 – 54 6,283 1,948 21,134

Company Company

Variable ratesVariable rates Fixed ratesFixed ratesLess thanLess than6 months6 months


OverOver1 year1 year

Less thanLess than6 months6 months


OverOver1 year1 year Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

At 31 December 2010At 31 December 2010 2,5862,586 –– –– 347347 548548 1,403 4,8844,884

At 31 December 2009 2,810 – – 54 523 1,948 5,335


104


24. Finance lease liabilities

The Group and the Company has a finance leases for motor vehicle from non-related parties. These leases

have no escalation clauses. There are no restrictions placed upon the Company by entering into these leases. All

leases are on a fixed repayment basis. The obligations under finance leases are secured by the lessor’s charge

over the leased assets.


$’000$’000 $’000 $’000 $’000

Minimum lease payments due:

- Not later than one year – 28 – 28

Less: Future finance charges – (3) – (3)

Present value of minimum lease payments – 25 – 25

The present value of minimum lease payments is analysed as follows:


$’000 $’000 $’000 $’000

Not later than one year (Note 23) – 25 – 25

25. Deferred income tax liabilities


$’000 $’000

Deferred income tax liabilities:

- to be settled within one year 186186 165

The movement in the deferred income tax liabilities for revaluation to fair value on investment properties during

the financial year is as follows:

Deferred income tax liabilities

Group Group$’000

20102010Balance at beginning of financial year 165Charged to statement of comprehensive income 30Currency translation differences (9)Balance at end of financial year 186186

2009

Balance at beginning of financial year 169

Currency translation differences (4)

Balance at end of financial year 165


105


26. Share capital

Group and CompanyGroup and Company2010 2009 20102010 2009

Number of ordinaryNumber of ordinaryshares(‘000)shares(‘000) $’000 $’000

Issued and paid-up capital

Beginning and end of financial year 202,948 202,948 202,948 40,862 40,862 40,862

All issued shares are fully paid and have no par value. Fully paid ordinary shares carry one vote per share and

carry a right to dividends as and when declared by the Company.

27. Other reserves

Group20102010 2009

$’000 $’000

(a) Comprise of:

Asset revaluation reserve 569569 569

Currency translation reserve (5,562)(5,562) (2,285)

Other reserve 6,3726,372 6,372

1,3791,379 4,656

(b) Movements: Group20102010 2009

$’000 $’000

(i) Asset revaluation reserve(i) Asset revaluation reserve Balance at beginning and end of financial year 569 569 569

(ii) Currency translation reserve(ii) Currency translation reserveBalance at beginning of financial year (2,285)(2,285) (1,081)

Net currency translation differences (4,204)(4,204) (1,716)

Non-controlling interests 927927 512

Balance at end of financial year (5,562)(5,562) (2,285)

(iii) Other reserve(iii) Other reserveBalance at beginning and end of financial year 6,3726,372 6,372

Other reserve represents reserve arising from restructuring exercise in 2001 as a result of listing of the Company.


106


28. Statutory reserves


$’000$’000 $’000

Enterprise expansion fund 3,8233,823 3,106

Reserve fund 4,2294,229 3,581

8,0528,052 6,687

In accordance with the “Law of the PRC on Joint Ventures Using Chinese and Foreign Investment” and the

Articles of Association of the subsidiaries, appropriations from net profit should be transferred to the Reserve

Fund and the Enterprise Expansion Fund, after offsetting accumulated losses from prior years, and before

profit distributions to shareholders. The percentages to be transferred to the Reserve Fund and the Enterprise

Expansion Fund are determined by the Board of Directors of the subsidiaries. The transfer to these reserves

must be made before profit distributions to shareholders.

In obtaining approval from the Board of Directors of the subsidiaries, the Enterprise Expansion Fund can be used

to expand production capacity or to increase capital, and the Reserve Fund can be used to offset accumulated

losses or to increase capital.


$’000$’000 $’000

Movements in statutory reserves

Enterprise expansion fund


Transfer from retained earnings 717717 756


Reserve fund


Transfer from retained earnings 648648 1,359


29. Dividends

Group and CompanyGroup and Company20102010 2009

$’000 $’000

Ordinary dividends paid

First and final dividend paid in respect of the previous financial year of 0.9 cents

per share 1,8271,827 –

At the forthcoming Annual General Meeting on 28 April 2011, a tax exempt (one-tier) first and final of 0.6 cents

(2009: 0.9 cents) per ordinary share amounting to a total of approximately $1,218,000 (2009: $1,827,000) will

be recommended. These financial statements do not reflect this dividend, which will be accounted for in the

shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2011.


107


30. Commitments

(a) Operating lease commitments – where the Group is a lessee

The Group leases factories under non-cancellable operating lease agreements. The leases have varying

terms, escalation clauses and renewal rights.

The future minimum lease payments for properties under non-cancellable operating leases with terms

within one year are analysed as follows:


$’000$’000 $’000

Not later than one year 62 52

(b) Operating lease commitments – where the Group is a lessor

The Group and Company lease out investment properties to non-related parties under non-cancellable

operating leases. The lessees are required to pay a fixed annual increasing rental during the lease period.

The future minimum lease payments receivable from investment properties under non-cancellable

operating leases with terms within one to ten years are analysed as follows:

GroupGroup2010 2009

$’000 $’000

Not later than one year 160 170

Between two and five years 1,0741,074 1,033

Later than five years 57 334

1,2911,291 1,537

(c) Capital commitments

Capital expenditures contracted for at the end of the reporting period but not recognised in the financial

statements are as follows:

GroupGroup2010 2009

$’000 $’000

Property, plant and equipment 623 –

Land use rights 2,5072,507 –

3,1303,130 –


108


31. Financial risk management

Financial risk factors

The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and

liquidity risk. The Group’s overall risk management strategy seeks to minimise any adverse effects from the

unpredictability of financial markets on the Group’s financial performance.

The Board of Directors is responsible for setting the objectives and underlying principles of financial risk

management for the Group.

(a) Currency risk

The Group operates primarily in the PRC and is exposed to foreign exchange risk arising from various

currency exposures including Renminbi (“RMB”), Japanese Yen (“JPY”) and United States Dollars (“USD”)

as sales and purchases to customers are primarily in those currencies.

The Group does not have a formal policy with respect to the abovementioned foreign exchange

transactions and have not undertaken any hedging activities as the Group believes that the practice

of using the same currencies for sales and purchases as far as possible provides a natural hedge and

reduces the exposure to foreign exchange fluctuations. If the Group’s business volumes grow in the

future, the directors may consider hedging the foreign exchange currency risks.

The financial statements of Chinese subsidiaries were translated from RMB to SGD to be included in the

Group’s consolidated financial statements.

The Group’s and the Company’s currency exposure based on the information provided to key

management is as follows:

RMBRMB JPYJPY USDUSD OthersOthers TotalTotal$’000 $’000 $’000 $’000 $’000

GroupGroupAt 31 December 2010At 31 December 2010Assets

Cash and cash equivalents 5,591 7,0437,043 1,5941,594 39 14,26714,267Trade and other receivables 17,91917,919 12,72912,729 10,98410,984 690690 42,32242,322

23,510 19,77219,772 12,57812,578 729729 56,58956,589

Liabilities

Borrowings 7,4427,442 –– 2,5862,586 2,2982,298 12,32612,326Trade and other payables 19,28419,284 18,21518,215 941941 495 38,93538,935Bills payable 3,4663,466 –– – –– 3,4663,466

30,19230,192 18,21518,215 3,5273,527 2,7932,793 54,72754,727

Net financial assets/ (liabilities) (6,682)(6,682) 1,5571,557 9,0519,051 (2,064)(2,064) 1,8621,862Currency exposure of financial assets/(liabilities)

net of those denominated in the respective

entities’ functional currencies (1,847)(1,847) –– 9,0519,051 690690 7,8947,894


109


31. Financial risk management (cont’d)

(a) Currency risk (cont’d)

RMBRMB JPYJPY USDUSD OthersOthers TotalTotal$’000 $’000 $’000 $’000 $’000

Group

At 31 December 2009

Assets

Cash and cash equivalents 9,853 5,111 855 50 15,869

Trade and other receivables 20,166 10,463 10,440 337 41,406

30,019 15,574 11,295 387 57,275

Liabilities

Borrowings 11,109 4,690 2,810 2,525 21,134

Trade and other payables 18,478 15,483 539 395 34,895

Bills payable 6,432 – – – 6,432

36,019 20,173 3,349 2,920 62,461

Net financial assets/ (liabilities) (6,000) (4,599) 7,946 (2,533) (5,186)

Currency exposure of financial assets/(liabilities)

net of those denominated in the respective

entities’ functional currencies (399) – 7,946 288 7,835

RMBRMB JPYJPY USDUSD SGDSGD Total$’000 $’000 $’000 $’000 $’000

CompanyCompanyAt 31 December 2010At 31 December 2010Assets

Cash and cash equivalents – – –– 3636 36Trade and other receivables 2,9902,990 –– – –– 2,9902,990

2,9902,990 –– –– 3636 3,0263,026

Liabilities

Borrowings – –– 2,5862,586 2,2982,298 4,8844,884Trade and other payables – – –– 493493 493493

– –– 2,5862,586 2,7912,791 5,377

Net financial assets/ (liabilities) 2,9902,990 –– (2,586)(2,586) (2,755)(2,755) (2,351)(2,351)

Company

At 31 December 2009

Assets

Cash and cash equivalents – – – 1 1

Trade and other receivables 6,059 – – – 6,059

6,059 – – 1 6,060

Liabilities

Borrowings – – 2,810 2,525 5,335

Trade and other payables – – – 382 382

– – 2,810 2,907 5,717

Net financial assets/ (liabilities) 6,059 – (2,810) (2,906) 343


110



(a) Currency risk (cont’d)

If the USD and RMB change against the SGD by 2% (2009: 2%) and 3% (2009: 3%) respectively with all

other variables including tax rate being held constant, the effects arising from the net financial assets/

liabilities position will be as follows:

20102010 2009

Increase/(Decrease)Increase/(Decrease) Increase/(Decrease)

Net ProfitNet Profi t EquityEquity Net Profit Equity

$’000 $’000 $’000 $’000

GroupGroupUSD against SGD

- strengthened 181181 181181 159 159

- weakened (181)(181) (181)(181) (159) (159)

RMB against SGD

- strengthened (55)(55) (55)(55) (12) (12)

- weakened 5555 55 12 12

20102010 2009

Increase/(Decrease)Increase/(Decrease) Increase/(Decrease)

Net ProfitNet Profi t EquityEquity Net Profit Equity

$’000 $’000 $’000 $’000

CompanyCompanyUSD against SGD

- strengthened (52)(52) (52) (56) (56)

- weakened 52 52 56 56

RMB against SGD

- strengthened 90 90 182 182

- weakened (90)(90) (90)(90) (182) (182)

(b) Interest rate risks

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are

substantially unaffected by changes in market interest rates, except for the interest rate risks arising from

the Group’s borrowings.

The Group’s interest risk mainly arises from borrowings, details of which are set out in Note 23(c).

Borrowings obtained at variable rates expose the Group and the Company to cash flow interest rate risk.

Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group’s policy

is to obtain the most favourable interest rates available without increasing its foreign currency exposure.

Surplus funds are placed with reputable banks.

The Group’s borrowings at variable rates on which effective hedges have not been entered into, are

denominated mainly in RMB, JPY and USD. If their interest rates increase/decrease by 0.5% (2009:

0.5%) with all other variables including tax rate being held constant, the Group’s net profit will be lower/

higher by $28,000 (2009: $64,000).

The Company’s borrowings at variable rates on which effective hedges have not been entered into, are

denominated mainly in USD. If the USD interest rates increase/decrease by 0.5% (2009: 0.5%) with all

other variables including tax rate being held constant, the Company’s net profit will be lower/higher by

$13,000 (2009: $14,000).


111



(c) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial

loss to the Group. The major classes of financial assets of the Group and of the Company are bank

deposits and trade receivables. For trade receivables, the Group adopts the policy of dealing only with

customers of appropriate credit history to mitigate credit risk. For other financial assets, the Group adopts

the policy of dealing only with high credit quality counterparties.

The Group’s companies, except for Fujian J.K. Wiring Systems Co., Ltd, do not have a significant

exposure to any individual customer or counterpart. Fujian J.K. Wiring Systems Co., Ltd is a contract

manufacturer of Sumitomo Wiring Systems Ltd, a company established in Japan, being the only customer

of Fujian J.K. Wiring Systems Co., Ltd.

The credit risk for trade receivables based on the information provided to key management is as follows:

Group20102010 2009

$’000 $’000

By geographical areas

China 15,47815,478 15,831

Japan 12,70312,703 10,372

America 7,4887,488 7,170

Malaysia 2,3962,396 2,410

Other countries 730 824

38,79538,795 36,607

Most of the Group’s cash and cash equivalents are deposited with banks in PRC. The carrying amounts

of trade receivables represent the Group’s maximum exposure to credit risk in relation to its financial

assets. The Group’s credit terms range from 90 days to 180 days.

No other financial assets carry a significant exposure to credit risk.

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high

credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither

past due nor impaired are substantially companies with a good collection track record with the

Group.

(ii) Financial assets that are past due and/or impaired

There is no other class of financial assets that is past due and/or impaired except for trade

receivables.

The age analysis of trade receivables past due but not impaired is as follows:

GroupGroup2010 2009

$’000 $’000

Past due 0 to 6 months 3,9413,941 5,329

Past due over 6 months 5,786 8,320

9,7279,727 13,649


112



(c) Credit risk (cont’d)

(ii) Financial assets that are past due and/or impaired (cont’d)

The carrying amount of trade receivables individually determined to be impaired and the movement

in the related allowance for impairment are as follows:


$’000 $’000

Past due 0 to 6 months 2,1362,136 1,841

Past due over 6 months 11,84911,849 10,332

13,98513,985 12,173

Less: Allowance for impairment (9,727) (8,195)

4,2584,258 3,978

The impaired trade receivables arise mainly from long outstanding debts.

(d) Liquidity risk

The Group adopts prudent liquidity risk management by maintaining sufficient cash and having adequate

committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group aims at

maintaining flexibility in funding by keeping committed credit lines available.

The table below analyses non-derivative financial liabilities of the Group and the Company into relevant

maturity groupings based on the remaining period from the end of the reporting period to the contractual

maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances

due within 12 months equal their carrying amounts as the impact of discounting is not significant.

CarryingCarryingamountamount

Cash flowsCash fl owsContractualContractualcash flowscash fl ows

Within1 year1 year

Within1 to 5 years1 to 5 years

More thanMore than5 years5 years

$’000 $’000 $’000$’000 $’000 $’000

20102010Trade payables 32,42132,421 32,421 32,42132,421 –– –Other payables 6,5146,514 6,5146,514 6,5146,514 –– –Bills payable 3,4663,466 3,466 3,4663,466 –– –Bank overdraft 347347 366 366366 –– –Bank loans 11,97911,979 12,76012,760 11,13511,135 1,040 585585

54,72754,727 55,52755,527 53,90253,902 1,040 585585

2009

Trade payables 28,043 28,043 28,043 – –

Other payables 6,852 6,852 6,852 – –

Bills payable 6,432 6,432 6,432 – –

Bank overdraft 29 31 31 – –

Bank loans 21,080 22,203 19,950 1,593 660

Obligation under finance

lease 25 28 28 – –

62,461 63,589 61,336 1,593 660


113



(e) Capital risk

The Group’s objectives when managing capital are:

• to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide

returns for shareholders and benefits for other stakeholders, and

• to provide an adequate return to shareholders by pricing products and services commensurately

with the level of risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure

and makes adjustments to it in the light of changes in economic conditions and the risk characteristics

of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the

amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets

to reduce debt.

The Group monitors capital based on a gearing ratio.

The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings

plus bills payable, trade and other payables less cash and cash equivalents. Total capital comprises all

components of equity (i.e. share capital, non-controlling interests, retained earnings, other reserves and

statutory reserves). The gearing ratios at 31 December 2010 and 2009 were as follows:


$’000$’000 $’000

Total debt 54,72754,727 62,461

Less: cash and cash equivalents (14,267)(14,267) (15,869)

Net debt 40,46040,460 46,592

Total equity 90,43690,436 82,654

Debt-to-adjusted equity ratio 0.450.45 0.56

(f) Fair value measurements

The Group does not have any financial instruments as at end of the reporting period which are carried at

fair value.

The carrying values less impairment allowance of trade receivables and payables are assumed to

approximate their fair values. The fair values of financial liabilities for disclosure purposes is estimated

based on quoted market prices or dealer quotes for similar instruments by discounting the future

contractual cash flows at the current market interest rate that is available to the Group for similar financial

instruments. The fair value of current borrowings approximates their carrying amount.


114


32. Significant related party transactions

In addition to the related party information shown elsewhere in the consolidated financial statements of the

Group, the following transactions took place between the Group and related parties during the financial year

ended 31 December 2010 on terms agreed by the parties concerned:

(a) Sales and purchases of goods and services

Sumitomo WiringSumitomo WiringSystems Ltd Systems Ltd (1) (1)

Juan KuangJuan Kuang (Pte) Ltd(Pte) Ltd (2) (2)

Juan KuangJuan Kuang Holdings Sdn BhdHoldings Sdn Bhd (2)(2)

Hubei JuanHubei JuanKuang ElectricKuang ElectricTechnologiesTechnologies

LimitedLimited (3)(3)

20102010 2009 20102010 2009 20102010 2009 20102010 2009

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Sales of goods 114,765114,765 77,979 725 406 450 457 – – 1,437

Purchase of raw

Materials from 50,759 38,047 – – – – – –

(1) Sumitomo Wiring Systems Ltd is a minority shareholder of one of the Company’s subsidiaries, Fujian J.K

Wiring Systems Co., Ltd.

(2) Juan Kuang (Pte) Ltd and Juan Kuang Holdings Sdn Bhd are related to the Company and the Group through

common directors.

(3) Hubei Juan Kuang Electric Technologies Limited is related to the Company and the Group through common

directors, the Group’s subsidiary has acquired it during the financial year.

Outstanding balances at 31 December 2010, arising from sale/purchase of goods and services,

are unsecured and receivable/payable within 12 months from the end of the reporting period and are

disclosed in Notes 13 and 22 respectively.

(b) Key management’s remuneration

Key management personnel of the Company are those persons having the authority and responsibility for

planning, directing and controlling activities of the company. The directors and executive officers of the

Company are considered as key management personnel of the Company.

The key management’s remuneration included fees, salary, bonus, commission and other emoluments

(including benefits-in-kind) computed based on the cost incurred by the Group and the Company, and

where the Group or Company did not incur any costs, the value of the benefit. The key management’s

remuneration is as follows:

GroupGroup20102010$’000

2009

$’000

Directors’ fees 204 168

Salaries and other short term employee benefits 1,687 1,017

Contribution to defined contribution plans 25 10

1,916 1,195

Included in the above is total compensation to directors of the Company amounting to $1,222,000 (2009:

$675,000).


115


33. Segment information

For management purposes, the Group is organised business units based on their products and services, and

has four main reportable operating segments as follows:

- Electric lighting products – manufacture and sale of electrical lighting products, fixtures and accessories

- Wire harness – manufacture and sale of wire harness products

- Semiconductor – manufacture, assembly and sale of semiconductor and multi-layer packages

- Others – manufacture of safe deposit box and rental of investment properties

Segment assets consist primarily of property, plant and equipment, inventories, trade and other receivables,

cash and cash equivalents, and mainly exclude investment properties and inter-segment balances. Segment

liabilities comprise operating liabilities and exclude inter-segment balances. Capital expenditures comprise

additions to property, plant and equipment (Note 18), land use rights (Note 19) and addtions of intangible assets

(Note 21).

Segment accounting policies are the same as the policies described in Note 2.

The following tables present revenue and profit information regarding industry segments for the year ended 31

December 2010 and certain asset and liability information regarding industry segments at 31 December 2010.

ElectricElectriclighting productslighting products Wire harnessWire harness SemiconductorSemiconductor Others EliminationElimination GroupGroup

20102010 2009 20102010 2009 20102010 2009 20102010 2009 20102010 2009 20102010 2009

$’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000

Revenue

- External sales 95,63295,632 81,786 114,765114,765 77,942 3,527 3,455 – – – – 213,924213,924 163,183

- Inter-segment sales 19,80319,803 15,263 – – – – – – (19,803)(19,803) (15,263) – –

Segment result 13,31013,310 11,909 6,0796,079 4,491 (310)(310) (167) – – – – 19,07919,079 16,233

Finance costs (260)(260) (804)

Share of profit of an

associated company 5151 235

Profit before income tax 18,87018,870 15,664

Income tax expense (3,780)(3,780) (3,211)

Profit from continuing

operations 15,09015,090 12,453

Loss from discontinued

operations (565) (565) (372)

Total profit for the year 14,52514,525 12,081

Equity holders of the

Company 12,53712,537 10,468

Non-controlling interests 1,9881,988 1,613

14,52514,525 12,081


116


33. Segment information (cont’d)

ElectricElectriclighting productslighting products Wire harnessWire harness SemiconductorSemiconductor OthersOthers GroupGroup

20102010 2009 20102010 2009 20102010 2009 20102010 2009 20102010 2009

$’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000

Segment assets 79,41879,418 78,429 46,32646,326 46,261 5,5675,567 6,223 8,2818,281 9,015 139,592139,592 139,928

Unallocated assets 7,2997,299 7,478

146,891146,891 147,406

Segment liabilities 19,60619,606 22,029 23,31623,316 20,289 574574 662 633 638 44,12944,129 43,618

Unallocated liabilities 12,32612,326 21,134

56,45556,455 64,752

Other segment information:

Additions of intangible assets 127127 124 – – – – – – 127127 124

Capital expenditure 3,3003,300 3,517 2,5682,568 1,313 6868 699 245245 1,311 6,1816,181 6,840

Depreciation and amortisation 3,0713,071 3,016 1,7171,717 1,850 697697 700 278 290 5,7635,763 5,856

Other non–cash expenses 2,4132,413 1,072 – – – – 109109 – 2,5222,522 1,072

Geographical segment

The Group’s three business segments operate in the following geographical areas:

PRC – the area of operations mainly arise from energy saving lighting products, low voltage electrical, low

voltage and semiconductor activities.

Japan – the area of operations mainly arise from wire harness activities.

America – the area of operations mainly arise from energy saving lighting products, low voltage electrical and

low voltage activities.

Others – the area of operations mainly arise from low voltage electrical and low voltage activities in Europe and

Southeast Asia regions.

PRCPRC JapanJapan America*America* OthersOthers GroupGroup20102010 2009 20102010 2009 20102010 2009 20102010 2009 20102010 2009

$’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000 $’000$’000 $’000

Segment revenue

Sales to external customers 50,42450,424 41,597 114,765114,765 77,755 41,05341,053 32,702 7,6827,682 11,129 213,924213,924 163,183

Other geographical information

Segment assets 144,390144,390 144,739 – – – – 2,5012,501 2,667 146,891146,891 147,406

Capital expenditure 6,1816,181 6,838 – – – – – 2 6,1816,181 6,840

* A larger portion of the America sales above was executed through one of our distributors in Hong Kong.

Sales are based on the country in which the customer is located. Total assets and capital expenditure are shown

by the geographical area where the assets are located.

Information about a major customer

Revenue from one major customer amounts to $36,709,000 (RMB182,453,000) [2009: $15,612,000 (RMB

73,323,000)], arising from sales by the electric lighting products segment.


117


34. Prior year reclassification and comparative fi gures

Land use rights with carrying value of $5,171,000 as at 31 December 2009, and $5,385,000 as at 31 December

2008 were classified under “Property, plant and equipment” in the prior years. The amount have been

reclassified as ”Land use rights” separately to better reflect the nature of the balances and to conform to the

requirements of Singapore Financial Reporting Standards. The items reclassified were as follows:

GroupGroup

RestatedRestated2008

RestatedRestated2009

PreviouslyPreviouslyreportedreported

20082008

PreviouslyPreviouslyreportedreported

2009$’000 $’000 $’000$’000 $’000$’000

Statement of financial positionStatement of fi nancial positionProperty, plant and equipment 42,174 42,158 47,559 47,329

Land use rights 5,385 5,171 – –

35. Business combinations

On 1 October 2010, the Group’s subsidiary Fujian Juan Kuang Yaming Electric Limited (“FJKYM”), acquired

the 100% equity interests of a new subsidiary Hubei Juan Kuang Electric Technologies Limited (“HBJK”).

The principal activity of Hubei JK is that of manufacture and sale of related electrical lighting products. The

investment is made with the objective of expanding another induction lamp production base to keep up with the

anticipated rising demand of the Group’s induction lighting products.

(a) Identifiable assets acquired and liabilities assumed

The fair value of the identifiable assets and liabilities acquired as at date of acquisition and cash flow

effects of the acquisition were as follows:

At Fair value

$’000

Cash and cash equivalent 583

Trade and other receivables 257

Inventories 409

Other current assets 410

Property, plant and equipment 1,879

Trade and other payables (1,360)

Net identifiable assets acquired 2,178

Cash consideration 2,178

Less: Cash and cash equivalents acquired (583)

Net cash outflows from acquisition of a subsidiary 1,595

(b) Acquisition-related costs

Acquisition-related costs of $6,000 are included in administrative expenses in the consolidated statement

of comprehensive income and in operating cash flows in the consolidated statement of cash flows.


118


35. Business combinations (cont’d)

(c) Revenue and profit contribution

The acquired business contributed revenue of $1,222,000 and net profit of $73,000 to the Group for the

period from 1 October 2010 to 31 December 2010. Had HBJK been consolidated from 1 January 2010,

consolidated revenue and consolidated profit for the year ended 31 December 2010 would have been

$214,500,000 and $14,518,000 respectively.

36. New accounting standards and FRS interpretation

Below are the mandatory standards, amendments and interpretations to existing standards that have been

published, and are relevant for the Group’s accounting periods beginning on or after 1 January 2011 or later

periods and which the Group has not early adopted:

• Amendments to FRS 24 – Related party disclosures (effective for annual periods beginning on or after 1

January 2011)

• Amendments to FRS 32 Financial instruments: Presentation – classification of rights issues (effective for

annual periods beginning on or after 1 February 2010)

• INT FRS 119 Extinguishing financial liabilities with equity instruments (effective for annual periods

commencing on or after 1 July 2010)

• Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets (effective for annual periods

commencing on or after 1 January 2012)

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the

future periods will not have a material impact on the financial statements of the Group and of the Company in

the period of their initial adoption, except for:-

Amendments to FRS 24 – Related party disclosures.

The amendment removes the requirement for government-related entities to disclose details of all transactions

with the government and other government-related entities. It also clarifies and simplifies the definition of a

related party. However, the revised definition of a related party will also mean that some entities will have more

related parties and will be required to make additional disclosures.

Management is currently considering the revised definition to determine whether any additional disclosures will

be required and has yet to put systems in place to capture the necessary information. It is therefore not possible

to disclose the financial impact, if any, of the amendment on the related party disclosures.

Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets

The amendments introduce a presumption that an investment property is recovered entirely through sale.

This presumption is rebutted if the investment property is held within a business model whose objective is to

consume substantially all of the economic benefits embodied in the investment property over time, rather than

through sale.

Management is currently considering the revised definition to determine whether any adjustments will be

required and has yet to determine whether the investment properties will be recovered entirely through sale or

to consume substantially all of the economic benefits embodied in the investment properties over time. It is

therefore not possible to disclose the financial impact, if any, of the amendment on the deferred tax liabilities

disclosures.


119


37. Determination of functional currency of a subsidiary - limitations on retrospective restatement in asubsidiary

During the year, the Group has reassessed the functional currency of one of the subsidiaries, Fujian J.K Wiring

Systems Co., Ltd (“JKW”) and determined that the appropriate functional currency for this subsidiary is the

Japanese Yen. The Group had been using the Chinese Renminbi as the functional currency of JKW since its

incorporation. Therefore, there is a prior period error which should ordinarily be corrected by retrospective

restatement as required by FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Notwithstanding the above, the Group has assessed that retrospective restatement is impracticable as it

would involve recreating the financial information from date of incorporation. Therefore, as permitted by FRS

8, the Group decided to correct the error prospectively from the earliest date practicable which the Group has

determined to be 1 January 2010. However, the Group has assessed the impact of using the incorrect functional

currency of JKW on the financial statements of the Group for the financial year ended 31 December 2010 and

concluded that the impact is immaterial. Accordingly, the Group has not made any adjustments relating to this

matter in the financial statements.

38. Authorisation of fi nancial statements

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of

JK Yaming International Holdings Ltd on 31 March 2011.


120

�� (Company Registration No: 199906353N)

Unaudited First Quarter Financial Statement

PART 1 - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR ANDFULL YEAR RESULTS

1(a) An income statement (for the group) together with a comparative statement for the Corresponding periodof the immediately preceding financial year.

(i) Income Statement for the First Quarter ended 31 March 2011

1st Quarterended 31 Mar

2011


2010Increase /

(Decrease)GROUP

S$'000 S$'000 %

Revenue 43,416 44,204 (1.8)

Cost of sales (35,724) (36,095) (1.0)

Gross profit 7,692 8,109 (5.1)

Other income - (net) 250 803 (68.9)

- Selling, general and administration (5,003) (4,722) 6.0

- Other expenses - Legal - (50) N.M.

- Finance cost (162) (201) (19.4)

- Share of (loss)/ profit of an associated company (49) 62 N.M.

Profit before income tax 2,728 4,001 (31.8)

Income tax expense (577) (841) (31.4)

Profit for the period 2,151 3,160 (31.9)

Attributable to:

Equity holders of the Company 1,972 2,916 (32.4)

Non-controlling interests 179 244 (26.6)

2,151 3,160 (31.9)

A Modest 2011 Head-start

The Group kicked off the year with a modest head-start. Total Group revenue declined by nearly 2% to S$43mn while theGroup pre-tax earnings for the first quarter fell by 32% to S$2.7mn, over the on-quarter comparison. Apart from the lowerrevenue, operating costs increase and lower other income were among the cited reasons for the earnings weakness duringthe past quarter. Consequently, a lower quarterly EPS of 0.97cents coupled with a NAV of 37.7 cents for each equity sharewere reported for the quarter under review.

121

APPENDIX V:UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 1Q11

1(a) An income statement (for the group) together with a comparative statement for the Corresponding periodof the immediately preceding financial year (cont’d).

(i) Income Statement for the First Quarter ended 31 March 2011 (cont’d)

Statement of Comprehensive Income

Profit for the period 2,151 3,160 (31.9)

Other comprehensive incomeCurrency translation differences arising fromconsolidation (1,565) (330) 374.2

Total comprehensive income for the period 586 2,830 (79.3)

Attributable to:

Equity holders of the Company 734 2,660 (72.4)

Non-controlling interests (148) 170 N.M.

586 2,830 (79.3)

(ii) Notes to the Consolidated Statement of Comprehensive Income


2011


2010Increase /

(Decrease)GROUP

S$'000 S$'000 %Depreciation of property, plant andequipment (1,356) (1,474) (8.0)

Amortisation of land use rights (24) (22) 9.1

Amortisation of intangible assets (25) (28) (10.7)

Foreign exchange (loss)/gain (net) (192) 27 N.M.

Interest on borrowings (162) (201) (19.4)

Interest income 12 10 20.0

N.M.*: Not Meaningful

122


1(b)(i) Statements of financial position (for the issuer and group), together with a comparative statement as atthe end of the immediately preceding financial year.

Statements of Financial Position Group Company

31.3.2011 31.12.2010 31.3.2011 31.12.2010

S$'000 S$'000 S$'000 S$'000Current Assets:

Inventories 33,734 29,633 - -

Trade receivables 18,504 23,437 - -

Other receivables 3,140 3,223 2,930 2,990

Other current assets 3,261 3,172 6 6

Amount owing by related parties 11,834 15,662 - -

Cash and cash equivalents 16,164 14,267 1 36Total current assets 86,637 89,394 2,937 3,032

Non-Current Assets:

Investment in subsidiaries - - 43,887 43,887

Investment in associate 1,322 1,401 1,125 1,125

Property, plant and equipment 40,416 41,573 1,255 1,277

Land use rights 5,575 5,695 - -

Investment properties 7,175 7,299 - -

Intangible assets 1,530 1,529 - -Total non-current assets 56,018 57,497 46,267 46,289

Total assets 142,655 146,891 49,204 49,321

Current Liabilities:

Trade payables 23,453 23,522 - -

Bills payable 3,194 3,466 - -

Other payables 7,059 6,260 497 493

Amount due to related parties 5,419 9,153 - -

Borrowings 10,757 10,923 3,847 3,481

Income tax liabilities 1,219 1,542 - -

Deferred income tax liabilities 183 186 - -Total current liabilities 51,284 55,052 4,344 3,974

Non-Current Liabilities:

Borrowings 1,263 1,403 1,263 1,403

Total liabilities 52,547 56,455 5,607 5,377

NET ASSETS 90,108 90,436 43,597 43,944

Capital and reserves attributable toequity holders of the Company

Share capital 40,862 40,862 40,862 40,862

Reserves 35,734 35,000 2,735 3,082

Share capital and reserves 76,596 75,862 43,597 43,944Non-controlling interests 13,512 14,574 - -TOTAL EQUITY 90,108 90,436 43,597 43,944

123


1(b)(ii) Aggregate amount of group’s borrowings and debt securities.Amount repayable in one year or less, or on demand

Group

As at 31.3.2011 As at 31.12.2010

Secured Unsecured Secured Unsecured

S$4,039,000 S$6,718,000 S$3,329,000 S$7,594,000

Amount repayable after one year

Group

As at 31.3.2011 As at 31.12.2010

Secured Unsecured Secured Unsecured

S$680,000 S$583,000 S$691,000 S$712,000

Details of any collateral

(a) Included in bank loans of the Group is a S$1.3mn outstanding loan and bank overdraft by the parent company secured bymortgages over its freehold property.

(b) Another bank loan of S$1.9mn included above is for our subsidiary “Anhui JK” being secured by legal mortgage of itsproperty and land use rights in China.

(c) RMB8.0mn (S$1.5mn equivalent) of short-term deposits in JKW was earmarked for a short-term loan taken up in JapaneseYen for an amount equivalent to S$1.5mn.

1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding periodof the immediately preceding financial year.

GROUP 1st Quarterended 31 Mar

2011


2010

S$'000 S$'000Cash flow from operation activities

Profit before income tax 2,728 4,001

Adjustment for non-cash items

Depreciation of property, plant and equipment 1,356 1,474

Amortisation of land use rights 24 22

Amortisation of intangible assets 25 28

Interest expenses 162 201

Interest income (12) (10)

Gain on disposal of property, plant and equipment (1) (3)

Share of loss/ (profit) of an associated company 49 (62)

Unrealised currency translation losses (582) (155)Operating profit before working capital change 3,749 5,496

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1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding periodof the immediately preceding financial year (cont’d).

GROUP 1st Quarterended 31 Mar

2011


2010

S$'000 S$'000

(Increase )/ decrease in

- inventories (4,101) (950)

- trade receivables 4,933 (659)

- other receivables 83 (1,322)

- other current assets (89) 260

- amount due from related parties 3,828 2,636

Increase / (decrease) in

- trade payables (69) (795)

- other payables 799 749

- amount due to related parties (3,734) (3,113)

Cash generated from operations 5,399 2,302

Interest received 12 10

Interest paid (162) (201)

Income tax paid (876) (1,021)

Net cash generated from operating activities 4,373 1,090

Cash flow from investing activities

Proceeds from disposal of property, plant and equipment 1 7

Purchases of property, plant and equipment (879) (810)

Additions of intangible assets (52) (10)

Net cash used in investing activities (930) (813)

Cash flow from financing activities

Proceeds from borrowings 1,519 3,359

(Repayment)/additions of bills payable (272) (267)

Repayment of borrowings (2,059) (3,703)

Bank deposits pledged with bank (1,536) -

Dividends - non-controlling interests (914) (712)Net cash used in financing activities (3,262) (1,323)

Net increase/(decrease) in cash and cash equivalents 181 (1,046)

Effects of exchange rate changes on cash and cash equivalents (241) (42)Cash and cash equivalents at beginning of financial period 13,920 10,848

Cash and cash equivalents at end of financial period 13,860 9,760

Note : Cash and cash equivalents

Cash and cash equivalents included in consolidated statement of cash flows comprise of following:

Group31 Mar 2011 31 Mar 2010

S$000 S$000Cash at bank and on hand 16,164 14,890Less: Short term bank deposits pledged (1,536) (4,973)Less: Bank overdraft (768) (157)

13,860 9,760

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1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equityother than those arising from capitalization issues and distributions to shareholders, together with acomparative statement for the corresponding period of the immediately preceding financial year.

GROUPSharecapital

Otherreserve

Revaluationreserve

Non-distributable

reserveTranslation

reserveRetainedearnings

Attributableto equity

holders ofthe

Company

Non-controllinginterests

Totalequity

S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000Balance as at 1 January2010 40,862 6,372 569 6,687 (2,285) 16,224 68,429 14,225 82,654Total comprehensiveincomefor the period - - - - (256) 2,916 2,660 170 2,830Transfer from retainedearnings to statutoryreserves - - - 233 - (233) - - -

Dividends paid- - - - - - - (712) (712)

Balance as at 31 March2010 40,862 6,372 569 6,920 (2,541) 18,907 71,089 13,683 84,772

-Balance as at 1 January2011 40,862 6,372 569 8,052 (5,562) 25,569 75,862 14,574 90,436Total comprehensiveincomefor the period - - - - (1,238) 1,972 734 (148) 586Transfer from retainedearnings to statutoryreserves - - - 237 - (237) - - -Dividends paid - - - - - - - (914) (914)Balance as at 31 March2011 40,862 6,372 569 8,289 (6,800) 27,304 76,596 13,512 90,108

COMPANY Share capitalRetainedearnings Total equity

S$'000 S$'000 S$'000

Balance as at 1 January 2010 40,862 8,170 49,032

Total comprehensive loss for the period - (360) (360)

Balance as at 31 March 2010 40,862 7,810 48,672

Balance as at 1 January 2011 40,862 3,082 43,944

Total comprehensive loss for the period - (347) (347)

Balance as at 31 March 2011 40,862 2,735 43,597

Non-distributable reserves represent amounts set aside in compliance with local laws in People’s Republic of China(“PRC”) where the Group operates. The amounts comprise enterprise expansion fund and general reserve fund.

126


1(d)(ii) Details of any changes in the company’s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of sharesfor cash or as consideration for acquisition or for any other purpose since the end of the previous periodreported on. State also the number of shares that may be issued on conversion of all the outstandingconvertibles, as well as the number of shares held as treasury shares, if any, against the total number of issuedshares excluding treasury shares of the issuer as at the end of the current financial period reported on and asat the end of the corresponding period of the immediately preceding financial year.

There was no change in the Company’s share capital during the first quarter ended 31 March 2011.

1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the currentfinancial period and as at the immediately preceding financial year.

31 March 2011 31 December 2010

Total number of issued ordinary sharesExcluding treasury shares 202,948,180 202,948,180

1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares asat the end of the current financial period reported on.

Not applicable.

2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. theSingapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalentstandard).

The figures have not been audited nor reviewed by our auditors.

3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications oremphasis of matter).

Not applicable.

4. Whether the same accounting policies and methods of computation as in the issuer’s most recently auditedannual financial statements have been applied.

The Group has adopted the same accounting policies and method of computation in the financial statements for thecurrent financial period compared to the audited financial statements for the financial year ended 31 December 2010.

5. If there are any changes in the accounting policies and methods of computation, including any required byan accounting standard, what has changed, as well as the reasons, for, and the effect of, the change.

Not applicable.

6. Earnings per ordinary share of the group for the current period reported on and the corresponding period ofthe immediately preceding financial year, after deducting any provision for preference dividends.

GROUP 31.03.2011 31.03.2010

(i) Based on the weighted averagenumber of ordinary shares on issue 0.97 cents 1.44 cents

(ii) On a fully diluted basis N.A. N.A.

Weighted average number ofordinary shares on issue applicableto basic earnings per share 202,948,180 202,948,180

* The company does not have any dilutive instruments as at 31 March 2011.

127


7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer atthe end of the (a) current period reported on and (b) immediately preceding financial year.

Group Company

31.03.2011 31.12.2010 31.03.2011 31.12.2010Net asset value per ordinary shareat the end of the financialperiod/year 37.7 cents 37.4 cents 21.5 cents 21.7 cents

Note:Net asset value per ordinary share as at 31 March 2011 and 31 December 2010 were calculated based on the numberof shares issued as at those dates of 202,948,180 of S$0.20 per share each.

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of thegroup’s business. The review must discuss any significant factors that affected the turnover, costs, andearnings of the group for the current financial period reported on, including (where applicable) seasonal orcyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets orliabilities of the group during the current financial period reported on.

Revenue by Segments 1Q11 1Q10 Chg Chg %S$'000 S$'000 S$'000 %

Electrical Lighting 17,543 21,247 (3,704) (17)

Wire Harness 25,193 21,812 3,381 16

Others 680 1,145 (465) (41)

Total 43,416 44,204 (788) (2)

Revenue -2% QoQGroup revenue recorded for the first quarter of the financial year was S$43mn, 2% lagged behind that of the correspondingquarter last year. Our wire harness segment recorded an increase of 16% on-quarter growth in revenue. However, salesperformance of other segments took a breather, resulting in a weaker quarter for the lighting segment. The segment saw a17% sag in revenue over the on-quarter comparison as stiffer market competitions began to abound. In spite of this weakness,induction lamps within the segment nevertheless continued to forge ahead recording a strong 41% revenue growth over thecomparison against 1Q10.

Gross Profit -5% QoQFollowing the revenue decline, the Group saw a 5% on-quarter drop in its gross profit to S$7.7mn for 1Q11, in part due to theincreasing material costs. Unfazed by the overall business slow down within the Group, induction lamps however remained ona strong growth path on the back of the holding up of its expansion programs, registering a remarkable 48% on-quarter growthin gross profit. In all, an overall lower Group gross margin was recorded at 17.7% for the past quarter, as compared to the18.3% previously.

Selling & Admin Operating Expenses +6% QoQAfter an excellent year in FY2010 and to support the anticipated business initiatives, R&D, sales and marketing activitiesstarted to kick in during the early part of the new financial year. These increased operating costs included staff costs increase,resulting in an overall 6% rise in the Selling and Admin (“S&A”) expenses. In cost-to-revenue measurement, or S&A Expenses% Revenue, it stood at a higher 11.5% at the quarterly close, as compared to last year’s 10.7%.

Glossary

FY Financial Year / Fiscal YearQoQ Quarter-on-Quarter, on-quarter, 1Q11 vs 1Q101Q11 First Quarter FY2011Forex Foreign ExchangeUSD US$, SGD Singapore $, RMB Chinese Yuan

128


Other IncomeOther income line as in the income statement saw a S$0.6mn drop on-quarter, due primarily to a special product developmentsubsidy grant being received last year. In addition, the unfavorable swing in foreign currency exchange difference taking placein the first quarter this year has further widened the on-quarter gap.

Net Profit After Tax -32% QoQPost-tax earnings for the quarter under review slid 32% to 2.2mn, compared to the S$3.2mn of the corresponding quarter inprevious year. As elaborated above, apart from the lower gross contribution caused by the contracted business volume, sellingand admin took a 6% Quarter-on-Quarter cost hike for increases in wages, staff incentive programs and the commitment inR&D programs. Other factors contributing to the lower net earnings were lower government subsidy income, foreign exchangelosses and share of losses from the associated company “JKE”.

Attributable Profit EPS -0.47 cents QoQProfit attributable to equity holders, posted for the quarter was S$2.0mn, against the S$2.9mn of 1Q10. Correspondingly, thistranslated into an EPS Earnings per Share of 0.97 cents for the quarter, or 0.47cents -32% lower than the 1.44 cents of 1Q10, as aconsequence to the aforesaid lower business volume and increased operating costs, largely.

Currency translation difference arising from group consolidationAs a result of a nearly 2% weaken RMB / SGD over the past quarter, a currency translation losses amounting to S$1.6mn wasreflected in the first quarter comprehensive income statement which has brought down the Group NAV.

Returns on Shareholder’s Equity ROE -6% QoQROE, or annualized attributable profit 1st quarter based expressed as a percentage of shareholder’s equity, stood at a lower 10.3%as compared to the 16% of prior year.

FINANCIAL POSITIONChanges during the past quarter ended 31 March 2011 were relatively subtle, though the Group financial position generallyimproved as Net Asset Value per share rose marginally to 37.7 cents from 37.4 cents 3 months ago.

Current Assets hovered around S$87mn as compared to the last year-end balance. Inventory stood S$4mn higher atS$34mn for the inventory built-up with turnover-cycle seen at 82-day. Net trade receivables however were at a lower S$19mnwith an improved DSO of 87-day as of the quarterly close. All in all, about 7% of the core subsidiary’s gross receivable wasinfrastructural lighting project related. Cash balance stood S$2mn higher at S$16mn which outsized total borrowing by S$4mn.

Non-current Assets comprising mainly of PPE or property, plant and equipment, remained constant at same level of net bookvalue of S$56mn as of the quarterly close. There was no significant movement during the past quarter.

Current Liabilities ended with a balance of S$51mn, or S$4mn lower than that 3 months earlier, due primarily to thesettlement of related party payable. The higher other payable reflected mostly the changed position in the advance paymentby our induction lamp customers. Short-term borrowings saw little changes over the past quarter.

Net Bank Borrowings remained at zero as total cash-on-hand outsized total bank borrowings.

Shareholder’s Equity for the Group, was S$1mn higher S$77mn level after recognizing the quarter’s low operating profitsand some currency translation losses arising from group consolidation. Consequently, net asset value per Share edged upslightly to 37.7 cents from 37.4 cents 3 months ago.

Cash Flow – Earnings generated for the quarter were comparatively lower. However, the timely trade receivable collectionfrom an infrastructure project during the quarter resulted in a positive working capital change, bumping up the quarter’s “netcash from operating activities” to S$4.4mn. Net cash used in the quarter for investing activities amounted to S$0.9mn, mainlyfor the production expansion program. After taking into account of the net cash used for financial activities during the quarter,the Group’s free cash flow stood at a positive S$3.4mn for this first quarterly close.

129


9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variancebetween it and the actual results.

Not applicable.

10. A commentary at the date of the announcement of the competitive conditions of the industry in which thegroup operates and any known factors or events that may affect the group in the next reporting period and thenext 12 months.

Japan massive earthquake and TsunamiTowards the end of the first quarter, Japan experienced a massive earthquake and a resulting tsunami which would cause adisruption to the country’s manufacturing supply chain. Our wire harness products are mostly for the exports to Japan throughour partnership with Sumitomo Wire Systems Ltd. Hence, our wire harness business will be affected by this March 11 disaster.Though its impact on the past quarter 1Q11 was little, our hire harness business has already started dealing with the disasteraftermath adjustments, as we expect a pull-back in the forthcoming 2Q11for this segment of business. We will continue toclosely monitor the situation and make further adjustments if required.

Induction Lamps growth continued to forge aheadAfter a great performance year in FY2010, our business growth momentum registered a slower pace in the first quarter of thenew financial year. Increased material and operating costs were among reasons, in addition to the intensifying competitivemarket condition. Hence, all businesses across the board took a breather in 1Q11 with the exception of induction lamps.

Despite the overall lower revenue growth over the past quarter across most segments, induction lamps continued to forgeahead racking up a significant 41% QoQ revenue growth. We expect this expansion program to stay on course contributinggreatly to the Group’s earnings backbone for the rest of the financial year. In 1Q11 alone, induction lamps contributed overone-fifths to the total Group revenue while its contribution to the Group’s gross profit was in excess of a half.

Prospects remain positiveWith Xingfan plant hardware gradually being set up in place, our greatness in induction lamps will scale us to greater heights.However, while we expect the demand for induction lamps to continue to come on stream, we are also mindful that theGroup’s earnings would likely be impacted by the trend of rising material and operating costs.

Looking ahead, notwithstanding the less-than-ideal performance in 1Q11, the Group foresees its earnings performance for therest of the financial year to be satisfactory, barring any unforeseen circumstances or unexpected developments.

11. Dividend(a) Current Financial Period Reported OnAny dividend declared for the current financial period reported on? NoName of Dividend: -Dividend Type: -Dividend Rate: -Tax Rate: -

(b) Corresponding Period of the Immediately Preceding Financial YearAny dividend declared for the corresponding period of the immediately preceding financial year?

No

(c) Date payableThe date payable for the dividend will be

Not applicable

(d) Books closure date

Not applicable

130


12. If no dividend has been declared / recommended, a statement to that effect.

No applicable

13. Interested Person Transactions for the Financial Period Ended 31 March 2011.

Aggregate value of all transactions conducted under a shareholders’ mandate approved at the AGM on 28 April 2011pursuant to Rule 920 of the SGX-ST Listing Manual.

2011 2010S$ ’000 S$ ’000

Juan Kuang Holdings Sdn Bhd (Group) 51 143Juan Kuang Pte Ltd 92 99

CONFIRMATION BY THE BOARD

We, Ang Chiong Chai and Tan Boon Kiat being two directors of JK Yaming International Holdings Ltd do hereby confirmon behalf of the directors that, to the best of our knowledge, nothing has come to the attention of the board of directorsof the Company which may render the first quarter 2011 financial results to be false or misleading, in any materialaspect.

On behalf of the directors

Ang Chiong Chai Tan Boon KiatExecutive Chairman Director

10/05/2011

131


132

In its announcement dated 10 May 2011 on the unaudited financial results of the Group for the threemonths ended 31 March 2011 (“1Q11”), the Company stated that:

“Prospects remain positive - With Xingfan plant hardware gradually being set up in place, our greatnessin induction lamps will scale us to greater heights. However, while we expect the demand for inductionlamps to continue to come on stream, we are also mindful that the Group’s earnings would likely beimpacted by the trend of rising material and operating costs. Looking ahead, notwithstanding the less-than-ideal performance in 1Q11, the Group foresees its earnings performance for the rest of the financialyear to be satisfactory, barring any unforeseen circumstances or unexpected developments” (the“Statement of Prospects”).

The Statement of Prospects, for which the Directors are solely responsible, was arrived at on basesconsistent with the accounting policies normally adopted by the Company and has been made on thefollowing assumptions:

(a) There will be no material changes in existing political, economic, legal or regulatory conditionsaffecting the activities of the Group, the industry or the country in which our customers operate.

(b) There will be no material changes in the bases or rates of taxation, tariffs, duties, currencyexchange rates, inflation rates and interest rates that may materially affect the Group’sperformance.

(c) There will be no material changes in the accounting policies which are consistent with those ofprior years and consistently applied in the forecast except changes made to comply with any newSingapore Financial Reporting Standards (FRS) that become effective in 1Q11.

(d) There will be no material changes in the structure and principal activities of the Group or in itsprimary sources of revenue.

(e) Induction lamps, the key earnings contributor for the Group continue to grow significantly with fairlygood current pricing and demand while relevant materials and operating costs are increasingmoderately.

(f) The commissioning of the Xingfan plant hardware will materially increase the Group’s volume ofproduction of induction lamps.

(g) There will be no material changes in the management of the Group.

(h) There will be no significant acquisition of property, plant or equipment except for those alreadyconsidered and approved by the Board in the budget for 1Q11.

(i) There will be no significant disposal of the Group’s property, plant and equipment.

(j) There will be no significant disruptions arising from industrial disputes, which will affect theoperations of the Group.

(k) There will be no significant acquisition or disposal of subsidiaries, associated companies and jointventures by the Group.

(l) There will be no material impairment to the carrying values of assets of the Group including assetsheld for investment, receivables, inventories and property, plant & equipment.

(m) There will be no exceptional circumstances which will require provisions to be made by the Groupin respect of any contingent liability or arbitration, threatened or otherwise, abnormal bad debts,uncompleted contracts or other assets.

(n) There will be no material changes to existing agreements or arrangements in relation to theGroup’s business operations.

APPENDIX VI:STATEMENT OF PROSPECTS

133

APPENDIX VII:REPORT OF THE AUDITORS ON THE STATEMENT OF PROSPECTS

134

APPENDIX VIII:LETTER FROM AmFRASER SECURITIES PTE. LTD. IN RELATION TO THE

STATEMENT OF PROSPECTS

AmFraser Securities Pte. Ltd.(Incorporated in the Republic of Singapore)(Company Registration No. 195500144H)

4 Shenton Way#13-01 SGX Centre 2

Singapore 068807

3 June 2011

To: The Independent Directors

160 Paya Lebar Road, #08-03Orion Industrial BuildingSingapore 409022

Dear Sirs

VOLUNTARY UNCONDITIONAL CASH OFFER TO ACQUIRE ALL THE ISSUED AND PAID-UPORDINARY SHARES IN THE CAPITAL OF JK YAMING INTERNATIONAL HOLDINGS LTD

Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall havethe same meanings herein.

This letter is prepared for inclusion in the circular to Shareholders dated 3 June 2011 (the “Circular”)issued by JK Yaming International Holdings Ltd (the “Company”) to its Shareholders in relation to theOffer.

The following statement of prospects was issued by the Company in its announcement of the Group’sunaudited interim financial results for the three months ended 31 March 2011 (“1Q11”) dated 10 May2011 and reproduced in Appendix VI of the Circular:

“Prospects remain positive - With Xingfan plant hardware gradually being set up in place, our greatness ininduction lamps will scale us to greater heights. However, while we expect the demand for inductionlamps to continue to come on stream, we are also mindful that the Group’s earnings would likely beimpacted by the trend of rising material and operating costs. Looking ahead, notwithstanding the less-than-ideal performance in 1Q11, the Group foresees its earnings performance for the rest of the financialyear to be satisfactory, barring any unforeseen circumstances or unexpected developments.” (the“Statement of Prospects”).

135

We have discussed the key bases and assumptions underlying the Statement of Prospects with themanagement of the Company. We have considered and relied on the Statement of Prospects by theCompany as set out in Appendix VI, as well as the letter addressed to the Board of Directors of theCompany by LTC LLP (“LTC”), the auditors of the Company, in relation to its review of the Statement ofProspects, as set out in Appendix VII.

We have relied on the accuracy and completeness of all financial and other information discussed with usand have assumed such accuracy and completeness for the purposes of providing this letter and havenot independently verified such information, whether written or verbal, and accordingly cannot and do notrepresent or warrant, and do not accept any responsibility for the accuracy, completeness or adequacy ofsuch information. We have not undertaken any independent evaluation or appraisal of any of the assetsor liabilities of the Company. Save as provided in this letter, we do not express any other opinion on theStatement of Prospects.

Based on our discussions with the management of the Company, and having considered the Statementof Prospects by the Company and the letter from LTC in relation to the Statement of Prospects as set outin Appendix VI and VII respectively, we are of the view that the Statement of Prospects (for which theDirectors are solely responsible) had been issued by the Board of Directors of the Company after dueand careful enquiry.

This letter is addressed to the Board of Directors of the Company for the sole purpose of complying withRule 25 of the Code, and we do not accept any responsibility to any other person (other than the Boardof Directors of the Company) in respect of, arising from or in connection with this letter.

Yours faithfully,For and on behalf ofAmFraser Securities Pte. Ltd.

Lim Tong Lee Tony Lee Beng YewDirector / Head of Corporate Finance Director – Corporate Finance

APPENDIX VIII:LETTER FROM AmFRASER SECURITIES PTE. LTD. IN RELATION TO THE

STATEMENT OF PROSPECTS

Documents

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