karin technology holdings limitedkarin.listedcompany.com/misc/ar2011.pdfthe outstanding results can...

Annual Report 2011

VISION in SPLENDOUR

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CORPORATE PROFILE

Listed on the Mainboard of the Singapore Exchange (SGX) since March 2005, our Group is a prominent IT & Components Solutions and Services Group with significant market presence spanning of 35 years in Hong Kong and the People’s Republic of China (the “PRC”).

From the time when it was newly established in 1977, our primarily business was focused on the electronic components and computer distribution for several electronics industry segments including the communications, computer, electrical appliances and utility. During the 1990s, our business has expanded to include outsourcing services, IC application design solutions and data storage management solutions.

Since our listing on the SGX Mainboard, we have carved out an escalating presence in two core businesses – Components Distribution, and IT Infrastructure Solutions and Services – in the PRC and Hong Kong markets.

In 2007, IMI Kabel Pte Ltd, a Singapore-based distributor of data control cables for a variety of industries ranging from industrial automation to port and shipyard, offshore oil fields and petrochemical facilities, was acquired by our Group.

Beijing

ShanghaiHangzhou

Hong Kong

GuangzhouShenzhen

Xiamen

Singapore

Qingdao

Beijing

ShanghaiHangzhou

Hong Kong

GuangzhouShenzhen

Xiamen

Singapore

Qingdao

COnTEnTs

CHAIRMAN’S STATEMENT

CEO’S MESSAGE & OPERATION REVIEW

FINANCIAL REVIEW

BOARD OF DIRECTORS

SENIOR MANAGEMENT

GROUP STRUCTURE

FISCAL YEAR 2011 EVENTS

MILESTONES

CORPORATE INFORMATION

REPORT ON CORPORATE GOVERNANCE

FINANCIAL CONTENTS

FINANCIAL SUMMARY

STATISTICS OF SHAREHOLDINGS

INFORMATION ABOUT INVESTMENT

PROPERTIES HELD

NOTICE OF ANNUAL GENERAL MEETING

4

6

10

13

15

17

20

22

24

25

37

105

107

109

110

VIsIOnThe Group’s business is built on firm foundations based on healthy financing and sound risk management, making us more resilient to adverse economic changes. Our core businesses have adopted clear and achievable growth strategies including strategies for expanding vendor relationships, extending the availability of products and services, both vertical and horizontal, increasing the range of applications for both existing and new industry clients and broadening customer base. In particular, our core IT business has reached new heights by expanding into areas such as security solutions and upgrading its service quality in line with the requirements of the new cloud computing era.

MIssIOnKarin Group is dedicated to offering value-added products together with quality professional services to fulfill customer needs and contribute to the growth of the electronic, semiconductor, computer and utility industries in Hong Kong, the PRC and ASEAN.

Annual Report 2011 Karin Technology Holdings Limited�

In the last few years, several new partnerships with well-known technology vendors were formed that has strategically positioned KARIN to achieve sustainable growth in revenue and earnings.

BRILLIANT FUTURE

Annual Report 2011 Karin Technology Holdings Limited �

KARIN is continually striving to develop mutually rewarding relationships with our employees, customers, partners,

vendors, and shareholders.


Dear ShareholDerS,

We ended fiscal year 2011 (“FY11”) with flying colours and it is with great pleasure that I announce the financial results of the Group.

Thanks to the advice of the management team who put in their best efforts to help the Group shoulder the blow and aftermath of the financial tsunami in the past three years, we were able to sail safely together through the storm and catch the waves of opportunity.

The growth both in revenue and net profit in FY11 are to the Board of Directors’ satisfaction. Not only have we maintained the Group’s track record of achieving profitability every year since our inception 35 years ago, our performance in FY11 also registered the second best net profit growth since our listing on the SGX in 2005.

CHAIRmAN’s sTATEmENT

Philip NGExecutive Chairman,

Karin Group

The outstanding results can be attributed to a few key success factors. Firstly, thanks to the Group being granted distribution rights in FY11, the sale of Apple Notebooks/iPads topped the lead in revenue contribution. Secondly, the Electronic Components Division, led by strong sales of industrial materials, contributed significantly to overall net earnings.

Looking ahead, joint ventures will continue to play a significant role in the building of successful future platforms for the Group. We have been exploring opportunities with technology development companies to provide solutions in green power and energy saving technology as we see a global trend towards these key directions.


In FY10 and FY11, the Board also made wise moves to secure office space in both Shenzhen and Shanghai at a reasonable price. We now have some extra office space in Shanghai which will provide for future operating expansion but until such time, it will render the Group some rental income.

In view of the good results and the Group’s strong cash position, the Board of Directors is pleased to declare a final dividend of HK$0.07 per share, bringing the full year dividend to HK$0.12 per share. We are proud to continue the trend of paying dividends to our shareholders every year since the Group’s IPO in 2005. It is our way of thanking you for your commitment and belief in us.

The management team is always working by the rule of healthy financing. But besides strong and healthy cash flow, we also combine risk management and sustainable growth in our business planning. The Board of Directors is monitoring the recent economic turmoil in the US and some European nations closely. Although our major markets are Hong Kong and China, which are still doing well, we continue to be vigilant and prepared for any storms that may come our way.

On behalf of the Board, I want to thank the management team and all our staff for their dedication and hard work. Special thanks to the team in Compucon Computers Limited and the logistic team in supporting the increased volume of distribution work, you have done us proud by demonstrating the Group’s ability to tackle new and difficult challenges with excellent outcomes.

Next year marks an important milestone for the Group as we celebrate our 35th anniversary. All the business units in the Group have provided the management with revenue targets for the fiscal year 2012 and based on their projections, the Board of Directors is cautiously optimistic that it will be another good year for the Group in terms of continuing growth in both revenue and earnings. Barring any unforeseen circumstances, we look forward to bringing you more positive news in the year ahead.

Ng Yuk Wing, PhilipExecutive Chairman, Karin Group

ACCUMULATED DIVIDEND PAIDSINCE IPO

1.31

20

18

16

14

12

10

8

6

4

2

0

IPOPrICE

2005 2006 2007 2008 2009 2010 2011SIN

GAPO

REC

ENTS

YEAR

2.74

4.48

6.81

8.78

10.26

12.20


Challenge and PerformanCe in fY11 – initiative uPon the Paradigm Shift

‘Despite the recent argument of the probability of a double-dip recession in US and the PIIGS (Portugal, Italy, Ireland, Greece and Spain) national debt crisis in Europe, the probability of having a double-dip recession in China is low as China has strong GDP growth with low interest rate and mild inflation in the coming year. Nevertheless, Karin Group is preparing for a year of inflation or stagflation in FY11 and our management are working out a business plan which aimed at double digit growth in both revenue and net profit. However, sluggish consumer spending in US and Europe, the low corporate investment in Hong Kong and Singapore and the impact on the SME, OEM & ODM business in China, because of the CNY appreciation and wages increment, may slow down the growth of the customers’ export business, capital spending and the rapid growth of Karin Group business as well.’ This was what I wrote as the ‘challenge ahead’ in my CEO’S message and Operations Review in our FY10 annual report a year ago. Indeed, it was the big picture throughout FY11 and it may be the global business environment in the coming 12 months as well.

As a result of slow growth of the global markets in US, Europe and Japan; increasing costs of operations in China, in particular wage increments and the appreciation of Chinese Yuan (CNY) in the past year; and the unexpected supply-chain problems resulting from the earthquake and tsunami crisis in Japan in March 2011, FY11 was a challenging year

CEO’S MESSAgE And OpERATiOn REviEw

for the Karin Group and our strategic partners. Nevertheless, the Group’s management have committed to what we said – a double-digit growth in FY11. Our revenue has grown 38.7% from HK$1,562,157,000 to HK$2,167,430,000 and profit for the year has grown 53.2% from HK$32,867,000 to HK$50,367,000, whilst selling and distribution costs have dropped 7.9% from HK$53,896,000 to HK$49,648,000 and administration expenses have grown 18.0% from HK$55,021,000 to HK$64,916,000.

our growing PlatformS – StaYing ahead of the market

Karin Group has four Strategic Business Units (SBUs): IT Solutions and Service (ITSS), Industrial Materials and Instrumentation Group (IMIG), Electronic and Electrical Component Group (EECG) and IC Application Design (ICAD). Among them, ITSS contributed the most revenue to the Group and grew quickly in FY11 because of the rapid growth of demand for Apple consumer products in the retail market, the strong demand for security and storage solutions by Brocade, F5, IBM, Oracle, Symantec, McAfee, Bluecoat, Checkpoint and the distribution of HP hardware products to the value-added-resellers (VAR). In FY12, our ITSS SBU expects the development of cloud computing and mobile solutions to be fast growing. To leverage these burgeoning trends, we will broaden our product portfolio and strengthen our technical capability in these market segments.

raymond ngCEO,

Karin Group


We continue to closely monitor account receivables and inventory levels to maintain healthy cash-flow. In addition, Karin also invests in long term core-competency-building-staff training through ISO quality control policies and procedures, FAE (Field Application Engineer) skill-set development and eBusiness ‘management information system’ (MIS) that is also a means to improve efficiency, productivity and profit-margin amidst the pressure of rapidly incremental costs of operation and keener competition in the electronics and IT industries. In fact, the Group is upgrading our logistic operations and risk management through the study and application of ISO 20000, ISO 27000 and CMMI (Capability Maturity Model Integration) policy and procedures to improve our Information Security Management System (ISMS), Information Technology Infrastructure Library (ITIL) and to back up our ITSS IT Outsourcing (ITO) business as well.

the Challenge ahead – reSPonSe to the unCertaintY and inStabilitY of the global eConomY

FY12 may be another tough year as the economy is still uncertain because of ongoing stagflation and weaker consumer-spending. The business environment is still insecure because the global economic crisis today is not temporary and businesses may not return to their normal business rhythm within a short time. Instead recovery will be slow in the coming years. The market is still unstable even though the capital and stock markets are driven by national fiscal policies and fund flows decided by fund managers. However, consumers tend to panic and lack confidence in US, European and Japanese governments in the management of their national debts.

Nevertheless the Karin Group believes that China can manage the global impact and pressure of any hard landing in the coming year. We will make every effort to guard against the risk of stagflation and raw materials and labor price pressures in Hong Kong and China. Indeed, the Karin Group plans to stick to our rule-of-thumb strategies in managing the stagflation in FY12. These include prudent financial management, reinforcement of professional engineering staff’s value-added skill-set in developing the potential market in China, fully utilizing the Group’s resources-based capability and duly assessing every investment risk which are aimed at achieving continued growth in revenue and profit in the coming year.

ng kin wing, raymondCEO, Karin Group

IMIG is a fast growing business for the Karin Group. IMIG focuses on distributing electrical and mechanical (E&M) components such as Shindengen and IXYS power semiconductor, Phoenix contacts, Hitachi capacitors, Cosel power-supply and a wide range of cables for industrial automation and infrastructure building in Hong Kong and China, and Rieff mechanical parts for industrial machinery manufacturing in China. IMIG works with Karin Group JVs including (a) IMI Kabel Singapore (IMIKS), a service provider in Singapore serving the ASEAN market, (b) Matrix Power, a designer and producer of power supplies in Shenzhen targeting the electric vehicle, infrastructure building and green power energy markets and (c) Cosel International Trading in Shanghai, which deals in the exporting and trading of switching mode power-supplies from China to overseas.

Our EECG and ICAD SBUs have focused on electronic components distribution and toy application-design-service since years ago. Today, EECG has steady business growth in supplying KDS Crystal oscillator, Hirose high precision connector and Nanya touch panel for the smartphone and mobile phone markets. In exploiting the growing potential of the automobile and health-care markets in China, EECG has set up a new team targeting ‘autotronics’ (electronics components for automobile manufacturing) as well as provides solutions by Nordic semiconductor for RFID (Radio Frequency Identification), wireless keyboard and mouse, and wireless health-care products.

Meanwhile, our ICAD unit is no longer solely a toy-dependent business unit as the ICAD FAE (Field Application Engineer) team now works with more non-toy projects incorporated with the Nuvoton ARM CORTEX MCU (Micro Controller Unit) series for consumer electronics and electrical appliances. ICAD has also developed solutions for the remote-control market with Nordic wireless solutions and Dragonchip MCU. Moreover, ICAD is getting into the audio market with support from VIA Technologies, Inc.

CoSt and riSk management – Surfing along the ‘PerfeCt Storm’

Financially healthy, finance-driven, core-competency-building and ‘doing better, faster and more with less’ (DBFM w/L) have been our strategic management guidelines since the establishment of the Karin Group 35 years ago and they are also the keys to our growth continuity and business sustainability.


With spanning of 35 years in the industry, KARIN has acquired the necessary experience to be able to offer extraordinary customer value.


Through our culture, our drive, and the expertise of each individual employee, KARIN is uniquely

positioned to supply best-in-class products, solutions, and services through dedication and excellence to customers in Hong Kong,

China and ASEAN.

PURSUIT of EXCELLENCE

Annual Report 2011 Karin Technology Holdings Limited10

FINANCIAL REVIEW

Profit and Loss

Revenue

In spite of various negative factors, including but not limited to, the national debts crisis spreading across the European continent and soaring costs of human resources in the People’s Republic of China in the year under review, the Group has managed to increase its consolidated revenue for the current year considerably by HK$605.2 million or 38.7% to HK$2,167.4 million from HK$1,562.2 million as recorded in the last financial year.

Revenue from our Components Distribution segment increased by HK$57.4 million or 10.9%, from HK$524.7 million for the year ended 30 June 2010 to HK$582.1 million for the year ended 30 June 2011. The increase was mostly attributed to the emerging trend for energy-saving home appliances such as inverter air conditioner, solar power equipment and lighting ignitor (ballast). Moreover, increased demand in components for home surveillance security system products also pushed up the revenue from the Components Distribution segment.

Revenue from our Integrated Circuit Application Design (“ICAD”) segment decreased marginally by HK$2.9 million or 1.6%, from HK$176.5 million for the year ended 30 June 2010 to HK$173.6 million for the year ended 30 June 2011. Although there was an increase in demand for educational toys which are embedded with our application design solution, the continuing weak economic environment in Northern America and Western Europe had affected demand in conventional toys which led to an overall decrease in revenue from the ICAD segment.

Revenue from our Information Technology Infrastructure (“IT Infrastructure”) segment increased significantly by HK$550.7 million or 64.0%, from HK$861.0 million for the year ended 30 June 2010 to HK$1,411.7 million for the year ended 30 June 2011. The increase was mainly due to securing the distributorship of iPad 2 in Hong Kong and Macau during the financial year under review. Furthermore, the broadening of our IT product offerings in the network security area also contributed to the increase in revenue from the IT Infrastructure segment.

GRoss pRofit

Gross profit increased by HK$25.2 million or 17.5%, from HK$144.1 million for the year ended 30 June 2010 to HK$169.3 million for the year ended 30 June 2011. The improvement was mainly due to relatively higher profit margins in the above mentioned components distribution segment and the IT Infrastructure segment.

reVenue by business segMents for fy11

8.0%

26.9%

65.1%

IC Application Design

Components Distribution

IT Infrastructure

reVenue by geograPhicaL regions for fy11

fy11

7.1%

15.6%

77.3%

Others

Mainland China

Hong Kong

fy11

Annual Report 2011 Karin Technology Holdings Limited 11

otheR income and Gains, net

Other income and gains increased by HK$6.9 million or 81.2%, from HK$8.5 million for the year ended 30 June 2010 to HK$15.4 million for the year ended 30 June 2011. The increase was mostly due to (i) the increase in fair value gain on investment properties by HK$2.2 million; (ii) the increase in fair value gain on derivative financial instrument by HK$1.0 million and (iii) the increase in gain on foreign exchange differences of HK$4.8 million due to the weakening United Stated Dollar against Renminbi and Singapore Dollar during the year under review.

seLLing and distribution costs

Selling and distribution costs decreased by HK$4.3 million or 8.0%, from HK$53.9 million for the year ended 30 June 2010 to HK$49.6 million for the year ended 30 June 2011. The decrease was mainly attributed to the reclassification of technical support staff costs from selling and distribution costs to cost of good sold (“COS”) during the current year in order to better reflect the COS. The amount reallocated was HK$7.1 million. Without this reallocation, selling and distribution costs would have increased by HK$2.8 million which was mostly due to increase in sales commission paid to sales staff in line with the increase in revenue during the year under review.

administRative expenses

Administrative expenses increased by HK$9.9 million or 18.0%, from HK$55.0 million for the year ended 30 June 2010 to HK$64.9 million for the year ended 30 June 2011. The increase was mainly due to (1) the increase in office premises depreciation charge of HK$0.9 million consisting of HK$0.6 million for self-owned office premises in Shenzhen and HK$0.3 million for five months of self-owned office premises in Shanghai; (2) increase in depreciation charge of HK$2.0 million which was based on the appreciated property value for leasehold land and buildings located in Hong Kong and Shenzhen, PRC; (3) offset by the savings in rental expenses of HK$1.4 million mostly resulting from the termination of leasing the office premises in Shenzhen and Shanghai, PRC since March 2010 and February 2011

respectively as we moved into our self-owned office premises; (4) increase of HK$1.2 million in miscellaneous expenses, including entertainment and travelling expenses; (5) property tax of HK$0.5 million paid in the PRC for those properties purchased during the year under review; and (6) increase in staff cost of HK$6.1 million due to higher provision of bonuses.

otheR expenses, net

Other expenses increased by HK$7.8 million or 780.0%, from HK$1.0 million for the year ended 30 June 2010 to HK$8.8 million for the year ended 30 June 2011. The increase was mainly due to impairment of trade receivables of HK$8.2 million (30 June 2010: reversal of impairment of trade receivables: HK$1.0 million). The impairment of trade receivables was mainly due to unforeseeable delay of completion of certain projects which are beyond the control of the Group before the customers settle our invoices.

finance costs

Finance costs increased by HK$0.5 million or 166.7%, from HK$0.3 million for the year ended 30 June 2010 to HK$0.8 million for the year ended 30 June 2011. The increase was due to higher banking borrowings at certain times of the current year to support the working capital requirement for the HK$605.2 million increase in revenue.

net pRofit

Net profit attributable to owners of the Company increased by HK$17.8 million or 52.7%, from HK$33.8 million for the year ended 30 June 2010 to HK$51.6 million for the year ended 30 June 2011. The improvement was mainly attributable to the increase in gross profit as explained above.

non-contRollinG inteRests

Non-controlling interests represent the non-controlling shareholder’s share of loss in our non-wholly owned subsidiaries.


FINANCIAL REVIEW

stateMent of financiaL Position

non-cuRRent assets

Non-current assets comprised goodwill of HK$2.1 million, investment properties, office equipment, leasehold land and buildings and motor vehicles amounting to HK$221.1 million and deferred tax assets of HK$1.6 million. As at 30 June 2011, non-current assets amounted to HK$224.9 million, representing approximately 29.8% of the total assets. Increase in non-current assets from last year was due to the acquisition of self-owned office premises in Shanghai, PRC during the year under review.

cuRRent assets

As at 30 June 2011, current assets amounted to HK$529.6 million, an increase of HK$79.6 million compared to the immediately preceding financial year end as at 30 June 2010. The increase was mainly due to (1) increase in net trade, factored trade and bills receivables by HK$26.5 million which was in turn due to the increase in sales towards the end of the current financial year; (2) increase in inventories level by HK$31.8 million resulting from an anticipated increase in sales in July 2011 which was subsequently realized; (3) increase in prepayments, deposits and other receivables by HK$13.4 million which was in turn mainly due to (i) prepayment of HK$10.0 million to a vendor in order to take advantage of prompt payment discounts through early settlement; and (ii) prepayment of HK$1.7 million for the purchase of fixed assets in the newly setup subsidiary, Matrix Power (Shenzhen) Co Ltd. (there was no such item in the last financial year); and (4) increase in cash and cash equivalents by HK$6.7 million which was in turn due to the spot settlement from customers who had exceeded the credit limit which the Group had granted to them.

cuRRent liabilities

As at 30 June 2011, current liabilities amounted to approximately HK$357.5 million, an increase of HK$84.9 million compared to the immediately preceding financial year end as at 30 June 2010. The increase was mainly due to (1) the increase in trade payables of HK$122.9 million in order to support the increase in sales towards the end of the current financial year; (2) increase in other payables and accruals of HK$15.7 million which was mainly due to increase in advanced payment from customers to secure their orders from us; and (3) decrease in interest-bearing bank and other borrowings by HK$55.8 million.

non-cuRRent liabilities

Non-current liabilities amounted to HK$14.3 million, representing 3.9% of the total liabilities as at 30 June 2011. The amount relates mainly to deferred tax liabilities of HK$14.0 million. Deferred tax liabilities are recognised as a result of temporary differences between the carrying amounts and tax bases of our land and building and investment properties.

liquidity and cash flow

As at 30 June 2011, cash and cash equivalents amounted to HK$74.3 million. Total interest bearing loans and borrowings (all short-term) as at 30 June 2011 were HK$24.3 million and the gearing ratios which is defined as total borrowings and finance leases to shareholders’ funds excluding non-controlling interests, was 0.06 times (30 June 2010: 0.27 times).

staff statistics

30%

25%

20%

15%

10%

5%

024 or below 25-29 30-34 35-39 40-44 45-49 50-54 55 or above

AGE RANGE

PRC and othersHK

staff statistics

60%

50%

40%

30%

20%

10%

04 or below 5-9 10 or above

YEARS OF SERVICE

PRC and othersHK


BoARd oF diReCToRS

Mr. Ng Kin Wing, Raymond

Chief Executive Officer

Mr. Ng Kin Wing, Raymond, is the Chief Executive Officer and an Executive Director of our Group. He was appointed to our Board on 5 September 2002. Mr. Ng is one of the founders of our Group and is responsible for overseeing the Group’s entire operations and general management. He has over 30 years of experience in the components distribution business. Mr. Ng is a full member of the Hong Kong Management Association and a fellow member of the Hong Kong Institute of Marketing. Mr. Ng obtained his higher certificate in mechanical engineering at the Hong Kong Technical College (former college of the Hong Kong Polytechnic University) in 1971 and Bachelor of Business Administration degree from the University of East Asia of Macau in 1990. In 2004 he obtained a Master of Business Administration degree from the Macquarie University of Sydney, Australia. In addition, he was awarded the degree of Master of Arts in Applied Translation from The Open University of Hong Kong in 2008. He is the younger brother of Mr. Philip Ng and the elder brother of Mr. Allan Ng.

Mr. Ng Yuk Wing, Philip

Executive Chairman

Mr. Ng Yuk Wing, Philip, is the Executive Chairman and an Executive Director of

our Group. He was appointed as director of the Group on 5 September 2002.

Mr. Ng is one of the founders of our Group, having established Karin Electronic

Supplies Co., Ltd. in 1977 and is responsible for the overall strategic planning

and business development of our Group. Mr. Ng has over 30 years of experience

in the components distribution business. He graduated from the University of

Hong Kong with a Bachelor of Science degree in Electrical Engineering in 1972.

He is the elder brother of Mr. Raymond Ng and Mr. Allan Ng.

Mr. Lee Yiu Chung, Eugene

Chief Operating Officer

Mr. Lee Yiu Chung, Eugene, is the Chief Operating Officer and an Executive Director of our Group. He joined our Group in 1988 and was appointed to our Board on 26 January 2003. Mr. Lee has over 20 years of experience in marketing and sales management and is responsible for overseeing the implementation of the entire operations of our Group. He obtained his Bachelor of Science degree in 1988 and Master of Science degree in Finance in 2005 both from the Chinese University of Hong Kong.


BoARd oF diReCToRS

Ms. Wong Bee Eng

Chief Executive Officer of Provenance Capital Pte. Ltd.

Ms. Wong Bee Eng is one of our Independent Directors and was appointed to our Board on 20 January 2005. She has over 27 years of experience in the corporate finance industry in Singapore with various foreign investment banks and local banks and was a co-founder and CEO of SAC Capital Private Limited. She is presently the chief executive officer of Provenance Capital Pte. Ltd., a boutique corporate finance firm licensed by the Monetary Authority of Singapore. Ms. Wong holds a Bachelor in Accountancy (Honours) degree from the National University of Singapore and a Master of Business Administration degree from the University of Michigan, Ann Arbor, USA. She is a qualified non-practising certified public accountant of the Institute of Certified Public Accountants in Singapore and a member of the Singapore Institute of Directors.

Mr. Lim Yew Kong, John

Executive Director of AXIA Equity Pte. Ltd.

Mr. Lim Yew Kong, John, was appointed an Independent Director of the Company on 20 January 2005. He is currently a director of AXIA Equity Pte. Ltd., a firm which provides business and financial advisory services to companies in Singapore and the region. Prior to this and since 1991, Mr. Lim was involved in the private equity and venture capital industry in Asia as a director of an investment advisory firm engaged in direct investment in the region. From 1989 to 1991, Mr. Lim worked in Dowell Schlumberger in the United Kingdom, where he was UK division controller. Between 1984 and 1988, he was with Arthur Andersen & Co, London. Mr. Lim graduated with a Bachelor’s Degree in Economics in 1984 from the London School of Economics and Political Science in the United Kingdom. He qualified as a chartered accountant in 1987 from the Institute of Chartered Accountants in England and Wales.

Prof. Ng Tung Sang

Chair Professor of Electronic Engineering at The University of Hong Kong

Prof. Ng Tung Sang is one of our Independent Directors. He was a Director of the Board Directors of School of Professional and Continuing Education, The University of Hong Kong, Head of Department of Electrical and Electronic Engineering and Dean of the Faculty of Engineering. Prof. Ng has extensive expertise in wireless communications, particularly in CDMA and the third and fourth generation mobile systems and is distinguished for his contribution in signal processing techniques in spread spectrum communication systems. Prof. Ng had been appointed as a consultant to Canon Inc. Japan, BHP Steel International and several other companies in Australia. He was awarded the Honorary Doctor of Engineering degree by the University of Newcastle, Australia, in 1997, the Senior Croucher Foundation Fellowship by The Croucher Foundation in 1999, and the IEEE Millennium medal by the Institute of Electrical & Electronic Engineers in 2000. Prof. Ng was previously appointed as our independent director on 26 January 2003. He was reappointed to our Board on 20 January 2005 after his resignation on 31 May 2003.


senioR mAnAgemenT

Ms. Fan Shu Yung, Cecilia

Human Resources & Administration Manager

Ms. Fan Shu Yung, Cecilia, is responsible for human resources

management and office administration of our Group. Ms.

Fan graduated from the University of Wollongong, Australia

with a Bachelor’s degree in Commerce and holds a Master

of Management degree in Human Resources Management

from the Macquarie University, Australia. Ms. Fan has been

working in a managerial position for 13 years. She joined

our Group in 1996.

Mr. Leung Yiu Chown, Desmond

General Manager of IT Infrastructure Division

Mr. Leung Yiu Chown, Desmond, is responsible for new

business development and overall operation for Oracle

Sun Microsystems’ business with our Group. He holds a

Bachelor of Science degree in Electrical Engineering from

the University of Washington. He has been in the IT industry

over 20 years. He had been a system analyst, software

specialist and operations manager for software services at

Digital Equipment Ltd where he was responsible for the

business process and establishment of the technical support

group providing technical support for the whole region

between 1982 to 1992. From 1992 to 1994, he was the

general manager of Winup Investment Ltd, where he was

responsible for real estate development in the PRC. From

1994 to 2001, Mr. Leung was the managing director of EPro

Systems Ltd before joining our Group in November 2001.

Mr. Cheng Pak Cheong, Ray

General Manager of IC Application Design Division

Mr. Cheng Pak Cheong, Ray, is responsible for the IC

application design segment of our Group. He has over

20 years of experience in the electronic industry including

sales, marketing and engineering. He holds a Bachelor of

Science degree from the University of Hong Kong; a Master

of Management degree in Financial Management and a

Master of Business Administration degree from Macquarie

Graduate School of Management; and a Master of Laws

degree from Renmin University of China. Mr. Cheng joined

our Group in July 1988.

Ms. Ching Ngar Yee, Becky

Logistics Manager

Ms. Ching Ngar Yee, Becky, is responsible for the Group’s

logistics development. She holds a Bachelor’s degree in

Social Sciences and Logistics. She also obtained a Master

of Science degree in Marketing from Napier University.

She is an Associate Member of the Chartered Institute of

Marketing and Chartered Member (CMILT) of Chartered

Institute of Logistics and Transport. She has 11 years of

experience in logistics development. Ms. Ching joined our

Group in 1995.

Mr. Chong Shi Fan, Stephen

General Manager of Industrial Materials &

Instrumentation Division

Mr. Chong Shi Fan, Stephen, is responsible for the sales and

marketing of industrial components and parts in our Group.

Mr. Chong graduated from PCL – University of Westminster

with a Bachelor’s degree in Mechanical Engineering. He has

20 years of experience in Sales & Marketing of Electrical and

Mechanical parts. Mr. Chong joined our Group in March

1991.


senioR mAnAgemenT

Mr. Mok Pui Wah, Kenneth

General Manager of Electronics Components

Division

Mr. Mok Pui Wah, Kenneth, joined our Group in March

1988 and is responsible for overseeing the sales and

marketing of the electronic components of our Group. Mr.

Mok graduated from the University of Kent at Canterbury

with a Bachelor in Electronic Engineering degree. He is an

associate member of the Institute of Electronic Engineers

and has over 20 years of experience in engineering, sales

and marketing of electronic and electrical components.

Mr. Ng Kam Wing, Allan

Chief Technology Officer

Mr. Ng Kam Wing, Allan, is responsible for the overall

IT (Information Technology) system control and the

development of ITSD (Information Technology Service

Division) of our Group. Mr. Ng holds a Bachelor of Science in

Civil Engineering degree from the University of Hong Kong

and is a member of the Hong Kong Institution of Engineers

as well as a professional member of the Association of

Computer Machinery. He was an engineer at various

companies between 1978 and 1985, a project manager

at a construction company from 1985 to 1989 and a senior

engineer at a telecommunication company from 1989 to

1991. He also has 20 years of experience in the IT industry,

having worked as a General Manager at various companies

where he was responsible for business software and IT

development from 1991 to 2001. Mr. Ng joined our Group

in October 2001 and is the younger brother of Mr. Philip

Ng and Mr. Raymond Ng.

Ms. Ng Shuk Yi, Louisa

Financial and Accounting Manager

Ms. Ng Shuk Yi, Louisa, is responsible for the overall

accounting affairs and credit policy setting and

implementation of our Group. She has over 20 years of

experience in the field of finance and accounting. Ms. Ng

joined our Group in 1980.

Mr. Wong Chi Cheung, Clarence

Financial Controller and Joint Company Secretary

Mr. Wong Chi Cheung, Clarence, is responsible for the

financial management and secretarial affairs of our Group.

Mr. Wong holds a Bachelor of Commerce Degree from the

University of Western Australia. He is a Fellow of the Hong

Kong Institute of Certified Public Accountants, a Fellow of

CPA Australia and a Fellow of Institute of Certified Public

Accountants of Singapore. He joined our Group in May

2007 and has over 20 years of experience in auditing,

accounting, and financial management as well as secretarial

affairs. Prior to joining our Group, he had worked with

Hong Kong listed companies, multinational corporations

and international accounting firms.


GROUP STRUCTURE

IMI Kabel Pte ltd.

KarIn electronIc tradIng (Shenzhen) co. ltd.- Beijing Office- Xiamen Office

new SPIrIt electronIc technology develoPMent (Shenzhen) co. ltd.- HangzHOu Office

new SPIrIt electronIc technology develoPMent (Shenzhen) co. ltd.

KarIn Int’l tradIng (ShanghaI) co. ltd.

Karin Technology holdings limiTed

KarIn electronIc tradIng (Shenzhen) co. ltd.

Karltec InforMatIon SySteM (Shenzhen) co. ltd.

KarIn electronIc SuPPlIeS co. ltd.

new SPIrIt technology ltd.

Sen SPIrIt technology ltd.

KePro SolutIonS ltd.

coMPucon coMPuterS ltd.

Karga SolutIonS ltd.

KarfId technology ltd.

chn

sgP

hKg

MatrIX Power technology (Shenzhen) co. ltd.

Karltec InforMatIon SySteM (Shenzhen) co. ltd.- guangzHOu Office

KarIn Int’l tradIng (ShanghaI) co. ltd.- QingDaO Office


KARIN is working towards a greener future by collaborating closely with leading companies in green technology.

TOWARDS A GREENER EARTH


Through endless pursuit of excellence, KARIN is ahead of the pack in innovating and distributing environmentally friendly

solutions and energy saving products.


FISCAL YEAR 2011 EVENTS

Oxfam Trailwalker

19-21 Nov 10

Hong Kong Electronics Fair, HKCEC

13-16 Oct 10Hong Kong Computer &

Communications Festival, HKCEC

20-23 Aug 10

OCTOBERAUGUST

NOVEMBER

Green Power Hiking

29 Jan 11

JANUARY


Apple Partners Spring Luncheon, Miyabi

18 Feb 11

McAfee Solution Day, The Mira

22 May 11

EMC Forum, JW Marriott

10 Jun 11

Oracle Partners Training, Oracle Office

15 Apr 11

MAYFEBRUARY

APRIL

New Year Walk,

from The Peak to Pok Fu Lam

26 Feb 11

Hong Kong Dragon Boat Carnival, Tsim Sha Tsui

17-19 Jun 11

JUNE


miLesTones

Accredited ISO9001:2008 certificate.Established business relationship with Brocade Communications Systems, Inc.Established business relationship with Check Point Software Technologies Limited.Established business relationship with F5 Networks Hong Kong Limited.Subsidiary company Karga Solutions was formed.Acquisition of own use property in Shenzhen

2009

Established business relationship with IBM Singapore Pte Limited.Established business relationship with Lexmark International (China) Ltd.Subsidiary company Gamatech Ltd. was disposed.

2008

Established business relationship with Conwise Technology Corporation Ltd.Established business relationship with Fujitsu Hong Kong Ltd.Established business relationship with Immense Advance Technology Corp.Established business relationship with Nan Ya Plastics Corporation (LCD Unit).Established business relationship with Samsung Electronics H.K. Co. Ltd.Established business relationship with Victor Century International Ltd.Opened Karin Solution Centre.Subsidiary company KARFID Technology Ltd. was formed.Acquisition of a subsidiary IMI Kabel Pte Ltd.

2007

Established business relationship with Quantum Corporation.Established business relationship with 3i Infortech Pte Ltd.Established business relationship with Fortinet International Inc.Established business relationship with Kashya Ltd.Established business relationship with Oracle Systems Hong Kong Ltd.Established business relationship with Hannspree Hong Kong Ltd.Karin International Trading (Shanghai) Co. Ltd. – Qingdao Representative Office was set up.Subsidiary company Karltec Information System (Shenzhen) Co. Ltd. was formed.Karin Electronic Trading (Shenzhen) Co. Ltd. – Xiamen Representative Office was set up.

2006

Established business relationship with Advanced Digital Information Corporation.Established business relationship with Computer Associates International Ltd.Subsidiary company Gamatech Ltd. was formed.Karin Technology Holdings Ltd. listed on the SGX Mainboard.

2005

Established business relationship with Apple Computers International Ltd.IT Support & Service Sales Division was established.Karin Electronic Trading (Shenzhen) Co. Ltd. – Beijing Representative Office was set up.

2004

Accredited ISO9001:2000 certificate.Established business relationship with BEA Systems HK Ltd.Established business relationship with EMC Computer Systems (FE) Ltd.Established business relationship with Nokia (H.K.) Ltd.Established business relationship with Dragonchip Ltd.Opened Sun iForce Low-Cost Computing Solution Centre.

2003

Established business relationship with Motorola Technology SDN BHDSubsidiary Company Matrix Power Technology (Shenzhen) Co. Ltd. was formedAcquisition of own use property in ShanghaiKarltec Information System (Shenzhen) Co. Ltd. – Guangzhou Office was set up.

2011

Established business relationship with Imation Hong Kong LimitedEstablished business relationship with Tectia LimitedEstablished business relationship with McAfee Ireland LimitedEstablished business relationship with UFIDA (Hong Kong) Co., Ltd.Established business relationship with TippingPoint Technologies, Inc.Established business relationship with Blue Coat Systems International SARL

2010


Established business relationship with Cheertek Inc.Established business relationship with Hewlett-Packard HK SAR Ltd.Established business relationship with Sun Microsystems of California Ltd.Established business relationship with Tenx Technology Inc.Opened Compucon Audio-Visual Product Center.New Spirit Technology Development (Shenzhen) Co. Ltd. – Hangzhou Representative Office was set up.

2002

Established business relationship with Borderware Technologies Inc.Subsidiary company Compucon Computers Ltd. was formed.Subsidiary company Karin Electronic Trading (Shenzhen) Co. Ltd. was formed.Subsidiary company New Spirit Electronic Technology Development (Shenzhen) Co. Ltd. was formed.Subsidiary company Sen Spirit Technology Ltd. was formed.

2001

Subsidiary company Karin International Trading (Shanghai) Co. Ltd.Subsidiary company New Spirit Technology Limited was formed.

2000

Established business relationship with Phoenix Contact Gmbh & Co. KG.1998

Accredited BSI certificate.Established business relationship with Compaq Computers Ltd.Established business relationship with Hirose Electric Co. Ltd.

1996

Accredited ISO9002:1994 certificate.1994

Established business relationship with Winbond Electronic Corp.1988

Established business relationship with Helukabel Singapore Pte. Ltd.1987

Industrial Material & Instrumental Marketing Group was established.1985

Computer Products Marketing Group was established.1984

Established business relationship with Shindengen Electric Manufacturing Co. Ltd.1982

1981

1977

Headquarter moved into Karin Building of Kwun Tong.China Trade Sales Division was established.

Established business relationship with Daishinku Corp.Karin Electronic Supplies Co. Ltd. was established in Hong Kong.Electronic Components Marketing Group was established.

Established business relationship with IXYS Corporation.1989


CORPORATE INFORMATION

BOARD OF DIRECTORS

Ng Yuk Wing, Philip (Executive Chairman)Ng Kin Wing, Raymond (Chief Executive Officer)Lee Yiu Chung, Eugene (Chief Operating Officer)Ng Tung Sang (Independent Director)Wong Bee Eng (Independent Director)Lim Yew Kong, John (Independent Director)

JOINT COMPANY SECRETARIES

Wong Chi Cheung, ClarenceChan Lai Yin

REGISTERED OFFICE

Clarendon House2 Church StreetHamilton HM 11Bermuda

BERMUDA COMPANY REGISTRATION NUMBER

32514

PRINCIPAL OFFICE

2nd Floor, Karin Building166 Wai Yip StreetKwun TongKowloonHong Kong

BERMUDA SHARE REGISTRAR AND SHARE TRANSFER AGENT

Butterfield Fulcrum Group (Bermuda) LimitedRosebank Centre11 Bermudiana RoadPembroke HM 08Bermuda

LEGAL ADVISER

Stamford Law CorporationF. Zimmern & Co

REGISTRAR FOR THE SINGAPORE SHARE TRANSFER AGENT

Tricor Barbinder Share Registration Services(A division of Tricor Singapore Pte. Ltd.)8 Cross Street #11-00PWC BuildingSingapore 048424

AUDITORS

Ernst & YoungCertified Public Accountants18th Floor, Two International Finance Centre,8 Finance Street, Central, Hong Kong(Partner-in-charge: Gary Wong Appointment date: since financial year ended 30 June 2011)

PRINCIPAL BANKERS

The Hongkong and Shanghai BankingCorporation Limited10th Floor, HSBC Main Building1 Queen’s RoadCentral, Hong Kong

Standard Chartered Bank (HK) Limited13th Floor, Standard Chartered Bank Building4-4A Des Voeux RoadCentral, Hong Kong

Shanghai Commercial Bank Limited57-61, Hong Ning RoadKwun TongKowloon, Hong Kong

OUR WEBSITE

http://www.karingroup.com



The Directors and management of the Company are committed to maintaining a high standard of corporate governance and transparency in order to protect the interests of the stakeholders of the Company. Process and procedures have been instituted and are being constantly reviewed and revised to ensure effective corporate governance.

This report outlines the corporate governance practices adopted by the Group, embodying the principles in the Code of Corporate Governance 2005 (the “Code”).

The Board is pleased to confirm that for the financial year ended 30 June 2011, the Group has adhered to the principles and guidelines as set out in the Code, except where otherwise stated.

Board matters

PrinciPle 1 — Board’s conduct of its affairs

The Board holds meetings on a regular basis throughout the year to approve the Company’s key strategic plans as well as major investments, disposals and funding decisions. The Board is responsible for the overall corporate governance of the Company including establishing goals for the management and reviewing management performance, Interested Person Transactions and the Group’s internal controls procedures. The Board works closely with management. All Directors objectively make decisions in the interests of the Company.

The Board also meets to consider, but not limited to, the following corporate matters:–

• Approval of half-yearly and year-end results announcements;• Approval of the Annual Reports and Financial Statements;• Convening of Shareholders’ Meetings;• Approval of Corporate Strategies; and• Proposal of dividends.

Matters which are specially reserved for the approval of the Board include, among others, investments in subsidiaries, any material acquisitions and disposals of assets and major undertakings (other than in the ordinary course of business).

To facilitate effective execution of its function, the Board has delegated specific responsibilities to three sub-committees namely the Audit, Nominating and Remuneration Committees. Each of the committees has its own terms of reference setting out its role and has the authority to examine particular issue and report back to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board.



The Board will meet at least twice a year. Ad-hoc meetings are convened when circumstances require. The number of the Board and the Board committees meetings held and the attendance of each Director during FY11 are set out as follows:

atteNdaNCe oF memBers at meetINGs oF tHe Board aNd tHe Board CommIttees HeLd dUrING FY11

Board audit committeeNominating committee

remuneration committee

Name of director

No. of meetings

held while a member

No. of meetings attended

No. of meetings

held while a member


No. of meetings

held while a member


No. of meetings

held while a member


Mr. Ng Yuk Wing, Philip (Executive Chairman)

2 2 – – – – – –

Mr. Ng Kin Wing, Raymond (Chief Executive Officer)

2 2 – – – – – –

Mr. Lee Yiu Chung, Eugene (Chief Operating Officer)

2 2 – – – – – –

Prof. Ng Tung Sang (Independent Director)

2 2 2 2 1 1 1 1

Ms. Wong Bee Eng (Lead Independent Director)

2 2 2 2 1 1 1 1

Mr. Lim Yew Kong, John (Independent Director)

2 2 2 2 1 1 1 1

The Board acknowledges the importance of monitoring the achievement of goals by the management and contribution of the Independent Directors. Independent Directors meet annually without management present.

Under the existing Bye-laws of the Company, the Directors may participate in any meeting of the Board by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

The Directors are updated on major events of the Group. They will receive, from time to time, further relevant training, if required, on changes in the business environment, relevant new law and regulations and changing commercial risk. The Directors were given opportunity to visit the Group’s operational facilities in Shenzhen, Shanghai and Hong Kong to gain a better understanding of the Group’s business operations. During the visits, the Directors were briefed on the Group’s business operations by its local executives and management staff.

PrinciPle 2 – Board comPosition and Balance

The Board comprises six Directors, three of whom are independent. Key information of the Board is found on pages 13 and 14 of the Annual Report.

There is an independent element on the Board, with Independent Directors constituting half of the Board.



The independence of each Director is reviewed by the Nominating Committee (“NC”). The NC adopts the Code definition of what constitutes an Independent Director in its review. The Board is of the view that all the Non-executive Directors are independent. With half of the Board deemed to be independent, the Board is able to exercise independent judgment on corporate affairs and provide management with diverse and objective perspective on issues. The Board interacts and works through robust exchange of ideas and views to help shape the Group’s strategic decision.

The Board has examined its size and is of the view that it is an appropriate size for effective decision-making, taking into account the scope and nature of the operations of the Company. The Board is of the view that no individual or small group of individuals dominates the Board’s decision-making process. As a team, the Board collectively provides core competencies in the areas of finance, business and electronic engineering. One of the independent directors has expertise in the industry of electrical and electronic engineering.

The Board is of the view that the current Board consists of the appropriate mix of expertise and experience to provide the necessary guidance to lead and direct the Group. Qualifications and experiences of the Board members are set out on pages 13 and 14 of the Annual Report. The Board will constantly examine its size with a view of determining its impact on its effectiveness.

Independent Directors review the performance of the management of the Company. To facilitate a more effective check on management performance, Independent Directors are encouraged to meet regularly without management present.

The Independent Directors review the performance of the Management and monitor the reporting of performance results of the Group periodically.

PrinciPle 3 – executive chairman and chief executive officer

There is a clear division of responsibilities between the Executive Chairman and Chief Executive Officer (“Ceo”) which ensures there is a balance of power and authority at the top, such that no one individual represents a considerable concentration of power.

The Executive Chairman and CEO of the Company is Mr. Ng Yuk Wing, Philip (“Philip Ng”) and Mr. Ng Kin Wing, Raymond (“raymond Ng”) respectively. Philip Ng is a brother of Raymond Ng. Philip Ng is primarily responsible for overseeing the overall management, and strategic planning and business development of the Group while Raymond Ng manages the business operations of the Group with the other Executive Director. The Executive Chairman is responsible for the effective working of the Board. The Executive Chairman’s responsibilities include;

• scheduling of meetings to enable the Board to perform its duties and responsibilities;

• preparing the agenda of meetings;

• ensuring the proper conduct of meetings and accurate documentation of the proceedings;

• ensuring the smooth and timely flow of information between the Board and management;

• ensuring compliance with internal policies and guidelines of the Group;

• ensuring effective communication with shareholders; and

• promote high standards of corporate governance.



In addition to the above duties, the Executive Chairman will assume duties and responsibilities as may be required from time to time.

The Board has a written terms of reference for the Lead Independent Director that describes the responsibilities and authority of a Lead Independent Director. Ms. Wong Bee Eng is the Lead Independent Director for 2 consecutive years effective from 21 October 2010 and her tenure as Lead Independent Director shall end in 2012. The Lead Independent Director shall be available to the shareholders where they have concerns which contact through the normal channels of the Executive Chairman or CEO has failed to resolve or for which such contact is inappropriate.

PrinciPle 4 – Board memBershiP

Nominating Committee (“NC”)

The NC comprises three members, all are independent directors. They are:

Mr. Lim Yew Kong, John – ChairmanMs. Wong Bee Eng – MemberProf. Ng Tung Sang – Member

The NC is responsible for:

• recommending to the Board on all Board appointments having regard to the Directors’ contribution and performance;

• reviewing and determining the independence of each Director annually;

• deciding whether or not a Director is able and has been adequately carrying out his duties as a Director;

• identifying and making recommendations to the Board as to the Directors who are retiring by rotation and to be put forward for re-election at each Annual General Meeting (“aGm’) of the Company, having regard to the Directors’ contribution and performance, including Independent Directors; and

• deciding whether a Director who has multiple Board representations, is able to and has been adequately carrying out his/her duties as a Director of the Group.

The NC has a written terms of reference that describe its responsibilities, which include maintaining an effective Board and ensuring that only competent individuals capable of contributing to the success of the Company are appointed. Where new appointments are required, the NC will consider recommendations for new Directors, review their qualifications and meet with such candidates before decision is made on a selection. The NC also promotes transparency in the selection and appointment of new Board members as well as their subsequent re-nomination/re-election.

The duties and responsibilities of the executive directors are clearly set out in their service contracts.

The Board is responsible for the training needs of the Company’s Directors. During FY11, the Directors have been briefed on the latest proposed changes and developments such as updates on the relevant laws and regulations, changes in technology and industrial practice relating to the Company’s business. The NC and the Board have agreed to review training programmes for the Board.

The NC was apprised of the Board succession plans of the Chairman and CEO through a committee of key senior management staff who works closely with the Chairman and CEO.



In accordance with the provisions of the Company’s Bye-Laws, one-third of the Directors shall retire from office at every AGM and each Director shall retire at least once every 3 years. A retiring director shall be eligible for re-election at the said AGM. The NC had identified Mr. Ng Kin Wing, Raymond and Ms. Wong Bee Eng for re-appointment at the forthcoming AGM. Their profiles are shown on pages 13 and 14 of the Annual Report.

The NC considered an independent director as one who has no relationship with the Company, its related companies or its officers that would interfere with the exercise of the Directors’ independent business judgement, which is in the best interest of the Company. On an annual basis, each director is required to submit a return on his independence to the Company Secretary. The NC shall review the returns and determine whether the director is to be considered independent. Although the non-executive directors had directorships in other companies which are not within the Group, the NC is of the view that such multiple board representation do not hinder them from carrying out their duties as directors. Each of the non-executive director is aware that he should commit sufficient time, attention, resources and expertise to the affairs of the Company. These Directors would widen the experience of the Board and give it a broader perspective.

Particulars of directors as at 30 June 2011

Name of DirectorDate of first appointment

Date of last re-election

Nature of appointment

Membership of Board committees

Directorship/chairmanship if both present and those held over the preceding three years in other listed company

Mr. Ng Yuk Wing, Philip (Executive Chairman)

05.09.2002 21.10.2010 Executive Chairman and Executive Director

None None

Mr. Ng Kin Wing, Raymond (Chief Executive Officer)

05.09.2002 22.10.2008 Chief Executive Officer and Executive Director

None None

Mr. Lee Yiu Chung, Eugene (Chief Operating Officer)

26.01.2003 15.10.2009 Chief Operating Officer and Executive Director

None None

Prof. Ng Tung Sang(Independent Director)

20.01.2005 15.10.2009 Independent Director Member of Audit Committee, Nominating Committee and Chairman of Remuneration Committee

None

Ms. Wong Bee Eng(Lead Independent Director)

20.01.2005 22.10.2008 Independent Director Chairman of Audit Committee and Member of Nominating Committee and Remuneration Committee

None

Mr. Lim Yew Kong, John (Independent Director)

20.01.2005 21.10.2010 Independent Director Member of Audit Committee and Remuneration Committee and Chairman of Nominating Committee

North Asia Resources Holdings Limited (HKEX) The Style Merchants Limited (SGX) Radiance Group Limited (SGX)



During the year, the NC had reviewed and determined that Prof. Ng Tung Sang, Mr. Lim Yew Kong, John and Ms. Wong Bee Eng are Independent Directors of the Company.

PrinciPle 5 – Board Performance

The NC has adopted a formal process for evaluation of the performance of the Board. In FY11, the Group has implemented Board-approved evaluation process and performance criteria for such evaluation and determination. The NC considered a number of factors, including achieving financial targets, performance of the Board, performance of individual Director’s vis-a-vis attendance and contributions during Board meetings.

The NC assessed the Board’s performance as a whole in FY11. The objective of the performance evaluation exercise is to identify strengths and challenges so that the Board is in better position to provide the required expertise and oversight.

The assessment process involves and includes input from the Board members, applying the performance criteria recommended by the NC and approved by the Board. The Directors’ input are collated and reviewed by the Chairman of the NC, who presents a summary of the overall assessment to the NC for review. The NC would discuss areas where the Board’s performance and effectiveness could be enhanced and recommendations for improvement are then submitted to the Board for discussion and for implementation.

During the year, the assessment of the effectiveness of the Board as a whole and contribution by each director to the effectiveness of the Board was performed in that the NC Chairman presented the key summary of the overall assessment. The Chairman would ensure that action is taken on the results of the performance evaluation.

PrinciPle 6 – access to information

The Board is furnished with Board papers prior to any Board meeting. These papers are issued in sufficient time to enable the Directors to obtain additional information or explanations from the management, if necessary. The Board papers include minutes of the previous meeting, budgets, financial results announcements, and reports from committees, internal and external auditors. The Directors may communicate directly with the management team and company secretary on all matters whenever they deem necessary.

In carrying out their duties, the Directors, whether individually or as a group, have direct access to the independent professional advisors to obtain advice. Any cost of obtaining such professional advice will be borne by the Company.

remUNeratIoN CommIttee (“rC”)

PrinciPle 7 – Procedures for develoPing remuneration Policies

The RC comprises three members, all are independent directors. They are:

Prof. Ng Tung Sang – ChairmanMs. Wong Bee Eng – MemberMr. Lim Yew Kong, John – Member

The Board has approved the written terms of reference of the RC. The RC performs the following functions:

• recommending to the Board a framework of remuneration for the Board and the key executives of the Group covering all aspects of remuneration such as Director’s fees, salaries, allowances, bonuses, options and benefits-in-kind;



• proposing to the Board, appropriate and meaningful measures for assessing the Executive Directors’ performance;

• determining the specific remuneration packages far each Executive Director;

• considering the eligibility of Directors for benefits under long-term incentive schemes; and

• considering and recommending to the Board the disclosure of the details of the Company’s remuneration, specific remuneration packages of the Directors and key executives of the Company to those required by law or by the Code.

The Directors do not participate in any decision concerning their own remuneration. The RC met to discuss and review the service agreements of the executive directors.

As part of its review, the RC will ensure that the remuneration package of employees related to Executive Directors and controlling shareholders of the Group are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities.

The Share Option Scheme Committee, consists of all members of the RC, was established to administer the Karin Employee Share Option Scheme (the “Option Scheme”) in accordance with the objectives and regulations of the Option Scheme and to determine participation eligibility, options offers and share allocation and to attend to such other matters that may be required. A member of the RC who is also a participant of the Option Scheme shall not be involved in the deliberation of Options granted or to be granted to him. Controlling shareholders and their Associates will not be eligible to participate in the Option Scheme. During FY11, the Company has issued 2,050,000 ordinary shares upon the exercise of options under the Option Scheme. Among them, one Independent Director has exercised his option. As at 7 September 2011, all of the three Independent Directors have exercised their options and became shareholders of the Company. No options were granted under the Option Scheme during FY11. The share options outstanding as at 30 June 2011 was 8,030,000 which could be convertible to 8,030,000 ordinary shares of the Company upon exercise.

The RC also administers the Karin Performance Share Plan (the “Share Plan”) in accordance with the Rules of the Share Plan approved by Shareholders on 21 October 2010. The key objectives of the Share Plan are to motivate eligible participants to optimise their performance standards and efficiency and to reward them for their significant contributions with participation in the equity of the Company. Group Employees and non-executive directors are eligible to participate in the Share Plan. No member of the RC shall be involved in any deliberation of Awards to be granted to him. During FY11, the RC had distributed 1,080,000 treasury shares to key executives other than Directors as extra bonus for achieving the Performance Target pursuant to the Share Plan.

The RC hopes that the implementation of the Option Scheme in conjunction with the Share Plan will inculcate in the eligible participants a stronger and more lasting sense of identification with the Group.

On 21 October 2010, shareholders have approved the participation in the Share Plan by the respective controlling shareholder, Mr. Ng Yuk Wing, Philip and Mr. Ng Kin Wing, Raymond. The Company is required to seek a specific and separate approval from independent shareholders at a general meeting to approve the specific number of shares and terms of the Share Plan to be granted. During FY11, the Company did not convene a specific general meeting on the grant of specific number of shares under the Share Plan to Mr. Ng Yuk Wing, Philip or Mr. Ng Kin Wing, Raymond.



PrinciPle 8 – level and mix of remuneration

The RC recommends to the Board a framework of remuneration for the Directors and key executive officers, and determines specific remuneration packages for each Executive Director. The recommendations of the RC on the remuneration of Directors would be submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to Directors’ Fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by the RC.

The remuneration package are set to ensure that it is competitive and sufficient to attract, retain and motivate directors and key executive officers of the required experience and expertise to run the Company successfully.

The service agreement of the Executive Directors is subject to review by the RC. The key terms among others, appointment period, remuneration and renewal term will be reviewed by the RC on annual basis.

Independent directors are paid a fee for sitting on any of the Board Committees. Save for Directors’ fees which have to be approved by the shareholders at every AGM, independent directors do not receive any remuneration from the Company.

PrinciPle 9 – disclosure on remuneration

The annual remuneration band of each individual Director and the top 5 key executives for the financial year ended 30 June 2011 are set out below:

directors’ remuneration

Name of DirectorRemuneration

BandDirector’s

fee%

Salary & benefit

%

Variable bonus

%

Exercise of share options

%Total

%

Mr. Ng Yuk Wing, Philip II – 66.6 33.4 – 100.0

Mr. Ng Kin Wing, Raymond II – 66.6 33.4 – 100.0

Mr. Lee Yiu Chung, Eugene II – 50.8 28.1 21.1 100.0

Prof. Ng Tung Sang I 81.1 – – 18.9 100.0

Ms. Wong Bee Eng I 100.0 – – – 100.0

Mr. Lim Yew Kong, John I 100.0 – – – 100.0

top 5 Key executives’ remuneration

Name of Key ExecutiveRemuneration

BandSalary & benefit

%

Variable bonus

%

Exercise of share options

%Total

%

Mr. Cheng Pak Cheong, Ray I 84.0 16.0 – 100.0

Mr. Chong Shi Fan, Stephen I 56.0 44.0 – 100.0

Mr. Lee Yiu Chown, Desmond I 56.8 19.6 23.6 100.0

Mr. Mok Pui Wah, Kenneth I 75.9 24.1 – 100.0

Ms. Ng Shuk Yi, Louisa I 65.5 25.6 8.9 100.0



NOTES:

Band I : S$0 to S$249,999Band II : between S$250,000 to S$499,999

There is one employee who is an immediate family member of the Executive Chairman and CEO and his remuneration is in Band I for FY11.

Key executives’ remuneration are set in accordance with a remuneration framework comprising basic salary (including variable and benefits-in-kind).

Details of the Karin Employee Share Option Scheme are set out in note 26 to the financial statements.

PrinciPle 10 – accountaBility

The Board accepts that it is accountable to the shareholders while the management is accountable to the Board. Management provides all members of the Board with a balanced and understandable management accounts of the Company’s performance, position and prospects on a monthly basis. The Board provides the shareholders with a balanced and understandable assessment of the Company’s performance, position and prospects on a half-yearly basis. Such responsibility is extended to the other price-sensitive public reports and reports to regulators (if required).

PrinciPle 11 – audit committee (“ac”)

The AC comprises three members, all are independent directors. They are:

Ms. Wong Bee Eng – ChairmanMr. Lim Yew Kong, John – MemberProf. Ng Tung Sang – Member

At least 2 members of the AC including the Chairman have accounting or related financial management expertise or experience.

The role of the AC is to assist the Board with discharging its responsibility to safeguard the Company’s assets, maintain adequate accounting records and, develop and maintain effective system of internal controls. The AC has full access to and co-operation by management. The AC is provided with reasonable resources to enable it to discharge its functions properly.

The AC, which has written terms of reference, meets periodically to perform its functions which include the following:

• review the independence of the Company’s external auditors;

• review the external auditors’ reports to evaluate the adequacy of internal controls;

• review the co-operation given by the Company’s officers to the external auditors;

• review adequacy of the effectiveness of the Group’s internal controls;

• review the financial statements and announcements of the Company and the Group before their submission to the Board for approval;

• nominate external auditors for re-appointment;



• review interested person transactions, if any; and

• review Whistle Blowing Policy.

Under the year reported on, the AC has reviewed all non-audit services provided by Ernst & Young, Hong Kong (“e&Y”). Non-audit fees for FY11 paid to E&Y were HK$190,500. The AC is satisfied that such services would not affect their independence. The AC has nominated E&Y, for re-appointment as external auditors of the Company at the forthcoming AGM.

The AC and Board are satisfied that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Company. The Company therefore is in compliance with Rule 716 of the Listing Manual of the Singapore Exchange Securities Trading Limited (the “sGX-st”)

The AC meets periodically and also hold informal meetings and discussion with Management from time to time. The AC has full discretion to invite any director or executive officer to attend its meetings.

The AC met, including but not limited to telephone conference, with the external auditors without theCompany’s Management, at least once annually.

PrinciPle 12 – internal controls

The Board believes in the importance of maintaining a sound system of internal controls to safeguard the interests of the shareholders and the Group’s assets. The system of internal controls provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives.

The Board, with the assistance of its AC, assesses the effectiveness of the system of internal controls of the Group by considering reviews performed by the management, the independent external auditors and the internal assessment report performed by internal audit staff from the Internal Audit Department. The internal audit staff will assess the effectiveness of the system of internal controls of the Group and assessment reports are being presented to the AC regularly.

Based on the reports presented so far, the Board believes that the system of internal controls maintained by the Company’s management is adequate to meet the needs of the Group in its current business environment.

PrinciPal 13 – internal audit

The Company has established an Internal Audit Department (“Iad”) to perform the internal audit function and to improve the system and processes of internal controls of the Company. IAD primarily reports to the Chairman of AC.

The AC has reviewed the internal audit programme, the scope and results of internal audit procedures and is satisfied that the internal audit function is adequately resourced and has appropriate standing within the Company.



CommUNICatIoN wItH sHareHoLders

PrinciPle 14 – regular, effective and fair communication with shareholders

Pursuant to the Listing Rules of the SGX-ST and in line with the continuing disclosure obligations of the Company, the Board’s policy is that shareholders should be informed promptly of all major developments that impact the Group.

Information is communicated to shareholders on a timely basis, through annual reports that are issued to all shareholders within the mandatory period, half-yearly/full year results announcements, notice of the general meeting and explanatory memoranda for annual general meetings and special general meetings, press releases and disclosures to the SGX-ST. The Company also holds media and analyst briefing. The Company ensures that price sensitive information is publicly released and is announced on an immediate basis, where required, under the listing manual of the SGX-ST. Where an immediate announcement is not possible, the announcement is made as soon as possible to ensure that shareholders and the public have a fair access to the information.

The Company always updates its corporate website at www.karingroup.com through which shareholders will be able to access information on the Group. The website provides a business profile, corporate announcements, press releases, annual reports and other information of the Group.

The Board may from time to time review the provisions of the existing Bye-laws of the Company to ensure they are in line with the good corporate governance practices as recommended by the Code. If the Board deems fit, it may propose any necessary amendment to the same to the shareholders for approval.

PrinciPle 15 – encourage greater shareholder ParticiPation

The Annual General Meeting (the “aGm”) of the Company is the principal forum for dialogue and interaction with all shareholders. The Company holds its AGM in Singapore. The Board welcomes shareholders to voice out their views and direct questions regarding the Group at the AGM. The members of the Board and the sub-committees and external auditors would be present at the AGM to answer questions from shareholders.

dealings in securities

The Directors of the Company have devised and adopted its own internal compliance code on Securities Transactions by Officers to govern the dealings in securities by the Directors and Officers of the Company and the Group, which is guided by the requirements of Rule 1207(18) of the SGX-ST.

In line with the internal compliance code, the Company issues circulars to its Directors, Officers and employees of the Group to ensure that there must be no dealings in the listed securities of the Company on short term considerations or one month before release of the half-yearly and full year financial results, and if they are in possession of any unpublished material price-sensitive information. All Directors are also required to file with the Company reports on all their dealings in the listed securities of the Company on a timely basis.

material contracts

There are no material contracts of the Company or its subsidiaries involving the interest of the Executive Chairman, CEO or any other Directors or controlling shareholders subsisting at the end of the financial year.



interested Person transactions

The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are conducted on an arm’s length basis and are not prejudicial to the interest of the shareholders.

There was no transaction with interested persons during the financial year ended 30 June 2011 that exceeded the stipulated thresholds as specified in Chapter 9 of the Listing Manual of the SGX-ST.

risK management

The Company regularly reviews and improves its business on operational level by taking into account the risk management perspective. The Company seeks to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The Company reviews all significant control policies and procedures and highlights all significant matters to the AC.

whistle Blowing Policy and Procedures

The Group has established a whistle blowing policy and appropriate procedures have been developed to provide a proper process within the Group for reporting malpractices, illegal acts or acts of omission that employees may encounter at work. No reporting for any of such incidents happened during the financial year ended 30 June 2011.


38

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43

45

46

48

50

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53

Financial contentsREPORT OF THE DIRECTORS

STATEMENT BY DIRECTORS

INDEPENDENT AUDITORS’ REPORT

AUDITED FINANCIAL STATEMENTS

Consolidated:

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Company:

Statement of financial position

NOTES TO FINANCIAL STATEMENTS


REPORT Of ThE diREcTORs

The directors present their report and the audited financial statements of Karin Technology holdings Limited (the “Company”) and its subsidiaries (the “Group”) for the year ended 30 June 2011.

DIRECTORS

The directors of the company in office during the year and up to the date of this report were:

ExEcutivE dirEctors:

Mr. Ng Yuk Wing, Philip – Executive chairmanMr. Ng Kin Wing, Raymond – chief Executive OfficerMr. Lee Yiu chung, Eugene – chief Operating Officer

indEpEndEnt dirEctors:

Prof. Ng Tung sangMs. Wong Bee EngMr. Lim Yew Kong, John

in accordance with the bye-laws of the company, Mr. Ng Kin Wing, Raymond and Ms. Wong Bee Engwill retire and, being eligible, will offer themselves for re-election at the forthcoming annual general meeting.

PRINCIPAL ACTIVITIES

The principal activity of the company is investment holding. details of the principal activities of the subsidiaries are set out in notes 1 and 14 to the financial statements. There were no significant changes in the nature of the Group’s principal activities during the year.

RESULTS AND DIVIDENDS

details of the results of the Group for the year ended 30 June 2011 and the state of affairs of the company and of the Group at that date are set out in the financial statements on pages 45 to 104.

An interim dividend of hK$0.050 per ordinary share with a total amount of approximately hK$10,327,000 was paid on 24 March 2011. The directors of the company proposed a final dividend of hK$0.070 per ordinary share with a total amount of approximately hK$14,360,000 to be paid for the year ended 30 June 2011. This recommendation has been incorporated in the financial statements as an allocation of retained profits within the equity section of the statement of financial position.

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Except as described in this report, neither at the end of nor at any time during the year was the company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures of the company or any other body corporate.



DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

According to the register of directors’ shareholdings, the following directors, who held office at the end of the financial year, had an interest in shares of the company and related corporations (other than wholly-owned subsidiaries) as stated below:

Direct interest Deemed interest At the At the At the At the beginning of end of beginning of end of the financial the financial the financial the financialName of director year year year year

The Company(ordinary shares of hK$0.10 each)

Mr. Ng Yuk Wing, Philip – – 72,142,950 72,142,950Mr. Ng Kin Wing, Raymond – – 70,639,950 70,639,950Mr. Lee Yiu chung, Eugene 1,995,000 2,995,000 – –Ms. Wong Bee Eng 100,000 100,000 – –Prof. Ng Tung sang – 100,000 – –

2,095,000 3,195,000 142,782,900 142,782,900

(options to subscribe for ordinary shares of hK$0.10 each)

Mr. Lee Yiu chung, Eugene 4,000,000 3,000,000 – –Prof. Ng Tung sang 100,000 – – –Mr. Lim Yew Kong, John 100,000 100,000 – –

4,200,000 3,100,000 – –

Mr. Ng Yuk Wing, Philip and Mr. Ng Kin Wing, Raymond, who by virtue of their interests of not less than 20% of the issued capital of the company, are deemed to have interests in the shares of the subsidiaries of the company.

Between the end of the financial year and 21 July 2011, Mr. Lim Yew Kong, John has exercised 100,000 options to ordinary shares of the company.

Except as disclosed in this report, no director of the company who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.

DIRECTORS’ CONTRACTUAL BENEFITS

Except as disclosed in the consolidated financial statements, since the end of the previous financial year, no director of the company has received or become entitled to receive a benefit by reason of a contract made by the company, a related corporation with the director, a firm of which the director is a member, or a company in which the director has a substantial financial interest.



SHARE OPTIONS

The Karin Employee share Option scheme for employees of the Group including executive and independent directors was adopted on 20 January 2005.

The committee administering the employee share option plans comprises three independent directors, namely Professor Ng Tung sang, Ms. Wong Bee Eng and Mr. Lim Yew Kong, John.

5,080,000, 5,380,000 and 2,400,000 share options were granted to the directors and employees of the Group on 3 November 2006, 5 April 2007 and 7 November 2008, respectively.

As at 30 June 2011, the following directors holding office had interests in the options to subscribe for ordinary shares of the company as below:

Number of unissued ordinary shares of HK$0.10 each under options held by directors Aggregate Aggregate options options granted since exercised since Aggregate Options commencement commencement options granted of the scheme of the scheme outstanding as Exercise price during the to end of the to end of the at end of the Singapore financial year financial year financial year financial year Name of director dollar (“S$”) under review under review under review under review

Mr. Lee Yiu chung, Eugene 0.1264 – 2,000,000 1,000,000 1,000,000Mr. Lee Yiu chung, Eugene 0.1608 – 2,000,000 – 2,000,000Prof. Ng Tung sang 0.1264 – 100,000 100,000 –Mr. Lim Yew Kong, John 0.1264 – 100,000 – 100,000

– 4,200,000 1,100,000 3,100,000

As at 30 June 2011, the employees who received 5% or more of the total number of options are set out below:

Number of unissued ordinary shares of HK$0.10 each under options held by employees Aggregate Aggregate options options granted since exercised since Aggregate Options commencement commencement options granted of the scheme of the scheme outstanding as during the to end of the to end of the at end of the Exercise financial year financial year financial year financial yearName of employee price S$ under review under review under review under review

Mr. cheng Pak cheong, Ray 0.1608 – 1,000,000 – 1,000,000Mr. Mok Pui Wah, Kenneth 0.1608 – 1,000,000 – 1,000,000Mr. chong shi fan, stephen 0.1264 – 100,000 – 100,000Mr. chong shi fan, stephen 0.1608 – 200,000 – 200,000Mr. chong shi fan, stephen 0.1060 – 700,000 – 700,000

– 3,000,000 – 3,000,000

details of the company’s share option scheme are set out in note 26 to the financial statements.



KARIN PERFORMANCE SHARE PLAN

The Karin Performance share Plan (the “Plan”) was adopted on 21 October 2010.

The committee administering the Plan is the Remuneration committee which comprises the three independent directors, Professor Ng Tung sang, Ms. Wong Bee Eng and Mr. Lim Yew Kong, John.

On 10 January 2011, 1,080,000 treasury shares were awarded to key executives of the company. The market price of the 1,080,000 treasury shares on the date of the grant was s$253,800.

As at 30 June 2011, save for the above, no other shares have been awarded pursuant to the Plan and in particular, no shares were awarded pursuant to the Plan to:

(i) any directors of the company:

(ii) any controlling shareholders and their Associates; and

(iii) any Group Employees which results in them receiving 5% or more of the total number of shares available under the Plan.

since the commencement of the Plan, an aggregate of 1,080,000 shares have been awarded to employees of the Group.

AUDIT COMMITTEE

The Audit committee comprises three members, all are independent directors. The current composition is as follows:

Ms. Wong Bee Eng (chairman)Mr. Lim Yew Kong, JohnProf. Ng Tung sang

The Audit committee performs the functions specified in the Listing Manual and the Best Practice Guide of the singapore Exchange securities Trading Limited, and the code of corporate Governance. The functions performed are detailed in the Report on corporate Governance on pages 25 to 36 of the Annual Report.

The Audit committee has nominated Ernst & Young, certified Public Accountants, hong Kong for re-appointment as auditors of the company at the forthcoming Annual General Meeting. The Audit committee has conducted an annual review of the non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination.

AUDITORS

The auditors, Ernst & Young, certified Public Accountants, hong Kong, have expressed their willingness to accept the re-appointment.

On behalf of the board of directors:

Ng Yuk Wing, Philip Ng Kin Wing, RaymondExecutive chairman chief Executive Officer

1 september 2011


statement by directors

We, ng yuk Wing, Philip and ng Kin Wing, raymond, being two of the directors of Karin technology Holdings Limited, do hereby state that, in the opinion of the directors,

(i) the accompanying consolidated and company statements of financial position, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company and of the Group as at 30 June 2011 and of the results of the business, changes in equity and cash flows of the Group for the year then ended, and

(ii) 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 board of directors:

Ng Yuk Wing, Philip Ng Kin Wing, Raymondexecutive chairman chief executive officer

1 september 2011



To the shareholders of Karin Technology Holdings Limited(Incorporated in Bermuda with limited liability)

We have audited the consolidated financial statements of Karin Technology Holdings Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages 45 to 104, which comprise the consolidated and company statements of financial position as at 30 June 2011, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

DirecTors’ responsibiLiTy for THe consoLiDaTeD financiaL sTaTemenTs

The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

auDiTors’ responsibiLiTy

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Our report is made solely to you, as a body, in accordance with Section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

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

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



opinion

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2011, and of the Group’s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards.

ernst & youngCertified Public Accountants18th Floor, Two International Finance Centre8 Finance Street, CentralHong Kong

1 September 2011


Year ended 30 June 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

2011 2010 Notes HK$’000 HK$’000

REVENUE 5 2,167,430 1,562,157

Cost of sales (1,998,094) (1,418,103 )

Gross profit 169,336 144,054

Other income and gains, net 5 15,422 8,468Selling and distribution costs (49,648) (53,896 )Administrative expenses (64,916) (55,021 )Other expenses, net (8,801) (974 )Finance costs 7 (780) (256 )

PROFIT BEFORE TAX 6 60,613 42,375

Income tax expense 8 (10,246) (9,508 )

PROFIT FOR THE YEAR 50,367 32,867

OTHER COMPREHENSIVE INCOME

Fair value revaluation of land and buildings, net of deferred tax 11 47,370 33,114Exchange differences on translation of foreign operations 1,705 85

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX 49,075 33,199

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 99,442 66,066

Profit/(loss) for the year attributable to: Owners of the Company 51,599 33,803 Non-controlling interests (1,232) (936 )

50,367 32,867

Total comprehensive income/(loss) attributable to: Owners of the Company 101,015 67,002 Non-controlling interests (1,573) (936 )

99,442 66,066

EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY (HK cents) 10

Basic 25.1 16.6

Diluted 24.7 16.3

Details of dividends for the year are disclosed in note 9 to the financial statements.


CONSOLIDATED STATEMENT OF FINANCIAL POSITION30 June 2011

2011 2010 Notes HK$’000 HK$’000

NON-CURRENTASSETS Property, plant and equipment 11 183,804 119,191 Investment properties 12 37,342 9,800 Goodwill 13 2,098 2,356 Deferred tax assets 24 1,618 482

Total non-current assets 224,862 131,829

CURRENTASSETS Inventories 15 130,110 98,340 Trade and bills receivables 16 290,005 259,974 Factored trade receivables 17 452 3,949 Prepayments, deposits and other receivables 18 32,789 19,395 Forward currency contracts 19 1,996 712 Cash and cash equivalents 20 74,263 67,604

Total current assets 529,615 449,974

CURRENTLIABILITIES Trade payables 21 256,343 133,466 Other payables and accruals 21 66,444 50,773 Tax payable 10,415 8,183 Interest-bearing bank and other borrowings 22 24,334 80,132

Total current liabilities 357,536 272,554

NET CURRENT ASSETS 172,079 177,420

TOTAL ASSETS LESS CURRENT LIABILITIES 396,941 309,249

NON-CURRENTLIABILITIES Finance lease payables 23 291 523 Deferred tax liabilities 24 14,047 9,147

Total non-current liabilities 14,338 9,670

Net assets 382,603 299,579


30 June 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

2011 2010 Notes HK$’000 HK$’000

EQUITYEquityattributabletoownersoftheCompany Issued capital 25 20,683 20,478 Treasury shares 25 (2,376) (1,226 ) Reserves 27(a) 363,433 281,263

381,740 300,515

Non-controllinginterests 863 (936 )

Total equity 382,603 299,579

NgYukWing,Philip NgKinWing,RaymondExecutive Chairman Chief Executive Officer

48


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 30 June 2011

48

Attributable to owners of the Company

Land and

buildings

Contributed revaluation General

Exchange Share surplus Share reserve reserve Non-

Issued Treasury fluctuation premium (Note 27 option (Note 27 (Note 27 Retained Proposed controlling Total

Notes capital shares reserve account (a)(i)) reserve (a)(ii)) (a)(iii)) profits dividends Total interests equity

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 July 2009 20,200 – 4,431 31,637 898 3,641 23,979 2,752 151,459 10,908 249,905 – 249,905

Profit/(loss) for the year – – – – – – – – 33,803 – 33,803 (936 ) 32,867Other comprehensive income for the year: Changes in fair value of land and buildings, net of tax – – – – – – 33,114 – – – 33,114 – 33,114 Exchange differences on translation of foreign operations – – 85 – – – – – – – 85 – 85

Total comprehensive income/ (loss) for the year – – 85 – – – 33,114 – 33,803 – 67,002 (936 ) 66,066

Issue of share under Karin Employee Share Option Scheme (the “Scheme”) 25 278 – – 2,453 – (761 ) – – – – 1,970 – 1,970

Purchase of own shares and held as treasury shares 25 – (1,226 ) – – – – – – – – (1,226 ) – (1,226 )

Equity-settled share option arrangements 26 – – – – – 392 – – – – 392 – 392

Final 2009 dividend paid – – – – – – – – (48 ) (5,454 ) (5,502 ) – (5,502 )

Special 2009 dividend paid – – – – – – – – (48 ) (5,454 ) (5,502 ) – (5,502 )

Interim 2010 dividend paid 9 – – – – – – – – (6,524 ) – (6,524 ) – (6,524 )

Proposed final 2010 dividend 9 – – – – – – – – (10,185 ) 10,185 – – –

At 30 June 2010 20,478 (1,226 ) 4,516* 34,090* 898* 3,272* 57,093* 2,752* 168,457* 10,185* 300,515 (936 ) 299,579

48 / 4948

Annual Report 2011 / Karin Technology Holdings LimitedAnnual Report 2011 Karin Technology Holdings Limited 49


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AttributabletoownersoftheCompany

Landand

buildings

Contributed revaluation General

Exchange Share surplus Share reserve reserve Non-

Issued Treasuryfluctuation premium (Note 27 option (Note 27 (Note 27 Retained Proposed controlling Total

Notes capital shares reserve account (a)(i)) reserve (a)(ii)) (a)(iii)) profits dividends Total interests equity

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 July 2010 20,478 (1,226) 4,516 34,090 898 3,272 57,093 2,752 168,457 10,185 300,515 (936) 299,579

Profit/(loss) for the year – – – – – – – – 51,599 – 51,599 (1,232) 50,367Other comprehensive income for the year: Changes in fair value of land and buildings, net of tax – – – – – – 47,370 – – – 47,370 – 47,370 Exchange differences on translation of foreign operations – – 2,046 – – – – – – – 2,046 (341) 1,705

Total comprehensive income/ (loss) for the year – – 2,046 – – – 47,370 – 51,599 – 101,015 (1,573) 99,442

Issue of share under Karin Employee Share Option Scheme (the “Scheme”) 25 205 – – 1,840 – (601) – – – – 1,444 – 1,444

Purchase of own shares and held as treasury shares 25 – (2,376) – – – – – – – – (2,376) – (2,376)

Distribution of treasury shares 25 – 1,226 – 297 – – – – – – 1,523 – 1,523

Equity-settled share option arrangements 26 – – – – – 131 – – – – 131 – 131

Capital contribution by a non-controlling shareholder – – – – – – – – – – – 3,372 3,372

Final 2010 dividend paid – – – – – – – – – (10,185) (10,185) – (10,185)

Interim 2011 dividend paid 9 – – – – – – – – (10,327) – (10,327) – (10,327)

Proposed final 2011 dividend 9 – – – – – – – – (14,360) 14,360 – – –

At 30 June 2011 20,683 (2,376) 6,562* 36,227* 898* 2,802* 104,463* 2,752* 195,369* 14,360* 381,740 863 382,603

* These reserve accounts comprise the consolidated reserves of HK$363,433,000 (2010: HK$281,263,000) in the consolidated

statement of financial position.


CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 30 June 2011

2011 2010 Notes HK$’000 HK$’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 60,613 42,375Adjustments for: Finance costs 7 780 256 Interest income 5 (471) (245 ) Loss/(gain) on disposal of items of property, plant and equipment 5, 6 156 (44 ) Fair value gains on investment properties 5 (5,985) (3,800 ) Fair value gains on derivative financial instruments, net 5 (1,284) (276 ) Depreciation 6 10,711 7,794 Write-down and write-off/(reversal of write-down) of obsolete inventories to net realisable value 6 3,009 (3,314 ) Impairment/(reversal of impairment) of trade receivables 6 8,155 (1,037 ) Impairment of goodwill 6 258 – Equity-settled share option expense 26 131 392 Expense recognised in respect of treasury shares awarded 6, 25 1,523 –

77,596 42,101

Increase in inventories (34,779) (21,442 )Increase in trade and bills receivables (38,186) (49,245 )Decrease in factored trade receivables 3,497 7,225Increase in prepayments, deposits and other receivables (13,394) (3,472 )Increase/(decrease) in trade payables 122,877 (7,367 )Increase in other payables and accruals 15,671 11,171

Cash generated from/(used in) operations 133,282 (21,029 )

Interest on bank and other loans paid 7 (736) (200 )Interest element on finance lease rental payments 7 (44) (56 )Dividends paid (20,512) (17,529 )Hong Kong profits tax paid (7,527) (7,760 )Mainland China and overseas corporate income tax paid (1,513) (2,337 )

Net cash flows from/(used in) operating activities 102,950 (48,911 )



CONSOLIDATED STATEMENT OF CASH FLOWS

2011 2010 Notes HK$’000 HK$’000

Net cash flows from/(used in) operating activities 102,950 (48,911 )

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of items of property, plant and equipment (21,454) (36,773 )Purchase of investment properties (21,550) –Interest received 471 245Proceeds from disposal of items of property, plant and equipment – 54Decrease in prepayment for acquisition of properties – 19,055Increase in time deposits with maturity of more than three months when acquired (9,682) –

Net cash flows used in investing activities (52,215) (17,419 )

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from exercise of employee share options 1,444 1,970Purchase of treasury shares 25 (2,376) (1,226 )New bank and other loans 498,875 157,790Repayment of bank and other loans (554,709) (81,490 )Capital element of finance lease rental payments (251) (216 )Capital contribution by a non-controlling shareholder 3,372 –

Net cash flows from/(used in) financing activities (53,645) 76,828

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (2,910) 10,498

Cash and cash equivalents at beginning of financial year 67,604 57,051

Effect of foreign exchange rate changes, net (113) 55

CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 64,581 67,604

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTSCash and bank balances other than time deposits 20 56,514 46,967Time deposits 20 17,749 20,637

Cash and cash equivalents as stated in the consolidated statement of financial position 20 74,263 67,604Non-pledged time deposits with original maturity of more than three months when acquired (9,682) –

Cash and cash equivalents as stated in the consolidated statement of cash flows 64,581 67,604


STATEMENT OF FINANCIAL POSITION30 June 2011

2011 2010 Notes HK$’000 HK$’000

NON-CURRENTASSETS Investments in subsidiaries 14 76,308 76,177

CURRENTASSETS Prepayments 18 – 30 Amounts due from subsidiaries 14 43,454 62,652 Cash and bank balances 20 846 780

Total current assets 44,300 63,462

CURRENTLIABILITIES Accruals 21 5,691 2,082 Amount due to a subsidiary 14 – 26,360

Total current liabilities 5,691 28,442

NET CURRENT ASSETS 38,609 35,020

Net assets 114,917 111,197

EQUITY Issued capital 25 20,683 20,478 Treasury shares 25 (2,376) (1,226 ) Reserves 27(b) 96,610 91,945

Total equity 114,917 111,197

NgYukWing,Philip NgKinWing,RaymondExecutive Chairman Chief Executive Officer


30 June 2011


1. CORPORATEINFORMATION

Karin Technology Holdings Limited (the “Company”) is a limited liability company incorporated in Bermuda. The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. The principal place of business of the Company is located at 2nd Floor, Karin Building, 166 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong.

The principal activity of the Company is investment holding. The principal activities of the Company’s subsidiaries consist of:

(i) the distribution of electronic components (“Components distribution”);

(ii) the provision of integrated circuit software application design solutions (“IC application design”); and

(iii) the provision of computer data storage management solutions and services and the distribution of other computer products (“IT infrastructure”).

2.1 BASISOFPREPARATION

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”, which comprise standards and interpretations approved by the International Accounting Standards Board (the “IASB”), and International Accounting Standards (“IASs”) and Standing Interpretations Committee Interpretations approved by the International Accounting Standards Committee that remain in effect). They have been prepared under the historical cost convention, except for investment properties, certain leasehold land and buildings, and derivative financial instruments which have been measured at fair value. These financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand (HK$’000) except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the year ended 30 June 2011. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated on consolidation in full. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.


NOTES TO FINANCIAL STATEMENTS30 June 2011

2.2 IMPACTOFNEWANDREVISEDINTERNATIONALFINANCIALREPORTINGSTANDARDS

The Group has adopted the following new and amendments to International Financial Reporting Standards (“IFRSs”) for the first time in the financial statements for the financial year ended 30 June 2011:

IFRS 1 Amendment Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standard – Limited Exemption from Comparative IFRS 7 Disclosures for First-time AdoptersIFRS 2 Amendments Amendments to IFRS 2 Share-based Payment – Group Cash-settled Share-based Payment TransactionsIAS 32 Amendment Amendment to IAS 32 Financial Instruments: Presentation – Classification of Rights IssuesIFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

Apart from the above, the IASB has issued Improvements to IFRSs 2009 and Improvement to IFRSs 2010 in April 2009 and May 2010, respectively, which set out amendments to a number of IFRSs primarily with a view to removing inconsistencies and clarifying wording. The amendments to IFRS 3, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17, IAS 27, IAS 36 and IAS 39 are effective in the current period.

The adoption of these new and amendments to IFRSs, together with the Improvements to IFRSs issued on April 2009 and May 2010, has had no significant financial effect and there have been no significant changes to the accounting policies applied in these financial statements.

2.3 IMPACTOFISSUEDBUTNOTYETEFFECTIVEINTERNATIONALFINANCIALREPORTINGSTANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in these financial statements.

IFRS 7 Amendments Amendments to IFRS 7 Financial Instruments: Disclosures 2

IFRS 9 Financial Instruments 5

IFRS 10 Consolidated Financial Statements 4

IFRS 11 Joint Arrangements 4

IFRS 12 Disclosure of Interests in Other Entities 4

IFRS 13 Fair Value Measurement 4

IAS 1 Amendments Amendments to IAS 1 Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income 3

IAS 19 Amendments Amendments to IFRIC 19 Employee Benefits 4

IAS 24 (Revised) Related Party Disclosures 1

IFRIC 14 Amendments Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement 1


30 June 2011


2.3 IMPACTOFISSUEDBUTNOTYETEFFECTIVEINTERNATIONALFINANCIALREPORTINGSTANDARDS(continued)

Apart from the above, the IASB has issued Improvements to IFRSs 2009 and Improvement to IFRSs 2010 in April 2009 and May 2010, respectively, which sets out amendments to a number of IFRSs primarily with a view to removing inconsistencies and clarifying wording. The amendments to IFRS 1, IFRS 7, IAS 1, IAS 34 and IFRIC 13 are effective for the annual periods beginning on or after 1 January 2011, although there are separate transitional provisions for each standard or interpretation.

1 Effective for annual periods beginning on or after 1 January 20112 Effective for annual periods beginning on or after 1 July 20113 Effective for annual periods beginning on or after 1 July 20124 Effective for annual periods beginning on or after 1 January 20135 Effective for annual periods beginning on or after 1 January 2015

The Group is in the process of making an assessment of the impact of these new and revised IFRSs upon initial application. So far, the Group considers that these new and revised IFRSs are unlikely to have a significant impact on the Group’s results of operations and financial position.

2.4 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

suBsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s profit or loss to the extent of dividends received and receivable. The Company’s investments in subsidiaries are stated at cost less any accumulated impairment losses.

Business comBinations and goodwill

Business combinations from 1 July 2009

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss.



2.4 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)

Business comBinations and goodwill (continued)

Business combinations from 1 July 2009(continued)

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured until it is finally settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the net identifiable assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets of the subsidiary acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 30 June. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Business combinations prior to 1 July 2009 but after 1 January 2005

In comparison to the above-mentioned requirements which were applied on a prospective basis, the following differences applied to business combinations prior to 1 July 2009:

Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest was measured at the proportionate share of the acquiree’s identifiable net assets.


30 June 2011



impairment of non-financial assets

Where an indication of impairment of exists, or when annual impairment testing for an asset is required (other than inventories, financial assets, deferred tax assets, investment properties and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. 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. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised impairment loss may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

related parties

A party is considered to be related to the Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group;

(b) the party is a member of the key management personnel of the Group;

(c) the party is a close member of the family of any individual referred to in (a) or (b);

(d) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (b) or (c); or

(e) the party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.




property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation.

Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Changes in the values of property, plant and equipment are dealt with as movements in the asset revaluation reserve. If the total of this reserve is insufficient to cover a deficit, on an individual asset basis, the excess of the deficit is charged to profit or loss. Any subsequent revaluation surplus is credited to profit or loss to the extent of the deficit previously charged. On disposal of a revalued asset, the relevant portion of the land and buildings revaluation reserve realised in respect of previous valuations is transferred to retained profits as a movement in reserves.

Depreciation is calculated on the straight-line basis to write off the cost or valuation of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Leasehold land and buildings Over the lease termsLeasehold improvements 20%Furniture and fixtures 20%Office equipment 30%Motor vehicles 25%

Where parts of an item of property, plant and equipment have different useful lives, the cost or valuation of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.


30 June 2011



investment properties

Investment properties are interests in land and buildings (including the leasehold interest under an operating lease for a property which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of the retirement or disposal.

leases

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to profit or loss so as to provide a constant periodic rate of charge over the lease terms.

Assets acquired through hire purchase contracts of a financing nature are accounted for as finance leases, but are depreciated over their estimated useful lives.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases net of any incentives received are charged to profit or loss on the straight-line basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the land and buildings elements, the entire lease payments are included in the cost of the land and buildings as a finance lease in property, plant and equipment.




investments and other financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss and loans and receivables, as appropriate. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

The Group’s financial assets include cash and bank balances, trade and other receivables, and derivative financial instruments.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Gains or losses on these financial assets are recognised in profit or loss. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair value recognised in “Other income” in profit or loss. These net fair value gains or losses recognised in profit or loss do not include any dividends or interest earned on these financial assets, which are recognised in accordance with the policy set out for “Revenue recognition” below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest. The effective interest rate amortisation is included in “Interest income” in profit or loss. The loss arising from impairment is recognised in profit or loss in other expenses.

derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.


30 June 2011



derecognition of financial assets (continued)

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced either directly or through the use of an allowance account and the amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery.




impairment of financial assets (continued)

Financial assets carried at amortised cost(continued)

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to other expense in profit or loss.

financial liaBilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are all classified as loans and borrowings. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables and interest-bearing bank and other borrowings.

Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

derecognition of financial liaBilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.


30 June 2011



derivative financial instruments

Initial recognition and subsequent measurement

The Group uses derivative financial instruments such as forward currency contracts to manage its foreign currency risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The Group’s forward currency contracts do not qualify for hedge accounting and accordingly any gains or losses arising from changes in fair value are taken directly to profit or loss.

treasury shares

Own equity instruments which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration is recognised in equity.

inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the statements of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.




income tax (continued)

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

• where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.


30 June 2011



revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold;

(b) from the rendering of services, when services have been rendered;

(c) rental income, on a time proportion basis over the lease terms;

(d) interest income, on an accrual basis using the effective interest rate method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset; and

(e) management fee income, when management services have been rendered.

employee Benefits

Share-based payment transactions

Share option schemeThe Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

In situations where equity instruments are issued and some or all of the goods or services received by the Group as consideration cannot be specifically identified, the unidentifiable goods or services are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date.

The cost of equity-settled transactions with employees for grants after 7 November 2002 is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.




employee Benefits (continued)

Share-based payment transactions(continued)

Share option scheme (continued)Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Employee performance share planThe Group operates an employee performance share plan for the purpose of motivating participants to optimise performance standards and efficiency and to maintain a high level of contribution to the Group. Employees and independent directors are eligible to participate in the plan. Eligible participants receive fully paid shares free of charge upon achieving a performance target, whereby employees render services as consideration for equity instruments (“performance share plan”).

In situations where equity instruments are issued and some or all of the goods or services received by the Group as consideration cannot be specifically identified, the unidentifiable goods or services are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date. The cost of performance share plan with employees and independent directors are measured by reference to the closing stock price of the Company on Singapore Exchange Securities Trading Limited (the “SGX-ST”) at the date at which they are granted.

A Remuneration Committee comprising directors is formed to determine the grant of awards to participants at any time. A participant who is a member of the Remuneration Committee, shall not be involved in deliberations in respect of awards issued from the performance share plan.

The Group will record the expense only at the time the awards are issued to eligible participants. The amount charges to the profit or loss for the grant of awards will be the same as the closing stock price of the Company on the SGX-ST at the date of grant when the Group delivers treasury shares in fulfillment of the awards.

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries and are charged to profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme.


30 June 2011



employee Benefits (continued)

Pension schemes(continued)

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in social security schemes operated by the local municipal government. These subsidiaries are required to contribute 13% to 44% of their payroll costs to the central pension schemes. The contributions are charged to profit or loss as they become payable in accordance with the rules of the central pension schemes.

Borrowing costs

All borrowing costs are recognised as expenses in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the equity section of the statement of financial position, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are proposed and declared, because the Company’s bye-laws grant the directors of the Company the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of certain overseas and Mainland China subsidiaries are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into the presentation currency of the Company at the exchange rates ruling at the end of the reporting period and their statements of comprehensive income are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas and Mainland China subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.



3. SIGNIFICANTACCOUNTINGJUDGEMENTSANDESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Operating lease commitments – Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

estimation uncertainty

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

Fair value of investment properties and leasehold land and buildings

Investment properties and leasehold land and buildings are carried in the consolidated statement of financial position at their fair value. The fair value was based on a valuation on these properties conducted by an independent firm of professional valuers using property valuation techniques which involve making assumptions on certain market conditions. Favourable or unfavourable changes to these assumptions would result in changes in the fair value of the Group’s investment properties and leasehold land and buildings and the corresponding adjustments to the gain or loss recognised in profit or loss and land and buildings revaluation reserve, respectively.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 30 June 2011 was approximately HK$2,098,000 (2010: HK$2,356,000). More details are given in note 13 to the financial statements.


30 June 2011


3. SIGNIFICANTACCOUNTINGJUDGEMENTSANDESTIMATES(continued)

estimation uncertainty (continued)

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and temporary differences to the extent that it is probable that taxable profit will be available against which the losses and temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets relating to temporary differences at 30 June 2011 was HK$1,618,000 (2010: HK$482,000). Further details are contained in note 24 to the financial statements.

Provision against obsolete inventories

Management reviews the aged analysis of inventories of the Group at the end of each reporting period, and provides provision against obsolete and slow-moving inventory items identified that are no longer suitable for sale. Management estimates the net realisable value for such inventories based primarily on the latest invoice prices and current market conditions. The Group carries out an inventory review on a product-by-product basis at the end of each reporting period and makes provision for obsolete items.

Impairment assessment of trade receivables

The policy for impairment assessment of trade receivables of the Group is based on the evaluation of collectability and the aged analysis of trade receivables and on management’s estimation. A considerable amount of estimation is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of debtors are to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Fair values of forward currency contracts

Forward currency contracts are stated at fair value. The Group estimates the fair values with reference to currency forward exchange rates for contracts with similar maturity profiles. The use of methodologies, models and assumptions in pricing and valuing these financial assets and liabilities is subjective and requires varying degrees of judgement, which may result in significantly different fair values and results.



4. OPERATINGSEGMENTINFORMATION

For management purpose, the Group is organised into business units based on their products and services and has three reportable operating segments as follows:

(a) the “Components distribution” operating segment engages in the distribution and trading of electronic components and cables;

(b) the “Integrated Circuit (“IC”) application design” operating segment engages in the provision of IC software application design solutions to electronics manufacturers; and

(c) the “IT infrastructure” operating segment engages in the provision of computer data storage management solutions and services and the distribution of other computer products.

Management monitors the results of its operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment results, which is a measure of adjusted profit before tax. The adjusted profit before tax is measured consistently with the Group’s profit before tax except that interest income, finance costs, net fair value gains on investment properties and derivative financial instruments and corporate and other unallocated expenses are excluded from such measurement.

Segment assets exclude deferred tax assets, cash and cash equivalents, forward currency contracts and corporate and other unallocated assets as these assets are managed on a group basis.

Segment liabilities exclude tax payable, interest-bearing bank and other borrowings, deferred tax liabilities and corporate and other unallocated liabilities as these liabilities are managed on a group basis.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.


30 June 2011


4. OPERATINGSEGMENTINFORMATION(continued)

IC Components application IT distribution designinfrastructure Total HK$’000 HK$’000 HK$’000 HK$’000

Yearended30June2011

Segmentrevenue:Sales to external customers 582,138 173,611 1,411,681 2,167,430Other revenue 1,466 124 5,589 7,179

Total 583,604 173,735 1,417,270 2,174,609

Reconciliation:Interest income 471Fair value gains on investment properties 5,985Fair value gains on derivative financial instruments, net 1,284Others 503

Total revenue 2,182,852

Segmentresults 15,101 10,256 35,569 60,926Reconciliation:Interest income 471Fair value gains on investment properties 5,985Fair value gains on derivative financial instruments, net 1,284Corporate and other unallocated expenses (7,273)Finance costs (780)

Profit before tax 60,613

Segmentassets 196,790 85,447 286,787 569,024Reconciliation:Deferred tax assets 1,618Cash and cash equivalents 74,263Forward currency contracts 1,996Corporate and other unallocated assets 107,576

Total assets 754,477

Segmentliabilities 16,400 29,540 253,388 299,328Reconciliation:Tax payable 10,415Interest-bearing bank and other borrowings 24,625Deferred tax liabilities 14,047Corporate and other unallocated liabilities 23,459

Total liabilities 371,874

Othersegmentinformation:Depreciation 10,711Impairment of goodwill 258Other non-cash expenses 7,832 23 3,309 11,164Capital expenditure 43,004Fair value gains on investment properties 5,985




IC Components application IT distribution design infrastructure Total HK$’000 HK$’000 HK$’000 HK$’000

Yearended30June2010

Segmentrevenue:Sales to external customers 524,663 176,530 860,964 1,562,157Other revenue 2,731 – 882 3,613

Total 527,394 176,530 861,846 1,565,770

Reconciliation:Interest income 245Fair value gains on investment property 3,800Fair value gains on derivative financial instruments, net 276Others 534

Total 1,570,625

Segmentresults 18,619 9,495 18,840 46,954Reconciliation:Interest income 245Fair value gains on investment property 3,800Fair value gains on derivative financial instruments, net 276Corporate and other unallocated expenses (8,644 )Finance costs (256 )

Profit before tax 42,375

Segmentassets 140,196 80,632 203,440 424,268Reconciliation:Deferred tax assets 482Cash and cash equivalents 67,604Forward currency contracts 712Corporate and other unallocated assets 88,737

Total assets 581,803

Segmentliabilities 51,268 31,789 76,613 159,670Reconciliation:Tax payable 8,183Interest-bearing bank and other borrowings 80,655Deferred tax liabilities 9,147Unallocated liabilities 24,569

Total liabilities 282,224

Othersegmentinformation:Depreciation 7,794Other non-cash income (1,357 ) (358 ) (2,636 ) (4,351 )Capital expenditure 36,773Fair value gains on investment property (3,800 )


30 June 2011



geographical information

Mainland HongKong China Others Total HK$’000 HK$’000 HK$’000 HK$’000

Yearended30June2011

Segmentrevenue:Sales to external customers 1,675,550 337,920 153,960 2,167,430Other revenue, excluding interest income 10,802 2,674 1,475 14,951

Total 1,686,352 340,594 155,435 2,182,381

Non-currentassets 113,801 110,667 394 224,862

Yearended30June2010

Segmentrevenue:Sales to external customers 1,160,615 321,008 80,534 1,562,157Other revenue, excluding interest income 6,278 1,455 490 8,223

Total 1,166,893 322,463 81,024 1,570,380

Non-currentassets 80,506 50,638 685 131,829

information aBout a maJor customer

The Group does not have a single external customer contribute to 10% or more of the Group’s revenue during the year (2010: Nil).



5. REVENUE,OTHERINCOMEANDGAINS,NET

Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold, after allowances for returns and trade discounts, and the value of services rendered during the year.

An analysis of revenue, other income and gains, net is as follows:

Group

2011 2010 Notes HK$’000 HK$’000

RevenueComponents distribution 582,138 524,663IC application design 173,611 176,530IT infrastructure 1,411,681 860,964

2,167,430 1,562,157

Otherincomeandgains,netManagement fee income 100 101Interest income 471 245Gross rental income 403 404Gain on disposal of items of property, plant and equipment – 44Fair value gains on investment properties 12 5,985 3,800Fair value gains on derivative financial instruments, net 19 1,284 276Foreign exchange difference, net 5,106 –Others 2,073 3,598

15,422 8,468


30 June 2011


6. PROFITBEFORETAX

The Group’s profit before tax is arrived at after charging/(crediting):

Group

2011 2010 Notes HK$’000 HK$’000

Cost of inventories sold 1,907,159 1,380,885Write-down and write-off/(reversal of write-down) of obsolete inventories to net realisable value* 3,009 (3,314 )Depreciation 11 10,711 7,794Operating lease rentals in respect of land and buildings 3,414 4,766Auditors’ remuneration 998 968Employee benefit expense (excluding directors’ remuneration): Wages and salaries 79,293 72,055 Equity-settled share option expense 26 131 392 Pension scheme contributions 4,267 4,622 Expense recognised in respect of treasury shares awarded 25 1,523 –

85,214 77,069

Directors’ remuneration: Fees 721 663 Other emoluments 7,336 6,486

8,057 7,149

Foreign exchange differences, net (5,106) 1,588Impairment/(reversal of impairment) of trade receivables# 16 8,155 (1,037 )Impairment of goodwill# 13 258 –Direct operating expense (including repairs and maintenance) arising on rental-earning investment properties 152 152Loss/(gain) on disposal of items of property, plant and equipment 156 (44 )

# The impairment/(reversal of impairment) of receivables and impairment of goodwill is included in “Other expenses,

net” on the face of the consolidated statement of comprehensive income.

* The write-down and write-off/(reversal of write-down) of obsolete inventories to net realisable value is included in

“Cost of sales” on the face of the consolidated statement of comprehensive income.



7. FINANCECOSTS

Group 2011 2010 HK$’000 HK$’000

Interest on bank and other loans 736 200Interest on finance leases 44 56

780 256

8. INCOMETAX

Hong Kong profits tax has been provided at the rate of 16.5% (2010: 16.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates.

Group 2011 2010 HK$’000 HK$’000

Current – Hong Kong Charge for the year 8,976 6,071 Underprovision in prior years 48 –Current – Mainland China Charge for the year 2,663 2,435 Underprovision/(overprovision) in prior years (119) 276Deferred (note 24) (1,322) 726

Total tax charge for the year 10,246 9,508

A reconciliation of the tax expense applicable to profit before tax at the statutory rate of Hong Kong to the tax expense at the effective tax rate, and a reconciliation of the applicable rate (i.e., the statutory tax rate) to the effective tax rate, are as follows:

Group 2011 2010 HK$’000 % HK$’000 %

Profit before tax 60,613 42,375

Tax at the statutory rate of Hong Kong 10,001 16.5 6,992 16.5Different tax rate of Mainland China 1,375 2.3 596 1.4Different tax rate of Singapore (1) – (10 ) –Adjustments in respect of current tax of previous periods (71) (0.1) 276 0.6Income not subject to tax (1,832) (3.0) (538 ) (1.3 )Expenses not deductible for tax 762 1.3 1,394 3.3Tax losses not recognised 5 – 726 1.7Others 7 – 72 0.2

Tax charge at the Group’s effective rate 10,246 17.0 9,508 22.4


30 June 2011


9. DIVIDENDS

Group 2011 2010 HK$’000 HK$’000

Interim dividend – HK$0.050 (2010: HK$0.032) per ordinary share 10,327 6,524Proposed final dividend – HK$0.070 (2010: HK$0.050) per ordinary share 14,360 10,185

24,687 16,709

The proposed final dividend for the current financial year is subject to the approval of the Company’s shareholders at the forthcoming annual general meeting.

10. EARNINGSPERSHAREATTRIBUTABLETOORDINARYSHAREHOLDERSOFTHECOMPANY

The calculation of the basic earnings per share amount is based on the profit for the year attributable to ordinary shareholders of the Company of approximately HK$51,599,000 (2010: HK$33,803,000), and the weighted average of 205,887,259 (2010: 204,078,904) ordinary shares in issue during the year, which has taken into account the effect of treasury shares.

The calculation of the diluted earnings per share amount is based on the profit for the year attributable to ordinary shareholders of the Company of approximately HK$51,599,000 (2010: HK$33,803,000), as used in the basic earnings per share calculation, and 208,666,167 (2010: 207,153,057) ordinary shares, which was the weighted average of 205,887,259 (2010: 204,078,904) ordinary shares in issue during the year, and the weighted average of 2,778,908 (2010: 3,074,153) ordinary shares deemed to have been issued at no consideration on the deemed exercise of all the outstanding share options during the year.



11. PROPERTY,PLANTANDEQUIPMENT

group

Leasehold landand Leasehold Furniture Office Motor buildings improvements andfixtures equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

30June2011

At 30 June 2010 and 1 July 2010: Cost or valuation 109,069 14,410 8,029 13,527 3,773 148,808 Accumulated depreciation (446) (9,510) (5,353) (11,558) (2,750) (29,617)

Net carrying amount 108,623 4,900 2,676 1,969 1,023 119,191

At 1 July 2010, net of accumulated depreciation 108,623 4,900 2,676 1,969 1,023 119,191Additions 18,218 2,032 447 408 349 21,454Disposals – – (117) (39) – (156)Depreciation provided during the year (5,996) (1,970) (1,056) (942) (747) (10,711)Surplus on revaluation 52,160 – – – – 52,160Exchange realignment 1,478 148 145 51 44 1,866

At 30 June 2011, net of accumulated depreciation 174,483 5,110 2,095 1,447 669 183,804

At 30 June 2011: Cost or valuation 174,483 15,358 7,590 13,747 4,229 215,407 Accumulated depreciation – (10,248) (5,495) (12,300) (3,560) (31,603)

Net carrying amount 174,483 5,110 2,095 1,447 669 183,804

Analysis of cost or valuation: At cost – 15,358 7,590 13,747 4,229 40,924 At 30 June 2011 valuation 174,483 – – – – 174,483

174,483 15,358 7,590 13,747 4,229 215,407


30 June 2011


11. PROPERTY,PLANTANDEQUIPMENT(continued)

group (continued)

Leasehold land and Leasehold Furniture Office Motor buildings improvements and fixtures equipment vehicles Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

30June2010

At 1 July 2009: Cost or valuation 41,900 10,933 7,172 13,078 3,743 76,826 Accumulated depreciation – (7,445 ) (4,125 ) (10,333 ) (1,851 ) (23,754 )


At 1 July 2009, net of accumulated depreciation 41,900 3,488 3,047 2,745 1,892 53,072Additions 32,103 3,430 802 438 – 36,773Disposals – – – (10 ) – (10 )Depreciation provided during the year (2,472 ) (2,022 ) (1,189 ) (1,223 ) (888 ) (7,794 )Surplus on revaluation 37,096 – – – – 37,096Exchange realignment (4 ) 4 16 19 19 54

At 30 June 2010, net of accumulated depreciation 108,623 4,900 2,676 1,969 1,023 119,191

At 30 June 2010: Cost or valuation 109,069 14,410 8,029 13,527 3,773 148,808 Accumulated depreciation (446 ) (9,510 ) (5,353 ) (11,558 ) (2,750 ) (29,617 )


Analysis of cost or valuation: At cost – 14,410 8,029 13,527 3,773 39,739 At 30 June 2010 valuation 109,069 – – – – 109,069

109,069 14,410 8,029 13,527 3,773 148,808



11. PROPERTY,PLANTANDEQUIPMENT(continued)

group (continued)

The Group’s leasehold land and buildings are situated in Hong Kong and the Mainland China and are held under medium term leases.

The Group’s leasehold land and buildings were revalued on 30 June 2011 by BMI Appraisals Limited, independent professionally qualified valuers, on an open market value, existing use basis. A revaluation surplus of HK$47,370,000 (2010: HK$33,114,000), net of deferred tax, resulted from the valuation has been credited to other comprehensive income during the year.

If the leasehold land and buildings were measured using the cost model, the carrying amount as at30 June 2011 would have been approximately HK$62,554,000 (2010: HK$13,840,000).

The leasehold land and buildings were not pledged or subject to any charges.

The net book value of the Group’s property, plant and equipment held under finance leases included in the total amount of office equipment at 30 June 2011 was approximately HK$417,000 (2010: HK$704,000).

12. INVESTMENTPROPERTIES

Group 2011 2010 HK$’000 HK$’000

Carrying amount at beginning of financial year 9,800 6,000Addition during the year 21,550 –Net gain from a fair value adjustment 5,985 3,800Exchange realignment 7 –

Carrying amount at end of financial year 37,342 9,800

The Group’s investment properties are situated in Hong Kong and the Mainland China and are held under medium term leases. They are leased to third parties under operating leases, further summary details of which are included in note 29(a) to the financial statements.

The Group’s investment properties were revalued on 30 June 2011 by BMI Appraisals Limited, independent professionally qualified valuers, using comparison approach.


30 June 2011


13. GOODWILL

Group 2011 2010 HK$’000 HK$’000

At beginning of financial year: Cost 5,104 5,104 Accumulated impairment (2,748) (2,748 )

Net carrying amount 2,356 2,356

Net carrying amount: At beginning of financial year 2,356 2,356 Impairment during financial year recognised in profit or loss (258) –

At 30 June 2,098 2,356

At 30 June: Cost 5,104 5,104 Accumulated impairment (3,006) (2,748 )

Net carrying amount 2,098 2,356

Goodwill acquired through business combinations has been allocated to the following cash-generating units, which are reportable segments, for impairment testing:

• Components distribution

• IC application design

• IT infrastructure

The recoverable amounts of these cash-generating units have been determined based on a value in use calculation using cash flow projections which are based on financial budgets approved by management covering a period of five years and cash flows for the following five years are extrapolated based on an estimated average growth rate of 10% per annum. The discounted rate applied to cash flow projections ranges between 5% and 6%.



13. GOODWILL(continued)

Key assumptions were used in the value in use calculation of the relevant cash-generating units for 30 June 2011 and 2010. The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

• Budgeted revenue

The basis used to determine the budgeted revenue is with reference to the expected growth rate of the market in which the assessed entity operates.

• Budgeted gross margins

The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budget year, increased for expected efficiency improvements.

• Business environment

There will be no major changes in the existing political, legal and economic conditions in Hong Kong, Mainland China and Singapore in which the assessed entity carries on its business.

• discount rate

The discount rate used is before tax and reflects specific risks relating to the relevant unit.

After the assessment, impairment of goodwill in respect of the IC application design cash-generating unit amounted to HK$258,000 (2010: Nil) was recognised in profit or loss during the year.

At the end of the financial year, the carrying amounts of goodwill allocated to each of the cash-generating units are as follows:

2011 2010 HK$’000 HK$’000

Components distribution 1,039 1,039IC application design 862 1,120IT infrastructure 197 197

Total 2,098 2,356


30 June 2011


14. INTERESTSINSUBSIDIARIES

Company 2011 2010 Notes HK$’000 HK$’000

Unlisted shares, at cost (a) 73,931 73,931Capital contribution in respect of employee shared-based compensation 2,377 2,246

76,308 76,177

Amounts due from subsidiaries (b) 43,454 65,187Impairment (c) – (2,535 )

43,454 62,652

Amount due to a subsidiary (b) – 26,360

Notes:

(a) Particulars of the subsidiaries are as follows:

Nominal

Placeof valueofissued Percentage

incorporation/ ordinary/ ofequity

registration registeredshare attributableto Principal

Name andoperations capital theCompany activities

Direct Indirect

Karin Electronic Supplies Hong Kong Ordinary – 100 Distribution and trading

Company Limited HK$506,000 of electronic components

and provision of computer

data storage management

solutions and services

New Spirit Electronic Technology PRC/ Registered – 100 Provision of IC software

Development (Shenzhen) Mainland China HK$1,000,000 application design

Company Limited* solutions

Karin Electronic Trading PRC/ Registered – 100 Trading of electronic

(Shenzhen) Company Mainland China HK$2,000,000 components, computer

Limited* products and peripherals

Karin International Trading PRC/ Registered – 100 Trading of electronic

(Shanghai) Company Mainland China US$1,288,000 components, computer

Limited* products and peripherals




Notes: (continued)

(a) Particulars of the subsidiaries are as follows: (continued)

Nominal

Placeof valueofissued Percentage

incorporation/ ordinary/ ofequity

registration registeredshare attributableto Principal

Name andoperations capital theCompany activities

Direct Indirect

Kepro Solutions Limited Hong Kong Ordinary – 100 Provision of computer

HK$1,000,000 data storage management

solutions and services

Sen Spirit Technology Hong Kong Ordinary – 100 Distribution of computer

Limited HK$1,000,000 products and peripherals

Compucon Computers Limited Hong Kong Ordinary – 100 Trading of computer

HK$100,000 products and peripherals

Compusmart Limited British Virgin Ordinary – 100 Property holding

Islands/Hong Kong US$1

KARFID Technology Hong Kong Ordinary – 100 Provision of radio

Limited HK$10,000 frequency identification

consultancy and implication

services and distribution of

computer related products

Karga Solutions Limited Hong Kong Ordinary – 100 Provision of professional

HK$1 consulting service and

software products,

solutions and training

Karltec Information System PRC/ Registered – 75 Distribution of computer

(Shenzhen) Company Mainland China HK$5,000,000 products and peripherals

Limited*

IMI Kabel Pte. Ltd.^ Singapore Ordinary – 70 Distribution of industrial

S$1 cables

Matrix Power Technology PRC/ Ordinary – 53 Provision of power supply

(Shenzhen) Co. Ltd.& Mainland China RMB6,000,000 solution services

* The English names of the subsidiaries are direct translations of their registered Chinese names.

^ Audited by KBH Integra PAC.

& Established during the year.


30 June 2011



Notes: (continued)

(a) Particulars of the subsidiaries are as follows: (continued)

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected

the results for the year or formed a substantial portion of the net assets of the Group. To give details of other

subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

(b) The balances with subsidiaries are unsecured, interest-free and have no fixed terms of repayment. The carrying

amounts of the balances approximate to their fair values.

(c) The movements in the provision for impairment of investments in subsidiaries are as follows:

Company

2011 2010

HK$’000 HK$’000

At beginning of financial year 2,535 1,053

Impairment losses recognised – 1,482

Impairment losses reversed (2,535) –

At end of financial year – 2,535

15. INVENTORIES

Group 2011 2010 HK$’000 HK$’000

Trading stocks 130,110 98,340

16. TRADEANDBILLSRECEIVABLES

Group 2011 2010 HK$’000 HK$’000

Trade and bills receivables 302,456 265,384Less: Impairment (12,451) (5,410 )

290,005 259,974



16. TRADEANDBILLSRECEIVABLES(continued)

Trade receivables, which are non-interest-bearing and generally have credit terms ranging from 30 to 60 days, are recognised and carried at their original invoice amounts less allowances for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

The movements in the provision for impairment of trade receivables are as follows:

Group 2011 2010 HK$’000 HK$’000

At beginning of financial year 5,410 8,739Impairment losses recognised/(reversed) (note 6) 8,155 (1,037 )Amount written off as uncollectible (1,286) (2,229 )Exchange realignment 172 (63 )

At end of financial year 12,451 5,410

Included in the provision for impairment of trade receivables for the year ended 30 June 2010 was a provision for individually impaired trade receivables of HK$1,260,000 with a carrying amount of HK$1,260,000. The individually impaired trade receivables relate to customers that were in financial difficulties and the full amount of the receivables is expected to be irrecoverable. The Group does not hold any collateral or other credit enhancements over these balances. There was no individually impaired trade receivable included in the balance for the year ended 30 June 2011.

The aged analysis of the trade receivables that are not considered to be impaired is as follows:

Group 2011 2010 HK$’000 HK$’000

Neither past due nor impaired 163,780 167,668Less than 1 month past due 60,318 65,6421 to 3 months past due 14,918 12,550Over 3 months past due 14 1,876

239,030 247,736

Trade receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there was no recent history of default. Trade receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral or other credit enhancements over these balances.


30 June 2011


17. FACTOREDTRADERECEIVABLES

At 30 June 2011, subsidiaries of the Group factored trade receivables of approximately HK$452,000 (2010: HK$3,949,000) to a bank. As the subsidiaries of the Group still retained the risks associated with the delay in payment by the customers, the financial asset derecognition conditions as stipulated in IAS 39 have not been fulfilled.

As at 30 June 2011 and 2010, no bank advances were obtained from the factored trade receivables.

The factored trade receivables are neither past due nor impaired.

18. PREPAYMENTS,DEPOSITSANDOTHERRECEIVABLES

Group Company 2011 2010 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000

Prepayments 29,245 16,931 – 30Deposits 471 690 – –Other receivables 3,073 1,774 – –

32,789 19,395 – 30

19. FORWARDCURRENCYCONTRACTS

The Group has entered into various forward currency contracts to manage its exchange rate exposures which did not meet the criteria for hedge accounting. Changes in fair values of non-hedging currency derivatives amounting to approximately HK$1,284,000 (2010: HK$276,000) were credited to profit or loss as “other income and gains, net” (note 5) during the year.

The forward currency contracts are stated at fair values. The fair values as determined and disclosed in these financial statements are based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (Level 2 of the fair value hierarchy as defined in HKFRS 7).



20. CASHANDCASHEQUIVALENTS


Cash and bank balances other then time deposits 56,514 46,967 846 780Time deposits 17,749 20,637 – –

74,263 67,604 846 780

At 30 June 2011, the cash and bank balances of the Group denominated in Renminbi (“RMB”) amounted to approximately HK$29,636,000 (2010: HK$25,704,000). The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months (2010: for one week) depending on the immediate cash requirement of the Group, and earn interest at the respective short term time deposit rates. The bank balances are deposited with major international banks in Mainland China, Hong Kong and Singapore and state-owned banks in Mainland China with no recent history of default.

21. TRADEPAYABLES,OTHERPAYABLESANDACCRUALS


Trade payables 256,343 133,466 – –

Receipt in advance 36,449 29,556 – –Other payables 7,052 6,318 – –Accruals 22,943 14,899 5,691 2,082

Other payables and accruals 66,444 50,773 5,691 2,082

322,787 184,239 5,691 2,082

The trade and other payables are non-interest-bearing and are normally settled on terms of 30 to 60 days.


30 June 2011


22. INTEREST-BEARINGBANKANDOTHERBORROWINGS

group 2011 2010

Effective Effective interest interest rate(%) Maturity HK$’000 rate (%) Maturity HK$’000

CurrentFinance lease payables (note 23) 4.00–5.00 2012 268 4.00 – 5.00 2011 232 (Fixed) (Fixed)Bank loans, unsecured 1.03–1.07 2011 23,300 1.04 – 1.31 2010 79,900 (Fixed) (Fixed)Other borrowing, unsecured 2.60 2011 766 – (Fixed)

24,334 80,132

Non-currentFinance lease payables (note 23) 4.00–5.00 2013 291 4.00 – 5.00 2013 523 (Fixed) (Fixed)

24,625 80,655

All the bank and other borrowings of the Group as at 30 June 2011 and 2010 are denominated in Hong Kong dollars.

At 30 June 2011, bank borrowings of approximately HK$23,300,000 (2010: HK$79,900,000) were covered by cross corporate guarantees given by the Company and its subsidiaries.



23. FINANCELEASEPAYABLES

The Group leases certain of its office equipment of which the leases are classified as finance leases and have remaining lease terms of three (2010: four) years.

At 30 June 2011, the total future minimum lease payments under finance leases and their present values were as follows:

Present Present valueof value of Minimum Minimum minimum minimum lease lease lease leaseGroup payments payments payments payments 2011 2010 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000

Amounts payable: Within one year 295 272 268 232 In the second year 233 272 223 247 In the third to fifth years, inclusive 69 287 68 276

Total minimum finance lease payments 597 831 559 755

Future finance charges (38) (76 )

Total net finance lease payables 559 755

Portion classified as current liabilities (note 22) (268) (232 )

Non-current portion (note 22) 291 523

At 30 June 2011 and 2010, the finance lease obligations were secured by the underlying assets acquired.


30 June 2011


24. DEFERREDTAX

The movements in deferred tax assets and liabilities during the year are as follows:

group Consolidated Consolidated statementof statementoffinancial comprehensive position income 2011 2010 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000

Deferredtaxassets

Asset provision 1,618 482

Deferredtaxliabilities

Tax depreciation allowance in excess of related depreciation 492 657Revaluation of land and buildings and investment properties to fair value 13,555 8,490

14,047 9,147

Deferred tax credited/(charged) to profit or loss during the year (note 8) 1,322 (726 )

Deferred tax charged to equity during the year 4,791 3,981

As at 30 June 2011 and 2010, there was no significant unrecognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group has no liability to additional tax should such amounts be remitted.

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between China and the jurisdiction of the foreign investors. For the Group, the applicable rate is 10%. The Group is therefore liable for withholding taxes on dividends distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008.

As at 30 June 2011 and 2010, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group’s subsidiaries established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. At 30 June 2011, the aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised was approximately HK$2,959,000 (2010: HK$1,374,000).



24. DEFERREDTAX(continued)

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

25. SHARECAPITAL

shares

GroupandCompany 2011 2010 HK$’000 HK$’000

Authorised: 10,000,000,000 ordinary shares of HK$0.10 each 1,000,000 1,000,000

Issued and fully paid:

Numberofshares Amount 2011 2010 2011 2010 HK$’000 HK$’000

At beginning of the financial year 204,780,000 202,000,000 20,478 20,200Share option exercised 2,050,000 2,780,000 205 278

At end of the financial year 206,830,000 204,780,000 20,683 20,478

treasury shares

During the year, the Company repurchased a total of 1,681,000 (2010: 1,080,000) ordinary shares of the Company on the SGX-ST at an aggregate consideration of HK$2,376,000 (2010: HK$1,226,000) and these shares were subsequently held by the Company.

The repurchase of the Company’s shares during the current and prior years were effected by the directors, pursuant to the mandate from shareholders received at the last annual general meeting, with a view to benefiting shareholders as a whole by enhancing the net asset value per share and earnings per share of the Group.

During the year, the Company awarded 1,080,000 (2010: Nil) treasury shares of the Company to certain employees, pursuant to the Karin employee performance share plan adopted at the annual general meeting held on 21 October 2010. The aggregate fair value of treasury shares at the date of award was HK$1,523,000 (2010: Nil) and was recognised as an expense in the profit or loss.

share options

Details of the Company’s share option scheme are included in note 26 to the financial statements.


30 June 2011


26. SHAREOPTIONSCHEME

The Company operates the Scheme for the purpose of providing incentives and rewards to eligible participants who have contributed significantly to the growth and performance of the Group. Eligible participants of the Scheme include the Company’s directors, including independent directors, and other employees of the Group.

The offer of a grant of share options may be accepted within 30 days after the relevant offer date by completing, signing and returning to the Company the acceptance form accompanied by payment of HK$1.00 as consideration by the grantee. The exercise period of the share options granted at market price commences at any time after the first anniversary from the offer date of that option and the exercise period of the share options granted at below market price commences at any time after the second anniversary from the offer date of that option, provided that the options shall be exercised before the tenth anniversary of the relevant offer date, except that the options granted to independent directors shall be exercised before the fifth anniversary of the relevant offer date, or an earlier date as may be determined by the committee of the Scheme (the “Committee”).

The exercise price of the share option is determined by the Committee at its absolute discretion and fixed by the Committee at (i) the average last dealt price for the Company’s shares determined by reference to the daily official lists published by the SGX-ST for the five consecutive trading days immediately prior to the relevant offer date, or (ii) a price which is set at a discount of not exceeding 20% of (i) and approved by the shareholders at a general meeting in a separate resolution in respect of that option. The aggregate number of shares in respect of which options may be offered to a grantee for subscription in accordance with the Scheme shall be determined at the absolute discretion of the Committee.

Share options do not confer rights on the holders either to dividends, or to vote at shareholders’ meetings.

The following share options were outstanding under the Scheme during the year:

2011 2010 Weighted Weighted average average exerciseprice Number exercise price Number Singapore ofoptions Singapore of options dollar(“S$”) ’000 dollar (“S$”) ’000 pershare per share

At beginning of financial year 0.1392 10,080 0.1370 12,860Exercised during the year 0.1178 (2,050) 0.1289 (2,780 )

At end of financial year 0.1447 8,030 0.1392 10,080



26. SHAREOPTIONSCHEME(continued)

The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:

Numberofoptions Exerciseprice* Exerciseperiod ’000 S$ pershare

At30June2011 100 0.1264 3Nov2008–2Nov2011 1,200 0.1264 3Nov2008–2Nov2016 5,180 0.1608 5Apr2009–4Apr2017 1,550 0.1060 7Nov2010–6Nov2018

8,030

At 30 June 2010 200 0.1264 3 Nov 2008 – 2 Nov 2011 2,300 0.1264 3 Nov 2008 – 2 Nov 2016 5,180 0.1608 5 Apr 2009 – 4 Apr 2017 2,400 0.1060 7 Nov 2010 – 6 Nov 2018

10,080

* The exercise price of the share options is subject to adjustment in case of rights or bonus issues, or other similar

changes in the Company’s share capital.

The fair value of the share options granted during the year ended 30 June 2007 of HK$3,380,000 was fully recongised as share option expense in profit or loss in the prior years.

The fair value of the share options granted during the year ended 30 June 2009 was approximately HK$783,000 of which approximately HK$131,000 (2010: HK$392,000) was recognised as a share option expense in profit or loss during the year.

The 2,050,000 (2010: 2,780,000) share options exercised during the year resulted in the issue of 2,050,000 (2010: 2,780,000) ordinary shares of the Company and new share capital of HK$205,000 (2010: HK$278,000) and share premium of HK$1,840,000 (2010: HK$2,453,000) (before issue expenses), as further detailed in note 27 to the financial statements.

At the end of the reporting period, the Company had 8,030,000 (2010: 10,080,000) share options outstanding under the Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 8,030,000 (2010: 10,080,000) additional ordinary shares of the Company and additional share capital of HK$803,000 (2010: HK$1,080,000) and share premium of HK$6,531,000 (2010: HK$6,803,000) (before issue expenses).

At the date of approval of these financial statements, the Company had 7,080,000 share options outstanding under the Scheme, which represent approximately 3.4% of the Company’s shares in issue as at that date.


30 June 2011


27. RESERVES

(a) group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity of the financial statements.

(i) The Group’s contributed surplus represents the difference between the nominal value of the issued share capital and the contributed surplus account of the Company acquired pursuant to a group restructuring, and the nominal value of the shares of the Company issued in exchange thereof.

(ii) The land and buildings revaluation reserve is used to record increments and decrements in the fair value of leasehold land and buildings to the extent that they offset each other.

(iii) In accordance with the relevant PRC regulations, each of the Group’s PRC subsidiaries is required to transfer not less than 10% of its profit after tax, as determined in accordance with PRC accounting standards and regulations, to the general reserve until such reserve reaches 50% of its registered capital. The quantum of the annual transfer is subject to the approval of the board of directors of the PRC subsidiaries in accordance with their respective articles of association. No transfer was made in the current and prior years as the general reserve of the relevant subsidiaries had reached 50% of its registered capital.

(b) company

Share Share premium Contributed option Retained Proposed Notes account surplus reserve profits dividends Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 July 2009 31,637 36,311 3,641 8,683 10,908 91,180

Profit for the year and total comprehensive income for the year – – – 16,209 – 16,209

Issue of shares under the Scheme 2,453 – (761 ) – – 1,692Equity-settled share option arrangements 26 – – 392 – – 392Final 2009 dividend paid – – – (48 ) (5,454 ) (5,502 )Special 2009 dividend paid – – – (48 ) (5,454 ) (5,502 )Interim 2010 dividend paid 9 – – – (6,524 ) – (6,524 )Proposed final 2010 dividend 9 – – – (10,185 ) 10,185 –

At 30 June 2010 and at 1 July 2010 34,090 36,311 3,272 8,087 10,185 91,945

Profit for the year and total comprehensive income for the year – – – 23,510 – 23,510

Issue of shares under the Scheme 1,840 – (601) – – 1,239Distribution of treasury shares 297 – – – – 297Equity-settled share option arrangements 26 – – 131 – – 131Final 2010 dividend paid 9 – – – – (10,185) (10,185)Interim 2011 dividend paid 9 – – – (10,327) – (10,327)Proposed final 2011 dividend 9 – – – (14,360) 14,360 –

At 30 June 2011 36,227 36,311 2,802 6,910 14,360 96,610



28. CONTINGENTLIABILITIES

At the end of the reporting period, contingent liabilities not provided for in the consolidated financial statements were as follows:


Bank guarantee given in lieu of a utility deposit 207 207 – –Guarantees given to banks in connection with facilities granted to subsidiaries – – 529,543 397,615Guarantees given to suppliers in connection with credit facilities granted to subsidiaries – – 181,414 156,125

207 207 710,957 553,740

As at 30 June 2011, the guarantees given to banks and suppliers in connection with facilities granted to subsidiaries by the Company were utilised to the extents of approximately HK$44,623,000 (2010: HK$139,696,000) and HK$154,598,000 (2010: HK$53,523,000), respectively.

29. OPERATINGLEASEARRANGEMENTS

(a) as lessor

The Group leases its investment properties (note 12 to the financial statements) under operating lease arrangement, with leases negotiated for a term of one year.

At 30 June 2011, the Group had no future minimum lease receivables under non-cancellable operating leases with its tenants (2010: HK$68,000 falling due within one year).

(b) as lessee

The Group leases certain of its warehouses, offices and office equipment under operating lease arrangements with leases negotiated for terms ranging from one to four years.

At 30 June 2011, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Group 2011 2010 HK$’000 HK$’000

Within one year 1,502 2,330In the second to fifth years, inclusive 318 1,025

1,820 3,355


30 June 2011


30. CAPITALCOMMITMENTS

The Group had no capital commitments at 30 June 2011 and 2010.

31. RELATEDPARTYTRANSACTION

(a) transaction with related party

In addition to the related party transactions and balances disclosed elsewhere in these financial statements, the Group had the following material transaction with a related party during the year:

2011 2010 HK$’000 HK$’000

Consulting fee paid to the father of a director and shareholder of a subsidiary of the Company 102 93

The above transaction was conducted on terms as agreed between the Group and the related party.

(b) compensation of key management personnel of the group 2011 2010 HK$’000 HK$’000

Short term employee benefits 13,633 13,326Post-employment benefits 132 132Equity-settled share option expense 16 256Treasury shares awarded 1,058 –

Total compensation paid to key management personnel 14,839 13,714



31. RELATEDPARTYTRANSACTION(continued)

(c) remuneration of directors

The remuneration of the directors of the Company analysed into the following bands is disclosed in compliance with Rule 1207(11) of Chapter 12 of the Listing Manual of the SGX-ST:

Numberofdirectors Executive Independent Total

2011

Below S$250,000 (HK$1,578,550) – 3 3S$250,000 to below S$500,000 (HK$1,578,550 to below HK$3,157,100) 3 – 3

3 3 6

2010

Below S$250,000 (HK$1,381,000) – 3 3S$250,000 to below S$500,000 (HK$1,381,000 to below HK$2,762,000) 3 – 3

3 3 6

Other than the foregoing, there were no other principal interested party relationships where control over financial and operating policies existed as at the end of the reporting period.

In the opinion of the directors, the above related party transactions were entered into in the ordinary course of the Group’s business and were in accordance with the terms of arrangements governing the transactions.


30 June 2011


32. FINANCIALINSTRUMENTSBYCATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

2011

Group Company Financial assetsat fairvalue through Loansand Loansand profitorloss receivables Total receivables HK$’000 HK$’000 HK$’000 HK$’000

FinancialassetsTrade and bills receivables – 290,005 290,005 –Factored trade receivables – 452 452 –Financial assets included in prepayments, deposits and other receivables – 3,544 3,544 –Forward currency contracts 1,996 – 1,996 –Amounts due from subsidiaries – – – 43,454Cash and cash equivalents – 74,263 74,263 846

1,996 368,264 370,260 44,300

Group Company

Financial Financial liabilitiesat liabilitiesat amortised amortised cost cost HK$’000 HK$’000

FinancialliabilitiesTrade payables 256,343 –Financial liabilities included in other payables and accruals 29,995 5,691Interest-bearing bank and other borrowings 24,066 –Finance lease payables 559 –

310,963 5,691



32. FINANCIALINSTRUMENTSBYCATEGORY(continued)

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows: (continued)

2010

Group Company Financial assets at fair value through Loans and Loans and profit or loss receivables Total receivables

HK$’000 HK$’000 HK$’000 HK$’000

FinancialassetsTrade and bills receivables – 259,974 259,974 –Factored trade receivables – 3,949 3,949 –Financial assets included in prepayments, deposits and other receivables – 2,464 2,464 –Forward currency contracts 712 – 712 –Amounts due from subsidiaries – – – 62,652Cash and cash equivalents – 67,604 67,604 780

712 333,991 334,703 63,432

Group Company

Financial Financial liabilities at liabilities at amortised amortised cost cost HK$’000 HK$’000

FinancialliabilitiesTrade payables 133,466 –Financial liabilities included in other payables and accruals 21,217 2,082Interest-bearing bank and other borrowings 79,900 –Finance lease payables 755 –

235,338 2,082


30 June 2011


33. FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES

The Group’s principal financial instruments mainly comprise interest-bearing bank and other borrowings, cash and cash equivalents and short term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

(a) interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations with floating interest rates. The Group monitors the movements in interest rates on an ongoing basis and evaluates the exposure for its debt obligations.

The following table demonstrates the sensitivity to a reasonably possible change in Hong Kong dollar interest rate, with all other variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings).

Group Increase/ Increase/ (decrease) (decrease)in inprofit basispoints beforetax HK$’000

Yearended30June2011

HK$ 25 (60)HK$ (25) 60

Yearended30June2010

HK$ 25 (200 )HK$ (25 ) 200



33. FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES(continued)

(b) foreign currency risk

The Group’s exposure to market risk for changes in foreign currency exchange rate relates primarily to certain trade receivables and payables and certain bank balances in currencies other than the units’ functional currencies. The Group uses foreign currency forward contracts to reduce its foreign currency risk, but the transactions do not qualify for hedge accounting in accordance with IAS 39.

The following table demonstrates the sensitivity at the end of the reporting period to reasonably possible changes in the United States dollar (“US$”), Japanese yen (“JPY”), RMB and S$ exchange rates, with all other variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities).

Group Increase/ Increase/ (decrease)in (decrease) exchange inprofit rate beforetax % HK$’000

Yearended30June2011

If HK$ weakens against US$ 0.5 (6)If HK$ strengthens against US$ (0.5) 6

If HK$ weakens against JPY 7.8 (38)If HK$ strengthens against JPY (7.8) 38

If RMB weakens against US$ 5.4 (595)If RMB strengthens against US$ (5.4) 595

If S$ weakens against US$ 11.4 845If S$ strengthens against US$ (11.4) (845)

Yearended31June2010

If HK$ weakens against US$ 0.5 498If HK$ strengthens against US$ (0.5 ) (498 )

If HK$ weakens against JPY 9.8 139If HK$ strengthens against JPY (9.8 ) (139 )

If RMB weakens against US$ 1.1 (213 )If RMB strengthens against US$ (1.1 ) 213

If S$ weakens against US$ 5.4 78If S$ strengthens against US$ (5.4 ) (78 )


30 June 2011



(c) credit risk

The carrying amounts of trade receivables included in the consolidated statement of financial position represents the Group’s maximum exposure to credit risk in relation to the Group’s financial assets. The Group has no significant concentration of credit risk in relation to trade receivables due to the Group’s large customer base. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector.

The Group performs ongoing credit evaluations of its customers’ financial condition and requires no collateral from its customers. The allowance for doubtful debts is based upon a review of the expected collectability of all trade receivables. In this regard, the directors of the Company consider that the Group’s credit risk is minimal.

With respect to credit risk arising from the other financial assets of the Group, comprising bank balances and other receivables, the Group’s exposure to credit risk arises from default of other parties, with a maximum exposure being equal to the carrying amounts of these instruments. There is no significant concentration of credit risk within the Group in relation to the other financial assets. The Company is also exposed to credit risk through the granting of financial guarantees, further details of which are disclosed in note 28 to the financial statements.

Further quantitative data in respect of the Group’s exposure to credit risk arising from trade receivables are disclosed in note 16 to the financial statements.

(d) liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial liabilities and financial assets (e.g., trade receivables) and projected cash flows from operations.

The Group adopts a prudent liquidity risk management which implies maintaining sufficient cash and the ability to apply for bank loan facilities if necessary.

The Group’s financial liabilities as at 30 June 2011, based on the contractual undiscounted payments, of approximately HK$310,672,000 (2010: HK$234,815,000) and HK$291,000 (2010: HK$523,000) were matured within one year and over one year, respectively. Further details of the financial liabilities of the Group are set out in note 32 to the financial statements. The balances due within one year and over one year approximate to their carrying balances as the impact of the discount is not significant. In addition, the Group has bank guarantee given in lieu of a utility deposit of HK$207,000 (2010: HK$207,000), which is repayable on demand.

The Company’s financial liabilities as at 30 June 2011, based on the contractual undiscounted payments, of approximately HK$5,691,000 (2010: HK$2,082,000) were matured within one year. Further details of the financial liabilities of the Company are set out in note 32 to the financial statements. The balances due within one year approximate to their carrying balances as the impact of the discount is not significant. In addition, the Company has guarantees given to banks and suppliers in connection with facilities granted to subsidiaries utilised as to HK$253,655,000 (2010: HK$193,219,000), in aggregate, which are repayable on demand.




(e) capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended 30 June 2011 and 2010.

The Group monitors its capital using a gearing ratio, which is interest-bearing bank and other borrowings and finance lease payables divided by the total equity. The Group’s policy is to keep the gearing ratio at a reasonable level. The gearing ratios as at the end of the reporting periods were as follows:

Group 2011 2010 HK$’000 HK$’000

Interest-bearing bank and other borrowings 24,066 79,900Finance lease payables 559 755

24,625 80,655

Total equity 382,603 299,579

Gearing ratio 0.06 0.27

34. EVENTSAFTERTHEREPORTINGPERIOD

(a) On 28 July 2011, an investment holding subsidiary, KIMIG Investment Limited was incorporated by the Company for a proposed establishment of a joint venture in the PRC. The establishment of the joint venture was not completed as at the date of approval of these financial statements.

(b) From 1 July 2011 up to the date of approval of these financial statements, the Company issued 950,000 new shares, upon the exercise by the option holders of the share options of the Company. 850,000 and 100,000 new shares were issued at the exercise prices of S$0.1060 per share and S$0.1264 per share, respectively.

(c) From 1 July 2011 up to the date of approval of these financial statements, the Company repurchased, in aggregate, 200,000 ordinary shares of the Company on the SGX-ST at an aggregate consideration of HK$278,652. These shares were held by the Company as treasury shares. As at the date of approval of these financial statements, the Company held 1,881,000 treasury shares.

35. APPROVALOFTHEFINANCIALSTATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 1 September 2011.


FINANCIAL SUMMARY

Five YeAR FiNANCiAL SUMMARY

A summary of the results and of the assets, liabilities and non-controlling interests of the Group for the last five financial years, as extracted from the published audited financial statements, is set out below. This summary does not form part of the audited financial statements.

Year ended 30 June 2011 2010 2009 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUE 2,167,430 1,562,157 1,566,262 1,893,938 1,444,106Cost of sales (1,998,094 ) (1,418,103 ) (1,423,597 ) (1,711,598 ) (1,303,417 )

Gross profit 169,336 144,054 142,665 182,340 140,689

Other income and gains, net 15,422 8,468 6,589 8,835 8,010Selling and distribution costs (49,648 ) (53,896 ) (50,094 ) (52,894 ) (41,048 )Administrative expenses (64,916 ) (55,021 ) (55,156 ) (56,817 ) (45,784 )Other expenses, net (8,801 ) (974 ) (6,215 ) (4,726 ) (8,710 )Finance costs (780 ) (256 ) (1,360 ) (2,917 ) (2,639 )Share of losses of associates – – – (67 ) (167 )

PROFIT BEFORE TAX 60,613 42,375 36,429 73,754 50,351

Income tax expense (10,246 ) (9,508 ) (5,761 ) (11,583 ) (10,124 )

PROFIT FOR THE YEAR 50,367 32,867 30,668 62,171 40,227

Profit/(loss) for the year attributable to: Owners of the Company 51,599 33,803 32,351 61,334 41,117 Non–controlling interests (1,232 ) (936 ) (1,683 ) 837 (890 )

50,367 (32,867 ) 30,668 62,171 40,227


FINANCIAL SUMMARY

As at 30 June 2011 2010 2009 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Non–current assets 224,862 131,829 81,582 58,162 50,587

Current assets 529,615 449,974 368,193 644,139 429,207Current liabilities (357,536 ) (272,554 ) (194,074 ) (458,910 ) (291,179 )

Net current assets (172,079 ) 177,420 174,119 185,229 138,028

Total assets less current liabilities 396,941 309,249 255,701 243,391 188,615Non–current liabilities (14,338 ) (9,670 ) (5,796 ) (5,093 ) (3,790 )

Net assets 382,603 299,579 249,905 238,298 184,825

Equity attributable to equity holders of the Company 381,740 300,515 249,905 236,615 184,825Non-controlling interests 863 (936 ) – 1,683 –

Total equity 382,603 299,579 249,905 238,298 184,825



STATISTICS OF SHAREHOLDERS AS AT 7 SEPTEMBER 2011

Authorised share capital : HK$1,000,000,000Issued and Fully Paid-up Capital : HK$20,609,900Class of Shares : Ordinary share of HK$0.10 eachVoting Rights : One Vote per ordinary share The Company cannot exercise any voting rights in respect of ordinary shares held by it as treasury shares.

DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS

No. of Shares (excluding No. of Ordinary % of treasury % of

Size of Holdings Shareholders Holders shares) Shares*

1 – 999 1 0.14 250 –1,000 – 10,000 360 49.66 1,633,000 0.7910,001 – 1,000,000 347 47.86 20,858,000 10.121,000,001 and above 17 2.34 183,607,750 89.09

TOTAL 725 100.00 206,099,000 100.00

SUBSTANTIAL SHAREHOLDERS

(As recorded in the Register of Substantial Shareholders as at 7 September 2011)

Direct Interest Deemed Interests No. of shares held (excluding No. of treasury

Name shares held % * shares) % *

Asia Platform Investment Limited 70,639,950 34.27 – –

Kiki Holding (PTC) Limited 70,639,950 34.27 – –

Ng Yuk Wing, Philip – – 72,142,950 (1) (3) 35.00

Ng Kin Wing, Raymond – – 70,639,950 (2) 34.27

Notes:–

(1) Asia Platform Investment Limited is an investment holding company which is wholly owned by Mr. Philip Ng.

(2) Deemed to be interested as Kiki Holding (PTC) Limited is the trustee of the Kiki Holding Unit Trust, all units of which are held by discretionary trust known as SUELO Trust whose discretionary objects are Mr. Raymond Ng’s immediate family members.

(3) Deemed to be interested as Mdm Leung Tak Ching (“Mdm Leung”) is the spouse of Mr. Philip Ng. Mdm Leung holds 1,503,000 ordinary shares up to the date of this report.

* Percentages are calculated based on the total number of issued shares, excluding treasury shares of the Company as at 7 September 2011.



LIST OF 20 LARGEST SHAREHOLDERS

No. Shareholder’s Name Number of Shares Held %*

1 ASIA PLATFORM INVESTMENT LIMITED 70,639,950 34.272 KIKI HOLDING (PTC) LIMITED 70,639,950 34.273 DBS NOMINEES PTE LTD 8,644,000 4.194 NG ENG SENG 7,905,000 3.845 SEET CHRISTINA 4,000,000 1.946 LEE YIU CHUNG EUGENE 2,995,000 1.457 WEE HIAN KOK 2,989,000 1.458 OCBC SECURITIES PRIVATE LTD 2,157,000 1.059 RIGEL TECHNOLOGY (S) PTE LTD 2,140,000 1.0410 CHENG KIM MAN EDWIN 2,132,000 1.0311 DBS VICKERS SECS (S) PTE LTD 1,632,775 0.7912 LEUNG TAK CHING 1,503,000 0.7313 TAN MING KIRK RICHARD 1,350,000 0.6614 YEO WHEE KIAK 1,328,000 0.6415 KIM SOO KOONG 1,290,000 0.6316 NG KAM WING ALLAN 1,139,075 0.5517 CIMB SECURITIES (SINGAPORE) PTE LTD 1,123,000 0.5418 LEUNG HAWK FAIN 650,000 0.3219 IE TJOEN SENG @ GAN TJOEN SENG 625,000 0.3020 KWAN TUCK LOCK MICHAEL 520,000 0.25

TOTAL 185,402,750 89.94

* Percentage is based on 206,099,000 Shares (excluding shares held as treasury shares) as at 7 September 2011. Treasury

shares as at 7 September 2011 is 1,881,000 shares.

TREASURY SHARES

Number of ordinary shares purchased and held in treasury as at 7 September 2011: 1,881,000

Percentage of such holding against the total number of issued ordinary shares (excluding ordinary shares held in treasury): 0.91%

COMPLIANCE WITH RULE 723 OF THE SGX-ST LISTING MANUAL

Based on information available and to the best knowledge of the Company as at 7 September 2011, approximately 29.12%* of the ordinary shares of the Company are held by the public. The Company is therefore in compliance with Rule 723 of the SGX-ST Listing Manual.

* Percentages are calculated based on the total number of issued shares, excluding treasury shares of the Company as at

7 September 2011.


INFORMATION ABOUT INVESTMENT PROPERTIES HELD

Major properties held for investMent purpose:

location purpose of property tenure of land term of lease

5th and 6th Floors, Office premises Leasehold The property is held fromKarin Building, the government for a termNo. 166 Wai Yip Street, of 21 years renewable forKwun Tong, Kowloon, 14 years commencing onHong Kong 1 July 1962, which has been statutorily extended to 30 June 2047.

Units 701 to 704 and Office premises Leasehold The property is held from709 to 710 the government for a termon Level 7, Tower 1, of 50 years commencing on Kerry Everbright City, 24 September 1992 andNo. 218 Tian Mu Road expiring on 23West, September 2042.Zhabei District,Shanghai,The PRC



NOTICE IS HEREBY GIVEN that an Annual General Meeting of the Company will be held at Mandarin Orchard Singapore, Grange Ballroom, Level 5, Main Tower, 333 Orchard Road, Singapore 238867 on Thursday, 13 October 2011 at 10.30 a.m. to transact the following businesses:

AS ORDINARY BUSINESS1. To receive and adopt the Audited Financial Statements of the Company for the

financial year ended 30 June 2011 together with the Directors’ Report and the Auditors’ Report thereon.

2. To approve a final dividend of HK7.0 cents per ordinary share for the financial year ended 30 June 2011.

3. To approve Directors’ Fees of HK$721,000 for the financial year ended 30 June 2011.

4. To re-elect the following Directors retiring pursuant to Bye-Law 86 of the Company’s Bye-Laws, and who, being eligible, offer themselves for re-election:

(i) Mr. Ng Kin Wing, Raymond

(ii) Ms. Wong Bee Eng (See explanatory Note 1)

5. To re-appoint Messrs Ernst & Young, Hong Kong as auditors of the Company and to authorise the Directors to fix their remuneration.

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)



AS SPECIAL BUSINESS

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

6. Authority to allot and issue shares

“That in accordance with Rule 806 of the Listing Manual (“Listing Manual”) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), approval be and is given to the Directors to issue:–

(a) shares in the Company (whether by way of bonus, rights or otherwise); or

(b) convertibles securities; or

(c) additional convertible securities arising from adjustments made to the number of convertible securities previously issued in the events of rights, bonus or capitalization issues; or

(d) shares arising from the conversion of convertible securities,

(Resolution 7)

at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that:–

(i) the aggregate number of shares and convertible securities that may be issued shall not be more than 50% of the total number of issued shares excluding treasury shares, in the capital of the Company or such other limit as may be prescribed by the SGX-ST as at the date the general mandate is passed;

(ii) the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to existing shareholders shall not be more than 20% of the total number of issued shares excluding treasury shares in the capital of the Company or such other limit as may be prescribed by the SGX-ST as at the date the general mandate is passed;

(iii) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraphs (i) and (ii) above, total number of issued shares excluding treasury shares in the capital of the Company shall be calculated based on the total number of issued shares excluding treasury shares in the capital of the Company as at the date the general mandate is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or employee stock options in issue as at the date the general mandate is passed and any subsequent bonus issue, consolidation or subdivision of the Company’s shares; and

(iv) unless earlier revoked or varied by the Company in general meeting, such authority shall continue in force until the next Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held, whichever is earlier.” (See Explanatory Note 2)



7. Authority to grant options and issue shares under the Karin Employee Share Option Scheme

“That the Directors of the Company be and are hereby authorised to offer and grant options in accordance with the provisions of the Karin Employee Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares as may be required to be issued pursuant to the exercise of the options under the Scheme provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15% of the total number of issued shares excluding treasury shares in the capital of the Company from time to time.” (See Explanatory Note 3)

8. “That, subject to and contingent upon the passing of Resolution 8 above, the exercise price of the options may, at the discretion of the Committee (as defined in the Scheme), be set at a discount subject to the following conditions:

(a) the maximum discount shall not exceed 20% of the market price, which is the average of the last dealt prices for a share determined by reference to the daily Official List published by the SGX-ST for a period of five (5) consecutive market days immediately prior to the relevant date of grant of the option (as determined in accordance with the rules of the Scheme); and

(b) in no event shall the exercise price be less than the nominal value of each share.”

(Resolution 8)

(Resolution 9)



9. Proposed renewal of the 2009 Share Buyback Mandate (see Appendix)

“That:

(a) pursuant to the Company’s Bye-laws (the “Bye-laws”), the Companies Act 1981 of Bermuda (the “Companies Law”) and the Listing Manual of the SGX-ST, approval be and is hereby given for the renewal of the 2009 Share Buyback Mandate (as hereinafter defined) and the directors of the Company (the “Directors”) be authorised to exercise all the powers of the Company to purchase or otherwise acquire issued ordinary shares, fully paid in the capital of the Company (“Shares”) not exceeding in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) on-market purchase(s) (“Market Purchase”), transacted on the SGX-ST through its ready market or, as the case may be, any other stock exchange on which the Shares may for the time being be listed and quoted, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

(ii) off-market purchase(s) (“Off-Market Purchase”) (if effected otherwise than on the SGX-ST) in accordance with an equal access scheme(s) as may be determined or formulated by the Directors as they may consider fit and in the interests of the Company, which scheme(s) shall satisfy all the conditions prescribed by the Bye-laws and the Listing Manual,

and otherwise in accordance with all other laws and regulations (the “Share Buyback Mandate”);

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this resolution and expiring on the earlier of:

(i) the date on which the next annual general meeting of the Company (“AGM”) is held or required by law or the Bye-laws to be held;

(ii) the date on which Share purchases or acquisitions pursuant to the Share Buyback Mandate are carried out to the full extent mandated; or

(iii) the date on which the authority conferred by the Share Buyback Mandate is varied or revoked at a general meeting.

(the “Relevant Period”).

(Resolution 10)



In this resolution:

“Prescribed Limit” means ten per cent. (10%) of the issued ordinary share capital of the Company as at the date of passing of this resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Law, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase: 105% of the Average Closing Price (as hereinafter defined);

(ii) in the case of an Off-Market Purchase: 120% of the Highest Last Dealt Price (as hereinafter defined), where:

“Average Closing Price” means the average of the closing market prices of a Share over the last five (5) market days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant five-day period;

“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the market day on which there were trades in the Shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase; and

“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

(c) the Directors be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or any of them may consider expedient, necessary, incidental or in the interests of the Company to give effect to the transactions contemplated and/or authorised by this resolution.” (See Explanatory Note 4)



10. Authority to allot and issue Shares under the Karin Performance Share Plan

“That the Directors of the Company be and are hereby authorised to grant awards in accordance with the provisions of the Karin Performance Share Plan (the “Plan”) and to allot and issue such number of fully paid Shares from time to time as may be required to be issued pursuant to the vesting of awards under the Plan provided always that the aggregate number of new Shares to be allotted and issued pursuant to the Plan shall not exceed 15% of the total number of issued Shares (excluding treasury shares) of the Company from time to time and that such authority shall, unless revoked or varied by the Company in general meeting, shall continue in full 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 5)

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

(Resolution 11)

BY ORDER OF THE BOARD

Wong Chi Cheung, ClarenceChan Lai YinJoint Company Secretaries

Singapore, 23 September 2011



BOOKS CLOSURE DATE

Subject to approval of Shareholders at the Annual General Meeting, the Register of Members and Share Transfer Books of the Company will be closed on 1 November 2011, for the purpose of determining Members’ entitlements to a final dividend of HK7.0 cents per ordinary share (the “Proposed Final Dividend”).

Duly completed registrable transfers in respect of the shares in the Company received up to the close of business at 5.00 p.m. on 31 October 2011 by the Company’s Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.), 8 Cross Street, #11-00 PWC Building, Singapore 048424 will be registered to determine Members’ entitlements to the Proposed Final Dividend. Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with shares in the Company as at 5.00 p.m. on 31 October 2011 will be entitled to the Proposed Final Dividend.

The Proposed Final Dividend, if approved at the Annual General Meeting, will be paid on 10 November 2011.

Explanatory notEs on BusinEssEs to BE transactEd:–

1. Ms. Wong Bee Eng, if re-elected, she will be a member of the Audit Committee and Nominating Committee and Chairman of the Remuneration Committee effective from 13 October 2011. Ms. Wong Bee Eng will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

2. Resolution no. 7 is to authorise the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to issue shares and/or convertible securities in the Company up to an amount not exceeding in aggregate 50 percent of the total number of issued shares excluding treasury shares in the capital of the Company of which the total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall not exceed 20 percent of the issued share capital of the Company at the time the resolution is passed, for such purposes as they consider would be in the interests of the Company. This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.

3. Resolution no. 8, if passed, will empower the Directors of the Company to offer and grant options under the Scheme and to allot and issue shares pursuant to the exercise of such options under the Scheme not exceeding 15 percent of the total number of issued shares excluding treasury shares in the capital of the Company from time to time.

4. Resolution 10, if passed, will empower the Directors, from the date of the above meeting until the next AGM, to repurchase Shares by way of Market Purchases or Off-Market Purchases of up to ten per cent. (10%) of the issued ordinary share capital of the Company at such price up to the Maximum Price. Information relating to this proposed resolution is set out in the appendix attached to the annual report.

5. Resolution 11, if passed, will empower the Directors, from the date of the above meeting until the next AGM, to grant awards and to allot and issue such number of fully paid Shares from time to time as may be required to be issued pursuant to the Karin Performance Share Plan not exceeding 15% of the total number of issued Shares (excluding treasury shares).

notEs:–

1. If a Member being a Depositor whose name appears in the Depository Register (as defined in Bye-Laws of the Company) wishes to attend and vote at the Annual General Meeting (the “Meeting”), then he/she/it should complete the Proxy Form and deposit the duly completed Proxy Form at the office of the Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.) at 8 Cross Street, #11-00 PWC Building, Singapore 048424, at least forty-eight (48) hours before the time of the Annual General Meeting.

2. If a Depositor wishes to appoint a proxy/proxies, then the Proxy Form must be signed and deposited at the office of the Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.), at least forty-eight (48) hours before the time of the Annual General Meeting.

Karin Technology Holdings Limited2nd Floor, Karin Building, 166 Wai Yip Street

Kwun Tong, Kowloon, Hong KongTel: (852) 2763 3188 / (852) 2389 8252

Fax: (852) 2372 6389www.karingroup.com

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