SKS TECHNOLOGIES GROUP LIMITED — Annual Report 2011

Aug 30, 2011

Results For Announcement To The Market For the Financial Year Ended 30 June 2011

Preliminary Final Report of Stokes (Australasia) Limited (ABN 24 004 554 929) for the Financial Year Ended 30 June 2011

This Preliminary Final Report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A.

Current Reporting Period:

Previous Corresponding Period:

Financial Year ended 30 June 2011 Financial Year ended 30 June 2010

Results For Announcement To The Market For the Financial Year Ended 30 June 2011

Revenue and Net Profit

		PercentageChange℅	Amount
Revenue from ordinary activities	down	(6)	15,194,985
Profit from ordinary activities after taxAttributable to members	down	171.1	(525, 260)
Profit attributable to membersDividends (Distributions)	down	171.1	(525, 260)
		Amount persecurity	FrankedAmount persecurity
Final dividend (cents)		0	0
Interim dividend(cents)		0	0
Record date for determining entitlementsto the dividend:			N/A
__________

• final dividend

interim dividend $\bullet$

Brief Explanation of Revenue, Net Profit/(Loss) and Dividends (Distributions)

The group made a loss of $525,260 for the year compared to a profit of $738,563 last year. Sales for the year were $15.2 million compared with last years sales of $16.2 million.

Income Statement For the Financial Year Ended 30 June 2011

	Note	2011$	2010$
Sales revenue (sale of goods)Cost of sales	$\overline{2}$	15,194,985(9,786,801)	16,225,484(9,981,441)
Gross Profit		5,408,184	6,244,043
Other revenue from ordinary activities		62,243	41,931
Distribution expenses		(1, 136, 451)	(1,205,853)
Selling expenses		(2,014,850)	(1,764,280)
Occupancy expenses		(631, 471)	(575, 702)
Administration expenses		(2, 145, 670)	(1,826,917)
Borrowing costs		(67, 245)	(143, 222)
Other expenses from ordinary activities
Profit / (Loss) Before Income Tax Expense	$\overline{2}$	(525, 260)	770,000
Income tax expense relating to ordinary activities			(31, 437)
Profit / (Loss) After Income Tax Expense		(525, 260)	738,563
Net profit attributable to outside equity interests
Net Profit / (Loss) Attributable to Members of theParent Entity		(525, 260)	738,563
Source Reference: ASX Appdx 4E.3
Basic earnings cents per share		(7.3)	10.20
Diluted earnings cents per share		(7.3)	10.20

Balance Sheet For the Financial Year Ended 30 June 2011

	Note	2011$	2010S
Current AssetsCash and cash equivalents	6(a)	199,255	461,322
Trade and other receivables		2,062,221	2,087,613
Inventories		3,788,378	3,207,283
Other		35,118	52,666
Total Current Assets		6,084,972	5,808,884
Non-Current Assets
Property, plant and equipment		226,788	299,615
Intangibles		25,001	25,001
Total Non-Current Assets		251,789	324,616
Total Assets		6,336,761	6,133,500
Current Liabilities		1,500,965	1,370,790
Trade and other payablesInterest-bearing loans and borrowings		916,534	400,064
Income tax payable			31,437
Provisions		919,139	827,039
Total Current Liabilities		3,336,638	2,629,330
Non-Current Liabilities
Provisions		72,677	51,464
Total Non-Current Liabilities		72,677	51,464
Total Liabilities		3,409,315	2,680,794
Net Assets		2,927,446	3,452,706
Equity
Contributed equity		6,208,884	6,208,884
Accumulated losses	5	(3, 281, 438)	(2,756,178)
Parent Entity InterestNon-Controlling Interest		2,927,446	3,452,706
Total Equity		2,927,446	3,452,706

Cash Flow Statement For the Financial Year Ended 30 June 2011

	Note	2011S	2010S
Cash Flows From Operating Activities
Receipts from customers		18,250,335	19,787,681
Payments to suppliers and employees		(18,905,782)	(18, 456, 535)
Interest received		7,438	6,123
Interest and other costs of finance paid		(67, 245)	(143,222)
Income tax paid		(31, 436)
Net cash provided by/(used in) operating activities	6(c)	(746, 690)	1,194,047
Cash Flows From Investing Activities
Payment for plant and equipment		(31, 846)	(64, 486)
Proceeds from sale of property, plant and equipment			2,277
Payment for net business assets net of cash acquired
Payments for subsidiary acquired			(175,000)
Net cash provided by/(used in) operating activities		(31, 846)	(237, 209)
Cash Flows From Financing Activities
Dividend Paid
Finance lease payments		(7, 913)	(20, 857)
Proceeds from issue of Share capital			144,338
Proceeds from borrowings
Repayment borrowings to related parties			(80, 464)
Repayment of borrowings		524,382	(737, 387)
Net cash provided by/(used in) financing activities		516,469	(694, 370)
Net Increase/(Decrease) In Cash Held		(262,067)	262,468
Cash& Cash equivalents at the Beginning of theFinancial Year		461,322	198,854
Cash and Cash equivalents at the Beginning of theFinancial Year	6(a)	199,255	461,322

Source Reference: ASX Appdx 4E.5

Statement of Changes in EquityFor the Financial Year Ended 30 June 2011

YEAR ENDED 30 JUNE 2010

parent	Notes	Attributable to equity holders of the		Non-ControllingInterest	Totalequity
	Issuedcapital	Accumulatedlosses	Total
At 1 July 2009Profit attributable	6,064,546	(3, 493, 265)	2,571,281	148,524	2,719,805
to members ofthe Parent EntityNon Controlling	F.	738,563	738,563		738,563
Interests acquiredShare issue		(1,476)	(1, 476)	(148, 524)	(150,000)
during the period	144,338		144,338		144,338
At 30 June 2010	6,208,884	(2,756,178)	3,452,706		3,452,706

YEAR ENDED 30 JUNE 2011

parent	Notes	Attributable to equity holders of the		Non-ControllingInterest	Totalequity
	Issuedcapital	Accumulatedlosses	Total
At 1 July 2010Profit attributable	6,208,884	(2,756,178)	3,452,706	×.	3,452,706
to members ofthe Parent EntityNon Controlling	$\sim$	(525, 260)	(525, 260)		(525, 260)
Interests acquiredShare issue			$\blacksquare$		GEV.
during the period	÷.	$\blacksquare$	$\blacksquare$		÷
At 30 June 2011	6,208,884	(3,281,438)	2,927,446		2,927,446

Notes to the Financial Statements For the Financial Year Ended 30 June 2011

Note	Contents
1	Basis of Preparation
2	Profit/(Loss) from Ordinary Activities
3	Commentary on Results
4	Sales of Assets
5	Accumulated Losses
6	Notes to the Statement of Cash Flows
7	Details relating to Dividends (Distributions)
8	Earnings Per Share
9	Net Tangible Assets per Share
10	Contingent Liabilities and Contingent Assets
11	Segment Information
12	Subsequent Events
13	Information on Audit or Review

Source Reference

1. Basis of Preparation

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

The accounting policies adopted in the preparation of the preliminary final report are consistent with those adopted and disclosed in the 2011 annual financial report.

The financial report has been prepared in accordance with generally accepted accounting principles which are based on the company and consolidated entity continuing as going concerns.

The Group's forward budget and cash flow projections are based on projected increases in sales over the levels achieved in 2011. The projections envisage the combined effects of increasing customer numbers, price increases and revisions to product ranges will result in an increase in turnover in excess of 10%. The ability of the Group to generate cash flow from operating activities, maintain debt levels and continue as a going concern is dependent on realisation of these projections and the management of other cash flows within the Group's funding facilities.

The Group continues to have the support of its financier. The directors have reviewed and approved the Group's forward budget and cash flow projections

The directors believe that the group will continue as a going concern and consequently will realise assets and settle liabilities and commitments in the ordinary course of business and at the amounts stated in the financial report.

Details of changes in accounting policies:

Change In Accounting Policy

The Group changed its accounting policy in relation to the measurement of inventories for the financial year ended 30 June 2011. Inventories were previously recognised by the Group on the basis that a provision for inventory obsolescence was determined to occur on 100% of those items of inventory in excess of 12 months expected sales based on current sales trends.

The Group has now determined that the provision for inventory obsolescence is to be based on items of inventory in excess of 12 months expected current sales trends at the following percentages:

Inventory in excess of:
1 year and less than 2 years	nil
2 years and less than 3 years	25%
3 years and less than 4 years	50%
4 years and over	$100%$

This change has been implemented as management and the Board are of the opinion that this basis of measurement more accurately recognises the carrying value of inventories. The aggregate effect of the change in accounting policy on the annual report for the year ended 30 June 2011 was to increase the inventory carrying value and the result for the year by $118,869.

Notes to the Financial Statements For the Financial Year Ended 30 June 2011

SourceReference			2011S	2010s
		2. Profit/(Loss) From Ordinary Activities
ASX Appdx4E.3		Profit/(Loss) from ordinary activities before incometax includes the following items of revenue andexpense:
	(a)	Revenue
		Net increments arising from the revaluationof non-current assets:InvestmentsProperty, plant and equipmentIntangibles
	(b)	Expenses
		Cost of sales	9,786,801	9,981,441
		Prov. for bad and doubtful debts	(19, 394)	(8,226)
		Non-current assets write down torecoverable amountProperty, plant and equipment
		Depreciation of non-current assets	99,687	133,618
		Amortisation of non-current assets	4,984	12,499

(c) Revision of Accounting Policies

Details of the nature and amount of revisions of accounting estimates:

	---	------
Refer to 1 above

Notes to the Financial Statements For the Financial Year Ended 30 June 2011

Source Reference

3. Commentary on Results

ASX Appdx Net Profit/(Loss) 4E.14 The consolidated group made a loss of $525,260 for the year ended 30 June 2011. (2010 profit of $738,563). Sales for the year were $15.2 million (2010: $16.2 million) Trading in Australia has been very challenging No dividend has been paid or is payable by Stokes (Australasia) Limited in respect of the year ended 30 June 2011 or year ended 30 June 2010.

		2011S	2010s
	4. Sale of Assets
ASX Appdx4E.3	Sales of assets in the ordinary course of businesshave given rise to the following profits and losses:		2,277
	Net Gain / (Loss)Property, plant and equipment		(5,780)
5.ASX Appdx	Accumulated Losses
4E.8	Balance at beginning of financial year	(2,756,178)	(3,493,265)
	Non-Controlling interest acquiredNet Profit / (Loss)	(525, 260)	(1, 476)738,563
	Balance at end of financial year	(3,281,438)	(2,756,178)
6.	Notes to the Statement of Cash Flows
ASX Appdx4E.5	Reconciliation of Cash(a)
	For the purposes of the statement of cashflows, cash includes cash on hand and inbanks and investments in money marketinstruments, net of outstanding bankoverdrafts. Cash at the end of the financialyear as shown in the statement of cash flowsis reconciled to the related items in thestatement of financial position as follows:

Cash on hand

SourceReferen

ererence
	2011	2010
	۰σП	--
	--------------------------------------	----

6. Notes to the Statement of Cash Flows (continued)

ASX Appdx4E.5

(b) Financing Facilities

		Secured bank facility, subject to:-Amount usedAmount unused	916,5341,583,466	392,1522,107,848
			2,500,000	2,500,000
		Secured overdraft facility, subject to:-Amount usedAmount unused
ASX Appdx4E.5	(c)	Reconciliation of Profit / (Loss) from OrdinaryActivities after Related Income Tax to NetCash Flows from Operating Activities
		Profit / (Loss) from ordinary activities afterrelated income tax(Profit)/Loss on disposal of non-currentassets	(525, 260)	738,5635,780
		Depreciation and amortisation of non-currentassets	104,671	146,117
		Inventory ProvisionsChanges in net assets and liabilities, net ofeffects from acquisition and disposal ofbusinesses:		(423, 243)
		(Increase)/decrease in assets:
		Current receivables	25,393	296,447
		Current inventories	(581,095)	230,961
		Other current assets	17,548	102,944
		Increase/(decrease) in liabilities:Current trade payables and accrualsCurrent tax liabilityProvisions-employee benefits	130,176113,313	149,79631,437(84, 755)
		Effects of exchange rate changes on the
		balance of cash held in foreign currencies	(31, 436)
		Net cash from operating activities	(746, 690)	1,194,047

Source Reference

7. Details Relating to Dividends (Distributions)

ASX Appdx4E.6, ASXAppdx4E.14.2			_______________________________________Date dividendpayable	Amount perShare	Amount persecurity offoreignsourcedDividend
	Final dividend	2011	N/A	Z.	œ
		2010	N/A	$\blacksquare$
		2009	N/A	$\blacksquare$
	Interim dividend	2008	N/A	$\blacksquare$
		2007	N/A	-	m.
	Total	2006	N/A	$\blacksquare$	ж.
		2005	N/A	۰.	۳.

Total dividend (distribution) per security (interim plus final)

ASX Appdx4E.6 ASXAppdx4E.14.2		2011¢	2010¢
	Ordinary securities (each class separately)
	Preference securities (each class separately)
	Other equity instruments (each classseparately)
	Interim and final dividend (distribution) on all securities
ASX Appdx4E.6 ASXAppdx4E.14.2		2011¢	2010¢
	Ordinary securities (each class separately)
	Preference securities (each class separately)	N/A	N/A
	Other equity instruments (each classseparately)	N/A	N/A
	Total

Any other disclosures in relation to dividends (distributions).

ASX Appdx4E.6, ASX Appdx4E.14.2

SourceReference

$\mathbf{Z}$ Details Relating to Dividends (Distributions) (continued)

Stokes Australasia Limited
Minority shareholders	$\blacksquare$
ctal

8. Earnings Per Share

Lamigo i vi vilaiv	2011$¢$ per share	2010$\phi$ per share
Basic EPSDiluted earnings per share	(7.3)(7.3)	10.210.2
Earnings used in the calculation of the basic anddiluted earnings per share.	(525, 260)	738,563
The earnings and weighted average number ofordinary shares used in the calculation of basicearnings per share are as follows:	7,239,177	7,239,177
	2011	2010
Earnings used in the calculation of basic EPS	(525, 260)	738,563
	2011	2010
Weighted average number of ordinary shares	7,239,177	7,239,177

Source Reference

	9. Net Tangible Assets Per Share	2011	2010
ASX Appdx4E.9	Net tangible assets per Share	0.40	0.48

$101$ Contingent Liabilities and Contingent Assets

Contingent Liabilities

The directors are not aware of any contingent liabilities as at 30 June 2011.

Contingent assets

Infringement of Trademark

Stokes (Australasia) Ltd has instigated litigation against a distributor for infringing various patents and further matters. The information usually required by Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of this litigation. The directors are of the opinion that the claim can be successfully proven.

The directors are not aware of any other contingent assets as at 30 June 2011.

Source Reference

SEGMENT INFORMATION $11.$

TYPES OF PRODUCTS AND SERVICES

Merchandising and distribution of appliance parts, badges, medallions, electrical switches and controls are primarily for the domestic market.

The manufacturing segment manufactures electric elements and metal components for industrial and household products.

	External Sales
	20115	2010S
ManufacturingMerchandiseInter segment interest	3,377,08612,369,5117,438	3,782,23012,834,6126,723
Total of all segments	15,754,035	16,623,565
EliminationsUnallocated	(559,050)	(398,081)
Consolidated sales revenue	15, 194, 985	16,225,484

SEGMENT RESULTS

	2011	2010
ManufacturingMerchandise	199,336676,309	347,3301,547,622
Total of all segments	875,645	1,894,952
Eliminations	(1,400,905)	(1, 124, 952)
Profit from ordinary activities before income tax expenseIncome tax expense relating to ordinary activities	(525, 260)	770,000(31, 437)
Profit from ordinary activities after related income tax expense	(525, 260)	738,563
Net Profit	(525,260)	738,563

Notes to the Financial Statements For the Financial Year Ended 30 June 2011

Source Beference

SEGMENT INFORMATION (continued) $11.$

SEGMENT ASSETS AND LIABILITIES

	Assets		Liabilities
	2011	2010	2011	2010
	s	$	$	S
Manufacturing	1,909,508	1,782,910	772,061	738,297
Merchandise	4,588,270	4,555,825	1,857,751	1,706,194
Total of all segments	6,497,778	6,338,735	2,629,812	2,444,491
Eliminations	(221, 390)	(263, 286)	(221, 390)	(263, 286)
Unallocated	60,375	58,051	1,000,893	499,589
Consolidated	6,336,763	6,133,500	3,409,315	2,680,794

OTHER SEGMENT INFORMATION

	Acquisition of Assets		Amortisation	Depreciation and
	2011	2010$	2011	2010S
ManufacturingMerchandise	9199,277	64,486	(32, 387)(52, 813)	(57,303)(74,344)
Total of all segments	10,196	64,486	(85, 200)	(131, 646)
Unallocated	21,649		(19, 471)	(14, 471)
Consolidated	31,845	64,486	(104, 671)	(146, 117)

$12.$ SUBSEQUENT EVENTS

On the 8th August 2011 the company arranged a variation to the General Business Factoring Agreement of 30th November 2009 with Oxford Funding Pty Ltd for a temporary increase to the advance rate from 80% to 90% until 29th February 2012. The subsidiary company, Edis Pty Ltd, provided a guarantee and indemnity as additional security to Oxford Funding Pty Ltd with all other terms and conditions remaining unchanged.

On the 31st August 2011 the directors resolved to proceed with a Share Purchase Plan which will allow shareholders to take up additional shares to a maximum value of $10,000 at an issue price of $0.20. The funds raised will be used as additional working capital and to take advantage of any opportunities as they arise.

No other significant events have occurred after balance date.

Notes to the Financial Statements For the Financial Year Ended 30 June 2011

SourceReference

13.	Information on Audit or Review
ASX Appdx4E.15	This preliminary final report is based on accounts to which one of the followingapplies:The accounts have been audited.	The accounts have been subject to
		review.
	The accounts are in the process ofПbeing audited or subject to review.	The accounts have not yet beenaudited or reviewed.
ASX Appdx4E.16	Description of likely dispute or qualification if the accounts have not yet beenaudited or subject to review or are in the process of being audited or subjected toreview.
ASX Appdx4E.17	Description of dispute or qualification if the accounts have been audited orsubjected to review.