PM Data 2009 Annual Report by Howard Woon

Annual Report 2009

2009 Annual Report Powermatic Data Systems Limited

Powermatic Data Systems Limited 135 Joo Seng Road, #08-01, PM Industrial Building, Singapore 368363 Tel: +65 6288 8220 Fax: +65 6280 9947 Co. Reg.No.: 198900414E

www.powermatic.com.sg

Sustained Development Powermatic Data Systems Limited Color: 2C Black + Pantone 690C

CONTENTS

CORPORATE INFORMATION

CHAIRMAN’S STATEMENT

OPERATIONS REVIEW

SUBSIDIARIES

PRODUCTS BY THE GROUP

GROUP FINANCIAL HIGHLIGHTS

PROFILE OF DIRECTORS

FINANCIAL CONTENTS

Powermatic Data Systems Limited annual report 09

CORPORATE INFORMATION

Board of Directors

Remuneration Committee

Auditors

executive directors

Mr David Tan Chao Hsiung Chairman

RSM Chio Lim LLP 8 Wilkie Road, #03-08

Dr Chen Mun President/Chairman

Mr Yee Lat Shing, Tom

Wilkie Edge Singapore 228095 Tel: +65 6533 7600 Fax: +65 6594 7811

Mr Chen Mong Chea

Prof. Lye Kin Mun

non-executive directors

Company Secretary

Mr Yee Lat Shing, Tom Independent Director

Mr Tan Cher Liang

Partner-in-charge of the audit: Mr Chan Weng Keen

Prof. Lye Kin Mun Independent Director

Registered Ofﬁce

(With effect from year ended 31 March 2009)

Mr David Tan Chao Hsiung Independent Director

Audit Committee Mr Yee Lat Shing, Tom Chairman Prof Lye Kin Mun Mr David Tan Chao Hsiung

Nominating Committee Prof. Lye Kin Mun Chairman Mr Yee Lat Shing, Tom Mr David Tan Chao Hsiung

135 Joo Seng Road #08-01 PM Industrial Building Singapore 368363 Tel: +65 6288 8220 Fax: +65 6280 9947

Share Registrar Boardroom Corporate & Advisory Services Pte Ltd 3 Church Street #08-01 Samsung Hub Singapore 049483 Tel: +65 6536 5355

Principal Bankers United Overseas Bank Limited 80 Rafﬂes Place UOB Plaza 1 Singapore 048624 HongKong and Shanghai Banking Corporation Limited 21 Collyer Quay #18-01 Hong Kong Bank Building Singapore 049320 Citibank N.A 3 Temasek Avenue #14-00 Centennial Tower Singapore 039190

Powermatic Data Systems Limited annual report 09

CHAIRMAN’S STATEMENT

“We expect that the Group’s ability to execute in a challenging marketplace will enable us to emerge from the current environment as a stronger force in the industry.”

Powermatic Data Systems Limited annual report 09

CHAIRMAN’S STATEMENT

The Group’s performance in second half of FY2009 was seriously affected by the rapidly deteriorating economic conditions in our main export markets. However, the Group has proven its ability to execute in a tough environment, in managing an operating profit of $1.66M, down from FY2008’s figure of $3.0M. The world economy today, despite some “green shoots” outlooks, is extremely challenging for many businesses. To ensure the group is best positioned to weather the current market conditions, we have looked at costs throughout the organization, particularly, • product and procurement costs by eliminating wastes in the product design from the specifications and development stage, and implementation of a phase 2 production planning and control system; • operating expenses, including reduction of employee headcount and mothballing one of our two factories in China. The concentration of production in one location will allow us to maximize the machinery and labour output. While we are not immune to the impact of an economic downturn, we see it as a time to improve our operations and competitive position, and to enter new markets. The improvements and changes we are making will enable us to grow and emerge stronger and our strong balance sheet will help us weather a prolonged crisis. We stay focused on implementing our strategy of slick and efficient manufacturing coupled with products meeting the challenges and opportunities offered by the demands of our customers. Business and technology rarely stand still, even in the worst of economic environments. We shall continually explore, create and adopt new innovations to keep our solutions ahead of the marketplace. We are placing a significant priority on operating expenses and costs. From this position we will continue to reinvest in growth in a focused and disciplined manner. We expect that the Group’s ability to execute in a challenging marketplace will enable us to emerge from the current environment as a stronger force in the industry. We thank you - our customers, vendors, shareholders and employees - for the continuous support you provide us.

Dr Chen Mun Chairman

Powermatic Data Systems Limited annual report 09

OPERATIONS REVIEW

In spite of the Global Financial Crisis, the Group is proﬁtable with net margin of 4.1%.

Group Performance The Group performance in financial year 2009 was impacted in the second half of the year by the economic downturn following the US sub-prime crisis. The turnover of the group decreased by 40% to $40.9 million from the previous year’s $67.8 million. Net profit after taxation also reduced from $12.6 million previous year to $1.66 million in the current financial year. However, if we exclude the $9.6 million one time gain from the sale of PM Industrial Building in the previous financial year’s numbers, the after tax profit from operation actually reduced from $3.0 million (net margin of 4.4%) previous financial year, to $1.66 million (net margin of 4.1%) current financial year. During the latter half of the current financial year, the group had taken various risk management initiatives, including various cost reduction exercises, tightening of credit management with more frequent review of debtor’s accounts, scaling down of exposure to low margin and higher risks accounts, and reduced our inventory holdings in response to the lower turnover. As a result, the Group had avoided incurring higher bad debt and inventory obsolescence that could affect many companies in a depressed economic climate.

Powermatic Data Systems Limited annual report 09

OPERATIONS REVIEW Cont’d

Network Product Business The network product business retreated by about 24% in volume compared to the previous year. We are consolidating our manufacturing in China, concentrating our activities in Suzhou, in order to enhance our manufacturing efﬁciencies and product development capabilities in China.

Distribution Business The computer peripheral business continued to retreat in the challenging environment with volume reduced by about 50% compared to the previous financial year. However, without the burden of large bad debt as in the previous financial year, it’s losses, in spite of the lower volume, was contained at $0.6 million, compared to losses of $0.52 million in the previous financial year. This was achieved through the corresponding cost reduction in the face of reducing volume and other risk management initiatives mentioned above.

Powermatic Data Systems Limited annual report 09

SUBSIDIARIES

Powermatic Data Systems Limited annual report 09

PRODUCTS by the GROUP Distributed

SATA, SCSI, SAS, RAID & Network Adapters External Fibre Channel RAID Subsystem

Optical Drives / Graphics Cards Small Form Factor PC & Accessories

2.5” / 3.5” Hard Disk. Optical Drives

Professional LCD Monitors Corporate . Medical . Graphics

Full range of Intel & AMD Mainboards & Graphics Card

Fibre Channel Host Bus Adapters & Switches

Thermal Fax, Paper Fax, Laser Fax, Mono Laser Multifunction Printers and consumables

Build to Order Notebooks, LCD/LCD TV, External Portabl Storage Solutions, Portable DVD Player and Accessories

Computing Accessories

Manufactured Wireless Mini PCI Modules

Wireless CPU Boards

Wireless Access Point

WLM200N2-26 2x2 802.11b/g/n MIMO Mini PCI

WP543 Wireless Host CPU Board Up to 300MHz Processing Speed Support up to 2 miniPCI slots

WPP54 Outdoor Access Point With Integrated 8dBi 2.4GHz 13dBi, 5GHz dual polarization antenna

WLM200N5-26 2x2 802.11a/n MIMO Mini PCI

WP188 Wireless Host CPU Board 266MHz/533MHz Intel processor Support 4 miniPCI slots

MME 2.4 G14/MME 5G16 Wireless Station Built in dual-polarization antenna, 14dBi for 2.4GHz 16dBi for 5.0GHz

Powermatic Data Systems Limited annual report 09

GROUP FINANCIAL HIGHLIGHTS

Sales by the Geographical Region

(%)

Singapore Europe Asia America

2005: 2006: 2007: 2008: 2009: 2005

Turnover

2006

2007

2008

2009

Staff Head Count

(S$million)

49.4

2005

2006

70.2

2007

133

2006

169 184

2008

221

2009

40.9

Proﬁt/ (Loss) after Tax

(S$million)

(7.3)

2005

(0.2)

(in number)

2007

2008 2009

3.5/ 17.1/ 1.7/ 77.7 1.71/ 7.71/ 0.09/ 90.49 1.36/ 8.16/ 0/ 90.48 0.86/ 7.64/ 0/ 91.5 0/ 5.6/ 0/ 94.4

171

2006

2007

1.8 12.6

2008 2009

Glance over the 5 Years

1.6

2005

2006

2007

2008

2009

Turnover (S$million)

49.4

70.2

40.9

Proﬁt/ (Loss) After Tax (S$million)

(7.3)

(0.2)

1.8

12.6

1.6

Staff Head Count (In Number)

133

169

184

221

171

Sales in Singapore (%)

77.7

90.49

90.48

91.7

94.3

Sales in Europe (%) Sales in Asia (except Singapore) (%) Sales in America (%)

1.7

0.09

17.1

7.71

8.16

7.46

5.7

3.5

1.71

1.36

0.84

Powermatic Data Systems Limited annual report 09

PROFILE of DIRECTORS

Chen Mun Dr Chen Mun is the Chairman and Chief Executive Ofﬁcer of the Group. He is also the founder of Powermatic Data Systems Limited and is responsible for spearheading the Company’s Research and Development programs as well as growth strategies of the Group. Prior to the founding of Powermatic, Dr Chen was a senior lecturer in the then University of Singapore. Dr Chen holds a bachelor’s degree in engineering from the University of Singapore and received a Ph.D. in engineering from the Imperial College, University of London.

Chen Mong Chea Mr Chen Mong Chea is an Executive Director and co-founder of the Powermatic Data Systems Limited. He holds a bachelor of arts degree from China and has more than 50 years of business experience in books and publishing prior to joining the Company.

Yee Lat Shing, Tom Mr Yee is an independent Director and Chairman of the Audit Committee of the Company since 1992. He is a Certified Public Accountant and was a partner of Ernst & Young, an international accounting firm, from 1974 to 1989. He has more than 35 years of experience in the field of accounting and auditing and extensive experience in handling major audit assignments of public listed and private companies in various industries, including insurance, manufacturing and retailing. He is currently a consultant. Mr Yee also sits on the boards of several listed companies including General Magnetics Ltd, Bonvest Holdings Limited, Cosco Corporation (S) Ltd, Eagle Brand Holdings Limited and Pacific Century Regional Developments Limited.

Lye Kin Mun Prof Lye Kin Mun is an independent Director and Chairman of the Nominating Committee of the Company. He holds a B.Sc. with distinction from the University of Alberta, Canada, in 1974, M.Eng. from the University of Singapore in 1979 and Ph.D. from the University of Hawaii at Manoa, U.S.A, in 1984 all in electrical engineering and was a Colombo Plan Scholar from 1970-74. He is currently Deputy Executive Director (Industry) of the Institute for Infocomm Research, Agency for Science, Technology and Research, and has been Director of the Centre for Wireless Communications, National University of Singapore from 1993 to 2002. Prof Lye has over 30 years experience in industry as well as teaching. Prof Lye has also served on the Boards of Singapore Polytechnic and Ngee Ann Polytechnic. He is a Director of Cellonics Inc., a startup company he co-founded. He was a consultant to several companies in the networking and wireless communications industry and sat on many national technical committees. He was also a member of the Asia-Paciﬁc Cadence Advisory Board and Advisory Committee for Next Generation Mobile Networks Project, Communications Research Lab., Japan. Prof Lye also serve as Chairman of the Strategic Programmes Review Panel of the Science and Engineering Research Council, A*STAR, and Expert Assessor for the Australian Research Council’s Discovery Projects.

David Tan Chao Hsiung David Tan was appointed a non-executive director on 24 March 2008. He has over 20 years of senior management experience in the banking and finance industry and has held positions in both local and foreign financial institutions including ABN Amro Bank, Keppel Bank and N.M. Rothschild (Singapore). Currently, he is the Chief Executive Officer of Omega Capital Ltd. He holds a Master in Commerce (specialising in Finance) from the University of New South Wales and a Bachelor of Economics from Macquarie University. He is also a Fellow of the Institute of CPA (Australia). In addition to sitting on the board of the Company, Mr Tan is a non-executive Independent Director of TMC Education Corporation Ltd which is listed on Catalist.

fiNaNCiaL CoNteNts 12

CORPORATE GOVERNANCE REPORT

DIRECTORS’ REPORT

STATEMENT BY DIRECTORS

INDEPENDENT AUDITORS’ REPORT

CONSOLIDATED INCOME STATEMENT

BALANCE SHEETS

STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

STATISTICS OF SHAREHOLDINGS

NOTICE OF TWENTIETH ANNUAL GENERAL MEETING PROXY FORM

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report Powermatic Data Systems Limited continues to uphold high standards of corporate governance and strives to develop procedures and policies consistent with best business practice so as to enhance corporate transparency and protect interest of shareholders. This report outlines the main corporate governance practices of the Company with specific reference to the Code of Corporate Governance 2005 (the “Code”). Except where compelling reasons require otherwise, the Company believes it has complied with the Code.

Board of Directors The members of the Board at the date of this Report are: Dr Chen Mun Mr Chen Mong Chea Mr Yee Lat Shing, Tom Prof Lye Kin Mun David Tan Chao Tsiung

President / Chairman Executive Director Independent Director Independent Director Independent Director

BOARD MATTERS Board’s Conduct of its Affairs (Principle 1) The Board is responsible for overall corporate governance and its main focus is to ensure proper management of the business and affairs of Company to protect and enhance long-term value and returns for its shareholders. The primary responsibilities of the Board are: • approving board policies, strategies, financial objectives and direction of the Group and monitoring performance of management; • dealing with matters brought up by the Audit Committee in relation to, in particular, the Group’s system of internal controls, including financial, operational and compliance controls, and risk management systems; • approving nominations of new Directors to the Board appointment of key personnel; • reviewing half-year and full-year accounts and announcements, results of operations and significant business plans including acquisitions and disposal of investments; • providing oversight in the proper conduct of the Company’s business and assuming responsibility for corporate governance; • approving interested person transactions; and • approving corporate or financial restructuring, share issuance, dividends and other returns to shareholders. The Board functions are either carried out by the Board or delegated to the various Committees established by the Board, namely the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”). These committees function within clearly defined terms of reference and operating procedures, which are reviewed on a regular basis. The Company provides ongoing education on Board processes, governance and best practices, including updates on changes in the relevant laws and regulations to enable them to make well-informed decisions. Newly appointed Directors will be considered for appropriate training and orientation programmes to familiarize them with the operations of the Company and its major business processes.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

The Board conducts regular meetings, which are scheduled in advance each year. Meetings of Board and Board Committees are supplemented by circular resolutions, which are accompanied by relevant explanations and supporting documents. The number of Board and Board committee meetings held in the financial year ended 31 March 2009 and the attendance of each Director are as follows: Board Meeting

Audit Committee

Nominating Committee

Remuneration Committee

Held

Attended

Held

Attended

Held

Attended

Held

Attended

Chen Mun

Chen Mong Chea

Yee Lat Shing, Tom

Lye Kin Mun

David Tan Chao Tsiung

Board Composition And Balance (Principle 2) The Board comprises two Executive Directors and three Independent Non-Executive Directors. The Board’s structure, size and composition are reviewed annually by the NC who is of the view that the current size of the Board is appropriate, taking into account the nature and scope of the Group’s operations, to facilitate effective decision making. The independence of each director is reviewed annually by the NC who has adopted the Code’s definition of what constitutes an independent director in its review. In respect of the NC’s review of the independence of each director for this financial year, the NC considered that, a majority of the Board is independent, including the Chairman of the NC. The strong independent element on the Board ensures that it is able to exercise objective and independent judgment on corporate affairs. The NC is satisfied that the Board comprises Directors who as a group provide core competencies such as accounting, finance, business and management experience, industry knowledge, and customer-based experience and knowledge. The NC and the Board is of the view that, given the commercial experience and academic qualifications of each of its members, its composition of Directors is well-balanced.

Role Of Chairman And Chief Executive Officer (Principle 3) The role of the Chairman and Chief Executive Officer (“CEO”) are not separated but the Board has a strong independent group of Directors to look after shareholders’ interests. Day-to-day running of business operations are delegated to key senior executives while the Chairman focuses on long term and strategic plans of the Company. The NC and the Board are of the view that it is in the best interests of the Group to adopt a single leadership structure i.e. where the CEO and Chairman of the Board is the same person, so as to ensure that the decisionmaking process of the Group would not be unnecessarily hindered. The Group’s Executive Chairman and CEO is Dr Chen Mun. He has played an instrumental role in developing the business of the Group and has also provided the Group with strong leadership and vision.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

The appointment of the Executive Chairman and CEO to the Board is reviewed by the NC and his remuneration package is reviewed by the RC at least once a year. Both the RC and the NC comprise of all Independent Directors. As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power and authority in a single individual. The Chairman is responsible for the proper workings of the Board which include the scheduling of meetings, setting of Board meeting agenda in consultation with the Company Secretary, exercising of control over quality and timeliness of information flow between the Management and the Board, managing the business of the board and board committees, monitoring the translation of the board’s decision and wishes into executive action and is assisted by the three Board committees in ensuring compliance with the Company’s guidelines on corporate governance.

Board Membership (Principle 4) Board Performance (Principle 5) Nominating Committee The NC, formed on 19 November 2001, comprises three Independent Non-Executive Directors. The principal functions of the NC are:• reviews the structure, size and composition of the Board and make recommendations to the Board; • identifies candidates and reviews all nominations for appointment of new directors, determining whether or not such nominee has the requisite qualifications, set up a process for the selection of such appointments and recommends all appointments of directors to the board and board committees. Accordingly, in selecting potential new directors, the NC will seek to identify the competencies required to enable the Board to fulfil its responsibilities. In doing so, the NC will have regard to the results of the annual appraisal of the Board’s performance. The NC may engage consultants to undertake research on, or assess, candidates for new positions on the Board, or to engage such other independent experts as it considers necessary to carry out its duties and responsibilities; • re-nominate and re-elect director for re-appointment, having regard to the directors’ contribution and performance; • identifies gaps in the mix of skills, experience and other qualities required in an effective Board; • reviews the independence of each Director and to ensure that the Board comprises at least one-third independent Directors. The NC met once during the financial period. The profile of the Directors are disclosed on pages 2 (“Corporate Information”) and 10 (“Profile of Directors”) of this annual report. The NC in considering the re-appointment of any Director, evaluates the performance of that Director and his contribution to the Board as a whole. Board performance evaluation is carried out at least once a year. The NC has reviewed the independence of Mr Yee Lat Shing, Tom, Prof Lye Kin Mun and Mr David Tan Chao Tsiung for FY2009. The NC is satisfied that there are no relationships, which would deem any of them not to be independent. Despite some of the Directors having other Board representation, the NC is satisfied that these Directors are able to and have adequately carried out their duties as Directors of the Company.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

Pursuant to Article 99 of the Articles of Association of the Company, every directors, other than the Managing Director, shall retire from office once every three years, and for this purpose, one-third of the Board are to retire from office by rotation and be subjected to re-election at the Company’s annual general meeting (“AGM”). Directors over 70 years of age are required to be re-appointed every year at the AGM pursuant to Section 153 of the Companies Act, Chapter 50 before they can continue to act as Director. The NC, with Mr David Tan abstaining from deliberations in respect of his own nomination, has recommended the re-election of Mr David Tan Chao Tsiung who is retiring under Article 99 as Director at the forthcoming AGM. The NC, with Mr Yee abstaining from deliberations in respect of his own nomination, has also recommended that Mr Chen Mong Chea and Mr Yee Lat Shing, Tom who are over 70 years of age, be nominated for re-appointment at the forthcoming AGM.

Access To Information (Principle 6) In order to ensure that the Board is able to fulfill its responsibilities, Management is required to provide adequate and timely information on all matters that require the Board’s decision as well as ongoing reports on material operational and financial matters of the Company and the Group. The Directors have also been provided with the contact numbers and email particulars of the Company’s senior management and the Company Secretary to facilitate access to any required information. The role of the Company Secretary is clearly defined and includes the responsibility of ensuring that board procedures are followed and that rules and regulations are complied with. Should the Directors, whether as a group or individually, need independent professional advice, such advice will be sought with the Board’s approval and the professional expense will be borne by the Company.

REMUNERATION MATTERS Procedures For Developing Remuneration Policies (Principle 7) Level And Mix Of Remuneration (Principle 8) Disclosure On Remuneration (Principle 9) The RC comprises three Independent Non-Executive Directors. The responsibilities of RC are: • to ensure a formal and transparent procedure for developing policy on executive remuneration, and for fixing the remuneration packages of individual directors, CEO and senior management. RC’s recommendations will be made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board. RC’s review cover all aspects of remuneration, including but not limited to Director’s fees, salaries, allowances, bonuses, options and benefits-in-kind; • to review remuneration of employees related to Executive Directors and controlling shareholders of the Company and the Group and that these commensurate with their respective job scopes and responsibilities. • to recommend the Directors’ fees of Non-Executive Directors to the Board based on their level of contribution taking into account factors such as effort, time spent and responsibilities. • to administer the Company’s Employee Stock Option Scheme (“ESOS”). The ESOS seeks to reward and retain Executive Directors and employees whose services are vital to the well-being and success of the Group and also to align interests of employees with that of the shareholders. Details of the ESOS are disclosed in the Directors’ Report.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

The RC met at least once during the year. The Executive Directors’ and key senior management remuneration packages are based on service contracts and their remuneration are reviewed by the RC. The Non-Executive Directors are paid a fixed fee. Fees paid to Non-Executive Directors are subject to approval of shareholders at the Annual General Meeting (“AGM”). No Director is involved in deciding his remuneration.

DISCLOSURE OF REMUNERATION OF DIRECTORS AND KEY EXECUTIVES Details of remuneration paid/payable to the directors of the Company and key executives of the Group for the year ended 31 March 2009 are set out below:

Fee %

Salary %

Bonus %

Other Benefits %

Total %

Chen Mun

–

78.4

19.0

2.6

100.0

Chen Mong Chea

–

84.1

14.0

1.9

100.0

Yee Lat Shing, Tom

100.0

–

100.0

Lye Kin Mun

100.0

–

100.0

David Tan Chao Tsiung

100.0

–

100.0

Chue Wai Tat

–

83.6

16.4

–

100.0

Ramachandran Pillai s/o Sankara Pillar

–

89.2

10.8

–

100.0

Yau Liong We

–

91.4

8.6

–

100.0

YawThiam Teng

–

94.4

5.6

–

100.0

Ng Gin Sim

–

88.2

11.8

–

100.0

DIRECTORS Below $250,000

KEY EXECUTIVES Below $250,000

REMUNERATION OF EMPLOYEE WHO IS AN IMMEDIATE FAMILY OF DIRECTOR(S) There is no immediate family member of a director, CEO or substantial shareholders in employment with the Group and whose remuneration exceeds S$150,000 for the financial year ended 31 March 2009 save for Mr Chen Mong Chea, Executive Director who is the father of Dr Chen Mun, Chairman of the Company.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

ACCOUNTABILITY AND AUDIT Accountability (Principle 10) The Board is mindful of its obligations to furnish timely information and to ensure full disclosure of material information in compliance with statutory reporting requirements. Price sensitive information are publicly released before it is communicated to any other interested parties.

Audit Committee (Principle 11) Internal Controls (Principle 12) The AC comprises three members, all of whom are independent of Management. The Board is of the view that the members of the AC have sufficient financial management expertise and experience and are qualified to discharge the AC functions. The AC is responsible for carrying out the following primary functions: • assisting the Board in discharging its statutory responsibilities on financial and accounting matters; • reviewing audit plans of the external and internal auditors and evaluating the reports issued by the external and internal auditors from their examination of the Company’s internal control system; • reviewing the financial and operating results of the Group and Company accounting polices and assistance given by the Management to its auditors; • reviews interim and annual announcement of results of the Group and Company before submission to the Board for approval; • reviewing the adequacy of the Company’s internal control (financial and operational) and risk management policies and systems established by the management; • reviewing the financial statements of the Group and Company before submission to the Board; • reviewing interested party transactions; • reviewing the independence of external auditors annually and consider the appointment or re-appointment of external auditors and matters relating to the resignation or removal of the auditors and approve the remuneration and terms of engagement of the external auditors; and • nominating external auditors for re-appointment. The AC has full access to and co-operation of Management, has full discretion to invite any Director or executive officer to attend the meetings and has been given reasonable resources to enable it to discharge its functions.

RISK MANAGEMENT The practice of risk management is undertaken by the Company’s Executive Directors and senior executives of each business unit under the purview of the Board of Directors. The significant risks factors relevant to the Group’s operations and management of such risks are discussed as follows:

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

Economic And Market Risks The Group’s main businesses are in the Networking and Computer and related products. The industry is subject to price cutting activities of our competitors as well as high levels of inventory obsolescence due to technological changes. We manage these risks through close monitoring of competitors pricing and activities and stringent management of all purchases to ensure optimum levels of inventory are maintained.

Financial Risks Such risks include mainly foreign exchange risks from foreign currency denominated assets and liabilities and credit risks arising from default by customers. The Group manages foreign exchange risk by arranging to purchase and sell its goods in the same currency and to settle such transactions within 90 days. Where there are longer term exposure, appropriate hedge instruments are used. In order to manage credit risks, we have an established system of credit evaluation and collection and close monitoring of debts at senior management level. The Board is satisfied with the Group’s risk management practices and that the risk facing the Group has been adequately addressed.

Internal Audits (Principle 13) The Company’s internal audit function in Singapore is currently outsourced to Messrs ELTICI e-Risk Services Pte Ltd. The internal auditor reports directly to the chairman of the AC on audit matters. Any non-compliance and internal control weaknesses noted during the internal audit and the recommendations thereof are reported to the AC as part of the review of the Group’s internal control system. The AC also reviews and approves the annual internal audit plans and resources to ensure that the internal auditor has the necessary resources to adequately perform its functions. The AC and the Board are satisfied that there are adequate internal controls in the Group.

Communications with Shareholders (Principle 14) The Company does not practice selective disclosure. In line with continuous disclosure obligations of the Company pursuant to the SGX-ST’s Listing Rules, the Board’s policy is that all shareholders should be equally and timely informed of all major developments that impact the Group. Information is communicated to shareholders on a timely basis through: • annual reports that are prepared and issued to all shareholders; • financial statements containing a summary of the financial information and affairs of the Group for interim and full year are published through the SGXNET; and • notices of and explanatory notes for AGM and Extraordinary General Meetings.

Greater Shareholder Participation (Principle 15) The Board regards the AGM as an opportunity to communicate directly with its investors and encourages participative dialogue. The CEO and External Auditors are present to assist the Directors in addressing relevant queries by shareholders. The chairpersons of the Audit, Remuneration and Nominating committees are normally available at the meeting to answer any questions pertaining to the functions and conduct of these Board committees.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Corporate Governance Report cont’d

Dealings in Securities The Company has adopted its own internal compliance code to provide guidance to its Directors and officers in relation to their dealings in the Company’s securities. Its Directors and officers are advised not to deal in the Company’s shares during the period commencing six weeks before the announcement of the Company’s halfyear and full-year results and ending one day after the public release of such results. Directors and Employees are also advised against dealing in the securities when they are in possession of any unpublished material price-sensitive information of the Group and Company.

Interested Person Transactions The Company did not have any material interested person transactions for the financial period from 1 April 2008 to 31 March 2009.

Material Contracts There were no material contracts entered into by the Company and its subsidiaries involving the interest of substantial shareholders or CEO or any Director, which are either subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Directors’ Report The directors of the company are pleased to present their report together with the audited financial statements of the company and of the group for the financial year ended 31 March 2009.

1. Directors at Date of Report The directors of the company in office at the date of this report are: Dr Chen Mun Chen Mong Chea Yee Lat Shing, Tom Lye Kin Mun David Tan Chao Hsiung

2. Arrangements to Enable Directors to Acquire Benefits by Means of the Acquisition of Shares and Debentures Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.

3. Directors’ Interests in Shares and Debentures The directors of the company holding office at the end of the financial year had no interests in the share capital and options of the company and related corporations as recorded in the register of directors’ shareholdings kept by the company under section 164 of the Companies Act, Cap. 50 except as follows: At beginning of year

At end of year

Direct interest In the company – Powermatic Data Systems Limited Dr Chen Mun Chen Mong Chea

At beginning of year

At end of year

Deemed interest

Number of shares of no par value 98,239,662 –

97,139,662 –

11,304,020 11,304,020

– –

By virtue of section 7 of the Companies Act, Cap. 50, Dr. Chen Mun is deemed to have interest in all the related corporations of the company. The directors’ interests as at 21 April 2009 were the same as those at the end of the year.

Contractual Benefits of Directors Since the beginning of the financial year, no director of the company has received or become entitled to receive a benefit which is required to be disclosed under section 201(8) of the Companies Act, Cap. 50, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. Certain directors of the company received remuneration from related corporations in their capacity as directors and or executives of those related corporations.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Directors’ Report cont’d

5. Options to Take Up Unissued Shares The company has an employee share option scheme known as the “Powermatic Data Systems Employees’ Share Option Scheme 2003” (the “Scheme”). The Scheme is a share incentive scheme designed to acknowledge the contributions made by the employees and to give recognition to such employees by giving them the opportunity to have a personal stake in the company and to motivate such employees in optimising their performance standards and efficiency and achieve strategic business objectives of the group and retention of key employees whose contributions are important to the long-term growth and profitability of the group. Under the rules of the Scheme, all directors and full-time employees of the group are eligible to participate in the Scheme except for employee or director who is also a controlling shareholder or an associate of a controlling shareholder. The Scheme extends only to the company and its subsidiaries. Employees of the company’s associated companies are not eligible under the Scheme. The aggregate number of shares over which options may be granted shall not exceed 15% of the issued share capital of the company on the day immediately preceding the offer date of the option. The Scheme is administered by the Remuneration Committee comprising David Tan Chao Hsiung (Chairman) and two independent directors of the company, Lye Kin Mun and Yee Lat Shing, Tom. All the options granted shall be exercisable from the 1st anniversary to the 5th anniversary of the offering date for non-executive directors and from the 1st anniversary to the 10th anniversary of the offering date for full time employees. The offer price shall be equal to the average of the last dealt price for a share for the three consecutive trading days immediately preceding the offer date. The outstanding number of options at the end of the reporting year was:

Date options granted 12.12.2003

Balance at 1.4.2008

Granted/ (lapsed) Exercised during during the year the year

260,000

–

Balance at 31.3.2009

Offer price per share

Year exercisable

260,000

13 cents

12.12.2004 – 11.01.2013

There were no unissued shares of subsidiaries under option as at 31 March 2009. The table below summarises the number of options that were outstanding, their weighted average exercise price as at the end of the year as well as the movements during the year. 2009

2008

2009 cents

2008 cents

Weighted average exercise price At 1 April Exercised Expired

260,000 – –

945,000 (585,000) (100,000)

13 – –

13 13 13

Balance at end of the year

260,000

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Directors’ Report cont’d

5. Options to Take Up Unissued Shares (cont’d) Particulars of employees of the company who received 5% or more of the total options under the Scheme are as follows:

Name of employees

Options granted during the financial year ended 31.3.2009

Aggregate options granted since commencement of Scheme to 31.3.2009

Aggregate options exercised since commencement of Scheme to 31.3.2009

Aggregate options outstanding as at 31.3.2009

– – – –

400,000 300,000 300,000 350,000

400,000 150,000 300,000 350,000

– 150,000 – –

Yau Liong We Yaw Thiam Teng Ng Gin Sim Derek Chua

6. Options Exercised During the financial year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares, except as indicated in paragraph 5 above.

Unissued Shares Under Option At the end of the financial year, there were no unissued shares under option except as indicated in paragraph 5 above.

8. Audit Committee The members of the audit committee at the date of this report are as follows: Yee Lat Shing, Tom Lye Kin Mun David Tan Chao Hsiung

(Chairman of audit committee and Independent and Non-executive director) (Independent and Non-executive director) (Independent and Non-executive director)

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

SPS0905001_Powermatic_AR.indb

•

Reviewed with the independent external auditors their audit plan;

•

Reviewed with the independent external auditors their evaluation of the company’s internal accounting controls, and their report on the financial statements and the assistance given by the company’s officers to them;

•

Reviewed with the internal auditors the scope and results of the internal audit procedures;

•

Reviewed the financial statements of the group and the company prior to their submission to the directors of the company for adoption; and

•

Reviewed the interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX).

7/1/2009

9:38:03 AM

Powermatic Data Systems Limited annual report 09

Directors’ Report cont’d

8. Audit Committee (cont’d) Other functions performed by the audit committee are described in the report on corporate governance included in the annual report. It also includes an explanation of how independent auditors’ objectivity and independence is safeguarded where the independent auditors provide non-audit services. The audit committee has recommended to the board of directors that RSM Chio Lim LLP be nominated for re-appointment as independent auditors at the next annual general meeting of the company.

9. Independent Auditors The independent auditors, RSM Chio Lim LLP, have expressed their willingness to accept reappointment.

10. Subsequent Developments There are no significant developments subsequent to the release of the group’s and the company’s preliminary financial statements, as announced on 27 May 2009, which would materially affect the group’s and the company’s operating and financial performance as of the date of this report except as indicated in note 31 of the financial statements.

On behalf of the Directors

Dr Chen Mun Director

Chen Mong Chea Director

10 June 2009

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Statement by Directors In the opinion of the directors, the financial statements set out on pages 27 to 73 are drawn up so as to give a true and fair view of the state of affairs of the group and of the company as at 31 March 2009 and the results, changes in equity and cash flows of the group and the changes in equity of the company for the year ended on that date and at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

On behalf of the Directors

........................................................ Dr Chen MUN Director

........................................................ Chen Mong Chea Director

10 June 2009

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Independent Auditors’ Report to the Members of Powermatic Data Systems Limited (Registration No: 198900414E) We have audited the accompanying financial statements of Powermatic Data Systems Limited and its subsidiaries (the group), set out on pages 27 to 73, which comprise the balance sheets of the group and the company as at 31 March 2009, and the income statement, statement of changes in equity and cash flow statement of the group, and statement of changes in equity of the company for the year then ended, and a summary of significant accounting policies and other explanatory notes. The financial statements for the year ended 31 March 2008 were audited by other independent auditors whose report dated 25 June 2008 expressed an unqualified opinion on those financial statements.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (“the Act”) and Singapore Financial Reporting Standards. This responsibility includes: (a)

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income statement and balance sheets and to maintain accountability of assets;

(b)

selecting and applying appropriate accounting policies; and

(c)

making accounting estimates that are reasonable in the circumstances.

Independent Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Independent Auditorsâ&#x20AC;&#x2122; Report to the Members of Powermatic Data Systems Limited (Registration No: 198900414E)

contâ&#x20AC;&#x2122;d Opinion

In our opinion, (a)

the consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the group and of the company as at 31 March 2009 and the results, changes in equity and cash flows of the group and the changes in equity of the company for the year ended on that date; and

(b)

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

RSM Chio Lim LLP Public Accountants and Certified Public Accountants Singapore

10 June 2009 Partner-in-charge of audit: Chan Weng Keen Effective from year ended 31 March 2009

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Consolidated Income Statement Year Ended 31 March 2009 Group 2009 $’000

2008 $’000

40,946 (32,227)

67,803 (55,836)

8,719

11,967

383 1,873

268 9,799

(2,485) (5,023) (754) (4) (541)

(3,245) (3,417) (876) (1) (1,724)

2,168 (513)

12,771 (122)

Net Profit for the Year

1,655

12,649

Profit Attributable to Owners of the Parent, Net of Tax Profit Attributable to Minority Interest, Net of Tax

1,655 –

12,649 –

1,655

12,649

Cents

Notes Revenue Cost of Sales Gross Profit Other Items of Income Interest Income Other Credits Other Items of Expenses Distribution Costs Administrative Expenses Other Operating Expenses Finance Costs Other Charges Net Profit Before Income Tax Income Tax Expense

Earnings Per Share Earnings Per Share Currency Unit Basic

0.96

7.30

Diluted

0.96

7.30

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

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Balance Sheets

As at 31 March 2009

Notes

2009 $’000

Group 2008 $’000

Company 2009 2008 $’000 $’000

11 12 13 14 15

2,169 – – 1,141 23

2,345 – – 1,771 23

218 4,081 – 1,141 23

165 2,115 – 1,771 23

3,333

4,139

5,463

4,074

2,646 2,299 1,407 1,091 40,992

5,427 5,462 1,223 1,445 40,825

– 14,807 1,407 672 21,413

– 8,816 1,223 860 27,648

Total Current Assets

48,435

54,382

38,299

38,547

Total Assets

51,768

58,521

43,762

42,621

34,553 7,356 (169)

34,553 7,434 852

34,553 4,214 267

34,553 635 1,545

Equity Attributable to Equity Holders of the Parent Minority Interest

41,740 –

42,839 –

39,034 –

36,733 –

Total Equity

41,740

42,839

39,034

36,733

– 3,002

13 4,000

– 3,000

13 4,000

3,002

4,013

3,000

4,013

513 4,688 12 1,813

121 9,391 13 2,144

– 364 12 1,352

– 649 13 1,213

7,026

11,669

1,728

1,875

Total Liabilities

10,028

15,682

4,728

5,888

Total Equity and Liabilities

51,768

58,521

43,762

42,621

ASSETS Non-Current Assets Property, Plant and Equipment Investments in Subsidiaries Investments in Associates Other Financial Assets, Non-Current Other Assets, Non-Current Total Non-Current Assets Current Assets Inventories Trade and Other Receivables, Current Other Financial Assets, Current Other Assets, Current Cash and Cash Equivalents

EQUITY AND LIABILITIES Equity Share Capital Retained Earnings Other Reserves

Non-Current Liabilities Finance Lease Liabilities, Non-Current Other Liabilities, Non-Current

16 17 18 19 20

21 23

24 25

Total Non-Current Liabilities Current liabilities Income Tax Payable Trade and Other Payables, Current Finance Lease Liabilities, Current Other Liabilities, Current Total Current Liabilities

26 24 25

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

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Statements of Changes in Equity Year Ended 31 March 2009

Group Current Year: Opening Balance at 1 April 2008 Items of Income and Expense Recognised Directly in Equity: Exchange Differences on Translation of Foreign Operations Losses on Available-For-Sale Instruments (Note 14) Impairment Losses Transferred from Equity to Income Statement Net Expense Recognised Directly in Equity Net Profit for the Year Total Recognised Income and Expense for the Year Other Movements in Equity: Transactions with Equity Holders: Dividends Paid (Note 10) Total Other Movements in Equity Closing Balance at 31 March 2009 Previous Year: Opening Balance at 1 April 2007 Items of Income and Expense Recognised Directly in Equity: Exchange Differences on Translation of Foreign Operations Gains on Available-For-Sale Instruments (Note 14) Net Income Recognised Directly in Equity Net Profit for the Year

Share Capital $’000

Other Reserves $’000

Retained Earnings $’000

Parent Total $’000

Minority Interest $’000

Total Equity $’000

34,553

852

7,434

42,839

–

42,839

–

257

–

257

–

257

–

(1,378)

–

(1,378)

–

(1,378)

–

100

–

100

–

100

– –

(1,021) –

– 1,655

(1,021) 1,655

– –

(1,021) 1,655

–

(1,021)

1,655

634

–

634

–

(1,733)

–

(1,733)

–

(1,733)

–

(1,733)

34,553

(169)

7,356

41,740

–

41,740

34,477

604

(5,215)

29,866

–

29,866

–

(121)

–

(121)

–

(121)

–

369

–

369

–

369

– –

248 –

– 12,649

248 12,649

– –

248 12,649

Total Recognised Income for the Year Other Movements in Equity: Transactions with Equity Holders: Issue of Share Capital (Note 21)

–

248

12,649

12,897

–

12,897

–

Total Other Movements in Equity

–

34,553

852

7,434

42,839

–

42,839

Closing Balance at 31 March 2008

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

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Statements of Changes in Equity Year Ended 31 March 2009 cont’d

Share Capital $’000

Other Reserves $’000

Retained Earnings $’000

Total Equity $’000

34,553

1,545

635

36,733

–

(1,378)

–

(1,378)

–

100

–

100

Net Expense Recognised Directly in Equity Net Profit for the Year

– –

(1,278) –

– 5,312

(1,278) 5,312

Total Recognised Income and Expense for the Year Other Movements in Equity: Transactions with Equity Holders: Dividends Paid (Note 10)

–

(1,278)

5,312

4,034

–

(1,733)

Total Other Movements in Equity

–

(1,733)

34,553

267

4,214

39,034

34,477

1,176

(9,677)

25,976

–

369

–

369

Net Income Recognised Directly in Equity Net Profit for the Year

– –

369 –

– 10,312

369 10,312

Total Recognised Income and Expense for the Year Other Movements in Equity: Transactions with Equity Holders: Issue of Share Capital (Note 21)

–

369

10,312

10,681

–

Total Other Movements in Equity

–

34,553

1,545

635

36,733

Company Current Year: Opening Balance at 1 April 2008 Items of Income and Expense Recognised Directly in Equity: Losses on Available-For-Sale Instruments (Note 14) Impairment Losses Transferred from Equity to Income Statement

Closing Balance at 31 March 2009 Previous Year: Opening Balance at 1 April 2007 Items of Income and Expense Recognised Directly in Equity: Gains on Available-For-Sale Instruments (Note 14)

Closing Balance at 31 March 2008

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

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Consolidated Cash Flow Statement Year Ended 31 March 2009 Group 2009 $’000

2008 $’000

2,168 (383) (101) 4 776 (87) 316 100 257

12,771 (268) (148) 1 637 (9,651) 42 – (119)

Operating Cash Flows before Changes in Working Capital Inventories Trade and Other Receivables, Current Other Assets, Current Trade and Other Payables Other Liabilities, Current

3,050 2,781 3,192 325 (4,703) (331)

3,265 (217) 5,255 (174) (1,773) 45

Net Cash Flows From Operations Before Interest and Tax Income Taxes Paid

4,314 (121)

6,401 –

Net Cash Flows From Operating Activities

4,193

6,401

Cash Flows From Investing Activities Disposal of Property, Plant and Equipment Acquisition of Property, Plant and Equipment Disposal of Other Financial Assets, Current Acquisition of Other Financial Assets, Current Acquisition of Other Financial Assets, Non-Current Cash Restricted in Use Over 3 Months Interest Income Received Dividend Income Received

263 (776) 500 (1,000) (748) (22,483) 383 101

24,658 (1,474) – – (5) – 268 148

Net Cash (Used In) From Investing Activities

(23,760)

23,595

Cash Flows From Financing Activities Issue of Shares Finance Lease Repayments Other Liabilities, Non-Current Interest Expense Paid Dividends Paid

– (14) (998) (4) (1,733)

76 (13) – (1) –

Net Cash Flows (Used In) From Financing Activities

(2,749)

(22,316) 40,825

30,058 10,767

18,509

40,825

Cash Flows From Operating Activities Profit Before Income Tax Interest Income Dividend Income Interest Expense Depreciation of Property, Plant and Equipment Gain on Disposal of Property, Plant and Equipment Loss on Sale of Investments Impairment Losses Transferred from Equity to Income Statement Net Effect of Exchange Rate Changes in Consolidating Subsidiaries

Net (Decrease)/Increase in Cash and Cash Equivalents Cash and Cash Equivalents, Cash Flow Statement, Beginning Balance Cash and Cash Equivalents, Cash Flow Statement, Ending Balance (Note 20A) The accompanying notes form an integral part of these financial statements.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 1.

General The company is incorporated in Singapore with limited liability. The financial statements are presented in Singapore dollars. The financial statements were approved and authorised for issue by the board of directors on 10 June 2009. The company is an investment holding company. It is listed on the Singapore Exchange Securities Trading Limited. The principal activities of the subsidiaries are described in Note 12 below. The registered office is: 135 Joo Seng Road, PM Industrial Building #08-01, Singapore 368363. The company is domiciled in Singapore.

2. Summary of Significant Accounting Policies Accounting Convention The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (“FRS”) as well as all related Interpretations to FRS (“INT FRS”) as issued by the Singapore Accounting Standards Council and the Companies Act, Cap 50. The financial statements are prepared on a going concern basis under the historical cost convention except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements. Basis of Presentation The consolidation accounting method is used for the consolidated financial statements that include the financial statements made up to the balance sheet date each year of the company and all of its directly and indirectly controlled subsidiaries. Consolidated financial statements are the financial statements of the group presented as those of a single economic entity. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including income, expenses and dividends, are eliminated in full on consolidation. The equity accounting method is used for associate in the group financial statements. The results of the investees acquired or disposed of during the financial year are accounted for from the respective dates of acquisition or up to the dates of disposal which is the date on which effective control is obtained of the acquired business until that control ceases. On disposal the attributable amount of goodwill if any is included in the determination of the gain or loss on disposal. The company’s financial statements have been prepared on the same basis, and as permitted by the Companies Act, Cap. 50, no income statement is presented for the company. Basis of Preparation of the Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Segment Reporting A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments. Revenue Recognition The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the year arising from the course of the ordinary activities of the entity and it is shown net of related tax, estimated returns, discounts and volume rebates. Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from rendering of services that are of short duration is recognised when the services are completed. Interest income is recognised using the effective interest method. Rental income is recognised on a time-proportion basis that takes into account the effective yield on the asset, on a straight-line basis over the lease term. Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established. Employee Benefits Contributions to defined contribution retirement benefit plans are recorded as an expense as they fall due. The entity’s legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund. This includes the government managed retirement benefit plan such as the Central Provident Fund in Singapore. For employee leave entitlement the expected cost of shortterm employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and in the case of non-accumulating compensated absences, when the absences occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive obligation based on past practice. Share-Based Compensation For the equity-settled share-based compensation transactions, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed on a straight-line basis over the vesting period is determined by reference to the fair value of the options granted excluding the effect of non-market conditions such as profitability and sales growth targets. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. The expected lives used in the model are adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. At each end of the reporting year, a revision is made of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised. Cancellations of grants of equity instruments during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied) are accounted for as an acceleration of vesting, therefore any amount unrecognised that would otherwise have been charged is recognised immediately in the income statement.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Income Tax The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax. Tax and deferred tax are recognised in the income statement except that when they relate to items that initially bypass the income statement and are taken to equity, in which case they are similarly taken to equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability is not recognised for all taxable temporary differences associated with investments in subsidiaries and associates because (a) the company is able to control the timing of the reversal of the temporary difference; and (b) it is probable that the temporary difference will not reverse in the foreseeable future. Foreign Currency Transactions The functional currency is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the balance sheet and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in the income statement except when deferred in equity as qualifying cash flow hedges. The presentation is in the functional currency. Translation of Financial Statements of Other Entities Each entity in the group determines the appropriate functional currency as it reflects the primary economic environment in which the entity operates. In translating the financial statements of an investee for incorporation in the consolidated financial statements the assets and liabilities denominated in currencies other than the functional currency of the company are translated at year end rates of exchange and the income and expense items are translated at average rates of exchange for the year. The components of shareholders’ equity are stated at historical value. The resulting translation adjustments (if any) are accumulated in a separate component of equity until the disposal of that investee. The presentation is in the functional currency. Property, Plant and Equipment Depreciation is provided on a straight-line basis to allocate the gross carrying amounts less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows: Leasehold properties Leasehold improvements Motor vehicles Furniture, fittings and equipment

SPS0905001_Powermatic_AR.indb

– – – –

2% Over the lease term of 20% 20% 10% to 33%

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Property, Plant and Equipment (cont’d) An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements. Property, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in the income statement. The residual value and the useful life of an asset is reviewed at least at each financial yearend and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. Cost also includes acquisition cost, any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent cost are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement when they are incurred. Cost includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. Leased Assets Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the balance sheet at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in the income statement as an integral part of the total lease expense. Rental income from operating leases is recognised in the income statement on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Initial direct cost 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.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Subsidiaries A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities accompanying a shareholding of more than one half of the voting rights or the ability to appoint or remove the majority of the members of the board of directors or to cast the majority of votes at meetings of the board of directors. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. In the company’s own separate financial statements, the investments in subsidiaries are stated at cost less any provision for impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The net book values of the subsidiaries are not necessarily indicative of the amounts that would be realised in a current market exchange. Associates An associate is an entity including an unincorporated entity in which the investor has a substantial financial interest (usually not less than 20% of the voting power), significant influence and that is neither a subsidiary nor a joint venture of the investor. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The investments in associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of net assets of the associate, less any impairment in value. The income statement reflects the group’s share of the results of operations of the associate. Profits and losses resulting from transactions between the group and an associate are recognised in the financial statements only to the extent of unrelated investors’ interests in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Losses of associates in excess of the group’s interest in the relevant entity are not recognised except to the extent that the group has an obligation. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group. In the company’s own separate financial statements, the investments in associates are stated at cost less any provision for impairment in value. Impairment loss recognised in profit or loss for an associate is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The net book values of the associates are not necessarily indicative of the amounts that would be realised in a current market exchange. Minority Interest The minority interest in the net assets and net results of consolidated subsidiary are shown separately in the consolidated balance sheet and consolidated income statement. Any minority interest in the acquiree (subsidiary) is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. 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 the losses.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Borrowing Costs All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Other borrowing costs are recognised as an expense in the period in which they are incurred. The interest expense is calculated using the effective interest method. Impairment of Non-Financial Assets Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The carrying amount of other non-financial assets is reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down through the income statement to its estimated recoverable amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in the income statement. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each reporting date non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Financial Assets Initial recognition and measurement and derecognition: A financial asset is recognised on the balance sheet when, and only when, the entity becomes a party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally represented by the transaction price. The transaction price for financial asset not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the “substance over form” based derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control. Subsequent measurement: Subsequent measurement based on the classification of the financial assets in one of the following four categories under FRS 39 is as follows:

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Financial Assets (cont’d) 1. Financial assets at fair value through profit or loss: Assets are classified in this category when they are incurred principally for the purpose of selling or repurchasing in the near term (trading assets) or are derivatives (except for a derivative that is a designated and effective hedging instrument) or have been classified in this category because the conditions are met to use the “fair value option” and it is used. These assets are carried at fair value by reference to the transaction price or current bid prices in an active market. All changes in fair value relating to assets at fair value through profit or loss are recognised directly in the income statement. They are classified as non-current assets unless management intends to dispose of the investment within 12 months of the end of the reporting year.

SPS0905001_Powermatic_AR.indb

Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classified in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in the income statement. The trade and other receivables are classified in this category.

Held-to-maturity financial assets: These are non-derivative financial assets with fixed or determinable payments and fixed maturity that the entity has the positive intention and ability to hold to maturity. Financial assets that upon initial recognition are designated as at fair value through profit or loss or available-for-sale and those that meet the definition of loans and receivables are not classified in this category. These assets are carried at amortised costs using the effective interest method minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred. If that is the case, the carrying amount of the asset is reduced through use of an allowance account. The gains and losses are recognised in income statement when the investments are derecognised or impaired, as well as through the amortisation process. Impairment losses recognised in profit or loss are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. Long-term investments in bonds and debt securities are classified in this category.

Available-for-sale financial assets: These are non-derivative financial assets that are designated as available for sale on initial recognition or are not classified in one of the previous categories. These assets are carried at fair value by reference to the transaction price or current bid prices in an active market. If such market prices are not reliably determinable, management establishes fair value by using valuation techniques. Changes in fair value of available-for-sale financial assets (other

7/1/2009

9:38:04 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 contâ&#x20AC;&#x2122;d

2. Summary of Significant Accounting Policies (contâ&#x20AC;&#x2122;d) Financial Assets (contâ&#x20AC;&#x2122;d) than those relating to foreign exchange translation differences on non-monetary investments) are recognised directly in equity in other reserves. Such reserves are recycled to the income statement when realised through disposal. Impairments below cost are recognised in the income statement. When there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is reclassified from equity to the income statement as a reclassification adjustment. If, in a subsequent period, the fair value of an equity instrument classified as availablefor-sale increases and the increase can be objectively related to an event occurring after the impairment loss, it is reversed against other reserves and are not subsequently reversed through profit or loss. However for debt instruments classified as available-for-sale impairment losses recognised in profit or loss are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. The weighted average method is used when determining the cost basis of publicly listed equities being disposed of. For non-equity instruments classified as available-for-sale the reversal of impairment is recognised in income statement. They are classified as non-current assets unless management intends to dispose of the investment within 12 months of the end of the reporting year. Typically non-current investments in equity shares and debt securities are classified in this category but do not include subsidiaries, joint ventures, or associates. Unquoted investments are stated at cost less provision for impairment in value where there are no market prices, and management is unable to establish fair value by using valuation techniques. For unquoted equity instruments impairment losses are not reversed. Cash and Cash Equivalents Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt instruments purchased with an original maturity of three months or less. For the cash flow statement the item includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable on demand that form an integral part of cash management. Financial Liabilities Initial recognition and measurement: A financial liability is recognised on the balance sheet when, and only when, the entity becomes a party to the contractual provisions of the instrument. The initial recognition of financial liability is at fair value normally represented by the transaction price. The transaction price for financial liability not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting year.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 contâ&#x20AC;&#x2122;d

2. Summary of Significant Accounting Policies (contâ&#x20AC;&#x2122;d) Financial Liabilities (contâ&#x20AC;&#x2122;d) Subsequent measurement: Subsequent measurement based on the classification of the financial liabilities in one of the following two categories under FRS 39 is as follows: 1.

Financial liabilities at fair value through profit or loss: As at year end date, there were no financial liabilities classified in this category.

Other financial liabilities: All liabilities, which have not been classified as in the previous category fall into this residual category. These liabilities are carried at amortised cost using the effective interest method. Trade and other payables and borrowing are classified in this category. Items classified within current trade and other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty and settlement is short-term.

Fair Value of Financial Instruments The carrying values of current financial assets and financial liabilities approximate their fair values due to the short-term maturity of these instruments. Disclosures of fair value are not made when the carrying amount current financial instruments is a reasonable approximation of fair value. The fair values of noncurrent financial instruments may not be disclosed separately unless there are significant items at the end of the reporting year and in the event the fair values are disclosed in the relevant notes. The maximum exposure to credit risk is the fair value of the financial instruments at the end of the reporting year. The fair value of a financial instrument is derived from an active market. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal and, for an asset to be acquired or liability held, the asking price. Inventories Inventories are measured at the lower of cost (weighted average method) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. A write down on cost is made for where the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. Equity Equity instruments are contracts that give a residual interest in the net assets of the company. Ordinary shares are classified as equity. Equity instruments are recognised at the amount of proceeds received net of incremental costs directly attributable to the transaction. The shares have no par value. Dividends on equity are recognised as liabilities when they are declared. Interim dividends are recognised when paid.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 contâ&#x20AC;&#x2122;d

2. Summary of Significant Accounting Policies (contâ&#x20AC;&#x2122;d) Provisions A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in the income statement in the period they occur. Critical Judgements, Assumptions and Estimation Uncertainties The critical judgements made in the process of applying the entityâ&#x20AC;&#x2122;s accounting policies that have the most significant effect on the amounts recognised in the financial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the 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. These estimates and assumptions are periodically monitored to make sure they incorporate all relevant information available at the date when financial statements are prepared. However, this does not prevent actual figures differing from estimates. Allowance for doubtful accounts: An allowance is made for doubtful accounts for estimated losses resulting from the subsequent inability of the customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. Management generally analyses accounts receivables and analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. To the extent that it is feasible impairment and uncollectibility is determined individually for each item. In cases where that process is not feasible, a collective evaluation of impairment is performed. At the end of the reporting year, the receivables carrying amount approximates the fair value and the carrying amounts might change materially within the next financial year but these changes would not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year. Net realisable value of inventories: A review is made periodically on inventory for excess inventory, obsolescence and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. These reviews require management to consider the future demand for the products. In any case the realisable value represents the best estimate of the recoverable amount and is based on the most reliable evidence available at the end of the reporting year and inherently involves estimates regarding the future expected realisable value. The usual considerations for determining the amount of allowance or write-down include ageing analysis, technical assessment and subsequent events. In general, such an evaluation process requires significant judgement and materially affects the carrying amount of inventories at the end of the reporting year. Possible changes in these estimates could result in revisions to the stated value of the inventories. The carrying amount of inventories at the end of the reporting year was $2,646,000 (2008: $5,427,000).

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d 2.

Summary of Significant Accounting Policies (cont’d) Critical Judgements, Assumptions and Estimation Uncertainties (cont’d) Useful lives of property, plant and equipment: The estimates for the useful lives and related depreciation charges for plant and equipment is based on commercial and production factors which could change significantly as a result of technical innovations and competitor actions in response to severe market conditions. The depreciation charge is increased where useful lives are less than previously estimated lives, or the carrying amounts written off or written down for technically obsolete or non-strategic assets that have been abandoned or sold. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from assumptions could require a material adjustment to the carrying amount of the balances affected. The carrying amounts of the specific asset (or class of assets) at the end of the reporting year affected by the assumption was $2,169,000 (2008: $2,345,000) and $218,000 (2008: $165,000) for the group and the company respectively. Income tax: The group recognises expected liabilities for tax based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual liability arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax provisions in the period when such determination is made. Impairment of available-for-sale financial assets: The group classifies certain assets as available-for-sale financial assets and recognises changes in their fair value in equity. When the fair value declines, management exercises judgement based on the observable data relating to the possible events that may have caused the decline in value to determine whether the decline is an impairment that should be recognised in the income statement. For the financial year ended 31 March 2009, the amount of impairment loss recognised for available-for-sale financial assets was $100,000 (2008: NIL). Provision for warranty costs: Certain products are covered by product warranty plans of varying periods, depending on local practices and regulations. A related provision is made for future warranty claims after taking into account the historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. The warranty obligations are affected by actual product failure rates and by material usage and service delivery costs incurred in correcting a product failure. If the actual claims costs were to differ by 10% from management’s estimates, the warranty provision would be an estimated $22,000 higher or $22,000 lower. The amount of warranty provision at the end of the reporting year was $221,000 (2008: $299,000). Deferred gain: The company sold its leasehold property, PM Industrial Building to MacarthurCook Industrial REIT on 10 March 2008. Under the terms of the sale and purchase agreement, the company has leased back the property for the next five years from 10 March 2008 to 9 March 2013. The excess of the sales price of $25 million above the fair value of $20 million is deferred and amortised over the leaseback period of five years. Significant judgement is required to determine the fair value of the leasehold property sold. Analysis has been carried out based on assumptions regarding future gross rental income and maintenance of the leasehold property.

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

2. Summary of Significant Accounting Policies (cont’d) Critical Judgements, Assumptions and Estimation Uncertainties (cont’d) Determination of functional currency: The group measures foreign currency transactions in the respective functional currencies of the company and its subsidiaries. In determining the functional currencies of the entities in the group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices.

Related Party Transactions FRS 24 defines a related party as an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common or joint control with, the entity in governing the financial and operating policies, or that has an interest in the entity that gives it significant influence over the entity in financial and operating decisions. It also includes members of the key management personnel or close members of the family of any individual referred to herein and others who have the ability to control, jointly control or significantly influence by or for which significant voting power in such entity resides with, directly or indirectly, any such individual. This includes parents, subsidiaries, fellow subsidiaries, associates, joint ventures and post-employment benefit plans, if any. 3.1

Related companies: Related companies in these financial statements include the members of the company. Associates also include those that are associates of the company and/or related companies. There are transactions and arrangements between the company and members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For non-current balances an interest is imputed based on the prevailing market interest rate for similar debt less the interest rate if any provided in the agreement for the balance. Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below.

3.2

Key management compensation: Group

Salaries and other short-term employee benefits

SPS0905001_Powermatic_AR.indb

2009 $’000

2008 $’000

713

896

Company 2009 2008 $’000 $’000 158

223

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d 3.

Related Party Transactions (cont’d) 3.2

Key management compensation: (cont’d) The above amounts are included under employee benefits expense. Included in the above amounts are following items: Group

Remuneration of directors of the company Fees to directors of the company

2009 $’000

2008 $’000

270 42

263 42

Company 2009 2008 $’000 $’000 133 42

263 42

Key management personnel are the directors and those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly. The above amounts for key management compensation are for all the directors of the company and of a subsidiary. Further information about the remuneration of individual directors is provided in the report on corporate governance.

4. Financial Information by Segments The primary reporting format is by business segment and the second reporting format is by geographical area.

4A. Primary Analysis by Business Segment For management purposes the group is organised into two major operating segments: network products and distribution. Such structural organisation is determined by the nature of risks and returns associated to each business segment and define the management structure as well as the internal reporting system. It represents the basis on which the management reports the primary segment information. The segments are as follows: Network products (LAN) segment comprises sales, manufacturing, marketing and distribution of wired and wireless network (LAN) products. Distribution segment comprises sales, marketing, assembly and distribution of computer and computer’s parts and peripherals. Internal transfer pricing policies of the group are based on arms length prices.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

4A. Primary Analysis by Business Segment (cont’d) Segment information about these businesses is presented below: Network Products $’000

Distribution $’000

Others $’000

Total $’000

Group: 2009 Operations: Revenue by segment — Total revenue by segment Inter-segment sales

16,335 (1)

22,586 (2)

2,028 –

40,949 (3)

External revenue

16,334

22,584

2,028

40,946

3,478

(602)

(2,053)

823

Operating profit/(loss) Amortisation of deferred income arising from sale of leasehold property Dividend income from unquoted corporations Foreign exchange gain Gain on disposal of property, plant and equipment Gain on sale of investment in associates Interest Income Provision for impairment in quoted shares Loss on revaluation of marketable securities Finance costs

1,000 101 188 87 6 383 (100) (316) (4)

Profit before income tax Income tax expense

2,168 (513)

Net profit for the year

1,655

Total profit Minority interests

1,655 –

Equity profit

1,655

Segment assets Unallocated assets

19,314 431

7,144 –

24,868 11

51,326 442

Total assets

19,745

7,144

24,879

51,768

Segment liabilities Unallocated liabilities

1,848 513

2,143 –

5,524 –

9,515 513

Total liabilities

2,361

2,143

5,524

10,028

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

4A. Primary Analysis by Business Segment (cont’d) Network Products $’000

Distribution $’000

Others $’000

Total $’000

55 656 672 95 – 79

1,488 – 32 215 – 53

19 120 71 423 1,618 –

1,562 776 775 733 1,618 132

Group: 2008 Operations Revenue by Segment — Total revenue by segment Inter-segment sales

21,439 (8)

44,759 (5)

1,618 –

67,816 (13)

External revenue

21,431

44,754

1,618

67,803

4,010

(516)

(641)

2,853

Group: 2009 Operations: Other Segment Information: Allowance for doubtful debts Capital expenditure Depreciation of property, plant and equipment Provisions Rental income Service Income

Operating profit Gain on disposal of property, plant and equipment Interest income Finance costs

SPS0905001_Powermatic_AR.indb

9,651 268 (1)

Profit before income tax Income tax expense

12,771 (122)

Net profit for the year

12,649

Total profit Minority interests

12,649 –

Equity profit

12,649

Segment assets Unallocated assets

15,268 711

10,662 –

31,853 27

57,783 738

Total assets

15,979

10,662

31,880

58,521

Segment liabilities Unallocated liabilities

4,021 121

5,548 –

5,992 –

15,561 121

Total liabilities

4,142

5,548

5,992

15,682

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

4A. Primary Analysis by Business Segment (cont’d) Network Products $’000

Distribution $’000

Others $’000

Total $’000

59 1,379 311 – 45 323

1,527 88 39 – 160 1,480

19 7 287 1,168 151 42

1,605 1,474 637 1,168 356 1,845

Group: 2008 Operations Other Segment Information Allowance for doubtful debts Capital expenditure Depreciation of property, plant and equipment Rental income Service Income Provisions

4B. Secondary Analysis by Geographical Area The following table provides an analysis of the revenue by geographical market, irrespective of the origin of the goods/services: Group

Revenue: Singapore United States of America Asia (except Singapore)

2009 $’000

2008 $’000

38,631 – 2,315

62,174 570 5,059

40,946

67,803

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment analysed by the geographical area in which the assets are located: Group

Segment Assets: Singapore Europe United States of America Asia (except Singapore)

Capital Expenditure: Singapore Asia (except Singapore)

SPS0905001_Powermatic_AR.indb

2009 $’000

2008 $’000

46,179 52 175 5,362

52,041 57 111 6,312

51,768

58,521

120 656

22 1,452

776

1,474

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d 5.

Revenue Group

Sale of goods Rental income Service and sundry income

2009 $’000

2008 $’000

38,918 1,617 411

66,185 1,168 450

40,946

67,803

6. Other Credits and (Other Charges) Group 2009 $’000

2008 $’000

Gain on disposal of property, plant and equipment Dividend income from unquoted corporations Foreign exchange adjustments gains/(losses) Gain on sale of investment in associates Impairment losses transferred from equity to income statement Loss on revaluation of marketable securities Reversal of provision for bonus Amortisation of deferred income arising from sale of leasehold property Allowance for doubtful debts

87 101 188 6 (100) (316) 491 1,000 (125)

9,651 148 (78) – – (42) – – (1,604)

Total

1,332

8,075

Presented in the income statement as: Other Credits Other Charges

1,873 (541)

9,799 (1,724)

Net

1,332

8,075

7. Employee Benefits Expense Group

SPS0905001_Powermatic_AR.indb

2009 $’000

2008 $’000

Employee benefits expense Contributions to defined contribution plan Other benefits

2,866 217 50

2,930 188 70

Total employee benefits expense

3,133

3,188

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

8. Income Tax Group

Current tax

2009 $’000

2008 $’000

513

122

The income tax expense varied from the amount determined by applying the Singapore income tax rate of 17% (2008: 18%) to profit before income tax as a result of the following differences: Group

Profit before income tax Income tax expense at statutory rate Non-allowable items Non-taxable items Utilisation of deferred tax assets on temporary differences not recognised in previous year Over provision in respect of prior years Deferred tax assets on temporary differences not recognised Effect of different tax rates in different countries Tax effect of change in tax rate

Effective tax rate

2009 $’000

2008 $’000

2,168

12,771

369 184 –

2,299 552 (2,337)

(288) (122) 234 120 16

(972) – 559 21 –

513

122

24%

0.95%

There are no income tax consequences of dividends to shareholders of the company. On 22 January 2009 the government announced a change in the national income tax rate from 18% to 17%. The new rate applies to current and deferred tax assets and liabilities from results for the year ended 31 March 2009. Temporary differences arising in connection with interests in subsidiaries and associates are insignificant. Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

Unrecorded deferred tax assets: Unabsorbed losses Provisions Other deferred tax assets

2,275 31 13

1,649 762 45

229 – –

45 – –

Total deferred tax assets

2,319

2,456

229

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:05 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

8. Income Tax (cont’d) No deferred tax asset has been recognised in respect of the above balance as the future profit streams are not probable. Included in unrecognised tax losses are losses of $517,000 (2008: $412,000) that will expire within five years from the year the losses were incurred. Other losses may be carried forward indefinitely. For the Singapore companies, the realisation of the future income tax benefits from tax loss carryforwards and temporary differences from capital allowances is available for an unlimited future period subject to the conditions imposed by law including the retention of majority shareholders as defined.

9. Earnings Per Share The following table illustrates the numerators and denominators used to calculate basic and diluted earnings per share of no par value: Group 2009 $’000

2008 $’000

1,655

12,649

173,269

The calculation of the earnings per share is based on the following: Net profit for the year attributable to the equity holders of the company Number of shares: Weighted average number of equity (‘000)

The weighted average number of equity shares refers to shares in circulation during the period. The dilutive effect derives from categories of transaction arising from share options (Note 22). Dilutive earnings per share for the year ended 31 March 2009 is computed on the same basis as basic earnings per share as the effect of the share options has been ignored for it is anti-dilutive in nature during the year. Basic earnings per share ratio is based on the weighted average number of common shares outstanding during each period. The diluted earnings per share is based on the weighted average number of common shares and dilutive common share equivalents outstanding during each period. The common share equivalents included in these calculations are: (1) shares of common share issuable upon assumed exercise of share options which would have a dilutive effect. Earnings applicable per common share amounts are calculated based on the weighted average number of common shares and common share equivalents outstanding during periods of net income, after deducting applicable preferred share dividends. Common share equivalents are attributable to share options. Per share amounts are calculated based only on the weighted average number of common shares outstanding during periods of net loss, after deducting applicable preferred share dividends.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

10. Dividends on Equity Shares Group and Company 2009 2008 $’000 $’000 1,733

Final tax exempt (one-tier) dividend paid for FY2008 of 1 cent per share

–

In respect of the current year, the directors propose that a final dividend of 1 cent per share with a total of $1,733,000 be paid to shareholders after the annual general meeting to be held on or around 24 July 2009. There are no income tax consequences. This dividend is subject to approval by shareholders at the next annual general meeting and has not been included as a liability in these financial statements. The proposed dividend for 2009 is payable in respect of all ordinary shares in issue at the end of the reporting year and including the new qualifying shares issued up to the date the dividend becomes payable.

11. Property, Plant and Equipment Leasehold properties $’000

Leasehold improvements $’000

Motor vehicles $’000

Furniture, fittings and equipment $’000

Total $’000

Cost: At 1 April 2007 Currency realignment Additions Disposals

16,568 – – (16,568)

– – – –

94 – 28 (9)

3,449 (47) 1,446 –

20,111 (47) 1,474 (16,577)

At 31 March 2008 Currency realignment Additions Disposals

– – – –

– – 120 –

113 – – –

4,848 (516) 656 (320)

4,961 (516) 776 (320)

At 31 March 2009

–

120

113

4,668

4,901

6,323 – 238 (6,561)

– – – –

10 1 23 (9)

2,261 (46) 376 –

8,594 (45) 637 (6,570)

At 31 March 2008 Currency realignment Depreciation for the year Disposals

– – – –

– – 24 –

25 – 21 –

2,591 (396) 731 (264)

2,616 (396) 776 (264)

At 31 March 2009

–

2,662

2,732

10,245

–

1,188

11,517

At 31 March 2008

–

2,257

2,345

At 31 March 2009

–

2,006

2,169

Group

Accumulated depreciation: At 1 April 2007 Currency realignment Depreciation for the year Disposals

Net book value: At 1 March 2007

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

11. Property, Plant and Equipment (cont’d) Leasehold properties $’000

Leasehold improvements $’000

Motor vehicles $’000

Furniture, fittings and equipment $’000

Total $’000

16,568 – (16,568)

– – –

85 – –

1,299 7 –

17,952 7 (16,568)

At 31 March 2008 Additions

– –

– 120

85 –

1,306 –

1,391 120

At 31 March 2009

–

120

1,306

1,511

6,323 238 (6,561)

– – –

1 17 –

1,176 32 –

7,500 287 (6,561)

At 31 March 2008 Depreciation for the year

– –

– 24

18 17

1,208 26

1,226 67

At 31 March 2009

–

1,234

1,293

10,245

–

123

10,452

At 31 March 2008

–

165

At 31 March 2009

–

218

Company Cost: At 1 April 2007 Additions Disposals

Accumulated depreciation: At 1 April 2007 Depreciation for the year Disposals

Net book value: At 1 March 2007

The depreciation expense for the group is charged as follows:

2009 2008

Cost of sales $’000

Administrative expenses $’000

Total $’000

453 109

323 528

776 637

Certain items are under finance lease agreements (see Note 24).

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

12. Investments in Subsidiaries Company 2009 2008 $’000 $’000 Unquoted equity investments at cost Additions

22,211 1,532

22,211 –

Sub-total

23,743

22,211

(19,662)

(20,096)

Carrying amount

4,081

2,115

Net book value of subsidiaries

5,495

1,222

Movements in provision for impairment: Balance at beginning of year Impairment loss charged to income statement included in other charges Written-off Impairment loss reversed to income statement included in other credits

20,096 1,134 – (1,568)

19,074 1,084 (62) –

Balance at end of year

19,662

20,096

Less: provision for impairment

The subsidiaries held by the company and its subsidiaries are listed below: Name of subsidiaries, country of incorporation, place of operations and principal activities (and independent auditors)

Cost in books of company 2009 2008 $’000 $’000

Effective percentage of equity held 2009 2008 % %

Compex Inc (a) United States of America Trader of computers and related peripherals

12,155

100

Compex Systems Pte Ltd (b) Singapore Trader of computers and related peripherals

1,569

100

99.9

5,000

100

Powermatic Data Systems (HK) Ltd (d) Hong Kong Dormant (East Asia Sentinel Limited, Hongkong) Powermatic Distribution Pte Ltd (b) Singapore Distributor of computers and related peripherals

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

12. Investments in Subsidiaries (cont’d) Name of subsidiaries, country of incorporation, place of operations and principal activities (and independent auditors)

321

75.8

100

Compex (Changshu) Co., Ltd (e) People’s Republic of China Manufacturer of computers and related peripherals

1,626

100

Compex (Suzhou) Co., Ltd (e) People’s Republic of China Manufacturer of computers and related peripherals

3,011

1,479

100

99.9

– (f)

0.01

– (f)

100

ReadyLink Network Technology GmbH (a) Germany Dormant

Powermatic India Pte Ltd (c) India Dormant Held through Powermatic Distribution Pte Ltd Powermatic India Pte Ltd (c) India Dormant Held through PM Distribution Sdn Bhd Virtualroute Sdn Bhd (d) Malaysia Computer system integrator and distributor of computers and related peripherals (Chuah Kim Seng & Co., Malaysia)

Effective percentage of equity held 2009 2008 % %

321

PM Distribution Sdn Bhd (d) Malaysia Investment holding and distributor of computer and related peripherals (SC Lim, Ng & Co., Malaysia)

SPS0905001_Powermatic_AR.indb

Cost in books of company 2009 2008 $’000 $’000

(a)

Not required to be audited under the law of its country of incorporation and it is not material.

(b)

Audited by RSM Chio Lim LLP.

(c)

Not audited as this company is dormant.

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

12. Investments in Subsidiaries (cont’d) (d)

Other independent auditors. Audited by firms of accountants other than member firms of RSM International of which RSM Chio Lim LLP in Singapore is a member. Their names are indicated above.

(e)

Audited by RSM China CPA Firm Shanghai International Division, a member firm of RSM International of which RSM Chio Lim LLP in Singapore is a member.

(f)

Less than $1,000.

As is required by Rule 716 of the Listing Manual of The Singapore Exchange Securities Trading Limited the audit committee and the board of directors of the company have satisfied themselves that the appointment of different auditors for certain of its overseas subsidiaries would not compromise the standard and effectiveness of the audit of the group.

13. Investments in Associates Group

Unquoted equity shares at cost Disposal Provision for impairment Share of net post-acquisition losses less tax

Share of net book value of associates

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

63 (63) – –

63 – – (63)

63 (63) – –

63 – (63) –

–

Share of losses of associates exceeding the amount of the investment were not recognised as losses in the income statement. The group’s share of losses of such associates not recognised was NIL (2008: $6,000). It had no obligation for these losses. The associates held by the company are listed below: Name of associates, country of incorporation, place of operations and principal activities

Percentage of Equity Held 2009 2008 % %

Campanile Pte Ltd (a) Singapore Business consultancy and management services and dealers in all types of computers, electrical and electronic appliances

–

Compex Manufacturing Sdn Bhd (b) Malaysia Dormant

–

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

13. Investments in Associates (cont’d) (a)

Disposed during the year.

(b)

Deregistered during the year.

The summarised financial information of the associates, not adjusted for the percentage ownership held by the group, is as follows: Group

Assets Liabilities Revenues Profit/(loss) for the year

2009 $’000

2008 $’000

– – – –

29 5 6 (13)

14. Other Financial Assets, Non-Current Group and Company 2009 2008 $’000 $’000 784 357

1,771 –

1,141

1,771

1,771 391 (1,378)

1,397 5 369

Fair value at end of year

784

1,771

Balance is made up of: Quoted equity shares in corporations as available-for-sale at fair value through equity Unquoted equity shares in corporations as available-for-sale at fair value through equity

779

1,766

Balance at end of year

784

1,771

At fair value At amortised cost

Movements during the year: Fair value at beginning of year Additions (Decrease)/increase in fair value through equity

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

14A. Held-to-Maturity Investment Group and Company 2009 2008 $’000 $’000

Movements during the year – at amortised cost: Amortised cost at beginning of year Additions at cost

– 357

– –

Amortised cost at end of year

357

–

Fair value of the above investment

360

–

The above balance is made up of quoted bonds in corporations with variable rates from 8.12% to 8.5 % and maturing on 7 May 2010 (effective rate 8.85%).

15. Other Assets, Non-Current Group and Company 2009 2008 $’000 $’000 Club membership at cost Less: allowance for impairment Balance at end of year

60 (37)

16. Inventories

Finished goods and goods for resale Work-in-process Raw materials

2009 $’000

Group 2008 $’000

Company 2009 2008 $’000 $’000

1,728 283 635

4,189 264 974

– – –

2,646

5,427

–

900

639

–

106 (168)

453 (192)

– –

838

900

–

Inventories are stated after allowance. Movements in allowance: Balance at beginning of year Charged to income statement included in cost of sales Used Balance at end of year The write-downs of inventories charged to income statement included in cost of goods sold Changes in inventories of finished goods and work-in-process (increase) Raw materials and consumable used

106

453

–

2,442 29,679

(356) 55,739

– –

The amount of inventories included in cost of goods sold

32,227

55,836

–

There are no inventories pledged as security for liabilities.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:06 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

17. Trade and Other Receivables Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

3,466 110 (1,563)

7,280 117 (1,973)

– 110 –

– 117 –

2,013

5,424

110

117

Other receivables: Subsidiaries (Notes 3 and 12) Less: allowance for impairment Other debtors

– – 286

– – 38

19,810 (5,254) 141

19,149 (10,466) 16

Subtotal

286

14,697

8,699

2,299

5,462

14,807

8,816

1,973

1,266

10,466

13,133

125

1,605

–

– (535)

– (898)

(5,212) –

(2,667) –

1,563

1,973

5,254

10,466

Trade receivables: Outside parties Rental receivable Less: allowance for impairment Subtotal

Total trade and other receivables Movements in above allowance: Balance at beginning of year Charge for trade receivables to income statement included in other charges Reversal for other receivables from subsidiaries to income statement included in other credits Used/bad debts written-off Balance at end of year

18. Other Financial Assets, Current Group and Company 2009 2008 $’000 $’000 Financial assets at fair value through profit or loss – Quoted equity shares in corporations Held-to-maturity investment (Note 18A)

SPS0905001_Powermatic_AR.indb

407 1,000

723 500

1,407

1,223

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

18A. Held-to-Maturity Investment Group and Company 2009 2008 $’000 $’000 Movements during the year — at amortised cost: Amortised cost at beginning of year Additions at cost Disposal on maturity

500 1,000 (500)

500 – –

Amortised cost at end of year

1,000

500

969

500

Fair value of the above investment

The rate of interest for the bonds and securities with fixed maturity is 2.29% per year (2008: 2.95%), receivable half yearly. The effective interest rate is 2.31% (2008: 2.95%) per year.

19. Other Assets, Current Group

Prepayments Deposits to secure services Tax recoverable

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

268 191 632

564 220 661

36 4 632

224 4 632

1,091

1,445

672

860

20. Cash and Cash Equivalents Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

Fixed deposits Fixed deposits with maturity of over 3 months Cash and bank balances

14,964 22,483 3,545

37,593 – 3,232

9,264 11,583 566

27,455 – 193

Cash at end of year

40,992

40,825

21,413

27,648

Interest earning balances

37,447

37,593

20,847

27,455

The rate of interest for the cash on interest earning balances is between 0.20% and 1.20% (2008: 1.08% and 2.60%) per year.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

20A. Cash and Cash Equivalents in the Consolidated Cash Flow Statement:

As shown above Fixed deposits with maturity over 3 months Cash and cash equivalents at end of year

2009 $’000

2008 $’000

40,992 (22,483)

40,825 –

18,509

40,825

Number of shares issued

Share Capital

21. Share Capital

Group and Company

’000

$’000

Ordinary shares of no par value: Balance at beginning of year 1 April 2007 Issue of shares by exercise of employee share options at $0.13 per share

172,684 585

34,477 76

Balance at end of year 31 March 2008 and 31 March 2009

173,269

34,553

The ordinary shares of no par value carry no right to fixed income and are fully paid. The only externally imposed capital requirement is that for the company to maintain its listing on the Singapore Stock Exchange it has to have share capital with at least a free float of at least 10% of the shares. The company met the capital requirement on its initial listing and the rules limiting treasury share purchases mean it will automatically continue to satisfy that requirement, as it did throughout the year. Management receives a report from the registrars frequently on substantial share interests showing the non-free float and it demonstrated continuing compliance with the 10% limit throughout the year. The objectives when managing capital are: to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The management sets the amount of capital in proportion to risk. There were no changes in the approach to capital management during the year. The management manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the management may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. The company has insignificant external borrowings. The debt-to-adjusted capital ratio does not provide a meaningful indicator of risk of borrowings.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

22. Share-Based Payments 22A. Share Options — The Scheme: During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted. The company has an employee share option scheme known as the “Powermatic Data Systems Employees’ Share Option Scheme 2003” (the “Scheme”). The Scheme is a share incentive scheme designed to acknowledge the contributions made by the employees and to give recognition to such employees by giving them the opportunity to have a personal stake in the company and to motivate such employees in optimising their performance standards and efficiency and achieve strategic business objectives of the group and retention of key employees whose contributions are important to the long-term growth and profitability of the Group. Under the rules of the Scheme, all directors and full-time employees of the group are eligible to participate in the Scheme except for employee or director who is also a controlling shareholder or an associate of a controlling shareholder. The Scheme extends only to the company and its subsidiaries. Employees of the company’s associated companies are not eligible under the Scheme. The aggregate number of shares over which options may be granted shall not exceed 15% of the issued share capital of the company on the day immediately preceding the offer date of the option. The Scheme is administered by the Remuneration Committee comprising David Tan Chao Hsiung (Chairman) and two independent directors of the company, Lye Kin Mun and Yee Lat Shing, Tom. All the options granted shall be exercisable from the 1st anniversary to the 5th anniversary of the offering date for non-executive directors and from the 1st anniversary to the 10th anniversary of the offering date for full time employees. The offer price shall be equal to the average of the last dealt price for a share for the three consecutive trading days immediately preceding the offer date.

22B. Activities under the Share Options Scheme: The outstanding number of options at the end of the reporting year was:

Date options granted 12.12.2003

Balance at 1.4.2008 260,000

Granted/ (lapsed) Exercised during during the year the year –

–

Balance at 31.3.2009 260,000

Offer price per share

Year exercisable

13 cents 12.12.2004 – 11.01.2013

There were no unissued shares of subsidiaries under option as at 31 March 2009.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

22B. Activities under the Share Options Scheme: (cont’d) The table below summarises the number of options that were outstanding, their weighted average exercise price as at the end of the year as well as the movements during the year. 2009

2008

2009 cents

2008 cents

Weighted average exercise price At 1 April Exercised Expired

260,000 – –

945,000 (585,000) (100,000)

13 – –

13 13 13

Balance at end of the year

260,000

Particulars of employees of the company who received 5% or more of the total options under the Scheme are as follows:

Name of employees Yau Liong We Yaw Thiam Teng Ng Gin Sim Derek Chua

Options granted during the financial year ended 31.3.2009

Aggregate options granted since commencement of Scheme to 31.3.2009

Aggregate options outstanding as at 31.3.2009

– – – –

400,000 300,000 300,000 350,000

400,000 150,000 300,000 350,000

– 150,000 – –

22C. Accounting for the Share Options: The company has an employee share option scheme (the “Scheme”) more fully disclosed in paragraph # 22A above. Activities under the Scheme are summarised in Note 22B above. The following table summarises information about employee share options outstanding at 31 March 2009:

Exercise price 13 cents

SPS0905001_Powermatic_AR.indb

Number outstanding

Number exercisable

Weighted average remaining life (Years)

260,000

4.5

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

23. Reserves Group

Fair value reserve Reserve on consolidation Foreign currency translation reserve

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

267 115 (551)

1,545 115 (808)

267 – –

1,545 – –

(169)

852

267

1,545

The foreign currency translation reserve accumulates all foreign exchange differences. The fair value reserve (net of deferred tax) arises from the annual revaluation of available-for-sale financial assets. It is not distributable until it is released to the income statement on the disposal of the investments. All reserves classified on the face of the balance sheet as retained earnings represents past accumulated earnings and are distributable as cash dividends. The other reserves are not available for cash dividends unless realised.

24. Finance Lease Liabilities Group and Company

Minimum payments $’000

Finance charges $’000

Present value $’000

–*

2009 Minimum lease payments payable: Due within one year Net book value of plant and equipment under finance leases

50 Minimum payments $’000

Finance charges $’000

Present value $’000

2008 Minimum lease payments payable: Due within one year Due within 2 to 5 years

15 14

(3) –*

13 13

Total

(3)

Group and Company

Net book value of plant and equipment under finance leases

It is a policy to lease certain of its motor vehicles under finance leases. The average lease term is 3 years. The fixed rate of interest for finance leases is about 3.375% (2008: 3.375%) per year. 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 S$. The obligations under finance leases are secured by the lessor’s charge over the leased assets. * Less than $1,000.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d 25. Other Liabilities Group

Non-current: Deferred income Other liabilities

Current: Deferred income Provision for warranty costs Deposits received Advance rental

2009 $’000

2008 $’000

Company 2009 2008 $’000 $’000

3,000 2

4,000 –

3,000 –

4,000 –

3,002

4,000

3,000

4,000

1,000 221 465 127

1,000 299 845 –

1,000 – 225 127

1,000 – 213 –

1,813

2,144

1,352

1,213

On 10 March 2008, the company sold its leasehold property, PM Industrial Building to MacarthurCook Industrial REIT. Under the terms of the sale and purchase agreement, the company has leased back the property for the next five years from 10 March 2008 to 9 March 2013. The excess of the sales price of $25 million above the fair value of $20 million is deferred and amortised over the leaseback period of five years. The fair value calculation was arrived based on management judgement. The group provides warranty on most products ranging from two years up to over the life of the products wherein faulty products are either repaired or replaced. The amount of accrual is based on the sales volume and past experience with the level of repairs and returns.

26. Trade and Other Payables Group

Trade payables: Outside parties and accrued liabilities Other payables: Others Total trade and other payables

SPS0905001_Powermatic_AR.indb

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

4,563

9,330

339

624

125

4,688

9,391

364

649

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

27. Financial Instruments: Information on Financial Risks 27A. Classification of Financial Assets and Liabilities The following table summarises the carrying amount of financial assets and liabilities recorded at the end of the reporting year by FRS 39 categories: Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

40,992

40,825

21,413

27,648

407 1,357 2,299 784

723 500 5,462 1,771

407 1,357 14,807 784

723 500 8,816 1,771

45,839

49,281

38,768

39,458

Financial liabilities Borrowings at amortised cost Trade and other payables at amortised cost

12 4,688

26 9,391

12 364

26 649

At end of year

4,700

9,417

376

675

Financial assets Cash and cash equivalents Financial assets at fair value through profit or loss Held-to-maturity investments Loans and receivables Available-for-sale financial assets At end of year

Further quantitative disclosures are included throughout these financial statements.

27B. Financial Risk Management The main purpose for holding or issuing financial instruments is to raise and manage the finances for the entity’s operating, investing and financing activities. There is exposure to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate, currency risk and price risk exposures. The management has certain practices for the management of financial risks and action to be taken in order to manage the financial risks. However these are not formally documented in written form. The guidelines include the following: (i)

Minimise interest rate, currency, credit and market risks for all kinds of transactions.

(ii)

Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and costs and payables and receivables denominated in the same currency and therefore put in place hedging strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk.

(iii)

All financial risk management activities are carried out and monitored by senior management staff.

(iv)

All financial risk management activities are carried out following good market practices.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

27C. Credit Risk on Financial Assets Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash equivalents and receivables. The maximum exposure to credit risk is the fair value of the financial instruments at the end of the reporting year. Credit risk on cash balances with banks and derivative financial instruments is limited because the counter-parties are banks with acceptable credit ratings. All unencumbered bank deposits with the banks licensed by the Monetary Authority of Singapore are guaranteed by the Singapore Government until 31 December 2010. At the end of the year the balances with the banks in Singapore amounted to $38,752,000. For credit risk on receivables an ongoing credit evaluation is performed of the debtors’ financial condition and a loss from impairment is recognised in the income statement. There is no significant concentration of credit risk, as the exposure is spread over a large number of counter-parties and customers. The exposure to credit risk is controlled by setting limits on the exposure to individual customers and these are disseminated to the relevant persons concerned and compliance is monitored by management. As is disclosed in Note 20 cash and cash equivalents balances represent amounts with a less than 90 day maturity except for amounts disclosed as with maturity over 3 months. The average credit period generally granted to non-related trade receivable customers range from 30-90 days (2008: 30-90 days). But some customers take a longer period to settle the amounts. The table below illustrates the financial assets ageing analysis: Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

Trade receivables: Less than 90 days 91 – 180 days Over 180 days

2,166 26 1,274

6,382 170 728

– – –

At end of year

3,466

7,280

–

The allowance is based on individual accounts totalling $1,563,000 (2008: $1,973,000) that are determined to be impaired at the year end date. These are not secured. The total of accounts over 90 days, net of provision, was NIL (2008: NIL). The total settled after the year end date was about $21,000 (2008: NIL). Other receivables are normally with no fixed terms and therefore there is no maturity. There is no concentration of credit risk with respect to trade receivables, as the group has a large number of customers. Quoted investments: All of them are readily marketable.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

27D. Liquidity Risk The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The following table analyses financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows): Finance leases liabilities $’000

Trade and other payables $’000

Total $’000

Group 2009: Less than 1 year

4,688

4,700

2008: Less than 1 year 1 – 3 years

15 14

9,391 –

9,406 14

9,391

9,420

Finance leases liabilities $’000

Trade and other payables $’000

Total $’000

Company 2009: Less than 1 year

364

376

2008: Less than 1 year 1 – 3 years

15 14

649 –

664 14

649

678

The average credit period taken to settle non-related party trade payables is about 60 days. The other payables are with short-term durations. It is expected that all the liabilities will be paid at their contractual maturity. In order to meet such cash commitments the operating activity is expected to generate sufficient cash inflows. In addition, the financial assets are held for which there is a liquid market and that are readily available to meet liquidity needs.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

27E. Interest Rate Risk The following table analyses the breakdown of the financial assets and liabilities by type of interest rate: Group

Company 2009 2008 $’000 $’000

2009 $’000

2008 $’000

Financial assets: Fixed rate Floating rate Non-interest bearing

37,447 1,357 7,035

37,593 500 11,188

20,847 1,357 16,564

27,455 500 11,503

At end of year

45,839

49,281

38,768

39,458

Financial liabilities: Fixed rate Non-interest bearing

12 4,688

26 9,391

12 364

26 649

At end of year

4,700

9,417

376

675

The interest rate risk exposure is mainly from changes in interest rates. The interest rate risk on financial assets is not significant. The interest rates are disclosed in the respective notes. Sensitivity analysis: The effect on profit before income tax is not significant.

27F. Foreign Currency Risks Analysis of amounts denominated in non-functional currency:

Group Financial assets:

SPS0905001_Powermatic_AR.indb

Trade Cash and other and cash equivalents receivables 2009 $’000 $’000

Trade Cash and other and cash Total equivalents receivables 2008 $’000 $’000 $’000

$’000

Total

US Dollars Malaysian Ringgit Euro China RMB Hong Kong Dollars

1,583 230 15 411 1

1,052 319 30 1,771 –

2,635 549 45 2,182 1

2,123 157 31 426 61

2,142 396 61 791 –

4,265 553 92 1,217 61

At end of year

2,240

3,172

5,412

2,798

3,390

6,188

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

27F. Foreign Currency Risks (cont’d) Trade and other payables 2009 2008 $’000 $’000

Financial liabilities:

US Dollars Malaysian Ringgit Euro China RMB Others

2,298 41 96 583 11

6,698 41 104 728 14

At end of year

3,029

7,585

The company has immaterial amounts denominated in non-functional currency. There is exposure to foreign currency risk as part of its normal business. The effect on profit before income tax is not significant.

27G. Equity Price Risk There are investments in equity shares or similar instruments. As at the end of the reporting year, some equity shares were held in companies listed on the Singapore Stock Exchange or other stock exchanges (see Notes 14 and 18). As a result, such investments are exposed to both currency risk and changes in fair value risk. Sensitivity analysis: Equity shares of listed entities on the Singapore Stock Exchange or other Stock exchanges are subject to fair value risk. The fair values of those assets as at the end of the reporting year are disclosed in Notes 14 and 18. A hypothetical 10% decrease in the fair value of those assets would result in a fair value loss of $119,100. This figure does not reflect the currency risk, which has been considered in the foreign currency risks analysis section only.

28. Operating Lease Payment Commitments At the end of the reporting year the total of future minimum lease payment commitments under noncancellable operating leases are as follows: Group 2009 $’000

2008 $’000

Company 2009 2008 $’000 $’000

Not later than one year Later than one year and not later than five years

1,972 5,733

1,855 7,444

1,820 5,733

1,820 7,438

Rental expense for the year

2,066

251

1,820

108

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:07 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

28. Operating Lease Payment Commitments (cont’d) Operating lease payments are for rentals payable for certain of factory properties, including the company’s leasehold property in Singapore, which was leased back from MacarthurCook Industrial REIT, from 10 March 2008 until 9 March 2013. The lease rental terms are negotiated for an average term of five years and rentals are subject to an escalation clause but the amount of the rent increase is not to exceed a certain percentage. The sub-lease rental income was $1,617,000 (2008: $1,168,000).

29. Operating Lease Income Commitments At the end of the reporting year the total of future minimum lease receivables committed under noncancellable operating leases are as follows: Group and Company 2009 2008 $’000 $’000 Not later than one year Later than one year and not later than five years

1,290 1,663

1,046 732

Rental received for the year

1,617

1,168

Operating lease income commitments are for certain leasehold property under a sale and leaseback agreement. The lease rental income terms are negotiated for an average term of three years and rentals are subject to an escalation clause but the amount of the rent increase is not to exceed a certain percentage.

30. Contingent Liabilities The Group and the Company (a)

Included in the loan receivable is a loan of US$500,000 (S$690,500) [2008: US$500,000 (S$690,500)] extended to a former supplier during financial year ended 28 February 2001. The loan bears interest at a rate of 7% (2008: 7%) per year and is secured by personal guarantees from two directors of the supplier. The company had taken legal action against the supplier for full repayment of a US$500,000 loan and for damages in respect of loss of profits as a result of breach of contract. The company owes this supplier approximately US$360,000. The company has already made a provision of approximately US$150,000 (S$250,000) in its financial statements for financial year ended 28 February 2003. The supplier initially claimed trial, but subsequently disposed of its assets and absconded. The high court in Taiwan then rendered a judgement that the supplier shall repay to the company an amount of US$73,290 plus delayed interest and all other claims were dismissed. On further proceeding to execute the judgement against the supplier the court issued a credit certificate (valid for 5 years) certifying this amount which can be claimed from the supplier, and closed the compulsory execution proceedings. The company has not recognised this amount awarded by the high court in its book, as it is unlikely to be collectible. In the event that the supplier surface again within the validity period of the credit certificate, the company will revive the claim.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

30. Contingent Liabilities (cont’d) (b)

Performance guarantees given by the company to a bank in respect of foreign employment contracts amounted to $5,000 (2008: $5,000).

(c)

Performance guarantees given by the company to a bank in respect of utility deposits amounted to $46,700 (2008: $46,700).

(d)

Shipping guarantees of $15,000 (2008: $520,770) are given by the company to a bank for trade purposes.

(e)

Performance guarantees given by the company to a bank in respect of leaseback arrangement with MacarthurCook Industrial REIT amounted to $1.82 million (2008: $1.82 million).

(f)

Under the terms of the sale and purchase and leaseback agreements for the sale and leaseback of PM Industrial Building, in respect of any Existing Sub-Lease which has a remaining term which is longer than the term of the leaseback agreement, if at the expiry of the term of the leaseback agreement, the actual rent from such Existing Sub-Lease is less than the market rate at the time, the company will compensate MacarthurCook Industrial REIT half the shortfall in rental for the duration of the period starting from the end of the term of the leaseback agreement to the end of the Existing Sub-Lease, subject to a total maximum of $80,000. The term of the leaseback agreement is for 5 years from 10 March 2008 to 9 March 2013.

(g)

Performance guarantees given by the company to a bank in respect of trade facility with a supplier amounted to $100,000 (2008: $100,000).

31. Events after the End of the Reporting Year After the balance sheet date, the company entered into a Memorandum of Understanding (“MOU”) to purchase a building for $18.75 million and paid a 1% deposit which is refundable in the event no contract of sale is executed. Under the terms of the MOU, the vendor has granted a 14 days exclusivity period to enable the company to perform due diligence before entering into the contract of sale.

32. Changes and Adoption of Financial Reporting Standards For the year ended 31 March 2009 the following new or revised Singapore FRS were adopted for the first time. The new or revised standards did not require any material modification of the measurement method or the presentation in the financial statements. FRS No.

Title

FRS 107 FRS 107 INT FRS 111 INT FRS 112 INT FRS 114

Financial Instruments: Disclosures Financial Instruments: Disclosures – Implementation Guidance FRS102 – Group and Treasury Share Transactions (*) Service Concessions Arrangements (*) FRS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (*) (*) Not relevant to the entity.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

33. Future Changes in Accounting Standards The following new or revised Singapore FRS that have been issued will be effective in future. The transfer to the new or revised standards from the effective dates are not expected to result in material adjustments to the financial position, results of operations, or cash flows for the following year. Effective date for periods beginning on or after

FRS No.

Title

FRS 1 FRS 23 FRS 103

(Revised) Presentation of Financial Statements Borrowing Costs (Revised) Business Combinations and consecutive amendments in other Standards Operating Segments Customer Loyalty Programs (*) Hedges of a Net Investment in a Foreign Operation Distributions of Non-cash Assets to Owners

FRS 108 INT FRS 113 INT FRS 116 INT FRS 117

1.1.2009 1.1.2009 1.1.2009 1.1.2009 1.7.2008 1.10.2008 1.7.2009

(*) Not relevant to the entity.

34. Reclassifications and Comparative Figures Certain reclassifications have been made to the prior year’s financial statements to enhance comparability with current year’s financial statements. The reclassifications included the following:

Consolidated income statement: Revenue Interest income Other credits Other income Distribution costs Administrative expenses Other operating expenses Other charges Balance sheet: Trade and other receivables Prepayments Other assets Deferred gain, non-current Other liabilities, non-current Deferred gain, current Other liabilities, current Provision for warranty costs

SPS0905001_Powermatic_AR.indb

After reclassification $’000

Before reclassification $’000

Difference $’000

67,803 268 9,799 – (3,245) (3,417) (876) –

66,185 – – 11,685 (4,849) (3,459) (954) (1,724)

1,618 268 9,799 (11,685) (1,604) (42) (78) 1,724

6,123 – 784 – 4,000 – 1,299 –

6,343 564 – 4,000 – 1,000 – 299

(220) (564) 784 (4,000) 4,000 (1,000) 1,299 (299)

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notes to the Financial Statements 31 March 2009 cont’d

34. Reclassifications and Comparative Figures (cont’d) The financial statements for the year ended 31 March 2008 were audited by other independent auditors (other than RSM Chio Lim LLP) whose report dated 25 June 2008 expressed an unqualified opinion on those financial statements.

35. Impact of the Current Financial Crisis The group’s business activities like others in many countries in the region and elsewhere, including Singapore, are experiencing severe economic difficulties as a consequence of the current turmoil in the world’s financial markets. This has resulted in violent fluctuations in foreign currency exchange rates, volatile stock and commodity markets, uncertainty of the availability of bank finance to suppliers and customers and a slowdown in growth. The current financial crisis have been significantly affected, and will continue to have an adverse impact on the company’s business, financial condition, results of operations, cash flows and prospects for the foreseeable future. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described in the notes to the financial statements. In addition the notes to the financial statements include the group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk. The group has considerable financial resources together with some good arrangements with a number of customers and suppliers. As a consequence, the management believes that the group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquires, the management has a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Statistics of Shareholdings As At 12 June 2009

Issued and fully paid-up capital Number of ordinary shares in issue Class of Shares Voting Rights

S$34,553,120 173,269,000 Ordinary Shares One vote per share

DISTRIBUTION OF SHAREHOLDINGS Size of Shareholdings

No. of Shareholders

No. of Shares

1 – 999 1,000 – 10,000 10,001 – 1,000,000 1,000,001 AND ABOVE

165 2,408 638 11

5.12 74.74 19.80 0.34

79,200 11,593,100 24,096,448 137,500,252

0.04 6.69 13.91 79.36

TOTAL

3,222

100.00

173,269,000

100.00

Substantial Shareholders (as recorded in the Register of Substantial Shareholders) Name of Shareholder Dr Chen Mun Ang Bee Yan

Direct Interest

97,139,662 13,874,000

56.06 8.01

Deemed Interest

0 0

No. of Shares

97,139,662 13,874,000 7,578,200 5,896,600 3,057,200 2,364,000 1,845,990 1,646,000 1,398,600 1,375,000 1,325,000 800,000 420,000 411,000 409,000 400,000 353,000 309,000 300,000 291,000

56.06 8.01 4.37 3.40 1.76 1.36 1.07 0.95 0.81 0.79 0.76 0.46 0.24 0.24 0.24 0.23 0.20 0.18 0.17 0.17

141,193,252

81.47

TWENTY LARGEST SHAREHOLDERS No. Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

CHEN MUN ANG BEE YAN UNITED OVERSEAS BANK NOMINEES PTE LTD DBS NOMINEES PTE LTD OCBC NOMINEES SINGAPORE PTE LTD LEONG HONG KAH OCBC SECURITIES PRIVATE LIMITED HO SOON TECK OVERSEA-CHINESE BANK NOMINEES PTE LTD RAMESH S/O PRITAMDAS CHANDIRAMANI MAYBAN NOMINEES (S) PTE LTD MARTIN COLUMBA GALLAGHER ANG HAO YAO HUANG PING K’NAR TAN KAH KIM LEE CHIANG HUAT KIM ENG SECURITIES PTE. LTD. LOI POH MUN LEE SEK LEONG CHRISTOPHER KUAH ANN SOON TOTAL

Percentage of Shareholdings in Public Hands 43.94% of the Company’s shares are in the hands of the public. Accordingly, the Company has complied with Rule 723 of the listing manual of the SGX-ST

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notice of Twentieth Annual General Meeting NOTICE IS HEREBY GIVEN that the Twentieth Annual General Meeting of Powermatic Data Systems Limited (“the Company”) will be held at 135 Joo Seng Road, #08-01 PM Industrial Building, Singapore 368363 at 11.00 a.m. on Friday, 24 July 2009 for the following purposes:

AS ORDINARY BUSINESS 1.

To receive and adopt the Directors’ Report and the Audited Financial Statements of the Company for the year ended 31 March 2009 together with the Independent Auditors’ Report thereon. (Resolution 1)

To declare a first and final one-tier tax exempt dividend of Singapore 1 cent per ordinary share for the year ended 31 March 2009. (Resolution 2)

To re-elect Mr David Tan Chao Hsiung as Director of the Company retiring pursuant to Article 99 of the Company’s Articles of Association. [See Explanatory Note (i)] (Resolution 3)

To re-appoint the following Directors, who are retiring pursuant to Section 153(6) of the Companies Act, Cap. 50, to hold office until the next Annual General Meeting of the Company: Mr Chen Mong Chea (Resolution 4) Mr Yee Lat Shing, Tom (Resolution 5) [See Explanatory Note (ii)]

To appoint Messrs RSM Chio Lim LLP as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 6)

To approve the payment of Directors’ fees of S$42,000 for the year ended 31 March 2009. (2008: S$42,000). (Resolution 7)

To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions: 8.

Authority to issue shares That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors of the Company be authorised and empowered to: (a)

SPS0905001_Powermatic_AR.indb

(i)

issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/ or

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notice of Twentieth Annual General Meeting cont’d

(ii)

make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and (b)

(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,

provided that: (1)

the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the total number of issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);

(2)

(subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued shares shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(3)

(a)

new shares arising from the conversion or exercise of any convertible securities;

(b)

new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution; and

(c)

any subsequent bonus issue, consolidation or subdivision of shares;

in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and

(4)

unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (iii)] (Resolution 8)

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notice of Twentieth Annual General Meeting cont’d

Authority to issue shares under the Powermatic Data Systems Employees’ Share Option Scheme 2003 That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the Powermatic Data Systems Employees’ Share Option Scheme 2003 (“the Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the total number of issued shares in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (iv)] (Resolution 9)

By Order of the Board

Tan Cher Liang Company Secretary Singapore, 9 July 2009 Explanatory Notes: (i)

Mr David Tan Chao Hsiung will, upon re-election as a Director of the Company, remain as Chairman of the Remuneration Committee and a member of the Audit and Nominating Committees and will be considered independent.

(ii)

Mr Chen Mong Chea will, upon re-appointment as a Director of the Company, remain as an Executive Director.

Mr Yee Lat Shing, Tom will, upon re-appointment as a Director of the Company, remain as Chairman of the Audit Committee and a member of Nominating and Remuneration Committees and will be considered independent.

(iii)

The Ordinary Resolution 8 in item 8 above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued shares in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to existing shareholders of the Company.

For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated based on the total number of issued shares in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Powermatic Data Systems Limited annual report 09

Notice of Twentieth Annual General Meeting contâ&#x20AC;&#x2122;d (iv)

The Ordinary Resolution 9 in item 9 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) fifteen per centum (15%) of the total number of issued shares in the capital of the Company from time to time.

Notes: 1.

A Member entitled to attend and vote at the Annual General Meeting (the â&#x20AC;&#x153;Meetingâ&#x20AC;?) is entitled to appoint one or two proxies to attend and vote in his/her/its stead. A proxy need not be a Member of the Company.

If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or the hand of its duly authorised officer or attorney.

The instrument appointing a proxy must be deposited at the Registered Office of the Company at 135 Joo Seng Road, #08-01 PM Industrial Building, Singapore 368363 not less than forty-eight (48) hours before the time appointed for holding the Meeting.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

IMPORTANT:

Proxy Form POWERMATIC DATA SYSTEMS LIMITED (Company Registration Number: 198900414E) (Incorporated in Singapore with limited liability)

For investors who have used their CPF monies to buy Powermatic Data Systems Limited’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

(Please see notes overleaf before completing this Form)

I/We, of being a member/members of Powermatic Data Systems Limited (the “Company”), hereby appoint: Name

NRIC/Passport No.

Proportion of Shareholdings No. of Shares

Address and/or (delete as appropriate) Name

NRIC/Passport No.

Proportion of Shareholdings No. of Shares

Address

or failing the person, or either or both of the persons, referred to the above, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Twentieth Annual General Meeting (the “Meeting”) of the Company to be held at 135 Joo Seng Road, #08-01 PM Industrial Building, Singapore 368363 on Friday, 24 July 2009 at 11.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote “For” or “Against” with a tick [√] within the box provided.) No.

Resolutions relating to:

Directors’ Report and Audited Financial Statements for the year ended 31 March 2009

Payment of proposed first & final dividend

Re-election of Mr David Tan Chao Hsiung as a Director

Re-appointment of Mr Chen Mong Chea as a Director

Re-appointment of Mr Yee Lat Shing, Tom as a Director

Appointment of Messrs RSM Chio Lim LLP as Auditors

Approval of Directors’ fees amounting to S$42,000

Authority to issue shares

Authority to issue shares under the Powermatic Data Systems Employees’ Share Option Scheme 2003 day of

Dated this

For

2009 Total number of Shares in:

Signature of Shareholder(s) or, Common Seal of Corporate Shareholder

Against

No. of Shares

(a) CDP Register (b) Register of Members

* Delete where inapplicable

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Notes: 1.

Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/ her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.

The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 135 Joo Seng Road, #08-01 PM Industrial Building, Singapore 368363 not less than 48 hours before the time appointed for the Meeting.

The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

SPS0905001_Powermatic_AR.indb

7/1/2009

9:38:08 AM

Annual Report 2009

2009 Annual Report Powermatic Data Systems Limited

Powermatic Data Systems Limited 135 Joo Seng Road, #08-01, PM Industrial Building, Singapore 368363 Tel: +65 6288 8220 Fax: +65 6280 9947 Co. Reg.No.: 198900414E

www.powermatic.com.sg

Sustained Development Powermatic Data Systems Limited Color: 2C Black + Pantone 690C