Boer Power Holdings Limited — Proxy Solicitation & Information Statement 2011

Nov 21, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Boer Power Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an offer or invitation to subscribe for or purchase any securities nor is it calculated to invite any such offer or invitation. In particular, this circular is not an offer of securities for sale in Hong Kong, the United States or elsewhere. Securities may not be offered or sold in the United States absent registration or an exemption from registration.

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BOER POWER HOLDINGS LIMITED 博耳電力控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1685)

(I) VERY SUBSTANTIAL ACQUISITION VOLUNTARY CONDITIONAL CASH OFFER FOR ALL SHARES IN SMB UNITED LIMITED, A COMPANY LISTED ON THE MAIN BOARD OF THE SINGAPORE EXCHANGE LIMITED (II) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to the Company

A letter from the Board of Directors of Boer Power Holdings Limited is set out on pages 6 to 20 of this circular.

A notice convening an extraordinary general meeting of Boer Power Holdings Limited to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 7 December 2011 at 2:30 p.m. is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you intend to attend and vote at the extraordinary general meeting or any adjourned meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any event not less than 48 hours before the time appointed for holding the such meeting or any adjourned meetings). Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjourned meeting should you so wish.

21 November 2011

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
THE ACQUISITION AND THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
ADDITIONAL DETAILS OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . .	12
FUTURE PLANS FOR THE OFFEREE GROUP AFTER
THE SUCCESSFUL CLOSE OF THE OFFER . . . . . . . . . . . . . . . . . . . . . .	12
INFORMATION ON THE OFFEREE, THE GROUP AND
THE OFFEROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
EFFECT OF THE OFFER ON THE ASSETS, LIABILITIES AND PROFITS
OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
REASONS AND BENEFITS OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . .	15
FINANCIAL AND TRADING PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . .	17
LISTING RULES REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
APPENDIX I — RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II — FINANCIAL INFORMATION ON THE GROUP . . . . . . . .	II-1
APPENDIX III — FINANCIAL INFORMATION ON
THE OFFEREE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV — PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	V-1
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

DEFINITIONS

In this circular, unless the context requires otherwise, the following terms shall have the following meanings:

• “Acquisition”

the acquisition of the Offer Shares pursuant to the Offer and the Compulsory Acquisition

• “Announcement Date”

the day the Acquisition and the Offer were announced, being 31 October 2011

• “Board”

the board of Directors of the Company

• “Closing Date”

• 5:30 p.m. on 19 December 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, being the last day for the lodgement of acceptances of the Offer

• “Company”

• Boer Power Holdings Limited, the Shares of which are listed on the Main Board of the Stock Exchange

• “Compulsory Acquisition”

• the compulsory acquisition of the Offeree Shares as mentioned in the section headed “Delisting and compulsory acquisition” in the “Letter from the Board”, which may be undertaken by the Offeror as described in such section

• “Consideration Offeree Shares”

• the 9,400,000 Offeree Shares in aggregate, which may potentially be validly allotted and issued pursuant to (and in accordance with the terms of) the S&P Agreement

• “Directors”

• the directors of the Company

• “EGM”

• the extraordinary general meeting to be convened and held by the Company on Wednesday, 7 December 2011 at 2:30 p.m. (which is prior to the successful close of the Offer) at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong to seek approval from Shareholders for, among other things, the Acquisition and the Offer

• “Enlarged Group”

• the Group as enlarged by the consolidation of the Offeree Group after the successful close of the Offer

– 1 –

DEFINITIONS

• “Existing Offeree Awards”

• the Offeree Awards granted on 3 October 2011 and 28 October 2011 by the Offeree under the Offeree Share Plan which may translate into 23,950,000 Offeree Shares or their equivalent cash value or a combination thereof

• “Group” the Company and its subsidiaries

• “HKFRS”

• Hong Kong Financial Reporting Standards

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Third Parties”

• independent third parties who are not connected persons of the Company and are independent of and not connected with the Company and the Directors, chief executive, controlling shareholders and substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules)

• “King Able”

• King Able Limited, a company incorporated in the British Virgin Islands

• “Last Trading Day” 28 October 2011, the last Market Day prior to the Announcement Day

• “Latest Practicable Date” 14 November 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing”

• the listing of the Company on the Main Board of the Stock Exchange

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Maximum Consideration”

• the estimated maximum consideration payable by the Offeror to satisfy the Offer in full

• “Market Day”

A day on which the SGX is open for trading of securities

– 2 –

DEFINITIONS

• “Offer”

• the voluntary conditional cash offer by PPCF, for and on behalf of the Offeror, to acquire all the Offer Shares for a consideration of S$0.32 (equivalent to approximately HK$1.94) in cash for each Offer Share held

• “Offer Announcement”

• announcement of the Offer released by PPCF in Singapore for and on behalf of the Offeror, on the Announcement Date

• “Offer Price”

• the consideration of S$0.32 per Offer Share

• “Offer Share(s)”

• all the Offeree Shares other than those already owned, controlled or agreed to be acquired by the Offeror, and shall include (i) all the Offeree Shares in issue, including any Offeree Shares owned, controlled or agreed to be acquired by any party acting or presumed to be acting in concert with the Offeror; (ii) any of the 23,950,000 Offeree Shares validly allotted and issued in satisfaction of (and in accordance with the terms of) the Existing Offeree Awards; and (iii) any of the 9,400,000 new Offeree Shares validly allotted and issued pursuant to (and in accordance with the terms of) the S&P Agreement. For the purposes of the Offer, an “Offer Share” refers to any one of the Offer Shares

• “Offeree”

• SMB United Limited, a company incorporated in Singapore under company number 199506364D, the Offeree Shares of which are listed on the Main Board of SGX

• “Offeree Award(s)”

• awards granted by the Offeree of fully-paid Offeree Shares or their equivalent cash value or a combination of both

• “Offeree Board” the board of directors of the Offeree

• “Offeree Group”

• the Offeree and its subsidiaries

– 3 –

DEFINITIONS

• “Offeree Issued Stock(s)”

• the allotment or issuance of Offeree Shares, the grant of Offeree Awards, the issuance of Offeree Stocks, the entering into of any agreement or undertaking to do any of the same or the causing to be done any act which would have the same effect as allotting or issuing Offeree Shares or granting Offeree Awards or issuing Offeree Stocks or otherwise having the same effect as diluting the voting rights in the Offeree

• “Offeree Shareholders” holders of Offeree Shares

• “Offeree Shares” all the issued and fully paid-up ordinary shares in the capital of the Offeree

• “Offeree Stock(s)”

• instruments convertible into rights to subscribe for and options in respect of securities being offered for or which carry voting rights in the Offeree

• “Offeror”

• Profit Sea Holdings Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of the Company

• “PPCF”

• PrimePartners Corporate Finance Pte. Ltd., the financial adviser to the Offeror in Singapore in respect of the Offer

• “PRC” the People’s Republic of China and, except where the context requires, reference in this circular to the PRC do not apply to Taiwan region or Hong Kong Special Administrative Region or Macau Special Administrative Region of the PRC

• “Prospectus”

• the prospectus of the Company dated 7 October 2010 in relation to the global offering of its Shares

• “RMB” or “Renminbi” Renminbi, the lawful currency of the PRC

• “S$”

• Singapore dollar, the lawful currency of Singapore

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “SFRS”

• Singapore Financial Reporting Standards

• “SGX”

• The Singapore Exchange Securities Trading Limited (trading as the Singapore Exchange (SGX))

– 4 –

DEFINITIONS

“Shareholders” holders of Shares “Shares” ordinary shares of HK$0.10 each in the share capital of the Company

“SIC” the Securities Industry Council of Singapore, the regulatory authority in Singapore that administers and enforces the Singapore Code

• “Singapore Code” the Singapore Code on Take-overs and Mergers

• “Singapore Companies Act” the Companies Act (Cap. 50) of Singapore

• “Singapore Securities and the Securities and Futures Act (Cap. 289) of Singapore Futures Act”

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

“S&P Agreement” the sale and purchase agreement for the acquisition of 440,400 ordinary shares in the issued share capital of Quantum Automation Pte. Ltd. by the Offeree, announced by the Offeree Board on 31 October 2011 as having been entered into on 28 October 2011 “VWAP” volume weighted average price of each Offeree Share

S$ is converted into HK$ at an exchange rate of S$1.00 = HK$6.06 for illustrative purposes in this circular.

– 5 –

LETTER FROM THE BOARD

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BOER POWER HOLDINGS LIMITED 博耳電力控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1685)

Executive Directors: Mr. Qian Yixiang Ms. Jia Lingxia Mr. Zha Saibin Mr. Qian Zhongming Mr. Huang Liang

Non-executive Director: Mr. Zhang Huaqiao

Independent non-executive Directors: Mr. Yeung Chi Tat Mr. Tang Jianrong Mr. Zhao Jianfeng

Registered office: Clifton House 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Headquarters and head office in the PRC: National Highway No. 312 Luoshe Town Huishan District Wuxi City Jiangsu Province PRC

Principal place of business in Hong Kong: Unit No. 1805 18/F, Infinitus Plaza No. 199 Des Voeux Road Central Hong Kong

21 November 2011

To the Shareholders

Dear Sir,

(I) VERY SUBSTANTIAL ACQUISITION VOLUNTARY CONDITIONAL CASH OFFER FOR ALL SHARES IN SMB UNITED LIMITED, A COMPANY LISTED ON THE MAIN BOARD OF THE SINGAPORE EXCHANGE LIMITED (II) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Company’s announcement made on the Announcement Date in relation to the Acquisition and the Offer which constitute a very substantial acquisition for the Company.

– 6 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (1) further details in relation to the aforesaid transactions, (2) further information on the Offeree Group, and (3) a notice of the EGM at which resolutions will be proposed to consider and, if thought fit, to approve, among other things, the Acquisition and the Offer.

THE ACQUISITION AND THE OFFER

On the Announcement Date, the Board and PPCF (for and on behalf of the Offeror, an indirect wholly-owned subsidiary of the Company) in Singapore announced that the Offeror intended to make a voluntary conditional cash offer for all the Offer Shares for a consideration of S$0.32 (equivalent to approximately HK$1.94) in cash for each Offer Share held. Such consideration represents:

• (1) a premium of approximately 1.6% over the closing price of S$0.315 per Offeree Share on the Latest Practicable Date;

• (2) a premium of approximately 16.4% over the closing price of S$0.275 per Offeree Share on the Last Trading Day;

• (3) a premium of approximately 16.8% over the VWAP on the SGX of S$0.274 for the one-month period prior to the Last Trading Day;

• (4) a premium of approximately 21.7% over the VWAP of S$0.263 for the three-month period prior to the Last Trading Day;

• (5) a premium of approximately 23.1% over the VWAP of S$0.260 for the six-month period prior to the Last Trading Day; and

• (6) a premium of approximately 28.0% over the VWAP of S$0.250 for the 12-month period prior to the Last Trading Day.

The Offer Price also represents a premium of approximately 9.2% over the net asset value per Offeree Share of S$0.293 as at 30 June 2011.

The quantum of the consideration per Offeree Share was determined based on the historical and prevailing market capitalisation of the Offeree, the net asset value of the Offeree as at 30 June 2011 and the nature and prospect of the Offeree’s business operations.

On 21 November 2011, PPCF, on behalf of the Offeror, has issued the formal offer document setting out the terms and conditions of the Offer. The Offer was made by the Offeror in accordance with section 139 of the Singapore Securities and Futures Act and the Singapore Code and a copy of the offer document can be found at www.sgx.com.

As at the Latest Practicable Date, based on the Bizfile Search as extracted from the Accounting and Corporate Regulatory Authority of Singapore, there were 479,751,999 Offeree Shares in issue.

– 7 –

LETTER FROM THE BOARD

The Offer Shares will be acquired:

• (1) fully paid;

• (2) free from any mortgage, debenture, lien, charge, pledge, title retention, right to acquire, security interest, option, pre-emptive or similar right, right of first refusal and any other encumbrance or condition whatsoever; and

• (3) together with all rights, benefits and entitlements attached thereto as the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Offeree on or after the Announcement Date.

If any dividend, other distribution or return of capital is declared, made or paid by the Offeree on or after the Announcement Date, the Offeror reserves the right to reduce the Offer Price by the amount of such dividend, distribution or return of capital.

The Offer will be extended, on the same terms and conditions, to all Offeree Shares owned, controlled or agreed to be acquired by any party acting or presumed to be acting in concert with the Offeror in connection with the Offer.

As at the date of this circular and based on the latest information available to the Company, none of the Offeror, its directors and parties acting in concert with it owned, controlled or agreed to acquire any Offer Shares or securities which carry voting rights in the Offeree or are convertible into Offeree Shares or rights to subscribe for, or options in respect of, such Offeree Shares or securities.

It is currently anticipated that the Company will have to pay the Maximum Consideration of approximately S$164.2 million (equivalent to approximately HK$995.1 million) in cash to satisfy the Offer in full. The cash consideration for the Offer will be financed by part of the funds raised from the initial public offering of the Company in October 2010 of approximately HK$510.0 million (approximately equivalent to S$84.2 million) and the remaining HK$485.1 million (approximately equivalent to S$80.0 million) by existing bank loan facilities extended to the Group.

In the announcement and formal offer document of the Offer published by PPCF on behalf of the Offeror on the SGX on 31 October 2011 and 21 November 2011, respectively, PPCF has confirmed that sufficient financial resources are available to the Offeror to satisfy full acceptances of the Offer.

– 8 –

LETTER FROM THE BOARD

Conditions

The Offer will be conditional upon the following conditions having been fulfilled or, as the case may be, waived (save for condition (2) which shall not be waived by the Offeror):

• (1) the Offeror having received, by the Closing Date, valid acceptances in respect of such number of Offer Shares which, when taken together with the Offeree Shares owned, controlled or agreed to be acquired by or on behalf of the Offeror and parties acting in concert with it, will result in the Offeror and parties acting in concert with it holding such number of Offeree Shares carrying not less than 52.5% of the voting rights attributable to the issued Offeree Shares ((a) the 23,950,000 Offeree Shares which may potentially be issued to the grantees of the Existing Offeree Awards; and (b) the Consideration Offeree Shares which may potentially be issued by the Offeree, are not to be taken into consideration in calculating the acceptance of this condition, save for (a) the Offeree Shares which are validly allotted and issued in satisfaction of (and in accordance with the terms of) the Existing Offeree Awards; and (b) the relevant Offeree Shares that have in fact been validly allotted and issued pursuant to (and in accordance with the terms of) the S&P Agreement as at the date of the relevant declaration as at the Closing Date “ Minimum Acceptance Level ”);

The Offeror reserves the right to revise the Minimum Acceptance Level during the course of the Offer, provided that the revised Offer remains open for another 14 days following the revision and the Offeree Shareholders who had accepted the initial Offer will be permitted to withdraw their acceptance within eight days of this revision.

• (2) the Company obtaining the approval of its Shareholders at the EGM to the Offer and the Acquisition; and

• (3) after the Announcement Date, the Offeree does not allot or issue Offeree Shares or grant Offeree Awards or issue Offeree Stocks or enter into any agreement or undertaking to do any of the same, or cause to be done any act which would have the same effect as allotting or issuing shares Offeree Shares or granting Offeree Awards or issuing Offeree Stocks or otherwise having the same effect as diluting the voting rights in the Offeree.

The condition in (3) above would not apply to the Existing Offeree Awards nor the Offeree Shares validly allotted and issued in satisfaction of (and in accordance with the terms of) the Existing Offeree Awards.

On 31 October 2011, some time after the Offeror released the Offer Announcement, the Offeree Board announced on the SGX that the Offeree had on 28 October 2011, entered into the S&P Agreement with each of (a) Ko Sui Hung, (b) Roberto Gatbonton De Jesus, (c) Chua Yiat Hin, (d) Lim Chin Keong, (e) Ng Cheng Leng, and (f) Lee Boon Hwa as vendors, (collectively, the “ Vendors ”) pursuant to which the Offeree will acquire from the Vendors

– 9 –

LETTER FROM THE BOARD

440,400 ordinary shares in the issued share capital of Quantum Automation Pte. Ltd. (the “ Sale Shares ”) (the “ Quantum Automation Acquisition Announcement ”). According to the Quantum Automation Acquisition Announcement, the Sale Shares represent 48% of the issued and paid-up capital of Quantum Automation Pte. Ltd. (an existing subsidiary of the Offeree), as at the date of the S&P Agreement. The Quantum Automation Acquisition Announcement states that the consideration for the Sale Shares amounted to S$2,476,900 (equivalent to approximately HK$15.0 million) which will be fully satisfied by an allotment and issue of the 9,400,000 Offeree Shares. Based on the Bizfile Search as extracted from the Accounting and Corporate Regulation Authority of Singapore and on the confirmation provided by the Offeree pursuant to Rule 8.7 of the Singapore Code, as at the Latest Practicable Date, none of the 9,400,000 Offeree Shares have yet been allotted or issued.

The Offeror will not be invoking the condition in (3) above solely in respect of (and without prejudice to the paragraph below) the 9,400,000 Offeree Shares to be validly allotted and issued pursuant to (and in accordance with the terms of) the S&P Agreement, if any.

For the avoidance of doubt, the Offeror’s waiver of the condition in (3) with respect to one issuance of Offeree Issued Stock, if exercised, is not to be construed to be a waiver of any subsequent issuance, and a waiver of a particular issuance of Offeree Issued Stock is without prejudice to the Offeror’s right to invoke the condition in (3) with respect to any subsequent issuance.

As at the Latest Practicable Date, Mr. Qian Yixiang and Ms. Jia Lingxia, both Directors, are the beneficial owners of an aggregate of approximately 67% of the issued share capital of the Company, which are held through King Able, a company held equally between them. King Able therefore holds more than 50% in nominal value of the Shares giving the right to attend and vote at the EGM required under condition (2) to approve the Offer and the Acquisition. Each of King Able, Mr. Qian Yixiang and Ms. Jia Lingxia has entered into a deed of undertaking, pursuant to which each of them (as the case may be) has unconditionally and irrevocably given, inter alia, an undertaking in favour of the Company and the Offeror that King Able will, and each of Mr. Qian Yixiang and Ms. Jia Lingxia will procure King Able to, exercise all of its voting rights and/or do any other acts to vote in favour of the Acquisition (and consequently the Offer) at the EGM.

Since the Offeror has announced a firm intention to make the Offer by the issuance of the announcement of the Offer on the SGX, the Offeror cannot withdraw the Offer without SIC’s consent. Subject to the SIC’s consent where required, the Offer will lapse if the conditions to the Offer have not been met or waived in the manner set out in this section and the following section headed “Waiver of condition (3)”.

Payment to acceptors of the Offer for the Offeree Shares must be made within 10 days after the Offer becomes or is declared unconditional in all respects or after the receipt of valid acceptances, where such acceptances are tendered after the Offer has become or been declared unconditional in all respects.

– 10 –

LETTER FROM THE BOARD

Waiver of condition (3)

In the event that the condition in (3) above is not met, and the Offeror nevertheless decides to waive condition in (3) in respect of that issuance of Offeree Issued Stock and proceed to extend the Offer to validly allotted and issued new Offeree Shares (in accordance with the terms and conditions governing that issuance of the Offeree Issued Stock), the waiver of a particular issuance of Offeree Issued Stock is without prejudice to the Offeror’s rights to invoke condition in (3) with respect to any subsequent issuance.

Revised offer

The Offeror reserves its right to revise the terms of the Offer to the extent permitted by the applicable laws and regulations, in particular, only to the extent permitted under the Singapore Code. If after Shareholders have approved the Offer on the existing terms, the Offeror revises any terms of the Offer which in the opinion of the Board are material, the Company will comply with the applicable requirements under the Listing Rules, including seeking approval from its Shareholders, where required.

Delisting and Compulsory Acquisition

It is the intention of the Offeror to privatise the Offeree and to delist the Offeree from the Official List of the SGX, should the option be available to the Offeror.

The Offeror intends to exercise any rights of compulsory acquisition that it may have in connection with the Offer. Pursuant to Section 215(1) of the Singapore Companies Act, if the Offeror acquires (or is deemed to have acquired, pursuant to Section 215(11) of the Singapore Companies Act) not less than 90% of the total issued Offeree Shares (other than those Offeree Shares already held at the date of the Offer by the Offeror, its related corporations and their respective nominees and Offeree Shares held in treasury), the Offeror would have the right to compulsorily acquire all the Offeree Shares not acquired by the Offeror pursuant to the Offer. In such event, the Offeror intends to exercise any rights of compulsory acquisition the Offeror may have in connection with the Offer.

Offeree Shareholders who have not accepted the Offer have the right under and subject to Section 215(3) of the Singapore Companies Act to require the Offeror to acquire their Offeree Shares in the event that the Offeror or its nominees acquire, pursuant to the Offer, such number of Offeree Shares which, together with the Offeree Shares held by the Offeror, its related corporations or their respective nominees, comprise 90% or more of the total number of issued Offeree Shares (excluding Offeree Shares held in treasury). Offeree Shareholders who have not accepted the Offer and who wish to exercise such right have been advised to seek their own independent advice.

Based on the present terms and conditions of the Offer, the Offeree will become a subsidiary of the Company upon the successful close of the Offer.

– 11 –

LETTER FROM THE BOARD

ADDITIONAL DETAILS OF THE OFFER

Share Options

Based on information available on the SGX and on the confirmation provided by the Offeree pursuant to Rule 8.7 of the Singapore Code, as at the Latest Practicable Date, there are no outstanding share options to subscribe for Offeree Shares which have been granted by the Offeree.

Share Awards

Based on information available on the SGX as at the Latest Practicable Date, the Offeree has adopted a performance share plan (“ Offeree Share Plan ”) pursuant to which the Existing Offeree Awards have been granted. As at the Latest Practicable Date, Existing Offeree Awards which may translate into 23,950,000 Offeree Shares or their equivalent cash value or a combination thereof have been granted by the Offeree. The Offeree Awards under the Offeree Share Plan may not necessarily entitle the participant of the Offeree Awards to Offeree Shares. The terms of the Offeree Share Plan further provide that the Offeree Awards are not transferable unless with the prior approval of the committee administering the Offeree Share Plan. Accordingly, the Offer will not be extended to participants of the Offeree Awards save for Offeree Shares which are validly allotted and issued in satisfaction of (and in accordance with the terms of) the Existing Offereee Awards.

Consideration Offeree Shares

The Offer will not be extended to the Vendors in respect of the Consideration Offeree Shares, save for any such Offeree Shares which are validly allotted and issued pursuant to (and in accordance with the terms of) the S&P Agreement.

FUTURE PLANS FOR THE OFFEREE GROUP AFTER THE SUCCESSFUL CLOSE OF THE OFFER

Following the successful close of the Offer, the Offeror intends to undertake a comprehensive review of the organisation, businesses and operations of the Offeree Group (the “ Review ”).

Save as disclosed and subject to the Review, the Company currently has no plans for any significant changes to the primary business of the Offeree Group. Plans with respect to the deployment of the Offeree’s fixed assets will be subject to the Review. However, based on currently available public information no material changes are envisaged.

Save as disclosed and subject to the Review, the Company currently has no plans with regard to the continued employment of the employees of the Offeree Group. The Directors recognise that the employees of the Offeree Group have contributed significantly to the success of the Offeree Group and believe that they will remain a key asset to the future development of the Enlarged Group. The Company currently intends to leverage on the strengths and expertise of the current team of key executives in the Offeree Group to implement the Enlarged Groups’ overseas business plans.

– 12 –

LETTER FROM THE BOARD

The Company will review the opportunities available to the Offeree Group for its future development after the successful close of the Offer. The course chosen will be influenced by the outcome of the Offer. The future development may result in any of a number of outcomes, including but not limited to, integration with other activities of the Offeree Group.

The Directors are of the view that the integration of the business and management culture within the Enlarged Group may be challenging and, if not implemented effectively and efficiently, may have an adverse impact on the Shareholders.

Please refer to the section headed “Reasons and Benefits of the Offer” below for further information on the Offer.

The Company reserves the right to review and alter its plans as aforesaid in response to any changes in the business environment in which the Enlarged Group operates.

INFORMATION ON THE OFFEREE, THE GROUP AND THE OFFEROR

Information on the Offeree

Based on publicly available information, the Offeree was incorporated in Singapore on 7 September 1995 and was listed on the Main Board of the SGX on 23 September 1996. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Offeree and the ultimate beneficiaries of the Offeree are Independent Third Parties.

Based on the Offeree’s annual report for the year ended 31 December 2010, the principal activity of the Offeree Group is the manufacture and distribution of switchgears, EDMI electronic revenue meters and its own Rudolf™brand of controllers, instrumentation and power quality systems.

As at the Latest Practicable Date, based on the Bizfile Search as extracted from the Accounting and Corporate Regulatory Authority of Singapore, the Offeree’s issued and paid-up share capital comprises 479,751,999 Offeree Shares.

Based on the Offeree’s annual financial report for the year ended 31 December 2010, its recorded audited net assets were approximately S$142.0 million (approximately HK$860.5 million) as at 31 December 2010. The table below sets out the profits before and after taxation of the Offeree for the three years ended 31 December 2008, 2009 and 2010.

		**For the **	**year ended **	**year ended **	31 December	31 December
	2008		2009			2010
	S$	HK$	S$		HK$	S$	HK$
	(million)	(million)	(million)	(million)		(million)	(million)
Profits before
taxation (Note)	18.2	110.3	29.3		177.6	22.5	136.4
Profits after
taxation (Note)	15.0	90.9	24.0		145.4	17.7	107.3

Note: The financial information is extracted from the audited annual reports of the Offeree for the three years ended 31 December 2008, 2009 and 2010 prepared in accordance with the SFRS.

– 13 –

LETTER FROM THE BOARD

Background information on the Group

The Group is a leading one-stop designer, manufacturer and seller of high quality integrated electrical distribution systems and solutions in the PRC with over 20 years of industry experience. The Company is the largest pure-domestic electrical distribution systems and solutions provider in the high-end segment of the electrical distribution equipment market in the PRC.

The Company does not have any current intention to downsize its existing business, nor are there any agreements, arrangements, understandings or negotiations for the disposal or termination of the Group’s existing business.

Background information on the Offeror

The Offeror was incorporated in the British Virgin Islands and was acquired by the Company, through its wholly-owned subsidiary, Cheer Success Holdings Limited, and is thus an indirect wholly-owned subsidiary of the Company. The Offeror has not conducted any business activities prior to its acquisition by Cheer Success Holdings Limited.

EFFECT OF THE OFFER ON THE ASSETS, LIABILITIES AND PROFITS OF THE GROUP

Upon the successful completion of the Offer, it is currently anticipated that the Offeror will be interested in at least 52.5% of the voting rights attributable to the issued Offeree Shares. As such, all the earnings, assets and liabilities of the Offeree Group will be consolidated into the consolidated financial statements of the Group after considering the impact of minority interest, if any.

As at 30 June 2011, the unaudited total assets and total liabilities of the Group prepared in accordance with HKFRS were approximately RMB1,866.6 million and RMB456.2 million respectively. As at 30 June 2011, the unaudited total assets and total liabilities of the Offeree Group prepared in accordance with SFRS were approximately S$258.7 million and S$102.3 million respectively. After the successful completion of the Offer and taking into consideration of the potential debt financing in relation to the Offer, the total assets and total liabilities of the Group are expected to increase respectively.

As extracted from the 2010 annual report and the results announcement for the six months ended 30 June 2011 of the Offeree Group, the audited net profit attributable to the owners of the Offeree Group for the year ended 31 December 2010 was approximately S$13.3 million and the unaudited net profit attributable to the owners of the Offeree Group for the six months ended 30 June 2011 was approximately S$7.8 million. Considering the historical earnings of the Offeree Group, and the potential synergies that may be realized by the Group after the successful completion of the Offer, the Offer could improve the earnings of the Group in the long term.

– 14 –

LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE OFFER

The PRC is one of the largest electricity consumers in the world. The Directors believe that the growth and market drive of the electricity market in the PRC is mainly attributable to the increase of investment in fixed assets in the PRC and the constant increase of power consumption in the PRC.

The Group’s integrated electrical distribution systems and solutions are important for the development of any smart grid network which provides for the efficient distribution of electricity. According to the PRC’s “Twelfth Five-year Plan”, smart grid has been designated to be a key area of development in the new energy industry in the PRC and the PRC aims to establish a strong smart grid network by 2015. The Company noticed a similar trend worldwide as many developed countries, such as members of the European Union, the United States and Japan, are also making considerable investments in smart grid technology to establish full coverage of the smart grid network in those countries. The Directors believe that smart grid network will become the development trend in the electricity market both domestically and internationally. While continuing to focus on the development of the domestic market in the PRC, which the Directors believe will continue to drive the greater part of the future growth of the Company’s business, the Company also intends to identify potential acquisition opportunities that can also increase its global market presence, its product offerings and enhance overall competitiveness.

Under the “Future Plans and Use of Proceeds” section of the Prospectus, it was stated that the Company intended to apply approximately 60% of net proceeds (equivalent to approximately HK$550.7 million) received by the Company in its initial public offering for potential acquisitions of companies in the electrical distribution business for the purpose of expanding its upstream component production capability or downstream sales channel and market segment in the PRC. Since the Listing, the Company has been in active search for strategic acquisition opportunities globally and has since identified the Offeree as an appropriate acquisition target for the Company. The Group came to know of the Offeree Group in 2008 when it was searching for potential international partners, and has over the years tracked the development of the Offeree Group with interest. The principal activity of the Offeree Group is in the manufacture and distribution of switchgears, EDMI electronic revenue meters and its own Rudolf™brand of controllers, instrumentation and power quality systems.

The Directors believe the Acquisition (and consequently the Offer) will not only bring immediate benefit in terms of increase in revenue and profits to the Group but will also be beneficial to the Enlarged Group through synergies with the Offeree Group in the areas as set out below:

(1) Expanding sales channels overseas

The Group currently mainly offers its integrated electrical distribution systems and solutions in the PRC whereas the Offeree has established sales channels to customers in Europe, Australia as well as in Asia. The Acquisition can facilitate the Company’s expansion into the overseas markets and in turn help increase the sales of its one-stop integrated electrical distribution systems and solutions.

– 15 –

LETTER FROM THE BOARD

(2) Increasing product offerings

Following a successful close of the Offer, the business of the Offeree Group will be repositioned and repackaged as an international brand. By leveraging on the Offeree’s experience in serving customers that operates in the business of offshore oil platforms, offshore oil and natural gas industries, manufacturing factories for solar wafers and semiconductor wafers, biotechnology laboratories and pharmacy laboratories, the Group can further enhance its market share in the PRC. The Offeree’s EDMI electronic revenue meters will bring a new product series to the Group whereas the Offeree’s building automation and control systems and power quality systems will also further enhance the overall competitive strengths of the Group’s existing energy-saving systems.

(3) Enhancing operation efficiency

The Directors believe the Acquisition could enhance the production and research facilities of the Enlarged Group, which would in turn help lower the operations costs and improve the profit margin of the Enlarged Group. With new production plants and implementation of the Group’s production expansion plan, the Group is equipped with an annual production capacity capable of producing electrical distribution systems worth up to RMB3 billion. This ensures that the Enlarged Group will have sufficient production capacity to produce the Offeree’s smart meters following the completion of the Acquisition. The Directors also believe that the Enlarged Group could further enhance its operation efficiency by utilising the generally lower production costs in the PRC to satisfy the demands of the Offeree’s overseas customers.

(4) Enhancing research capabilities

Following the completion of the Acquisition, the Enlarged Group can further enhance its research and product development capabilities by combining the Group’s existing know-how with the Offeree Group’s experience in developing products for overseas customers. In addition, the existing intellectual property rights owned by the Offeree Group can be further ultilised.

(5) Increasing attractiveness to overseas talents

The Offeree Group is an established company with a long operation history. The Offeree Group’s existing talents will add depth and expertise to the Group’s workforce. The Directors further believe that the Acquisition will enable the Company to expand its scale and enhance its overall competitiveness, which will in turn help attract more talented professionals to join the Enlarged Group.

The Board (including the independent non-executive Directors) is also of the view that the terms of the Offer are fair and reasonable and in the interests of the Shareholders as a whole.

– 16 –

LETTER FROM THE BOARD

FINANCIAL AND TRADING PROSPECTS

The economic environment for the Group’s businesses remains broadly supportive, with the overall economy in the PRC performing well with the gross domestic product reaching RMB20.4 trillion in the first half of the year, representing a year-on-year increase of 9.6%.

As outlined in the PRC’s “Twelve Five Year Plan” and at the recent 4th Meeting of the 11th Session of the National Committee of the Chinese People’s Political Consultative Conference and the 4th Meeting of the National People’s Congress of the PRC, the PRC government has established a clear direction for the future economic plans of the PRC which places a great emphasis on environmental protection and energy conservation and smart grid is classified as the development focus of the new energy industry. The Directors believe that the estimated total investment on smart grid in the PRC will exceed RMB4 trillion in the coming decade.

In addition, with the rapid growth in the economy and further urbanisation and construction of the PRC, the demand for power supply in the PRC is increasing. Benefiting from these favourable industry conditions, the Group has taken advantage of the opportunities that has arisen from the market and strengthened its position in the electrical distribution market of the PRC. As for business development, the Group will continue to focus on further business expansion and maintain its leading position in the industry. Looking forward, while capturing the momentum of the rapid development of the high-end market, the Group will further expand its upstream component production capability and expand its downstream sales channel and market segment in the PRC in order to enlarge its market share in the industry and to sustain a long term growth.

The Group will continue to focus on capturing the opportunities brought by the rapid development of the smart grid industry, further enhance its position in the high end market and provide our customers with quality products and services so as to stand out amongst its numerous competitors.

LISTING RULES REQUIREMENTS

As certain applicable size test percentages (as defined under Rule 14.07 of the Listing Rules) in respect of the Offer, assuming the Compulsory Acquisition is completed, are more than 100%, the Offer constitutes a very substantial acquisition for the Company under Chapter 14 of the Listing Rules. Accordingly, the Offer is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. CCB International Capital Limited has been appointed as the financial advisor to the Company in Hong Kong on the Acquisition.

The Offer will be conditional on, among other things, Shareholders’ approval at the EGM at which voting is to be made by poll. No Shareholder is required to abstain from voting at the EGM, unless such Shareholder has a material interest in the Offer other than being a Shareholder. As at the date of this circular, the Board is not aware that any Shareholder has such a material interest in the Offer.

– 17 –

LETTER FROM THE BOARD

As mentioned in the section headed “Conditions” of this circular, the Company has already secured irrevocable undertakings from Shareholders holding approximately 67% of the issued share capital of the Company to vote in favour of the Acquisition (and consequently the Offer) at the EGM.

Pursuant to the Listing Rules, the Company is required to set out in this circular, among other things, accountants’ reports on the Offeree Group which sets out its financial information for at least the last three completed financial years and any additional interim period ended within 6 months from the date of the circular.

The Offeree is a listed company on the SGX. As the Offer is not invited by the Offeree Board, the Company does not have the co-operation of the board of directors of the Offeree and thus does not have access to non-public information and records necessary for the preparation of this circular for the purpose of complying with the disclosure requirements under the Listing Rules in respect of the Offeree and the Enlarged Group. Accordingly, the Company will not be able to include the relevant information/reports in this circular. Nevertheless, the Company has included in Appendix III of this circular the information required under Rule 14.67A(2), including the published audited financial information of the Offeree Group for the three years ended 31 December 2008, 2009 and 2010 and the published unaudited financial statements of the Offeree Group for the six months ended 30 June 2011, which will enable the Shareholders to evaluate the Offer and make an informed voting decision with respect to the Offer.

The Company prepares its financial statements using HKFRS, and the Directors believe that, based on the internal assessment by the financial management team of the Company, there are no principal differences between HKFRS and SFRS (being the Offeree Group’s accounting standards) that applicable to the Company and the Offeree Group and there may not have a material impact on the financial statements of the Offeree Group, if it were prepared under HKFRS.

In accordance with Rule 14.67A of the Listing Rules, the Company will, after the successful close of the Offer, issue a supplemental circular to the Shareholders in the manner described in Rule 14.67A(3) which will contain all the disclosures required under Rules 14.68 and 14.69 of the Listing Rules that would have been excluded from the initial circular. Pursuant to Rule 14.67A(3), the Company is required to despatch the supplemental circular to the Shareholders within 45 days of the earlier of (1) the Company being able to gain access to the Offeree’s books and records for the purpose of complying with the disclosure requirements under the Listing Rules in respect of the Offeree and the Enlarged Group; and (2) the Company being able to exercise control over the Offeree upon the successful close of the Offer.

Should the Company require more time to prepare the supplemental circular, the Company will apply to the Stock Exchange for an extension for the despatch of the supplemental circular and make an announcement in this regard. Shareholders and potential investors should note that the despatch of the supplemental circular will not affect the approval to be obtained from the Shareholders at the EGM, the date of the EGM and the implementation of the Offer.

– 18 –

LETTER FROM THE BOARD

EGM

The notice convening the EGM to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 7 December 2011 at 2:30 p.m. is set out in this circular.

A form of proxy for use by the Shareholders in connection with the business of the EGM is enclosed with this circular for your attention. To enable you to exercise your voting rights as the Shareholders, whether or not you are able to attend the EGM, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at a general meeting of the Company must be taken by way of a poll. Accordingly, each of the resolutions to be considered and, if thought fit, passed at the EGM will be voted by way of a poll by the Shareholders. Article 79 of the Articles of Association provides that on a poll, every Shareholder present in person or by proxy shall have one vote for every Share held by that Shareholder. An explanation of the detailed procedures of conducting a poll will be provided to the Shareholders at the EGM. The Company will publish an announcement on the poll results on the respective websites of the Company at “www.boerpower.com” and Stock Exchange at “www.hkexnews.hk” shortly after the conclusion of the EGM.

RECOMMENDATION

The Board considers that the terms of the Acquisition and the Offer are on normal commercial terms and the transactions contemplated thereunder are in the interests of the Company and its Shareholders as a whole.

Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM in relation to the Acquisition and the Offer. The Company is not aware that any Shareholders have a material interest in the aforesaid transactions (other than being Shareholders) and that any Shareholders are required to abstain from voting on the ordinary resolutions in this regard.

GENERAL

The Company will issue further announcements informing Shareholders and potential investors the progress on the Offer as and when appropriate or required.

Shareholders and potential investors should note that the Offer, which is conditional on, among other things, the condition of acceptance, may or may not be completed. Shareholders and investors are reminded to exercise caution when dealing in the securities of the Company.

– 19 –

LETTER FROM THE BOARD

As at the date hereof, the Board comprises of (i) five executive Directors, namely Mr. Qian Yixiang, Ms. Jia Lingxia, Mr. Zha Saibin, Mr. Qian Zhongming and Mr. Huang Liang; (ii) one non-executive Director, Mr. Zhang Huaqiao; and (iii) three independent non-executive Directors, Mr. Yeung Chi Tat, Mr. Tang Jianrong and Mr. Zhao Jianfeng.

Your attention is drawn to the additional information set out in the appendices to this circular.

By order of the Board Boer Power Holdings Limited Qian Yixiang Chairman

– 20 –

APPENDIX I

RISK FACTORS

Set out below are some risk factors in relation to the Group’s proposed acquisition of the Offeree which the Directors consider that the Shareholders may wish to consider when deciding whether or not to vote for the resolutions regarding the Acquisition and the Offer at the EGM.

INACCURACY IN INFORMATION ON THE OFFEREE GROUP

The Company has relied on publicly available information released by the Offeree. Any inaccuracy in this information could adversely affect the anticipated prospects and benefits of the Acquisition (and consequently the Offer) and results of the Enlarged Group. In addition, it is possible that additional risks may exist in relation to the Offeree Group’s businesses which are not known to the Company.

UNCERTAINTY REGARDING THE LEVEL OF INTEGRATION THAT MAY BE ACHIEVABLE

Upon the successful close of the Offer, the Company will seek, to the extent possible, to integrate the Offeree’s operations within the Group with a view to maximising operational synergies. The extent to which these synergies of benefits are realisable depends upon a range of factors including the outcome of the Offer.

The Directors are of the view that the integration the business and management culture within the Enlarged Group may be challenging and if not implemented effectively and efficiently may have an adverse impact on the Shareholders.

There is a risk that the synergies expected to arise from the combination of the Group and the Offeree Group fail to materialise or take longer than expected to materialise. The Group may incur greater than anticipated implementation costs during the integration of the businesses of the Group and the Offeree Group. This may affect the future earnings performance of the Enlarged Group.

UNCERTAINTY IN DEALING IN THE OFFEREE GROUP’S OPERATING ENVIRONMENT

The Group has been operating principally in the PRC whilst the Offeree Group operates in Singapore as well as serves customers from other countries. The operating environment of the Offeree Group is significantly different from that in the PRC. The Group may incur greater than anticipated problems in adjusting to the operating environment of the Offeree Group and it may take longer than anticipated to become familiar with such operating environment. This may affect the future earnings performance of the Enlarged Group.

EXCHANGE RATE RISKS

Singapore dollar is the reporting currency of the Offeree whilst the reporting currency of the Group is RMB. Any material fluctuation of the exchange rate of Singapore dollar against RMB may affect the consolidated results and financial position of the Enlarged Group after the successful close of the Offer.

– I-1 –

APPENDIX I

RISK FACTORS

FINANCING

The business of the Offeree Group requires continuous investments. The net funds of the Enlarged Group may not be sufficient for expenditure that may be required to integrate the operations of the Group and the Offeree Group or to expand its operations or for other capital expenditure or otherwise in the Enlarged Group’s operations.

The Enlarged Group may need to raise additional debt or equity funds in the future. There is no assurance that the Enlarged Group will be able to obtain additional debt or equity funding when required in the future, or that the terms associated with such funding will be acceptable to the Enlarged Group, particularly having regard to the current uncertain economic environment. This may have an adverse effect on the Enlarged Group’s financial results.

ACCOUNTING

The Enlarged Group will be required to perform a fair value assessment of the Offeree Group’s assets and liabilities following the successful close of the Offer. This assessment may result in increased depreciation and amortisation charges and cost of sales. These charges may be substantially greater than those that would exist in the Group and the Offeree Group as separate businesses. This may reduce future earnings of the Enlarged Group. Goodwill and other intangible assets may be recorded by the Enlarged Group as a result of the Offer depending on the fair value of the assets and liabilities of the Offeree Group to be assessed by the Company. Any such goodwill and intangible assets would be subject to future impairment test. Any impairment would adversely affect the results of the Enlarged Group.

PROSPECTS DEPEND ON THE OFFEREE’S ABILITY TO ATTRACT, RETAIN AND TRAIN KEY PERSONNEL AND OTHER WORKFORCE

Recruiting, retaining and training qualified personnel is critical to the operation the Offeree Group. The business operations of the Offeree Group require continued support from its financial, administrative, sales, marketing and public relations personnel. If the Offeree Group is not successful in retaining and attracting such right key personnel, and workforce following the successful close of the Offer, its business and results of operations could be materially and adversely affected and would in term adversely affect the results of the Enlarged Group.

LITIGATION

The Enlarged Group may be subject to litigation and other claims based on the conduct of the Offeree Group that occurred prior to a successful close of the Offer.

NEW BUSINESS SEGMENT OF THE GROUP

The Group’s existing business is primarily located in the PRC. The Group currently does not operate in Singapore as well as in most of the countries that the Offeree Group currently operates. The Offeree’s business, though similar to the Group’s business in

– I-2 –

APPENDIX I

RISK FACTORS

nature, is based in different jurisdictions and represents a new business segment to the Group. The new business, coupled with a different regulatory and operating environment, may pose significant challenges to the Group’s administrative, financial and operational resources. The corporate and staff culture of the Offeree Group may be significantly different from that of the Group. The Company does not have significant experience in this new segment. The management of the Group may not have all necessary knowledge to manage this new business segment.

Following the successful close of the Offer, the Company intends to undertake a comprehensive review of the organisation, businesses and operations of the Offeree Group. Nevertheless, the Company may not be able to fully understand, monitor, review and manage the business development of the Offeree Group, changes to the operating environment, market and the related laws and regulations. Accordingly, the implementation of the Enlarged Group’s business strategies may be adversely affected and return of the Group’s investment in the Offeree may be adversely affected, especially if the Company is not able to work smoothly with the management of the Offeree Group after the successful close of the Offer.

PRODUCTION SAFETY

The operations of the Offeree Group may be affected by accidents, technical difficulties, mechanical failure or plant breakdown in future. Such technical difficulties, mechanical failure or plant breakdown may result in disruptions to the operation of the Offeree Group and thus increase in the operating costs.

There is no assurance that accidents will not occur which may disrupt the business operation of the Offeree Group and may result in mandatory suspension of operation, financial losses, compensatory claims, fines, penalties or damage to the reputation of the Offeree Group.

NATURAL DISASTERS OR SEVERE WEATHER CONDITIONS COULD MATERIALLY AND ADVERSELY AFFECT THE OPERATIONS OF THE OFFEREE GROUP

Any unpredictable severe weather conditions may require the Offeree Group to evacuate personnel or curtail natural disasters and may result in damage to its resources locations, which could result in temporary suspension of its operations. During periods of curtailed activity due to natural disasters or adverse weather conditions, the Offeree Group may continue to incur operating expenses. Any damage to its business locations could materially and adversely affect its business and operating results.

– I-3 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

PUBLISHED FINANCIAL INFORMATION

Please note that the unaudited interim report of the Company for the six months ended 30 June 2011 and the Company’s audited annual report 2010 for the year ended 31 December 2010 are available free of charge, in read-only, printable format on the Company’s website at the following addresses:

• (a) in respect of the Company’s unaudited interim report for the six months ended 30 June 2011 at:

http://boerpower.todayir.com/attachment/20110923170201001282154_en.pdf

• (b) in respect of the Company’s audited annual report 2010 for the year ended 31 December 2010 at:

http://boerpower.todayir.com/attachment/20110427163201001195329_en.pdf

Please also note that the audited financial statements of the Company for the two years ended 31 December 2008 and 2009 are also available from the Prospectus, which is available free of charge, in read-only, printable format on the Company’s website at the following address:

http://boerpower.todayir.com/attachment/201101141749442_en.pdf

MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

For the six months ended 30 June 2011 (“HY2011”)

Financial review

The total turnover of the Group for HY2011 decreased by 16.3% to approximately RMB362.0 million as compared to the corresponding period in 2010, of which approximately RMB7.9 million, RMB249.7 million, RMB 19.4 million and RMB 85.0 million were attributable to the Group’s Electrical Distribution System Solutions (“ EDS Solutions ”), Intelligent Electrical Distribution Systems Solutions (“ iEDS Solutions ”), Energy Efficiency Solutions (“ EE Solutions ”) and Components and Spare Parts Business (“ CSP Business ”), respectively.

The total profit attributable to the equity shareholders of the Company amounted to RMB104.2 million for HY2011, representing an increase of 19.1% as compared to the same period of 2010. Excluding non-operational contributions from “Other revenue” and “Gain on acquisition of a subsidiary”, the profit from operations of the Group amounted to RMB75.7 million for HY2011, representing a decrease of 27.0% as compared to the same period of 2010. The decrease in profit from operations of the Group was mainly due to the substantial decrease in contribution from the EDS Solutions business segment.

– II-1 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

EDS Solutions

The total sales of EDS Solutions of the Group for HY2011 amounted to RMB7.9 million (2010: RMB185.7 million), representing 2.1% (2010: 42.9%) of the Group’s total turnover during the period. The substantial decrease in total sales of EDS Solutions was principally a result of the realignment of the business strategies of the Group to focus more on the higher gross profit margin and higher technological know-how business segment of the Group. Competition in the EDS Solutions business segment has increased in intensity due to fewer large EDS Solutions projects coming to market, which caused price competition amongst competitors in a bid to secure new projects. The reportable segment gross profit of this business segment during the period was RMB0.9 million (2010: RMB65.3 million), representing a decrease of 98.6% as compared to that of 2010.

The segment gross profit margin of EDS Solutions segment decreased from 35.2% for 2010 to 11.7% for the period due to deterioration in margins for EDS Solutions projects.

iEDS Solutions

The total sales of iEDS Solutions of the Group for HY2011 was RMB249.7 million (2010: RMB202.9 million), which accounted for approximately 69.0% (2010: 46.9%) of the Group’s total turnover during the period. The significant increase in the sales of the Group’s iEDS Solutions was mainly due to the increase marketing efforts of the Group in this business segment and the increase in demand for intelligent power transmission and electricity distribution solutions and related products to improve electricity usage efficiency and reduce cost. The reportable segment gross profit of this business segment was RMB95.0 million (2010: RMB73.6 million), representing an increase of 29.0% as compared to that of 2010.

The segment gross profit margin of iEDS Solutions segment increased from 36.3% for 2010 to 38.0% for the period due to higher technological requirement from the Group’s customers.

EE Solutions

The total sales of EE Solutions of the Group for HY2011 was RMB19.4 million (2010: RMB1.2 million), which accounted for approximately 5.4% (2010: 0.3%) of the Group’s total turnover during the period. The substantial increase in turnover of the EE Solutions business segment is a result of the Group’s increased marketing efforts in this business segment and also increasing demand from the customers to upgrade their electrical distribution system to increase electricity usage efficiency, reduce power use and reduce cost. The reportable segment gross profit of this business segment was RMB10.4 million (2010: RMB0.8 million), representing an increase of 1,194.5% as compared to that of 2010.

The segment gross profit margin of EE Solutions segment decreased from 64.1% for 2010 to 53.3% for the period as the Group increased marketing effort in a bid to increase sales in this business segment.

– II-2 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

CSP Business

The total sales of the CSP Business of the Group for HY2011 was RMB84.9 million (2010: RMB42.7 million), which accounted for approximately 23.5% (2010: 9.9%) of the Group’s total turnover during the period. The increase in sales of CSP Business was mainly a result of our effort in expanding components manufacturing ability and sale. The reportable segment gross profit of this business segment was RMB27.5 million (2010: RMB14.8 million), representing an increase of 85.6% as compared to that of 2010.

The segment gross profit margin of CSP Business segment decreased from 34.7% for 2010 to 32.4% for the period due to the integration of Boer (Wuxi) Special Electric Power Capacitor Co. Ltd. (“ Boer Capacitor ”) into the Group.

Capital structure, liquidity and financial resources

During HY2011, there was no movement in the number of ordinary shares issued in the Company.

During HY2011, the Group maintained a healthy liquidity position. The Group was financed by internal resources. The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. As at 30 June 2011, the cash and cash equivalents, net current assets and total assets less current liabilities were RMB296 million (31 December 2010: RMB 268 million), RMB1,178 million (31 December 2010: RMB 1,277 million) and RMB 1,418 million (31 December 2010: RMB1,366 million), respectively.

As at 30 June 2011, the Group has no bank borrowing (2010: Nil) and the time deposits with original maturity over three months and cash and cash equivalents of the Group were RMB463.1 million (31 December 2010: RMB659.0 million) and RMB295.8 million (2010: RMB268.1 million), respectively.

During HY2011, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 30 June 2011.

Contingent liabilities

As at 30 June 2011, the Group had capital commitments for property, plant and equipment of up to RMB285.6 million. Save as disclosed above, the Group did not have any contingent liabilities as at 30 June 2011.

Human resources

The Group had 1,161 employees as at 30 June 2011. The total staff costs for HY2011 were approximately RMB24 million (six months ended 30 June 2010: RMB23 million). The remuneration policy was in line with the current legislation in the relevant jurisdictions, market conditions and performance of the staff and the Group.

The remuneration of employees includes salary and discretionary bonus. The Group has adopted a share award scheme to provide incentives to the employees.

– II-3 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The remuneration policy and packages, including the share awards, of the Group’s employees, senior management and directors were maintained at market level and reviewed periodically by the management and the remuneration committee, whichever appropriate.

Charge of assets

As at 30 June 2011, none of the Group’s assets or properties were charged for the purpose of securing general banking facilities granted to the Group.

Material investment, acquisitions and disposals

During HY2011, in order to expand the Group’s upstream component production capability, the Group entered into an equity transfer agreement with the vendor to acquire 100% equity interest in Boer Capacitor, which is engaged in the manufacture and sale of capacitors, for a cash consideration of RMB62.0 million.

The Group recognised a gain on acquisition of a subsidiary of RMB24.4 million because of different valuations of intangible assets by the Group and the vendor. Boer Capacitor contributed RMB39.0 million to the Group’s turnover and profit of RMB8.5 million to the Group’s results for the period between the date of acquisition and 30 June 2011.

Foreign exchange rate risk

During HY2011, as the Group’s principal activities were carried out in the PRC, the Group’s transactions were mainly denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions involving RMB must take place through the People’s Bank of China or other institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions were the rates of exchange quoted by the People’s Bank of China that were determined largely by supply and demand. During HY2011, the Group did not have a policy on foreign currency risk as it had minimal export sales during the period and the impact of foreign currency risk on the Group’s total sales is minimal.

MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

For the financial year ended 31 December 2010 (“FY2010”)

Financial review

The Group achieved significant growth during FY2010. The total turnover of the Group amounted to RMB911.1 million for FY2010, representing an increase of 85.7% as compared to 2009. Out of the total turnover of the Group for FY2010, approximately RMB322.6 million, RMB490.8 million, RMB 1.6 million and RMB 96.1 million were attributable to the Group’s EDS Solutions, iEDS Solutions, EE Solutions and CSP Business, respectively.

– II-4 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The increase in turnover for FY2010 was mainly as a result of the increase in market demand of the Group’s solutions and products and the expansion of our sales network. The total profit attributable to the equity shareholders of the Company amounted to RMB180.1 million for FY2010, representing an increase of 135.7% as compared to 2009.

As at 31 December 2010, the total assets of the Group was RMB1,758.4 million (2009: RMB611.5 million) while the total liabilities was RMB392.0 million (2009: RMB407.7 million) and the total equity of the Group amounted to RMB1,366.4 million (2009: RMB203.7 million).

EDS Solutions

The total sales of EDS Solutions of the Group for FY2010 amounted to RMB322.6 million (2009: RMB258.9 million), representing 35.4% (2009: 52.8%) of the Group’s total turnover during the year. The increase in total sales of EDS Solutions was principally a result of the increased market demand of our solutions and our effort in sales and marketing network. The reportable segment gross profit of this business segment during the year was RMB112.4 million (2009: RMB80.5 million), representing an increase of 39.6% as compared to that of 2009.

The segment gross profit margin of EDS Solutions segment increased from 31.1% for 2009 to 34.8% for the year.

iEDS Solutions

The total sales of iEDS Solutions of the Group for FY2010 was RMB490.8 million (2009: RMB161.0 million), which accounted for approximately 53.9% (2009: 32.8%) of the Group’s total turnover during the year. The significant increase in the sales of our iEDS Solutions of 204.8% was mainly attributable to the increased market demand in intelligent power transmission and electrical distribution solutions and related products amid with the overall development of electricity market in the PRC. The reportable segment gross profit of this business segment was RMB183.9 million (2009: RMB50.9 million), representing an increase of 261.1% as compared to that of 2009.

The segment gross profit margin of iEDS Solutions segment increased from 31.6% for 2009 to 37.5% for the year.

EE Solutions

The total sales of EE Solutions of the Group for FY2010 was RMB1.6 million (2009: RMB0.9 million), which accounted for approximately 0.2% (2009: 0.2%) of the Group’s total turnover during the year. The reportable segment gross profit of this business segment was RMB1.0 million (2009: RMB0.6 million), representing an increase of 68.4% as compared to that of 2009.

The segment gross profit margin of EE Solutions segment slightly decreased from 67.8% for 2009 to 67.3% for the year.

– II-5 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

CSP Business

The total sales of the CSP Business of the Group for FY2010 was RMB96.1 million (2009: RMB69.8 million), which accounted for approximately 10.5% (2009: 14.2%) of the Group’s total turnover during the year. The increase in sales of CSP Business was mainly a result of our effort in expanding our components manufacturing capability and business. The reportable segment gross profit of this business segment was RMB34.9 million (2009: RMB24.0 million), representing an increase of 45.2% as compared to that of 2009.

The segment gross profit margin of CSP Business segment increased from 34.4% for 2009 to 36.3% for the year.

Capital structure, liquidity and financial resources

During FY2010, the movements in the number of ordinary shares issued in the Company are as follows:

• (i) Since the reorganisation was not completed as at 31 December 2009, the share capital as at 31 December 2009 amounted to RMB7,511,000 that represented the aggregate amount of paid-in capital of the companies now comprising the Group after elimination of investments in subsidiaries.

On 12 February 2010, the Company was incorporated with an authorised share capital of HK$390,000 divided into 3,900,000 shares of HK$0.10 each. Pursuant to the resolutions in writing of the shareholders of the Company passed on 30 September 2010, the authorised share capital of the Company was increased to HK$200,000,000 by the creation of additional 1,996,100,000 shares of HK$0.10 each.

• (ii) On 29 January 2010, the authorised and issued share capital of Power Investment (H.K.) Limited (“ Boer Hong Kong ”) was increased from HK$10,000 comprising 10,000 shares to HK$100,000 comprising 100,000 shares. The increase is equivalent to approximately RMB79,000.

On 29 January 2010 and 31 January 2010, Cheer Success Holdings Limited (“ Cheer Success ”) acquired the entire issued share capital of Boer Hong Kong of HK$100,000 by subscribing 90,000 new shares of HK$1.00 each at a subscription price of HK$90,000 (equivalent to RMB79,000) and acquiring the remaining 10,000 shares held by the then existing shareholders.

• (iii) On 30 September 2010, the Company allotted and issued 9,000 ordinary shares credited as fully paid with par value of HK$0.10 each as a consideration to purchase the entire issued share capital of Cheer Success at a consideration of US$1,000 (approximately equivalent of RMB7,000) from the then common shareholders of the Group by entering into a share swap agreement. As a result, the issued share capital of Boer Hong Kong of HK$100,000 (equivalent to RMB90,000) was deducted from the share capital.

– II-6 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

• (iv) Pursuant to the written resolutions on 30 September 2010, the Company allotted and issued 562,490,000 shares of HK$0.10 each to the then existing shareholders of the Company. This resolution was conditional on the share premium account being credited as a result of the Company’s public offering and pursuant to this resolution, a sum of HK$56,249,000 (equivalent to RMB47,986,000) standing to the credit of the share premium account was subsequently applied in paying up this capitalisation in full.

• (v) On 20 October 2010, the Company issued 187,500,000 shares of HK$0.10 each, at a price of HK$6.38 per share by way of placing and public offering to Hong Kong and overseas investors.

• On 4 November 2010, the Company also issued 28,125,000 shares of HK$0.10 each at a price of HK$6.38 per share upon the exercise of the over-allotment option in connection of the initial public offering. Net proceeds from such issues amounted to HK$1,251,242,000, equivalent to RMB1,066,547,000, (after offsetting expenses directly attributable to the issue of shares of RMB107,052,000), out of which RMB18,395,000 and RMB1,048,152,000 were recorded in share capital and share premium respectively.

During FY2010, the Group maintained a healthy liquidity position. The Group was financed by internal resources. The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. The cash and cash equivalents balance as at 31 December 2010 amounted to RMB268 million. As at 31 December 2010, the Group’s financial position remained healthy, with equity attributable to equity shareholders of the Company of RMB1,366 million (2009: RMB172 million).

The gearing ratio as at 31 December 2010 (total bank loans divided by total assets) was measured at nil as compared to 8.2% recorded as at 31 December 2009. The Group does not have significant exposure to interest rate risk as it does not expect interest rate fluctuation would have significant impact to the fair value or cash flows of its cash and bank deposits held as at 31 December 2010. The Group has no bank borrowings as at 31 December 2010.

During FY2010, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 31 December 2010.

Contingent liabilities

The Group did not have any contingent liabilities as at 31 December 2010.

– II-7 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Human resources

The Group had 961 employees as at 31 December 2010. The total staff costs for the year under review were approximately RMB46 million (2009: RMB41 million). The remuneration policy was in line with the current legislation in the relevant jurisdictions, market conditions and performance of the staff and the Group.

The remuneration of employees includes salary and discretionary bonus. The Group has adopted a share award scheme to provide incentives to the employees.

The remuneration policy and packages, of the Group’s employees, senior management and directors were maintained at market level and reviewed periodically by the management and the remuneration committee, whichever appropriate.

Charge of assets

As at 31 December 2010, none of the Group’s assets or properties were charged for the purpose of securing general banking facilities granted to the Group.

Material investment, acquisitions and disposals

During FY2010, the Company’s indirect wholly-owned subsidiary, Boer Hong Kong, as transferee, entered into an equity interest transfer agreement with Wuxi Weiqi Trading Co., Ltd. (“Wuxi Weiqi”) as transferor, pursuant to which Boer Hong Kong acquired 25% equity interest in Yixing Boai Automation Complete Sets of Equipment Co., Ltd. (“Yixing Boai”) for an aggregate consideration of RMB2.5 million (equivalent to approximately HK$3.0 million). Upon the completion of such transfer on 29 October 2010, the equity interest owned by Boer Hong Kong in Yixing Boai increased from 75% to 100% and Yixing Boai became a wholly-owned subsidiary of the Company.

Foreign exchange rate risk

During FY2010, as the Group’s principal activities were carried out in the PRC, the Group’s transactions were mainly denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions involving RMB must take place through the People’s Bank of China or other institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions were the rates of exchange quoted by the People’s Bank of China that were determined largely by supply and demand. During FY2010, the Group did not have a policy on foreign currency risk as it had minimal export sales during the period and the impact of foreign currency risk on the Group’s total sales is minimal.

– II-8 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

For the year ended 31 December 2009 (“FY2009”)

Financial review

The Group achieved satisfactory growth during FY2009. The total turnover of the Group amounted to RMB490.7 million for FY2009, representing an increase of 21.0% as compared to 2008. Out of the total turnover of the Group for FY2009, approximately RMB258.9 million, RMB161.0 million, RMB1.0 million and RMB69.8 million were attributable to the Group’s EDS Solutions, iEDS Solutions, EE Solutions and CSP Business, respectively.

The increase in turnover for FY2009 was mainly as a result of the increase in market demand of the Group’s solutions and products and the expansion of our sales network. The total profit attributable to the equity shareholders of the Company amounted to RMB76.4 million for FY2009, representing an increase of 48.2% as compared to 2008. As at 31 December 2009, the total assets of the Group was RMB611.5 million (2008: RMB540.7 million) while the total liabilities was RMB407.7 million (2008: RMB359.0 million) and the total equity of the Group amounted to RMB203.7 million (2008: RMB181.7 million).

EDS Solutions

The total sales of EDS Solutions of the Group for FY2009 amounted to RMB258.9 million (2008: RMB277.8 million), representing 52.8% (2008: 68.5%) of the Group’s total turnover during the year. The increase in total sales of EDS Solutions was principally a result of the increased market demand of our solutions and our effort in sales and marketing network. The reportable segment gross profit of this business segment during the year was RMB80.5 million (2008: RMB77.2 million), representing an increase of 4.3% as compared to that of 2008.

The segment gross profit margin of EDS Solutions segment increased from 27.8% for 2008 to 31.1% for the year.

iEDS Solutions

The total sales of iEDS Solutions of the Group for FY2009 was RMB161.0 million (2008: RMB70.5 million), which accounted for approximately 32.8% (2008: 17.4%) of the Group’s total turnover during the year. The significant increase in the sales of our iEDS Solutions of 228.3% was mainly attributable to the increased market demand in intelligent power transmission and electrical distribution solutions and related products amid with the overall development of electricity market in the PRC. The reportable segment gross profit of this business segment during the year was RMB50.9 million (2008: RMB26.7 million), representing an increase of 90.6% as compared to that of 2008.

The segment gross profit margin of iEDS Solutions segment decreased from 37.8% for 2008 to 31.6% for the year.

– II-9 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

EE Solutions

The total sales of EE Solutions of the Group for FY2009 was RMB0.9 million (2008: Nil). The reportable segment gross profit of this business segment was RMB0.6 million (2008: Nil). The segment gross profit margin of EE Solutions segment amounted to 67.8% for the year.

CSP Business

The total sales of the CSP Business of the Group for FY2009 was RMB69.8 million (2008: RMB57.2 million), which accounted for approximately 14.2% (2008: 14.1%) of the Group’s total turnover during the year. The increase in sales of CSP Business was mainly a result of our effort in expanding our components manufacturing capability and business. The reportable segment gross profit of this business segment was RMB24.0 million (2008: RMB19.2 million), representing an increase of 25.0% as compared to that of 2008.

The segment gross profit margin of CSP Business segment increased from 33.7% for 2008 to 34.4% for the year.

Capital structure, liquidity and financial resources

During FY2009, the Group maintained a healthy liquidity position. The Group was financed by internal resources. The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. The cash and cash equivalents balance as at 31 December 2009 amounted to RMB28 million. As at 31 December 2009, the Group’s financial position remained healthy, with equity attributable to equity shareholders of the Company of RMB172 million (2008: RMB176 million).

The gearing ratio, being bank loans divided by total assets, as at 31 December 2009 was 8.2% as compared to 26.8% recorded as at 31 December 2008. The Group does not have significant exposure to interest rate risk as it does not expect interest rate fluctuation would have significant impact to the fair value or cash flows of its cash and bank deposits held as at 31 December 2009.

During FY2009, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 31 December 2009.

Contingent liabilities

As at 31 December 2009, the Group did not have any contingent liabilities.

– II-10 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

Human resources

The Group had 793 employees as at 31 December 2009. The total staff costs for the year under review were approximately RMB41 million (2008: RMB34 million). The remuneration policy was in line with the current legislation in the relevant jurisdictions, market conditions and performance of the staff and the Group. The remuneration of employees includes salary and discretionary bonus. The Group has adopted a share award scheme to provide incentives to the employees. The remuneration policy and packages, of the Group’s employees, senior management and directors were maintained at market level and reviewed periodically by the management and the remuneration committee, whichever appropriate.

Charge of assets

As at 31 December 2009, none of the Group’s assets or properties were charged for the purpose of securing general banking facilities granted to the Group.

Foreign exchange rate risk

During FY2009, as the Group’s principal activities were carried out in the PRC, the Group’s transactions were mainly denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions involving RMB must take place through the People’s Bank of China or other institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions were the rates of exchange quoted by the People’s Bank of China that were determined largely by supply and demand. During FY2009, the Group did not have a policy on foreign currency risk as it had minimal export sales during the period and the impact of foreign currency risk on the Group’s total sales is minimal.

For the year ended 31 December 2008 (“FY2008”)

Financial review

The Group achieved satisfactory growth during FY2008. The total turnover of the Group for FY2008 amounted to RMB405.6 million for FY2008, representing an increase of 13.5% as compared to 2007. Out of the total turnover of the Group for FY2008, approximately RMB277.9 million, RMB70.5 million and RMB57.2 million were attributable to the Group’s EDS Solutions, iEDS Solutions and CSP Business, respectively.

The increase in turnover for FY2008 was mainly as a result of the increase in market demand of the Group’s solutions and products and the expansion of our sales network. The total profit attributable to the equity shareholders of the Company amounted to RMB51.6 million for FY2008, representing an increase of 31.0% as compared to 2007. As at 31 December 2008, the total assets of the Group was RMB540.7 million (2007: RMB505.4 million) while the total liabilities was RMB359.0 million (2007: RMB376.6 million) and the total equity of the Group amounted to RMB181.7 million (2007: RMB128.8 million).

– II-11 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

EDS Solutions

The total sales of EDS Solutions of the Group for FY2008 amounted to RMB277.8 million (2007: RMB254.7 million), representing 68.5% (2007: 71.3%) of the Group’s total turnover during the year. The increase in total sales of EDS Solutions was principally a result of the increased market demand of our solutions and our effort in sales and marketing network. The reportable segment gross profit of this business segment during the year was RMB77.2 million (2007: RMB50.2 million), representing an increase of 53.8% as compared to that of 2007.

The segment gross profit margin of EDS Solutions segment increased from 19.7% for 2007 to 27.8% for the year.

iEDS Solutions

The total sales of iEDS Solutions of the Group for FY2008 was RMB70.5 million (2007: RMB54.5 million), which accounted for approximately 17.4% (2007: 15.2%) of the Group’s total turnover during the year. The increase in the sales of our iEDS Solutions of 29.4% was mainly attributable to the increased market demand in intelligent power transmission and electrical distribution solutions and related products amid with the overall development of electricity market in the PRC. The reportable segment gross profit of this business segment during the year was RMB26.7 million (2007: RMB16.8 million), representing an increase of 58.9% as compared to that of 2007.

The segment gross profit margin of iEDS Solutions segment increased from 30.9% for 2007 to 37.8% for the year.

CSP Business

The total sales of the CSP Business of the Group for FY2008 was RMB57.2 million (2007: RMB48.1 million), which accounted for approximately 14.1% (2007: 13.5%) of the Group’s total turnover during the year. The increase in sales of CSP Business was mainly a result of our effort in expanding our components manufacturing capability and business. The reportable segment gross profit of this business segment was RMB19.2 million (2007: RMB12.3 million), representing an increase of 56.1% as compared to that of 2007.

The segment gross profit margin of CSP Business segment increased from 25.6% for 2007 to 33.7% for the year.

Capital structure, liquidity and financial resources

During FY2008, the Group maintained a healthy liquidity position. The Group was financed by internal resources. The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. The cash and cash equivalents balance as at 31 December 2008 amounted to RMB15 million. As at 31 December 2008, the Group’s financial position remained healthy, with equity attributable to equity shareholders of the Company of RMB176 million (2007: RMB125 million).

– II-12 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

The gearing ratio, being bank loans divided by total assets, as at 31 December 2008 was 26.8% as compared to 33.5% recorded as at 31 December 2007. The Group does not have significant exposure to interest rate risk as it does not expect interest rate fluctuation would have significant impact to the fair value or cash flows of its cash and bank deposits held as at 31 December 2008.

During FY2008, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 31 December 2008.

Contingent liabilities

As at 31 December 2008, the Group did not have any contingent liabilities.

Human resources

The Group had 580 employees as at 31 December 2008. The total staff costs for the year under review were approximately RMB34 million (2007: RMB22 million). The remuneration policy was in line with the current legislation in the relevant jurisdictions, market conditions and performance of the staff and the Group. The remuneration of employees includes salary and discretionary bonus. The Group has adopted a share award scheme to provide incentives to the employees. The remuneration policy and packages, of the Group’s employees, senior management and directors were maintained at market level and reviewed periodically by the management and the remuneration committee, whichever appropriate.

Charge of assets

As at 31 December 2008, none of the Group’s assets or properties were charged for the purpose of securing general banking facilities granted to the Group.

Foreign exchange rate risk

During FY2008, as the Group’s principal activities were carried out in the PRC, the Group’s transactions were mainly denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions involving RMB must take place through the People’s Bank of China or other institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions were the rates of exchange quoted by the People’s Bank of China that were determined largely by supply and demand. During FY2008, the Group did not have a policy on foreign currency risk as it had minimal export sales during the period and the impact of foreign currency risk on the Group’s total sales is minimal.

– II-13 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

STATEMENT OF INDEBTEDNESS

1 Borrowings

As at 30 September 2011, being the latest practicable date for the purpose of the indebtedness statement prior to the printing of this circular, the Group’s total indebtedness amounted to RMB16.5 million which represented bills payable.

2 Contingent Liabilities

As at 30 September 2011, the Group did not have any significant contingent liabilities.

Apart from intra-group liabilities, the Group did not have outstanding mortgages, charges, debentures, loan capital, bank overdrafts, loans, debt securities or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities outstanding as at 30 September 2011.

The Directors have confirmed that, up to the Latest Practicable Date, there have been no material changes in the Group’s indebtedness and contingent liabilities since 30 September 2011.

STATEMENT OF SUFFICIENCY OF WORKING CAPITAL

The Directors are of the opinion that, based on the internal resources and the available banking facilities of the Group and taking into account the Acquisition and the Offer, the Group has sufficient working capital for its present requirements for the next 12 months from the date of this circular.

– II-14 –

APPENDIX II

FINANCIAL INFORMATION ON THE GROUP

PROPERTY INTERESTS

Particulars of the Group’s property interests are set out in Appendix IV to this circular. Jones Lang LaSalle Sallmanns Limited has valued the property interests of the Group as at 31 October 2011. A summary of values and valuation certificates issued by Jones Lang LaSalle Sallmanns Limited in respect of the Group are included in Appendix IV to this circular. The table below sets out the reconciliation of the aggregate amount of net book value of the Group’s property interests as at 31 December 2010 with the valuation of the Group’s property interests as at 31 October 2011 as set out in Appendix IV to this circular:

Valuation of properties (including the lease prepayments) of the Group as at 31 October 2011 as set out in the property valuation report in Appendix IV to this circular Net book value as at 31 December 2010 Buildings Lease prepayments Construction in progress Add: Additions from 1 January 2011 to 31 October 2011 Less: Depreciation and amortization from 1 January 2011 to 31 October 2011 Net book value as at 31 October 2011 Net valuation surplus	RMB’000 17,566 19,809 16,828	RMB’000 174,074
	54,203 88,766 (3,923)	139,046
		35,028

Note: In the valuation of the Group’s properties, Jones Lang LaSalle Sallmanns Limited has attributed no commercial value to certain properties which have not obtained any title certificate. However, for reference purpose, Jones Lang LaSalle Sallmanns Limited are of the opinion that the depreciated replacement costs of these properties as at the date of valuation would be RMB12,408,000, RMB40,628,000 and RMB23,000,000, respectively, assuming all relevant title certificates have been obtained and the buildings could be freely transferred. We have adopted these valuation of RMB12,408,000, RMB40,628,000 and RMB23,000,000, respectively for this reconciliation purpose.

MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2010, being the date to which the latest published audited consolidated financial statements of the Group were made up to.

– II-15 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

PUBLISHED FINANCIAL INFORMATION

The financial information of the Offeree Group is prepared in compliance with the SFRS which are materially consistent with the HKFRS. However, after gaining access to the books and records of the Offeree Group, the Company can carry out a more in-depth comparison between the accounting standards adopted by the Offeree and the Company. Should any material differences in accounting standards are noted, the Company will set out such finding in the supplemental circular.

A. UNAUDITED FINANCIAL STATEMENTS OF THE OFFEREE FOR THE SIX MONTHS ENDED 30 JUNE 2011

The following is an extract of the unaudited financial statements of the Offeree for the six months ended 30 June 2011, which were prepared in accordance with SFRS, from the result announcements for the six months ended 30 June 2011 of the Offeree.

Specific page/section references mentioned in the unaudited financial statements of the Offeree for the six months ended 30 June 2011 are referred to in the Offeree’s result announcements for the six months ended 30 June 2011 which is available free of charge, in read-only, printable format on the Offeree’s website at http://www.smbunited.com/ wp-content/uploads/2011/02/SMB_Announcement_2Q2011.pdf.

– III-1 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 1 (a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Period ended June 30, 2011

Revenue Cost of sales Gross profit Other operating income Selling expenses General and administrative expenses Other operating expenses Other gains and (losses) Share of losses of associates Share of gains (losses) of joint venture Finance cost Profit before income tax Income tax expense Profit for the period Other comprehensive income: Exchange differences arising on translating foreign operations Available-for-sale financial assets Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit attributable to: Owners of the company Non-controlling interests Total comprehensive income attributable to: Owners of the company Non-controlling interests	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Change Jun 30, 2011 Jun 30, 2010 Change $’000 $’000 % $’000 $’000 % 71,396 60,555 17.9 130,372 107,243 21.6 (48,579) (41,687) 16.5 (90,257) (73,406) 23.0 22,817 18,868 20.9 40,115 33,837 18.6 395 869 (54.5) 786 1,375 (42.8) (1,274) (783) 62.7 (2,318) (1,461) 58.7 (12,173) (9,347) 30.2 (22,543) (18,061) 24.8 (1,266) (930) 36.1 (2,160) (1,848) 16.9 350 (1,249) NM (446) (1,212) (63.2) (28) (110) (74.5) (216) (199) 8.5 201 (99) NM 193 (147) NM (190) (140) 35.7 (346) (245) 41.2 8,832 7,079 24.8 13,065 12,039 8.5 (1,698) (1,509) 12.5 (2,737) (2,581) 6.0 7,134 5,570 28.1 10,328 9,458 9.2 (184) (837) (78.0) (363) (27) 1,244.4 – (5) NM – (43) NM (184) (842) (78.1) (363) (70) 418.6 6,950 4,728 47.0 9,965 9,388 6.1 5,673 4,608 23.1 7,814 7,269 7.5 1,461 962 51.9 2,514 2,189 14.8 7,134 5,570 28.1 10,328 9,458 9.2 5,450 4,072 33.8 7,466 7,442 0.3 1,500 656 128.7 2,499 1,946 28.4 6,950 4,728 47.0 9,965 9,388 6.1	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Change Jun 30, 2011 Jun 30, 2010 Change $’000 $’000 % $’000 $’000 % 71,396 60,555 17.9 130,372 107,243 21.6 (48,579) (41,687) 16.5 (90,257) (73,406) 23.0 22,817 18,868 20.9 40,115 33,837 18.6 395 869 (54.5) 786 1,375 (42.8) (1,274) (783) 62.7 (2,318) (1,461) 58.7 (12,173) (9,347) 30.2 (22,543) (18,061) 24.8 (1,266) (930) 36.1 (2,160) (1,848) 16.9 350 (1,249) NM (446) (1,212) (63.2) (28) (110) (74.5) (216) (199) 8.5 201 (99) NM 193 (147) NM (190) (140) 35.7 (346) (245) 41.2 8,832 7,079 24.8 13,065 12,039 8.5 (1,698) (1,509) 12.5 (2,737) (2,581) 6.0 7,134 5,570 28.1 10,328 9,458 9.2 (184) (837) (78.0) (363) (27) 1,244.4 – (5) NM – (43) NM (184) (842) (78.1) (363) (70) 418.6 6,950 4,728 47.0 9,965 9,388 6.1 5,673 4,608 23.1 7,814 7,269 7.5 1,461 962 51.9 2,514 2,189 14.8 7,134 5,570 28.1 10,328 9,458 9.2 5,450 4,072 33.8 7,466 7,442 0.3 1,500 656 128.7 2,499 1,946 28.4 6,950 4,728 47.0 9,965 9,388 6.1	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Change Jun 30, 2011 Jun 30, 2010 Change $’000 $’000 % $’000 $’000 % 71,396 60,555 17.9 130,372 107,243 21.6 (48,579) (41,687) 16.5 (90,257) (73,406) 23.0 22,817 18,868 20.9 40,115 33,837 18.6 395 869 (54.5) 786 1,375 (42.8) (1,274) (783) 62.7 (2,318) (1,461) 58.7 (12,173) (9,347) 30.2 (22,543) (18,061) 24.8 (1,266) (930) 36.1 (2,160) (1,848) 16.9 350 (1,249) NM (446) (1,212) (63.2) (28) (110) (74.5) (216) (199) 8.5 201 (99) NM 193 (147) NM (190) (140) 35.7 (346) (245) 41.2 8,832 7,079 24.8 13,065 12,039 8.5 (1,698) (1,509) 12.5 (2,737) (2,581) 6.0 7,134 5,570 28.1 10,328 9,458 9.2 (184) (837) (78.0) (363) (27) 1,244.4 – (5) NM – (43) NM (184) (842) (78.1) (363) (70) 418.6 6,950 4,728 47.0 9,965 9,388 6.1 5,673 4,608 23.1 7,814 7,269 7.5 1,461 962 51.9 2,514 2,189 14.8 7,134 5,570 28.1 10,328 9,458 9.2 5,450 4,072 33.8 7,466 7,442 0.3 1,500 656 128.7 2,499 1,946 28.4 6,950 4,728 47.0 9,965 9,388 6.1	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Change Jun 30, 2011 Jun 30, 2010 Change $’000 $’000 % $’000 $’000 % 71,396 60,555 17.9 130,372 107,243 21.6 (48,579) (41,687) 16.5 (90,257) (73,406) 23.0 22,817 18,868 20.9 40,115 33,837 18.6 395 869 (54.5) 786 1,375 (42.8) (1,274) (783) 62.7 (2,318) (1,461) 58.7 (12,173) (9,347) 30.2 (22,543) (18,061) 24.8 (1,266) (930) 36.1 (2,160) (1,848) 16.9 350 (1,249) NM (446) (1,212) (63.2) (28) (110) (74.5) (216) (199) 8.5 201 (99) NM 193 (147) NM (190) (140) 35.7 (346) (245) 41.2 8,832 7,079 24.8 13,065 12,039 8.5 (1,698) (1,509) 12.5 (2,737) (2,581) 6.0 7,134 5,570 28.1 10,328 9,458 9.2 (184) (837) (78.0) (363) (27) 1,244.4 – (5) NM – (43) NM (184) (842) (78.1) (363) (70) 418.6 6,950 4,728 47.0 9,965 9,388 6.1 5,673 4,608 23.1 7,814 7,269 7.5 1,461 962 51.9 2,514 2,189 14.8 7,134 5,570 28.1 10,328 9,458 9.2 5,450 4,072 33.8 7,466 7,442 0.3 1,500 656 128.7 2,499 1,946 28.4 6,950 4,728 47.0 9,965 9,388 6.1
	22,817 395 (1,274) (12,173) (1,266) 350 (28) 201 (190) 8,832 (1,698) 7,134 (184) – (184)	18,868 20.9 869 (54.5) (783) 62.7 (9,347) 30.2 (930) 36.1 (1,249) NM (110) (74.5) (99) NM (140) 35.7 7,079 24.8 (1,509) 12.5 5,570 28.1 (837) (78.0) (5) NM (842) (78.1)	40,115 786 (2,318) (22,543) (2,160) (446) (216) 193 (346) 13,065 (2,737) 10,328 (363) – (363)	33,837 1,375 (1,461 (18,061 (1,848 (1,212 (199 (147 (245
				12,039 (2,581
				9,458
				(27 (43
				(70
	6,950	4,728 47.0	9,965
	5,673 1,461	4,608 23.1 962 51.9	7,814 2,514	7,269 2,189
	7,134	5,570 28.1	10,328
	5,450 1,500	4,072 33.8 656 128.7	7,466 2,499	7,442 1,946
	6,950	4,728 47.0	9,965

– III-2 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Profit for the period is arrived at after charging/(crediting) the following:

			Group
	**Second **	Quarter		**Half **	Year
	Jun 30,	Jun 30,		Jun 30,	Jun 30,
	2011	2010		2011	2010
	$’000	$’000		$’000	$’000
Allowance for (Reversal of allowance):
Doubtful trade receivables	–	(669)		–	(632)
Doubtful non-trade receivables	–	(22)		–	15
Foreseeable losses on contracts	(3)		–	–	–
Inventories	659	394		659	394
Amortisation of intangible assets	15		–	19	–
Amount written off (recovered):
Receivables	–		27	(10)	18
Inventories	264		82	327	82
Depreciation of property, plant and
equipment	1,046	969		2,078	1,868
Depreciation of assets on lease	27		15	53	29
Loss (Gain) on disposal of property,
plant and equipment	11	(10)		16	(14)
Gain on disposal of available-for-sale
investments	–		–	–	(47)
Reclassification to profit or loss from
equity on disposal of available-for-sale
investment	–		–	–	(44)
Changes in fair value of financial
derivative instruments	–		–	(112)	–
Interest income	(59)	(46)		(142)	(68)
Net foreign exchange (gain) loss	(360)	1,260		543	1,318
Research costs	1,265	963		2,158	1,816
Share option expense	–		49	12	99
(Over) Under provision of income tax
expense in prior years	(67)		26	(125)	(54)

– III-3 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.

STATEMENTS OF FINANCIAL POSITION

June 30, 2011

ASSETS Current assets Cash and bank balances Trade receivables Other receivables and prepayments Inventories Contract work-in-progress Total current assets Non-current assets Property, plant and equipment Assets on lease Subsidiaries Associates Joint venture Available-for-sale investments Other receivables Intangible assets Deferred tax assets Total non-current assets Total assets	Group Jun 30, 2011 Dec 31, 2010 $’000 $’000 49,952 62,122 75,640 75,454 5,855 4,333 70,032 50,211 2,459 2,390	Group Jun 30, 2011 Dec 31, 2010 $’000 $’000 49,952 62,122 75,640 75,454 5,855 4,333 70,032 50,211 2,459 2,390	Company Jun 30, 2011 Dec 31, 2010 $’000 $’000 6,393 10,554 – – 10,610 11,887 – – – –	Company Jun 30, 2011 Dec 31, 2010 $’000 $’000 6,393 10,554 – – 10,610 11,887 – – – –
	203,938 42,971 234 – 1,276 979 75 1,009 6,491 1,753 54,788	194,510 38,592 269 – 1,489 463 75 1,009 6,311 1,754 49,962	17,003 673 – 101,577 – – 75 – – – 102,325	22,441
				509 – 74,293 – – 75 – – –
				74,877
	258,726	244,472	119,328	97,318

– III-4 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

LIABILITIES AND EQUITY Current liabilities Bank borrowings Trade payables Other payables Contract work-in-progress Current portion of finance leases Income tax payable Total current liabilities Non-current liabilities Other payables Finance leases Long-term loans Deferred tax liabilities Financial guarantee contracts Total non-current liabilities Capital, reserves and non-controlling interests Share capital Reserves Equity attributable to owners of the company Non-controlling interests Total equity Total liabilities and equity	Group Jun 30, 2011 Dec 31, 2010 $’000 $’000 14,670 10,530 42,235 32,393 13,641 14,072 1,721 1,209 342 456 4,356 4,834	Group Jun 30, 2011 Dec 31, 2010 $’000 $’000 14,670 10,530 42,235 32,393 13,641 14,072 1,721 1,209 342 456 4,356 4,834	Company Jun 30, 2011 Dec 31, 2010 $’000 $’000 14,530 – – – 12,937 2,220 – – 76 94 2 165	Company Jun 30, 2011 Dec 31, 2010 $’000 $’000 14,530 – – – 12,937 2,220 – – 76 94 2 165
	76,965 – 797 22,515 2,005 – 25,317 75,113 65,469 140,582 15,862 156,444	63,494 1,222 498 5,529 2,001 – 9,250 75,113 66,862 141,975 29,753 171,728	27,545 – 118 – 5 295 418 75,113 16,252 91,365 – 91,365	2,479
				– – – 5 319
				324
				75,113 19,402
				94,515 –
				94,515
	258,726	244,472	119,328	97,318

– III-5 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

1(b)(ii) Aggregate amount of group’s borrowings and debt securities.

Amount repayable in one year or less, or on demand

**June **	**30, **	2011	**December **	**31, **	2010
Secured		Unsecured	Secured		Unsecured
$’000		$’000	$’000		$’000
7,023		7,989	7,003		3,983

Amount repayable after one year

**June **	**30, **	2011	**December **	**31, **	2010
Secured		Unsecured	Secured		Unsecured
$’000		$’000	$’000		$’000
18,909		4,403	1,494		4,533

Details of any collateral

Certain land and buildings, investment property and motor vehicles from the Group with a net book value of $9,493,000 (FY2010: $9,323,000), cash and fixed deposits amounting to $549,000 (FY2010: $590,000), and shares of a subsidiary are pledged to financial institutions to obtain bank loans and credit facilities.

– III-6 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.

CONSOLIDATED STATEMENT OF CASH FLOWS

Period ended June 30, 2011

Operating activities Profit before income tax Adjustments for: Share of losses of associates Share of (gains) losses of joint venture Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of assets on lease Dividend income Interest expense Reversal of doubtful trade receivables (Reversal of) Allowance for doubtful non-trade receivables Allowance for inventories Reversal of forseeable losses on contracts Loss (Gain) on disposal of property, plant and equipment Interest income Gain on disposal of available-for-sale investments Reclassification to profit or loss from equity on disposal of available-for-sale investment Changes in fair value of financial derivative instruments Share option expense Operating cash flows before movements in working capital Trade receivables Other receivables and prepayments Inventories Contract work-in-progress Trade payables Other payables Cash generated from operations Income tax paid Interest paid Net cash used in operating activities	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 8,832 7,079 13,065 12,039 28 110 216 199 (201) 99 (193) 147 15 – 19 – 1,046 969 2,078 1,868 27 15 53 29 (5) (4) (5) (4) 190 140 346 245 – (669) – (632) – (22) – 15 659 394 659 394 (3) – – – 11 (10) 16 (14) (59) (46) (142) (68) – – – (47) – – – (44) – – (112) – – 49 12 99 10,540 8,104 16,012 14,226 49 (6,060) (186) (3,337) 82 (2,596) (1,072) (3,231) (9,661) (1,937) (20,480) (7,914) 492 (676) 443 73 2,205 7,270 9,842 4,198 (647) (1,594) (1,541) (3,104) 3,060 2,511 3,018 911 (2,985) (2,590) (3,652) (3,282) (190) (140) (346) (245) (115) (219) (980) (2,616)	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 8,832 7,079 13,065 12,039 28 110 216 199 (201) 99 (193) 147 15 – 19 – 1,046 969 2,078 1,868 27 15 53 29 (5) (4) (5) (4) 190 140 346 245 – (669) – (632) – (22) – 15 659 394 659 394 (3) – – – 11 (10) 16 (14) (59) (46) (142) (68) – – – (47) – – – (44) – – (112) – – 49 12 99 10,540 8,104 16,012 14,226 49 (6,060) (186) (3,337) 82 (2,596) (1,072) (3,231) (9,661) (1,937) (20,480) (7,914) 492 (676) 443 73 2,205 7,270 9,842 4,198 (647) (1,594) (1,541) (3,104) 3,060 2,511 3,018 911 (2,985) (2,590) (3,652) (3,282) (190) (140) (346) (245) (115) (219) (980) (2,616)	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 8,832 7,079 13,065 12,039 28 110 216 199 (201) 99 (193) 147 15 – 19 – 1,046 969 2,078 1,868 27 15 53 29 (5) (4) (5) (4) 190 140 346 245 – (669) – (632) – (22) – 15 659 394 659 394 (3) – – – 11 (10) 16 (14) (59) (46) (142) (68) – – – (47) – – – (44) – – (112) – – 49 12 99 10,540 8,104 16,012 14,226 49 (6,060) (186) (3,337) 82 (2,596) (1,072) (3,231) (9,661) (1,937) (20,480) (7,914) 492 (676) 443 73 2,205 7,270 9,842 4,198 (647) (1,594) (1,541) (3,104) 3,060 2,511 3,018 911 (2,985) (2,590) (3,652) (3,282) (190) (140) (346) (245) (115) (219) (980) (2,616)	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 8,832 7,079 13,065 12,039 28 110 216 199 (201) 99 (193) 147 15 – 19 – 1,046 969 2,078 1,868 27 15 53 29 (5) (4) (5) (4) 190 140 346 245 – (669) – (632) – (22) – 15 659 394 659 394 (3) – – – 11 (10) 16 (14) (59) (46) (142) (68) – – – (47) – – – (44) – – (112) – – 49 12 99 10,540 8,104 16,012 14,226 49 (6,060) (186) (3,337) 82 (2,596) (1,072) (3,231) (9,661) (1,937) (20,480) (7,914) 492 (676) 443 73 2,205 7,270 9,842 4,198 (647) (1,594) (1,541) (3,104) 3,060 2,511 3,018 911 (2,985) (2,590) (3,652) (3,282) (190) (140) (346) (245) (115) (219) (980) (2,616)
	10,540 49 82 (9,661) 492 2,205 (647) 3,060 (2,985) (190) (115)	8,104 (6,060) (2,596) (1,937) (676) 7,270 (1,594) 2,511 (2,590) (140) (219)	16,012 (186) (1,072) (20,480) 443 9,842 (1,541) 3,018 (3,652) (346) (980)	14,226 (3,337 (3,231 (7,914 73 4,198 (3,104
				911 (3,282 (245
				(2,616

– III-7 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

Investing activities Interest received Purchase of property, plant and equipment (Note A) Proceeds on disposal of property, plant and equipment Acquisition of investment in joint venture Proceeds on disposal of available-for-sale investments Expenditure on product development Dividends received Net cash used in investing activities Financing activities Repayment of finance leases Repayment of bank loans New bank loans raised Net repayment of trust receipts and banker’s acceptance Decrease in cash deposits pledged to bank Dividends paid to equity holders of the company Dividends paid to non-controlling interests of subsidiaries Acquisition of equity and unexercised employee share options in a subsidiary from non-controlling interests Proceeds from exercise of employee share options of a subsidiary Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Effect of foreign exchange rate changes Cash and cash equivalents at end of the period Cash and cash equivalents consist of: Cash at bank Fixed deposits Bank overdrafts	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 59 46 142 68 (5,323) (942) (6,339) (1,876) 15 99 121 104 (307) – (307) (250) – – – 576 (114) (9) (146) (14) 5 4 5 4 (5,665) (802) (6,524) (1,388) (160) (204) (342) (234) (167) (99) (273) (198) 16,965 3,314 21,145 4,314 (2,170) (582) (235) (223) 46 80 41 63 (4,797) (7,196) (4,797) (7,196) (1,010) (1,330) (1,010) (1,330) (15,576) (8) (20,589) (8) 1,135 94 1,135 159 (5,734) (5,931) (4,925) (4,653) (11,514) (6,952) (12,429) (8,657) 57,461 55,868 58,455 57,426 (110) (263) (189) (116) 45,837 48,653 45,837 48,653 49,090 43,325 49,090 43,325 313 7,816 313 7,816 (3,566) (2,488) (3,566) (2,488) 45,837 48,653 45,837 48,653	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 59 46 142 68 (5,323) (942) (6,339) (1,876) 15 99 121 104 (307) – (307) (250) – – – 576 (114) (9) (146) (14) 5 4 5 4 (5,665) (802) (6,524) (1,388) (160) (204) (342) (234) (167) (99) (273) (198) 16,965 3,314 21,145 4,314 (2,170) (582) (235) (223) 46 80 41 63 (4,797) (7,196) (4,797) (7,196) (1,010) (1,330) (1,010) (1,330) (15,576) (8) (20,589) (8) 1,135 94 1,135 159 (5,734) (5,931) (4,925) (4,653) (11,514) (6,952) (12,429) (8,657) 57,461 55,868 58,455 57,426 (110) (263) (189) (116) 45,837 48,653 45,837 48,653 49,090 43,325 49,090 43,325 313 7,816 313 7,816 (3,566) (2,488) (3,566) (2,488) 45,837 48,653 45,837 48,653	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 59 46 142 68 (5,323) (942) (6,339) (1,876) 15 99 121 104 (307) – (307) (250) – – – 576 (114) (9) (146) (14) 5 4 5 4 (5,665) (802) (6,524) (1,388) (160) (204) (342) (234) (167) (99) (273) (198) 16,965 3,314 21,145 4,314 (2,170) (582) (235) (223) 46 80 41 63 (4,797) (7,196) (4,797) (7,196) (1,010) (1,330) (1,010) (1,330) (15,576) (8) (20,589) (8) 1,135 94 1,135 159 (5,734) (5,931) (4,925) (4,653) (11,514) (6,952) (12,429) (8,657) 57,461 55,868 58,455 57,426 (110) (263) (189) (116) 45,837 48,653 45,837 48,653 49,090 43,325 49,090 43,325 313 7,816 313 7,816 (3,566) (2,488) (3,566) (2,488) 45,837 48,653 45,837 48,653	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 $’000 $’000 $’000 $’000 59 46 142 68 (5,323) (942) (6,339) (1,876) 15 99 121 104 (307) – (307) (250) – – – 576 (114) (9) (146) (14) 5 4 5 4 (5,665) (802) (6,524) (1,388) (160) (204) (342) (234) (167) (99) (273) (198) 16,965 3,314 21,145 4,314 (2,170) (582) (235) (223) 46 80 41 63 (4,797) (7,196) (4,797) (7,196) (1,010) (1,330) (1,010) (1,330) (15,576) (8) (20,589) (8) 1,135 94 1,135 159 (5,734) (5,931) (4,925) (4,653) (11,514) (6,952) (12,429) (8,657) 57,461 55,868 58,455 57,426 (110) (263) (189) (116) 45,837 48,653 45,837 48,653 49,090 43,325 49,090 43,325 313 7,816 313 7,816 (3,566) (2,488) (3,566) (2,488) 45,837 48,653 45,837 48,653
	(5,665) (160) (167) 16,965 (2,170) 46 (4,797) (1,010) (15,576) 1,135 (5,734) (11,514) 57,461 (110)	(802) (204) (99) 3,314 (582) 80 (7,196) (1,330) (8) 94 (5,931) (6,952) 55,868 (263)	(6,524) (342) (273) 21,145 (235) 41 (4,797) (1,010) (20,589) 1,135 (4,925) (12,429) 58,455 (189)	(1,388
				(234 (198 4,314 (223 63 (7,196 (1,330 (8 159
				(4,653
				(8,657 57,426 (116
	45,837	48,653	45,837
	49,090 313 (3,566)	43,325 7,816 (2,488)	49,090 313 (3,566)	43,325 7,816 (2,488
	45,837	48,653	45,837

Notes to Consolidated Statement of Cash Flows

• A. During the financial period ended June 30, 2011, the group acquired property, plant and equipment with an aggregate cost of $6,866,000 (6 months 2010: $1,949,000) of which $527,000 (6 months 2010: $73,000) was acquired under finance lease agreement. Cash payments of $6,339,000 (6 months 2010: $1,876,000) was made to purchase property, plant and equipment.

– III-8 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.

STATEMENTS OF CHANGES IN EQUITY

Period ended June 30, 2011

Group Balance at January 1, 2011 Total comprehensive income for the period Recognition of share-based payments Effects of acquiring part of non-controlling interests in a subsidiary Balance at March 31, 2011 Total comprehensive income for the period Dividends Exercise of a subsidiary’s employee share options Effects of acquiring part of non-controlling interests in a subsidiary Balance at June 30, 2011 Balance at January 1, 2010 Total comprehensive income for the period Recognition of share-based payments Exercise of a subsidiary’s employee share options Balance at March 31, 2010 Total comprehensive income for the period Dividends Recognition of share-based payments Exercise of a subsidiary’s employee share options Effects of acquiring part of non-controlling interests in subsidiaries Balance at June 30, 2010	Share capital $’000 75,113 – – –	Share option reserve $’000 648 – 7 –	Other capital reserve Investment revaluation reserve $’000 $’000 (71) (42) – – – – (719) –	Other capital reserve Investment revaluation reserve $’000 $’000 (71) (42) – – – – (719) –	Currency translation reserve $’000 (669) (125) – –	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 66,996 141,975 29,753 2,141 2,016 999 – 7 5 – (719) (4,294)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 66,996 141,975 29,753 2,141 2,016 999 – 7 5 – (719) (4,294)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 66,996 141,975 29,753 2,141 2,016 999 – 7 5 – (719) (4,294)	Total $’000 171,728 3,015 12 (5,013
	75,113 – – – –	655 – – – –	(790) – – (654) (2,696)	(42) – – – –	(794) (216) – – –	69,137 5,673 (4,797) – –	143,279 5,457 (4,797) (654) (2,696)	26,463 1,500 (1,010) 1,789 (12,880)	169,742
									6,957 (5,807 1,135 (15,576
	75,113	655	(4,140)	(42)	(1,010)	70,013	140,589	15,862	156,451
	75,113 – – – 75,113 – – – – –	532 – 29 – 561 – – 29 – –	– – – (37) (37) – – – (59) 27	(35) (18) – – (53) (5) – – – –	(990) 727 – – (263) (531) – – – –	60,874 2,661 – – 63,535 4,608 (7,196) – – –	135,494 3,370 29 (37) 138,856 4,072 (7,196) 29 (59) 27	24,554 1,290 21 102 25,967 656 (1,330) 20 126 (8)	160,048 4,660 50 65
									164,823
									4,728 (8,526 49 67 19
	75,113	590	(69)	(58)	(794)	60,947	135,729	25,431	161,160

– III-9 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Company Balance at January 1, 2011 Total comprehensive income for the period Balance at March 31, 2011 Total comprehensive income for the period Dividends Balance at June 30, 2011 Balance at January 1, 2010 Total comprehensive income for the period Balance at March 31, 2010 Total comprehensive income for the period Dividends Balance at June 30, 2010	Share capital Investment revaluation reserve $’000 $’000 75,113 (42) – –	Share capital Investment revaluation reserve $’000 $’000 75,113 (42) – –	Retained earnings $’000 19,444 142	Total $’000 94,515 142 94,657 1,505 (4,797) 91,365 89,044 359 89,403 328 (7,196) 82,535
	75,113 – –	(42) – –	19,586 1,505 (4,797)	94,657
				1,505 (4,797
	75,113	(42)	16,294
	75,113 – 75,113 – –	(60) 7 (53) (5) –	13,991 352 14,343 333 (7,196)	89,044 359
				89,403
				328 (7,196
	75,113	(58)	7,480

1(d)(ii) Details of any changes in the company’s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.

None.

– III-10 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 1(d)(iii) To show the number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year.

The number of ordinary shares issued as at June 30, 2011 is 479,751,999 (FY 2010: 479,751,999).

• 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.

Not applicable.

2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice.

The figures have not been audited and have not been reviewed.

3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of a matter).

Not applicable.

4. Whether the same accounting policies and methods of computation as in the issuer’s most recently audited annual financial statements have been applied.

The Group has applied the same accounting policies and methods of computations in the financial statements for the current financial period compared with those of the audited financial statements as at December 31, 2010.

5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change.

The adoption of the new/revised FRS does not have a material impact on the Group and Company.

– III-11 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends.

Basic earnings per share based on the weighted average number of ordinary shares in issue (cents) On a fully diluted basis (cents)	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 1.18 0.96 1.63 1.52 1.18 0.96 1.63 1.52	Group Second Quarter Half Year Jun 30, 2011 Jun 30, 2010 Jun 30, 2011 Jun 30, 2010 1.18 0.96 1.63 1.52 1.18 0.96 1.63 1.52
		1.52

Basic earnings per share is computed based on the weighted average number of ordinary shares of 479,752,000 (2Q2010: 479,752,000).

Diluted earnings per share is computed based on the weighted average number of ordinary shares of 479,752,000 (2Q2010: 479,752,000).

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:

• (a) current financial period reported on; and

• (b) immediately preceding financial year.

Net asset value per ordinary share based on issued share capital at the end of the period (cents)	Group Jun 30, 2011 Dec 31, 2010 29.3 29.6	Company Jun 30, 2011 Dec 31, 2010 19.0 19.7

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group’s business. It must include a discussion of the following:

• (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and

– III-12 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• (b) any material factors that affected cash flow, working capital, assets or liabilities of the group during the current financial period reported on.

The Group registered a turnover of $71.4 million in 2Q2011, representing an increase of 17.9% from the previous corresponding financial period. Higher overseas sales to Oceania, Europe and Africa regions contributed to this improved performance.

Selling expenses increased by $0.5 million due to higher overseas marketing expenses and an increase in the amount of travelling as a result of the higher overseas deliveries.

General and administrative expenses increased by 30.2% to $12.2 million. Besides higher bonus accruals and increments at the beginning of the year, the increase was also due to new hires in new subsidiaries as we expand our overseas production capacity.

Other operating expenses increased to $1.3 million for the second quarter mainly due to the increase in R&D headcount by our Power & Technology division.

As a result of the appreciation of the New Zealand and Australian dollar, the Group recorded foreign exchange gain of $0.4 million as reflected under other gains and losses.

On a quarter-to quarter basis, the improvement in the Group’s 2Q2011 bottomline of 23.1% is in line with the improvement in turnover. Overall, the Group managed to record profit attributable to shareholders of $7.8 million for the first half of 2011, of which $5.7 million was recorded in the second quarter, a jump of 165% over the first quarter.

Group balance sheet and cash flow statement- explanation of significant variances

Inventories increased by $19.8 million to $70.0 million. This was due to raw materials being accumulated for production in anticipation of orders to be fulfilled in the coming months. The purchase of these raw materials resulted in an increase in our trade payables by $9.8 million to $42.2 million.

Property, plant and equipment increased by $4.4 million and this was mainly due to the purchase of a property in Malaysia as we look to further increase our production capacity.

The Group’s borrowings increased by $21.3 million and this included funds that was borrowed for the purchase of EDMI Limited’s shares that are not already owned by the Group.

– III-13 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.

There were no forecast or prospect statement previously disclosed to shareholders.

10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

The Ministry of Trade and Industry (MTI) in Singapore had earlier announced that the Singapore economy grew by 0.9% on a year-on-year basis in the second quarter of 2011, which is far lower than the 9.3% growth that was achieved in the preceding quarter. The slowdown in growth was mainly attributed to the contraction in the manufacturing sector. Against the uncertain economic backdrop, margins of our products and services in the local market is expected to remain under pressure.

Our overseas markets, on the other hand, continue to see healthy demand for our products and services and this trend should continue unless the volatile global economy further sours the markets that we operate in.

With growing interest in energy management and energy efficiency of buildings, the Group is also exploring new opportunities in energy management solutions, particularly in the local market. The recently announced green certification of the M-Cube switchgear will also allow for opportunities to be tapped in the local building and construction industry in its drive to be more environmentally friendly and sustainable.

11. Dividend

• (a) Current financial period reported on

Any dividend declared for the current financial period reported on? No

• (b) Corresponding period of the immediately preceding financial year

Any dividend declared for the corresponding period of the immediately preceding financial year? No

• (c) Date Payable

Not applicable

• (d) Book Closure Date

Not applicable

12. If no dividend has been declared/recommended, a statement to that effect.

Not applicable

– III-14 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

B. AUDITED FINANCIAL STATEMENTS OF THE OFFEREE FOR THE YEAR ENDED 31 DECEMBER 2010

The following is an extract of the audited financial statements of the Offeree for the year ended 31 December 2010, which were prepared in accordance with SFRS, from the 2010 annual report and financial statements of the Offeree.

Specific page/section references mentioned in the audited financial statements of the Offeree for the year ended 31 December 2010 are referred to in the Offereee’s 2010 annual report and financial statements which is available free of charge, in read-only, printable format on the Offeree’s website at http://www.smbunited.com/wp-content/uploads/2011/02/AR2010.pdf.

STATEMENTS OF FINANCIAL POSITION

December 31, 2010

Note ASSETS Current assets Cash and bank balances 6 Trade receivables 7 Other receivables and prepayments 8 Inventories 9 Contract work-in-progress 10 Total current assets Non-current assets Property, plant and equipment 11 Assets on lease 12 Subsidiaries 13 Associates 14 Joint venture 15 Available-for-sale investments 16 Intangible assets 17 Other receivables 18 Deferred tax assets 19 Total non-current assets Total assets	Group 2010 2009 $’000 $’000 62,122 59,545 75,454 75,812 4,333 3,591 50,211 46,707 2,390 2,756	Group 2010 2009 $’000 $’000 62,122 59,545 75,454 75,812 4,333 3,591 50,211 46,707 2,390 2,756	Company 2010 2009 $’000 $’000 10,554 9,797 – – 11,887 16,629 – – – –	Company 2010 2009 $’000 $’000 10,554 9,797 – – 11,887 16,629 – – – –
	194,510 38,592 269 – 1,489 463 75 6,311 1,009 1,754 49,962	188,411 36,568 210 – 820 511 587 5,025 – 1,019 44,740	22,441 509 – 74,293 – – 75 – – – 74,877	26,426
				580 – 66,140 – – 57 – – –
				66,777
	244,472	233,151	97,318	93,203

– III-15 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note LIABILITIES AND EQUITY Current liabilities Bank borrowings 20 Trade payables 21 Other payables 22 Derivative financial instruments 23 Contract work-in-progress 10 Current portion of finance leases 24 Income tax payable Total current liabilities Non-current liabilities Other payables 22 Finance leases 24 Long-term loans 20 Deferred tax liabilities 25 Financial guarantee contracts Total non-current liabilities Capital, reserves and non-controlling interests Share capital 27 Reserves 28 Equity attributable to owners of the company Non-controlling interests Total equity Total liabilities and equity	Group 2010 2009 $’000 $’000 10,530 6,926 32,393 34,684 13,959 13,322 113 60 1,209 2,217 456 499 4,834 4,985	Group 2010 2009 $’000 $’000 10,530 6,926 32,393 34,684 13,959 13,322 113 60 1,209 2,217 456 499 4,834 4,985	Company 2010 2009 $’000 $’000 – – – – 2,220 2,614 – – – – 94 94 165 51	Company 2010 2009 $’000 $’000 – – – – 2,220 2,614 – – – – 94 94 165 51
	63,494 1,222 498 5,529 2,001 – 9,250 75,113 66,862 141,975 29,753 171,728	62,693 3,403 870 4,537 1,600 – 10,410 75,113 60,381 135,494 24,554 160,048	2,479 – – – 5 319 324 75,113 19,402 94,515 – 94,515	2,759
				937 94 – 3 366
				1,400
				75,113 13,931
				89,044 –
				89,044
	244,472	233,151	97,318	93,203

– III-16 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended December 31, 2010

Note Revenue 29 Cost of sales Gross profit Other operating income 30 Selling expenses General and administrative expenses Other operating expenses Other (losses) and gains 31 Share of losses of associates 14 Share of losses of joint venture 15 Finance cost Profit before tax Income tax expense 32 Profit for the year 33 Other comprehensive income: Exchange differences arising on translating foreign operations Available-for-sale financial assets: Gain arising during the year Reclassification to profit or loss from equity on disposal of available-for-sale investments Other comprehensive income for the period, net of tax Total comprehensive income for the period	Group 2010 2009 $’000 $’000 229,525 226,508 (161,898) (162,132) 67,627 64,376 2,200 3,676 (3,584) (3,151) (37,765) (36,202) (3,921) (3,808) (899) 5,336 (437) (361) (215) (156) (517) (454) 22,489 29,256 (4,800) (5,278) 17,689 23,978 363 1,468 18 425 (44) 1,844 337 3,737 18,026 27,715	Group 2010 2009 $’000 $’000 229,525 226,508 (161,898) (162,132) 67,627 64,376 2,200 3,676 (3,584) (3,151) (37,765) (36,202) (3,921) (3,808) (899) 5,336 (437) (361) (215) (156) (517) (454) 22,489 29,256 (4,800) (5,278) 17,689 23,978 363 1,468 18 425 (44) 1,844 337 3,737 18,026 27,715
	363 18 (44) 337	1,468 425 1,844
		3,737
	18,026

– III-17 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Profit attributable to: Owners of the company Non-controlling interests Total comprehensive income attributable to: Owners of the company Non-controlling interests Basic earnings per share (cents) 34 Diluted earnings per share (cents) 34	Group 2010 2009 $’000 $’000 13,318 21,221 4,371 2,757 17,689 23,978 13,632 23,372 4,394 4,343 18,026 27,715 2.78 4.42 2.78 4.42	Group 2010 2009 $’000 $’000 13,318 21,221 4,371 2,757 17,689 23,978 13,632 23,372 4,394 4,343 18,026 27,715 2.78 4.42 2.78 4.42
		23,978
		23,372 4,343
		27,715
		4.42
		4.42

– III-18 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

STATEMENTS OF CHANGES IN EQUITY

Year ended December 31, 2010

Share capital Share option reserve Note $’000 $’000 Group Balance at January 1, 2009 75,113 416 Total comprehensive income and loss for the year – – Dividends 38 – – Recognition of share-based payments 26 – 116 Exercise of a subsidiary’s employee share options – – Effects of acquiring part of non-controlling interests in subsidiary – – Balance at December 31, 2009 75,113 532 Total comprehensive income and loss for the year – – Dividends 38 – – Recognition of share-based payments 26 – 116 Exercise of a subsidiary’s employee share options – – Effects of acquiring part of non-controlling interests in subsidiary – – Non-controlling interests arising from acquisition of subsidiaries – – Balance at December 31, 2010 75,113 648 Note Company Balance at January 1, 2009 Total comprehensive income for the year Dividends 38 Balance at December 31, 2009 Total comprehensive income for the year Dividends 38 Balance at December 31, 2010	Share capital $’000 75,113 – – – – –	Share option reserve $’000 416 – – 116 – –	Share option reserve $’000 416 – – 116 – –	Other capital reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 – (1,320) (1,856) – 1,285 866 – – – – – – – – – – – –	Other capital reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 – (1,320) (1,856) – 1,285 866 – – – – – – – – – – – –	Other capital reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 – (1,320) (1,856) – 1,285 866 – – – – – – – – – – – –	Other capital reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 – (1,320) (1,856) – 1,285 866 – – – – – – – – – – – –	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)	Retained earnings Attributable to owners of the company Non- controlling interests $’000 $’000 $’000 44,451 116,804 21,467 21,221 23,372 4,343 (4,798) (4,798) (230) – 116 82 – – 261 – – (1,369)
	75,113 – – – – – –		532 – – 116 – – –	– – – – (103) 32 –	(35) (7) – – – – –		(990) 321 – – – – –		60,874 13,318 (7,196) – – – –	135,494 13,632 (7,196) 116 (103) 32 –		24,554 4,394 (1,484) 82 240 (8) 1,975	160,048 18,026 (8,680 198 137 24 1,975
			648	(71) (42) (669) Share capital Investment revaluation reserve $’000 $’000 75,113 (85) – 25 – –					66,996 141,975 Retained earnings $’000 6,142 12,647 (4,798)
				75,113 – –		(60) 18 –			13,991 12,649 (7,196)			89,044 12,667 (7,196
				75,113		(42)			19,444

– III-19 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended December 31, 2010

Operating activities Profit before income tax Adjustments for: Share of losses of associates Share of losses of joint venture Depreciation of property, plant and equipment Depreciation of assets on lease Dividend income Interest expense Amortisation of intangible assets (Reversal of) Allowance for doubtful trade receivables Allowance for inventories (Reversal of) Allowance for foreseeable losses on contracts Gain on disposal of property, plant and equipment Interest income Loss on dilution of shareholding interest in a subsidiary Gain on dilution of shareholding interest in an associate Gain on disposal of a subsidiary Gain on acquisition of shareholding interest in a subsidiary Reclassification to profit or loss from equity on disposal of available-for-sale investment Gain on disposal of available-for-sale investments Changes in fair value of financial derivative instruments Share option expense Operating cash flows before movements in working capital Trade receivables Other receivables and prepayments Inventories Contract work-in-progress Trade payables Other payables Cash generated from operations Income tax paid Interest paid Net cash from operating activities	Group 2010 2009 $’000 $’000 22,489 29,256 437 361 215 156 3,748 3,220 75 44 (4) (3) 517 454 15 – (548) 476 1,852 2,486 (166) 836 (56) (36) (203) (185) – 79 – (73) – (277) – (643) (44) 1,844 (47) (2,263) 53 60 198 198 28,531 35,990 841 (17,872) (332) (516) (4,018) (4,249) (476) (215) (3,132) 6,074 (3,154) 7,300 18,260 26,512 (5,279) (3,289) (517) (454) 12,464 22,769	Group 2010 2009 $’000 $’000 22,489 29,256 437 361 215 156 3,748 3,220 75 44 (4) (3) 517 454 15 – (548) 476 1,852 2,486 (166) 836 (56) (36) (203) (185) – 79 – (73) – (277) – (643) (44) 1,844 (47) (2,263) 53 60 198 198 28,531 35,990 841 (17,872) (332) (516) (4,018) (4,249) (476) (215) (3,132) 6,074 (3,154) 7,300 18,260 26,512 (5,279) (3,289) (517) (454) 12,464 22,769
	28,531 841 (332) (4,018) (476) (3,132) (3,154) 18,260 (5,279) (517) 12,464	35,990 (17,872 (516 (4,249 (215 6,074 7,300
		26,512 (3,289 (454
		22,769

– III-20 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Investing activities Interest received Purchase of property, plant and equipment A Proceeds on disposal of property, plant and equipment Proceeds on disposal of available-for-sale investments Acquisition of investment in associate Acquisition of investment in joint venture Acquisition of investment in subsidiaries 40 Proceeds from disposal of a subsidiary 39 Expenditure on product development Loan to associate Loan to joint venture Dividends received Net cash used in investing activities Financing activities Repayment of finance leases Repayment of bank loans New bank loan raised Net (repayments) proceeds from trust receipts and banker’s acceptance (Increase) decrease in cash and deposits pledged to bank 6 Dividends paid to equity holders of the company Dividends paid to non-controlling interests of subsidiaries Acquisition of equity in a subsidiary from non-controlling interests Capital contribution from non-controlling interests Proceeds from exercise of employee share options of a subsidiary Net cash used in financing activities	Group 2010 2009 $’000 $’000 203 185 (4,595) (2,499) 138 423 576 2,946 – (105) (250) (50) (185) (3,903) – 96 (316) (151) (1,145) – – (325) 4 3 (5,570) (3,380) (530) (602) (821) (1,793) 4,314 4,046 (376) 554 (69) 818 (7,196) (4,798) (1,484) (230) (8) (726) 23 – 169 182 (5,978) (2,549)	Group 2010 2009 $’000 $’000 203 185 (4,595) (2,499) 138 423 576 2,946 – (105) (250) (50) (185) (3,903) – 96 (316) (151) (1,145) – – (325) 4 3 (5,570) (3,380) (530) (602) (821) (1,793) 4,314 4,046 (376) 554 (69) 818 (7,196) (4,798) (1,484) (230) (8) (726) 23 – 169 182 (5,978) (2,549)
	(5,570) (530) (821) 4,314 (376) (69) (7,196) (1,484) (8) 23 169 (5,978)	(3,380
		(602 (1,793 4,046 554 818 (4,798 (230 (726 – 182
		(2,549

– III-21 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at end of the year Cash and cash equivalents consist of: Cash at bank 6 Fixed deposits 6 Bank overdrafts 20	Group 2010 2009 $’000 $’000 916 16,840 57,426 40,602 113 (16) 58,455 57,426 51,689 47,652 9,843 11,372 (3,077) (1,598) 58,455 57,426

Note A

During the financial year, the group acquired property, plant and equipment with an aggregate cost of $4,710,000 (2009: $3,139,000) of which $115,000 (2009: $640,000) was acquired under finance lease agreement. Cash payments of $4,595,000 (2009: $2,499,000) was made to purchase property, plant and equipment.

– III-22 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

NOTES TO FINANCIAL STATEMENTS

December 31, 2010

1 GENERAL

The company (Registration No. 199506364D) is incorporated in Singapore with its principal place of business and registered office at 9 Senoko Drive, Singapore 758197. The company is listed on the main board of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in Singapore dollars.

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

The principal activities of the subsidiaries, associates and joint venture are disclosed in Notes 13, 14 and 15 to the financial statements.

The consolidated financial statements of the group and statement of financial position and statement of changes of equity of the company for the year ended December 31, 2010 were authorised for issue by the Board of Directors on March 29, 2011.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

Adoption of new and revised standards

In the current financial year, the group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after January 1, 2010. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the group’s and company’s accounting policies and has no material effect on the amounts reported in the current or prior years except as disclosed below:

FRS 103 (2009) Business Combinations

FRS 103 (2009) has been adopted in the current year and is applied prospectively to business combinations for which the acquisition date is on or after January 1, 2010. The main impact of the adoption of FRS 103 (2009) Business Combinations on the company has been:

• to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests (previously referred to as ‘minority’ interests) either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net assets of the acquiree.

• to change the recognition and subsequent accounting requirements for contingent consideration. Under the previous version of the Standard, contingent consideration was recognised at the acquisition date only if payment of the contingent consideration was probable and it could be measured reliably; any subsequent adjustments to the contingent consideration were recognised against goodwill. Under the revised Standard, contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration are recognised against goodwill only to the extent that they arise from better information about the fair value at the acquisition date, and they occur within the ‘measurement period’ (a maximum of 12 months from the acquisition date). All other subsequent adjustments are recognised in profit or loss.

• to require that acquisition-related costs be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in consolidated profit or loss as incurred, whereas previously they were accounted for as part of the cost of the acquisition.

These changes in policies have affected the accounting for the acquisition of EDMI (Shenzhen) Co., Ltd where the acquisition-related costs are recognised in profit or loss as incurred. The changes do not have a material impact on the financial statements of the group.

Amendments to FRS 1 Presentation of Financial Statements (as part of Improvements to FRSs issued in 2010)

The amendments to FRS 1 clarify that an entity may choose to present the required analysis of items of other comprehensive income either in the statement of changes in equity or in the notes to the financial

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

statements. The company has applied the amendments in advance of their effective date (annual periods beginning on or after January 1, 2011). The amendments have been applied retrospectively.

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the company were issued but not effective:

• FRS 24 (Revised) Related Party Disclosures

Consequential amendments were also made to various standards as a result of these new/revised standards.

FRS 24 (Revised) Related Party Disclosures

FRS 24 (Revised) Related Party Disclosures is effective for annual periods beginning on or after January 1, 2011. The revised standard clarifies the definition of a related party and consequently additional parties may be identified as related to the reporting entity. In the period of initial adoption, the changes to related party disclosures, if any, will be applied retrospectively with restatement of the comparative information.

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in 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.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies in line with those used by other members of the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interest of non-controlling shareholders may be initially measured (at date of original business combination) either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company.

When the group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

In the company’s financial statements, investments in subsidiaries, associates and joint venture are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by the group to the former owners of the acquiree, and equity interests issued by the group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

Where a business combination is achieved in stages, the group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with FRS 102 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the group obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year from acquisition date.

The accounting policy for initial measurement of non-controlling interests is described above.

Financial instruments

Financial assets and financial liabilities are recognised on the group’s statement of financial position when the group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transactions costs and other premiums or discounts) through the expected life of the financial instrument or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Financial assets

Financial assets comprise “available-for-sale” financial assets, “trade and other receivables” and “cash and cash equivalents”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets

Investments are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs.

Certain shares held by the group are classified as available-for-sale and are stated at fair value. Fair value is determined in the manner described in Note 4b(vi). Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the group’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other comprehensive income.

Trade and other receivables

Receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term receivables where the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and bank overdrafts that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted.

For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period of 30 to 90 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any subsequent increase in fair value after an impairment loss, is recognised in other comprehensive income.

Derecognition of financial assets

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis, except for short-term payables where the recognition of interest would be immaterial.

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount of obligation under the contract recognised as a provision in accordance with FRS 37 Provision, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance with FRS 18 Revenue.

Finance lease obligations are recognised in accordance with the accounting policy denoted below.

Derecognition of financial liabilities

The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire.

Derivative financial instruments and hedge accounting

The group’s activities expose it primarily to the financial risks of changes in foreign exchange rates.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Derivative financial instruments are initially measured at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at the end of each reporting period.

Changes in the fair value of derivative financial instruments are recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Cost of inventories is determined as follows:

Raw materials	–	first-in, first-out method
Work-in-progress	–	standard cost which approximates actual average cost
Finished goods	–	first-in, first-out method

Contract work-in-progress

Where the outcome of a contract work-in-progress can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Property, plant and equipment/assets on lease

These assets are carried at cost, less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method and on the following bases:

Leasehold land and buildings	–	1.69% to 3.85% (over the term of lease)
Plant and equipment	–	10% to 331∕3%
Motor vehicles	–	10% to 20%
Meters	–	20%

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Fully depreciated assets still in use are retained in the financial statements.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

Assets held under operating lease relate to utility meters leased out to customers under operating lease agreements. These assets are being depreciated over their expected useful lives which are the shorter of the operating lease term and their estimated useful life, not exceeding five years.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the consolidated statement of comprehensive income.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the equity over the net amounts of the identifiable assets acquired and the liabilities assumed at the acquisition date.

If, after assessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

The group’s policy for goodwill arising on the acquisition of an associate or a jointly controlled entity is described under “Associates” below.

Intangible assets

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development of identifiable and unique software/ products that are controlled by the group and have probable economic benefit exceeding the costs beyond one year is recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset for use or sale;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Costs include the staff costs of the product development team and an appropriate portion of direct overheads. Costs that enhance or extend performance of product beyond their original specifications are capitalised and added to the original cost of the product. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

Product development costs that are capitalised are amortised using the straight-line method over their estimated useful lives of 3 years.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The estimated useful lives and amortisation method are reviewed at the end of each annual reporting period with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.

Patents, trademarks and licenses are amortised on a straight-line basis over the period of expected benefits, generally not exceeding 3 years. The estimated useful lives and amortisation method are reviewed on the same basis as internally generated assets.

Impairment of tangible and intangible assets excluding goodwill

At the end of each reporting period, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Associates

An associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the group’s interest in that associate (which includes any long-term interests that, in substance, form part of the group’s net investment in the associate) are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

impairment as part of the investment. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a group entity transacts with an associate of the group, unrealised profits and losses are eliminated to the extent of the group’s interest in the relevant associate.

Interests in joint venture

A joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

Where a group entity undertakes its activities under joint venture arrangements directly, the group’s share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the group’s share of the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to/from the group and their amount can be measured reliably.

Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The group reports its interests in jointly controlled entities using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations. The group’s share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

Where the group transacts with its joint ventures, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Warranties

Warranty cost is provided for the estimated liability to repair or replace products under warranty at the end of the reporting period. This warranty cost is determined based on assessment of each batch of production and the directors’ best estimate of the expenditure required to settle the group’s obligation.

Provision for warranty cost is made where there are indicators of defects which may result in material repair or replacement costs.

Share-based payments

The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non market-based vesting conditions) at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 26. The fair value determined at the grant date of the equity- settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non market-based vesting conditions.

At the end of each reporting period, the group revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share option reserve.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The policy described above is applied to all equity-settled share-based payments that were granted after November 22, 2002 and vested after January 1, 2005.

Government grants

Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions attaching to them and the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The group as lessee

Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease, or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated custom returns, rebates and other similar allowances.

• 1) Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• the group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 2) Revenue from long-term contracts is recognised by reference to the stage of completion of the contract at the end of the reporting period. When losses are expected, after taking into consideration estimated cost to complete, such losses are recorded immediately.

• 3) Revenue from rendering of services is recognised when the services are completed.

• 4) Income from providing financial guarantees is recognised in profit or loss over the guarantee period on a straight-line basis.

• 5) Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

• 6) Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the profit or loss in the period in which they are incurred.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the company and subsidiaries operate by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised directly outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

Foreign currency transactions and translation

The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the group and the statement of financial position of the company are presented in Singapore dollars, which is the functional currency of the company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of nonmonetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation accumulated in a separate component of equity, shall be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognised.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in a separate component of equity under the header of foreign currency translation reserve (attributable to non-controlling interest, as appropriate).

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(a) Critical judgements in applying the group’s accounting policies

Management did not make any material judgements that have significant effect on the amounts recognised in the financial statements, except for those affecting accounting estimation as disclosed in Note 3(b).

(b) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

• (i) Allowances for doubtful receivables (Note 7 and Note 8)

An allowance is made for estimated irrecoverable amounts of receivables. Management analyses age of accounts receivables, historical payment trends, customer credit worthiness and results of recovery efforts when making a judgement over the adequacy of the allowances for receivables.

At December 31, 2010, trade and other receivables were stated net of allowances of $2,319,000 (2009: $3,112,000) and $236,000 (2009: $238,000) respectively.

• (ii) Allowance for inventory obsolescence (Note 9)

The policy for allowance for inventories of the group is based on the age analysis of inventories, historical sales and utilisation and on management’s judgement regarding sale prospects. Management estimated an allowance for inventory obsolescence of $5,370,000 at December 31, 2010 (2009: $3,486,000).

• (iii) Recoverability of contract work-in-progress (Note 10)

In estimating foreseeable losses on contract work-in-progress, management evaluates the status of each project and estimates the cost required to complete the work and the recoverable amounts.

• (iv) Property, plant and equipment (Note 11)

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as disclosed in Note 2. Changes in the expected useful lives, including terms of leases, could impact future depreciation charges.

• (v) Recoverable of investments in subsidiaries (Note 13)

Where there are indicators of potential impairment of investment in subsidiaries, management projects the cash flows of these subsidiaries and estimates the recoverable amount by discounting the projected cash flows and terminal value to present value. Any change in such projections and estimates can result in changes to the allowance for impairment loss in future periods.

At December 31, 2010, the impairment loss allowance for subsidiaries made by the company was $1,000,000 (2009: $1,000,000).

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• (vi) Recoverability of goodwill (Note 17)

Determining whether goodwill on acquisition of business is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the end of the financial year was $5,825,000 (2009 : $4,861,000). Management considers the goodwill to be recoverable from future cash flows and has concluded that there is no impairment loss in 2009 and 2010. Information relating to the discount rates are found in Note 17.

4 FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period.

Financial assets Loan and receivables (including cash and cash equivalents) Available-for-sale financial assets Financial liabilities Derivative financial instruments Amortised cost Financial guarantee contracts	Group 2010 2009 $’000 $’000 141,701 138,309 75 587 113 60 64,587 64,241 – –	Company 2010 2009 $’000 $’000 22,441 26,426 75 57 – – 2,267 3,692 366 413	Company 2010 2009 $’000 $’000 22,441 26,426 75 57 – – 2,267 3,692 366 413
			– 3,692 413

(b) Financial risk management strategies and objectives

The Board of Directors reviews the overall financial risk management on specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, use of derivative financial instruments and investing excess cash. The group’s overall financial risk management strategy is to minimise potential adverse effects of these on the financial performance of the group. These are reviewed quarterly by the Board of Directors. Risk management is monitored by the Corporate Office.

The group may use derivative financial instruments to manage its exposure to foreign currency risk, including forward exchange contracts to hedge the exchange rate risks arising from trade receivables and trade payables, and firm commitments to buy or sell goods.

The group does not hold or issue derivative financial instruments for speculative purposes.

There has been no change to the group’s exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.

i) Credit risk management

Credit risk refers to the risk that a customer may default on its payment resulting in financial loss to the group. The group has adopted a policy of gradually extending credit to customers who are creditworthy and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from non-payment. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed and where appropriate, credit guarantee insurance cover is purchased. Credit exposure is controlled by using customer credit limits that are reviewed and approved by the management regularly.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The carrying amount of financial assets recorded in the financial statements, grossed up for allowances for losses, represents the group’s maximum exposure to credit risk without taking into account the value of any collateral obtained.

Further details relating to trade and other receivables are disclosed in Notes 7 and 8.

ii)

Interest rate risk management

The group is exposed to interest rate risk through the impact of interest rate changes on interest-bearing debts and interest-earning fixed deposits.

The interest rates and terms of repayment for bank loans and finance leases of the group are disclosed in Notes 20 and 24 to the financial statements respectively.

The interest rates and repricing period for fixed deposits are disclosed in Note 6.

Quantitative data of the group’s interest-bearing financial instruments are provided in section (iv) of this note.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates that impacts borrowings.

If interest rates had been 100 basis points higher or lower for borrowings and all other variables were held constant, the group’s profit for the year ended December 31, 2010 would decrease/ increase by $161,000 (2009: decrease/increase by $115,000).

No sensitivity analysis is prepared for fixed deposits as any reasonably possible change in interest rate on fixed deposits would have insignificant impact to the group’s profit.

iii) Foreign exchange risk management

The group transacts business in various currencies and therefore is exposed to foreign exchange risk. The significant carrying amounts of monetary assets (including intra-group receivables) and monetary liabilities (including intra-group payables) denominated in currencies other than the respective group entities’ functional currencies at the end of the reporting period are as follows:

		Group	Group			Company	Company
	Liabilities		Assets		Liabilities		Assets
	2010	2009	2010	2009	2010	2009	2010	2009
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Singapore dollar	5,439	8,759	4,009	5,617	–	–	–	–
United States dollar	11,876	12,381	21,074	24,547	–	–	–	–
Australian dollar	524	359	11,829	8,228	–	–	–	–
New Zealand dollar	66	283	10,266	5,840	–	–	–	–

Companies in the group may use forward contracts to hedge their exposure to foreign currency risk.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the major relevant foreign currencies against the functional currency of each group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the group where the denomination of the loan is in a currency other than the currency of the lender or the borrower.

If the major relevant foreign currencies strengthen by 10% against the functional currency of each group entity, profit for the year will (decrease) increase by:

	Singapore	Singapore	United States	United States	Australian	Australian	New Zealand	New Zealand
	**Dollar **	Impact	Dollar Impact		**Dollar **	Impact	**Dollar **	Impact
	2010	2009	2010	2009	2010	2009	2010	2009
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	(143)	(314)	920	1,217	1,131	785	1,020	556

If the major relevant foreign currencies weaken by 10% against the functional currency of each group entity, profit for the year will increase (decrease) by:

	Singapore	Singapore	**United **	States	Australian	Australian	New Zealand	New Zealand
	**Dollar **	Impact	Dollar Impact		**Dollar **	Impact	**Dollar **	Impact
	2010	2009	2010	2009	2010	2009	2010	2009
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	143	314	(920)	(1,217)	(1,131)	(785)	(1,020)	(556)

The group also has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The group does not hedge its investments that are denominated in foreign currencies.

iv) Liquidity risk management

The group has sufficient funds and credit lines to finance its working capital requirements.

Liquidity and interest rate risk analysis

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company can be required to pay. The table includes both interest and principal cash flows. The adjustment

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FINANCIAL INFORMATION ON THE OFFEREE GROUP

column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statement of financial position.

Weighted average effective interest rate per annum % Group 2010 Non-interest bearing – Finance lease liability (fixed rate) 6.0 Variable interest rate instruments 3.2 2009 Non-interest bearing – Finance lease liability (fixed rate) 6.0 Variable interest rate instruments 3.2 Company 2010 Non-interest bearing – Finance lease liability (fixed rate) 5.6 2009 Non-interest bearing – Finance lease liability (fixed rate) 5.6	On demand or within 1 year $’000 46,352 514 10,866 57,732	Within 2 to 5 years $’000 1,222 528 4,976 6,726	After 5 years $’000 – 6 719 725	Adjustment $’000 – (94) (502) (596)	Total $’000 47,574 954 16,059
					64,587
	48,006 576 7,143	3,403 924 3,912	– 32 770	– (163) (362)	51,409 1,369 11,463
	55,725	8,239	802	(525)	64,241
	2,173 108	– –	– –	– (14)	2,173 94
	2,281	–	–	(14)	2,267
	2,567 108	937 108	– –	– (28)	3,504 188
	2,675	1,045	–	(28)	3,692

In addition to the above, the company has provided corporate guarantees to banks for credit facilities given by these banks to subsidiaries. At December 31, 2010, the subsidiaries have borrowings from these banks totaling $7,877,000 (2009: $6,342,000). Management considers that the likelihood of the company having to make payments under these guarantees is remote.

Non-derivative financial assets

The following table details the expected maturity for non-derivative financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the group’s liquidity risk management as the group’s liquidity risk is managed on a net asset and liability basis.

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FINANCIAL INFORMATION ON THE OFFEREE GROUP

The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the group and the company anticipates that the cash flow will occur in a different period.

Weighted average effective interest rate per annum % Group 2010 Non-interest bearing – Fixed interest rate instruments 0.8 2009 Non-interest bearing – Fixed interest rate instruments 0.8 Company 2010 Non-interest bearing – Fixed interest rate instrument 0.2 2009 Non-interest bearing – Fixed interest rate instrument 0.1	On Demand or within 1 year $’000 130,311 10,381 140,692	Within 2 to 5 years $’000 1,084 – 1,084	Total $’000 131,395 10,381
			141,776
	126,148 11,836	912 –	127,060 11,836
	137,984	912	138,896
	17,935 4,506	75 –	18,010 4,506
	22,441	75	22,516
	22,921 3,505	57 –	22,978 3,505
	26,426	57	26,483

v) Equity price risk management

The group and company are exposed to equity risks arising from equity investments classified as available-for-sale. The group does not actively trade available-for-sale investments.

Further details of these equity investments can be found in Note 16 to the financial statements.

Equity price sensitivity

The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the reporting date.

In respect of available-for-sale equity investments, if the closing market prices on the last market day of the financial year had been 10% higher/lower while all other variables were held constant:

• the group’s net profit for the year ended December 31, 2010 and 2009 would have been unaffected as the equity investments are classified as available-for-sale; and

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FINANCIAL INFORMATION ON THE OFFEREE GROUP

• the group’s asset revaluation reserves would increase/decrease by $8,000 (2009: increase/decrease by $59,000).

vi) Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair value of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

The fair values of financial assets and financial liabilities are determined as follows:

• a) the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

• b) the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

• c) the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

Management considers that the carrying amounts of all financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values.

The group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

• b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

• c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

Financial instruments measured at fair value

Financial assets of the group and of the company which are measured at fair value comprise available-for-sale quoted equity shares which are stated at quoted prices at the end of the reporting period (Level 1 in the fair value hierarchy).

The group and the company had no financial liabilities carried at fair value in 2010 and 2009.

(c) Capital risk management policies and objectives

The group manages capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of entities in the group comprises share capital, reserves, retained earnings and debt, which includes the borrowings disclosed in Notes 20 and 24.

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FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group reviews the capital structure and periodically ensures compliance with loan covenants imposed by the banks. The group is required to maintain a specified minimum consolidated tangible net worth and maintain gearing ratio below a specified threshold. It balances its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt.

The group’s overall strategy remains unchanged from 2009.

The company is in compliance with externally imposed capital requirements for the financial years ended December 31, 2010 and 2009.

5 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

	Group
	2010	2009
	$’000	$’000
Sale of goods to associate	(934)	(1,223)
Sales of goods to joint venture	(594)	(80)
Purchase of goods from joint venture	19	–

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Short-term benefits Post-employment benefits Long-term employment benefits (reversal of overprovision) Share-based payments	Group 2010 2009 $’000 $’000 9,140 7,019 244 239 (796) 3,403 64 63 8,652 10,724	Group 2010 2009 $’000 $’000 9,140 7,019 244 239 (796) 3,403 64 63 8,652 10,724
		10,724

The remuneration of directors and key management of the group is determined by the remuneration committee having regard to the performance of individuals and market trends.

Long-term employment benefits represent key management personnel’s remuneration under a Performance Bonus Scheme (Note 22) .

6 CASH AND BANK BALANCES

Cash at bank Fixed deposits Cash and deposits under pledge Total	Group 2010 2009 $’000 $’000 51,689 47,652 9,843 11,372 590 521 62,122 59,545	Company 2010 2009 $’000 $’000 6,048 6,292 4,506 3,505 – – 10,554 9,797	Company 2010 2009 $’000 $’000 6,048 6,292 4,506 3,505 – – 10,554 9,797
			9,797

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Cash and bank balances comprise cash held by the group and company and short-term bank deposits with an original maturity of twelve months or less. The carrying amounts of these assets approximate their fair values.

The weighted average interest rate for fixed deposits is approximately 0.8% (2009: 0.8%) per annum and for a tenure of approximately 6 to 360 days (2009: 7 to 360 days). The fixed deposits can be withdrawn without having to incur significant costs.

Deposits amounting to $590,000 (2009: $521,000) of the group are pledged to banks as security for credit facilities, including those disclosed in Note 35.

The group’s and company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2010	2009	2010	2009
	$’000	$’000	$’000	$’000
Singapore dollar	1,693	1,562	–	–
United States dollar	5,116	8,219	644	702
Euro	401	310	–	–
Australian dollar	1,535	910	–	–
Vietnamese dong	104	116	–	–
New Zealand dollar	2,170	3,238	–	–
British pound	146	146	–	–

7 TRADE RECEIVABLES

Outside parties Retention sums Less: Allowance for doubtful trade receivables Associates (Note 14) Joint venture (Note 15) Related party (Note 5)	Group 2010 2009 $’000 $’000 65,380 64,720 8,612 10,785 (2,319) (3,112	Group 2010 2009 $’000 $’000 65,380 64,720 8,612 10,785 (2,319) (3,112
	71,673 3,231 550 –	72,393 3,299 – 120
	75,454	75,812

The credit period on sale of goods is generally 30 to 90 days (2009: 30 to 120 days). No interest is charged on overdue trade receivables.

Allowance for doubtful trade receivables is made taking into account the factors set out in Note 3(b)(i). In determining the recoverability of a trade receivable, management also considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.

Before accepting any new customer, the management assesses the potential customer’s credit quality and determines the credit terms for each customer. Limits attributed to customers are reviewed periodically. At December 31, 2009, a customer accounted for $15,840,000 or 20.9% of total outstanding trade receivables. At December 31, 2010, no individual customer accounts for 10% or more of the total outstanding balance.

The retention sums held by customers are classified as current because they are expected to be realised in the normal operating cycle.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The table below is an analysis of trade receivables as at December 31:

Not past due and not impaired Past due but not impaired (i) Impaired receivables – individually assessed (ii), (iii) – Customer placed under liquidation/judicial management – past due and no response to repayment demands – others Less: Allowance for doubtful trade receivables Total trade receivables, net (i) Aging of receivables that are past due but not impaired (iv): < 6 months 6 months to 9 months 9 months to 12 months > 12 months	Group 2010 2009 $’000 $’000 43,478 54,585 31,659 21,080 75,137 75,665 583 690 1,816 2,192 237 377 (2,319) (3,112) 317 147 75,454 75,812 19,323 13,553 4,996 1,707 1,878 1,039 5,462 4,781 31,659 21,080	Group 2010 2009 $’000 $’000 43,478 54,585 31,659 21,080 75,137 75,665 583 690 1,816 2,192 237 377 (2,319) (3,112) 317 147 75,454 75,812 19,323 13,553 4,996 1,707 1,878 1,039 5,462 4,781 31,659 21,080
		75,665
		690 2,192 377 (3,112)
		147
		75,812
		13,553 1,707 1,039 4,781
		21,080

(ii) These amounts are stated before any deduction for impairment losses.

(iii) These receivables are not secured by any collateral or credit enhancements.

(iv) These are from customers with no past credit default and for which there is no clear indication of deterioration in credit quality.

Movement in the allowance for doubtful trade receivables:

Balance at beginning of the year Exchange differences Amounts written off during the year (Decrease) Increase in allowance recognised in profit or loss Disposal of a subsidiary Balance at end of the year	Group 2010 2009 $’000 $’000 3,112 2,696 9 33 (254) (10) (548) 476 – (83) 2,319 3,112	Group 2010 2009 $’000 $’000 3,112 2,696 9 33 (254) (10) (548) 476 – (83) 2,319 3,112
		3,112

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2010	2009
	$’000	$’000
United States dollar	10,150	11,585
British pound	2,915	500
Euro	581	1,648
Thai baht	2,465	2,555
New Zealand dollar	7,022	2,378
Malaysian ringgit	663	1
Vietnamese dong	448	17
Others	–	62

8 OTHER RECEIVABLES AND PREPAYMENTS

Staff loans Deposits Prepayments Income tax recoverable Other receivables Less: Allowance for doubtful non-trade receivables Subsidiaries (Note 13) Associates (Note 14)	Group 2010 2009 $’000 $’000 540 503 1,646 894 1,217 639 220 200 946 1,164	Group 2010 2009 $’000 $’000 540 503 1,646 894 1,217 639 220 200 946 1,164	Company 2010 2009 $’000 $’000 60 135 – – – – – – 12 109	Company 2010 2009 $’000 $’000 60 135 – – – – – – 12 109
	4,569 (236) 4,333 – –	3,400 (238) 3,162 – 429	72 – 72 11,815 –	244 –
				244 16,385 –
	4,333	3,591	11,887	16,629

Amounts due from subsidiaries and associates are unsecured, interest-free and repayable on demand.

Movement in the allowance for doubtful non-trade receivables:

Balance at beginning of the year Exchange differences Amount written off Disposal of a subsidiary	Group 2010 2009 $’000 $’000 238 412 (2) (1) – (41) – (132) 236 238	Company 2010 2009 $’000 $’000 – 46 – – – (46 – – – –	Company 2010 2009 $’000 $’000 – 46 – – – (46 – – – –
			–

– III-45 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s and company’s other receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2010	2009	2010	2009
	$’000	$’000	$’000	$’000
United States dollar	210	76	–	–
Australian dollar	14	189	–	–
British pound	99	22	–	–
Thai baht	67	257	–	–
Vietnamese dong	201	188	–	–
Others	2	–	19	14

9 INVENTORIES

Raw materials Work-in-progress Finished goods	Group 2010 2009 $’000 $’000 25,412 25,526 7,182 5,773 17,617 15,408 50,211 46,707	Group 2010 2009 $’000 $’000 25,412 25,526 7,182 5,773 17,617 15,408 50,211 46,707
		46,707

The carrying amounts of inventories are stated net of allowance of $5,370,000 (2009: $3,486,000) to reduce the inventories to their estimated net realisable value.

The cost of inventories recognised as expense during the year includes $1,852,000 (2009: $2,486,000) of allowance for inventories. There is no significant write back of allowance in 2010 and 2009.

10 CONTRACT WORK-IN-PROGRESS

Contract costs incurred plus recognised profits Less: Progress billings Provision for foreseeable losses Included in current assets Progress billings Provision for foreseeable losses Less: Contract costs incurred plus recognised profits Included in current liabilities	Group 2010 2009 $’000 $’000 31,323 49,789 (27,749) (45,206 (1,184) (1,827 2,390 2,756	Group 2010 2009 $’000 $’000 31,323 49,789 (27,749) (45,206 (1,184) (1,827 2,390 2,756
		2,756
	14,405 575 (13,771)	26,818 98 (24,699
	1,209	2,217

– III-46 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

11 PROPERTY, PLANT AND EQUIPMENT

Group Cost: At January 1, 2009 Exchange differences Additions Disposals Acquired on acquisition of a subsidiary (Note 40) Disposal of a subsidiary At December 31, 2009 Exchange differences Additions Disposals Acquired on acquisition of a subsidiary (Note 40) At December 31, 2010 Accumulated depreciation: At January 1, 2009 Exchange differences Depreciation Eliminated on disposals Disposal of a subsidiary At December 31, 2009 Exchange differences Depreciation Eliminated on disposals At December 31, 2010 Carrying amount: At December 31, 2010 At December 31, 2009	Leasehold land and buildings $’000 31,707 (45) 21 – – –	Plant and equipment $’000 24,444 634 2,700 (1,406) 795 (38)	Motor vehicles $’000 2,324 72 418 (402) 37 (151)	Total $’000 58,475 661 3,139 (1,808) 832 (189)
	31,683 63 21 (6) – 31,761 6,611 (11) 682 – – 7,282 15 686 (2) 7,981	27,129 120 4,420 (1,046) 924 31,547 14,688 248 2,267 (1,031) (33) 16,139 75 2,752 (1,001) 17,965	2,298 19 269 (271) 118 2,433 1,308 39 271 (390) (107) 1,121 10 310 (238) 1,203	61,110 202 4,710 (1,323) 1,042
				65,741
				22,607 276 3,220 (1,421) (140)
				24,542 100 3,748 (1,241)
				27,149
	23,780 24,401	13,582 10,990	1,230 1,177	38,592
				36,568

– III-47 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Company Cost: At January 1, 2009 Additions Disposals At December 31, 2009 Additions At December 31, 2010 Accumulated depreciation: At January 1, 2009 Depreciation Eliminated on disposals At December 31, 2009 Depreciation At December 31, 2010 Carrying amount: At December 31, 2010 At December 31, 2009	Plant and equipment $’000 321 12 (15) 318 15 333 308 4 (15) 297 6 303 30 21	Motor vehicles $’000 798 – – 798 – 798 159 80 – 239 80 319 479 559	Total $’000 1,119 12 (15)
			1,116 15
			1,131
			467 84 (15)
			536 86
			622
			509
			580

The group and company have motor vehicles and equipment with carrying amounts of $1,909,000 (2009: $2,216,000) and $479,000 (2009: $559,000) respectively which are under finance leases.

The group has pledged certain land and buildings which have aggregate carrying amount of $7,413,000 (2009: $7,575,000) to obtain bank loans and credit facilities.

– III-48 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

12 ASSETS ON LEASE

Particulars of major properties are as follows:

Location	Description	Tenure
9 Senoko Drive	Part single-storey and	60-year lease from November 1992
Singapore 758197	part 2-storey factory and office
15 Senoko Way	Part single-storey and	30-year lease from February 1991
Singapore 758036	part 2-storey factory and office
15 Senoko Avenue	Part single-storey and	25-year lease from March 1998
Singapore 758305	part 3-storey factory and office
17 Senoko Avenue	Part single-storey and	30-year lease from September 1990,
Singapore 758307	part 2-storey factory and office	with an option to extend another
		30 years subject to certain
		conditions
PLO 131, 133, 134,	2-storey factory	60-year lease from December 1996
Jalan Cyber 5
Kawasan Perindustrian
Senai 3, 81400 Senai Johor,
Malaysia
47 Yishun Industrial	4-storey factory and office	30-year lease from January 1992
Park A
Singapore 768724
18 Kaki Bukit Road 3	3 office units	60-year lease from January 1995
#04-01/02/03
Entrepreneur Business
Centre
Singapore 415978

This pertains to meters leased to customers under operating lease arrangements.

Cost: At January 1, 2009 Transfer from inventory At December 31, 2009 Transfer from inventory At December 31, 2010 Accumulated depreciation: At January 1, 2009 Depreciation At December 31, 2009 Depreciation At December 31, 2010 Carrying amount: At December 31, 2010 At December 31, 2009	Meters $’000 – 254
	254 134
	388
	– 44
	44 75
	119
	269
	210

– III-49 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

13 SUBSIDIARIES

Unquoted equity shares, at cost Impairment loss Recognition of share options granted to employees of subsidiaries Advances to subsidiary Interest imputation on advances to subsidiary Deemed investment arising from corporate guarantees provided to financial institutions who have granted credit facilities to subsidiaries	Company 2010 2009 $’000 $’000 68,975 55,944 (1,000) (1,000) 67,975 54,944 42 42 – 5,670 2,238 2,238 4,038 3,246 74,293 66,140	Company 2010 2009 $’000 $’000 68,975 55,944 (1,000) (1,000) 67,975 54,944 42 42 – 5,670 2,238 2,238 4,038 3,246 74,293 66,140
		54,944 42 5,670 2,238 3,246
		66,140

The increase in unquoted equity shares at cost result from subscription for new shares issued by existing subsidiaries.

Advances to subsidiary were unsecured and interest-free. They were measured at amortised cost using the effective interest method. The advances to the subsidiary have been converted to additional equity in the subsidiary in December 2010.

Nominal amount of advances to subsidiary Amount recognised as additional investment in subsidiaries Fair value at inception date of advances Deemed interest income recognised Amortised cost balance and carrying amount at end of year Transfer to investment in unquoted equity shares	Company 2010 2009 $’000 $’000 6,898 6,898 (2,238) (2,238)	Company 2010 2009 $’000 $’000 6,898 6,898 (2,238) (2,238)
	4,660 1,237 5,897 (5,897)	4,660 1,010
		5,670 –
	–	5,670

The interest income imputed is calculated by applying an effective interest rate of 4% (2009: 4%) per annum. The advances to subsidiaries are denominated in Singapore dollar, which is the functional currency of the company.

Deemed investment of $42,000 (2009: $42,000) in subsidiaries relate to share option granted under the SMB Share Option Scheme 2001 by the company to an employee of a subsidiary.

The deemed investment in subsidiaries arising from financial guarantees provided by the company is as follows:

At beginning of year Additions during the year Repayment of term loan during the year At end of year	Company 2010 2009 $’000 $’000 3,246 3,345 792 832 – (931) 4,038 3,246	Company 2010 2009 $’000 $’000 3,246 3,345 792 832 – (931) 4,038 3,246
		3,246

– III-50 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The additional deemed investment in subsidiaries of $792,000 (2009: $832,000) was recognised as financial guarantee income in the company’s statement of comprehensive income.

Details of the company’s significant subsidiaries at December 31, 2010 are as follows:

	Country of	Effective proportion	Effective proportion	Effective proportion
	incorporation	of ownership
Name of subsidiary	and operation	interests			Principal activities
		2010	2009
		%		%
Bridex Singapore	Singapore	100		100	Import, export and supply of
Pte Ltd (1)					transformers and electrical
					products and investment
					holding.
Quantum Automation	Singapore	52		52	Design, installation and
Pte Ltd (1)					maintenance of
					computerised automation
					and control systems.
SMB Electric Pte Ltd (1)	Singapore	100		100	Manufacture and supply of
					electrical switchgear.
SMB Electric Harwal	Singapore	100		100	Manufacture and supply of
Pte Ltd (formerly					electrical switchgear.
known as Bridex
Harwal Pte Ltd) (1)
SMB Electric Industries	Singapore	100		100	Manufacture and supply of
Pte Ltd (1)					electrical switchgear.
SMB Electric Systems	Singapore	100		100	Manufacture and supply of
Pte Ltd (1)					electrical switchgear.
SMB Harwal Electric	Australia	100		100	Manufacture and supply of
Pty Limited (3)					electrical switchgear.
SMB United Industries	Malaysia	100		100	Investment holding.
Sdn Bhd (2)
Subsidiaries of
Bridex Singapore
Pte Ltd
Bridex Australia	Australia	100		100	Distribution of electrical and
Pty Limited (5)					electronic products.
EDMI Limited (1)	Singapore	59		59	Manufacture and
					distribution of electronic
					revenue meters.
Subsidiaries of
Quantum Automation
Pte Ltd
eSwitch Engineering	Singapore	31		31	Trading, general importers
Pte Ltd (1)					and exporters, engineering
					and electrical works.
Quantum Automation	Singapore	52		52	General trading, sales and
(Asia) Pte Ltd (1)					distribution of automation
					products.

– III-51 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

	Country of	Effective proportion	Effective proportion	Effective proportion
	incorporation	of ownership
Name of subsidiary	and operation	interests			Principal activities
		2010	2009
		%		%
QA Systems Integration	Malaysia	52		52	Supply, contract, design and
(M) Sdn Bhd (2)					install, commission and
					maintenance of advanced
					computerised automation
					and control systems for
					building, industrial and
					commercial application,
					and dealing in engineering
					products.
Subsidiaries of SMB
United Industries
Sdn Bhd
Brighten Switchboard	Malaysia	100		100	Manufacture, dealing,
Builders (M)					installation and repair of
Sdn Bhd (2)					electrical switchboards and
					appliances.
SMB Switchgear &	Malaysia	100		100	Manufacture and sale of
Engineering					metal in-housing for
Sdn Bhd (2)					electrical switchboards.
Subsidiary of
Brighten Switchboard
Builders (M) Sdn Bhd
SMB Brighten	Malaysia	100		100	Dealing, installation and
Switchboard					repair of electrical
Engineering					switchboards and
Sdn Bhd (2)					appliances.
Subsidiaries of EDMI
Limited
EDMI International	People’s	59		59	Provision of services and
Trading (Shanghai)	Republic of				trading of electronic
Co., Ltd (4)	China				equipment.
EDMI Pty Ltd (5)	Australia	59		59	Design and distribution of
					electronic revenue meters.
EDMI Philippines Inc (6)	Philippines	59		59	Sale of electronics revenue
					meters, supply of
					electronic components and
					provision of service and
					after sales support.
EDMI Gas Pty Ltd (5)	Australia	59		59	Sale and manufacture of
					mechanical gas measuring
					components.
EDMI HK Limited (7)	Hong Kong	59		–	Investment holding.

– III-52 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

	Country of	Effective proportion	Effective proportion	Effective proportion
	incorporation	of ownership
Name of subsidiary	and operation	interests			Principal activities
		2010	2009
		%		%
PT. EDMI Indonesia (8)	Indonesia	56		–	Distribution and import of
					meter devices, data
					terminals, accessories,
					testing equipment and
					software for electrical
					systems.
Subsidiary of
EDMI HK Limited
EDMI (Shenzhen) Co.,	People’s	35		–	Manufacture, research and
Ltd	Republic of				development, sale and
(Formerly known as	China				distribution of electric
Shenzhen PCSoft Tech					energy meters, automatic
Co., Ltd) (2) (9)					meter reading system,
					biological recognition
					electric products and
					related software and
					hardware.

The proportion of voting power held by the group in each of the subsidiaries is similar to the effective proportion of ownership interests except as follows:

	Effective proportion of
Name of subsidiary	voting power held
	2010	2009
	%	%
Subsidiary of
Quantum Automation Pte Ltd
eSwitch Engineering Pte Ltd (1)	52	52
Subsidiary of
EDMI HK Limited
EDMI (Shenzhen) Co., Ltd (Formerly known as
Shenzhen PCSoft Tech Co., Ltd) (2) (9)	59	–

• (1) Audited by Deloitte & Touche LLP, Singapore.

• (2) Audited by overseas practices of Deloitte Touche Tohmatsu.

• (3) Audited by RSM Bird Cameron, Australia.

• (4) Audited by Shanghai Zhong Hui Certified Public Accountants, People’s Republic of China.

• (5) Audited by WHK Horwath, Australia.

• (6) Audited by Ramon F. Garcia & Company, CPA, Philippines.

• (7) The entity was incorporated on March 15, 2010 Note 40(a).

• (8) The entity was incorporated on August 9, 2010 Note 40(b).

• (9) The entity was acquired on August 1, 2010 Note 40(a).

– III-53 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

14 ASSOCIATES

Cost of investment in associates Share of post-acquisition reserve Adjustments on unrealised gain on transactions with a related party Carrying amount Additional funds provided to associate	Group 2010 2009 $’000 $’000 1,213 1,213 (750) (298 (120) (95 343 820 1,146 – 1,489 820	Group 2010 2009 $’000 $’000 1,213 1,213 (750) (298 (120) (95 343 820 1,146 – 1,489 820
		820 –
		820

Details of the group’s associates at December 31, 2010 are as follows:

		Proportion of	Proportion of
	Country of	ownership interests
	incorporation	and voting
Name of associate	and operation	power held		Principal activities
		2010	2009
		%	%
Associate of SMB
Electric Xiamen
Co., Ltd
Yang Zhou Long Tai (1)	People’s	30	30	Manufacturing and supply of
	Republic of			electrical switchgear and
	China			components.
Associate of EDMI
Limited
Power House	Thailand	29	29	Manufacturing and sale of
Technology Company				electronic revenue meters.
Limited (2) (3)

(1) Audited by Bao Ying Ren Yang, Certified Public Accountants, People’s Republic of China.

(2) Audited by V.R. Accounting Solution Co., Ltd., Thailand.

(3) The associate is 49% held by a subsidiary, EDMI Limited. EDMI Limited is 59% (2009: 59%) held by the company, resulting in an effective interest of approximately 29% (2009: 29%) held by the group.

– III-54 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Summarised financial information in respect of the group’s associates is set out below:

Total assets Total liabilities Group’s share of associates’ net assets Adjustment on unrealised gain on transactions with a related party Net group’s share of associates’ net assets Revenue Losses for the year Group’s share of associates’ losses for the year JOINT VENTURE Capital contribution to joint venture Share of post acquisition reserve Additional funds provided to joint venture	Group 2010 2009 $’000 $’000 8,283 10,196 (6,464) (7,268) 1,819 2,928 463 915 (120) (95) 343 820 2,507 8,757 (964) (862) (437) (361) Group 2010 2009 $’000 $’000 908 657 (770) (471)	Group 2010 2009 $’000 $’000 8,283 10,196 (6,464) (7,268) 1,819 2,928 463 915 (120) (95) 343 820 2,507 8,757 (964) (862) (437) (361) Group 2010 2009 $’000 $’000 908 657 (770) (471)
	138 325	186 325
	463	511

15 JOINT VENTURE

The additional funds provided to the joint venture are interest-free. They have been provided to the joint venture as additional capital for its operating needs.

Details of the joint venture of the group at December 31, 2010 are as follows:

		Effective	Effective
	Country of	Proportion of		Proportion of
	incorporation	ownership		voting power
Name of joint venture	and operation	interests		held		Principal activities
		2010	2009	2010	2009
		%	%	%	%
Joint venture of
EDMI Limited
Wallaby Metering Systems	India	29	30	50	50	Design, manufacture and
Private Limited (1)						marketing of electronic
						energy meters and
						systems for automatic
						energy reading
						management.

(1) Audited by CNGSN & Associates Chartered Accountants.

– III-55 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Summarised financial information in respect of the group’s joint venture is set out below:

Total assets Total liabilities Revenue Loss for the year	Group 2010 2009 $’000 $’000 1,219 750 (944) (378) 275 372 504 97 (430) (312)	Group 2010 2009 $’000 $’000 1,219 750 (944) (378) 275 372 504 97 (430) (312)
		372
		97
		(312)

The 50% equity stake in the joint venture is held by the partially owned subsidiary, EDMI Ltd.

16 AVAILABLE-FOR-SALE INVESTMENTS

						Group		Company
						2010	2009	2010	2009
						$’000	$’000	$’000	$’000
Quoted	equity	shares,	at	fair	value	75	587	75	57

The investments in quoted equity securities offer the group the opportunity for returns through dividend income and fair value gains.

The fair values of these securities are based on the quoted closing market prices on the last market day of the financial year.

The group’s and company’s available-for-sale investments that are not denominated in the functional currencies of the respective entities are as follows:

		Group		Company
		2010	2009	2010	2009
		$’000	$’000	$’000	$’000
British	pound	–	530	–	–

– III-56 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

17 INTANGIBLE ASSETS

Goodwill on acquisition of business Patents, Trademarks and licenses Product Development costs $’000 $’000 $’000 Group Cost: At January 1, 2009 217 297 444 Exchange differences 808 78 13 Arising from acquisition of a subsidiary Note 40(c) 3,836 – – Additions – – 151 At December 31, 2009 4,861 375 608 Exchange differences 224 15 22 Arising from acquisition of a subsidiary Note 40(a) 740 – – Additions – – 316 At December 31, 2010 5,825 390 946 Amortisation: At January 1, 2009 – 297 444 Exchange differences – 78 – At December 31, 2009 – 375 444 Exchange differences – 15 1 Amortisation for the year – – 15 At December 31, 2010 – 390 460 Carrying amount: At December 31, 2010 5,825 – 486 At December 31, 2009 4,861 – 164	Goodwill on acquisition of business Patents, Trademarks and licenses Product Development costs $’000 $’000 $’000 Group Cost: At January 1, 2009 217 297 444 Exchange differences 808 78 13 Arising from acquisition of a subsidiary Note 40(c) 3,836 – – Additions – – 151 At December 31, 2009 4,861 375 608 Exchange differences 224 15 22 Arising from acquisition of a subsidiary Note 40(a) 740 – – Additions – – 316 At December 31, 2010 5,825 390 946 Amortisation: At January 1, 2009 – 297 444 Exchange differences – 78 – At December 31, 2009 – 375 444 Exchange differences – 15 1 Amortisation for the year – – 15 At December 31, 2010 – 390 460 Carrying amount: At December 31, 2010 5,825 – 486 At December 31, 2009 4,861 – 164	Goodwill on acquisition of business Patents, Trademarks and licenses Product Development costs $’000 $’000 $’000 Group Cost: At January 1, 2009 217 297 444 Exchange differences 808 78 13 Arising from acquisition of a subsidiary Note 40(c) 3,836 – – Additions – – 151 At December 31, 2009 4,861 375 608 Exchange differences 224 15 22 Arising from acquisition of a subsidiary Note 40(a) 740 – – Additions – – 316 At December 31, 2010 5,825 390 946 Amortisation: At January 1, 2009 – 297 444 Exchange differences – 78 – At December 31, 2009 – 375 444 Exchange differences – 15 1 Amortisation for the year – – 15 At December 31, 2010 – 390 460 Carrying amount: At December 31, 2010 5,825 – 486 At December 31, 2009 4,861 – 164	Goodwill on acquisition of business Patents, Trademarks and licenses Product Development costs $’000 $’000 $’000 Group Cost: At January 1, 2009 217 297 444 Exchange differences 808 78 13 Arising from acquisition of a subsidiary Note 40(c) 3,836 – – Additions – – 151 At December 31, 2009 4,861 375 608 Exchange differences 224 15 22 Arising from acquisition of a subsidiary Note 40(a) 740 – – Additions – – 316 At December 31, 2010 5,825 390 946 Amortisation: At January 1, 2009 – 297 444 Exchange differences – 78 – At December 31, 2009 – 375 444 Exchange differences – 15 1 Amortisation for the year – – 15 At December 31, 2010 – 390 460 Carrying amount: At December 31, 2010 5,825 – 486 At December 31, 2009 4,861 – 164	Total $’000 958 899 3,836 151
	4,861 224 740 –	375 15 – –	608 22 – 316	5,844 261 740 316
	5,825	390	946	7,161
	– – – – –	297 78 375 15 –	444 – 444 1 15	741 78
				819 16 15
	– 5,825 4,861	390 – –	460 486 164	850
				6,311
				5,025

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination.

The carrying amount of goodwill, net of exchange differences, had been allocated to CGUs which are based on the subsidiaries’ operating divisions as follows:

Manufacturing division of SMB Harwal Electric Pty Limited Wholesale division of Bridex Australia Pty Limited Wholesale division of EDMI Gas Pty Ltd Manufacturing division of EDMI (Shenzhen) Co., Ltd	Group 2010 2009 $’000 $’000 79 77 225 214 4,781 4,570 740 – 5,825 4,861	Group 2010 2009 $’000 $’000 79 77 225 214 4,781 4,570 740 – 5,825 4,861
		4,861

– III-57 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

18 OTHER RECEIVABLES

The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill may be impaired.

The recoverable amounts of CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the growth rates and expected changes to selling prices and direct costs during the period and the discount rate to discount projected cash flows to present value. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and risks specific to the CGUs.

The group prepares cash flow forecasts derived from the most recent financial budgets approved by management and extrapolates cash flows for the following four years based on an estimated growth rate of 2.5% to 10% (2009: 1% to 10%) per annum. This rate does not exceed the average long-term growth rate for the relevant markets.

The rate used to discount the forecast cash flows from the above operating divisions ranges from 9% to 14.4% (2009: 12.9% to 19.6%) per annum.

As at December 31, 2010, any reasonably possible change to the key assumptions applied is not likely to cause the recoverable amounts to be below the carrying amounts of the CGUs.

							Group
							2010	2009
							$’000	$’000
Retention	sum	receivable	from	a	third	party	1,009	–

The group’s long term receivables that are not denominated in the functional currencies of the respective entities are as follows:

			Group
			2010	2009
			$’000	$’000
New	Zealand	dollar	1,009	–

19 DEFERRED TAX ASSETS

At beginning of year Exchange differences Credit to profit and loss Under (Over) provision in prior year Arising from acquisition of a subsidiary Note 40 (c) Reclassification (Note 25) At end of year	Group 2010 2009 $’000 $’000 1,019 868 34 161 583 311 208 (1) – 109 (90) (429) 1,754 1,019	Group 2010 2009 $’000 $’000 1,019 868 34 161 583 311 208 (1) – 109 (90) (429) 1,754 1,019
		1,019

– III-58 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The following are the major deferred tax assets (liabilities) recognised by the group and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2009 (9) 740 Exchange differences – 160 (Charge) Credit to profit and loss (9) 157 Over provision in prior year – (1) Arising from acquisition of a subsidiary – 109 Reclassification – (429) At December 31, 2009 (18) 736 Exchange differences – 24 Credit to profit and loss 7 167 Under provision in prior year – 208 Reclassification (6) 191 At December 31, 2010 (17) 1,326	Tax losses $’000 14 (1) 61 – – – 74 (2) 3 – – 75	Others $’000 123 2 102 – – – 227 12 406 – (275) 370	Total $’000 868 161 311 (1 109 (429
			1,019 34 583 208 (90
			1,754

20 BANK BORROWINGS

Bank overdrafts Trust receipts A Trust receipts B Banker’s acceptance Short term bank loan A Short term bank loan B Bank loan A Bank loan B Bank loan C Bank loan D Bank loan E Bank loan F Total	Group 2010 2009 $’000 $’000 3,077 1,598	Group 2010 2009 $’000 $’000 3,077 1,598
	172 1,032 334 1,538 3,000 1,000 4,000 789 188 317 253 3,000 2,897 7,444	49 1,752 112
		1,913
		3,000 –
		3,000
		828 201 544 379 3,000 –
		4,952
	16,059	11,463

– III-59 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The borrowings are repayable as follows:

On demand or within one year In the second to fifth year inclusive After five years Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Group 2010 2009 $’000 $’000 10,530 6,926 4,849 3,806 680 731 16,059 11,463 (10,530) (6,926) 5,529 4,537	Group 2010 2009 $’000 $’000 10,530 6,926 4,849 3,806 680 731 16,059 11,463 (10,530) (6,926) 5,529 4,537
		11,463 (6,926)
		4,537

Bank overdrafts are repayable on demand. The average effective interest rate approximated 6.0% (2009: 5.3%) per annum during the year and is determined based on prime lending rate.

Trust receipts A have a repayment term of 90 to 180 days (2009: 90 to 180 days). The average effective interest rate approximated 5.3% (2009: 6.4%) per annum during the year and is based on prime rate (2009: 1% to 1.5% plus prime rate).

Trust receipts B is unsecured and have a repayment term of 65 to 91 days (2009: 60 to 90 days). The average effective interest rate approximated 1.69% (2009: 1.9%) per annum during the year.

Banker’s acceptance have a repayment term of 150 days (2009: 133 days). The average effective interest rate approximated 4.5% (2009: 3.8%) per annum during the year. It is covered by a corporate guarantee by the company of $2,502,000 (2009: $943,000).

Short term bank loan A is a short-term revolving loan which is repayable on demand. The average effective interest rate approximated 1.7% (2009: 2.4%) per annum which is determined based on 0.85% above cost of fund. The loan is renewed on a monthly basis.

Short term bank loan B is an unsecured monthly renewable money market loan and bears interest at 1.25% per annum above the bank’s cost of fund.

Bank loan A bears fixed interest at 2.65% and 3% per annum, for the first year (2004) and second year respectively; 1.37% per annum below prevailing board rates for the third and fourth years; and 1.25% per annum prevailing board rates for subsequent years. It is repayable in 240 monthly instalments effective from November 2004.

Bank loan B bears fixed interest at 4.5% and 5% per annum for the first year (2006) and second year respectively; and 0.75% per annum above the bank’s commercial financing rate for subsequent years. It is repayable in 180 monthly instalments from September 2006.

Bank loan C bears fixed interest rate at 4.25% per annum for the first year, 4.75% per annum for second year and at 0.5% bank’s commercial financing rate for subsequent years. It is repayable in 60 monthly instalments from May 2007.

Bank loan D is unsecured and bears fixed interest rate of 5% per annum. This loan was taken on January 22, 2009. Repayments commenced in November 2009 and will continue until October 2012.

Bank loan E is unsecured and bears interest rate of 1.75% per annum over Singapore Interbank Offered Rate (“SIBOR”). This loan was taken on January 30, 2009. Repayments will commence in January 2011 and continue until December 2015.

Bank loan F is unsecured and bears interest rate at 3.03% per annum for the first to third year, and for subsequent years, 1% per annum above Enterprise Financing Rate. This loan was taken in 2010. Monthly instalment payments will commence in March 2011 and continue until February 2015.

Bank overdrafts, trust receipts A, and bank loan A and B are secured by a legal mortgage on a subsidiary’s leasehold property and a corporate guarantee of $5,105,000 (2009: $5,105,000) provided by the company.

– III-60 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Bank loan C and short term bank loan A are secured by a legal mortgage on subsidiary’s leasehold property and a corporate guarantee of $9,762,000 (2009: $20,013,000) by the company.

Trust receipts and bank loans are mainly arranged at floating rates thus exposing the group to cash flow interest rate risk.

The group’s borrowings are denominated in the functional currencies of the respective borrowing entities.

21 TRADE PAYABLES

Outside parties Associates (Note 14) Joint venture (Note 15)	Group 2010 2009 $’000 $’000 32,391 34,435 – 249 2 – 32,393 34,684	Group 2010 2009 $’000 $’000 32,391 34,435 – 249 2 – 32,393 34,684
		34,684

At December 31, 2010, the group has $608,000 (2009: $26,000) of trade payables arising from contract work which are due for settlement after more than 12 months. These amounts have been classified as current because they are expected to be realised in the normal operating cycle.

The credit period on purchases of goods is generally 30 to 90 days (2009: 30 to 120 days). No interest is charged on outstanding trade payables.

The group’s trade payables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2010	2009
	$’000	$’000
Singapore dollar	209	34
United States dollar	8,315	10,519
Euro	545	619
British pound	96	156
Vietnamese dong	56	29
Malaysia ringgit	52	3
Others	61	23

22 OTHER PAYABLES

Subsidiaries (Note 13) Associates (Note 14) Amounts owing to directors Salary-related accruals Sundry creditors Accrued expenses Advances from customers Financial guarantee contracts Less: Non-current portion of salary-related accruals	Group 2010 2009 $’000 $’000 – – – 1 2,152 1,907 9,034 9,909 1,422 1,564 2,400 2,462 173 882 – –	Group 2010 2009 $’000 $’000 – – – 1 2,152 1,907 9,034 9,909 1,422 1,564 2,400 2,462 173 882 – –	Company 2010 2009 $’000 $’000 4 316 – – 1,820 1,888 154 1,120 2 1 193 179 – – 47 47	Company 2010 2009 $’000 $’000 4 316 – – 1,820 1,888 154 1,120 2 1 193 179 – – 47 47
	15,181 (1,222)	16,725 (3,403)	2,220 –	3,551 (937
	13,959	13,322	2,220	2,614

– III-61 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The amounts owing to directors are unsecured, interest-free and repayable on demand. They comprise accrued fees and performance bonus.

The company has provided financial guarantees to banks in respect of loans and credit facilities extended to certain subsidiaries.

Salary-related accruals include an amount of $1,222,000 (2009: $3,403,000) in respect of key management personnel’s remuneration under a Performance Bonus Scheme (the “Scheme”), which is payable after 2011 (Note 5) . Certain key management personnel of the Group’s subsidiaries are remunerated under this Scheme.

Pursuant to this Scheme, these key management personnel are entitled to bonus payout calculated at certain percentage of profits in excess of the financial targets set out under this Scheme. The Scheme covers the financial year ended December 31, 2008 to financial year ended December 31, 2011. Movement in the provision for directors’ performance bonus is as follows:

Balance at beginning of the year Payment during the year (Reversal) Charge to profit or loss Balance at end of the year	Group 2010 2009 $’000 $’000 3,403 310 (1,385) (310) (796) 3,403 1,222 3,403	Company 2010 2009 $’000 $’000 937 55 (312) (55) (625) 937 – 937	Company 2010 2009 $’000 $’000 937 55 (312) (55) (625) 937 – 937
			937

The group’s and company’s other payables that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2010	2009	2010	2009
	$’000	$’000	$’000	$’000
United States dollar	40	89	–	–
Euro	191	220	–	–
British pound	100	74	–	–
Vietnamese dong	73	17	–	–

23 DERIVATIVE FINANCIAL INSTRUMENTS

				Group
				2010	2009
				Liabilities	Liabilities
				$’000	$’000
Forward	foreign	exchange	contract	113	60

The forward foreign exchange contract has a maturity date within 3 month (2009: 1 month) from the end of the financial year.

– III-62 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

At the end of the reporting period, the total notional amount of outstanding forward foreign exchange contract to which the group is committed is as follows:

Outstanding contract Buy United States dollars in exchange for Singapore dollars Sell New Zealand dollars in exchange for Singapore dollars	Average exchange rate 2010 2009 1.35 – – 1.02	Foreign currency 2010 2009 US$’000 US$’000 1,800 – NZ$’000 NZ$’000 – 300	Contract value 2010 2009 $’000 $’000 2,420 – $’000 $’000 – 306	Fair value 2010 2009 $’000 $’000 113 – $’000 $’000 – 60	Fair value 2010 2009 $’000 $’000 113 – $’000 $’000 – 60
					$’000 60

The fair value of forward foreign exchange contract is estimated based on quoted forward exchange rates and yield curves derived from quoted interest rates matching the maturity of the contract. Changes in the fair value of the forward foreign exchange contract are recorded in profit or loss.

24 FINANCE LEASES

Group Amounts payable under finance leases: Within one year In the second to fifth year inclusive After five years Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments 2010 2009 $’000 $’000 514 576 528 924 6 32 1,048 1,532 (94) (163) 954 1,369	Minimum lease payments 2010 2009 $’000 $’000 514 576 528 924 6 32 1,048 1,532 (94) (163) 954 1,369	Present value of minimum lease payments 2010 2009 $’000 $’000 456 499 492 838 6 32 954 1,369 NA NA 954 1,369	Present value of minimum lease payments 2010 2009 $’000 $’000 456 499 492 838 6 32 954 1,369 NA NA 954 1,369
				1,369 NA
				1,369
			(456)	(499)
			498	870

– III-63 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Company Amounts payable under finance leases: Within one year In the second to fifth year inclusive Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments 2010 2009 $’000 $’000 108 108 – 108 108 216 (14) (28) 94 188	Present value of minimum lease payments 2010 2009 $’000 $’000 94 94 – 94 94 188 NA NA 94 188 (94) (94) – 94	Present value of minimum lease payments 2010 2009 $’000 $’000 94 94 – 94 94 188 NA NA 94 188 (94) (94) – 94
			188 NA
			188 (94)
			94

The term of finance leases entered into is between 3 to 7 years (2009: 3 to 7 years).

For the year ended December 31, 2010, the weighted average effective borrowing rates for the group was 6% (2009: 6%) per annum. The effective borrowing rate for the company was 5.6% (2009: 5.6%) per annum. Interest rates are fixed at the contract date, and thus expose the group and company to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

All lease obligations are denominated in the functional currency of the respective entities.

The fair values of the group’s lease obligations approximate their carrying amounts.

The group’s and company’s obligation under finance leases are secured by the leased assets.

25 DEFERRED TAX LIABILITIES

At beginning of year Exchange differences Charge to profit and loss Under (Over) provision in prior years Effect of change in tax rate Disposal of a subsidiary (Note 39) Reclassification (Note 19) At end of year	Group 2010 2009 $’000 $’000 1,600 1,481 8 38 172 564 311 (12) – (41) – (1) (90) (429) 2,001 1,600	Company 2010 2009 $’000 $’000 3 2 – – 2 – – 1 – – – – – – 5 3	Company 2010 2009 $’000 $’000 3 2 – – 2 – – 1 – – – – – – 5 3
			3

– III-64 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The following are the major deferred tax liabilities (assets) recognised by the company and the group and movements thereon during the year:

Accelerated tax depreciation $’000 Group At January 1, 2009 1,444 Exchange differences (3) Charge (Credit) to profit and loss 123 Over provision in prior years (9) Effect of change in tax rate (41) Disposal of a subsidiary (1) Reclassification – At December 31, 2009 1,513 Exchange differences 4 Charge (Credit) to profit and loss 181 Under provision in prior years 311 Reclassification (5) At December 31, 2010 2,004 Company At January 1, 2009 Charge to profit and loss At December 31, 2009 Charge to profit and loss At December 31, 2010	Accelerated tax depreciation $’000 Group At January 1, 2009 1,444 Exchange differences (3) Charge (Credit) to profit and loss 123 Over provision in prior years (9) Effect of change in tax rate (41) Disposal of a subsidiary (1) Reclassification – At December 31, 2009 1,513 Exchange differences 4 Charge (Credit) to profit and loss 181 Under provision in prior years 311 Reclassification (5) At December 31, 2010 2,004 Company At January 1, 2009 Charge to profit and loss At December 31, 2009 Charge to profit and loss At December 31, 2010	Allowance for doubtful receivables $’000 – 20 225 – – – (429)	Tax losses $’000 – – (16) – – – –	Others $’000 37 21 232 (3) – – –	Others $’000 37 21 232 (3) – – –	Total $’000 1,481 38 564 (12 (41 (1 (429
	1,513 4 181 311 (5)	(184) (7) – – 191	(16) – – – 16	287 11 (9) – (292)		1,600 8 172 311 (90
	2,004	–	–		(3) 2,001 Accelerated tax depreciation $’000 2 1	2,001
					3 2
					5

At the end of the reporting period, deferred tax liabilities arising from undistributed profits of subsidiaries have not been recognised because the group controls the dividend policy of these subsidiaries and has no intention to distribute profits of subsidiaries in countries where withholding tax apply on dividends. The amount of the undistributed profits in these countries approximate $10,890,000 (2009: $7,390,000).

26 SHARE-BASED PAYMENTS

Share award scheme

(a) SMB Performance Share Plan (the “Plan”)

The Plan was approved by the shareholders of the company at an Extraordinary General Meeting held on April 30, 2009. Awards granted under the Plan are principally performance-based with performance targets to be set over a multi-year performance period. Performance targets set are intended to be based on medium-term corporate objectives covering market competitiveness, quality of returns, business growth and productivity growth. The performance targets are stretched targets aimed at sustaining long term growth.

The Committee administering this scheme comprises independent directors: Koh Ah Huat (Chairman), Henry Hoe Leong Seng and Tay Teng Tiow.

– III-65 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The Committee shall decide, in relation to each Award to be granted to a Participant:

• i) the Award date;

• ii) the number of shares comprised under an Award or their equivalent in cash (based on the aggregate market value of the shares which are the subject of the Award) or if a combination of both, the proportion between the shares and the cash which are the subject of the Award;

• iii) the performance target(s) (if any), the performance period during which such performance target(s) are to be satisfied, (if any); and

• iv) any other condition which the Committee may determine in relation to that Award.

The total number of new shares which may be issued pursuant to Awards granted under the proposed Plan, when added to the number of new shares issued and issuable in respect of all Awards granted, shall not exceed 15% of the issued share capital of the Company on the day preceding the relevant date of Award.

No Awards under the plan have been granted since the commencement of the plan.

Equity-settled share option scheme

• (a) SMB Share Option Scheme 2001

This scheme was approved by the shareholders on September 7, 2001. In 2009, the SMB Share Option Scheme 2001 was terminated.

• (b) EDMI Share Option Scheme 2003

Each share option entitles the directors (excluding executive directors who are substantial shareholders) and employees (excluding employees who are also controlling shareholders and their associates) of EDMI Limited group to subscribe for one new ordinary share in EDMI Limited at an exercise price determined at the average price of EDMI Limited’s share traded in the Singapore Exchange Securities Trading Limited for the three consecutive trading days immediately preceding the offer date of that option, rounded up to the nearest whole cent in the event of fractional prices.

The aggregate nominal amount of shares that the committee may grant options, when added to the aggregate nominal amount of shares issued and issuable under the EDMI Share Option Scheme 2003 shall not exceed 15% of the issued share capital of EDMI Limited on the date immediately preceding the offer date of the option.

To qualify for the EDMI Share Option Scheme 2003, eligible employees must be in full time service of EDMI Limited group for at least one year on or prior to the relevant offer date. However, the committee administering the scheme may at its discretion abridge the one-year service requirement in respect of any employee.

The options are granted for a consideration of $1.00 for all the shares in respect of which the options are granted. The options may be exercised after one year from the date of the grant subject to the condition that up to 25%, 50% and 75% of the options may be exercised prior to the second, third and fourth anniversary of the offer date of options respectively. The shares under option may be exercised in full or in multiples of 1,000 shares on payment of the exercise price. Options granted will be cancelled upon the occurrence of certain events such as cessation of employment.

Options are exercisable at a price based on the average of the last dealt prices on the Singapore Exchange Securities Trading Limited, for a share over the three trading days immediately preceding the grant of the option, rounded to the nearest whole cent in the event of fractional prices. The exercisable period is 10 years for directors and employees, and 5 years for independent directors of EDMI Limited group. If the options remain unexercised after the specified period from the date of grant, the options expire. Options are forfeited if the participant leaves the EDMI Limited group before the options vest.

– III-66 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Details of the share options outstanding during the year are as follows:

Outstanding at beginning of year Exercised during the year Lapsed during the year Outstanding at end of year Exercisable at end of year	EDMI Limited 2010 2009 Number of share options Weighted average exercise price Number of share options Weighted average exercise price ‘000 $ ‘000 $ 10,065 0.23 11,965 0.23 (1,300) 0.13 (1,400) 0.13 (280) 0.18 (500) 0.13 8,485 10,065 7,833 0.18 8,880 0.16

The weighted average share price at the date of exercise for share options exercised during the year was $0.29 (2009: $0.17). The options outstanding at the end of the year have a weighted average remaining contractual life of 3.6 years (2009: 4.6 years) for executive share options. The non-executive share options had a remaining life of 0.1 year at December 31, 2009. There was no unexercised non-executive share option at December 31, 2010.

No share options were granted in 2010.

During the year, the group recognised total expense (net of minority interests) of $198,000 (2009: $198,000) related to equity-settled share-based payment transactions under the EDMI Share Option Scheme 2003.

27 SHARE CAPITAL

		**Group and **	Company
	2010	2009	2010	2009
	‘000	‘000	$’000	$’000
	Number of ordinary shares
Issued and paid up:
At end and beginning of year	479,752	479,752	75,113	75,113

The ordinary shares, which have no par value, carry one vote per share and do not carry a right to fixed dividends.

28 RESERVES

Capital reserve

The share option reserve arises on the grant of share option to directors and employees under the employee share option plan. Further information about share-based payments is disclosed in Note 26 of the financial statements.

Revaluation reserve

The investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, the portion of the reserve that relates to that financial asset is effectively realised, and is recognised in profit or loss. Where a revalued financial asset is impaired, the portion of the reserve that relates to that financial asset is recognised in profit or loss.

Currency translation reserve

Exchange differences relating to the translation from the functional currencies of the group’s foreign subsidiaries into Singapore dollars are brought to account by recognising those exchange differences in other comprehensive income and accumulating them in a separate component of equity under the header of currency translation reserve.

– III-67 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

29 REVENUE

Sale of goods Contract revenue Service income	Group 2010 2009 $’000 $’000 199,498 173,215 22,879 46,887 7,148 6,406 229,525 226,508	Group 2010 2009 $’000 $’000 199,498 173,215 22,879 46,887 7,148 6,406 229,525 226,508
		226,508

30 OTHER OPERATING INCOME

Interest income from non-related companies Rental income Reversal of provision for doubtful trade receivable Dividend income from non-related companies Government grant Miscellaneous income	Group 2010 2009 $’000 $’000 203 185 146 – 548 – 4 3 326 1,533 973 1,955 2,200 3,676	Group 2010 2009 $’000 $’000 203 185 146 – 548 – 4 3 326 1,533 973 1,955 2,200 3,676
		3,676

31 OTHER (LOSSES) AND GAINS

Gain on disposal of property, plant and equipment Net foreign exchange (loss) gain Loss on dilution of shareholding interest in a subsidiary Gain on dilution of shareholding interest in an associate Gain on disposal of a subsidiary Gain on acquisition of shareholding interest in a subsidiary Gain on disposal of available-for-sale investments Reclassification to profit or loss from equity on disposal of available-for-sale investment Changes in fair value of financial derivative instruments (Note 23)	Group 2010 2009 $’000 $’000 56 36 (993) 4,027 – (79) – 73 – 277 – 643 47 2,263 44 (1,844) (53) (60) (899) 5,336	Group 2010 2009 $’000 $’000 56 36 (993) 4,027 – (79) – 73 – 277 – 643 47 2,263 44 (1,844) (53) (60) (899) 5,336
		5,336

32 INCOME TAX EXPENSE

Current Deferred Under (over) provision in prior years Income tax expense for the year	Group 2010 2009 $’000 $’000 4,800 5,085 (411) 212 411 (19) 4,800 5,278	Group 2010 2009 $’000 $’000 4,800 5,085 (411) 212 411 (19) 4,800 5,278
		5,278

– III-68 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Domestic income tax is calculated at 17% (2009: 17%) of the estimated assessable profit for the year. Taxation for foreign entities is calculated at the rates prevailing in the relevant jurisdictions.

The total charge for the year can be reconciled to the accounting profit as follows:

Profit before tax Income tax expense Average effective tax rate Tax at the domestic income tax rate Tax effect of income that are not taxable in determining taxable profit Under (Over) provision in prior years Tax effect of utilisation of deferred tax benefit previously not recognised Deferred tax benefit not recognised Effect of different tax rates of subsidiaries operating in other jurisdictions Tax exemption and rebate Effect of change in tax rate Other items Average effective tax rate	Group 2010 2009 $’000 $’000 22,489 29,256 4,800 5,278 21.3% 18.0% Group 2010 2009 % % 17.0 17.0 (0.3) – 1.8 (0.1) (2.0) (0.1) 3.5 0.6 2.0 1.2 (1.0) (0.8) – (0.2) 0.3 0.4 21.3 18.0	Group 2010 2009 $’000 $’000 22,489 29,256 4,800 5,278 21.3% 18.0% Group 2010 2009 % % 17.0 17.0 (0.3) – 1.8 (0.1) (2.0) (0.1) 3.5 0.6 2.0 1.2 (1.0) (0.8) – (0.2) 0.3 0.4 21.3 18.0
		18.0

The group has tax losses carry forwards available for offsetting against future taxable income as follows:

Amount at beginning of year Exchange differences Adjustments Amount in current year Amount utilised in current year Disposal of a subsidiary Amount at end of year Deferred tax benefit on above: – recognised – not recognised	Group 2010 2009 $’000 $’000 4,953 5,250 (99) 64 (81) 5 2,345 971 (1,199) (155) – (1,182) 5,919 4,953 75 67 1,115 984	Group 2010 2009 $’000 $’000 4,953 5,250 (99) 64 (81) 5 2,345 971 (1,199) (155) – (1,182) 5,919 4,953 75 67 1,115 984
		4,953
		67 984

Deferred tax benefits vary from the Singapore statutory tax rate as it includes deferred tax on overseas operation.

The potential tax savings relating to tax losses carried forward are recognised as deferred tax assets only when there is reasonable expectation of realisation in the foreseeable future. The tax losses can be carried forward to future periods subject to the conditions imposed by the law in the respective tax jurisdictions.

– III-69 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

33 PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging (crediting):

Depreciation and amortisation: Depreciation of property, plant and equipment Depreciation of assets on lease Amortisation of product development cost(1) Total depreciation and amortisation Directors’ remuneration: Company’s directors Subsidiaries’ directors Total directors’ remuneration Employee benefits expense (including directors’ remuneration): Cost of defined contribution plans Others Total employee benefits expense Research costs(2) Non-audit fees paid/payable to: Auditors of the company Other auditors Cost of inventories recognised as expense Allowance for inventories (Reversal of) Allowance for doubtful trade receivables (Reversal of) Allowance for foreseeable losses on contracts Inventory written off Bad debts written off	Group 2010 2009 $’000 $’000 3,748 3,220 75 44 15 – 3,838 3,264 3,886 3,535 2,745 5,741 6,631 9,276 3,450 2,954 52,152 49,024 55,602 51,978 3,768 3,295 50 66 19 15 149,907 147,238 1,852 2,486 (548) 476 (166) 836 360 161 153 37	Group 2010 2009 $’000 $’000 3,748 3,220 75 44 15 – 3,838 3,264 3,886 3,535 2,745 5,741 6,631 9,276 3,450 2,954 52,152 49,024 55,602 51,978 3,768 3,295 50 66 19 15 149,907 147,238 1,852 2,486 (548) 476 (166) 836 360 161 153 37
		3,264
		3,535 5,741
		9,276
		2,954 49,024
		51,978
		3,295 66 15 147,238 2,486 476 836 161 37

(1) These are included in general and administrative expenses in the consolidated statement of comprehensive income.

(2) These are included in other operating expenses in the consolidated statement of comprehensive income.

34 EARNINGS PER SHARE

The calculation of basic earnings per share is based on the group’s net profit attributable to owners of the company of $13,318,000 (2009: $21,221,000) divided by the ordinary shares of 479,751,999 shares in issue throughout both years.

For both years, fully diluted earnings per share is the same as basic earnings per share as there are no dilutive shares outstanding at the end of both years.

– III-70 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

35 COMMITMENTS

(i) Financial commitment

	Group		Company
	2010	2009	2010	2009
	$’000	$’000	$’000	$’000
Performance guarantee – unsecured	3,019	4,772	–	–
Performance guarantee – secured	2,845	4,819	–	–
Bankers’ guarantee – unsecured	463	289	–	–
Bankers’ guarantee – secured	447	259	–	–
Corporate guarantees to banks in
connection with credit facilities of
subsidiaries – unsecured	–	–	43,148	44,200

The maximum estimated amount that the group and the company could become liable is shown above.

Information on securities provided for secured performance guarantee is found in Note 6.

(ii) Capital commitment

Purchase of property, plant and equipment 36 OPERATING LEASE ARRANGEMENTS The group as lessee Minimum lease payments under operating leases recognised as an expense in the year	Group 2010 2009 $’000 $’000 4,437 349 Group 2010 2009 $’000 $’000 2,528 2,240

At the end of the reporting period, the group has outstanding commitments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive After five years	Group 2010 2009 $’000 $’000 2,109 1,986 3,932 4,734 5,938 6,055 11,979 12,775	Group 2010 2009 $’000 $’000 2,109 1,986 3,932 4,734 5,938 6,055 11,979 12,775
		12,775

Operating lease payments represent rentals payable by the group for its leasehold land, certain of its factory and office premises, and office equipment. Leases are entered into for a period of one to thirty years.

Operating lease commitments stated above includes existing rental rates before deduction for discretionary rebates given by the landlord for certain premises. Certain rental rates are subject to future adjustments based on changes in the consumer price index.

– III-71 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group as lessor

The group rents out its meters under operating leases. Service income earned during the year was $375,000 (2009: $224,000).

The agreements provide for service income to be earned as long as the customers’ facilities are tenanted and meter readings taken. There is no guaranteed minimum number of subscriptions to metered readings and correspondingly no fixed minimum operating lease income committed for future period.

Leases are negotiated for an average term of five years.

37 SEGMENT INFORMATION

Segment revenue and expense: The accounting policies of the reportable segments are the same as the group’s accounting policies described in Note 2. Segment revenue and expense are the operating revenue and expense reported in the group’s statement of comprehensive income that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital additions mainly include the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of accounts payable and accruals. Products and services from which reportable segments derive their revenues For management purposes, the group is organised into four main operating divisions: switchgear; power and technology; trading and distribution; and building services. These are also the divisions that the group’s chief operating decision maker focused on for the purposes of resource allocation and assessment of segment performance. The group’s reportable segments under FRS 108, therefore, remained unchanged from 2009.

Principal activities of each reportable segment are as follows:

Switchgear	–	Manufacture and supply of electrical switchgear.
Power and technology	–	Manufacture and sale of electronic revenue meters for use
		principally by utility companies involved in the generation,
		distribution and supply of electricity; provision of electrical
		efficiency and energy management solutions.
Trading and distribution	–	Import, export and supply of electrical and electronic components
		and equipment.
Building services	–	Design, installation and maintenance of computerised automation
		and control systems; plumbing and electrical contracting and
		supply of related products.
Others	–	This comprise investment holding and corporate activities.

– III-72 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Information regarding the group’s reportable segments is presented below.

Segment revenues and results

2010 Revenue External revenue Inter-segment revenue Result Segment results Interest expense Interest income Share of results of associates Share of results of joint venture Profit before income tax Income tax expense Profit after income tax 2009 Revenue External revenue Inter-segment revenue Result Segment results Interest expense Interest income Share of results of associates Share of results of joint venture Profit before income tax Income tax expense Profit after income tax	Switchgear $’000 94,108 798 94,906	Power and technology Trading and distribution $’000 $’000 98,470 15,074 58 3,384 98,528 18,458	Power and technology Trading and distribution $’000 $’000 98,470 15,074 58 3,384 98,528 18,458	Building services $’000 21,873 – 21,873	Others Elimination $’000 $’000 – – – (4,240) – (4,240)	Others Elimination $’000 $’000 – – – (4,240) – (4,240)	Total $’000 229,525 –
							229,525
	6,908 121,743 2,544	12,600 69,266 541	1,762 14,980 6,901	2,161 20,519 14	24 – –	– – (10,000)	23,455 (517 203 (437 (215
							22,489 (4,800
							17,689
							226,508 –
	124,287 16,215	69,807 8,504	21,881 3,783	20,533 796	– 744	(10,000) –	226,508
							30,042 (454 185 (361 (156
							29,256 (5,278
							23,978

– III-73 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The accounting policies of the reportable segments are the same as the group’s accounting policies described in Note 2. Segment results represent the profit earned by each segment and exclude allocation of interest expense and income, share of profits of associates, joint venture and income tax expense. This is the measure reported to the chief operation decision maker for the purposes of resource allocation and assessment of segment performance.

2010 Segment assets Associates and joint venture Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation 2009 Segment assets Associates and joint venture Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation	Switchgear $’000 102,408 20,428 1,774 1,797 – 107,515 21,843 1,289 1,661 –	Power and technology Trading and distribution $’000 $’000 92,316 18,615 17,952 2,413 2,823 43 1,652 194 198 – 78,042 19,204 17,501 3,734 1,676 76 1,168 216 198 –	Building services $’000 16,217 5,933 56 109 – 14,831 7,420 86 135 –	Others Elimination $’000 $’000 11,135 – 2,169 – 14 – 86 – – – 10,622 – 3,188 – 12 – 84 – – –	Total $’000 240,691 1,952 1,829
					244,472
					48,895 23,849
					72,744
					4,710 3,838 198
					230,214 1,331 1,606
					233,151
					53,686 19,417
					73,103
					3,139 3,264 198

– III-74 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible and financial assets attributable to each segment.

All assets are allocated to reportable segments other than investments in associates (Note 14) , investments in joint venture (Note 15) , available-for-sale investments (Note 16) and deferred tax assets (Note 19) . Goodwill has been allocated to reportable segments as described in Note 17. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

Geographical information

The group operates in six principal geographical areas namely Singapore, New Zealand, Australia, Malaysia, Europe and Asia (excluding Singapore and Malaysia).

The group’s revenue from external customers and information about its non-current assets (excluding financial instruments and deferred tax assets) by geographical location is detailed below:

Singapore Australia New Zealand Malaysia Asia (excluding Singapore and Malaysia) Europe Others	Revenue from external customers 2010 2009 $’000 $’000 80,419 116,179 46,518 30,641 21,141 19,695 25,706 13,628 23,859 19,232 30,687 20,709 1,195 6,424 229,525 226,508	Non-current assets 2010 2009 $’000 $’000 31,057 28,841 9,203 8,412 – – 4,253 4,550 2,611 1,330 – – – – 47,124 43,133	Non-current assets 2010 2009 $’000 $’000 31,057 28,841 9,203 8,412 – – 4,253 4,550 2,611 1,330 – – – – 47,124 43,133
			43,133

Information about major customers

There was no single customer that contributes greater than 10% of the Group’s total revenue in 2010. In 2009, a single customer in the switchgear division contributed $36,112,000 to the group’s total revenue.

38 DIVIDENDS

In 2009, the company declared and paid a final dividend of 1.0 cent per ordinary share (tax exempt one-tier) totalling $4,798,000 in respect of the financial year ended December 31, 2008.

In 2010, the company declared and paid a final dividend of 1.5 cents per ordinary share (tax exempt one-tier) totalling $7,196,000 in respect of the financial year ended December 31, 2009.

In respect of the current year, the directors proposed that a final dividend of 1.0 cent per ordinary share (tax exempt one-tier) be paid to shareholders on May 25, 2011. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as liability in these financial statements. The proposed dividend is payable to all shareholders who are on the Register of Members as at May 11, 2010. Based on the number of shares as at February 28, 2010, the total estimated dividend to be paid is $4,798,000.

– III-75 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

39 DISPOSAL OF A SUBSIDIARY

In April 2009, the group disposed its subsidiary, MW Dynamics Pte Ltd.

Details of the disposal are as follows:

Book values of net assets (liabilities) disposed

Non-current assets Property, plant and equipment Current assets Inventories Trade and other receivables Contract work-in-progress Cash and bank balances Total current assets Non-current liabilities Finance lease Deferred tax liability Total non-current liabilities Current liabilities Income tax payable Finance lease Trade and other payables Total current liabilities Net liabilities disposed Gain on disposal Total consideration Satisfied by: Cash Deferred consideration Net cash inflow arising on disposal: Cash consideration received Cash and cash equivalents disposed of	2009 $’000 49 3 987 26 4
	1,020
	(10 (1
	(11
	(5 (12 (1,118
	(1,135
	(77 277
	200
	100 100
	200
	100 (4
	96

The deferred consideration was settled in 2010.

– III-76 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

40 ACQUISITION OF SUBSIDIARIES

• (a) On March 15, 2010, the group’s subsidiary, EDMI Limited, incorporated a wholly-owned subsidiary, EDMI HK Limited. On July 21, 2010, EDMI HK Limited acquired 60% of the equity share in EDMI (Shenzhen) Co., Ltd, for a cash consideration of $3,668,000 (RMB$18 million). This transaction has been accounted for by the purchase method of accounting.

The group acquired EDMI (Shenzhen) Co., Ltd to allow the group to tap on the existing business and operations of EDMI (Shenzhen) Co., Ltd and gain access to the metering business in the PRC and be in the position to seize opportunities and broaden its market presence and customer base therein.

The net assets acquired in the transaction, and the goodwill arising, are as follows:

Net assets acquired: Cash and cash equivalents Trade receivables Other receivables Inventories Property, plant and equipment Trade payables Other payables Goodwill arising on acquisition: Consideration transferred Plus: non-controlling interest Less: fair value of identifiable net assets acquired Goodwill arising on acquisition Net cash outflow arising on acquisition: Total consideration Less: Cash and cash equivalent balances acquired Cash paid in statement of cash flows	Fair value $’000 3,483 944 390 1,472 1,042 (841) (1,610)
	4,880
	2010 $’000 3,668 1,952 (4,880)
	740
	3,668 (3,483)
	185

The goodwill paid for the acquisition of EDMI (Shenzhen) Co., Ltd is attributable to the anticipated positive net cash flows from the distribution of the group’s products in the new markets and the anticipated future synergies from the business combination.

EDMI (Shenzhen) Co., Ltd contributed revenue of approximately $2,249,000 to the group and loss of $1,145,000 to the group’s operating results for the period between the date of its acquisition by the group and December 31, 2010.

If the acquisition had been completed on January 1, 2010, EDMI (Shenzhen) Co., Ltd would have contributed revenue of $2,843,000 and loss of $2,131,000 to the group’s operating results.

– III-77 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• (b) The addition to non-controlling interests during the year were derived from the following:

Acquisition of 60% equity stake in EDMI (Shenzhen) Co., Ltd Incorporation of the following partially owned subsidiaries: PT. EDMI Indonesia	2010 $’000 1,952 23
	1,975

• (c) On April 1, 2009, the group acquired 75% of the share capital of EDMI Gas Pty Ltd for cash consideration of $3,902,000. On May 21, 2009, the group acquired the remaining 25% of the share capital of EDMI Gas Pty Ltd from the two other shareholders for a cash consideration of $378,000. This transaction had been accounted for by the purchase method of accounting.

The net assets acquired in the transaction, and the goodwill arising, were as follows:

Acquiree’s carrying amount before combination $’000 Net assets acquired: Plant and equipment 832 Inventories 288 Deferred tax asset 109 Other current assets 9 Employee entitlements (363) Bank loan (413) Bank overdraft (276) Finance lease (62) 124 Goodwill Total consideration Net cash outflow arising on acquisition: Total consideration Add: Bank overdraft Less: Offset of loan receivable from EDMI Gas Pty Ltd Cash paid in statement of cash flows	Fair value adjustments $’000 – 207 – (4) 117 – – – 320		Fair value $’000 832 495 109 5 (246 (413 (276 (62
			444
			3,836
			4,280
			2009 $’000 4,280 276 (653
			3,903

The goodwill arising on the acquisition of EDMI Gas Pty Ltd is attributable to the anticipated positive net cash flows from the distribution of the group’s products in the new markets and the anticipated future operating synergies from the combination.

EDMI Gas Pty Ltd contributed approximately $4,408,000 revenue and $185,000 to the group’s profit before income tax for the period between the date of acquisition and December 31, 2009.

If the acquisition had been completed on January 1, 2009, total group revenue for 2009 and profit for 2009 would have not be materially different.

– III-78 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

41 EVENTS AFTER THE REPORTING PERIOD

• (a) On March 25, 2011, the wholly owned subsidiary, Bridex Singapore Pte Ltd (“Bridex”) completed the off-market transfer of 127,920,535 shares in its subsidiary EDMI Limited (“EDMI”), representing approximately 59.77% of shares in EDMI to the company, SMB United Limited (“SMB”), referred to as the Internal Transfer.

Following the Internal Transfer, EDMI became a directly owned subsidiary of SMB. The number of shares in EDMI comprises the shares in EDMI held by Bridex at December 31, 2010 and 2,631,000 of shares in EDMI purchased by Bridex subsequent to December 31, 2010.

The consideration for the Internal Transfer is the cost carried by Bridex, and is funded through internal resources of SMB.

• (b) On March 28, 2011, EDMI and SMB announced that SMB has presented to the directors of EDMI (the “EDMI Directors”) a formal proposal (the “Delisting Proposal”) to seek the voluntary delisting of EDMI (“Delisting”) from the Official List of the Singapore Exchange Securities Trading Limited (the “SGX-ST”) pursuant to Rules 1307 and 1309 of the SGX-ST Listing Manual.

Under the Delisting Proposal, SMB will make a cash offer to acquire all the issued ordinary shares in the capital of EDMI (“EDMI Shares”) other than these held, directly or indirectly, by SMB (“Exit Offer”), for a cash price of S$0.365 per share (“Exit Offer Price”). The Exit Offer is conditional on:

• (i) shareholders’ approval being obtained at SMB’s extraordinary general meeting to be convened; and

• (ii) the approval of shareholders of EDMI for the delisting being obtained, to acquire all the EDMI Shares, other than those EDMI Shares held, directly or indirectly, by SMB as at the date of the Exit Offer (“Offer Shares”).

The Exit Offer Price has been determined on the basis that the Offer Shares will be acquired without the right to receive the final dividend of 0.75 cent per EDMI share declared by EDMI as announced on February 25, 2011.

The Exit Offer will also be extended, on the same terms and conditions, to all new EDMI shares unconditionally issued or to be issued pursuant to the valid exercise prior to the close of the Exit Offer of any option to subscribe for new EDMI Shares granted under EDMI’s share option scheme, the EDMI Share Option Scheme 2003.

The EDMI Directors have reviewed the Delisting Proposal and have decided to (i) apply to the SGX-ST for the Delisting; and (ii) subject to the approval of the SGX-ST, convene an extraordinary general meeting of EDMI (“EDMI EGM”) to seek the approval of EDMI Shareholders for the Delisting.

• (c) On March 28 and 29, 2011, SMB announced the acquisition of additional shares in EDMI.

– III-79 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

C. AUDITED FINANCIAL STATEMENTS OF THE OFFEREE FOR THE YEAR ENDED 31 DECEMBER 2009

The following is an extract of the audited financial statements of the Offeree for the year ended 31 December 2009, which were prepared in accordance with SFRS, from the 2009 annual report and financial statements of the Offeree.

Specific page/section references mentioned in the audited financial statements of the Offeree for the year ended 31 December 2009 are referred to in the Offereee’s 2009 annual report and financial statements which is available free of charge, in read-only, printable format on the Offeree’s website at http://www.smbunited.com/wp-content/uploads/2011/02/AR2009.pdf.

STATEMENTS OF FINANCIAL POSITION

December 31, 2009

Note ASSETS Current assets Cash and bank balances 6 Trade receivables 7 Other receivables and prepayments 8 Inventories 9 Contract work-in-progress 10 Total current assets Non-current assets Property, plant and equipment 11 Assets on lease 12 Subsidiaries 13 Associates 14 Joint ventures 15 Available-for-sale investments 16 Intangible assets 17 Other receivables 18 Deferred tax assets 19 Total non-current assets Total assets	Group 2009 2008 $’000 $’000 59,545 44,422 75,812 59,010 3,591 3,363 46,707 44,706 2,756 1,818 188,411 153,319	Group 2009 2008 $’000 $’000 59,545 44,422 75,812 59,010 3,591 3,363 46,707 44,706 2,756 1,818 188,411 153,319	Company 2009 2008 $’000 $’000 9,797 1,998 – – 16,629 14,840 – – – – 26,426 16,838	Company 2009 2008 $’000 $’000 9,797 1,998 – – 16,629 14,840 – – – – 26,426 16,838
				16,838
	36,568 210 – 820 511 587 5,025 – 1,019 44,740	35,868 – – 1,013 280 845 217 499 868 39,590	580 – 66,140 – – 57 – – – 66,777	652 – 66,021 – – 32 – – –
				66,705
	233,151	192,909	93,203	83,543

– III-80 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note LIABILITIES AND EQUITY Current liabilities Bank borrowings 20 Trade payables 21 Other payables 22 Derivative financial instruments 23 Contract work-in-progress 10 Current portion of finance leases 24 Income tax payable Total current liabilities Non-current liabilities Other payables 22 Finance leases 24 Long-term loans 20 Deferred tax liabilities 25 Financial guarantee contracts Total non-current liabilities Capital, reserves and minority interests Share capital 27 Reserves Equity attributable to owners of the company Minority interests Total equity Total liabilities and equity	Group 2009 2008 $’000 $’000 6,926 7,566 34,684 29,126 13,322 9,471 60 – 2,217 632 499 450 4,985 3,201	Group 2009 2008 $’000 $’000 6,926 7,566 34,684 29,126 13,322 9,471 60 – 2,217 632 499 450 4,985 3,201	Company 2009 2008 $’000 $’000 – – – – 2,614 1,483 – – – – 94 94 51 137	Company 2009 2008 $’000 $’000 – – – – 2,614 1,483 – – – – 94 94 51 137
	62,693 3,403 870 4,537 1,600 – 10,410 75,113 60,381 135,494 24,554 160,048	50,446 310 841 1,560 1,481 – 4,192 75,113 41,691 116,804 21,467 138,271	2,759 937 94 – 3 366 1,400 75,113 13,931 89,044 – 89,044	1,714
				55 189 – 2 413
				659
				75,113 6,057
				81,170 –
				81,170
	233,151	192,909	93,203	83,543

– III-81 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended December 31, 2009

Note Revenue 29 Cost of sales Gross profit Other operating income 30 Selling expenses General and administrative expenses Other operating expenses Other gains and (losses) 31 Share of losses of associates 14 Share of losses of joint ventures 15 Finance cost Profit before tax Income tax expense 32 Profit for the year 33 Other comprehensive income: Exchange differences arising on translating foreign operations Available-for-sale financial assets: Gain (Loss) arising during the year Release of fair value reserve on disposal of available-for-sale investments Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit attributable to: Owners of the company Minority interests Total comprehensive income attributable to: Owners of the company Minority interests Basic earnings per share (cents) 34 Diluted earnings per share (cents) 34	Group 2009 2008 $’000 $’000 226,508 213,347 (162,132) (154,371) 64,376 58,976 3,676 921 (3,151) (3,385) (36,202) (30,531) (3,808) (3,473) 5,336 (3,269) (361) (222) (156) (283) (454) (553) 29,256 18,181 (5,278) (3,168) 23,978 15,013 1,468 (983) 425 (1,969) 1,844 – 3,737 (2,952) 27,715 12,061 21,221 13,563 2,757 1,450 23,978 15,013 23,372 11,793 4,343 268 27,715 12,061 4.42 2.83 4.42 2.83	Group 2009 2008 $’000 $’000 226,508 213,347 (162,132) (154,371) 64,376 58,976 3,676 921 (3,151) (3,385) (36,202) (30,531) (3,808) (3,473) 5,336 (3,269) (361) (222) (156) (283) (454) (553) 29,256 18,181 (5,278) (3,168) 23,978 15,013 1,468 (983) 425 (1,969) 1,844 – 3,737 (2,952) 27,715 12,061 21,221 13,563 2,757 1,450 23,978 15,013 23,372 11,793 4,343 268 27,715 12,061 4.42 2.83 4.42 2.83
	64,376 3,676 (3,151) (36,202) (3,808) 5,336 (361) (156) (454) 29,256 (5,278)	58,976 921 (3,385 (30,531 (3,473 (3,269 (222 (283 (553
		18,181 (3,168
	23,978
	1,468 425 1,844 3,737	(983 (1,969 –
		(2,952
	27,715
	21,221 2,757	13,563 1,450
	23,978
	23,372 4,343	11,793 268
	27,715 4.42 4.42

– III-82 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

STATEMENTS OF CHANGES IN EQUITY

Year ended December 31, 2009

Note Group Balance at January 1, 2008 Total comprehensive income and loss for the year Dividends 38 Recognition of share-based payments 26 Exercise of a subsidiary’s employee share options Equity contributed by minority shareholders Equity acquired from minority shareholders Balance at December 31, 2008 Total comprehensive income and loss for the year Dividends 38 Recognition of share-based payments 26 Exercise of a subsidiary’s employee share options Equity acquired from minority shareholders Balance at December 31, 2009	Share capital $’000 75,113 – – – – – –	Share option reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 285 (260) (1,146) – (1,060) (710) – – – 131 – – – – – – – – – – –	Share option reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 285 (260) (1,146) – (1,060) (710) – – – 131 – – – – – – – – – – –	Share option reserve Investment revaluation reserve Currency translation reserve $’000 $’000 $’000 285 (260) (1,146) – (1,060) (710) – – – 131 – – – – – – – – – – –	Retained earnings Attributable to owners of the company $’000 $’000 37,604 111,596 13,563 11,793 (6,716) (6,716) – 131 – – – – – –	Retained earnings Attributable to owners of the company $’000 $’000 37,604 111,596 13,563 11,793 (6,716) (6,716) – 131 – – – – – –	Minority interests $’000 21,229 268 (281) 101 103 96 (49)	Total $’000 132,825 12,061 (6,997) 232 103 96 (49)
	75,113 – – – – –	416 – – 116 – –	(1,320) 1,285 – – – –	(1,856) 866 – – – –	44,451 21,221 (4,798) – – –	116,804 23,372 (4,798) 116 – –	21,467 4,343 (230) 82 261 (1,369)	138,271 27,715 (5,028) 198 261 (1,369)
	75,113	532	(35)	(990)	60,874	135,494	24,554	160,048

– III-83 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Company Balance at January 1, 2008 Total comprehensive income for the year Dividends 38 Balance at December 31, 2008 Total comprehensive income for the year Dividends 38 Balance at December 31, 2009	Share capital Investment revaluation reserve $’000 $’000 75,113 (190) – 105 – –	Share capital Investment revaluation reserve $’000 $’000 75,113 (190) – 105 – –	Retained earnings $’000 5,709 7,149 (6,716)	Total $’000 80,632 7,254 (6,716) 81,170 12,672 (4,798) 89,044
	75,113 – –	(85) 25 –	6,142 12,647 (4,798)	81,170 12,672 (4,798
	75,113	(60)	13,991

– III-84 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended December 31, 2009

CONSOLIDATED STATEMENT OF CASH FLOWS Year ended December 31, 2009
Note Operating activities Profit before income tax Adjustments for: Share of losses of associates Share of losses of joint ventures Depreciation of property, plant and equipment Depreciation of assets on lease Dividend income Interest expense Amortisation of intangible assets Allowance for doubtful trade receivables Allowance for doubtful non-trade receivables Allowance (Reversal of allowance) for inventories Allowance for foreseeable losses on contracts Gain on disposal of property, plant and equipment Intangible assets written off Interest income Loss on dilution of shareholding interest in a subsidiary Gain on dilution of shareholding interest in an associate Gain on disposal of a subsidiary Gain on acquisition of shareholding interest in a subsidiary Release of fair value reserve on disposal of available-for-sale investments Gain on disposal of available-for-sale investments Impairment loss on available-for-sale investments Changes in fair value of financial derivative instruments Share option expense Operating cash flows before movements in working capital Trade receivables Other receivables and prepayments Inventories Contract work-in-progress Trade payables Other payables Cash generated from operations Income tax paid Interest paid Net cash from operating activities	Group 2009 2008 $’000 $’000 29,256 18,181 361 222 156 283 3,220 3,054 44 – (3) (7) 454 553 – 219 476 149 – 141 2,486 (66) 836 831 (36) (119) – 23 (185) (357) 79 26 (73) – (277) – (643) – 1,844 – (2,263) – – 190 60 – 198 232 35,990 23,555 (17,872) 13,765 (516) (155) (4,249) (375) (215) 572 6,074 (3,588) 7,300 (615) 26,512 33,159 (3,289) (2,240) (454) (553) 22,769 30,366
	35,990 (17,872) (516) (4,249) (215) 6,074 7,300 26,512 (3,289) (454) 22,769	23,555 13,765 (155 (375 572 (3,588 (615
		33,159 (2,240 (553
		30,366

– III-85 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Investing activities Interest received Purchase of property, plant and equipment A Proceeds on disposal of property, plant and equipment Proceeds on disposal of available-for-sale investments Acquisition of investment in associates Acquisition of investment in joint venture Acquisition of equity in a subsidiary from minority shareholders Acquisition of business 40 Proceeds from disposal of a subsidiary 39 Expenditure on product development Loan to proposed acquisition company Loan to joint venture Dividends received Net cash used in investing activities Financing activities Repayment of finance leases Repayment of bank loans New bank loan raised Net proceeds from trust receipts and banker’s acceptance Increase in cash deposits pledged to bank 6 Dividends paid to equity holders of the company Dividends paid to minority shareholders of subsidiaries Capital contribution from minority shareholders Proceeds from exercise of employee share options of a subsidiary Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at end of the year Cash and cash equivalents consist of: Cash at bank 6 Fixed deposits 6 Bank overdrafts 20	Group 2009 2008 $’000 $’000 185 357 (2,499) (6,344) 423 922 2,946 – (105) – (50) (523) (726) (49) (3,903) – 96 – (151) – – (653) (325) – 3 7 (4,106) (6,283) (602) (526) (1,793) (5,251) 4,046 2,017 554 72 818 (14) (4,798) (6,716) (230) (281) – 96 182 77 (1,823) (10,526) 16,840 13,557 40,602 27,136 (16) (91) 57,426 40,602 47,652 39,512 11,372 3,571 (1,598) (2,481) 57,426 40,602	Group 2009 2008 $’000 $’000 185 357 (2,499) (6,344) 423 922 2,946 – (105) – (50) (523) (726) (49) (3,903) – 96 – (151) – – (653) (325) – 3 7 (4,106) (6,283) (602) (526) (1,793) (5,251) 4,046 2,017 554 72 818 (14) (4,798) (6,716) (230) (281) – 96 182 77 (1,823) (10,526) 16,840 13,557 40,602 27,136 (16) (91) 57,426 40,602 47,652 39,512 11,372 3,571 (1,598) (2,481) 57,426 40,602
	(4,106) (602) (1,793) 4,046 554 818 (4,798) (230) – 182 (1,823) 16,840 40,602 (16)	(6,283
		(526 (5,251 2,017 72 (14 (6,716 (281 96 77
		(10,526
		13,557 27,136 (91
	57,426
	47,652 11,372 (1,598)	39,512 3,571 (2,481
	57,426

Note A

During the financial year, the group acquired property, plant and equipment with an aggregate cost of $3,139,000 (2008: $7,275,000) of which $640,000 (2008: $931,000) was acquired under finance lease agreement. Cash payments of $2,499,000 (2008: $6,344,000) was made to purchase property, plant and equipment.

– III-86 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

NOTES TO FINANCIAL STATEMENTS

December 31, 2009

1 GENERAL

The company (Registration No. 199506364D) is incorporated in Singapore with its principal place of business and registered office at 9 Senoko Drive, Singapore 758197. The company is listed on the mainboard of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in Singapore dollars.

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

The principal activities of the subsidiaries, associates and joint ventures are disclosed in Notes 13, 14 and 15 to the financial statements.

The consolidated financial statements of the group and statement of financial position and statement of changes of equity of the company for the year ended December 31, 2009 were authorised for issue by the Board of Directors on March 24, 2010.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

Adoption of new and revised standards

In the current financial year, the group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after January 1, 2009. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the group’s and company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:

FRS 1 – Presentation of Financial Statements (Revised)

FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatements or reclassifies items in the financial statements.

Amendments to FRS 107 Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments

The amendments to FRS 107 expand the disclosures required in respect of fair value measurements and liquidity risk.

FRS 108 – Operating Segments

The group adopted FRS 108 with effect from January 1, 2009. FRS 108 requires operating segments to be identified on the basis of internal reports about components of the group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (FRS 14 Segment Reporting ) required an entity to identify two sets of segments (Business and Geographical), using a risks and rewards approach, with the entity’s system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. Following the adoption of FRS 108, the identification of the group’s reportable segments remain unchanged (Note 37).

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the group and the company were issued but not effective:

• Amendments to FRS 7 Statement of Cash Flows

• Amendment to FRS 39 Financial instruments: Recognition and Measurement-Efigible Hedged items

• Amendment to FRS 39 Financial instruments: Recognition and Measurement and INT FRS 109 Reassessment of Embedded Derivatives – Amendments relating to Embedded Derivatives

• INT FRS 117 Distribution of Non-cash Assets to Owners

• FRS 24 (Revised) Related Party Disclosures

• FRS 27 (Revised) Consolidated and Separate Financial Statements

• FRS 28 (Revised) Investment in Associates

• FRS 103 (Revised) Business Combinations

• Improvements to Financial Reporting Standards (issued in June 2009).

Consequential amendments were also made to various standards as a result of these new/revised standards.

The management anticipates that the adoption of these FRSs, INT FRSs and amendments to FRS that were issued but not yet effective until future periods will have no material impact on the financial statements of the group and of the company in the period of their initial adoption, except for the following:

FRS 27 (Revised) Consolidated and Separate Financial Statements ; and FRS 103 (Revised) Business Combinations

FRS 27 (Revised) is effective for annual periods beginning on or after July 1, 2009. FRS 103 (Revised) is effective for business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after July 1, 2009.

Apart from matters of presentation, the principal amendments to FRS 27 that will impact the group concern the accounting treatment for transactions that result in changes in a parent’s interest in a subsidiary. It is likely that these amendments will significantly affect the accounting for such transactions in future accounting periods, but the extent of such impact will depend on the detail of the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

Similarly, FRS 103 relates to accounting for business combination transactions. The changes to the Standard are significant, but their impact can only be determined once the details of future business combination transactions is known. The amendments to FRS 103 will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

FRS 28 (Revised) Investments in Associates

In FRS 28 (Revised), the principle adopted under FRS 27 (Revised) (see above) that a loss of control is recognised as a disposal and re-acquisition of any retained interest at fair value is extended by consequential amendment to FRS 28 (Revised); therefore, when significant influence is lost, the investor measures any investment retained in the former associate at fair value, with any consequential gain or loss recognised in profit or loss.

FRS 28 (Revised) will be adopted for periods beginning on or after July 1, 2009 and will be applied prospectively in accordance with the relevant transitional provisions and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

Amendments to FRS 7 Statement of Cash Flows

The amendments (part of Improvements to FRSs issued in June 2009) specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

the statement of cash flows. Consequently, cash flows in respect of development costs that do not meet the criteria in FRS 38 intangible Assets for capitalisation as part of an internally generated intangible asset (and, therefore, are recognised in profit or loss as incurred) will be reclassified from investing to operating activities in the statement of cash flows. The amendments to FRS 7 will be adopted for periods beginning on or after January 1, 2010.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies in line with those used by other members of the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover its share of those losses.

In the company’s financial statements, investments in subsidiaries, associates and joint ventures are carried at cost less any impairment in net recoverable value that has been recognised in the profit and loss statement.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Safe and Discontinued Operations , which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated profit and loss statement.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Financial instruments

Financial assets and financial liabilities are recognised on the group’s statement of financial position when the group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transactions costs and other premiums or discounts) through the expected life of the financial instrument or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Financial assets

Financial assets comprise “available-for-sale” financial assets, “trade and other receivables” and “cash and cash equivalents”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets

Investments are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs.

Certain shares held by the group are classified as available-for-sale and are stated at fair value. Fair value is determined in the manner described in Note 4b(vi). Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the group’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other comprehensive income.

Trade and other receivables

Receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term receivables where the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and bank overdrafts that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted.

For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the credit period of 30 to 120 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any subsequent increase in fair value after an impairment loss, is recognised in other comprehensive income.

Derecognition of financial assets

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis, except for short-term payables where the recognition of interest would be immaterial.

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount of obligation under the contract recognised as a provision in accordance with FRS 37 Provision, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance with FRS 18 Revenue .

Finance lease obligations are recognised in accordance with the accounting policy denoted below.

Derecognition of financial liabilities

The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire.

Derivative financial instruments and hedge accounting

The group’s activities expose it primarily to the financial risks of changes in foreign exchange rates.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Derivative financial instruments are initially measured at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each balance sheet date.

Changes in the fair value of derivative financial instruments are recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Cost of inventories is determined as follows:

Raw materials	–	first-in, first-out method
Work-in-progress	–	standard cost which approximates actual average cost
Finished goods	–	first-in, first-out method

Contract work-in-progress

Where the outcome of a contract work-in-progress can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Property, plant and equipment/assets on lease

These assets are carried at cost, less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method and on the following bases:

Leasehold land and buildings	–	1.69% to 3.85% (over the term of lease)
Plant and equipment	–	10% to 331∕3%
Motor vehicles	–	10% to 20%
Meters	–	20%

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Fully depreciated assets still in use are retained in the financial statements.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

Assets held under operating lease relate to utility meters leased out to customers under operating lease agreements. These assets are being depreciated over their expected useful lives and the asset shall be fully depreciated over the shorter of the operating lease term and its estimated useful life not exceeding five years.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profit and loss statement.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Goodwill

Goodwill arising on the acquisition of a business, subsidiary or a jointly controlled entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the business, subsidiary or jointly controlled entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a business, subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Intangible assets

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development of identifiable and unique software/ products that are controlled by the group and have probable economic benefit exceeding the costs beyond one year is recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset for use or sale;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Costs include the staff costs of the software/product development team and an appropriate portion of direct overheads. Costs that enhance or extend performance of computer software program/product beyond their original specifications are capitalised and added to the original cost of the software/product. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

Computer software/product development costs that are capitalised are amortised using the straight-line method over their estimated useful lives of 3 years.

The estimated useful lives and amortisation method are reviewed at the end of each annual reporting period with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as internally generated intangible assets.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Patents, trademarks and licenses are amortised on a straight-line basis over the period of expected benefits not exceeding 3 years. The estimated useful lives and amortisation method are reviewed on the same basis as internally generated assets.

Impairment of tangible and intangible assets excluding goodwill

At the end of each reporting period, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss statement.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit and loss statement.

Associates

An associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Safe and Discontinued Operations . Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the group’s interest in that associate (which includes any long-term interests that, in substance, form part of the group’s net investment in the associate) are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the consolidated profit and loss statement.

Where a group entity transacts with an associate of the group, unrealised profits and losses are eliminated to the extent of the group’s interest in the relevant associate.

Interests in joint ventures

A joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

The results and assets and liabilities of joint ventures are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

it is accounted for under FRS 105 Non-current Assets Held for Safe and Discontinued Operations . Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of a joint venture in excess of the group’s interest in that joint venture (which includes any long-term interests that, in substance, form part of the group’s net investment in the joint venture) are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

Any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the consolidated profit and loss statement.

Where a group entity transacts with its joint ventures, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Warranties

Warranty cost is provided for the estimated liability to repair or replace products under warranty at the balance sheet date. This warranty cost is determined based on assessment of each batch of production and the directors’ best estimate of the expenditure required to settle the group’s obligation.

Provision for warranty cost is made where there are indicators of defects which may result in material repair or replacement costs.

Share-based payments

The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non market-based vesting conditions) at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 26. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non market-based vesting conditions.

At the end of each reporting period, the group revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payments that were granted after November 22, 2002 and vested after January 1, 2005.

Government grants

Government grants relating to expenditures which are not capitalised are credited to the profit and loss statement as and when the underlying expenses are included and taken to the profit and loss statement to match such related expenditure and at such time when the amount of grant can be reliably established and there is reasonable assurance that the group can comply with the conditions attaching to them and the grants will be received.

– III-95 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The group as lessee

Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease, or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to profit and loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight- line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated custom returns, rebates and other similar allowances.

• 1) Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• the group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

• 2) Revenue from contracts that are of short duration is recognised when the contracts are completed. Revenue from long-term contracts is recognised by reference to the stage of completion of the contract at the end of the reporting period. When losses are expected, after taking into consideration estimated cost to complete, such losses are recorded immediately.

• 3) Revenue from rendering of services that are of a short duration is recognised when the services are completed.

• 4) Income from providing financial guarantees is recognised in profit and loss over the guarantee period on a straight-line basis.

• 5) Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

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APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 6) Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the profit and loss statement in the period in which they are incurred.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the profit and loss statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the company and subsidiaries operate by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

– III-97 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised directly outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

Foreign currency transactions and translation

The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the group and the statement of financial position of the company are presented in Singapore dollars, which is the functional currency of the company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation accumulated in a separate component of equity, shall be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognised.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(a) Critical judgements in applying the group’s accounting policies

Management did not make any material judgements that have significant effect on the amounts recognised in the financial statements, except for those affecting accounting estimation as disclosed in Note 3(b).

– III-98 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

(b) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

(i) Allowances for doubtful receivables (Note 7 and Note 8)

An allowance is made for estimated irrecoverable amounts of receivables. Management analyses age of accounts receivables, historical payment trends, customer credit worthiness and results of recovery efforts when making a judgement over the adequacy of the allowances for receivables.

At December 31, 2009, trade and other receivables were stated net of allowances of $3,112,000 (2008: $2,696,000) and $238,000 (2008: $412,000) respectively.

(ii) Allowance for inventory obsolescence (Note 9)

The policy for allowance for inventories of the group is based on the aging analysis of inventories, historical sales and utilisation and on management’s judgement regarding sale prospects. Management estimated an allowance for inventory obsolescence of $3,300,000 at December 31, 2009 (2008: $814,000).

At December 31, 2009, the inventories of EDMI Limited (a subsidiary) include certain meters of $1,111,000 (2008: $1,734,000) which were returned by a customer in Australia in 2005 and 2006. Management has assessed the recoverable amounts of these meters based on the current market demand and has made an allowance for inventory obsolescence of $588,000 (2008: $Nil).

(iii) Recoverability of contract work-in-progress (Note 10)

In estimating foreseeable losses on contract work-in-progress, management evaluates the status of each project and estimates the cost required to complete the work and recoverable amounts.

• (iv) Property, plant and equipment (Note 11)

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as disclosed in Note 2. Changes in the expected useful lives, including terms of leases, could impact future depreciation charges.

• (v) Recoverable of investments in subsidiaries (Note 13)

Where there are indicators of potential impairment of investment in subsidiaries, management projects the cash flows of these subsidiaries and estimates the recoverable amount by discounting the projected cash flows and terminal value to present value. Any change in such projections and estimates can result in changes to the allowances for impairment loss in future periods.

At December 31, 2009, the impairment loss allowance for subsidiaries made by the company was $1,000,000 (2008: $2,506,000).

(vi) Recoverability of goodwill (Note 17)

Determining whether goodwill on acquisition of business is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the end of the financial year was $4,861,000 (2008: $217,000). Management considers the goodwill to be recoverable from future cash flows and has concluded that there is no impairment loss in 2008 and 2009. Information relating to the discount rates are found in Note 17.

– III-99 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

4 FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the balance sheet date.

Financial assets Loan and receivables (including cash and cash equivalents) Available-for-sale financial assets Financial liabilities Derivative financial instruments in designated hedge accounting relationship Amortised cost Financial guarantee contracts	Group 2009 2008 $’000 $’000 138,309 106,542 587 845 Group 2009 2008 $’000 $’000 60 – 64,241 49,324 – –	Company 2009 2008 $’000 $’000 26,426 16,838 57 32 Company 2009 2008 $’000 $’000 – – 3,692 1,774 413 460

(b) Financial risk management strategies and objectives

The Board of Directors reviews the overall financial risk management on specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, use of derivative financial instruments and investing excess cash. The group’s overall financial risk management strategy is to minimise potential adverse effects of these on the financial performance of the group. These are reviewed quarterly by the Board of Directors. Risk management is monitored by the Corporate Office.

The group may use derivative financial instruments to manage its exposure to foreign currency risk, including forward exchange contracts to hedge the exchange rate risks arising from trade receivables and trade payables, and firm commitments to buy or sell goods.

The group does not hold or issue derivative financial instruments for speculative purposes.

There has been no change to the group’s exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.

i) Credit risk management

Credit risk refers to the risk that a customer may default on its payment resulting in financial loss to the group. The group has adopted a policy of gradually extending credit to customers who are creditworthy and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from non-payment. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed and where appropriate, credit guarantee insurance cover is purchased. Credit exposure is controlled by using customer credit limits that are reviewed and approved by the management regularly.

The carrying amount of financial assets recorded in the financial statements, grossed up for allowances for losses, represents the group’s maximum exposure to credit risk without taking into account the value of any collateral obtained.

Further details relating to trade and other receivables are disclosed in Note 7 and 8.

– III-100 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

ii) Interest rate risk management

The group is exposed to interest rate risk through the impact of interest rate changes on interest-bearing debts and interest-earning fixed deposits.

The interest rates and terms of repayment for bank loans and finance leases of the group are disclosed in Notes 20 and 24 to the financial statements respectively.

The interest rates and repricing period for fixed deposits are disclosed in Note 6.

Quantitative data of the group’s interest-bearing financial instruments are provided in section (iv) of this note.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates that impacts borrowings.

If interest rates had been 100 basis points higher or lower for borrowings and all other variables were held constant, the group’s profit for the year ended December 31, 2009 would decrease/increase by $115,000 (2008: decrease/increase by $91,000).

No sensitivity analysis is prepared for fixed deposits as any reasonably possible change in interest rate on fixed deposits would have insignificant impact to the group’s profit.

iii) Foreign exchange risk management

The group transacts business in various currencies and therefore is exposed to foreign exchange risk. The significant carrying amounts of monetary assets (including intra-group receivables) and monetary liabilities (including intra-group payables) denominated in currencies other than the respective group entities’ functional currencies at the end of the reporting period are as follows:

		Group				Company
	Liabilities		Assets		Liabilities		Assets
	2009	2008	2009	2008	2009	2008	2009	2008
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Singapore dollar	8,759	12,376	5,617	7,168	–	–	–	–
United States dollar	12,381	11,739	24,547	19,905	–	–	–	–
Australian dollar	359	215	8,228	5,555	–	–	–	–
New Zealand dollar	283	124	5,840	1,221	–	–	–	–

Companies in the group may use forward contracts to hedge their exposure to foreign currency risk.

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the major relevant foreign currencies against the functional currency of each group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the group where the denomination of the loan is in a currency other than the currency of the lender or the borrower.

– III-101 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

If the major relevant foreign currencies strengthen by 10% against the functional currency of each group entity, profit for the year will (decrease) increase by:

	Singapore		United States	United States	Australian	Australian	New Zealand	New Zealand
	Dollar Impact		Dollar Impact		Dollar	Impact	Dollar Impact
	2009	2008	2009	2008	2009	2008	2009	2008
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	(314)	(521)	1,217	817	785	534	556	122

If the major relevant foreign currencies weakens by 10% against the functional currency of each group entity, profit for the year will increase (decrease) by:

	Singapore		United States	United States	Australian	Australian	New Zealand	New Zealand
	Dollar Impact		Dollar Impact		Dollar	Impact	Dollar	Impact
	2009	2008	2009	2008	2009	2008	2009	2008
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	314	521	(1,217)	(817)	(785)	(534)	(556)	(122)

If the relevant foreign currency strengthens by 10% against the functional currency of each group entity, revaluation reserve in equity will increase by:

		British pound impact
		2009	2008
		$’000	$’000
Group
Revaluation	reserve	53	81

If the relevant foreign currency weakens by 10% against the functional currency of each group entity, there will be an equal and opposite effect on revaluation reserve in equity.

The group also has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The group does not hedge its investments that are denominated in foreign currencies.

iv) Liquidity risk management

The group has sufficient funds and credit lines to finance its working capital requirements.

Liquidity and interest rate risk analysis

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company can be required to pay. The table includes both interest and principal cash flows. The adjustment

– III-102 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statement of financial position.

Weighted average effective interest rate per annum % Group 2009 Non-interest bearing – Finance lease liability (fixed rate) 6.0 Variable interest rate instruments 3.2 2008 Non-interest bearing – Finance lease liability (fixed rate) 6.0 Variable interest rate instruments 4.7 Company 2009 Non-interest bearing – Finance lease liability (fixed rate) 5.6 2008 Non-interest bearing – Finance lease liability (fixed rate) 5.6	On demand or within 1 year $’000 48,006 576 7,143 55,725 38,597 524 7,927 47,048	Within 2 to 5 years $’000 3,403 924 3,912 8,239 310 940 1,103 2,353	After 5 years Adjustment $’000 $’000 – – 32 (163) 770 (362) 802 (525) – – – (173) 1,341 (1,245) 1,341 (1,418)	After 5 years Adjustment $’000 $’000 – – 32 (163) 770 (362) 802 (525) – – – (173) 1,341 (1,245) 1,341 (1,418)	Total $’000 51,409 1,369 11,463
					64,241
					38,907 1,291 9,126
					49,324
	2,567 108	937 108	– –	– (28)	3,504 188
	2,675	1,045	–	(28)	3,692
	1,436 108	55 216	– –	– (41)	1,491 283
	1,544	271	–	(41)	1,774

In addition to the above, the company has provided corporate guarantees to banks for credit facilities given by these banks to subsidiaries. At December 31, 2009, the subsidiaries have borrowings from these banks totalling $6,342,000 (2008: $9,126,000). The earliest period that the guarantees can be called upon is one year. Management considers that it is more likely than not that no amount will be payable by the company under these financial guarantee contracts.

– III-103 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Non-derivative financial assets

The following table details the expected maturity for non-derivative financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the group’s liquidity risk management as the group’s liquidity risk is managed on a net asset and liability basis.

The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the group and the company anticipates that the cash flow will occur in a different period.

Weighted average effective interest rate per annum % Group 2009 Non-interest bearing – Fixed interest rate instruments 0.8 2008 Non-interest bearing – Fixed interest rate instruments 2.4 Company 2009 Non-interest bearing – Fixed interest rate instrument 0.1 2008 Non-interest bearing – Fixed interest rate instrument 1.2	On demand or within 1 year $’000 126,148 11,836 137,984	Within 2 to 5 years $’000 912 – 912	Total $’000 127,060 11,836
			138,896
	101,191 4,852	1,344 –	102,535 4,852
	106,043	1,344	107,387
	22,921 3,505	57 –	22,978 3,505
	26,426	57	26,483
	15,835 1,003	32 –	15,867 1,003
	16,838	32	16,870

v) Equity price risk management

The group and company is exposed to equity risks arising from equity investments classified as available-for-sale. The group does not actively trade available-for-sale investments.

Further details of these equity investments can be found in Note 16 to the financial statements.

Equity price sensitivity

The sensitivity analysis below have been determined based on the exposure to equity price risks at the reporting date.

– III-104 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

In respect of available-for-sale equity investments, if the closing market prices on the last market day of the financial year had been 10% higher/lower while all other variables were held constant:

• the group’s net profit for the year ended December 31, 2009 and 2008 would have been unaffected as the equity investments are classified as available-for-sale; and

• the group’s asset revaluation reserves would increase/decrease by $59,000 (2008: increase/decrease by $85,000).

The group’s sensitivity to equity prices has not changed significantly from the prior year.

vi) Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair value of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

The fair values of financial assets and financial liabilities are determined as follows:

• a) the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

• b) the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

• c) the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

Management considers that the carrying amounts of all financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values.

The group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

• b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

• c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

– III-105 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Financial instruments measured at fair value

Total	Level 1	Level 2	Level 3
$’000	$’000	$’000	$’000

Financial Assets Group 2009 Available-for-sale investments: – Quoted equities 2008 Available-for-sale investments: – Quoted equities Company 2009 Available-for-sale investments: – Quoted equities 2008 Available-for-sale investments: – Quoted equities	587 845 57 32	587 845 57 32	– – – –	–
				–
				–
				–

The group and the company had no financial liabilities carried at fair value in 2009 and 2008.

(c) Capital risk management policies and objectives

The group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the group comprises share capital, reserves, retained earnings and debt, which includes the borrowings disclosed in Notes 20 and 24.

The group reviews its capital structure and periodically ensures compliance with the loan covenant imposed by the bank. It balances its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt.

The group’s overall strategy remains unchanged from 2008.

The company is in compliance with externally imposed capital requirements for the financial years ended December 31, 2009 and 2008.

– III-106 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

5 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

	Group
	2009	2008
	$’000	$’000
Sale of goods to associate	(1,223)	(2,561)
Sales of goods to joint venture	(80)	(336)
Sales of goods to related party	–	(75)
Purchase of goods from associate	–	1,133
Purchase of goods from related party	–	27
Other income from related party	–	(242)
Other expense to related party	–	245

At December 31, 2008, certain bank overdraft and trust receipts (Note 20) were secured by a personal guarantee of a director for $1,500,000 (2009: Nil).

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Short-term benefits Post-employment benefits Long-term employment benefits Share-based payments	Group 2009 2008 $’000 $’000 7,019 6,116 239 218 3,403 310 63 87 10,724 6,731	Group 2009 2008 $’000 $’000 7,019 6,116 239 218 3,403 310 63 87 10,724 6,731
		6,731

The remuneration of directors and key management of the group is determined by the remuneration committee having regard to the performance of individuals and market trends.

Long-term employment benefits represent key management personnel’s remuneration under a Performance Bonus Scheme (Note 22).

6 CASH AND BANK BALANCES

Cash at bank Fixed deposits Deposits under pledge Total	Group 2009 2008 $’000 $’000 47,652 39,512 11,372 3,571 521 1,339 59,545 44,422	Company 2009 2008 $’000 $’000 6,292 995 3,505 1,003 – – 9,797 1,998	Company 2009 2008 $’000 $’000 6,292 995 3,505 1,003 – – 9,797 1,998
			1,998

Cash and bank balances comprise cash held by the group and company and short-term bank deposits with an original maturity of twelve months or less. The carrying amounts of these assets approximate their fair values.

– III-107 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The weighted average interest rate for fixed deposits is approximately 0.8% (2008: 2.4%) per annum and for a tenure of approximately 7 to 360 days (2008: 7 to 360 days). The fixed deposits can be withdrawn without having to incur significant costs.

Deposits amounting to $521,000 (2008: $1,339,000) of the group are pledged to banks as security for credit facilities, including those disclosed in Note 35.

The group’s and company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2009	2008	2009	2008
	$’000	$’000	$’000	$’000
Singapore dollar	1,562	72	–	–
United States dollar	8,219	6,290	–	–
Euro	310	207	–	–
Australian dollar	910	2,060	–	–
Vietnamese dong	116	116	–	–
New Zealand dollar	3,238	–	–	–
British pound	146	95	–	–

7 TRADE RECEIVABLES

Outside parties Less: Allowance for doubtful trade receivables Associates (Note 14) Joint venture (Note 15) Related party (Note 5)	Group 2009 2008 $’000 $’000 75,505 59,266 (3,112) (2,696	Group 2009 2008 $’000 $’000 75,505 59,266 (3,112) (2,696
	72,393 3,299 – 120	56,570 2,114 246 80
	75,812	59,010

The credit period on sale of goods is generally 30 to 120 days (2008: 30 to 120 days). No interest is charged on overdue trade receivables.

Allowance for doubtful trade receivables is made taking into account the factors set out in Note 3(b)(i). In determining the recoverability of a trade receivable, management also considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.

Before accepting any new customer, the management assesses the potential customer’s credit quality and determines the credit terms for each customer. Limits attributed to customers are reviewed periodically. At December 31, 2009, a customer accounts for $15,840,000 or 20.9% of total outstanding trade receivables. No other individual customer accounts for 10% or more of the total outstanding receivables at December 31, 2009. At December 31, 2008, there was no individual customer accounting for 10% or more of the total outstanding balance.

– III-108 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The table below is an analysis of trade receivables as at December 31:

Not past due and not impaired Past due but not impaired (i) Impaired receivables – individually assessed (ii), (iii) – customer placed under liquidation/judicial management – past due and no response to repayment demands – others Less: Allowance for doubtful trade receivables Total trade receivables, net (i) Aging of receivables that are past due but not impaired (iv): < 6 months 6 months to 9 months 9 months to 12 months >12 months	Group 2009 2008 $’000 $’000 54,585 38,208 21,080 20,496 75,665 58,704 690 689 2,192 1,524 377 789 (3,112) (2,696) 147 306 75,812 59,010	Group 2009 2008 $’000 $’000 54,585 38,208 21,080 20,496 75,665 58,704 690 689 2,192 1,524 377 789 (3,112) (2,696) 147 306 75,812 59,010
		58,704
		689 1,524 789 (2,696)
		306
		59,010
	13,553 1,707 1,039 4,781	12,516 2,320 2,655 3,005
	21,080	20,496

(ii) These amounts are stated before any deduction for impairment losses.

(iii) These receivables are not secured by any collateral or credit enhancements.

(iv) These receivables are from customers with no past credit default and for which there is no clear indication of deterioration on credit quality.

Movement in the allowance for doubtful trade receivables:

Balance at beginning of the year Exchange differences Amounts written off during the year Increase in allowance recognised in profit or loss Disposal of a subsidiary Balance at end of the year	Group 2009 2008 $’000 $’000 2,696 3,386 33 (80) (10) (759) 476 149 (83) – 3,112 2,696	Group 2009 2008 $’000 $’000 2,696 3,386 33 (80) (10) (759) 476 149 (83) – 3,112 2,696
		2,696

At December 31, 2009, retention sums held by customers amounting to $10,785,000 (2008: $2,327,000) are classified as current because they are expected to be realised in the normal operating cycle.

– III-109 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2009	2008
	$’000	$’000
United States dollar	11,585	9,820
British pound	500	1,053
Euro	1,648	658
Thai baht	2,555	1,492
New Zealand dollar	2,378	1,221
Chinese renminbi	9	220
Malaysian ringgit	1	505
Others	70	55

8 OTHER RECEIVABLES AND PREPAYMENTS

Staff loans Deposits Prepayments Income tax recoverable Other receivables Less: Allowance for doubtful non-trade receivables Subsidiaries (Note 13) Associates (Note 14) Joint ventures (Note 15) Related parties (Note 5) Less: Allowance for doubtful non-trade receivables	Group 2009 2008 $’000 $’000 503 453 894 772 639 752 200 9 1,164 1,407	Group 2009 2008 $’000 $’000 503 453 894 772 639 752 200 9 1,164 1,407	Company 2009 2008 $’000 $’000 135 141 – – – – – – 109 25	Company 2009 2008 $’000 $’000 135 141 – – – – – – 109 25
	3,400 (238) 3,162 – 429 – – –	3,393 (388) 3,005 – 172 48 162 (24)	244 – 244 16,385 – – – –	166 –
				166 14,720 – – – (46
	3,591	3,363	16,629	14,840

Amounts due from subsidiaries, associates, joint ventures and related parties are unsecured, interest-free and repayable on demand.

Movement in the allowance for doubtful non-trade receivables:

Balance at beginning of the year Exchange differences Increase in allowance recognised in profit or loss Amount written off Disposal of a subsidiary	Group 2009 2008 $’000 $’000 412 273 (1) (2) – 141 (41) – (132) – 238 412	Company 2009 2008 $’000 $’000 46 46 – – – – (46) – – – – 46	Company 2009 2008 $’000 $’000 46 46 – – – – (46) – – – – 46
			46

– III-110 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s and company’s other receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2009	2008	2009	2008
	$’000	$’000	$’000	$’000
United States dollar	76	666	–	–
Australian dollar	189	69	–	–
British pound	22	20	–	–
Thai baht	257	–	–	–
Vietnamese dong	188	–	–	–
Others	–	–	14	7

9 INVENTORIES

Raw materials Work-in-progress Finished goods	Group 2009 2008 $’000 $’000 25,526 22,088 5,773 6,553 15,408 16,065 46,707 44,706	Group 2009 2008 $’000 $’000 25,526 22,088 5,773 6,553 15,408 16,065 46,707 44,706
		44,706

The group recognised $2,486,000 as part of allowance for inventory in profit or loss for the financial year ended December 31, 2009.

In 2008, due to the increase in demand and usage of certain goods in the financial year, the group reversed $66,000, being part of allowance for inventory in 2007, to the prior year profit or loss.

10 CONTRACT WORK-IN-PROGRESS

Contract costs incurred plus recognised profits Less: Progress billings Provision for foreseeable losses Included in current assets Progress billings Provision for foreseeable losses Less: Contract costs incurred plus recognised profits Included in current liabilities	Group 2009 2008 $’000 $’000 49,789 17,178 (45,206) (14,044 (1,827) (1,316 2,756 1,818	Group 2009 2008 $’000 $’000 49,789 17,178 (45,206) (14,044 (1,827) (1,316 2,756 1,818
		1,818
	26,818 98 (24,699)	16,985 20 (16,373
	2,217	632

– III-111 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

11 PROPERTY, PLANT AND EQUIPMENT

Group Cost: At January 1, 2008 Exchange differences Additions Disposals At December 31, 2008 Exchange differences Additions Disposals Acquired on acquisition of a subsidiary (Note 40) Disposal of a subsidiary At December 31, 2009 Accumulated depreciation: At January 1, 2008 Exchange differences Depreciation Eliminated on disposals At December 31, 2008 Exchange differences Depreciation Eliminated on disposals Disposal of a subsidiary At December 31, 2009 Carrying amount: At December 31, 2009 At December 31, 2008	Leasehold land and buildings $’000 29,841 (178) 2,600 (556)	Plant and equipment $’000 23,632 (733) 4,575 (3,030)	Motor vehicles $’000 2,520 (74) 100 (222)	Total $’000 55,993 (985) 7,275 (3,808)
	31,707 (45) 21 – – – 31,683 6,026 (40) 680 (55) 6,611 (11) 682 – – 7,282	24,444 634 2,700 (1,406) 795 (38) 27,129 15,688 (374) 2,106 (2,732) 14,688 248 2,267 (1,031) (33) 16,139	2,324 72 418 (402) 37 (151) 2,298 1,308 (50) 268 (218) 1,308 39 271 (390) (107) 1,121	58,475 661 3,139 (1,808) 832 (189)
				61,110
				23,022 (464) 3,054 (3,005)
				22,607 276 3,220 (1,421) (140)
				24,542
	24,401 25,096	10,990 9,756	1,177 1,016	36,568
				35,868

– III-112 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Company Cost: At January 1, 2008 Additions At December 31, 2008 Additions Disposals At December 31, 2009 Accumulated depreciation: At January 1, 2008 Depreciation At December 31, 2008 Depreciation Eliminated on disposals At December 31, 2009 Carrying amount: At December 31, 2009 At December 31, 2008	Plant and equipment $’000 309 12	Motor vehicles $’000 798 –	Total $’000 1,107 12
	321 12 (15) 318 281 27 308 4 (15) 297	798 – – 798 80 79 159 80 – 239	1,119 12 (15)
			1,116
			361 106
			467 84 (15)
			536
	21 13	559 639	580
			652

The group and company have motor vehicles and equipment with carrying amounts of $2,216,000 (2008: $2,263,000) and $559,000 (2008: $639,000) respectively which are under finance leases.

The group has pledged certain land and buildings which have aggregate carrying amount of $7,575,000 (2008: $7,737,000) to obtain bank loans and credit facilities.

Particulars of major properties are as follows:

Location 9 Senoko Drive Singapore 758197 15 Senoko Way Singapore 758036 15 Senoko Avenue Singapore 758305 17 Senoko Avenue Singapore 758307

• Description Part single-storey and part 2-storey factory and office

• Part single-storey and part 2-storey factory and office

• Part single-storey and part 3-storey factory and office

• Part single-storey and part 2-storey factory and office

• Tenure 60-year lease from November 1992

• 30-year lease from February 1991

• 25-year lease from March 1998

• 30-year lease from September 1990, with an option to extend another 30 years subject to certain conditions

PLO 131, 133, 134, Jalan Cyber 5 Kawasan Perindustrian Senai 3, 81400 Senai Johor, Malaysia

2-storey factory

• 60-year lease from December 1996

– III-113 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Location	Description	Tenure
47 Yishun Industrial Park A	4-storey factory and office	30-year lease from
Singapore 768724		January 1992
18 Kaki Bukit Road 3	3 office units	60-year lease from
#04-01/02/03 Entrepreneur		January 1995
Business Centre
Singapore 415978

12 ASSETS ON LEASE

This pertains to meters under operating lease arrangement.

Cost: At January 1, 2008 and December 31, 2008 Transfer from inventory At December 31, 2009 Accumulated depreciation: At January 1, 2008 and December 31, 2008 Depreciation At December 31, 2009 Carrying amount: At December 31, 2009 At December 31, 2008	Meters $’000 – 254
	254
	– 44
	44
	210
	–

13 SUBSIDIARIES

Unquoted equity shares, at cost Impairment loss Recognition of share-based payment Advances to subsidiaries Interest imputation on advances to subsidiaries Deemed investment arising from corporate guarantees provided to financial institutions who have granted credit facilities to subsidiaries	Company 2009 2008 $’000 $’000 55,944 57,450 (1,000) (2,506	Company 2009 2008 $’000 $’000 55,944 57,450 (1,000) (2,506
	54,944 42 5,670 2,238 3,246	54,944 42 5,452 2,238 3,345
	66,140	66,021

– III-114 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Advances to subsidiaries are unsecured and interest-free. Advances to subsidiaries are measured at amortised cost using the effective interest method. The advances to subsidiaries are expected to be repaid over 10 years from January 1, 2005.

Nominal value of advances to subsidiaries Amount recognised as additional investment in subsidiaries Fair value at inception date of advances Deemed interest income recognised Amortised cost balance at end of year Less: Allowance for advances Carrying amount at end of year	Company 2009 2008 $’000 $’000 6,898 10,839 (2,238) (3,184 4,660 7,655 1,010 911 5,670 8,566 – (3,114 5,670 5,452	Company 2009 2008 $’000 $’000 6,898 10,839 (2,238) (3,184 4,660 7,655 1,010 911 5,670 8,566 – (3,114 5,670 5,452
		7,655 911
		8,566 (3,114
		5,452

The interest income imputed is calculated by applying an effective interest rate of 4% (2008: 4%) per annum. The advances to subsidiaries are denominated in Singapore dollar, which is the functional currency of the company.

Deemed investment of $42,000 (2008: $42,000) in subsidiaries relate to share option granted under the SMB Share Option Scheme 2001 by the company to an employee of a subsidiary.

The deemed investment in subsidiaries arising from financial guarantees provided by the company is as follows:

At beginning of year Additions during the year Repayment of term loan during the year At end of year	Company 2009 2008 $’000 $’000 3,345 2,658 832 687 (931) – 3,246 3,345	Company 2009 2008 $’000 $’000 3,345 2,658 832 687 (931) – 3,246 3,345
		3,345

All the additional deemed investment in subsidiaries of $832,000 (2008: $687,000) was recognised as financial guarantee income in the company’s profit and loss statement.

Details of the company’s significant subsidiaries at December 31, 2009 are as follows:

		Effective proportion	Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and
Name of subsidiary	and operation	voting power held			Principal activities
		2009	2008
		%		%
Bridex Singapore	Singapore	100		100	Import, export and supply of
Pte Ltd (1)					transformers and electrical
					products and investment
					holding.
Bridex Harwal Pte Ltd (1)	Singapore	100		100	Manufacture and supply of
					electrical switchgear.

– III-115 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

		Effective proportion	Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and
Name of subsidiary	and operation	voting power held			Principal activities
		2009	2008
		%		%
Quantum Automation	Singapore	52		52	Design, installation and
Pte Ltd (1)					maintenance of
					computerised automation
					and control systems.
SMB Electric Pte Ltd (1)	Singapore	100		100	Manufacture and supply of
					electrical switchgear.
SMB Electric Industries	Singapore	100		100	Manufacture and supply of
Pte Ltd (1)					electrical switchgear.
SMB Electric Systems	Singapore	100		100	Manufacture and supply of
Pte Ltd (1)					electrical switchgear.
SMB Harwal Electric	Australia	100		100	Manufacture and supply of
Pty Limited (3)					electrical switchgear.
SMB United Industries	Malaysia	100		100	Investment holding.
Sdn Bhd (2)
MW Dynamics Pte Ltd	Singapore	–		50	Plumbing and electrical
(1)(10)					contracting and trading
					and installation of sanitary
					and bathroom accessories.
Subsidiaries of Bridex
Singapore Pte Ltd
Bridex Australia Pty	Australia	100		100	Distribution of electrical and
Limited (7)					electronic products.
Bridex Electric	Philippines	100		100	Distribution of electrical and
Philippines, Inc. (4)					electronic products.
EDMI Limited (1)	Singapore	59		56	Manufacture and
					distribution of electronic
					revenue meters.
Subsidiaries of SMB
United Industries
Sdn Bhd
Brighten Switchboard	Malaysia	100		100	Manufacture, dealing,
Builders (M)					installation and repair of
Sdn Bhd (2)					electrical switchboards and
					appliances.
SMB Switchgear &	Malaysia	100		100	Manufacture and sale of
Engineering					metal in-housing for
Sdn Bhd (2)					electrical switchboards.

– III-116 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Effective proportion Country of of ownership incorporation interests and Name of subsidiary and operation voting power held Principal activities 2009 2008 % % Subsidiary of Brighten Switchboard Builders (M) Sdn Bhd SMB Brighten Malaysia 100 100 Dealing, installation and Switchboard repair of electrical Engineering switchboards and Sdn Bhd[(2)] appliances. Subsidiaries of EDMI Limited EDMI International People’s 59 56 Provision of services and Trading (Shanghai) Republic of trading of electronic Co., Ltd[(5)] China equipment. EDMI Meters Sdn Bhd[(6)] Malaysia 59 56 Provision of services and after sales support for electronic revenue meters and supply of electronic components. EDMI Pty Ltd[(7)] Australia 59 56 Design and distribution of electronic revenue meters. EDMI Philippines Inc[(4)] Philippines 59 56 Sale of electronics revenue meters, supply of electronic components and provision of service and after sale support. EDMI Gas Pty Ltd Australia 59 – Sale and manufacture of (Formerly known as mechanical gas measuring Atlas Measurement components. Pty Ltd)[(7)][(11)] Subsidiaries of Quantum Automation Pte Ltd eSwitch Engineering Singapore 31 31 Trading, general importers Pte Ltd[(1)] and exporters, engineering and electrical works. Quantum Automation Singapore 52 52 General trading, sales and (Asia) Pte Ltd[(1)] distribution of automation products. Quantum Automation People’s 52 52 Design, installation and Systems (Shanghai) Republic of maintenance of Co., Ltd[(8)] China computerised automation

• 56 Sale of electronics revenue meters, supply of electronic components and provision of service and after sale support.

• 31 Trading, general importers and exporters, engineering and electrical works.

• 52 General trading, sales and distribution of automation products.

• 52 Design, installation and maintenance of computerised automation and control systems.

– III-117 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

		Effective proportion	Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and
Name of subsidiary	and operation	voting power held			Principal activities
		2009	2008
		%		%
QA Systems Integration	Malaysia	52		52	Supply, contract, design and
(M) Sdn Bhd (2)					install, commission and
					maintenance of advanced
					computerised automation
					and control systems for
					building, industrial and
					commercial application,
					and dealing in engineering
					products.
Subsidiary of SMB
Electric Pte Ltd
SMB Electric (Xiamen)	People’s	100		100	Manufacture and supply of
Co., Ltd (9)	Republic of				electrical switchgears and
	China				components.

• (1) Audited by Deloitte & Touche LLP, Singapore.

• (2) Audited by overseas practices of Deloitte Touche Tohmatsu.

• (3) Audited by RSM Bird Cameron, Australia.

• (4) Audited by Ramon F. Garcia & Company, CPA, Philippines.

• (5) Audited by Shanghai Zhong Hui Certified Public Accountants, People’s Republic of China.

• (6) Audited by Crowe Horwath, Kuala Lumpur.

• (7) Audited by WHK Horwath, Australia.

• (8) Audited by Shanghai Zhonghua Huyin Certified Public Accountants, People’s Republic of China.

• (9) Audited by Xiamen Hong Zheng Certified Public Accountants, People’s Republic of China.

• (10) In 2008, this was deemed to be a subsidiary of the company as the company exercises control over the entity. In 2009, this subsidiary was disposed to a non-related party (Note 39).

• (11) The entity was acquired on April 1, 2009 (Note 40).

14 ASSOCIATES

Cost of investment in associates Share of post-acquisition reserve Adjustments on unrealised gain on transactions with a related party Carrying amount	Group 2009 2008 $’000 $’000 1,213 1,108 (298) 39 (95) (134) 820 1,013	Group 2009 2008 $’000 $’000 1,213 1,108 (298) 39 (95) (134) 820 1,013
		1,013

– III-118 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Details of the group’s associates at December 31, 2009 are as follows:

		Proportion of	Proportion of
	Country of	ownership interests
	incorporation	and voting
Name of associate	and operation	power held		Principal activities
		2009	2008
		%	%
Associate of SMB
Electric Xiamen
Co., Ltd
Yang Zhou Long Tai	People’s	30	40	Manufacturing and supply of
(Formerly known as	Republic of			electrical switchgear and
Baoying Yanlord SMB	China			components.
Electric Co., Ltd) (3)
Associate of EDMI
Limited
Power House	Thailand	29	28	Manufacturing and sale of
Technology Company				electronic revenue meters.
Limited (1) (2)

(1) Audited by V.R. Accounting Solution Co., Ltd., Thailand.

(2) The associate is 49% held by a subsidiary, EDMI Limited. EDMI Limited is 59% (2008: 56%) held by the company, resulting in an effective interest of approximately 29% (2008: 28%) held by the group.

(3) Audited by Bao Ying Ren Yang, Certified Public Accountants, People’s Republic of China.

Summarised financial information in respect of the group’s associates is set out below:

Total assets Total liabilities Group’s share of associates’ net assets Adjustment on unrealised gain on transactions with a related party Net group’s share of associates’ net assets Revenue Losses for the year Group’s share of associates’ losses for the year	Group 2009 2008 $’000 $’000 10,196 6,467 (7,268) (3,719 2,928 2,748	Group 2009 2008 $’000 $’000 10,196 6,467 (7,268) (3,719 2,928 2,748
		2,748
	915 (95)	1,147 (134
	820 8,757 (862) (361)	1,013
		7,718
		(525
		(222

– III-119 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

15 JOINT VENTURES

Capital contribution to joint venture (a) Share of post acquisition reserve (b) Additional fund provided to joint venture	Group 2009 2008 $’000 $’000 657 608 (471) (328) 186 280 325 – 511 280	Group 2009 2008 $’000 $’000 657 608 (471) (328) 186 280 325 – 511 280
		280 –
		280

The additional fund provided to the joint venture is interest-free. It has been provided to the joint venture as additional capital for its operating needs.

• (a) The capital contribution comprises contribution to Wallaby Metering Systems Private Limited of $657,000 (2008: $607,000).

(b) In 2008, the unrecognised share of loss for the joint ventures was approximately $3,000 as the group considers the amount to be immaterial.

Details of the joint ventures of the group at December 31, 2009 are as follows:

		Proportion of	Proportion of
	Country of	ownership interests
	incorporation	and voting
Name of joint venture	and operation	power held		Principal activities
		2009	2008
		%	%
Joint ventures of EDMI
Limited
Wallaby Metering	India	30	28	Design, manufacture and
Systems Private				marketing of electronic
Limited (1)				energy meters and systems
				for automatic energy
				reading management.
Advanced Meter	Singapore	–	28	Dormant since 2006. Striked
Software Pte Ltd				off and ceased to exist in
				2009.

(1) The entity is incorporated on July 20, 2007 and is insignificant to the results of the group as at year end.

– III-120 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Summarised financial information in respect of the group’s joint ventures is set out below:

Total assets Total liabilities Revenue Loss for the year	Group 2009 2008 $’000 $’000 750 706 (378) (199) 372 507 97 37 (312) (540)	Group 2009 2008 $’000 $’000 750 706 (378) (199) 372 507 97 37 (312) (540)
		507
		37
		(540)

16 AVAILABLE-FOR-SALE INVESTMENTS

						Group		Company
						2009	2008	2009	2008
						$’000	$’000	$’000	$’000
Quoted	equity	shares,	at	fair	value	587	845	57	32

The investments in quoted equity securities offer the group the opportunity for returns through dividend income and fair value gains.

The fair value of these securities are based on the quoted closing market prices on the last market day of the financial year.

The group’s and company’s available-for-sale investments that are not denominated in the functional currencies of the respective entities are as follows:

		Group		Company
		2009	2008	2009	2008
		$’000	$’000	$’000	$’000
British	pound	530	813	–	–

– III-121 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

17 INTANGIBLE ASSETS

Group Cost: At January 1, 2008 Exchange differences Amount written off At December 31, 2008 Exchange differences Arising from acquisition of a subsidiary (Note 40) Additions At December 31, 2009 Amortisation: At January 1, 2008 Exchange differences Amortisation for the year Amount written off At December 31, 2008 Exchange differences At December 31, 2009 Impairment: At January 1, 2008 Eliminated on write off At December 31, 2008 and 2009 Carrying amount: At December 31, 2009 At December 31, 2008	Goodwill on acquisition of business $’000 293 (76) –	Patents, trademarks and licenses $’000 377 (80) –	Software development costs $’000 520 – (520)	Product development costs $’000 911 – (467)	Total $’000 2,101 (156) (987)
	217 808 3,836 – 4,861 – – – – – – – – – –	297 78 – – 375 339 (78) 36 – 297 78 375 – – –	– – – – – 478 – 29 (507) – – – – – –	444 13 – 151 608 677 – 154 (387) 444 – 444 70 (70) –	958 899 3,836 151
					5,844
					1,494 (78) 219 (894)
					741 78
					819
					70 (70)
					–
	4,861 217	– –	– –	164 –	5,025
					217

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination.

– III-122 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The carrying amount of goodwill, net of exchange differences, had been allocated to CGUs which are based on the subsidiaries’ operating divisions as follows:

Manufacturing division of SMB Harwal Electric Pty Limited Wholesale division of Bridex Australia Pty Limited Wholesale division of EDMI Gas Pty Ltd	Group 2009 2008 $’000 $’000 77 61 214 156 4,570 – 4,861 217	Group 2009 2008 $’000 $’000 77 61 214 156 4,570 – 4,861 217
		217

The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and risks specific to the CGUs. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The group prepares cash flow forecasts derived from the most recent financial budgets approved by management and extrapolates cash flows for the following four years based on an estimated growth rate of 1% to 10% (2008: 5% to 10%) per annum. This rate does not exceed the average long-term growth rate for the relevant markets.

The rate used to discount the forecast cash flows from the above operating divisions ranges from 12.9% to 19.6% (2008: 13.9%) per annum.

As at December 31, 2009, any reasonably possible change to the key assumptions applied is not likely to cause the recoverable amounts to be below the carrying amounts of the CGUs.

18 OTHER RECEIVABLES

				Group
				2009	2008
				$’000	$’000
Loan	to	outside	party	–	499

During the year, the interest-free loan to outside party was applied towards the consideration payable for the acquisition of EDMI Gas Pty Ltd (Note 40).

The group’s long term receivables that are not denominated in the functional currencies of the respective entities are as follows:

		Group
		2009	2008
		$’000	$’000
Australian	dollar	–	499

– III-123 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

19 DEFERRED TAX ASSETS

At beginning of year Exchange differences Credit to profit and loss Over provision in prior year Arising from acquisition of a subsidiary (Note 40) Reclassification (Note 25) At end of year	Group 2009 2008 $’000 $’000 868 1,027 161 (151) 311 4 (1) – 109 – (429) (12) 1,019 868	Group 2009 2008 $’000 $’000 868 1,027 161 (151) 311 4 (1) – 109 – (429) (12) 1,019 868
		868

The following are the major deferred tax assets recognised by the group and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2008 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 Exchange differences – 160 (Charge) Credit to profit and loss (9) 157 Over provision in prior year – (1) Arising from acquisition of a subsidiary – 109 Reclassification – (429) At December 31, 2009 (18) 736	Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2008 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 Exchange differences – 160 (Charge) Credit to profit and loss (9) 157 Over provision in prior year – (1) Arising from acquisition of a subsidiary – 109 Reclassification – (429) At December 31, 2009 (18) 736	Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2008 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 Exchange differences – 160 (Charge) Credit to profit and loss (9) 157 Over provision in prior year – (1) Arising from acquisition of a subsidiary – 109 Reclassification – (429) At December 31, 2009 (18) 736	Tax losses $’000 248 (14) (220) –	Others $’000 252 (2) (115) (12)	Total $’000 1,027 (151) 4 (12)
	(9) – (9) – – –	740 160 157 (1) 109 (429)	14 (1) 61 – – –	123 2 102 – – –	868 161 311 (1) 109 (429)
	(18)	736	74	227	1,019

– III-124 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

20 BANK BORROWINGS

Bank overdraft A Bank overdraft B Trust receipts A Trust receipts B Trust receipts C Banker’s acceptance Short term bank loan A Short term bank loan B Bank loan A Bank loan B Bank loan C Bank loan D Bank loan E Total The borrowings are repayable as follows: On demand or within one year In the second to fifth year inclusive After five years Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Group 2009 2008 $’000 $’000 1,598 1,778 – 703	Group 2009 2008 $’000 $’000 1,598 1,778 – 703
	1,598 49 1,752 – 112 1,913 3,000 – 3,000 828 201 544 379 3,000 4,952	2,481
		959 – 225 175
		1,359
		3,000 449
		3,449
		864 213 760 – –
		1,837
	11,463	9,126
	6,926 3,806 731 11,463 (6,926)	7,566 780 780
		9,126 (7,566
	4,537	1,560

Bank overdraft A is repayable on demand. The average effective interest rate approximated 5.3% (2008: 5.3%) per annum during the year and is determined based on prime lending rate.

In 2008, bank overdraft B was repayable on demand. The average effective interest rate approximated Nil (2008: 5.9%) per annum and was determined based on 1% plus prime rate.

Trust receipts A have a repayment term of 90 to 180 days (2008: 90 to 180 days). The average effective interest rate approximated 6.4% (2008: 5.6%) per annum during the year and is based on 1% to 1.5% (2008: 1% to 1.5%) plus prime rate.

Trust receipts B have a repayment term of 60 to 90 days (2008: Nil). The average effective interest rate approximated 1.9% (2008: Nil) per annum during the year.

– III-125 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

In 2008, trust receipts C have a repayment term 150 days. The average effective interest rate approximated 6% per annum year and was determined based on 1% plus prime rate.

Banker’s acceptance have a repayment term of 133 days (2008: 150 days). The average effective interest rate approximated 3.8% (2008: 5.3%) per annum during the year. It is covered by a corporate guarantee by the company of $943,000 (2008: $955,000).

Short term bank loan A is a short-term revolving loan which is repayable on demand. The average effective interest rate approximated 2.4% per annum (2008: 3.4%) which is determined based on 0.85% above cost of fund. The loan is renewed every month.

In 2008, short term bank loan B had a tenure of 6 months. The average effective interest rate approximated 8.8% per annum which was determined based on 1.5% above the bank lending rate. It was covered by a corporate guarantee by the company of $499,000.

Bank loan A bears fixed interest at 2.65% and 3% per annum, for the first year (2004) and second year respectively; 1.37% per annum below prevailing board rates for the third and fourth years; and 1.25% per annum prevailing board rates for subsequent years. It is repayable in 240 monthly instalments effective from November 2004.

Bank loan B bears fixed interest at 4.5% and 5% per annum for the first year (2006) and second year respectively; and 0.75% per annum above the bank’s commercial financing rate for subsequent years. It is repayable in 180 monthly instalments from September 2006.

Bank loan C bears fixed interest rate at 4.25% per annum for the first year of drawn down, 4.75% per annum for second year of drawndown and at 0.5% bank’s commercial financing rate for subsequent years. It is repayable in 60 monthly instalments from May 2007.

Bank loan D is unsecured and bears fixed interest rate of 5% per annum. This loan was raised on January 22, 2009. Repayments commenced in November 2009 and will continue until October 2012.

Bank loan E is unsecured and bears interest rate of 1.75% per annum over Singapore Interbank Offered Rate (“SIBOR”). This loan was raised on January 30, 2009. Repayments will commence in January 2011 and continue until December 2015.

Bank overdraft A, trust receipts A and bank loan A and B are secured by a legal mortgage on a subsidiary’s leasehold property and a corporate guarantee of $5,105,000 (2008: $5,105,000) provided by the company.

In 2008, bank overdraft B and trust receipts C are covered by corporate guarantee from the company of $1,500,000 and personal guarantee by a director of $1,500,000. In 2009, the amounts were fully repaid.

Bank loan C and short term bank loan A are secured by a legal mortgage on subsidiary’s leasehold property and a corporate guarantee of $20,013,000 (2008: $20,013,000) by the company.

Trust receipts and bank loans are mainly arranged at floating rates thus exposing the group to cash flow interest rate risk.

The group’s borrowings are denominated in the functional currencies of the respective borrowing entities.

21 TRADE PAYABLES

Outside parties Associates (Note 14) Related parties (Note 5)	Group 2009 2008 $’000 $’000 34,435 28,918 249 179 – 29 34,684 29,126	Group 2009 2008 $’000 $’000 34,435 28,918 249 179 – 29 34,684 29,126
		29,126

At December 31, 2009, the group has $26,000 (2008: $157,000) of trade payables arising from contract work which are due for settlement after more than 12 months. These amounts have been classified as current because they are expected to be realised in the normal operating cycle.

– III-126 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The credit period on purchases of goods is generally 30 to 120 days (2008: 30 to 120 days). No interest is charged on outstanding trade payables.

The group’s trade payables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2009	2008
	$’000	$’000
Singapore dollar	34	64
United States dollar	10,519	9,622
Euro	619	760
British pound	156	91
Others	55	70

22 OTHER PAYABLES

Subsidiaries (Note 13) Associates (Note 14) Related parties (Note 5) Amounts owing to directors Salary-related accruals Sundry creditors Accrued expenses Advances from customers Financial guarantee contracts Less: Non-current portion of salary-related accruals	Group 2009 2008 $’000 $’000 – – 1 – – 216 1,907 951 9,909 3,581 1,564 2,260 2,462 2,385 882 388 – –	Group 2009 2008 $’000 $’000 – – 1 – – 216 1,907 951 9,909 3,581 1,564 2,260 2,462 2,385 882 388 – –	Company 2009 2008 $’000 $’000 316 212 – – – – 1,888 951 1,120 98 1 40 179 190 – – 47 47	Company 2009 2008 $’000 $’000 316 212 – – – – 1,888 951 1,120 98 1 40 179 190 – – 47 47
	16,725 (3,403)	9,781 (310)	3,551 (937)	1,538 (55
	13,322	9,471	2,614	1,483

The amounts owing to directors are unsecured, interest-free and repayable on demand. They comprise accrued fees and performance bonus.

The company has provided financial guarantees to banks in respect of loans and credit facilities extended to certain subsidiaries.

Salary-related accruals include an amount of $3,403,000 (2008: $310,000) in respect of key management personnel’s remuneration under a Performance Bonus Scheme (the “Scheme”), which is payable after 2011 (Note 5). Certain key management personnel of the Group’s subsidiaries are remunerated under this Scheme.

– III-127 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Persuant to this Scheme, these key management personnel are entitled to bonus payout calculated at certain percentage of profits in excess of the financial targets set out under this Scheme. The Scheme covers the financial year ended December 31, 2008 to financial year ended December 31, 2011. Movement in the provision for directors’ performance bonus is as follows:

Balance at beginning of the year Payment during the year Charge to profit or loss (Note 5) Balance at end of the year	Group 2009 2008 $’000 $’000 310 – (310) – 3,403 310 3,403 310	Company 2009 2008 $’000 $’000 55 – (55) – 937 55 937 55	Company 2009 2008 $’000 $’000 55 – (55) – 937 55 937 55
			55

The group’s and company’s other payables that are not denominated in the functional currencies of the respective entities are as follows:

			Group		Company
			2009	2008	2009	2008
			$’000	$’000	$’000	$’000
United	States	dollar	89	324	–	–
Euro			220	68	–	–
British	pound		74	33	–	–
Others			17	–	–	–

23 DERIVATIVE FINANCIAL INSTRUMENTS

				Group
				2009	2008
				Liabilities	Liabilities
				$’000	$’000
Forward	foreign	exchange	contract	60	–

The forward foreign exchange contract has a maturity date within 1 month from the end of the financial year.

At the end of the reporting period, the total notional amount of outstanding forward foreign exchange contract to which the group is committed is as follows:

	Average exchange	Average exchange
	rate		**Foreign **	currency	**Contract **	value	**Fair **	value
	2009	2008	2009	2008	2009	2008	2009	2008
			NZ$’000	NZ$’000	$’000	$’000	$’000	$’000
Outstanding contract
Sell New Zealand dollars
in exchange for
Singapore dollars	1.02	–	300	–	306	–	60	–

The fair value of forward foreign exchange contract is estimated based on quoted forward exchange rates and yield curves derived from quoted interest rates matching maturity of the contracts. Changes in the fair value of the forward foreign exchange contract are recorded in profit or loss.

– III-128 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

24 FINANCE LEASES

Group Amounts payable under finance leases: Within one year In the second to fifth year inclusive After five years Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months Company Amounts payable under finance leases: Within one year In the second to fifth year inclusive Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments 2009 2008 $’000 $’000 576 524 924 940 32 –	Minimum lease payments 2009 2008 $’000 $’000 576 524 924 940 32 –	Minimum lease payments 2009 2008 $’000 $’000 576 524 924 940 32 –	Present value of minimum lease payments 2009 2008 $’000 $’000 499 450 838 841 32 –	Present value of minimum lease payments 2009 2008 $’000 $’000 499 450 838 841 32 –
	1,532 (163)		1,464 (173)	1,369 NA	1,291 NA
	1,369 108 108 216 (28)		1,291	1,369	1,291
				(499)	(450
				870	841
		)	108 216 324 (41)	94 94 188 NA	94 189
	216 (28				283 NA
	188		283	188	283
				(94)	(94
				94	189

The term of finance leases entered into is between 3 to 7 years (2008: 3 to 7 years).

For the year ended December 31, 2009, the weighted average effective borrowing rates for the group is 6% (2008: 6%) per annum. The effective borrowing rate for the company was 5.6% (2008: 5.6%) per annum. Interest rates are fixed at the contract date, and thus expose the group and company to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

All lease obligations are denominated in the functional currency of the respective entities.

– III-129 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The fair value of the group’s lease obligations approximate their carrying amounts.

The group’s and company’s obligation under finance leases are secured by the leased assets.

25 DEFERRED TAX LIABILITIES

At beginning of year Exchange differences Charge (Credit) to profit and loss (Over) Under provision in prior years Effect of change in tax rate Disposal of a subsidiary (Note 39) Reclassification (Note 19) At end of year	Group 2009 2008 $’000 $’000 1,481 1,324 38 (13) 564 193 (12) (11) (41) – (1) – (429) (12) 1,600 1,481	Company 2009 2008 $’000 $’000 2 5 – – – (3) 1 – – – – – – – 3 2	Company 2009 2008 $’000 $’000 2 5 – – – (3) 1 – – – – – – – 3 2
			2

The following are the major deferred tax liabilities (assets) recognised by the company and the group and movements thereon during the year:

Group At January 1, 2008 Exchange differences Charge to profit and loss (Over) Under provision in prior years Reclassification At December 31, 2008 Exchange differences Charge to profit and loss (Over) Under provision in prior years Effect of change in tax rate Disposal of a subsidiary Reclassification At December 31, 2009 Company At January 1, 2008 Credit to profit and loss At December 31, 2008 Charge to profit and loss At December 31, 2009	Accelerated tax depreciation $’000 1,283 (9) 183 (13) –	Allowance for doubtful receivables $’000 – – – – –	Tax losses $’000 – – – – –	Others $’000 41 (4) 10 2 (12)	Others $’000 41 (4) 10 2 (12)	Total $’000 1,324 (13) 193 (11) (12)
	1,444 (3) 123 (9) (41) (1) –	– 20 225 – – – (429)	– – (16) – – – –	37 21 232 (3) – – –		1,481 38 564 (12) (41) (1) (429)
	1,513	(184)	(16)	287 1,600 Accelerated tax depreciation $’000 5 (3) 2 1 3		1,600
					2 1
					3

– III-130 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

26 SHARE-BASED PAYMENTS

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed profits of certain overseas subsidiaries for which deferred tax liabilities have not been recognised is $3,326,000 (2008: $1,502,000). No liability has been recognised because the group controls the dividend policy of the subsidiaries and has determined that the profits from these subsidiaries will not be distributed in the foreseeable future.

Share award scheme

(a) SMB Performance Share Plan (the “Plan”)

The Plan was approved by the shareholders of the company at an Extraordinary General Meeting held on April 30, 2009. Awards granted under the Plan are principally performance-based with performance targets to be set over a multi-year performance period. Performance targets set are intended to be based on medium-term corporate objectives covering market competitiveness, quality of returns, business growth and productivity growth. The performance targets are stretched targets aimed at sustaining long term growth.

The committee administering this scheme comprises independent directors: Koh Ah Huat (Chairman), Henry Hoe Leong Seng and Tay Teng Tiow.

The Committee shall decide, in relation to each Award to be granted to a Participant:

• (i) the Award date;

• (ii) the number of shares comprised under an Award or their equivalent in cash (based on the aggregate market value of the shares which are the subject of the Award) or if a combination of both, the proportion between the shares and the cash which are the subject of the Award;

• (iii) the performance target(s) (if any), the performance period during which such performance target(s) are to be satisfied, if any; and

• (iv) any other condition which the Committee may determine in relation to that Award.

The total number of new shares which may be issued pursuant to Awards granted under the proposed Plan, when added to the number of new shares issued and issuable in respect of all Awards granted thereunder, shall not exceed 15% of the issued share capital of the company on the day preceding the relevant date of Award.

No Awards under the plan have been granted since the commencement of the plan.

Equity-settled share option scheme

• (a) SMB Share Option Scheme 2001

This scheme was approved by the shareholders on September 7, 2001. As at the beginning of the year, there were no unissued shares under option under this scheme. During the financial year, the SMB Share Option Scheme 2001 was terminated.

• (b) EDMI Share Option Scheme 2003

Each share option entitles the directors (excluding executive directors who are substantial shareholders) and employees (excluding employees who are also controlling shareholders and their associates) of EDMI Limited group to subscribe for one new ordinary share in EDMI Limited at an exercise price determined at the average price of EDMI Limited’s share traded in the Singapore Exchange Securities Trading Limited for the three consecutive trading days immediately preceding the offer date of that option, rounded up to the nearest whole cent in the event of fractional prices.

The aggregate nominal amount of shares that the committee may grant options, when added to the aggregate nominal amount of shares issued and issuable under the EDMI Share Option Scheme 2003 shall not exceed 15% of the issued share capital of EDMI Limited on the date immediately preceding the offer date of the option.

– III-131 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

To qualify for the EDMI Share Option Scheme 2003, eligible employees must be in full time service of EDMI Limited group for at least one year on or prior to the relevant offer date. However, the committee administering the scheme may at its discretion abridge the one-year service requirement in respect of any employee.

The options are granted for a consideration of $1.00 for all the shares in respect of which the options are granted. The options may be exercised after one year from the date of the grant subject to the condition that up to 25%, 50% and 75% of the options may be exercised prior to the second, third and fourth anniversary of the offer date of options respectively. The shares under option may be exercised in full or in multiples of 1,000 shares on payment of the exercise price. Options granted will be cancelled upon the occurrence of certain events such as cessation of employment.

Options are exercisable at a price based on the average of the last dealt prices on the Singapore Exchange Securities Trading Limited, for a share over the three trading days immediately preceding the grant of the option, rounded to the nearest whole cent in the event of fractional prices. The exercisable period is 10 years for directors and employees, and 5 years for independent directors of EDMI Limited group. If the options remain unexercised after the specified period from the date of grant, the options expire. Options are forfeited if the participant leaves the EDMI Limited group before the options vest.

Details of the share options outstanding during the year are as follows:

Outstanding at beginning of year Exercised during the year Lapsed during the year Outstanding at end of year Exercisable at end of year	EDMI Limited 2009 2008 Number of share options Weighted average exercise price Number of share options Weighted average exercise price ’000 $ ’000 $ 11,965 0.22 15,505 0.23 (1,400) 0.13 (590) 0.13 (500) 0.13 (2,950) 0.31 10,065 11,965 8,880 6,728

The weighted average share price at the date of exercise for share options exercised during the year was $0.13 (2008: $0.22). The options outstanding at the end of the year have a weighted average remaining contractual life of 4.6 years (2008: 5.6 years) for executive share options and 0.1 years (2008: 1.1 years) for non-executive share options.

No share options were granted in 2009.

During the year, the group recognised total expense (net of minority interests) of $116,000 (2008: $131,000) related to equity-settled share-based payment transactions under the EDMI Share Option Scheme 2003.

– III-132 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

27 SHARE CAPITAL

		**Group and **	Company
	2009	2008	2009	2008
	’000	’000	$’000	$’000
	Number of
	ordinary shares
Issued and paid up:
At end and beginning of year	479,752	479,752	75,113	75,113

The ordinary shares, which have no par value, carry one vote per share and do not carry a right to fixed dividends.

28 RESERVES

Capital reserve

The share option reserve arises on the grant of share option to directors and employees under the employee share option plan. Further information about share-based payments is disclosed in Note 26 of the financial statements.

Revaluation reserve

The investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, the portion of the reserve that relates to that financial asset is effectively realised, and is recognised in profit or loss. Where a revalued financial asset is impaired, the portion of the reserve that relates to that financial asset is recognised in profit or loss.

Currency translation reserve

Exchange differences relating to the translation from the functional currencies of the group’s foreign subsidiaries into Singapore dollars are brought to account by recognising those exchange differences in other comprehensive income and accumulating them in a separate component of equity under the header of currency translation reserve.

29 REVENUE

Sale of goods Contract revenue Service income	Group 2009 2008 $’000 $’000 173,215 193,756 46,887 13,448 6,406 6,143 226,508 213,347	Group 2009 2008 $’000 $’000 173,215 193,756 46,887 13,448 6,406 6,143 226,508 213,347
		213,347

– III-133 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

30 OTHER OPERATING INCOME

Interest income from non-related companies Dividend income from non-related companies Government grant Miscellaneous income	Group 2009 2008 $’000 $’000 185 357 3 7 1,533 11 1,955 546 3,676 921	Group 2009 2008 $’000 $’000 185 357 3 7 1,533 11 1,955 546 3,676 921
		921

31 OTHER GAINS AND (LOSSES)

Gain on disposal of property, plant and equipment Net foreign exchange gain (loss) Loss on dilution of shareholding interest in a subsidiary Gain on dilution of shareholding interest in an associate Impairment loss on available-for-sale investments Gain on disposal of a subsidiary Gain on acquisition of shareholding interest in a subsidiary Gain on disposal of available-for-sale investments Release of fair value reserve on disposal of available-for-sale investments Intangible assets written off Changes in fair value of financial derivative instruments (Note 23)	Group 2009 2008 $’000 $’000 36 119 4,027 (3,149) (79) (26) 73 – – (190) 277 – 643 – 2,263 – (1,844) – – (23) (60) – 5,336 (3,269)	Group 2009 2008 $’000 $’000 36 119 4,027 (3,149) (79) (26) 73 – – (190) 277 – 643 – 2,263 – (1,844) – – (23) (60) – 5,336 (3,269)
		(3,269)

32 INCOME TAX EXPENSE

Current Deferred Over provision in prior years Income tax expense for the year	Group 2009 2008 $’000 $’000 5,085 3,463 212 189 (19) (484) 5,278 3,168	Group 2009 2008 $’000 $’000 5,085 3,463 212 189 (19) (484) 5,278 3,168
		3,168

Domestic income tax is calculated at 17% (2008: 18%) of the estimated assessable profit for the year. Taxation for foreign entities is calculated at the rates prevailing in the relevant jurisdictions.

– III-134 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The total charge for the year can be reconciled to the accounting profit as follows:

Profit before tax Income tax expense Average effective tax rate Tax at the domestic income tax rate Tax effect of expenses that are not deductible in determining taxable profit Over provision in prior years Tax effect of utilisation of deferred tax benefit previously not recognised Deferred tax benefit not recognised Effect of different tax rates of subsidiaries operating in other jurisdictions Tax exemption and rebate Effect of change in tax rate Other items Average effective tax rate	2009 2008 $’000 $’000 29,256 18,181 5,278 3,168 18.0% 17.4% Group 2009 2008 % % 17.0 18.0 – 3.1 (0.1) (2.6) (0.1) (0.1) 0.6 0.5 1.2 0.9 (0.8) (1.8) (0.2) (0.3) 0.4 (0.3) 18.0 17.4	2008 $’000 18,181 3,168 17.4%
		17.4

The group has tax losses carryforwards available for offsetting against future taxable income as follows:

Amount at beginning of year Exchange differences Adjustments Amount in current year Amount utilised in current year Disposal of a subsidiary Amount at end of year Deferred tax benefit on above: – recognised – not recognised	Group 2009 2008 $’000 $’000 5,250 5,635 64 (150) 5 325 971 451 (155) (1,011) (1,182) – 4,953 5,250 67 14 984 1,054	Group 2009 2008 $’000 $’000 5,250 5,635 64 (150) 5 325 971 451 (155) (1,011) (1,182) – 4,953 5,250 67 14 984 1,054
		5,250
		14 1,054

Deferred tax benefits vary from the Singapore statutory tax rate as it includes deferred tax on overseas operation.

The potential tax savings relating to tax losses carried forward are recognised as deferred tax assets only when there is reasonable expectation of realisation in the foreseeable future. The tax losses can be carried forward to future periods subject to the conditions imposed by the law in the respective tax jurisdictions.

– III-135 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

33 PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging (crediting):

Depreciation, amortisation and impairment: Depreciation of property, plant and equipment Depreciation of assets on lease Amortisation: Patents, trademarks and licences (1) Software development cost (2) Product development cost (1) Product development cost (2) Impairment loss on available-for-sale investments Total depreciation, amortisation and impairment Directors’ remuneration: Company’s directors Subsidiaries’ directors Total directors’ remuneration Employee benefits expense (including directors’ remuneration): Cost of defined contribution plans Others Total employee benefits expense Research costs (3) Non-audit fees paid/payable to: Auditors of the company Other auditors Cost of inventories recognised as expense Allowance (Reversal of allowance) for inventories Allowance for doubtful trade receivables Allowance for doubtful non-trade receivables Allowance for foreseeable losses on contracts Inventory written off Bad debts written off	Group 2009 2008 $’000 $’000 3,220 3,054 44 – – 36 – 29 – 76 – 78 – 190 3,264 3,463	Group 2009 2008 $’000 $’000 3,220 3,054 44 – – 36 – 29 – 76 – 78 – 190 3,264 3,463
		3,463
	3,535 5,741	2,714 3,033
	9,276	5,747
	2,954 49,024	2,973 44,704
	51,978 3,295 66 15 147,238 2,486 476 – 836 161 37	47,677
		3,076 60 12 141,042 (66 149 141 831 14 106

(1) These are included in general and administrative expenses in the consolidated statement of comprehensive income.

(2) These are included in cost of sales in the consolidated statement of comprehensive income.

(3) These are included in other operating expenses in the consolidated statement of comprehensive income.

34 EARNINGS PER SHARE

The calculation of basic earnings per share is based on the group’s net profit attributable to owners of the company of $21,221,000 (2008: $13,563,000) divided by the ordinary shares of 479,751,999 shares in issue throughout both years.

– III-136 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

For both years, fully diluted earnings per share is the same as basic earnings per share as there are no dilutive shares outstanding at the end at both years.

35 COMMITMENTS

(i) Financial commitment

	Group		Company
	2009	2008	2009	2008
	$’000	$’000	$’000	$’000
Performance guarantee – unsecured	4,772	1,754	–	–
Performance guarantee – secured	4,819	5,185	–	–
Bankers’ guarantee – unsecured	289	–	–	–
Bankers’ guarantee – secured	259	176	–	–
Corporate guarantees to banks in
connection with credit facilities of
subsidiaries – unsecured	–	–	44,200	44,823

The maximum estimated amount that the group and the company could become liable is shown above.

In addition to deposits amounting to approximately $197,000 (2008: $196,000) pledged to the bank for bank credit facilities, the securities for performance guarantee include legal mortgages on the subsidiaries’ leasehold properties.

(ii) Capital commitment

36

Purchase of plant and equipment OPERATING LEASE ARRANGEMENTS The group as lessee Minimum lease payments under operating leases recognised as an expense in the year	Group 2009 2008 $’000 $’000 349 500 Group 2009 2008 $’000 $’000 2,240 2,310

At the balance sheet date, the group has outstanding commitments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive After five years	Group 2009 2008 $’000 $’000 1,986 1,451 4,734 1,917 6,055 5,921 12,775 9,289	Group 2009 2008 $’000 $’000 1,986 1,451 4,734 1,917 6,055 5,921 12,775 9,289
		9,289

Operating lease payments represent rentals payable by the group for its leasehold land, certain of its factory and office premises, and office equipment. Leases are entered into for a period of one to thirty years.

– III-137 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Operating lease commitments stated above includes existing rental rates before deduction for discretionary rebates given by the landlord for certain premises. Certain rental rates are subject to future adjustments based on changes in the consumer price index.

The group as lessor

The group rents out its meters, which was previously classified as inventory, under operating leases. Service income earned during the year was $224,000 (2008: $Nil).

The agreements provide for service income to be earned as long as the customers’ faculties are tenanted and meter readings taken. There is no guaranteed minimum number of subscription to metered readings and correspondingly no fixed minimum operating lease income committed for future period.

Leases are negotiated and service income was fixed for an average term of five years.

37 SEGMENT INFORMATION

Segment revenue and expense:

The accounting policies of the reportable segments are the same as the group’s accounting policies described in Note 2. Segment revenue and expense are the operating revenue and expense reported in the group’s statement of comprehensive income that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital additions mainly include the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of accounts payable and accruals.

Products and services from which reportable segments derive their revenues

For management purposes, the group is organised into four main operating divisions: switchgear; power and technology; trading and distribution; and building services. These are also the divisions the group’s chief operating decision maker focused on for the purposes of resource allocation and assessment of segment performance. The group’s reportable segments under FRS 108, therefore, remained unchanged from 2008.

Principal activities of each reportable segment are as follows:

Switchgear	–	Manufacture and supply of electrical switchgear.
Power and technology	–	Manufacture and sale of electronic revenue meters for use
		principally by utility companies involved in the generation,
		distribution and supply of electricity; provision of electrical
		efficiency and energy management solutions.
Trading and distribution	–	Import, export and supply of electrical and electronic components
		and equipment.
Building services	–	Design, installation and maintenance of computerised automation
		and control systems; plumbing and electrical contracting and
		supply of related products.
Others	–	This comprise investment holding and corporate activities.

– III-138 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Information regarding the group’s reportable segments is presented below.

Segment revenues and results

2009 Revenue External revenue Inter-segment revenue Result Segment results Interest expense Interest income Share of results of associates Share of results of joint ventures Profit before income tax Income tax expense Profit after income tax 2008 Revenue External revenue Inter-segment revenue Result Segment results Interest expense Interest income Share of results of associates Share of results of joint ventures Profit before income tax Income tax expense Profit after income tax	Switchgear $’000 121,743 2,544 124,287	Power and technology $’000 69,266 541 69,807	Trading and distribution $’000 14,980 6,901 21,881	Building services $’000 20,519 14 20,533	Others $’000 – – –	Elimination $’000 – (10,000) (10,000)	Total $’000 226,508 –
							226,508
	16,215 116,684 1,810	8,504 56,125 511	3,783 15,620 8,413	796 24,918 –	744 – –	– – (10,734)	30,042 (454 185 (361 (156
							29,256 (5,278
							23,978
							213,347 –
	118,494 12,080	56,636 2,738	24,033 2,065	24,918 1,217	– 782	(10,734) –	213,347
							18,882 (553 357 (222 (283
							18,181 (3,168
							15,013

The accounting policies of the reportable segments are the same as the group’s accounting policies described in Note 2. Segment profit represents the profit earned by each segment with allocation of interest expense and income, share of profits of associates, joint ventures and income tax expense. This is the measure reported to the chief operation decision maker for the purposes of resource allocation and assessment of segment performance.

– III-139 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

2009 Segment assets Associates and joint ventures Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation 2008 Segment assets Associates and joint ventures Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation	Switchgear $’000 107,515 21,843 1,289 1,661 – 96,216 12,541 6,160 1,727 23	Power and technology $’000 78,042 17,501 1,676 1,168 198 56,334 13,705 864 954 232	Trading and distribution $’000 19,204 3,734 76 216 – 17,006 3,395 175 234 –	Building services $’000 14,831 7,420 86 135 – 17,533 8,541 64 252 –	Others $’000 10,622 3,188 12 84 – 2,815 1,357 12 106 –	Elimination $’000 – – – – – – – – – –	Total $’000 230,214 1,331 1,606
							233,151
							53,686 19,417
							73,103
							3,139 3,264 198
							189,904 1,293 1,712
							192,909
							39,539 15,099
							54,638
							7,275 3,273 255

– III-140 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible and financial assets attributable to each segment.

All assets are allocated to reportable segments other than investments in associates (Note 14), investments in joint venture (Note 15), available-for-sale investments and deferred tax assets. Goodwill has been allocated to reportable segments as described in Note 17. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

Geographical information

The group operates in five principal geographical areas namely Singapore, Oceania, Malaysia, Europe and Asia (excluding Singapore and Malaysia).

The group’s revenue from external customers and information about its non-current assets by geographical location is detailed below:

Singapore Oceania Malaysia Asia (excluding Singapore and Malaysia) Europe Others	Revenue from external customers 2009 2008 $’000 $’000 116,179 112,565 50,336 38,003 13,628 26,609 19,232 21,469 20,709 11,915 6,424 2,786 226,508 213,347	Non-current assets 2009 2008 $’000 $’000 29,960 31,836 8,817 1,969 4,551 4,584 1,412 1,201 – – – – 44,740 39,590	Non-current assets 2009 2008 $’000 $’000 29,960 31,836 8,817 1,969 4,551 4,584 1,412 1,201 – – – – 44,740 39,590
			39,590

Information about major customers

In 2009, revenue arising from a single customer of 10% or more of the Group’s total revenue amounted to $36,112,000 (2008: Nil). This is a customer of our switchgear division.

38 DIVIDENDS

In 2008, the company declared and paid a final dividend of 1.4 cents per ordinary shares (tax exempt one-tier) totalling $6,716,528 in respect of the financial year ended December 31, 2007.

In 2009, the company declared and paid a final dividend of 1.0 cent per ordinary shares (tax exempt one-tier) totalling $4,797,520 in respect of the financial year ended December 31, 2008.

In respect of the current year, the directors proposed that a final dividend of 1.5 cents per ordinary share (tax exempt one-tier) be paid to shareholders on May 21, 2010. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as liability in these financial statements. The proposed dividend is payable to all shareholders who are on the Register of Members as at May 7, 2010. Based on the number of shares as at February 26, 2010, the total estimated dividend to be paid is $7,196,000.

– III-141 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

39 DISPOSAL OF A SUBSIDIARY

In April 2009, the group disposed its subsidiary, MW Dynamics Pte Ltd.

Details of the disposal are as follows:

Book values of net assets (liabilities) disposed Non-current assets Property, plant and equipment Current assets Inventories Trade and other receivables Contract work-in-progress Cash and bank balances Total current assets Non-current liabilities Finance lease Deferred tax liability Total non-current liabilities Current liabilities Income tax payable Finance lease Trade and other payables Total current liabilities Net liabilities disposed Gain on disposal Total consideration Satisfied by: Cash Deferred consideration Net cash inflow arising on disposal: Cash consideration received Cash and cash equivalents disposed of	2009 $’000 49 3 987 26 4
	1,020
	(10 (1
	(11
	(5 (12 (1,118
	(1,135
	(77 277
	200
	100 100
	200
	100 (4
	96

The deferred consideration will be settled in cash by the purchaser in 2010.

– III-142 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

40 ACQUISITION OF A SUBSIDIARY

On April 1, 2009, EDMI Limited (a subsidiary) acquired 75% of the share capital of EDMI Gas Pty Ltd (formerly known as Atlas Measurement Pty Ltd) for a cash consideration of $3,902,000. On May 21, 2009, EDMI Limited acquired the remaining 25% of the share capital of EDMI Gas Pty Ltd from the two other shareholders for a cash consideration of $378,000. This transaction has been accounted for by the purchase method of accounting.

The net assets acquired in the transaction and the goodwill arising are as follows:

Net assets acquired: Plant and equipment Inventories Deferred tax asset Other current assets Employee entitlements Bank loan Bank overdraft Finance lease Goodwill Total consideration Net cash inflow arising on acquisition: Total cash consideration Add: Bank overdraft Less: Offset of loan receivable from EDMI Gas Pty Ltd Cash paid in statement of cash flow	Acquiree’s carrying amount before combination $’000 832 288 109 9 (363) (413) (276) (62)	Fair value adjustments $’000 – 207 – (4) 117 – – –		Fair value $’000 832 495 109 5 (246) (413) (276) (62)
	124	320		444 3,836
	(Note 18)			4,280
				2009 $’000 (4,280) (276) 653
				(3,903)

The goodwill arising on the acquisition of EDMI Gas Pty Ltd is attributable to the anticipated positive net cash flows from the distribution of the group’s products in the new markets and the anticipated future operating synergies from the combination.

EDMI Gas Pty Ltd contributed approximately $4,408,000 revenue and $185,000 to the Group’s profit before income tax for the period between the date of acquisition and December 31, 2009.

If the acquisition had been completed on January 1, 2009, total group revenue and profit for the year would have not been materially different.

– III-143 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

41 EVENTS AFTER THE REPORTING PERIOD

• (i) On January 28, 2010 and March 23, 2010 EDMI Limited (subsidiary) issued an aggregate of 440,000 and 60,000 ordinary shares at $0.13 per share, pursuant to the exercise of options granted under the EDMI Share Option Scheme 2003.

• (ii) Subsequent to the reporting period,

• (a) EDMI Limited has incorporated a wholly-owned subsidiary, EDMI HK Limited (“EDMI HK”) in Hong Kong with paid up capital of HKD10,000. The principal activity of EDMI HK is that of investment holding and the sale of electronic revenue meters in Hong Kong or abroad.

• (b) Noustech Pty Ltd, a wholly-owned subsidiary of EDMI Limited has made an application with the Australian Securities & Investments Commission for voluntary deregistration.

42 RECLASSIFICATIONS AND COMPARATIVE FIGURES

Certain reclassifications have been made to the prior year’s financial statements to enhance comparability with the current year’s financial statements.

As a result, certain line items have been amended in the statement of comprehensive income. Comparative figures have been adjusted to conform to the current year’s presentation.

The items were reclassified as follows:

Statements of financial position Group Other payables (under current liabilities) Other payables (under non-current liabilities) Company Other payables (under current liabilities) Other payables (under non-current liabilities)	Previously reported After reclassification 2008 2008 $’000 $’000 9,781 9,471 – 310 9,781 9,781	Previously reported After reclassification 2008 2008 $’000 $’000 9,781 9,471 – 310 9,781 9,781
		9,781
	3,551 –	2,614 937
	3,551	3,551

These reclassifications have no impact on the corresponding amount as at December 31, 2007.

	3,551 3,551	3,551 3,551
	s at December 31, 2007.
Consolidated statement of comprehensive income General and administrative expenses Other operating expenses Other gains and losses	(33,561) (3,712) –	(30,531 (3,473 (3,269
	(37,273)	(37,273

– III-144 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

D. AUDITED FINANCIAL STATEMENTS OF THE OFFEREE FOR THE YEAR ENDED 31 DECEMBER 2008

The following is an extract of the audited financial statements of the Offeree for the year ended 31 December 2008, which were prepared in accordance with SFRS, from the 2008 annual report and financial statements of the Offeree.

Specific page/section references mentioned in the audited financial statements of the Offeree for the year ended 31 December 2008 are referred to in the Offereee’s 2008 annual report and financial statements which is available free of charge, in read-only, printable format on the Offeree’s website at http://www.smbunited.com/wp-content/uploads/2011/02/ar2008.pdf.

BALANCE SHEETS

December 31, 2008

Note ASSETS Current assets Cash and bank balances 6 Trade receivables 7 Other receivables and prepayments 8 Inventories 9 Contract work-in-progress 10 Total current assets Non-current assets Property, plant and equipment 11 Investment property 12 Subsidiaries 13 Associates 14 Joint ventures 15 Available-for-sale investments 16 Intangible assets 17 Other receivables 18 Deferred tax assets 19 Total non-current assets Total assets	Group 2008 2007 $’000 $’000 44,422 32,120 59,010 72,924 3,363 3,349 44,706 44,265 1,818 3,941	Group 2008 2007 $’000 $’000 44,422 32,120 59,010 72,924 3,363 3,349 44,706 44,265 1,818 3,941	Company 2008 2007 $’000 $’000 1,998 7,759 – – 14,840 11,231 – – – –	Company 2008 2007 $’000 $’000 1,998 7,759 – – 14,840 11,231 – – – –
	153,319 35,868 – – 1,013 280 845 217 499 868 39,590	156,599 32,971 – – 1,193 83 3,004 537 – 1,027 38,815	16,838 652 – 66,021 – – 32 – – – 66,705	18,990
				746 – 68,389 – – 117 – – –
				69,252
	192,909	195,414	83,543	88,242

– III-145 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note LIABILITIES AND EQUITY Current liabilities Bank borrowings 20 Trade payables 21 Other payables 22 Contract work-in-progress 10 Current portion of finance leases 23 Income tax payable Total current liabilities Non-current liabilities Finance leases 23 Long-term loans 20 Deferred tax liabilities 24 Financial guarantee contracts Total non-current liabilities Capital, reserves and minority interests Share capital 26 Reserves Equity attributable to equity holders of the company Minority interests Total equity Total liabilities and equity	Group 2008 2007 $’000 $’000 7,566 11,363 29,126 32,714 9,781 10,396 632 1,352 450 339 3,201 2,451	Group 2008 2007 $’000 $’000 7,566 11,363 29,126 32,714 9,781 10,396 632 1,352 450 339 3,201 2,451	Company 2008 2007 $’000 $’000 – – – – 1,538 6,770 – – 94 94 137 –	Company 2008 2007 $’000 $’000 – – – – 1,538 6,770 – – 94 94 137 –
	50,756 841 1,560 1,481 – 3,882 75,113 41,691 116,804 21,467 138,271	58,615 547 2,103 1,324 – 3,974 75,113 36,483 111,596 21,229 132,825	1,769 189 – 2 413 604 75,113 6,057 81,170 – 81,170	6,864
				283 – 5 458
				746
				75,113 5,519
				80,632 –
				80,632
	192,909	195,414	83,543	88,242

– III-146 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED PROFIT AND LOSS STATEMENT

Year ended December 31, 2008

Note Revenue 27 Cost of sales Gross profit Other operating income 28 Selling expenses General and administrative expenses Other operating expenses Share of (losses) profits of associates 14 Share of losses of joint ventures 15 Finance cost Exceptional item 30 Profit before tax Income tax expense 29 Profit for the year 30 Attributable to: Equity holders of the company Minority interests Basic earnings per share (cents) 31 Diluted earnings per share (cents) 31	Group 2008 2007 $’000 $’000 213,347 191,576 (154,371) (141,735) 58,976 49,841 921 1,669 (3,385) (3,943) (33,561) (29,465) (3,712) (2,271) (222) 111 (283) – (553) (642) – 7,393 18,181 22,693 (3,168) (1,916) 15,013 20,777 13,563 19,616 1,450 1,161 15,013 20,777 2.83 4.11 2.83 4.10	Group 2008 2007 $’000 $’000 213,347 191,576 (154,371) (141,735) 58,976 49,841 921 1,669 (3,385) (3,943) (33,561) (29,465) (3,712) (2,271) (222) 111 (283) – (553) (642) – 7,393 18,181 22,693 (3,168) (1,916) 15,013 20,777 13,563 19,616 1,450 1,161 15,013 20,777 2.83 4.11 2.83 4.10
	13,563 1,450	19,616 1,161
	15,013 2.83 2.83

– III-147 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

STATEMENTS OF CHANGES IN EQUITY

Year ended December 31, 2008

Note Group Balance at January 1, 2007 Loss on available-for-sale investments Exchange differences arising on translation of foreign operations Net (expense) income recognised directly in equity Transfer to profit or loss on sale of available-for-sale investments Profit for the year Total recognised income and expense for the year Dividends 34 Recognition of share-based payments 25 Issue of new shares due to exercise of share options of the company 26 Placement of new shares by subsidiary to minority shareholders Exercise of a subsidiary’s employee share options Balance at December 31, 2007		Share capital $’000 73,314	Share option reserve Investment revaluation reserve $’000 $’000 269 579	Share option reserve Investment revaluation reserve $’000 $’000 269 579	Currency translation reserve $’000 (1,023)	Retained earnings Attributable to equity holders of the company $’000 $’000 31,262 104,401	Retained earnings Attributable to equity holders of the company $’000 $’000 31,262 104,401	Minority interests $’000 15,870	Minority interests $’000 15,870
		– – – – –	– – – – –	(82) – (82) (757) –	– (123) (123) – –	– – – – 19,616	(82) (123) (205) (757) 19,616	(55) 59 4 – 1,161	(137) (64) (201) (757) 20,777
		– – – 1,799 – –	– – 136 (28) – (92)	(839) – – – – –	(123) – – – – –	19,616 (13,274) – – – –	18,654 (13,274) 136 1,771 – (92)	1,165 (918 103 – 4,405 604	19,819 (14,192) 239 1,771 4,405 512
		75,113	285	(260)	(1,146)	37,604	111,596	21,229

– III-148 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Balance at December 31, 2007 Loss on available-for-sale investments Exchange differences arising on translation of foreign operations Net expense recognised directly in equity Transfer to profit or loss on impairment of available-for-sale investments Profit for the year Total recognised income and expense for the year Dividends 34 Recognition of share-based payments 25 Exercise of a subsidiary’s employee share options Equity contributed by minority shareholders Equity acquired from minority shareholders Balance at December 31, 2008		Share capital $’000 75,113	Share option reserve Investment revaluation reserve $’000 $’000 285 (260)	Share option reserve Investment revaluation reserve $’000 $’000 285 (260)	Currency translation reserve $’000 (1,146)	Retained earnings Attributable to equity holders of the company $’000 $’000 37,604 111,596	Retained earnings Attributable to equity holders of the company $’000 $’000 37,604 111,596	Minority interests $’000 21,229	Minority interests $’000 21,229
		– – – – –	– – – – –	(1,165) – (1,165) 105 –	– (710) (710) – –	– – – – 13,563	(1,165) (710) (1,875) 105 13,563	(909) (273) (1,182) – 1,450	(2,074) (983) (3,057) 105 15,013
		– – – – – –	– – 131 – – –	(1,060) – – – – –	(710) – – – – –	13,563 (6,716) – – – –	11,793 (6,716) 131 – – –	268 (281) 101 103 96 (49)	12,061 (6,997) 232 103 96 (49)
		75,113	416	(1,320)	(1,856)	44,451	116,804	21,467

– III-149 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

STATEMENTS OF CHANGES IN EQUITY

Year ended December 31, 2008

Note Company Balance at January 1, 2007 Loss on available-for-sale investments (recognized directly in equity) Profit for the year Total recognised income and expense for the year Dividends 34 Recognition of share-based payments 25 Issue of new shares due to exercise of share options of the company 26 Balance at December 31, 2007 Transfer to profit or loss on impairment of available-for-sale investments Profit for the year Total recognised income and expense for the year Dividends 34 Balance at December 31, 2008		Share capital $’000 73,314	Share option reserve Investment revaluation reserve $’000 $’000 26 (178)	Share option reserve Investment revaluation reserve $’000 $’000 26 (178)	Retained earnings $’000 12,798	Total $’000 85,960 (12) 6,185 6,173 (13,274) 2 1,771 80,632 105 7,149 7,254 (6,716) 81,170	Total $’000 85,960 (12) 6,185 6,173 (13,274) 2 1,771 80,632 105 7,149 7,254 (6,716) 81,170
		– –	– –	(12) –	– 6,185
		– – – 1,799	– – 2 (28)	(12) – – –	6,185 (13,274) – –
		75,113	–	(190)	5,709	80,632
		– –	– –	105 –	– 7,149	105 7,149
		– –	– –	105 –	7,149 (6,716)	7,254 (6,716
		75,113	–	(85)	6,142

– III-150 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

CONSOLIDATED CASH FLOW STATEMENT

Year ended December 31, 2008

Note Operating activities Profit before income tax Adjustments for: Share of (losses) profits of associates Share of losses of joint ventures Depreciation of property, plant and equipment Depreciation of investment property Dividend income Interest expense Amortisation of intangible assets Allowance (Reversal) of doubtful trade receivables Allowance of doubtful non-trade receivables (Reversal) Allowance of inventories Allowance for foreseeable losses on contracts Disposal of property, plant and equipment – Gain on disposal of property, plant and equipment – Unrealised profit on sale of property, plant and equipment to joint venture Gain on disposal of investment property Intangible assets written off Interest income Loss (Gain) on dilution of shareholding interest in a subsidiary Gain on disposal of available-for-sale investments Impairment loss on available-for-sale investments Share option expense Operating cash flows before movements in working capital Trade receivables B Other receivables and prepayments Inventories Contract work-in-progress Trade payables Other payables Cash generated from operations Income tax paid Interest paid Net cash from (used in) operating activities	Group 2008 2007 $’000 $’000 18,181 22,693 222 (111) 283 – 3,054 2,951 – 73 (7) (7) 553 642 219 448 149 (920) 141 33 (66) 81 831 203 (119) (88) – 115 – (23) 23 40 (357) (389) 26 (582) – (7,393) 190 – 232 239 23,555 18,005 13,765 (20,232) (155) (383) (375) (5,062) 572 1,017 (3,588) 7,297 (615) 1,494 33,159 2,136 (2,240) (4,204) (553) (642) 30,366 (2,710)	Group 2008 2007 $’000 $’000 18,181 22,693 222 (111) 283 – 3,054 2,951 – 73 (7) (7) 553 642 219 448 149 (920) 141 33 (66) 81 831 203 (119) (88) – 115 – (23) 23 40 (357) (389) 26 (582) – (7,393) 190 – 232 239 23,555 18,005 13,765 (20,232) (155) (383) (375) (5,062) 572 1,017 (3,588) 7,297 (615) 1,494 33,159 2,136 (2,240) (4,204) (553) (642) 30,366 (2,710)
	23,555 13,765 (155) (375) 572 (3,588) (615) 33,159 (2,240) (553) 30,366	18,005 (20,232 (383 (5,062 1,017 7,297 1,494
		2,136 (4,204 (642
		(2,710

– III-151 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note Investing activities Interest received Purchase of property, plant and equipment A Proceeds on disposal of property, plant and equipment Proceeds on disposal of investment property Acquisition of investment in associates Acquisition of investment in joint venture Acquisition of equity from minority shareholder Proceeds from sale of available-for-sale investments Repayment of loan by joint venture partner Loan to proposed acquisition company Dividends received Net cash (used in) from investing activities Financing activities Repayment of finance leases Net (repayment) proceeds from bank loans Proceeds on issue of new shares Proceeds from placement of new shares by subsidiary Increase in cash deposits pledged to bank 6 Dividends paid to equity holders of the company Dividends paid to minority shareholders of subsidiaries Capital contribution from minority shareholders Proceeds from exercise of employee share options of a subsidiary Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at end of the year Cash and cash equivalents consist of: Cash at bank 6 Fixed deposits 6 Bank overdrafts 20	Group 2008 2007 $’000 $’000 357 389 (6,344) (5,406) 922 1,495 – 3,250 – (1,005) (523) (83) (49) – – 8,645 – 627 (653) – 7 7 (6,283) 7,919 (526) (471) (3,162) 3,466 – 1,771 – 5,139 (14) (119) (6,716) (13,274) (281) (918) 96 – 77 452 (10,526) (3,954) 13,557 1,255 27,136 25,866 (91) 15 40,602 27,136 39,512 23,370 3,571 7,425 (2,481) (3,659) 40,602 27,136	Group 2008 2007 $’000 $’000 357 389 (6,344) (5,406) 922 1,495 – 3,250 – (1,005) (523) (83) (49) – – 8,645 – 627 (653) – 7 7 (6,283) 7,919 (526) (471) (3,162) 3,466 – 1,771 – 5,139 (14) (119) (6,716) (13,274) (281) (918) 96 – 77 452 (10,526) (3,954) 13,557 1,255 27,136 25,866 (91) 15 40,602 27,136 39,512 23,370 3,571 7,425 (2,481) (3,659) 40,602 27,136
	(6,283) (526) (3,162) – – (14) (6,716) (281) 96 77 (10,526) 13,557 27,136 (91)	7,919
		(471 3,466 1,771 5,139 (119 (13,274 (918 – 452
		(3,954
		1,255 25,866 15
	40,602
	39,512 3,571 (2,481)	23,370 7,425 (3,659
	40,602

– III-152 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Note A

During the financial year, the group acquired property, plant and equipment with an aggregate cost of $7,275,000 (2007: $6,132,000) of which $931,000 (2007: $726,000) was acquired under finance lease agreement. Cash payments of $6,344,000 (2007: $5,406,000) was made to purchase property, plant and equipment.

Note B

In 2007, the group made an investment in equity shares of a company (Note 16). The consideration payable of $3,012,000 for the investment was settled by way of offset against the trade receivables due from the same company.

See accompanying notes to financial statements.

– III-153 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

NOTES TO FINANCIAL STATEMENTS

December 31, 2008

1 GENERAL

The company (Registration No. 199506364D) is incorporated in Singapore with its principal place of business and registered office at 9 Senoko Drive, Singapore 758197. The company is listed on the mainboard of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in Singapore dollars.

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

The principal activities of the subsidiaries, associates and joint ventures are disclosed in Notes 13, 14 and 15 to the financial statements.

The consolidated financial statements of the group and balance sheet and statement of changes of equity of the company for the year ended December 31, 2008 were authorised for issue by the Board of Directors on March 25, 2009.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

Adoption of new and revised standards

In the current financial year, the group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after January 1, 2008. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the group’s and company’s accounting policies and has no material effect on the amounts reported for the current or prior years.

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the group and the company were issued but not effective:

FRS	1	–	Presentation of Financial Statements (Revised)
FRS	23	–	Borrowing Costs (Revised)
FRS	102	–	Share-based Payments (Amendments relating to Vesting Conditions and
			Cancellations)
FRS	108	–	Operating Segments

Consequential amendments were also made to various standards as a result of these new/revised standards.

The management anticipates that the adoption of these FRS, INT FRS and amendments to FRS that were issued but not yet effective until future periods will have no material impact on the financial statements of the group and of the company in the period of their initial adoption, except for the following:

FRS 1 – Presentation of Financial Statements (Revised)

FRS 1(Revised) will be effective for annual periods beginning on or after January 1, 2009, and will change the basis for presentation and structure of the financial statements. It does not change the recognition, measurement or disclosure of specific transactions and other events required by other FRSs.

FRS 23 – Borrowing Costs (Revised)

FRS 23(Revised) will be effective for annual periods beginning on or after January 1, 2009 and eliminates the option available under the previous version of FRS 23 to recognise all borrowing costs immediately as an expense. An entity shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. As the change in accounting policy is to be applied prospectively, there will be no impact on amounts reported for 2008.

– III-154 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

FRS 108 – Operating Segments

FRS 108 will be effective for annual financial statements beginning on or after January 1, 2009 and supercedes FRS 14 – Segment Reporting . FRS 108 requires operating segments to be identified on the basis of internal reports about components of the group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, FRS 14 requires an entity to identify two sets of segments (business and geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. As a result, following the adoption of FRS 108, the identification of the group’s reportable segments may change.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies in line with those used by other members of the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover its share of those losses.

In the company’s financial statements, investments in subsidiaries, associates and joint ventures are carried at cost less any impairment in net recoverable value that has been recognised in the profit and loss statement.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued Operations , which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated profit and loss statement.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Financial instruments

Financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes a party to the contractual provisions of the instrument.

– III-155 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transactions costs and other premiums or discounts) through the expected life of the financial instrument or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments.

Financial assets

Financial assets comprise “available-for-sale” financial assets, “trade and other receivables” and “cash and cash equivalents”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets

Investments are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs.

Certain shares held by the group are classified as available-for-sale and are stated at fair value. Fair value is determined in the manner described in Note 4b(vi). Gains and losses arising from changes in fair value are recognised directly in the revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the revaluation reserve is included in profit or loss for the period. Dividends on available-for-sale equity instruments are recognised in profit or loss when the group’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity.

Trade and other receivables

Receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term receivables where the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and bank overdrafts that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is directly reduced by the impairment loss for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

– III-156 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss, is recognised directly in equity.

Derecognition of financial assets

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis, except for short-term payables where the recognition of interest would be immaterial.

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount of obligation under the contract recognised as a provision in accordance with FRS 37 Provision, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance with FRS 18 Revenue .

Finance lease obligations are recognised in accordance with the accounting policy denoted below.

Derecognition of financial liabilities

The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire.

Derivative financial instruments and hedge accounting

The group’s activities expose it primarily to the financial risks of changes in foreign exchange rates.

The group uses derivative financial instruments (primarily foreign currency forward contracts) to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments.

Derivative financial instruments are initially measured at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each balance sheet date.

Changes in the fair value of derivative financial instruments are recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

– III-157 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Cost of inventories is determined as follows:

Raw materials – first-in, first-out method Work-in-progress – standard cost which approximates actual average cost Finished goods – first-in, first-out method

Contract work-in-progress

Where the outcome of a contract work-in-progress can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Property, plant and equipment

Property, plant and equipment are carried at cost, less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method and on the following bases:

Leasehold land and buildings – 1.69% to 3.85% (over the term of lease) Plant and equipment – 10% to 33[1] ∕3% Motor vehicles – 10% to 20%

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Fully depreciated assets still in use are retained in the financial statements.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profit and loss statement.

Investment property

Investment property is carried at cost less accumulated depreciation and any impairment losses. Depreciation is charged so as to write off the cost of the property over its estimated useful life of 50 years using the straight-line method.

The estimated useful life, residual value and depreciation method are reviewed at each year end, with the effect of any changes in estimates accounted for on a prospective basis.

– III-158 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Goodwill

Goodwill arising on the acquisition of a business, subsidiary or a jointly controlled entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the business, subsidiary or jointly controlled entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a business, subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Intangible assets

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development of identifiable and unique software/products that are controlled by the group and have probable economic benefit exceeding the costs beyond one year is recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset for use or sale;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Costs include the staff costs of the software/product development team and an appropriate portion of direct overheads. Costs that enhance or extend performance of computer software program/product beyond their original specifications are capitalised and added to the original cost of the software/product. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

Computer software/product development costs that are capitalised are amortised using the straight-line method over their estimated useful lives of 3 years.

The estimated useful lives and amortisation method are reviewed at the end of each annual reporting period with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

– III-159 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as internally generated intangible assets.

Patents, trademarks and licenses are amortised on a straight-line basis over the period of expected benefits not exceeding 3 years. The estimated useful lives and amortisation method are reviewed on the same basis as internally generated assets.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss statement.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit and loss statement.

Associates

An associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations . Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the group’s interest in that associate (which includes any long-term interests that, in substance, form part of the group’s net investment in the associate) are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the consolidated profit and loss statement.

Where a group entity transacts with an associate of the group, unrealised profits and losses are eliminated to the extent of the group’s interest in the relevant associate.

Interests in joint ventures

A joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

The results and assets and liabilities of joint ventures are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case

– III-160 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations . Under the equity method, investments in joint ventures are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of a joint venture in excess of the group’s interest in that joint venture (which includes any long-term interests that, in substance, form part of the group’s net investment in the joint venture) are not recognised, unless the group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

Any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the consolidated profit and loss statement.

Where a group entity transacts with its joint ventures, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Warranties

Warranty cost is provided for the estimated liability to repair or replace products under warranty at the balance sheet date. This warranty cost is determined based on assessment of each batch of production at the directors’ best estimate of the expenditure required to settle the group’s obligation.

Provision for warranty cost is made where there are indicators of defects which may result in material repair or replacement costs.

Share-based payments

The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non market-based vesting conditions) at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 25. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non market-based vesting conditions.

At each balance sheet date, the group revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised over the remaining vesting period with a corresponding adjustment to the equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payments that were granted after November 22, 2002 and vested after January 1, 2005.

Government grants

Government grants relating to expenditures which are not capitalised are credited to the profit and loss statement as and when the underlying expenses are included and taken to the profit and loss statement to match such related expenditure and at such time when the amount of grant can be reliably established and there is reasonable assurance that the group can comply with the conditions attaching to them and the grants will be received.

– III-161 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The group as lessee

Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease, or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to profit and loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated custom returns, rebates and other similar allowances.

• 1) Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• the group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

• 2) Revenue from contracts that are of short duration is recognised when the contracts are completed. Revenue from long-term contracts is recognised by reference to the stage of completion of the contract at the balance sheet date. When losses are expected, after taking into consideration estimated cost to complete, such losses are recorded immediately.

• 3) Revenue from rendering of services that are of a short duration is recognised when the services are completed.

• 4) Income from providing financial guarantees is recognised in profit and loss over the guarantee period on a straight-line basis.

• 5) Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

– III-162 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

• 6) Rental income from investment property is recognised on a straight-line basis over the term of the relevant lease.

• 7) Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the profit and loss statement in the period in which they are incurred.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the profit and loss statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the company and subsidiaries operate by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

– III-163 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

Foreign currency transactions and translation

The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company are presented in Singapore dollars, which is the functional currency of the company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the group’s translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

– III-164 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Critical judgements in applying the group’s accounting policies

Management did not make any material judgements that have significant effect on the amounts recognised in the financial statements except as discussed below.

Impairment of available-for-sale equity investment

During the year, there was a significant decline in the fair value of the available-for-sale equity instrument of EDMI Limited (a subsidiary) from $2,887,000 at the beginning of the financial year to $813,000 as at December 31, 2008. The loss arising from the decline in fair value is recognised directly in the revaluation reserve in equity. Management is of the view that the decline in fair value is not an impairment loss that should be charged against profit for the year in the profit and loss statement. Management concluded that EDMI Limited will be able to recover its original cost of investment of $3,012,000 on the basis that:

• i) the investee has positive near term business prospects that would enable it to enhance its earning potential despite losses reported by the investee company in recent financial years;

• ii) the investee has been able to raise additional funds to support near term working capital requirements;

• iii) the current depressed equity market conditions are not expected to persist and will recover in the longer term; and

• iv) the company has the intent and ability to retain its investment for a period of time sufficient to allow for the anticipated recovery in the investee’s fair value to an amount equal to or above its original investment cost.

Management’s conclusion on the recoverable value of the available-for-sale equity instrument involves considerable judgement. There is a possibility that an impairment loss will be recognised in a subsequent reporting period if the decline in fair value continues and recoverability becomes doubtful.

(ii) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

Allowance for inventories

The policy for allowance for inventories of the group is based on the aging analysis of inventories and on management’s judgement on the saleability of the inventories.

As at December 31, 2008, the inventories of EDMI Limited (a subsidiary) include certain meters of $1,734,000 (2007: $2,631,000) which were returned by a customer in Australia in 2005 and 2006. Management has plans to utilise the meters by end of year 2010 and is of the view that no allowance is required.

Allowances for receivables

An allowance for receivables accounts for estimated loss resulting from the subsequent inability of the customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. Management specifically analyses accounts receivables and historical bad debt, customer credit worthiness, results of recovery efforts and past default experience when making a judgement to evaluate the adequacy of the allowances for receivables.

– III-165 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Impairment of investments in subsidiaries, associates and joint ventures

Determining whether investments in subsidiaries, associates and joint ventures are impaired requires an estimation of the value in use of the investments. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

Recoverability of contract work-in-progress

Judgement is exercised in determining foreseeable losses on construction contracts as disclosed in Note 10. In making judgement, the group evaluates by relying on past experience and cost estimates.

4 FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the balance sheet date.

Financial assets Loan and receivables (including cash and cash equivalents) Available-for-sale financial assets Financial liabilities Amortised cost Financial guarantee contracts	Group 2008 2007 $’000 $’000 106,542 107,732 845 3,004 Group 2008 2007 $’000 $’000 49,324 57,462 – –	Company 2008 2007 $’000 $’000 16,838 18,990 32 117 Company 2008 2007 $’000 $’000 1,774 7,098 460 507

(b) Financial risk management strategies and objectives

The group’s overall financial risk management strategy is to minimise potential adverse effects on the financial performance of the group. The Board of Directors reviews the overall financial risk management on specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, use of derivative financial instruments and investing excess cash. These are reviewed quarterly by the Board of Directors. Risk management is monitored by the Corporate Office.

The group may use derivative financial instruments to manage its exposure to foreign currency risk, including forward exchange contracts to hedge the exchange rate risks arising from trade receivables and trade payables, and firm commitments to buy or sell goods.

The group does not hold or issue derivative financial instruments for speculative purposes.

There has been no change to the group’s exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.

i) Credit risk management

Credit risk refers to the risk that a customer will default on its payment resulting in financial loss to the group. The group has adopted a policy of gradually extending credit to customers who are credit worthy and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from non-payment. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of trade receivables and, where appropriate, credit guarantee insurance cover is purchased. Credit exposure is controlled by the customer credit limits that are reviewed and approved by the management regularly.

– III-166 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Further details of credit risks on trade and other receivables are disclosed in Note 7 and 8.

ii) Interest rate risk management

The group is exposed to interest rate risk through the impact of interest rate changes on interest-bearing debts and interest-earning fixed deposits.

The interest rates and terms of repayment for bank loans and finance leases of the group are disclosed in Notes 20 and 23 to the financial statements respectively.

The interest rates and repricing period for fixed deposits are disclosed in Note 6.

Summary quantitative data of the group’s interest-bearing financial instruments can be found in section (iv) of this note.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the group’s profit for the year ended December 31, 2008 would decrease/increase by $91,000 (2007: decrease/increase by $135,000).

iii) Foreign exchange risk management

The group transacts business in various currencies and therefore is exposed to foreign exchange risk. The significant carrying amounts of monetary assets (including intra-group receivables) and monetary liabilities (including intra-group payables) denominated in currencies other than the respective group entities’ functional currencies at the reporting date are as follows:

Singapore dollar United States dollar Australian dollar British pound

	Group				Company
Liabilities		Assets		Liabilities		Assets
2008	2007	2008	2007	2008	2007	2008	2007
$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
12,376	11,135	7,168	7,171	–	–	–	–
11,739	6,604	19,905	14,180	–	–	–	–
215	2	5,555	7,180	–	–	–	–
124	269	1,981	5,387	–	–	–	–

Companies in the group may use forward contracts to hedge their exposure to foreign currency risk in the local reporting currency.

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the major relevant foreign currencies against the functional currency of each group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the group where the denomination of the loan is in a currency other than the currency of the lender or the borrower.

– III-167 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

If the major relevant foreign currencies strengthen by 10% against the functional currency of each group entity, profit for the year will (decrease) increase by:

	Singapore	Singapore	**United **	States	Australian	Australian	British
	**Dollar **	impact	**Dollar **	impact	**Dollar **	impact	Pound impact
	2008	2007	2008	2007	2008	2007	2008	2007
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	(521)	(396)	817	758	534	718	105	223

If the major relevant foreign currencies weakens by 10% against the functional currency of each group entity, profit for the year will increase (decrease) by:

	Singapore	Singapore	**United **	States	Australian	Australian	British
	**Dollar **	impact	**Dollar **	impact	**Dollar **	impact	Pound impact
	2008	2007	2008	2007	2008	2007	2008	2007
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Group
Profit for the year	521	396	(817)	(758)	(534)	(718)	(105)	(223)

If the relevant foreign currency strengthens by 10% against the functional currency of each group entity, revaluation reserve in equity will increase by:

		British pound
		impact
		2008	2007
		$’000	$’000
Group
Revaluation	reserve	81	289

If the relevant foreign currency weakens by 10% against the functional currency of each group entity, there will be an equal and opposite effect on revaluation reserve in equity.

The group also has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The group does not hedge its investments that are denominated in foreign currencies.

iv) Liquidity risk management

The group has sufficient funds and credit lines to finance its working capital requirements.

Liquidity and interest rate risk analysis

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company can be required to pay. The table includes both interest and principal cash flows. The adjustment

– III-168 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the balance sheet.

Weighted average effective interest rate or within per annum % Group 2008 Non-interest bearing – Finance lease liability (fixed rate) 6.0 Variable interest rate instruments 4.7 Weighted average effective interest rate per annum % Group 2007 Non-interest bearing – Finance lease liability (fixed rate) 5.7 Variable interest rate instruments 4.9 Company 2008 Non-interest bearing – Finance lease liability (fixed rate) 5.6 Financial guarantee contracts 2.0 2007 Non-interest bearing – Finance lease liability (fixed rate) 5.6 Financial guarantee contracts 2.0	On demand 2 to 1 year $’000 38,907 524 7,927 47,358 On demand or within 1 year $’000 43,110 378 11,919 55,407	Within 5 years $’000 – 940 1,103 2,043 Within 2 to 5 years $’000 – 613 1,661 2,274	After 5 years $’000 – – 1,341 1,341 After 5 years $’000 – 14 1,579 1,593	Adjustment $’000 – (173) (1,245) (1,418) Adjustment $’000 – (119) (1,693) (1,812)	Total $’000 38,907 1,291 9,126
					49,324
					Total $’000 43,110 886 13,466
					57,462
	1,491 108 47	– 216 150	– – 263	– (41) –	1,491 283 460
	1,646	366	263	(41)	2,234
	6,721 108 49	– 323 172	– – 286	– (54) –	6,721 377 507
	6,878	495	286	(54)	7,605

– III-169 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Non-derivative financial assets

The following table details the expected maturity for non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the group and the company anticipates that the cash flow will occur in a different period.

Weighted average effective interest rate per annum % Group 2008 Non-interest bearing – Fixed interest rate instruments 2.4 2007 Non-interest bearing – Fixed interest rate instruments 2.2 Company 2008 Non-interest bearing – Fixed interest rate instrument 1.2 2007 Non-interest bearing – Fixed interest rate instrument 1.9	On demand or within 1 year $’000 101,191 4,852 106,043	Within 2 to 5 years $’000 1,344 – 1,344	Total $’000 102,535 4,852
			107,387
	99,046 8,686	3,004 –	102,050 8,686
	107,732	3,004	110,736
	15,835 1,003	32 –	15,867 1,003
	16,838	32	16,870
	13,314 5,676	117 –	13,431 5,676
	18,990	117	19,107

v) Equity price risk management

The group and company is exposed to equity risks arising from equity investments classified as available-for-sale. Available-for-sale equity investments are held for strategic rather than trading purposes. The group does not actively trade available-for-sale investments.

Further details of these equity investments can be found in Note 16 to the financial statements.

– III-170 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Equity price sensitivity

The sensitivity analysis below have been determined based on the exposure to equity price risks at the reporting date.

In respect of available-for-sale equity investments, if the closing market prices on the last market day of the financial year had been 10% higher/lower while all other variables were held constant:

• the group’s net profit for the year ended December 31, 2008 and 2007 would have been unaffected as the equity investments are classified as available-for-sale; and

• the group’s asset revaluation reserves would increase/decrease by $85,000 (2007: increase/decrease by $300,000).

The group’s sensitivity to equity prices has not changed significantly from the prior year.

vi) Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair value of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

The fair values of financial assets and financial liabilities are determined as follows:

• a) the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

• b) the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

• c) the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

(c) Capital risk management policies and objectives

The group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the group consists of debt, which includes the borrowings disclosed in Notes 20 and 23, and equity attributable to equity holders of the parent, comprising share capital, reserves and retained earnings as presented in the group’s statement of changes in equity.

The group reviews its capital structure periodically. It balances its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt.

The group’s overall strategy remains unchanged from 2007.

– III-171 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

5 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

	Group
	2008	2007
	$’000	$’000
Sale of goods to associate	(2,561)	(6,921)
Sale of property, plant and equipment to associate	–	(512)
Sales of goods to joint venture	(336)	–
Sales of goods to related party	(75)	(36)
Purchase of goods from associate	1,133	–
Purchase of goods from related party	27	27
Other income from related party	(242)	(186)
Other expense to related party	245	215

Certain bank overdraft and trust receipts (Note 20) are secured by a personal guarantee of a director of $1,500,000 (2007: $1,700,000).

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Short-term benefits Post-employment benefits Share-based payments	Group 2008 2007 $’000 $’000 6,426 6,287 218 243 87 100 6,731 6,630	Group 2008 2007 $’000 $’000 6,426 6,287 218 243 87 100 6,731 6,630
		6,630

The remuneration of directors and key management of the group is determined by the remuneration committee having regard to the performance of individuals and market trends.

6 CASH AND BANK BALANCES

Cash at bank Fixed deposits Deposits under pledge Total	Group 2008 2007 $’000 $’000 39,512 23,370 3,571 7,425 1,339 1,325 44,422 32,120	Company 2008 2007 $’000 $’000 995 2,083 1,003 5,676 – – 1,998 7,759	Company 2008 2007 $’000 $’000 995 2,083 1,003 5,676 – – 1,998 7,759
			7,759

Cash and bank balances comprise cash held by the group and company and short-term bank deposits with an original maturity of twelve months or less. The carrying amounts of these assets approximate their fair values.

– III-172 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The weighted average interest rate for fixed deposits is approximately 2.4% (2007: 2.2%) per annum and for a tenure of approximately 7 to 360 days (2007: 7 to 365 days). The fixed deposits could be drawn down without having to incur significant costs.

Deposits amounting to $1,339,000 (2007: $1,325,000) of the group are pledged to the bank as security for credit facilities including those disclosed in Note 32(ii).

The group’s and company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Singapore dollar	72	1,134	–	–
United States dollar	6,290	3,560	–	–
Euro	207	184	–	–
Australian dollar	2,060	433	–	–
Vietnamese Dong	116	–	–	–
British Pound	95	34	–	–

7 TRADE RECEIVABLES

Outside parties Less: Allowance for doubtful trade receivables Associates (Note 14) Joint venture (Note 15) Related party (Note 5)	Group 2008 2007 $’000 $’000 59,266 70,399 (2,696) (3,386	Group 2008 2007 $’000 $’000 59,266 70,399 (2,696) (3,386
	56,570 2,114 246 80	67,013 5,796 37 78
	59,010	72,924

The average credit period on sale of goods is 30 to 120 days (2007: 30 to 120 days). No interest is charged on overdue trade receivables.

Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Before accepting any new customer, the group will assess the potential customer’s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed periodically. There is no non-related party customer which represents more than 5% of the total balance of trade receivables.

In determining the recoverability of a trade receivable, the group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, management believes that there is no further credit provision required in excess of the allowance for doubtful debts.

– III-173 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The table below is an analysis of trade receivables as at December 31:

Not past due and not impaired Past due but not impaired (i) Impaired receivables – individually assessed (ii), (iii) – customer placed under liquidation/judicial management – past due and no response to repayment demands – others Less: Allowance for doubtful trade receivables Total trade receivables, net (i) Aging of receivables that are past due but not impaired: < 6 months 6 months to 9 months 9 months to 12 months >12 months (iv)	Group 2008 2007 $’000 $’000 38,208 58,184 20,496 14,379 58,704 72,563 689 1,052 1,524 2,371 789 324 (2,696) (3,386) 306 361 59,010 72,924 12,516 9,493 2,320 1,448 2,655 959 3,005 2,479 20,496 14,379	Group 2008 2007 $’000 $’000 38,208 58,184 20,496 14,379 58,704 72,563 689 1,052 1,524 2,371 789 324 (2,696) (3,386) 306 361 59,010 72,924 12,516 9,493 2,320 1,448 2,655 959 3,005 2,479 20,496 14,379
		72,563 1,052 2,371 324 (3,386)
		361 72,924
		9,493 1,448 959 2,479
		14,379

(ii) These amounts are stated before any deduction for impairment losses.

(iii) These receivables are not secured by any collateral or credit enhancements.

(iv) Significant balances relate to receivables from long standing customers with no clear indicators of past credit default experience.

Movement in the allowance for doubtful trade receivables:

Balance at beginning of the year Exchange differences Amounts written off during the year Increase (Decrease) in allowance recognised in profit or loss Balance at end of the year	Group 2008 2007 $’000 $’000 3,386 9,468 (80) 29 (759) (5,191) 149 (920) 2,696 3,386	Group 2008 2007 $’000 $’000 3,386 9,468 (80) 29 (759) (5,191) 149 (920) 2,696 3,386
		3,386

At December 31, 2008, trade receivables include $788,000 (2007: $836,000) arising from contract work which are due for settlement after more than 12 months, but have been classified as current because they are expected to be realised in the normal operating cycle.

– III-174 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2008	2007
	$’000	$’000
United States dollar	9,820	7,751
British pound	1,053	2,437
Euro	658	545
Thai baht	1,492	5,253
New Zealand dollar	1,221	–
Chinese renminbi	220	347
Malaysian ringgit	505	9
Others	55	8

8 OTHER RECEIVABLES AND PREPAYMENTS

Staff loans Deposits Prepayments Income tax recoverable Other receivables Less: Allowance for doubtful non-trade receivables Subsidiaries (Note 13) Associate (Note 14) Joint ventures (Note 15) Related parties (Note 5) Less: Allowance for doubtful non-trade receivables	Group 2008 2007 $’000 $’000 453 565 772 507 752 661 9 214 1,407 1,516	Group 2008 2007 $’000 $’000 453 565 772 507 752 661 9 214 1,407 1,516	Company 2008 2007 $’000 $’000 141 147 – – – – – 68 25 27	Company 2008 2007 $’000 $’000 141 147 – – – – – 68 25 27
	3,393 (388) 3,005 – 172 48 162 (24)	3,463 (273) 3,190 – – 40 119 –	166 – 166 14,720 – – – (46)	242 –
				242 11,035 – – – (46)
	3,363	3,349	14,840	11,231

Amounts due from subsidiaries, associate, joint ventures and related parties are unsecured, interest-free and repayable on demand.

Movement in the allowance for doubtful non-trade receivables:

Balance at beginning of the year Exchange differences Increase in allowance recognised in profit or loss Reclassification (Note 13)	Group 2008 2007 $’000 $’000 273 241 (2) (1) 141 33 – – 412 273	Company 2008 2007 $’000 $’000 46 66 – – – – – (20) 46 46	Company 2008 2007 $’000 $’000 46 66 – – – – – (20) 46 46
			46

– III-175 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s and company’s other receivables that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
United States dollar	666	316	–	–
Australian dollar	69	45	–	–
British pound	20	28	–	–
Others	–	24	7	–

9 INVENTORIES

Raw materials Work-in-progress Finished goods	Group 2008 2007 $’000 $’000 22,088 21,939 6,553 5,749 16,065 16,577 44,706 44,265	Group 2008 2007 $’000 $’000 22,088 21,939 6,553 5,749 16,065 16,577 44,706 44,265
		44,265

Due to the increase in demand and usage of certain goods in the financial year, the group reversed $66,000, being part of allowance of inventory in 2007, to the current year profit or loss.

10 CONTRACT WORK-IN-PROGRESS

Contracts work-in-progress at balance sheet date: Amounts due from contract customers Contract costs incurred plus recognised profits Less: Progress billings Provision for foreseeable losses Contracts work-in-progress at balance sheet date: Amounts due to contract customers Progress billings Provision for foreseeable losses Less: Contract costs incurred plus recognised profits	Group 2008 2007 $’000 $’000 1,818 3,941	Group 2008 2007 $’000 $’000 1,818 3,941
	17,178 (14,044) (1,316)	26,997 (22,551 (505
	1,818 632	3,941
		1,352
	16,985 20 (16,373)	18,665 – (17,313
	632	1,352

At December 31, 2008, retention monies held by customers for contract work amounted to $84,000 (2007: $301,000).

– III-176 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

11 PROPERTY, PLANT AND EQUIPMENT

Group Cost: At January 1, 2007 Exchange differences Additions Disposals At December 31, 2007 Exchange differences Additions Disposals At December 31, 2008 Accumulated depreciation: At January 1, 2007 Exchange differences Depreciation Eliminated on disposals At December 31, 2007 Exchange differences Depreciation Eliminated on disposals At December 31, 2008 Carrying amount: At December 31, 2008 At December 31, 2007	Leasehold land and buildings $’000 27,145 – 2,696 –	Plant and equipment $’000 22,748 122 2,148 (1,386)	Motor vehicles $’000 3,072 16 1,288 (1,856)	Total $’000 52,965 138 6,132 (3,242)
	29,841 (178) 2,600 (556) 31,707 5,377 – 649 – 6,026 (40) 680 (55) 6,611	23,632 (733) 4,575 (3,030) 24,444 14,437 61 2,034 (844) 15,688 (374) 2,106 (2,732) 14,688	2,520 (74) 100 (222) 2,324 2,021 10 268 (991) 1,308 (50) 268 (218) 1,308	55,993 (985) 7,275 (3,808)
				58,475
				21,835 71 2,951 (1,835)
				23,022 (464) 3,054 (3,005)
				22,607
	25,096 23,815	9,756 7,944	1,016 1,212	35,868
				32,971

– III-177 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Company Cost: At January 1, 2007 Additions Disposals At December 31, 2007 Additions At December 31, 2008 Accumulated depreciation: At January 1, 2007 Depreciation Eliminated on disposals At December 31, 2007 Depreciation At December 31, 2008 Carrying amount: At December 31, 2008 At December 31, 2007	Plant and equipment $’000 308 1 –	Motor vehicles $’000 1,427 1,064 (1,693)	Total $’000 1,735 1,065 (1,693)
	309 12 321 255 26 – 281 27 308	798 – 798 844 89 (853) 80 79 159	1,107 12
			1,119
			1,099 115 (853)
			361 106
			467
	13 28	639 718	652
			746

The group and company have motor vehicles and equipment with carrying amounts of $2,263,000 (2007: $1,406,000) and $639,000 (2007: $718,000) respectively which are under finance leases.

The group has pledged certain land and buildings which have aggregate carrying amount of $7,737,000 (2007: $5,912,000) to obtain bank loans and credit facilities. Particulars of major properties are as follows:

Location Description 9 Senoko Drive Part single-storey and Singapore 758197 part 2-storey factory and office 15 Senoko Way Part single-storey and Singapore 758036 part 2-storey factory and office 15 Senoko Avenue Part single-storey and Singapore 758305 part 3-storey factory and office 17 Senoko Avenue Part single-storey and Singapore 758307 part 2-storey factory and office

Tenure

• 60-year lease from November 1992 30-year lease from February 1991

• 25-year lease from March 1998

• 30-year lease from September 1990, with an option to extend another 30 years subject to certain conditions

PLO 131, 133, 134, Jalan Cyber 5 Kawasan Perindustrian Senai 3, 81400 Senai Johor, Malaysia

2-storey factory

• 60-year lease from December 1996

– III-178 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Location	Description	Tenure
47 Yishun Industrial	4-storey factory and office	30-year lease from January 1992
Park A
Singapore 768724
18 Kaki Bukit Road 3	3 office units	60-year lease from January 1995
#04-01/02/03
Entrepreneur Business
Centre
Singapore 415978
INVESTMENT PROPERTY
		Group
		$’000
Cost:
At January 1, 2007		5,500
Disposal		(5,500)
At December 31, 2007 and	2008	–
Accumulated depreciation:
At January 1, 2007		1,741
Depreciation		73
Eliminated on disposal		(1,814)
At December 31, 2007 and	2008	–
Impairment:
Impairment loss recognised at January 1, 2007		459
Eliminated on disposal		(459)
Balance at December 31, 2007 and 2008		–
Carrying amount:
At December 31, 2007 and	2008	–

12 INVESTMENT PROPERTY

In 2007, the investment property was sold for a consideration of $3,250,000.

Rental income earned by the group from the investment property amounted to $Nil (2007: $269,000). Direct operating expenses arising from the investment property in the year amounted to $Nil (2007: $73,000).

13 SUBSIDIARIES

Unquoted equity shares, at cost Impairment loss Recognition of share-based payment Advances to subsidiaries Interest imputation on advances to subsidiaries Deemed investment arising from corporate guarantees provided to financial institutions who have granted credit facilities to subsidiaries	Company 2008 2007 $’000 $’000 57,450 59,769 (2,506) (2,506)	Company 2008 2007 $’000 $’000 57,450 59,769 (2,506) (2,506)
	54,944 42 5,452 2,238 3,345	57,263 42 5,242 3,184 2,658
	66,021	68,389

– III-179 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Advances to subsidiaries are unsecured and interest-free. Advances to subsidiaries are measured at amortised cost using the effective interest method. The advances to subsidiaries are expected to be repaid over 10 years from January 1, 2005.

Nominal value of advances to subsidiaries Amount recognised as additional investment in subsidiaries Fair value at inception date of advances Deemed interest income recognised Amortised cost balance at end of year Less: Allowance for advances Carrying amount at end of year	Company 2008 2007 $’000 $’000 10,839 10,839 (3,184) (3,184) 7,655 7,655 911 582 8,566 8,237 (3,114) (2,995) 5,452 5,242	Company 2008 2007 $’000 $’000 10,839 10,839 (3,184) (3,184) 7,655 7,655 911 582 8,566 8,237 (3,114) (2,995) 5,452 5,242
		7,655 582
		8,237 (2,995)
		5,242

The interest income imputed is calculated by applying an effective interest rate of 4% (2007: 4%) per annum. The advances to subsidiaries are denominated in Singapore dollar, which is the functional currency of the company.

Deemed investment of $42,000 (2007: $42,000) in subsidiaries relate to share option granted under the SMB Share Option Scheme 2001 Note 25(a) by the company to an employee of a subsidiary.

The deemed investment in subsidiaries arising from financial guarantees provided by the company is as follows:

At beginning of year Additions during the year Repayment of term loan during the year At end of year	Company 2008 2007 $’000 $’000 2,658 2,253 687 505 – (100) 3,345 2,658	Company 2008 2007 $’000 $’000 2,658 2,253 687 505 – (100) 3,345 2,658
		2,658

During the financial year, out of the additional deemed investment in subsidiaries of $687,000 (2007: $505,000), $687,000 (2007: $411,000) was recognised as financial guarantee income in the company’s profit and loss statement and the remaining $Nil (2007: $94,000) was recognised as additional financial guarantee contract obligation (see Note 22).

– III-180 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Details of the company’s significant subsidiaries at December 31, 2008 are as follows:

		Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and voting
Name of subsidiary	and operation	power held		Principal activities
		2008	2007
		%	%
MW Dynamics Pte	Singapore	50	50	Plumbing and electrical
Ltd (1) (11)				contracting and trading
				and installation of sanitary
				and bathroom accessories.
Bridex Singapore Pte	Singapore	100	100	Import, export and supply of
Ltd (1)				transformers and electrical
				products and investment
				holding.
Bridex Harwal Pte	Singapore	100	–	Manufacture and supply of
Ltd (1) (12)				electrical switchgears.
Quantum Automation	Singapore	52	52	Design, installation and
Pte Ltd (1)				maintenance of
				computerised automation
				and control systems.
SMB Electric Pte Ltd (1)	Singapore	100	100	Manufacture and supply of
				electrical switchgears.
SMB Electric Industries	Singapore	100	100	Manufacture and supply of
Pte Ltd (1)				electrical switchgears.
SMB Electric Systems Pte	Singapore	100	100	Manufacture and supply of
Ltd (1)				electrical switchgears.
SMB Harwal Electric Pty	Australia	100	100	Manufacture and supply of
Limited (3)				electrical switchgears.
SMB United Industries	Malaysia	100	100	Investment holding.
Sdn Bhd (2)
Subsidiaries of Bridex
Singapore Pte Ltd
Bridex Australia Pty	Australia	100	100	Distribution of electrical and
Limited (3)				electronic products.
Bridex Electric	Philippines	100	100	Distribution of electrical and
Philippines, Inc. (4)				electronic products.
Bridex Harwal Pte	Singapore	–	100	Manufacture and supply of
Ltd (1) (12)				electrical switchgears.
EDMI Limited (1)	Singapore	56	56	Manufacture and
				distribution of electronic
				revenue meters.

– III-181 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

		Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and voting
Name of subsidiary	and operation	power held		Principal activities
		2008	2007
		%	%
Subsidiaries of SMB
United Industries
Sdn Bhd
Brighten Switchboard	Malaysia	100	100	Manufacture, dealing,
Builders (M) Sdn				installation and repair of
Bhd (2)				electrical switchboards and
				appliances.
SMB Switchgear &	Malaysia	100	100	Manufacture and sale of
Engineering Sdn				metal in-housing for
Bhd (2)				electrical switchboards.
Subsidiary of Brighten
Switchboard Builders
(M) Sdn Bhd
SMB Brighten	Malaysia	100	100	Dealing, installation and
Switchboard				repair of electrical
Engineering Sdn				switchboards and
Bhd (2)				appliances.
Subsidiaries of EDMI
Limited
EDMI International	People’s	56	56	Provision of services and
Trading (Shanghai)	Republic of			trading of electronic
Co., Ltd (5)	China			equipment.
EDMI Meters Sdn Bhd (6)	Malaysia	56	56	Provision of services and
				after sales support for
				electronic revenue meters
				and supply of electronic
				components.
EDMI Pty Ltd (7)	Australia	56	56	Design and distribution of
				electronic revenue meters.
EDMI Vietnam Company	Vietnam	29	29	Provision of installation and
Limited (8)				testing services for
				electronic revenue meters.

– III-182 –

APPENDIX III

FINANCIAL INFORMATION ON THE OFFEREE GROUP

		Effective proportion	Effective proportion
	Country of	of ownership
	incorporation	interests and voting
Name of subsidiary	and operation	power held		Principal activities
		2008	2007
		%	%
Subsidiaries of
Quantum Automation
Pte Ltd
eSwitch Engineering Pte	Singapore	31	31	Trading, general importers
Ltd (1)				and exporters, engineering
				and electrical works.
Quantum Automation	Singapore	52	52	General trading, sales and
(Asia) Pte Ltd (1)				distribution of automation
				products.
Quantum Automation	People’s	52	52	Design, installation and
Systems (Shanghai)	Republic of			maintenance of
Co., Ltd (9)	China			computerised automation
				and control systems.
QA Systems Integration	Malaysia	52	52	Supply, contract, design and
(M) Sdn Bhd (2)				install, commission and
				maintenance of advanced
				computerised automation
				and control systems for
				building, industrial and
				commercial application,
				and dealing in engineering
				products.

Subsidiary of SMB Electric Pte Ltd SMB Electric (Xiamen) People’s 100 100 Manufacture and supply of Co., Ltd[(10)] Republic of electrical switchgears and China components.

• (1) Audited by Deloitte & Touche LLP, Singapore.

• (2) Audited by overseas practices of Deloitte Touche Tohmatsu.

• (3) Audited by RSM Bird Cameron, Australia.

• (4) Audited by Ramon F. Garcia & Company, CPA, Philippines.

• (5) Audited by Shanghai Zhong Hui Certified Public Accountants, People’s Republic of China.

• (6) Audited by Horwath, Kuala Lumpur.

• (7) Audited by BDO Kendalls, Australia.

• (8) Audited by AFC Saigon, Vietnam.

• (9) Audited by Shanghai Zhonghua Huyin Certified Public Accountants, People’s Republic of China.

• (10) Audited by Xiamen Hong Zheng Certified Public Accountants, People’s Republic of China.

• (11) This is deemed to be a subsidiary of the company as the company exercises control over the entity.

• (12) During the financial year, shareholdings of Bridex Harwal Pte Ltd were transferred from Bridex Singapore Pte Ltd to the company.

– III-183 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

14 ASSOCIATES

Cost of investment in associates Share of post-acquisition reserve Adjustments on unrealised gain on transactions with a related party Carrying amount	Group 2008 2007 $’000 $’000 1,108 1,108 39 200 (134) (115 1,013 1,193	Group 2008 2007 $’000 $’000 1,108 1,108 39 200 (134) (115 1,013 1,193
		1,193

Details of the group’s associates at December 31, 2008 are as follows:

		Proportion of
	Country of	ownership interests
	incorporation	and voting
Name of associate	and operation	power held		Principal activities
		2008	2007
		%	%
Associate of SMB
Electric Xiamen Co.,
Ltd
Baoying Yanlord SMB	People’s	40	40	Manufacturing and supply of
Electric Co., Ltd (3)	Republic of			electrical switchgears and
	China			components.
Associate of EDMI
Limited
Power House	Thailand	28	28	Manufacturing and sale of
Technology Company				electronic revenue meters.
Limited (1) (2)

(1) Audited by V.R. Accounting Solution Co., Ltd., Thailand.

(2) The associate is 49% held by a subsidiary, EDMI Limited. EDMI Limited is 56% (2007: 56%) held by the company, resulting in an effective interest of approximately 28% (2007: 28%) held by the group.

(3) Audited by Bao Ying Ren Yang, Certified Public Accountants, People’s Republic of China.

– III-184 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Summarised financial information in respect of the group’s associates is set out below:

Total assets Total liabilities Group’s share of associates’ net assets Adjustment on unrealised gain on transactions with a related party Net group’s share of associates’ net assets Revenue (Loss) Profit for the year Group’s share of associates’ (loss) profit for the year 15 JOINT VENTURES Capital contribution to joint venture Share of post acquisition reserve (a)	Group 2008 2007 $’000 $’000 6,467 9,320 (3,719) (6,202) 2,748 3,118 1,147 1,308 (134) (115) 1,013 1,193 7,718 7,181 (525) 224 (222) 111 Group 2008 2007 $’000 $’000 608 83 (328) – 280 83	Group 2008 2007 $’000 $’000 6,467 9,320 (3,719) (6,202) 2,748 3,118 1,147 1,308 (134) (115) 1,013 1,193 7,718 7,181 (525) 224 (222) 111 Group 2008 2007 $’000 $’000 608 83 (328) – 280 83
		83

(a) The unrecognised share of loss for the joint ventures for 2008 is approximately $3,000 (2007: $19,000). The group considers this amount to be immaterial.

– III-185 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Details of the joint ventures of the group at December 31, 2008 are as follows:

		Proportion of
	Country of	ownership interests
	incorporation	and voting power
Name of joint venture	and operation	held		Principal activities
		2008	2007
		%	%
Joint ventures of EDMI
Limited
Advanced Meter	Singapore	28	28	Intended activities:
Software Pte Ltd (1)				Licensing and sale of
				software for meters. It has
				outsourced software
				development to a party
				related to the other joint
				venturers. This software
				development has yet to be
				completed and no revenue
				has been generated.
Wallaby Metering	India	28	28	Design, manufacture and
Systems Private				marketing of electronic
Limited (2)				energy meters and systems
				for automatic energy
				reading management.

(1) The entity has become dormant since financial year 2006 and is audited by Horwath First Trust, Singapore.

(2) The entity is incorporated on July 20, 2007 and is insignificant to the results of the group as at year end.

Summarised financial information in respect of the group’s joint ventures is set out below:

Total assets Total liabilities Revenue Loss for the year	Group 2008 2007 $’000 $’000 706 185 (199) (90 507 95 37 – (540) (39	Group 2008 2007 $’000 $’000 706 185 (199) (90 507 95 37 – (540) (39
		95
		–
		(39

16 AVAILABLE-FOR-SALE INVESTMENTS

						Group		Company
						2008	2007	2008	2007
						$’000	$’000	$’000	$’000
Quoted	equity	shares,	at	fair	value	845	3,004	32	117

The investments in quoted equity securities offer the group the opportunity for returns through dividend income and fair value gains.

– III-186 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The fair value of these securities are based on the quoted closing market prices on the last market day of the financial year.

The group’s and company’s available-for-sale investments that are not denominated in the functional currencies of the respective entities are as follows:

British pound 17 INTANGIBLE ASSETS Group Cost: At January 1, 2007 Exchange differences Amount written off At December 31, 2007 Exchange differences Amount written off At December 31, 2008 Amortisation: At January 1, 2007 Exchange differences Amortisation for the year Amount written off At December 31, 2007 Exchange differences Amortisation for the year Amount written off At December 31, 2008 Impairment: At January 1, 2007 and December 31, 2007 Eliminated on write off At December 31, 2008 Carrying amount: At December 31, 2008 At December 31, 2007	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)	Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 813 2,887 – – Goodwill on acquisition of business Patents, trademarks and licenses Software development costs Product development costs Total $’000 $’000 $’000 $’000 $’000 278 362 520 978 2,138 15 15 – – 30 – – – (67) (67)
						Total $’000 2,138 30 (67)
	293 (76) – 217 – – – – – – – – – – – –	377 (80) – 297 204 9 126 – 339 (78) 36 – 297 – – –	520 – (520) – 439 – 39 – 478 – 29 (507) – – – –	911 – (467) 444 421 – 283 (27) 677 – 154 (387) 444 70 (70) –		2,101 (156) (987)
						958
						1,064 9 448 (27)
						1,494 (78) 219 (894)
						741
						70 (70)
						–
	217 293	– 38	– 42	– 164		217
						537

– III-187 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination.

The carrying amount of goodwill, net of exchange differences, had been allocated to CGUs which are based on the subsidiaries’ operating divisions as follows:

Manufacturing division of SMB Harwal Electric Pty Limited Wholesale division of Bridex Australia Pty Limited	Group 2008 2007 $’000 $’000 61 77 156 216 217 293	Group 2008 2007 $’000 $’000 61 77 156 216 217 293
		293

The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and risks specific to the CGUs. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The group prepares cash flow forecasts derived from the most recent financial budgets approved by management and extrapolates cash flows for the following four years based on an estimated growth rate of 5% to 10% (2007: 5% to 10%) per annum.

This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount the forecast cash flows from the above operating divisions is 9.7% (2007: 9.7%) per annum.

18 OTHER RECEIVABLES

				Group
				2008	2007
				$’000	$’000
Loan	to	outside	party	499	–

The loan is interest-free and to be offset against EDMI Limited’s (subsidiary) subscription price on the date of completion of the acquisition of ATLAS Group (Note 35a).

The group’s other receivables is denominated in Australian dollar.

19 DEFERRED TAX ASSETS

At beginning of year Exchange differences Credit to profit and loss Overprovision in prior year Reclassification (Note 24) At end of year	Group 2008 2007 $’000 $’000 1,027 492 (151) 12 4 124 – 399 (12) – 868 1,027	Group 2008 2007 $’000 $’000 1,027 492 (151) 12 4 124 – 399 (12) – 868 1,027
		1,027

– III-188 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The following are the major deferred tax assets recognised by the group and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2007 (61) 365 Exchange differences – 12 Credit (Charge) to profit and loss 10 180 (Over) Under provision in prior year 30 (9) At December 31, 2007 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 20 BANK BORROWINGS Bank overdraft A Bank overdraft B Bank overdraft C Trust receipts A Trust receipts B Banker’s acceptance Short term bank loan A Short term bank loan B Short term bank loan C Short term bank loan D Short term bank loan E Short term bank loan F Bank loan A Bank loan B Bank loan C Bank loan D Total	Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2007 (61) 365 Exchange differences – 12 Credit (Charge) to profit and loss 10 180 (Over) Under provision in prior year 30 (9) At December 31, 2007 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 20 BANK BORROWINGS Bank overdraft A Bank overdraft B Bank overdraft C Trust receipts A Trust receipts B Banker’s acceptance Short term bank loan A Short term bank loan B Short term bank loan C Short term bank loan D Short term bank loan E Short term bank loan F Bank loan A Bank loan B Bank loan C Bank loan D Total	Accelerated tax depreciation Provisions and allowances $’000 $’000 Group At January 1, 2007 (61) 365 Exchange differences – 12 Credit (Charge) to profit and loss 10 180 (Over) Under provision in prior year 30 (9) At December 31, 2007 (21) 548 Exchange differences – (135) Credit (Charge) to profit and loss 12 327 Reclassification – – At December 31, 2008 (9) 740 20 BANK BORROWINGS Bank overdraft A Bank overdraft B Bank overdraft C Trust receipts A Trust receipts B Banker’s acceptance Short term bank loan A Short term bank loan B Short term bank loan C Short term bank loan D Short term bank loan E Short term bank loan F Bank loan A Bank loan B Bank loan C Bank loan D Total		Tax losses $’000 – – (130) 378	Others $’000 188 – 64 –	Others $’000 188 – 64 –	Total $’000 492 12 124 399
	(21) – 12 –	548 (135) 327 –		248 (14) (220) –	252 (2) (115) (12)		1,027 (151 4 (12
	(9)	740		14 123 Group 2008 $’000 1,778 703 –			868
							2007 $’000 1,555 961 1,143
				2,481 959 225 175 1,359 – 3,000 449 – – – 3,449 864 213 760 –			3,659
							870 141 420
							1,431
							511 1,500 – 127 823 3,028
							5,989
							900 225 966 296
				1,837 9,126			2,387
							13,466

– III-189 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The borrowings are repayable as follows:

On demand or within one year In the second to fifth year inclusive After five years Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Group 2008 2007 $’000 $’000 7,566 11,363 780 1,231 780 872 9,126 13,466 (7,566) (11,363) 1,560 2,103	Group 2008 2007 $’000 $’000 7,566 11,363 780 1,231 780 872 9,126 13,466 (7,566) (11,363) 1,560 2,103
		13,466 (11,363)
		2,103

Bank overdraft A is repayable on demand. The average effective interest rate approximated 5.3% (2007: 5.3%) per annum during the year and is determined based on prime lending rate.

Bank overdraft B is repayable on demand. The average effective interest rate approximated 5.9% (2007: 5.9%) per annum during the year and is determined based on 1% plus prime rate.

Bank overdraft C was repayable on demand and unsecured. In 2007, the average effective interest rate approximated 6.9% per annum and was determined based on 0% to 0.75% plus prime rate.

Trust receipts A have a repayment term of 90 to 180 days (2007: 90 to 180 days). The average effective interest rate approximated 5.6% (2007: 5%) per annum during the year and is based on 1% to 1.5% (2007: 1% to 1.8%) plus prime rate.

Trust receipts B have a repayment term of 150 days (2007: 150 days). The average effective interest rate approximated 6% (2007: 6%) per annum during the year and is determined based on 1% plus prime rate.

Banker’s acceptance have a repayment term of 150 days (2007: 150 days). The average effective interest rate approximated 5.3% (2007: 4.1%) per annum during the year. It is covered by a corporate guarantee by the company of $955,000 (2007: $1,000,000).

In 2007, short term bank loan A bore an average effective interest at 2.9% per annum. It was repayable in 6 monthly instalments from November 2007. The loan was fully repaid in 2008.

Short term bank loan B is a short-term revolving loan which is repayable on demand and average effective interest rate approximated 3.4% per annum (2007: 4.3%) which is determined based on 0.85% above cost of fund. The loan is renewed every month.

Short term bank loan C has a tenure of 6 months. The average effective interest rate approximated 8.8% per annum which is determined based on 1.5% above the bank lending rate. It is covered by a corporate guarantee by the company of $499,000.

In 2007, short term bank loan D was repayable on demand and bore interest at 8.2% to 9% per annum which was determined based on 0.75% above cost of fund. It was covered by a corporate guarantee by the company of $633,000. The loan was fully repaid in 2008.

In 2007, short term bank loan E was repayable on demand and bore interest at 7.3% to 8.7% per annum. It was covered by a corporate guarantee by the company of $1,226,000. The loan was fully repaid in 2008.

In 2007, short term bank loan F bore an average effective interest at 3.9% per annum and was repayable within the next 12 months. The loan was fully repaid in 2008.

Bank loan A bears fixed interest at 2.65% and 3% per annum, for the first year (2004) and second year respectively; 1.37% per annum below prevailing board rates for the third and fourth years; and 1.25% per annum prevailing board rates for subsequent years. It is repayable in 240 monthly instalments effective from November 2004.

– III-190 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Bank loan B bears fixed interest at 4.5% and 5% per annum for the first year (2006) and second year respectively; and 0.75% per annum above the bank’s commercial financing rate for subsequent years. It is repayable in 180 monthly instalments from September 2006.

Bank loan C bears fixed interest rate at 4.25% per annum for the first year of drawndown, 4.75% per annum for second year of drawndown and at 0.5% bank’s commercial financing rate for subsequent years. It is repayable in 60 monthly instalments from May 2007.

In 2007, bank loan D bore interest at 6% per annum and was repayable in 160 monthly instalments effective from November 2003. Bank loan D was secured by a first legal mortgage on a subsidiary’s leasehold property. It was also covered by a corporate guarantee of $443,000 by another subsidiary. The loan was fully repaid in 2008.

Bank overdraft A, trust receipts A, short term bank loan A and bank loan A and B are secured by a legal mortgage on a subsidiary’s leasehold property and a corporate guarantee of $5,105,000 (2007: $5,105,000) provided by the company.

Bank overdraft B and trust receipts B are covered by corporate guarantee from the company of $1,500,000 (2007: $7,500,000) and personal guarantee by a director of $1,500,000 (2007: $1,700,000).

Bank loan C and short term bank loan B are secured by a legal mortgage on subsidiary’s leasehold property and a corporate guarantee of $20,013,000 (2007: $17,200,000) by the company.

Trust receipts and bank loans are mainly arranged at floating rates thus exposing the group to cash flow interest rate risk.

The group’s borrowings that are not denominated in the functional currencies of the respective entities are as follows:

			Group		Company
			2008	2007	2008	2007
			$’000	$’000	$’000	$’000
United	States	dollar	–	135	–	–

21 TRADE PAYABLES

Outside parties Associate (Note 14) Related parties (Note 5)	Group 2008 2007 $’000 $’000 28,918 32,685 179 – 29 29 29,126 32,714	Group 2008 2007 $’000 $’000 28,918 32,685 179 – 29 29 29,126 32,714
		32,714

At December 31, 2008, the group has $157,000 (2007: $129,000) of trade payables arising from contract work which are due for settlement after more than 12 months. These amounts have been classified as current because they are expected to be realised in the normal operating cycle.

The average credit period on purchases of goods is 30 to 120 days (2007: 30 to 120 days). No interest is charged on outstanding trade payables. The group has financial risk management policies in place to ensure that all payables are within the credit time frame.

– III-191 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group’s trade payables that are not denominated in the functional currencies of the respective entities are as follows:

	Group
	2008	2007
	$’000	$’000
Singapore dollar	64	111
United States dollar	9,622	4,245
Euro	760	1,227
British pound	91	269
Malaysian ringgit	–	9
Others	70	7

22 OTHER PAYABLES

Subsidiaries (Note 13) Associates (Note 14) Related parties (Note 5) Amounts owing to directors Salary-related accruals Sundry creditors Accrued expenses Advances from customers Financial guarantee contracts	Group 2008 2007 $’000 $’000 – – – 699 216 186 951 1,233 3,581 4,099 2,260 1,237 2,385 2,740 388 202 – – 9,781 10,396	Company 2008 2007 $’000 $’000 212 5,291 – – – 951 1,233 98 55 40 58 190 84 – – 47 49 1,538 6,770	Company 2008 2007 $’000 $’000 212 5,291 – – – 951 1,233 98 55 40 58 190 84 – – 47 49 1,538 6,770
			6,770

The amounts owing to directors are unsecured, interest-free and repayable on demand. They comprise accrued fees and performance bonus.

The company has provided financial guarantees to banks in respect of loans borrowed and credit facilities by certain subsidiaries.

The group’s and company’s other payables that are not denominated in the functional currencies of the respective entities are as follows:

	Group		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
United States dollar	324	–	–	–
Euro	68	–	–	–
British pound	33	–	–	–
Thai baht	–	205	–	–

– III-192 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

23 FINANCE LEASES

Group Amounts payable under finance leases: Within one year In the second to fifth year inclusive After five years Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months Company Amounts payable under finance leases: Within one year In the second to fifth year inclusive Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments 2008 2007 $’000 $’000 524 378 940 613 – 14	Minimum lease payments 2008 2007 $’000 $’000 524 378 940 613 – 14	Minimum lease payments 2008 2007 $’000 $’000 524 378 940 613 – 14	Present value of minimum lease payments 2008 2007 $’000 $’000 450 339 841 534 – 13	Present value of minimum lease payments 2008 2007 $’000 $’000 450 339 841 534 – 13
	1,464 (173)		1,005 (119)	1,291 NA	886 NA
	1,291 108 216 324 (41)		886	1,291	886
				(450)	(339
				841	547
		)	108 323 431 (54)	94 189 283 NA	94 283
	324 (41				377 NA
	283		377	283	377
				(94)	(94
				189	283

The term of finance leases entered into is between 3 to 7 years (2007: 3 to 7 years).

For the year ended December 31, 2008, the weighted average effective borrowing rates for the group is 6% (2007: 5.7%) per annum. The effective borrowing rate for the company was 5.6% (2007: 5.6%) per annum. Interest rates are fixed at the contract date, and thus expose the group and company to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

All lease obligations are denominated in the functional currency of the respective entities.

The fair value of the group’s lease obligations approximate their carrying amounts.

The group’s and company’s obligation under finance leases are secured by the leased assets.

– III-193 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

24 DEFERRED TAX LIABILITIES

At beginning of year Exchange differences (Over) Under provision in prior years Charge (Credit) to profit and loss Effect of change in tax rate Reclassification (Note 19) At end of year	Group 2008 2007 $’000 $’000 1,324 1,161 (13) 3 (11) 230 193 (9) – (61) (12) – 1,481 1,324	Company 2008 2007 $’000 $’000 5 11 – – – – (3) (6) – – – – 2 5	Company 2008 2007 $’000 $’000 5 11 – – – – (3) (6) – – – – 2 5
			5

The following are the major deferred tax liabilities (assets) recognised by the company and the group and movements thereon during the year:

Accelerated tax depreciation Allowance for doubtful debts $’000 $’000 Group At January 1, 2007 1,233 (131) Exchange differences 1 – Under (Over) provision in prior years 76 131 Charge (Credit) to profit and loss 34 – Effect of change in tax rate (61) – At December 31, 2007 1,283 – Exchange differences (9) – (Over) Under provision in prior years (13) – Charge to profit and loss 183 – Reclassification – – At December 31, 2008 1,444 – Company At January 1, 2007 Credit to profit and loss At December 31, 2007 Credit to profit and loss At December 31, 2008	Accelerated tax depreciation Allowance for doubtful debts $’000 $’000 Group At January 1, 2007 1,233 (131) Exchange differences 1 – Under (Over) provision in prior years 76 131 Charge (Credit) to profit and loss 34 – Effect of change in tax rate (61) – At December 31, 2007 1,283 – Exchange differences (9) – (Over) Under provision in prior years (13) – Charge to profit and loss 183 – Reclassification – – At December 31, 2008 1,444 – Company At January 1, 2007 Credit to profit and loss At December 31, 2007 Credit to profit and loss At December 31, 2008	Accelerated tax depreciation Allowance for doubtful debts $’000 $’000 Group At January 1, 2007 1,233 (131) Exchange differences 1 – Under (Over) provision in prior years 76 131 Charge (Credit) to profit and loss 34 – Effect of change in tax rate (61) – At December 31, 2007 1,283 – Exchange differences (9) – (Over) Under provision in prior years (13) – Charge to profit and loss 183 – Reclassification – – At December 31, 2008 1,444 – Company At January 1, 2007 Credit to profit and loss At December 31, 2007 Credit to profit and loss At December 31, 2008	Tax losses $’000 (43) – 25 16 2	Others $’000 102 2 (2) (59) (2)	Others $’000 102 2 (2) (59) (2)	Total $’000 1,161 3 230 (9) (61)
	1,283 (9) (13) 183 –	– – – – –	– – – – –	41 (4) 2 10 (12)		1,324 (13) (11) 193 (12)
	1,444	–	–		37 1,481 Accelerated tax depreciation $’000 11 (6)	1,481
					5 (3)
					2

At the balance sheet date, deferred tax liability arising from undistributed profits of subsidiaries has not been recognised because the group controls the dividend policy of the subsidiary and has determined that the profits will not be distributed in the foreseeable future.

– III-194 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

25 SHARE-BASED PAYMENTS

Equity-settled share option scheme

• (a) SMB Share Option Scheme 2001

In 2007, the company issued 11,835,000 fully paid ordinary shares for cash on the exercise of options under the SMB Share Option Scheme 2001.

During the year, there was no grant of options under this scheme to directors and employees of the company or any corporation in the group. As at the beginning and end of the year, there were no unissued shares under option under this scheme. Subsequent to the financial year end, the SMB Share Option Scheme 2001 was terminated.

Under this scheme, each share option entitled the directors (excluding executive directors who are substantial shareholders) and employees (excluding employees who are also controlling shareholders and their associates) of the group to subscribe for one new ordinary share in the company at an exercise price determined at the average price of the company’s share traded in the Singapore Exchange Securities Trading Limited for the three consecutive trading days immediately preceding the offer date of that option, rounded up to the nearest whole cent in the event of fractional prices.

The aggregate nominal amount of shares that the committee may grant options, when added to the aggregate nominal amount of shares issued and issuable under the SMB Share Option Scheme 2001 shall not exceed 15% of the issued share capital of the company on the date immediately preceding the offer date of the option.

Details of the share options outstanding during the year are as follows:

Outstanding at beginning of year Exercised during the year Outstanding at end of year Exercisable at end of year	Company 2008 2007 Number of share options Weighted average exercise price Number of share options Weighted average exercise price ’000 $ ’000 $ – – 11,835 0.15 – – (11,835) 0.15 – – – –

The weighted average share price at the date of exercise for share options exercised during the year was $NIL (2007: $0.31). All options granted have been fully exercised at end of 2007.

No share options were granted in 2008 and 2007. The fair values of share options granted that falls within the scope of FRS 102 Share-based Payment were calculated using the Binomial pricing model. The inputs into the model were as follows:

Weighted average share price	$0.144
Weighted average exercise price	$0.144
Expected volatility	51.6%
Expected life	4
Risk free rate	2.74%
Expected dividend yield	4.73%

Expected volatility was determined by calculating the historical volatility of the company’s share price over the preceding three years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

– III-195 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

During the year, the company recognised total expenses of $NIL (2007: $2,000) related to equity-settled share-based payment transactions under the SMB Share Option Scheme 2001.

(b) EDMI Share Option Scheme 2003

Each share option entitles the directors (excluding executive directors who are substantial shareholders) and employees (excluding employees who are also controlling shareholders and their associates) of EDMI Limited group to subscribe for one new ordinary share in EDMI Limited at an exercise price determined at the average price of EDMI Limited’s share traded in the Singapore Exchange Securities Trading Limited for the three consecutive trading days immediately preceding the offer date of that option, rounded up to the nearest whole cent in the event of fractional prices.

The aggregate nominal amount of shares that the committee may grant options, when added to the aggregate nominal amount of shares issued and issuable under the EDMI Share Option Scheme 2003 shall not exceed 15% of the issued share capital of EDMI Limited on the date immediately preceding the offer date of the option.

To qualify for the EDMI Share Option Scheme 2003, eligible employees must be in full time service of EDMI Limited group for at least one year on or prior to the relevant offer date. However, the committee administering the scheme may at its discretion abridge the one-year service requirement in respect of any employee.

The options are granted for a consideration of $1.00 for all the shares in respect of which the options are granted. The options may be exercised after one year from the date of the grant subject to the condition that up to 25%, 50% and 75% of the options may be exercised prior to the second, third and fourth anniversary of the offer date of options respectively. The shares under option may be exercised in full or in multiples of 1,000 shares on payment of the exercise price. Options granted will be cancelled upon the occurrence of certain events such as cessation of employment.

Options are exercisable at a price based on the average of the last dealt prices on the Singapore Exchange Securities Trading Limited, for a share over the three trading days immediately preceding the grant of the option, rounded to the nearest whole cent in the event of fractional prices. The exercisable period is 10 years for directors and employees, and 5 years for independent directors of EDMI Limited group. If the options remain unexercised after the specified period from the date of grant, the options expire. Options are forfeited if the participant leaves the EDMI Limited group before the options vest.

Details of the share options outstanding during the year are as follows:

Outstanding at beginning of year Granted during the year Exercised during the year Lapsed during the year Outstanding at end of year Exercisable at end of year	EDMI Limited 2008 2007 Number of share options Weighted average exercise price Number of share options Weighted average exercise price ’000 $ ’000 $ 15,505 0.23 13,615 0.13 – – 5,610 0.32 (590) 0.13 (3,480) 0.13 (2,950) 0.31 (240) 0.23 11,965 15,505 6,728 3,175

The weighted average share price at the date of exercise for share options exercised during the year was $0.22 (2007: $0.35). The options outstanding at the end of the year have a weighted average remaining contractual life of 5.6 years (2007: 6.6 years) for executive share options and 1.1 years (2007: 2.1 years) for non-executive share options.

– III-196 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The estimated fair values of the options granted on March 13, 2007 are $665,000. No share options were granted in 2008.

The fair values for share options granted in 2007 were calculated using the Binomial pricing model. The inputs into the model were as follows:

Weighted average share price	$0.32
Weighted average exercise price	$0.32
Expected volatility	48%
Expected life	7.9
Risk free rate	3.0%
Expected dividend yield	1.0%

Expected volatility was determined by calculating the historical volatility of the subsidiary’s share price over the previous two years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

During the year, the group recognised total expense (net of minority interests) of $131,000 (2007: $134,000) related to equity-settled share-based payment transactions under the EDMI Share Option Scheme 2003.

• (c) During the year, total share option expense (net of minority interests) recognised by the group under SMB Share Option Scheme 2001 and EDMI Share Option Scheme 2003 is $131,000 (2007: $136,000).

26 SHARE CAPITAL

Issued and paid up: At beginning of year Exercise of share options Note 25(a) At end of year	2008 ’000 479,752 – 479,752	Group and Company 2007 2008 ’000 $’000 Number of ordinary shares 467,917 75,113 11,835 – 479,752 75,113	2007 $’000 73,314 1,799
			75,113

The ordinary shares, which have no par value, carry one vote per share and carry a right to dividends when declared by the company.

27 REVENUE

Sale of goods Contract revenue Service income	Group 2008 2007 $’000 $’000 193,756 169,750 13,448 16,803 6,143 5,023 213,347 191,576	Group 2008 2007 $’000 $’000 193,756 169,750 13,448 16,803 6,143 5,023 213,347 191,576
		191,576

– III-197 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

28 OTHER OPERATING INCOME

Interest income from non-related companies Rental income from non-related companies Gain on dilution of investment in a subsidiary Dividend income from non-related companies Government grant Miscellaneous income	Group 2008 2007 $’000 $’000 357 389 – 269 – 582 7 7 11 12 546 410 921 1,669	Group 2008 2007 $’000 $’000 357 389 – 269 – 582 7 7 11 12 546 410 921 1,669
		1,669

29 INCOME TAX EXPENSE

Current Deferred Overprovision in prior years Income tax expense for the year	Group 2008 2007 $’000 $’000 3,463 2,627 189 (194) (484) (517) 3,168 1,916	Group 2008 2007 $’000 $’000 3,463 2,627 189 (194) (484) (517) 3,168 1,916
		1,916

Domestic income tax is calculated at 18% (2007: 18%) of the estimated assessable profit for the year. Taxation for foreign entities is calculated at the rates prevailing in the relevant jurisdictions.

The total charge for the year can be reconciled to the accounting profit as follows:

Profit before tax Income tax expense Average effective tax rate Tax at the domestic income tax rate Tax effect of expenses that are not deductible (taxable) in determining taxable profit Overprovision in prior years Tax effect of utilisation of deferred tax benefit previously not recognised Deferred tax benefit not recognised Effect of different tax rates of subsidiaries operating in other jurisdictions Tax exemption and rebate Effect of change in tax rate Other items Average effective tax rate	2008 $’000 18,181 3,168 17.4% 2008 % 18.0 3.1 (2.6) (0.1) 0.5 0.9 (1.8) (0.3) (0.3) 17.4	2007 $’000 22,693 1,916 8.4%
		2007 % 18.0 (4.2) (2.3) (2.4) 0.4 0.5 (1.5) (0.2) 0.1
		8.4

– III-198 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

The group has tax losses carryforwards available for offsetting against future taxable income as follows:

Amount at beginning of year Exchange differences Adjustments Amount in current year Amount utilised in current year Amount at end of year Deferred tax benefit on above: – recognised – not recognised	Group 2008 2007 $’000 $’000 5,635 7,535 (150) 61 325 130 451 389 (1,011) (2,480 5,250 5,635 14 248 1,054 976	Group 2008 2007 $’000 $’000 5,635 7,535 (150) 61 325 130 451 389 (1,011) (2,480 5,250 5,635 14 248 1,054 976
		5,635
		248 976

Deferred tax benefits vary from the Singapore statutory tax rate as it includes deferred tax on overseas operation.

The potential tax savings relating to tax losses carried forward are recognised as deferred tax assets only when there is reasonable expectation of realisation in the foreseeable future. The tax losses can be carried forward to future periods subject to the conditions imposed by the law in the respective tax jurisdictions.

30 PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging (crediting):

Depreciation, amortisation and impairment: Depreciation of property, plant and equipment Depreciation of investment property Amortisation: Patents, trademarks and licences (1) Software development cost (2) Product development cost (1) Product development cost (2) Impairment loss on available-for-sale investments Total depreciation, amortisation and impairment Directors’ remuneration: Company’s directors Subsidiaries’ directors Total directors’ remuneration Employee benefits expense (including directors’ remuneration): Cost of defined contribution plans Others Total employee benefits expense	Group 2008 2007 $’000 $’000 3,054 2,951 – 73 36 126 29 39 76 131 78 152 190 – 3,463 3,472	Group 2008 2007 $’000 $’000 3,054 2,951 – 73 36 126 29 39 76 131 78 152 190 – 3,463 3,472
		3,472
	2,714 3,033	2,965 2,410
	5,747	5,375
	2,973 44,704	2,504 39,294
	47,677	41,798

– III-199 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Net foreign exchange loss (gain) (1) Research costs (3) Non-audit fees paid/payable to: Auditors of the company Other auditors Cost of inventories recognised as expense (Reversal) Allowance for inventories Allowance (Reversal) for doubtful trade receivables Allowance for doubtful non-trade receivables Allowance for foreseeable losses on contracts Inventory written off Bad debts written off Intangible assets written off Loss (Gain) on dilution of shareholding interest in a subsidiary Exceptional item – Gain on disposal of available-for-sale investments	Group 2008 2007 $’000 $’000 3,149 (165) 3,076 3,029 60 57 12 11 141,042 125,424 (66) 81 149 (920) 141 33 831 203 14 94 106 89 23 40 26 (582) – (7,393)	Group 2008 2007 $’000 $’000 3,149 (165) 3,076 3,029 60 57 12 11 141,042 125,424 (66) 81 149 (920) 141 33 831 203 14 94 106 89 23 40 26 (582) – (7,393)
		(7,393)

(1) These are included in general and administrative expenses in the consolidated profit and loss statement.

(2) These are included in cost of sales in the consolidated profit and loss statement.

(3) These are included in other operating expenses in the consolidated profit and loss statement.

31 EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the company is based on the following data:

Earnings Net profit attributable to equity holders of the company Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share Effect of dilutive potential ordinary shares arising from share options Weighted average number of ordinary shares for the purposes of diluted earnings per share	Group 2008 2007 $’000 $’000 13,563 19,616 2008 2007 No. of shares No. of shares (’000) (’000) 479,752 477,121 – 1,517 479,752 478,638	Group 2008 2007 $’000 $’000 13,563 19,616 2008 2007 No. of shares No. of shares (’000) (’000) 479,752 477,121 – 1,517 479,752 478,638
		2007 No. of shares (’000) 477,121 1,517
		478,638

– III-200 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

32 COMMITMENTS

(i) Operating lease commitments

The group as lessee

	Group
	2008	2007
	$’000	$’000
Minimum lease payments under operating leases
recognised as an expense in the year	2,310	2,417

At the balance sheet date, the group has outstanding commitments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive After five years	Group 2008 2007 $’000 $’000 1,451 1,615 1,917 2,387 5,921 7,076 9,289 11,078	Group 2008 2007 $’000 $’000 1,451 1,615 1,917 2,387 5,921 7,076 9,289 11,078
		11,078

Operating lease payments represent rentals payable by the group for its leasehold land, and certain of its factory and office premises, and office equipment. Leases are entered into for a period of one to thirty years.

Operating lease commitments stated above includes existing rental rates before deduction for discretionary rebates given by the landlord for certain premises. Certain rental rates are subject to future adjustments based on changes in the consumer price index.

The group as lessor

The group rents out its investment property in Singapore under operating lease. Property rental income earned in 2007 was $269,000. The investment property was disposed in 2007.

(ii) Other financial commitments

	Group		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Performance guarantee – unsecured	1,754	1,583	–	–
Performance guarantee – secured	5,185	5,049	–	–
Bankers’ guarantee – secured	176	–	–	–
Corporate guarantees to banks in
connection with credit facilities of
subsidiaries – unsecured	–	–	44,823	30,380

The maximum estimated amount that the group and the company could become liable is shown above.

In addition to deposits amounting to approximately $196,000 (2007: $64,000) pledged to the bank, the securities for performance guarantee include legal mortgages on the subsidiaries’ leasehold properties and personal guarantee by a director of that subsidiary.

– III-201 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

33 SEGMENT INFORMATION

Segment revenue and expense: Segment revenue and expense are the operating revenue and expense reported in the group’s profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital additions include the total cost incurred to acquire property, plant and equipment, and intangible assets directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of accounts payable and accruals.

Business segments

For management purposes, the group is organised into four main operating divisions: switchgear; power and technology; trading and distribution; and building services.

Principal activities of each business segment are as follows:

Switchgear	–	Manufacture and supply of electrical switchgears.
Power and technology	–	Manufacture and sale of electronic revenue meters for use
		principally by utility companies involved in the generation,
		distribution and supply of electricity; provision of electrical
		efficiency and energy management solutions.
Trading and distribution	–	Import, export and supply of electrical and electronic components
		and equipment.
Building services	–	Design, installation and maintenance of computerised automation
		and control systems; plumbing and electrical contracting and
		supply of related products.
Others	–	This comprise investment holding and corporate activities.

– III-202 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

2008 Revenue External revenue Inter-segment revenue Result Segment results Interest expense Interest income Share of results of associates Share of results of joint ventures Profit before income tax Income tax expense Profit after income tax Other information Segment assets Associates and joint ventures Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation	Switchgear $’000 116,684 1,810 118,494 12,080 96,216 12,541 6,160 1,727 23	Power and technology $’000 56,125 511 56,636 2,738 55,835 13,705 864 954 232	Trading and distribution $’000 15,620 8,413 24,033 2,065 17,006 3,395 175 234 –	Building services $’000 24,918 – 24,918 1,217 17,533 8,541 64 252 –	Others $’000 – – – 782 2,815 1,357 12 106 –	Elimination $’000 – (10,734) (10,734) – – – – – –	Total $’000 213,347 –
							213,347
							18,882 (553 357 (222 (283
							18,181 (3,168
							15,013
							189,405 1,293 2,211
							192,909
							39,539 15,099
							54,638
							7,275 3,273 255

– III-203 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

2007 Revenue External revenue Inter-segment revenue Result Segment results Exceptional item Interest expense Interest income Share of results of associates Profit before income tax Income tax expense Profit after income tax Other information Segment assets Associates and joint ventures Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Capital expenditure (property, plant and equipment) Depreciation and amortisation Non-cash expenses other than depreciation and amortisation	Switchgear $’000 96,232 3,404 99,636 9,748 86,241 21,526 3,690 1,549 1	Power and technology $’000 51,991 2,849 54,840 2,293 57,834 7,014 1,142 1,154 277	Trading and distribution $’000 16,328 8,236 24,564 2,898 18,459 4,521 156 272 –	Building services $’000 27,025 – 27,025 1,173 18,561 9,895 78 382 –	Others $’000 – – – (670) 9,012 1,505 1,066 115 1	Elimination $’000 – (14,489) (14,489) – – – – – –	Total $’000 191,576 –
							191,576
							15,442 7,393 (642 389 111
							22,693 (1,916
							20,777
							190,107 1,276 4,031
							195,414
							44,461 18,128
							62,589
							6,132 3,472 279

– III-204 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

Geographical segments

The group operates in four principal geographical areas namely, Singapore, Oceania, Malaysia and Asia (excluding Singapore and Malaysia).

Segment revenue is based on the geographical location of customers. Segment assets and capital expenditure are based on the geographical location of the assets and capital expenditure.

Singapore Oceania Malaysia Asia (excluding Singapore and Malaysia) Others	Revenue 2008 2007 $’000 $’000 112,565 105,391 38,003 23,358 26,609 28,229 21,469 26,459 14,701 8,139 213,347 191,576	Carrying amount of segment assets 2008 2007 $’000 $’000 154,208 154,251 11,782 15,647 17,377 16,898 9,542 8,618 – – 192,909 195,414	Capital expenditure 2008 2007 $’000 $’000 5,374 5,242 366 445 1,408 171 127 274 – – 7,275 6,132	Capital expenditure 2008 2007 $’000 $’000 5,374 5,242 366 445 1,408 171 127 274 – – 7,275 6,132
				6,132

34 DIVIDENDS

In 2007, the company declared and paid a dividend of 1.8 cents per ordinary shares less tax (18%) totalling $7,037,302 in respect of the financial year ended December 31, 2006. The company also declared and paid an interim dividend of 1.3 cents per ordinary share (tax exempt one-tier) totalling $6,236,776 in respect of the financial year ended December 31, 2007.

In 2008, the company declared and paid a final dividend of 1.4 cents per ordinary shares (tax exempt one-tier) totalling $6,716,528 in respect of the financial year ended December 31, 2007.

In respect of the current year, the directors propose that a final dividend of 1.0 cent per ordinary share (tax exempt one-tier) be paid to shareholders on May 22, 2009. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as liability in these financial statements. The proposed dividend is payable to all shareholders who are on the Register of Members as at May 11, 2009. Based on the number of shares as at February 27, 2009, the total estimated dividend to be paid is $4,798,000.

35 EVENTS AFTER THE BALANCE SHEET DATE

• (a) In the current financial year, EDMI Limited (subsidiary) has entered into a Shareholders’ Deed of Arrangement and a Deed of Variation of Shareholders’ Deed of Arrangement (the “Deeds”) with

• (i) Global Machine Tools Pty Ltd (“GFT”);

• (ii) Ian Grant Montgomery and Jennie Helen Akers ATF Dorothy Akers Trust (“DAT”);

• (iii) Brad Golic (“BG”) as shareholder representative of GFT;

• (iv) Ian Grant Montgomery (“IGM”) as shareholder representative of DAT;

• (v) Lee Kwang Mong, Douglas David Ross and Chin Jin Meng as shareholder representative of EDMI; and

• (vi) Atlas Measurement Pty Ltd (“ATLAS”)

– III-205 –

APPENDIX III FINANCIAL INFORMATION ON THE OFFEREE GROUP

to record their agreement on the relationship between themselves and the way ATLAS carry on the proposed acquisition from the Atlas Group of Companies (“ATLAS Group”).

ATLAS Group consist of Atlas Measurement (Gas) Pty Ltd, Atlas Measurement (Electricity) Pty Ltd and BSR Tooling (Australia) Pty Ltd which are all incorporated in Australia and are in the business of supplying quantity measurement and control equipment in the gas and electricity industries throughout Australia and associated repair services.

In accordance with the Deeds, EDMI Limited will subscribe for 60% of shares in ATLAS at an agreed subscription price of A$3,216,000. The remaining 40% will be subscribed equally between GFT and DAT at A$1,072,000 each of the 20% shareholding interest in ATLAS.

Based on letter of agreement dated on June 12, 2008, the purchase price has been revised from A$5,360,000 to A$4,288,000. The company will subscribe for 75% of shares in ATLAS at an agreed subscription price of A$3,216,000. The remaining 25% will be subscribed equally between GFT and DAT at A$536,000 each of the 12.5% shareholding interest in ATLAS.

Based on the Final Extension Letter Agreement dated on November 26, 2008, it was mutually agreed that the final extension date in relation to the satisfaction of all the conditions precedent for the acquisition shall be extended to March 31, 2009. EDMI Limited has extended a loan amounting A$500,000 to ATLAS Group in June 2008 and the loan shall be used to partially offset against the company subscription price on the date of completion of the acquisition. The loan is interest free for the period from the loan disbursement date until the date of completion of the acquisition. In the event that the proposed acquisition is not completed by March 31, 2009, the company is entitled to the repayment of the full amount of the loan, together with all interest accrued based on prevailing commercial interest rate thereon from ATLAS Group within 12 months from the loan disbursement date.

• (b) Subsequent to the financial year end, Bridex Singapore Pte Ltd (subsidiary of the company) has acquired an aggregate of 6,603,000 shares in EDMI Limited (a subsidiary company) over 2 tranches, through a married deal at the price of $0.11 per share (excluding brokerage and fees), resulting in an increase in the company’s deemed interest in EDMI Limited (held through Bridex Singapore Pte Ltd) to 125,289,535 shares, representing 59.29% of EDMI Limited’s issued share capital.

– III-206 –

APPENDIX IV

PROPERTY VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from Jones Lang LaSalle Sallmanns Limited, an independent valuer, in connection with its valuation as at 31 October 2011 of the property interests of the Group.

Jones Lang LaSalle Sallmanns Limited 6/F Three Pacific Place 1 Queen’s Road East Hong Kong tel +852 2169 6000 fax +852 2169 6001 Licence No: C-030171

21 November 2011

The Board of Directors Boer Power Holdings Limited Clifton House 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Dear Sirs,

Reference is made to the Boer Power Holdings Limited’s announcement in relation to the Acquisition and the Offer which constitute a very substantial acquisition voluntary conditional cash offer for all shares in SMB United Limited, a company listed on the main board of the Singapore Exchange Limited.

In accordance with your instructions to value the properties in which Boer Power Holdings Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in the People’s Republic of China (the “PRC”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital values of the property interests as at 31 October 2011 (the “date of valuation”).

Our valuation of the property interests represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

Where, due to the nature of the buildings and structures of property interests in Group I and the particular locations in which they are situated, there are unlikely to be relevant market comparable sales readily available. The property interests have therefore been valued on the basis of their depreciated replacement cost.

– IV-1 –

APPENDIX IV

PROPERTY VALUATION REPORT

Depreciated replacement cost is defined as “the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization.” It is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement (reproduction) of the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimization. The depreciated replacement cost of the property interest is subject to adequate potential profitability of the concerned business.

We have attributed no commercial value to the property interests in Group II and III, which are rented by the Group, due either to the short-term nature of the lease or the prohibition against assignment or sub-letting or otherwise due to the lack of substantial profit rent.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interests valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Valuation Standards published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards on Properties published by the Hong Kong Institute of Surveyors; and the International Valuation Standards published by the International Valuation Standards Council.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including State-owned Land Use Rights Certificates, Building Ownership Certificates and official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – Jingtian & Gongcheng Law Firm, concerning the validity of the property interests in the PRC.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

– IV-2 –

APPENDIX IV

PROPERTY VALUATION REPORT

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuation is summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of

Jones Lang LaSalle Sallmanns Limited

Paul L. Brown	Eddie T.W. Yiu
B.Sc. FRICS FHKIS	MRICS MHKIS RPS (GP)
Chief Valuation Adviser	Associate Director

Note: Paul L. Brown is a Chartered Surveyor who has 28 years’ experience in the valuation of properties in the PRC and 31 years of property valuation experience in Hong Kong and the United Kingdom as well as relevant experience in the Asia-Pacific region.

Eddie T.W. Yiu is a Chartered Surveyor who has 17 years’ experience in the valuation of properties in Hong Kong and the PRC as well as relevant experience in the Asia-Pacific region.

– IV-3 –

APPENDIX IV

PROPERTY VALUATION REPORT

SUMMARY OF VALUES

Group I – Property interests held and occupied by the Group in the PRC

		Capital value		Capital value
		in existing	Interest	attributable to
		state as at	attributable	the Group as at
No.	Property	31 October 2011	to the Group	31 October 2011
		RMB		RMB
1.	Two parcels of land,	83,241,000	100%	83,241,000
	5 buildings, various
	structures and a
	building under
	construction located at
	No. 1 Huaxiang Road
	the Centralised
	Industrial Area
	Dajian Village
	Wanshi Town
	Yixing City
	Jiangsu Province
	The PRC
2.	A parcel of land,	14,797,000	100%	14,797,000
	2 buildings and
	various structures
	located at Luoyang
	Road
	Zhenbei Village and
	Qunsheng Village
	Luoshe Town
	Huishan District
	Wuxi City
	Jiangsu Province
	The PRC
	Sub-total:	98,038,000		98,038,000

– IV-4 –

APPENDIX IV

PROPERTY VALUATION REPORT

Group II – Property interests rented and occupied by the Group in the PRC

No. Property

Capital value in existing state as at 31 October 2011 RMB

1. A parcel of land, 18 buildings and various structures located at Duankaiqiao Village Luoshe Town Huishan District Wuxi City Jiangsu Province The PRC

No commercial value

1. 3 buildings beside national highway No. 312 Luoshe Town Huishan District Wuxi City Jiangsu Province The PRC 5. A unit on Level 2 of Building No. 7 beside national highway No. 312 Luoshe Town Huishan District Wuxi City Jiangsu Province The PRC 6. Unit 508 on Level 5 of Tower A Jiahao International Center No. 116 Zizhuyuan Road Haidian District Beijing The PRC

No commercial value

No commercial value

No commercial value

– IV-5 –

APPENDIX IV

PROPERTY VALUATION REPORT

No. Property

Capital value in existing state as at 31 October 2011 RMB

1. Unit 2201 on Level 22 of Tower No. 3 Jiaye International Mansion No. 158 Lushan Road Jianye District Nanjing City Jiangsu Province The PRC

No commercial value

Sub-total: Nil

Group III – Property interests rented and occupied by the Group in Hong Kong

				Capital value in
				existing state as at
No.	Property			31 October 2011
				RMB
8.	Unit 1805 on the 18th Floor, Infinitus Plaza		No commercial value
	199 Des Voeux Road, Central
	Hong Kong
		Sub-total:		Nil
		Capital value		Capital value
		in existing		attributable to
		state as at		the Group as at
		31 October 2011		31 October 2011
		RMB		RMB
	Grand total:	98,038,000		98,038,000

– IV-6 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group I – Property interests held and occupied by the Group in the PRC

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
1.	Two parcels	The property comprises 2	The property is currently	83,241,000
	of land,	parcels of land with a	occupied by the Group
	5 buildings,	total site area of	for production and
	various structures	approximately 74,887.2	ancillary purposes except
	and a building under	sq.m., 5 buildings and	for the CIP building
	construction located	various structures erected	which is currently under
	at No. 1 Huaxiang	thereon which were	construction.
	Road the Centralised	completed in various
	Industrial Area	stages between 2005 and
	Dajian Village	2010.
	Wanshi Town
	Yixing City	The buildings have a
	Jiangsu Province	total gross floor area of
	The PRC	approximately 39,339.72
		sq.m..
		The buildings comprise 4
		industrial buildings and
		a dormitory.
		The structures mainly
		include roads, boundary
		fences and a bicycle shed,
		etc.
		The property also
		comprises a building (the
		“CIP building”) which is
		currently under
		construction. As advised
		by the Group, the CIP
		building is scheduled to
		be completed in 2012.
		Upon completion, this
		CIP building will have a
		gross floor area of
		approximately 6,462.6
		sq.m..
		The land use rights of the
		property have been
		granted for terms with
		the expiry dates on 28
		November 2055 and 26
		May 2057 for industrial
		use.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Certificates – Yi Guo Yong (2010) Zi Di Nos. 27600006 and 27600007, the land use rights of 2 parcels of land of the property with a total site area of approximately 74,887.2 sq.m. have been granted to Yixing Boai Automation Complete Sets of Equipment Co., Ltd. (“Yixing Boai”), a wholly-owned subsidiary of the Company for terms with the expiry dates on 28 November 2055 and 26 May 2057 for industrial use.

– IV-7 –

APPENDIX IV

PROPERTY VALUATION REPORT

1. Pursuant to 5 Building Ownership Certificates – Yi Fang Quan Zheng Wan Shi Zi Di Nos. 1000022662 to 1000022664, 1000025918 and 1000060781, 5 buildings of the property with a total gross floor area of approximately 39,339.72 sq.m. are owned by Yixing Boai.

2. Pursuant to a Construction Work Planning Permit – Jian Zi Di No. Zhen 320282201100392 in favour of Yixing Boai, the CIP building with a gross floor area of approximately 6,462.6 sq.m. has been approved for construction.

3. As advised by the Group, the total construction cost of the CIP building is estimated to be approximately RMB14,500,000, of which RMB12,322,965 had been paid as at the date of valuation.

4. In the valuation of this property, we have attributed no commercial value to the CIP building which has not obtained the construction commencement permit. However, for reference purpose, we are of the opinion that the capital value of the CIP building (excluding the land) as at the date of valuation would be RMB12,408,000 assuming the construction commencement permit has been obtained.

5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:

6. a. Yixing Boai has the rights to occupy, use, transfer, lease, mortgage or otherwise dispose of the property;

7. b. Yixing Boai has not obtained the construction commencement permit for the CIP building. Yixing Boai should commence the construction of the CIP building upon obtaining the construction commencement permit. According to the confirmation from Yixing Boai, the construction commencement permit for the CIP building is under application; and

8. c. According to the confirmation from Yixing Boai, the property is not subject to any mortgages or third party encumbrance.

– IV-8 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
2.	A parcel of land,	The property comprises a	The property is currently	14,797,000
	2 buildings and	parcel of land with a site	occupied by the Group
	various structures	area of approximately	for production and office
	located at	33,941.9 sq.m., 2	purposes.
	Luoyang Road	buildings and various
	Zhenbei Village and	structures erected
	Qunsheng Village	thereon which were
	Luoshe Town	completed in 2011.
	Huishan District
	Wuxi City	The buildings have a
	Jiangsu Province	total gross floor area of
	The PRC	approximately 23,367
		sq.m..
		The buildings comprise
		an industrial building
		and an office building.
		The structures mainly
		include roads, boundary
		fences and a bicycle shed,
		etc.
		The land use rights of the
		property have been
		granted for a term with
		the expiry date on 24
		October 2059 for
		industrial use.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate – Xi Hui Guo Yong (2010) Di No. 0237, the land use rights of the property with a site area of approximately 33,941.9 sq.m. have been granted to Boer (Wuxi) Power System Co., Ltd. (“Boer Wuxi”), a wholly-owned subsidiary of the Company for a term with the expiry date on 24 October 2059 for industrial use.

2. Pursuant to a Construction Work Planning Permit – 3202062011062700001A in favour of Boer Wuxi, 2 buildings of the property with a total gross floor area of approximately 23,367 sq.m. have been approved for construction.

3. In the valuation of this property, we have attributed no commercial value to 2 buildings with a total gross floor area of approximately 23,367 sq.m. which have not obtained any title certificate. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the 2 buildings (excluding the land) as at the date of valuation would be RMB40,628,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred.

4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:

5. a. Boer Wuxi has the rights to occupy, use, transfer, lease, mortgage or other dispose of the land use rights of the property;

6. b. There is no material legal impediment for Boer Wuxi in obtaining the Building Ownership Certificate; and

7. c. According to the confirmation from Boer Wuxi, the property is not subject to any mortgages or third party encumbrance.

– IV-9 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group II – Property interests rented and occupied by the Group in the PRC

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
3.	A parcel of land,	The property comprises a	The property is currently	No commercial
	18 buildings and	parcel of land with a site	occupied by the Group	value
	various structures	area of approximately	for production and office
	located at	32,000 sq.m., 18 buildings	purposes.
	Duankaiqiao Village	and various structures
	Luoshe Town	erected thereon which
	Huishan District	were completed in
	Wuxi City	various stages between
	Jiangsu Province	1988 and 2010.
	The PRC
		The buildings have a
		total gross floor area of
		approximately 20,972.57
		sq.m..
		The buildings comprise
		16 industrial buildings
		and 2 office buildings.
		The structures mainly
		include roads, boundary
		fences, etc.
		The land parcel of the
		property is a
		collectively-owned land
		which is rented by Boer
		(Wuxi) Special Electric
		Power Capacitor Co.,
		Ltd. for a term of 10 years
		with the expiry date on
		31 December 2020 for
		industrial use.

Notes:

1. Pursuant to a Land Lease Agreement, the land use rights of the property are leased to Boer (Wuxi) Special Electric Power Capacitor Co., Ltd. (“Boer Capacitor”), a wholly-owned subsidiary of the Company, from the Committee of Qianzhou Jiedao Tieluqiao Village for a term of 10 years with the expiry date on 31 December 2020 for industrial use at an annual rent of RMB480,000.

2. In the valuation of this property, we have attributed no commercial value to 18 buildings with a total gross floor area of approximately 20,972.57 sq.m. which have not obtained any title certificate. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the 18 buildings and various structures (excluding the land) as at the date of valuation would be RMB23,000,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred.

– IV-10 –

APPENDIX IV

PROPERTY VALUATION REPORT

1. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:

2. a. The Land Lease Agreement will be legally binding and enforceable after completion the relevant registration procedure with the relevant local authorities. According to the confirmation from Boer Capacitor, the relevant registration work is in the process;

3. b. According to the Temporary Administrative Rules Governing Wuxi City Collectively-owned Construction Land Use Rights Circulation (無錫市集體建設用地使用權 流轉管理暫行辦法), collectively-owned land use rights can be leased out on condition that the ownership rights of land have not changed. Upon leasing of the collectively-owned land use rights, the buildings and structures erected thereon are leased altogether. Accordingly, the Committee of Qianzhou Jiedao Tieluqiao Village can lease out the land and buildings of the property to Boer Capacitor; and

4. c. According to the confirmation from Boer Capacitor, portions of the buildings of the property with a total gross floor area of approximately 1,453.64 sq.m. have Building Ownership Certificates. For the remaining portions of the buildings which have not obtained Building Ownership Certificates, the lease behavior by Boer Capacitor will be legally binding and enforceable after obtaining Building Ownership Certificates.

– IV-11 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
4.	3 buildings beside	The property comprises 3	The property is currently	No commercial
	national highway	single-storey industrial	occupied by the Group	value
	No. 312 Luoshe Town	buildings completed in	for production and
	Huishan District	about 1998.	storage purposes.
	Wuxi City
	Jiangsu Province	The property has a total
	The PRC	gross floor area of
		approximately 8,498.42
		sq.m..
		The property is leased
		from Wuxi Boer Power
		Instrumentation
		Company Ltd., a
		connected party of the
		Company, for a term of
		10 years commencing
		from 1 January 2010 and
		expiring on 31 December
		2019 at an annual rent of
		RMB840,000, exclusive of
		management fees, water
		and electricity charges.

Notes:

1. Pursuant to a Tenancy Agreement dated 22 February 2010, entered into between Wuxi Boer Power Instrumentation Company Ltd. (“Wuxi Boer”), a connected party of the Company, and Boer (Wuxi) Power System Co., Ltd. (“Boer Wuxi”), an indirect wholly-owned subsidiary of the Company, the property was leased to Boer Wuxi for a term of 10 years commencing from 1 January 2010 and expiring on 31 December 2019 at an annual rent of RMB840,000, exclusive of management fees, water and electricity charges.

2. We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:

3. a. The Tenancy Agreement is legally binding and enforceable.

– IV-12 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
5.	A unit on Level 2 of	The property comprises a	The property is currently	No commercial
	Building No. 7	unit on Level 2 of a	occupied by the Group	value
	beside national	2-storey industrial	for office purpose.
	highway No. 312	building completed in
	Luoshe Town	1998.
	Huishan District
	Wuxi City	The property has a gross
	Jiangsu Province	floor area of
	The PRC	approximately 80 sq.m..
		The property is leased
		from Wuxi Boer Power
		Instrumentation
		Company Limited, a
		connected party of the
		Company, for a term of
		10 years commencing
		from 1 January 2010 and
		expiring on 31 December
		2019 at an annual rent of
		RMB7,200.

Notes:

1. Pursuant to a Tenancy Agreement dated 22 February 2010, entered into between Wuxi Boer Power Instrumentation Company Ltd, (“Wuxi Boer”), a connected party of the Company, and Wuxi Boer Power Engineer Co., Ltd. (“Boer Services Co”), an indirect wholly-owned subsidiary of the Company, the property was leased to Boer Services Co for a term of 10 years commencing from 1 January 2010 and expiring on 31 December 2019 at an annual rent of RMB7,200.

2. We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:

3. a. The Tenancy Agreement is legally binding and enforceable.

– IV-13 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as at No. Property Description and tenure Particulars of occupancy 31 October 2011 RMB 6. Unit 508 on Level 5 The property comprises a The property is currently No commercial of Tower A unit on Level 5 of a occupied by the Group value Jiahao International 15-storey composite for office purpose. Center building completed in No. 116 Zizhuyuan 2004. Road Haidian District The property has a gross Beijing floor area of The PRC approximately 150 sq.m.. The property is leased from Zhang Jianqi (張建綺), an independent third party, for a term of 3 years commencing from 1 January 2010 and expiring on 31 December 2012 at an annual rent of RMB150,000, exclusive of management fees, water and electricity charges.

Notes:

1. Pursuant to a Tenancy Agreement dated 1 January 2010, entered into between Zhang Jianqi, an independent third party, and Boer (Wuxi) Power System Co., Ltd. (“Boer Wuxi”), an indirect wholly-owned subsidiary of the Company, the property was leased to Boer Wuxi for a term of 3 years commencing from 1 January 2010 and expiring on 31 December 2012 at an annual rent of RMB150,000.

2. We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:

3. a. The Tenancy Agreement is legally binding and enforceable.

– IV-14 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
7.	Unit 2201 on Level 22	The property comprises a	The property is currently	No commercial
	of Tower No. 3	unit on Level 22 of a	occupied by the Group	value
	Jiaye International	29-storey office building	for office purpose.
	Mansion No. 158	completed in 2006.
	Lushan Road
	Jianye District	The property has a gross
	Nanjing City	floor area of
	Jiangsu Province	approximately 327.57
	The PRC	sq.m..
		The property is leased
		from Zheng Feng (鄭鋒),
		an independent third
		party, for a term of 3
		years commencing from
		16 January 2010 and
		expiring on 15 January
		2013 at an annual rent of
		RMB182,400, exclusive of
		management fees, water
		and electricity charges.

Notes:

1. Pursuant to a Tenancy Agreement dated 1 January 2010, entered into between Zheng Feng, an independent third party, and Boer (Wuxi) Power System Co., Ltd. (“Boer Wuxi”), an indirect wholly-owned subsidiary of the Company, the property was leased to Boer Wuxi for a term of 3 years commencing from 16 January 2010 and expiring on 15 January 2013 at an annual rent of RMB182,400.

2. We have been provided with a legal opinion on the legality of the Tenancy Agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:

3. a. The Tenancy Agreement is legally binding and enforceable.

– IV-15 –

APPENDIX IV

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group III – Property interest rented and occupied by the Group in Hong Kong

				Capital value in
				existing state
				as at
No.	Property	Description and tenure	Particulars of occupancy	31 October 2011
				RMB
8.	Unit 1805 on the	The property comprises a	The property is currently	No commercial
	18th Floor	unit on the 18th Floor of	occupied by the Group	value
	Infinitus Plaza	a 39-storey office	for office purpose.
	199 Des Voeux Road	building completed in
	Central	about 1987.
	Hong Kong
		The property has a
		lettable area of
		approximately 142.1
		sq.m..
		Pursuant to a Tenancy
		Agreement made
		between Power
		Investment (H.K.)
		Limited, as Tenant, and
		Foxhill Investment
		Limited, as Landlord, an
		independent third party,
		the property is leased by
		the Group for a term of 2
		years commencing from 1
		April 2010 and expiring
		on 31 March 2012 at a
		monthly rent of
		HK$56,030, exclusive of
		rates, management fees
		and air-conditioning
		charges.

Notes:

1. The registered owner of the property is Foxhill Investment Limited with Memorial No. UB8989535 dated 31 July 2003.

– IV-16 –

APPENDIX V

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTEREST

(a) Disclosure of interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executives of the Company in the Shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register maintained by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors (the ‘‘ Model Code ’’) were disclosed as follows in accordance with the Listing Rules. Certain information herein is based on additional information of the relevant events on or before the Latest Practicable Date with the disclosure deadlines under the SFO falling after the Latest Practicable Date.

			Approx.% of
			the issued
		Total number	share capital
		of ordinary	of the
Director	Capacity	shares held	Company	Note
		(long position
		in shares)
Mr. Qian Yixiang	Interest of controlled	520,500,000	67.03	1
	corporation
Ms. Jia Lingxia	Interest of controlled	520,500,000	67.03	1
	corporation
Mr. Zha Saibin	Beneficial owner	390,000	0.05
Mr. Huang Liang	Beneficial owner	2,000	–

Note:

1. The 520,500,000 Shares are owned by King Able Limited, a company owned as to 50% by Mr. Qian Yixiang and 50% by Ms. Jia Lingxia.

Apart from the above, as at the Latest Practicable Date, there were no interest of the Directors or chief executives of the Company in the Shares and the underlying Shares of the Company and any shares and underlying shares of its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of

– V-1 –

APPENDIX V

GENERAL INFORMATION

Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which were required pursuant to Section 352 of the SFO to be entered in the register maintained by the Company referred to therein, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

(b) Substantial shareholders

As at the Latest Practicable Date, according to the register of interests kept by the Company under section 336 of the SFO and so far as is known to the Directors, the following person and companies (other than the Directors or chief executive of the Company) had, or were deemed or taken to have an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group or had any option in respect of such capital:

			Approx.% of
			the issued
		Total number	share capital
Substantial		of ordinary	of the
shareholders	Capacity	shares held	Company
		(long position
		in shares)		Note
Jin Bor-Shi	Interest of controlled	45,000,000	5.80	1
	corporation
Leon Capital Partners	Interest of controlled	45,000,000	5.80	1
	corporation
Leon Capital	Interest of controlled	45,000,000	5.80	1
	corporation
Leon Capital L.P.I	Interest of controlled	45,000,000	5.80	1
	corporation
Silver Crest Global	Beneficial owner	45,000,000	5.80	1
Limited

Note:

1. Silver Crest Global Limited is wholly owned by Leon Capital L.P.I, which is controlled by Leon Capital. Leon Capital is wholly owned by Leon Capital Partners which is wholly owned by Jin Bor-Shi. Leon Capital L.P.I, Leon Capital, Leon Capital Partners and Jin Bor-Shi were all deemed to be interested in the 45,000,000 ordinary shares held by Silver Crest Global Limited.

Save as disclosed above, as at the Latest Practicable Date, as far as the Company is aware of, there was no other person (other than any Director or the chief executive of the Company) who had any interests or short positions in the Shares or underlying Shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO.

– V-2 –

APPENDIX V

GENERAL INFORMATION

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employee within one year without payment of compensation (other than statutory compensation)).

4. DIRECTORS’ INTEREST IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENT SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to or which were proposed to be acquired, disposed of by or leased to any member of the Group, since 31 December 2010, being the date to which the latest published audited financial statements of the Group were made up.

As at the Latest Practicable Date, there was no contract or arrangement subsisting in which a Director was materially interested and which was significant in relation to the business of the Group.

5. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, there is no litigation or claims of material importance pending or threatened against any member of the Group.

6. MATERIAL CONTRACTS

The following material contracts have been entered into by members of the Group otherwise than in the ordinary course of business within the two years immediately preceding the date of issue this circular:

(i) Adoption of share award scheme (“Scheme”) by the Company

On 17 June 2011, the Board has approved the adoption of the Scheme and pursuant to which the Company has executed a trust deed with Bank of Communications Trustee Limited (“ Trustee ”) as trustee of the Scheme on 17 June 2011. As at the Latest Practicable Date, the Company has paid the Trustee HK$60 million as funds for operation of the Scheme. Please refer to the announcement made by the Company on 20 June 2011 and 13 July 2011 for further details.

(ii) Acquisition of 100% equity interest in Boer (Wuxi) Special Electric Power Capacitor Co. Ltd. (“Boer Capacitor”)

On 8 June 2011, Boer (Wuxi) Power System Co., Ltd. (“ Boer Wuxi ”) as purchaser entered into an equity transfer agreement (“ Capacitor Agreement ”) with Mr. Xu Mingshen (“ Mr. Xu ”) as vendor, pursuant to which Boer Wuxi has conditionally agreed to purchase and Mr. Xu has conditionally agreed to sell, 100% equity interest in Boer Capacitor for a consideration of RMB62,000,000. Upon completion of the Capacitor Agreement on 8 June 2011, Boer Capacitor became a wholly-owned subsidiary of the Company. Please refer to the announcement made by the Company on 8 June 2011 for further details.

– V-3 –

APPENDIX V

GENERAL INFORMATION

(iii) Acquisition of equity interest in Yixing Boai Automation Complete Sets of Equipment Co., Ltd. (“Yixing Boai”)

On 26 October 2010, Power Investment (H.K.) Limited (“ Boer HK ”) as transferee entered into an equity transfer agreement (“ Yixing Boai Agreement ”) with Wuxi Weiqi Trading Co., Ltd. as transferor, pursuant to which Boer HK agreed to acquire 25% equity interest in Yixing Boai for a total consideration of RMB2.5 million. Upon completion of the Yixing Boai Agreement on 29 October 2010, the equity interest owned by Boer HK in Yixing Boai increased from 75% to 100% and Yixing Boai became a wholly-owned subsidiary of the Company. Please refer to the announcement made by the Company on 3 March 2011 for further details.

(iv) Other material contracts as disclosed in the Prospectus of the Company

The material contracts (F) to (S) as referred to in the section headed “Further information about the business of our Group – 8. Summary of material contracts” under Appendix VI – Statutory and General Information of the Prospectus of the Company dated 7 October 2010. Please refer to the Prospectus for further details.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal office of the Company in Hong Kong at Unit No. 1805, 18/F, Infinitus Plaza, No. 199 Des Voeux Road Central, Hong Kong during normal business hours up to and including Wednesday, 7 December 2011:

• (i) The memorandum and articles of association of the Company;

• (ii) the annual report of the Company for the year ended 31 December 2010 and the interim report of the Company for the six months ended 30 June 2011;

• (iii) the Prospectus of the Company dated 7 October 2010;

• (iv) the letter, summary of values and valuation certificate relating to the property interests of the Group prepared by Jones Lang LaSalle Sallmanns Limited, the texts of which are set out in Appendix IV to this circular;

• (v) the annual reports of the Offeree for the year ended 31 December 2008, 2009 and 2010 and the result announcement of the Offeree for the six months ended 30 June 2011;

• (vi) the material contracts referred to in paragraph 6 of this Appendix;

– V-4 –

APPENDIX V

GENERAL INFORMATION

• (vii) a circular despatched by the Company on 27 April 2011 in relation to, inter alia, proposals for general mandates to issue and repurchase shares, re-election of retiring directors and notice of annual general meeting;

• (viii) letter of consent referred in paragraph 8 below; and

• (ix) this circular.

8. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given, or agreed to the inclusion of, its opinion or advice in this circular:

Name	Qualification
Jones Lang LaSalle Sallmanns	Independent professional surveyors and
Limited	valuers

Jones Lang LaSalle Sallmanns Limited has given, and has not withdrawn, its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, Jones Lang LaSalle Sallmanns Limited was not beneficially interested in the share capital of any member of the Group or had any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and did not have any direct or indirect interest in any assets which had been acquired, disposed of by or leased to or which were proposed to be acquired, disposed of by or leased to any member of the Group, since 31 December 2010, the date to which the latest published audited financial statements of the Group were made up.

9. MISCELLANEOUS

• (a) So far as the Directors are aware, none of the Directors or their respective associates have any interest in any business which competes or likely to compete, directly or indirectly, with the business of the Group under Rule 8.10 of the Listing Rules.

• (b) The secretary of the Company is To Kwong Yeung. He is a member of The Hong Kong Institute of Certified Public Accountants.

• (c) The registered office of the Company is Clifton House, 75 Fort Street, P.O. Box 1350 Grand Cayman, KY1-1108, Cayman Islands.

• (d) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investors Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text, in the case of any inconsistency.

– V-5 –

NOTICE OF EGM

==> picture [176 x 33] intentionally omitted <==

BOER POWER HOLDINGS LIMITED 博耳電力控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1685)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Boer Power Holdings Limited (the “ Company ”) will be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 7 December 2011 at 2:30 p.m. for the purpose of considering and, if thought fit, passing the following resolutions with or without amendments:

ORDINARY RESOLUTIONS

“ THAT

• (a) the acquisition of all the issued and fully paid-up ordinary shares in the capital of SMB United Limited (the “ Offeree Shares ”) (other than those already owned, controlled or agreed to be acquired by Profit Sea Holdings Limited (the “ Offeror ”), an indirect wholly owned subsidiary of the Company but shall include (i) all the Offeree Shares in issue, including any Offeree Shares owned, controlled or agreed to be acquired by any party acting or presumed to be acting in concert with the Offeror; (ii) any of the 23,950,000 Offeree Shares validly allotted and issued in satisfaction of (and in accordance with the terms of) the awards granted by the Offeree as at 14 November which may translate into 23,950,000 Offeree Shares or their equivalent cash value or a combination thereof; and (iii) any of the 9,400,000 new Offeree Shares validly allotted and issued pursuant to (and in accordance with the terms of) the sale and purchase agreement for the acquisition of 440,400 ordinary shares in the issued share capital of Quantum Automation Pte. Ltd. by the Offeree, announced by the board of directors of the Offeree on 31 October 2011 as having been entered into on 28 October 2011 (the “ Offer Shares ”)), and the compulsory acquisition of the Offeree Shares as mentioned in the section headed “Delisting and compulsory acquisition” in the “Letter from the Board” in the circular (“ Circular ”) despatch by the Company to its shareholders on 21 November 2011 (collectively, the “ Acquisition ”), by way of a voluntary conditional cash offer (the “ Offer ”) by the Offeror in respect of the Offer Shares for a consideration of S$0.32 (equivalent to approximately HK$1.94) in cash for each Offer Share held as announced in the announcement of the Company dated 31 October 2011, the details of which are also set out in the Circular, be and are hereby ratified, confirmed, authorised and approved and any one of the directors of the Company (the “ Directors ”) be and is hereby authorised to do all such acts and things and execute all such documents which they consider necessary, desirable or expedient for the implementation of and giving effect to the Acquisition and the Offer and the transactions contemplated thereunder;

– EGM-1 –

NOTICE OF EGM

• (b) any one of the Directors be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in the opinion of such Director may be necessary, appropriate, desirable or expedient to implement and/or give effect to the transactions set out in this resolution (the “ Offer Transactions ”) and to agree to any variation, amendments, supplement or waiver of matters relating thereto (including but not limited to amending the terms of the Offer) as are, in the opinion of such Director, in the interests of the Company, to the extent that such variation, amendment, supplement or waiver do not constitute material changes to the material terms of the Offer Transactions.”

By order of the board Boer Power Holdings Limited Qian Yixiang Chairman

Hong Kong, 21 November 2011

Registered office: Headquarters and head office in the PRC: Clifton House National Highway No. 312 75 Fort Street Luoshe Town P.O. Box 1350 Huishan District Grand Cayman Wuxi City KY1-1108 Jiangsu Province Cayman Islands PRC

Principal place of business in Hong Kong: Unit No. 1805 18/F, Infinitus Plaza No. 199 Des Voeux Road Central Hong Kong

Notes:

1. A member entitled to attend and vote at the EGM is entitled to appoint one or more than one proxy (where he or she is holder of 2 or more Shares) to attend and, subject to the provisions of the articles of association of the Company, to vote on his or her behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number of Shares in respect of which each such proxy is so appointed.

2. A form of proxy for use at the EGM is enclosed. Whether or not you intend to attend the EGM in person, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

– EGM-2 –

NOTICE OF EGM

1. In order to be valid, the form of proxy, together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority must be deposited at Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.

2. In the case of joint holders of any shares of the Company (“Shares”), any one of such holders may vote at the EGM, either personally or by proxy, in respect of such Share as if he or she was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such Shares shall alone be entitled to vote in respect thereof.

3. The register of members of the Company will be closed from Monday, 5 December 2011 to Wednesday, 7 December 2011 (both days inclusive) for the purpose of identifying the shareholders who are entitled to attend and vote at the EGM and no transfer of Shares will be registered during such period. In order to qualify for the right to attend the EGM, completed transfer forms accompanied by the share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 2 December 2011.

As at the date hereof, the Board comprises (i) five executive Directors, namely Mr. Qian Yixiang, Ms. Jia Lingxia, Mr. Zha Saibin, Mr. Qian Zhongming and Mr. Huang Liang; (ii) one non-executive Director, Mr. Zhang Huaqiao; and (iii) three independent non-executive Directors, Mr. Yeung Chi Tat, Mr. Tang Jianrong and Mr. Zhao Jianfeng.

– EGM-3 –