quality - morningstar, inc

ANNUAL REPORT 2001

Quality productsand service begin withquality thinking.

Startech Electronics Ltd(Reg No: 1999/06220H)

C O N T E N T S

Corporate Profile 2

Corporate Structure 3

Corporate Information 4

Board of Directors 5

Chairman’s Statement 6

Financial Highlights 8

Financial Report 9

Notice of Annual General Meeting

Proxy Form

Brought to you by Global Reports

Our Vision At Startech, We strive to be the “Total Electronics

Manufacturing Services Provider and Distributor of Quality Products”

to our valued customers; by leveraging on our investments in

people, technology, facilities and our constant pursuit for quality;

thereby gaining the support and confidence of our customers.


The Group now has three core businesses

Printed Circuit Board Product AssemblyChip-on FlexPrototype production runsProduct development supportSupply chain management service through sourcing and procurement of electronicscomponents

Distributing Teknek contact cleaning machines and Cemco hot air solder leveling machinesand its related maintenance support, parts and consumables

We design and customise LV Switchgear systems largely for government infrastructureprojects.

● ElectronicsManufacturing

Services

● Distribution

● Switchgear Designand Assembly

Established in 1989 as Electronics Manufacturing Services, Startech broadened its business portfolio in 1999 when it acquiredthe Distribution and Switchgear business from the co-founders of those divisions.

Today, Startech has expanded its earnings base from Electronics Manufacturing Services to include, Distribution of Machineryand associated consumables used in the electronics Manufacturing industry and Specialty chemicals used in wafer fabricationprocess and Switchgear Design & Assembly which are used mainly in governmental infratstructure projects.

On 30 July 2001 Startech was admitted to the Official List of the SGX SESDAQ by way of an invitation in respect of 13,000,000new shares of $0.10 each at $0.32

Currently the Group has operations in Singapore and People’s Republic of China.

Our Goal is to provide high quality services and products by leveraging on our investments in people, technology and facilities.

To position itself for growth, the Group will continue to pursue new business opportunities both in Singapore and China.The expansion of our China operations being the key to the Electronics Manufacturing Services.

Startech attributes its success to providing high quality services and products through its pool of committed staff. The Groupcontinues to expand and enhance its staff through training and recruitment. This together with its sound management team,will enable the Group to continue offering its customers quality and value-added services.

StartechElectronics Ltd

2CORPORATE PROFILE



(Reg No: 1999/06220H)

PV StartechMarketing

Limited

Hi-TechDistribution

Pte Ltd

Switech Systems& Marketing

Pte Ltd

WeinixingElectronics(Shenzhen)

Co., Ltd

ChemitecIndustrial

Private Limited

StartechPower

Pte Ltd

100% 100% 80%

StartechManufacturing

Pte Ltd

100% 100% 100%100%

StartechElectronics Ltd3

CORPORATE STRUCTURE


Board of Directors Saw Chee Keang (Executive Chairman & CEO)Choo Tian WangNg Chee FattWong Kwan Seng Robert (appointed on 2.7.2001)Ong Kian Min (appointed on 2.7.2001)Teo Boon Tieng (appointed on 2.7.2001)

Audit Committee Wong Kwan Seng Robert (Chairman)Ong Kian MinTeo Boon Tieng

Nominating Committee Saw Chee KeangWong Kwan Seng RobertOng Kian MinTeo Boon Tieng

Remuneration Wong Kwan Seng RobertCommittee Ong Kian Min

Teo Boon Tieng

Secretaries Foo Fei Ying Sandy (appointed on 14.2.2001)Kwang Yeit Lam Madelyn (appointed on 14.2.2001)

Registered Office 13 Woodlands WalkSingapore 738318

Share Registrar Lim Associates (Pte) Ltd10 Collyer Quay #19-08Ocean BuildingSingapore 049315

Auditors BDO InternationalCertified Public Accountants112 Middle Road #02-01Midland HouseSingapore 188970

Partner-in-charge : Lee Joo Hai

Principal Banker Malayan Banking Berhad


4CORPORAT E I N F O R M A T I O N


Saw Chee Keang Mr Saw is the Executive Chairman and Chief Executive Officer of the Company. He is the founder of the electronicsmanufacturing services division and has more than 17 years experience in the electronics industry. Mr Saw overseesthe Group’s operations with a primary responsibility for charting the strategic growth of the Group. He is alsoactively involved in marketing and business development.

Choo Tian Wang Mr Choo Tian Wang is an Executive Director of Company and of the Group. Mr Choo graduated from the SingaporePolytechnic with a Diploma in Chemical Process Technology (Polymer) in 1978. He also holds a Diploma in Sales &Marketing from the Marketing Institute of Singapore.He is the co-founder of the Distribution division and has more than 19 years experience in the electronics businesswhich he can draw on to spearhead the future development of our distribution business brings. His responsibilitiesinclude marketing and development and assisting the CEO on the overall operations of the Group.

Ng Chee Fatt Mr Ng is a substantial shareholder and Non-Executive Director of the Company. Mr Ng graduated from the SingaporePolytechnic with a Diploma in Electronics and Communications Engineering. He is the founder and managing directorof Datasource Electronics Pte Ltd and brings with him an extensive experience in the electronics industry that couldbenefit our Group in terms of setting strategic directions for our development.

Ong Kian Min Independent DirectorA President and Singapore Police Scholar, Mr Ong is currently a consultant with legal firm Drew & Napier LLC. He isalso a Member of Parliament for Tampines Group Representation Constituency.

Wong Kwan Seng Robert Mr Wong Kwan Seng Robert is an Independent Director of our Company and chairman of our Audit Committee.He is also a member of the remuneration committee. A graduate from the National University of Singapore, hepractices law under his own firm, Messrs Robert Wong & Company. Mr Wong practices mainly corporate law withparticular emphasis on corporate finance. He has acted as solicitor in numerous initial public offers, rights issues,issues of debentures, takeovers, mergers and acquisitions and joint ventures.

Teo Boon Tieng Mr Teo Boon Tieng is an Independent Director of our Company and member of the remuneration committee. He isa Certified Public Accountant (“CPA”) with the Institute of Certified Public Accounts of Singapore (“ICPAS”) and aFellow Member of the Association of Chartered and Certified Accountants (“ACCA”), UK. He practices under his firm,Messrs Teo Boon Tieng & Co. Mr Teo also holds a Bachelor of Science (Honours) Degree in Estate Management fromthe National University of Singapore.Mr Teo brings with him a wealth of experience with his background in audit and compliance matters, he is able tocontribute to the Group by helping to ensure adoption of, and adherence to, high standards of corporate governancewithin our Group.

FRONT ROW, LEFT TO RIGHT:

Wong Kwan Seng Robert,Saw Chee Keang,

Ng Chee Fatt,

BACK ROW, LEFT TO RIGHT:

Teo Boon Tieng,Choo Tian Wang,

Ong Kian Min


B O A R D O F D I R E C TORS


REVIEW OF MAJOR OPERATIONS

Electronics Manufacturing Services (“EMS”)This division remains the core operations of the Group.The EMS division recorded a decrease in earnings of 12.8%to $29.39 million from $33.72 million in FY2000.The net profit before tax decreased by 68.0% to $0.65million from $2.03 million in FY2000.

The decrease in revenue is a result of the difficult conditionsarising from the slowdown in the world economy. The profitbefore tax was also affected by the increase borrowings,depreciation and bad and doubtful debts.

DistributionRevenue from Distribution recorded a decrease of 14.5%to $6.17 million from $7.22 million in FY2000. The net profitbefore tax decreased by 30.6% to $0.50 million from $0.72million in FY2000.

The decrease in revenue is a result in the slowdown inorders from the semi-conductor industry and the waferfabs. The net profit was also affected by the competitivepricing.

Switchgear Design and AssemblyRevenue for Switchgear division recorded a decreaseof 27.6% to $2.1 million from $2.9 million in FY2000.This division recorded a net loss of $0.20 million comparedto a profit of $0.17 million in FY2000.

The decrease in revenue is mainly due to the competitivepricing for contracts which eroded the margins.

Industry outlook and prospectsThe Directors are cautious of the expected recovery in theoverall economic situation. Any recovery may be hamperedby the continuing competitive pricing in its business sectors.In order to alleviate this situation, the Group is focusing onthe expansion of its operations in China.

Although the economic situation in the short term will bechallenging, we will continue to remain focused on ourEMS business. We will continue to expand our portfolio ofcustomers to ensure that the Group is not reliant of a fewlarge customers.

The other business divisions are continuing to look fornew business that will complement and grow the Group’srevenue.

We are committed to enhancinglong term shareholder value

through enhancing corporateperformance and accountability.

On behalf of the Board of Directors, I am pleased to announce the results for the Financial Year2001 which ended on 31 December 2001.

FY2001 has been a difficult year, revenue decreased 14.1% from $43.87 million in FY2000 to $37.69million. Net profit after tax decreased 78.2% from $2.61 million in FY2000 to $0.57 million.

The decrease in revenue affected all operations mainly due to the slowdown in the world economy.The net profit after tax decrease was mainly due to the competitive pricing, increase in borrowings,depreciation and amortisation, and bad and doubtful debt provision.


6C H A I R M A N ’ S S TA T E M E N T


We would like to assure our shareholders that we willcontinue to remain prudent in every new business venture.We will make suitable investments when opportunitypresents itself so that we would be able to capitalise on thefuture growth of the regional economies.

In light of the overall global economic situation and thecurrent uncertainties in the short term, we believe the keyis to further integrate our business operations and tocontinue exercising prudence in monitoring overheadsand maximising the usage of our resources.

Training and DevelopmentStartech believes that our greatest asset is our staff.We provide on-the-job training (“OJT”) to ensure thatthey have the knowledge to perform tasks efficiently.These staff are guided by the supervisory staff of eachrespective departments to provide employees with applicationspecific skills and concurrently develop problem-solving skills.

Startech Share Option Scheme(The “Startech ESOS”)The Startech ESOS was introduced on 17 July 2001 to providean opportunity for all eligible employees of the Companyand its subsidiary companies to participate in the equity of

the Company as well as to motivate them to greaterdedication, loyalty and higher standard of performance andto give recognition for the contribution to the success anddevelopment of our Company and its Subsidiary Companies.

Corporate GovernanceWe are actively taking steps towards observing the CorporateGovernance Code. We are committed to enhancing long termshareholder value through enhancing corporate performanceand accountability. We plan to engage in greater interactionwith shareholders and the financial community throughpress releases and media briefings.

On Behalf of the Board of Directors, I would like to thank ourshareholders, customers, bankers and business associates fortheir support during the Listing of the Company and theircontinuing support. I would also like to thank ourmanagement, contractors suppliers and staff for their hardwork and dedication which have made the listing successful.

Saw Chee KeangExecutive Chairman & CEO



8F I N A N C I A L H I G H L I G H T S

For comparative purposes, EPS is calculated using profit after taxation attributable to shareholders and divided by the pre-invitation share capitalof 69,333,590 shares. For comparative purposes, NTA is calculated based on the pre-invitation share capital of 69,333,590 shares based on

shareholders’ equity less minority interest, deferred expenditure and intangible assets.

Operating Profit (S$ million)

2001 2000 1999 19980

10

20

30

40

50

Turnover (S$ million)

2001 2000 1999 19980

1

2

3

4

(S$”000”) FY2001 FY2000 FY1999 FY1998

Turnover 37,692 43,873 26,482 19,705

Operating Profit 1,926 3,805 2,083 1,301

Profit Attributable to Shareholders 599 2,481 1,207 515

Total Assets 31,153 28,702 20,811 13,283

Total Shareholders’ Funds 13,094 6,904 4,433 3,126

Issued Paid-up Capital 8,233 4,433 4,433 1,031

Working Capital 9,768 4,566 (2,550) 458

Earning Per Share (cents) 0.95 3.58 1.74 0.74

NTA Per Share (cents) 20.85 9.95 6.19 4.25


F I N A N C I A L R E P O R T

Report of the Directors 10

Report on Corporate Governance 17

Statement by Directors 19

Auditors’ Report to the Members 20

Balance sheets 21

Profit and loss accounts 23

Statements of changes in equity 24

Consolidated cash flow statement 26

Notes to the financial statements 29

Statistics of shareholdings 56

Notice of Annual General Meeting 57

Proxy Form


The Directors of the Company present their report to the members together with the audited financial statements of theGroup and of the Company for the financial year ended 31 December 2001.

On 2 July 2001, the Company was converted into a public company and changed its name from Startech Electronics Pte Ltdto Startech Electronics Ltd. The Company was admitted to the official list of the Stock Exchange of Singapore Dealing andAutomated Quotation System (“SGX-SESDAQ”) on 30 July 2001.

DirectorsThe Directors of the Company in office at the date of this report are:-

Saw Chee KeangChoo Tian WangNg Chee FattWong Kwan Seng, Robert (appointed on 2.7.2001)Ong Kian Min (appointed on 2.7.2001)Teo Boon Tieng (appointed on 2.7.2001)

Principal activitiesThe principal activity of the Company are those of an investment holding company and the marketing and trading in electronicscomponents.

The principal activities of the subsidiary companies are set out in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

Acquisition or disposal of subsidiariesThere was no acquisition or disposal of subsidiary companies during the financial year.


10R E P O R T O F T H E D I R E C TORS


Results for the financial yearThe Group The Company

$ $

Profit/(Loss) after taxation 579,400 (32,224)Minority interest 19,104 -

Profit/(Loss) attributable to shareholders 598,504 (32,224)Retained profits/(Accumulated losses)

at beginning of financial year

- as previously reported 2,520,658 -- prior year adjustment (Note 29 to the financial statements) (49,763) (14,898)

- as restated 2,470,895 (14,898)

Retained profits/(Accumulated losses)at end of financial year 3,069,399 (47,122)

Transfers to/(from) reservesThe Group

andThe Company

$

Share premium account

Balance at beginning of financial year –Share premium arising from issue of 892,253 ordinary shares of $1.00 each

for the conversion of Redeemable Convertible Loan 1,607,747

Bonus issue of 1,607,747 ordinary shares of $1.00 each from the capitalisationof share premium arising from conversion of Redeemable Convertible Loan (1,607,747)

Issue of 13,000,000 ordinary shares of $0.10 each at a premium of $0.22 each 2,860,000

Listing expenses (1,068,764)

Balance at end of financial year 1,791,236

Other than the above, there were no material transfers to or from reserves of the Group and of the Company during thefinancial year.

Transfers to/from provisionsThere were no material transfers to or from provisions of the Group and of the Company except for those provided in thenormal course of operations as disclosed in the profit and loss accounts.


R E P O R T O F T H E D I R E C TORS


Issue of shares and debenturesThe Company

On 2 July 2001, the Company increased its authorised share capital from $7,000,000 to $20,000,000 comprising 20,000,000ordinary shares of $1 each by the creation of 13,000,000 ordinary shares of $1 each.

On 3 July 2001, the following were changes effected to the Company’s authorised, issued and paid-up capital:-

(a) the issuance of 703,523 ordinary shares of $1 each to the Redeemable Convertible Loan (“RCL”) 1 Lenders pursuant totheir conversion of the RCL to ordinary shares;

(b) the bonus issue of 1,296,477 ordinary shares of $1 each at one bonus share for every 3.96 shares owned (from thecapitalisation of share premium arising from RCL 1 conversion);

(c) the issuance of 188,730 ordinary shares of $1 each to the RCL 2 Lenders pursuant to their conversion of the RCL toordinary shares;

(d) the bonus issue of 311,270 ordinary shares of $1 each at one bonus share for every 21.27 shares owned (from thecapitalisation of share premium arising from RCL 2 conversion); and

(e) the sub-division of each ordinary share of $1 each in the capital of the Company into 10 ordinary shares of $0.10 eachin the capital of the Company.

On 30 July 2001, the Company issued 13,000,000 ordinary shares of $0.10 each for cash at $0.32 per share fully paid uppursuant to an initial public offering. The cash proceeds from the issue were to be used for the expansion of the Group’soperations, to repay bank borrowings and for working capital to finance the Group’s continued growth and development.

The newly issued shares rank pari passu in all respects with the existing shares already in issue.

No other shares or debentures were issued by any corporation in the Group during the financial year.

Arrangements to enable Directors to acquire shares or debenturesNeither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object isto enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of theCompany or any other body corporate.




Directors’ interests in shares or debenturesAccording to the register of Directors’ shareholdings, none of the Directors of the Company holding office at the end of thefinancial year had interest in the shares of the Company and its related corporations except as detailed below:-

Balance as Balance asat 1.1.2001 at 31.12.2001

Number of Number ofordinary ordinaryshares of shares ofpar value par value$1 each $0.10 each

The Company

Saw Chee Keang 623,337 5,094,350Choo Tian Wang 92,214 1,088,250Ng Chee Fatt 749,034 9,821,740Wong Kwan Seng, Robert - 50,000Ong Kian Min - 50,000Teo Boon Tieng - 50,000

In accordance with the Listing Manual of the Singapore Securities Trading Limited, the Directors of the Company state that,according to the register of Directors’ shareholdings, the Directors’ interests as at 21 January 2002 in shares of the Companyhave not changed from those disclosed as at 31 December 2001.

DividendsNo dividend has been paid or declared during the financial year and the Directors of the Company do not recommend thatany be paid for the financial year just ended.

Bad and doubtful debtsBefore the profit and loss account and the balance sheet of the Company were made out, the Directors of the Company tookreasonable steps to ascertain that action had been taken in relation to the writing off and providing for bad and doubtfuldebts and have satisfied themselves that all known bad debts have been written off and that adequate provision has beenmade for doubtful debts.

At the date of this report, the Directors of the Company are not aware of any circumstances which would render any amountswritten off or provided for bad and doubtful debts in the group of companies inadequate to any substantial extent.




Current assetsBefore the profit and loss account and the balance sheet of the Company were made out, the Directors of the Company tookreasonable steps to ascertain that any current assets which were unlikely to realise their book values in the ordinary courseof business have been written down to their estimated realisable values or that adequate provisions had been made for thedifference between those values.

At the date of this report, the Directors of the Company are not aware of any circumstances which would render the valuesattributable to current assets in the consolidated financial statements misleading.

Charges and contingent liabilitiesSince the end of the financial year, no charges on the assets of the Company or any corporation in the Group have arisenwhich secure the liability of any other person and no contingent liabilities of the Company or any corporation in the Grouphave arisen.

Ability to meet obligationsNo contingent or other liability of the Company or any corporation in the Group has become enforceable or is likely tobecome enforceable within the period of twelve months after the end of the financial year which, in the opinion of theDirectors of the Company, will or may substantially affect the ability of the Group and of the Company to meet its obligationsas and when they fall due.

Other circumstances affecting financial statementsAt the date of this report, the Directors of the Company are not aware of any circumstances not otherwise dealt with in thisreport or the consolidated financial statements which would render any amount stated in the financial statements of theCompany and the consolidated financial statements misleading.

Unusual itemsIn the opinion of the Directors of the Company, the results of the operations of the Group and of the Company have not beensubstantially affected by any item, transaction or event of a material and unusual nature during the financial year, except forthe prior year adjustment as disclosed in Note 29 to the financial statements.

Unusual items after year end dateIn the opinion of the Directors of the Company, no item, transaction or event of a material and unusual nature has arisen inthe interval between the end of the financial year and the date of this report which would affect substantially the results ofthe operations of the Group and of the Company for the financial year in which this report is made.




Directors’ contractual benefitsSince the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit(other than as disclosed as emoluments and/or professional fees in the financial statements or the fixed salary of a full timeemployee of the Company) by reason of a contract made by the Company or by a related corporation with the Director orwith a firm of which he is a member, or with a company in which he has a substantial financial interest.

Share optionsStartech Employee Share Option Scheme (“Startech ESOS”)On 17 July 2001, the shareholders (excluding those shareholders who are eligible to participate in the Startech ESOS) at anExtraordinary General Meeting(“EGM”) approved the Startech ESOS.

The Startech ESOS is administered by the Startech ESOS Committee (“Committee”) which comprises:

Saw Chee KeangChoo Tian WangWong Kwan Seng, Robert

Under Startech ESOS, the Committee will grant, for the consideration of $1.00 each, to qualifying Executive Directors, Non-Executive Directors, full time employees of the Group and the Company and Directors to subscribe for any ordinary shares of$0.10 each in the capital of the Company.

The aggregate number of shares which the Committee may grant options under the Startech ESOS shall not exceed 15% ofthe total issued share capital of the Company on the date preceding the date the option is offered.

The options which are granted under the Startech ESOS may have exercise prices that are at the Committee’s discretion, setat a discount to the market price of a share. The maximum discount shall not exceed 20% of the market price of a share, andsuch options may be exercised only on the 2nd anniversary from the date the offer of the option(“Incentive Option”).Alternatively, the option price may be fixed at a price equal to the average of the last dealt market price for a share for thethree consecutive Market Days immediately preceding the offer of the relevant option (“Market Price Option”). Where theexercise price is not set at a discount to the market price, the relevant option may be exercised after the 1st anniversary to thedate of offer of that option.

As at the end of the financial year, there were no share options granted under Startech ESOS and no other share optionsgranted by the Company or its subsidiary companies during the financial year.

There were no shares issued during the financial year by virtue of the exercise of options to take up unissued shares of theCompany or its subsidiary companies.

There were no unissued shares of the Company or any other corporation in the Group under option as at the end of thefinancial year.




Audit CommitteeThe Audit Committee was formed by the Board of Directors and it comprises three members, all of whom are Non-ExecutiveDirectors. The members of the Audit Committee at the date of this report are:-

Wong Kwan Seng, Robert (Chairman)Ong Kian MinTeo Boon Tieng

The Audit Committee met as necessary and performed the functions specified in the Singapore Companies Act. In performingits functions, the Audit Committee reviewed the following:-

(a) the audit plans, which outlined the overall scope of work, of the Group’s and the Company’s external auditors;(b) the external auditors’ reports;(c) the assistance and co-operation given by the Group’s and the Company’s officers to the external auditors;(d) the financial statements of the Group and the Company before their submission to the Board of Directors for adoption;(e) nominate external auditors for re-appointment; and(f) interested persons transactions.

The Audit Committee has recommended to the Board of Directors that the auditors, BDO International, be nominated forre-appointment as auditors of the Company at the forthcoming Annual General Meeting of the Company.

AuditorsThe auditors, BDO International, have expressed their willingness to accept re-appointment.

On behalf of the Directors

Saw Chee Keang Choo Tian WangDirector Director

Singapore18 April 2002




The Board is committed to good corporate governance and to comply with the Code of Corporate Governance issued by theSingapore Exchange Securities Trading Limited (“SGX”) on 5 April 2001 and will work towards compliance by 2003.

Procedures and policies of the Company are developed in compliance with statutory and regulatory requirements to enhancetransparency and standards of accountability and in accordance with best practices to protect the interest of shareholders.The Board has put in place various self-regulatory and monitoring mechanisms.

Board of DirectorsThe Board of Startech Electronics Limited comprises six Directors as follows :

Saw Chee Keang (Chairman and Chief Executive Officer)Choo Tian Wang (Executive Director)Ng Chee Fatt (Non-Executive Director)Wong Kwan Seng, Robert (Independent Non-Executive Director)Ong Kian Min (Independent Non-Executive Director)Teo Boon Tieng (Independent Non-Executive Director)

While the Board is responsible for setting the directions and proper management of the Company, it is also committed toincrease the level of corporate governance in the Company. To enable the Board to carry out its functions more effectively,the following sub-committees were established.

Audit CommitteeThe Audit Committee members, activities and responsibilities are set out in the Report of the Directors.

Nominating CommitteeThe Board has established a Nominating Committee to ensure a formal and transparent procedure for the appointment andre-appointment of Directors. Its responsibilities also include the determination and assessment annually whether or not aDirector is independent and the individual Board members’ contribution to the effectiveness of the Board.

The Nominating Committee comprises of the following Board members:-


Startech Share Option Scheme (“Startech ESOS”)The Startech ESOS Committee comprises three members :


The Committee is responsible for the administration of the Startech ESOS in the Company.


R E P O R T O N C O R P O R A T E G O V E R N A N C E


Remuneration CommitteeThe Remuneration Committee comprises three Board members. The Committee evaluates the performance and compensationof the Executive Directors and recommends the Executive Directors’ service agreements to the Board for approval. The membersof the Remuneration Committee are:

Wong Kwan Seng, RobertOng Kian MinTeo Boon Tieng

The Committee is responsible for the review and recommendation of the annual remuneration package of the ExecutiveDirectors.

Securities TransactionsFollowing the introduction of the Best Practices Guide by the Singapore Exchange Trading Limited, the Company has adoptedan internal compliance code which mirrors substantially the provisions of the Best Practices Guide in the Listing Manual toprovide guidance to its Directors and officers in relation to the dealings in its securities.

The Company issues circulars to its Directors and relevant officers not to deal in the Company’s shares during the period inwhich they have access to unpublished price-sensitive information to remind them that they are to report on their dealingsin shares of the Company.

They are also reminded of the prohibition in dealings in shares of the Company during certain periods of the year in accordancewith the guidelines set out in the Best Practices Guide.





18R E P O R T O N C O R P O R AT E G O V E R N A N C E


In the opinion of the Directors of Startech Electronics Ltd (formerly known as Startech Electronics Pte Ltd), the accompanyingbalance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flow statement togetherwith the notes thereon are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Companyas at 31 December 2001 and of the results of the business and the changes in equity of the Group and of the Company andcash flows of the Group for the financial year ended on that date, and at the date of this statement there are reasonablegrounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has authorised these financial statements for issue on the date of this statement.





STAT E M E N T B Y D I R E C TORS


We have audited the accompanying financial statements of Startech Electronics Ltd (formerly known as Startech ElectronicsPte Ltd) and of the Group comprising the balance sheets of the Group and of the Company as at 31 December 2001, the profitand loss accounts and statements of changes in equity of the Group and of the Company and cash flow statement of theGroup for the financial year then ended as set out on pages 21 to 55. These financial statements are the responsibility of theCompany’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:-

(a) the accompanying consolidated financial statements and financial statements are properly drawn up in accordance withthe provisions of the Singapore Companies Act, Cap. 50 (“Act”) and Singapore Statements of Accounting Standard and soas to give a true and fair view of:-

(i) the state of affairs of the Group and of the Company as at 31 December 2001 and of the results and changes inequity of the Group and of the Company and cash flows of the Group for the financial year ended on that date; and

(ii) the other matters required by Section 201 of the Act to be dealt with in the consolidated financial statements andfinancial statements;

(b) the accounting and other records, and the registers required by the Act to be kept by the Company and by thosesubsidiary companies incorporated in Singapore of which we are the auditors, have been properly kept in accordancewith the provisions of the Act.

We have considered the financial statements and auditors’ report of a subsidiary company of which we have not acted asauditors, being financial statements included in the consolidated financial statements. The name of the subsidiary companywhich is audited by another firm of auditors is Weinixing Electronics (Shenzhen) Co., Ltd.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements, and we have received satisfactory information and explanation as required by us for thosepurposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification, and inrespect of subsidiary companies incorporated in Singapore did not include any comment made under Section 207(3) of the Act.

BDO INTERNATIONALCertified Public Accountants



20A U D I TORS’ REPORTto the members of Startech Electronics Ltd(Formerly known as Startech Electronics Pte Ltd)(Registration No: 199906220H)


The Group The CompanyNote 2001 2000 2001 2000

(restated) (restated)$ $ $ $

Non-current assetsFixed assets 3 6,320,525 7,185,170 7,350 8,820Intangible asset 4 - 4,000 - -Other non-current assets 5 139,312 203,642 - -Subsidiary companies 6 - - 4,433,357 4,433,357

6,459,837 7,392,812 4,440,707 4,442,177

Current assetsStock and work-in-progress 7 6,712,291 6,077,399 - -Trade debtors 8 13,801,921 11,113,271 1,893,990 -Other debtors, deposits

and prepayments 9 55,620 144,866 - 98,624Due by subsidiary companies 10 - - 5,025,686 2,376,278Due by related parties 11 - 3,740 - -Fixed deposits with banks 12 2,596,319 2,407,575 - -Cash and bank balances 1,527,492 1,561,956 1,830 5,604

24,693,643 21,308,807 6,921,506 2,480,506

Less:-Current liabilitiesTrade creditors 3,206,444 3,523,220 - -Other creditors and accruals 13 768,231 674,128 306,094 2,732Finance lease creditors 14 432,048 436,243 - -Due to related party 15 304,513 370,000 - -Due to a corporate shareholder 16 1,292,629 1,172,309 - 1,490Due to Directors 17 2,189 433,875 - -Bank borrowings 18 8,322,706 7,099,734 1,078,646 -Redeemable convertible loan

- unsecured 19 - 2,500,000 - 2,500,000Provision for taxation 596,789 533,034 - -

14,925,549 16,742,543 1,384,740 2,504,222

Net current assets/(liabilities) 9,768,094 4,566,264 5,536,766 (23,716)

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


B A L A N C E S H E E T S31 December 2001




Non-current liabilitiesFinance lease creditors 14 (891,891) (1,193,617) - -Bank borrowings 18 (2,198,957) (3,824,012) - -Deferred taxation 20 (38,847) (13,847) - -

(3,129,695) (5,031,476) - -

Net assets 13,098,236 6,927,600 9,977,473 4,418,461

Capital and reservesShare capital 21 8,233,359 4,433,359 8,233,359 4,433,359Share premium account 22 1,791,236 - 1,791,236 -Retained profits/

(Accumulated losses) 3,069,399 2,470,895 (47,122) (14,898)

Interests of shareholders of the Company 13,093,994 6,904,254 9,977,473 4,418,461

Minority interest 4,242 23,346 - -

13,098,236 6,927,600 9,977,473 4,418,461



22B A L A N C E S H E E T S31 December 2001




Revenue 23 37,691,617 43,872,812 2,391,365 -

Cost of sales (31,369,913) (35,546,104) (1,886,375) -

Gross profit 6,321,704 8,326,708 504,990 -

Other operating income 391,577 107,253 - -

Distribution costs (21,603) (94,782) - -

Other operating expenses (4,765,577) (4,533,711) (532,244) (5,263)

Operating profit/(loss) 24 1,926,101 3,805,468 (27,254) (5,263)

Finance costs 25 (979,417) (877,376) (4,970) -

Profit/(Loss) before taxation 946,684 2,928,092 (32,224) (5,263)

Taxation 26 (367,284) (449,009) - -

Profit/(Loss) after taxation 579,400 2,479,083 (32,224) (5,263)

Minority interest 19,104 1,447 - -

Profit/(Loss) attributable

to shareholders 598,504 2,480,530 (32,224) (5,263)



P R O F I T A N D L O S S A C C O U N T Sfor the financial year ended 31 December 2001


(AccumulatedShare losses)/

Share premium RetainedThe Group Note capital account profits Total

$ $ $ $

Balance at 1 January 2000- as previously reported 4 - - 4- prior year adjustment 29 - - (9,635) (9,635)

- as restated 4 - (9,635) (9,631)Issue of shares 21 4,433,355 - - 4,433,355Net profit for the financial year- restated for the effect of the

prior year adjustment - - 2,480,530 2,480,530

Balance at 31 December 2000, as restated 4,433,359 - 2,470,895 6,904,254

Balance at 1 January 2001- as previously reported 4,433,359 - 2,520,658 6,954,017- prior year adjustment 29 - - (49,763) (49,763)

- as restated 4,433,359 - 2,470,895 6,904,254

Issue of ordinary shares for theconversion of RedeemableConvertible Loan 21 892,253 - - 892,253

Share premium arising from issue of892,253 ordinary shares of $1.00 eachfor the conversion of RedeemableConvertible Loan - 1,607,747 - 1,607,747

Bonus issue of 1,607,747 ordinaryshares of $1.00 from the capitalisationof share premium arising fromconversion of RedeemableConvertible Loan 21 1,607,747 (1,607,747) - -

Public issue of ordinary shares 21 1,300,000 - - 1,300,000

Share premium arising from public issue of13,000,000 ordinary shares of$0.10 each at a premium of $0.22 each - 2,860,000 - 2,860,000

Listing expenses * - (1,068,764) - (1,068,764)

Net profit for the financial year - - 598,504 598,504

Balance at 31 December 2001 8,233,359 1,791,236 3,069,399 13,093,994

* Included in the listing expenses are fees of $100,000 paid to the auditors of the Company for services rendered as ReportingAccountants for the initial public offering (“IPO”) of the Company’s shares.



24STA T E M E N T S O F C H A N G E S I N E Q U I T Yfor the financial year ended 31 December 2001


(AccumulatedShare losses)/

Share premium RetainedThe Company Note capital account profits Total

$ $ $ $

Balance at 1 January 2000- as previously reported 4 - - 4- prior year adjustment 29 - - (9,635) (9,635)

- as restated 4 - (9,635) (9,631)Issue of shares 21 4,433,355 - - 4,433,355Net loss for the financial year- restated for the effect of the

prior year adjustment - - (5,263) (5,263)

Balance at 31 December 2000, as restated 4,433,359 - (14,898) 4,418,461

Balance at 1 January 2001- as previously reported 4,433,359 - - 4,433,359- prior year adjustment 29 - - (14,898) (14,898)

- as restated 4,433,359 - (14,898) 4,418,461

Issue of ordinary shares for theconversion of RedeemableConvertible Loan 21 892,253 - - 892,253

Share premium arising from issue of892,253 ordinary shares of $1.00 eachfor the conversion of RedeemableConvertible Loan - 1,607,747 - 1,607,747

Bonus issue of 1,607,747 ordinaryshares of $1.00 from the capitalisationof share premium arising fromconversion of RedeemableConvertible Loan 21 1,607,747 (1,607,747) - -

Public issue of ordinary shares 21 1,300,000 - - 1,300,000

Share premium arising from public issue of13,000,000 ordinary shares of$0.10 each at a premium of $0.22 each - 2,860,000 - 2,860,000

Listing expenses * - (1,068,764) - (1,068,764)

Net loss for the financial year - - (32,224) (32,224)

Balance at 31 December 2001 8,233,359 1,791,236 (47,122) 9,977,473

* Included in the listing expenses are fees of $100,000 paid to the auditors of the Company for services rendered as ReportingAccountants for the initial public offering (“IPO”) of the Company’s shares.



STA T E M E N T S O F C H A N G E S I N E Q U I T Yfor the financial year ended 31 December 2001


2001 2000restated

$ $

Cash flows from operating activitiesProfit before taxation 946,684 2,928,092

Adjustments for:-Amortisation of intangible asset 4,000 4,000Depreciation of fixed assets 1,165,521 1,048,548Interest expense 979,417 877,376Interest income (97,423) (44,533)(Gain)/Loss on disposal of fixed assets (34,544) 2,360Loss on disposal of other non-current assets 12,230 -Provision for diminution in value of other

non-current assets 49,800 -

Operating profit before working capital changes 3,025,685 4,815,843

Working capital changes:-Increase in stock and work-in-progress (634,892) (1,888,953)Increase in trade and other debtors (2,599,404) (3,628,127)Decrease/(Increase) in amount due by related parties 3,740 (142,734)Increase in amount due to a corporate shareholder 120,319 1,172,309(Decrease)/Increase in amount due to Directors (431,687) 407,498(Decrease)/Increase in amount due to related party (65,487) 370,000Decrease in trade and other creditors (2,008,423) (2,277,759)

Cash used in operating activities (2,590,149) (1,171,923)Interest paid (979,417) (877,376)Income tax paid (278,529) (173,770)

Net cash used in operating activities (3,848,095) (2,223,069)



26C O N S O L I D AT E D C A S H F L O W S TA T E M E N Tfor the financial year ended 31 December 2001


2001 2000restated

$ $

Cash flows from investing activitiesAcquisition of subsidiary companies (Note A) - 669,254Purchase of fixed assets (689,232) (740,177)Proceeds from disposal of fixed assets 422,900 17,020Proceeds from sale of other non-current assets 42,300 -Purchase of other non-current assets (40,000) (1,030)

Net cash used in investing activities (264,032) (54,933)

Cash flows from financing activitiesProceeds from issue of shares net of issue expenses 5,591,236 -(Repayment to)/Proceeds from bank borrowings (2,109,457) 2,224,166Proceeds from Redeemable Convertible Loan - 2,500,000(Repayment to)/Proceeds from finance lease creditors (305,921) 1,198,046Interest income received 97,423 44,533

Net cash from financing activities 3,273,281 5,966,745

(Decrease)/Increase in cash and cash equivalents (838,846) 3,688,743Cash and cash equivalents at beginning of financial year 3,688,743 -

Cash and cash equivalents at end of financial year (Note B) 2,849,897 3,688,743



C O N S O L I D A T E D C A S H F L O W S TA T E M E N Tfor the financial year ended 31 December 2001


A. Acquisition of subsidiary companiesIn the previous financial year, the Group acquired the subsidiary companies set out in Note 6 to the financial statements.The fair values of assets and liabilities acquired were as follows:-

$

Plant and machinery 7,512,921Other non-current assets 202,612Intangible asset 17,635Current assets 12,069,994Cash and bank balances 1,270,115Current liabilities (8,312,787)Bank term loans (8,418,792)Minority interest (24,793)

Share of net assets acquired 4,316,905Less:-

Portion discharged by issuance of shares (4,433,355)Cash and bank balances of subsidiary companies acquired (1,270,115)Amount due to holding company 717,311

Net cash inflow from acquisition of subsidiary companies (669,254)

B. Cash and cash equivalentsCash and cash equivalents included in the consolidated cash flow statement comprise the following consolidated balancesheet amounts:-

2001 2000$ $

Cash and bank balances 1,527,492 1,561,956Fixed deposits with banks 2,596,319 2,407,575Bank overdrafts (1,273,914) (280,788)

2,849,897 3,688,743



28C O N S O L I D AT E D C A S H F L O W S TA T E M E N Tfor the financial year ended 31 December 2001


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

1. General corporate informationStartech Electronics Ltd (formerly known as Startech Electronics Pte Ltd) (“Company”) is a company domiciled andincorporated in Singapore, with its registered office at 13 Woodlands Walk, Singapore 738318.

On 2 July 2001, the Company changed its name from Startech Electronics Pte Ltd to Startech Electronics Ltd.

The principal activity of the Company are those of an investment holding company and the marketing and trading inelectronics components.

The principal activities of the subsidiary companies are set out in Note 6 to the financial statements.

The number of employees of the Group and of the Company as at 31 December 2001 were 151 (2000: 160) and 2(2000: Nil) respectively.

2. Significant accounting policies(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with the Statementsof Accounting Standard (“SAS”) issued by the Institute of Certified Public Accountants of Singapore and thedisclosure requirements of the Singapore Companies Act, Cap. 50.

In the current financial year, the Company has adopted the following SAS:-

SAS 8 (Revised 2000) Net Profit and Loss for the Period, Fundamental Errors and Changes in AccountingPolicies

SAS 10 (Revised 2000) Events After the Balance Sheet DateSAS 17 (2000) Employee BenefitsSAS 22 (2000) Business CombinationsSAS 31 (2000) Provisions, Contingent Liabilities and Contingent AssetsSAS 32 (2000) Financial Instruments: Disclosure and PresentationSAS 34 (2000) Intangible AssetsSAS 36 (2000) Impairment of Assets

The adoption of these SAS has resulted in some changes in the detailed application of the Company’s accountingpolicies and some modifications to the financial statements presentation. Except for the effect on adoption ofSAS 34 (2000) “Intangible Assets”, none of these amendments has resulted in adjustments to opening balancesof retained profits of the prior and current financial year and to changes in comparative figures.


N O T E S T O T H E F I N A N C I A L S T AT E M E N T S31 December 2001


2. Significant accounting policies (cont’d)

(b) Basis of preparation of financial statements

The financial statements of the Group and of the Company, expressed in Singapore dollars, are prepared inaccordance with the historical cost convention.

(c) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiarycompanies made up to the end of the financial year. Significant inter-company balances and transactions havebeen eliminated on consolidation and the consolidated financial statements reflect external transactions only.

(d) Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase priceand any direct attributable costs of bringing the asset to working condition for its intended use. Expenditurefor additions, improvements and renewals are capitalised and expenditure for maintenance and repairs arecharged to the profit and loss accounts. When assets are sold or retired, their cost and accumulated depreciationare removed from the financial statements and any gain or loss resulting from their disposal is included in theprofit and loss accounts.

Depreciation is calculated on the straight line method so as to write-off the cost of the assets over theirestimated useful lives. The annual rates used for this purpose are as follows:-

%Plant and machinery 10 - 20Test equipment 20Furniture and fittings 10 - 20Electrical fittings 10Office equipment 10 - 20Computer 331/

3

Air-conditioners 10 - 331/3

Renovation 10Motor vehicles 20

Fully depreciated assets are retained in the financial statements until such time when they are no longer in use.

(e) Intangible asset

Intangible asset consists of the purchase price of a business name of an entity previously engaged in trading ofchemicals. This amount is written off to the profit and loss accounts over a period of 5 years.


30N OT E S T O T H E F I N A N C I A L S T A T E M E N T S31 December 2001



(f) Other non-current assets

Other non-current assets comprise club memberships held on a long-term basis. They are stated at cost lessimpairment losses, if any.

(g) Subsidiary companies

Investment in subsidiary companies are stated at cost less impairment losses, if any.

(h) Deferred expenditure

The above expenditure comprises pre-operating, preliminary and also expenditure incurred for the setting up ofa manufacturing plant in Shenzhen, People’s Republic of China. In accordance with the Statements of AccountingStandards, the Company applied the new SAS 34, “Intangible Assets”, which is effective for financial yearsbeginning on or after 1 October 2000. Under the new standard, all preliminary expenses have to be recognisedas an expense as and when they are incurred and charged to the profit and loss account. The changes inaccounting policy has been applied retrospectively and the effect of change is disclosed in Note 29 to thefinancial statements.

(i) Impairment

The carrying amounts of the Company’s non-current assets are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount isestimated. An impairment loss is recognised whenever the carrying amount of the asset or its cash generatingunit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss accounts.

The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is theamount obtainable from the sale of an asset in an arm’s length transaction. Value in use is the present value ofestimated future cash flows expected to arise from the continuing use of an asset and from its disposal at theend of its useful life. Recoverable amounts are estimated for individual assets or if it is not possible, for the cashgenerating unit.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamounts. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceedthe carrying amount that would have been determined, net of depreciation or amortisation, if no impairmentloss has been recognised. Reversals of impairment are recognised in the profit and loss accounts.

(j) Stock and work-in-progress

Stock is stated at the lower of cost and net realisable value. Cost is determined on a “first-in, first-out” basisand in the case of manufactured goods include cost of material, direct labour and an appropriate portion ofmanufacturing overheads. Net realisable value is the price at which the stock can be realised in the normalcourse of business after allowing for damaged, obsolete or slow-moving stock.





(j) Stock and work-in-progress (cont’d)

Work-in-progress is stated at cost less progress billings received and receivable, including retentions. Costincludes direct materials and appropriate portion of overheads in relation to the manufacture of switchboard.Provision for losses are made when such losses can be reasonably assessed and determined by the Directors.

(k) Trade and other debtors

Trade and other debtors are carried at net realisable value.

Known bad debts are written off and specific provisions are made for those debts considered to be doubtful ofcollection.

(l) Trade and other creditors

Trade and other creditors are stated at cost.

(m) Employee benefits

As required by Singapore law, the Group and the Company make contributions to the state pension scheme, theCentral Provident Fund (“CPF”), for companies incorporated in Singapore. CPF contributions are recognised ascompensation expense in the same financial year as the employment that gives rise to the contribution.

(n) Finance leases

Leases in which the Company assumes substantially all the risks and rewards incidental to ownership of theleased item are classified as finance leases. Fixed assets acquired by way of finance leases are capitalised at anamount equal to the lower of its fair value and the present value of the minimum lease payments at theinception of the lease term, less accumulated depreciation and impairment losses. Lease payments are apportionedbetween the finance charges and reduction of the lease liability so as to achieve a constant rate of interest onthe remaining balance of liability. Finance charges are charged to the profit and loss accounts.

Capitalised lease assets are depreciated over the shorter of the estimated economic useful life of the asset orthe lease term.

(o) Operating leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leasedterm, are classified as operating lease.

Operating lease payments are charged to the profit and loss accounts on a straight line basis over the period ofthe lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made tothe lessor by way of penalty is recognised as an expense in the period in which termination takes place.





(p) Related party

A related party is defined as a company, not being a subsidiary or an associated company, in which the shareholdersor Directors of the Company have an equity interest or exercise control or significant influence.

(q) Interest-bearing borrowings

Interest-bearing borrowings are recognised at cost.

(r) Share capital

Ordinary share capital is recognised at the fair value of the consideration received by the Company.

(s) Recognition of income

Revenue from sales of products is recognised upon passage of title to the customer which generally coincideswith their delivery and acceptance.

Revenue from long-term contracts is based on the percentage of completion method. The percentage ofcompletion method is determined by reference to the percentage of actual costs incurred to date againstbudgeted costs.

Interest and maintenance contract income are recognised on an accrual basis.

(t) Finance costs

Interest expense and similar charges are expensed in the profit and loss accounts in the financial year in whichthey are incurred.

(u) Foreign currencies

Monetary assets and liabilities maintained in foreign currencies are translated into Singapore dollars at theapproximate rates of exchange ruling at the balance sheet date. Transactions during the financial year havebeen converted at the rates prevailing on the transaction dates. All exchange differences are dealt with in theprofit and loss accounts.

For the purpose of consolidation, the financial statements of the foreign subsidiary companies whose operationsare integral to those of the Group, all monetary items are translated into Singapore dollars at the rates ofexchange prevailing at the balance sheet date and all non-monetary items are recorded at the historical rates ofexchange. The results of the foreign subsidiary companies are translated into Singapore dollars at the averageexchange rate. Exchange differences due to such currency translations are taken to the consolidated profit andloss account.





(v) Taxation

Current taxation is provided based on the tax payable on the income for the financial year that is chargeable totax.

Deferred taxation is provided using the liability method for all material timing differences in the recognition ofcertain income and expenses for accounting and taxation purposes. Deferred tax benefits are recognised onlywhere such benefits are expected to be realisable in the near future.

(w) Prior year adjustment

All income and expenditure arising in the course of the Group’s and the Company’s normal business are takeninto account in arriving at the results for the financial year. Any prior year adjustments are shown separatelyand are not included in the results for the financial year.

(x) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services(business segment), or in providing products or services within a particular economic environment (geographicalsegment), which is subject to risks and rewards that are different from those of other segments.

Segment information is presented in respect of the Group’s business and geographical segments. The primaryformat, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that canbe allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the financial year to acquire segment assets thatare expected to be used for more than one financial year.




3. Fixed assetsPlant and Office Furniture Electrical Air- Motor Test

The Group machinery equipment and fittings fittings Computer conditioner Renovation vehicles equipment Total

$ $ $ $ $ $ $ $ $ $

Cost

Balance as at 1.1.2001 8,990,693 55,714 361,764 218,357 161,411 298,669 285,531 622,587 39,279 11,034,005

Additions 547,483 186 630 - 1,608 - - 139,325 - 689,232

Disposals (760,000) - - - - - - (126,070) - (886,070)

Balance as at 31.12.2001 8,778,176 55,900 362,394 218,357 163,019 298,669 285,531 635,842 39,279 10,837,167

Accumulated Depreciation

Balance as at 1.1.2001 2,899,307 39,604 157,916 78,865 73,701 130,332 87,581 345,136 36,393 3,848,835

Charged for the

financial year 869,294 6,723 44,607 21,900 33,702 30,424 40,394 115,947 2,530 1,165,521

Disposals (380,000) - - - - - - (117,714) - (497,714)

Balance as at 31.12.2001 3,388,601 46,327 202,523 100,765 107,403 160,756 127,975 343,369 38,923 4,516,642

Depreciation for 2000 769,645 8,011 44,546 21,900 13,598 30,423 39,904 117,991 2,530 1,048,548

Net Book Value

As at 31.12.2001 5,389,575 9,573 159,871 117,592 55,616 137,913 157,556 292,473 356 6,320,525

As at 31.12.2000 6,091,386 16,110 203,848 139,492 87,710 168,337 197,950 277,451 2,886 7,185,170




3. Fixed assets (cont’d)

The Group (cont’d)

As at the balance sheet date, the Group had fixed assets purchased under finance lease contracts with a net bookvalue of $1,801,502 (2000: $2,365,411).

Certain of the Group’s motor vehicles with a net book value at year end of $264,659 (2000: $249,173) are registered inthe names of the Group’s Directors who are holding the motor vehicles in trust for the Group.

The assets of one of the companies of the Group are charged by way of first open debenture to secure bankingfacilities granted to the Group as disclosed in Note 18.

The Company Renovation$

Cost

Balance as at 1.1.2001 and 31.12.2001 9,800

Accumulated Depreciation

Balance as at 1.1.2001 980Charged for the financial year 1,470

Balance as at 31.12.2001 2,450

Depreciation for 2000 980

Net Book Value

As at 31.12.2001 7,350

As at 31.12.2000 8,820

4. Intangible assetThe Group

2001 2000$ $

Purchased business name, at cost 20,000 20,000Less:-

Accumulated amortisation 20,000 16,000

- 4,000




4. Intangible asset (cont’d)Movements in accumulated amortisation of intangible asset during the financial year were as follows:-

2001 2000$ $

Balance at beginning of financial year 16,000 -Arising from acquisition of subsidiary companies - 12,000Charged for the financial year 4,000 4,000

Balance at end of financial year 20,000 16,000

5. Other non-current assetsThe Group

2001 2000$ $

Transferable club memberships, at cost 242,526 242,526Add: Purchase 40,000 -Less: Disposal (78,664) -

203,862 242,526Less:-

Provision for diminution in value 64,550 38,884

139,312 203,642

Movements in provision for diminution in value of other non-current assets during the financial year were as follows:-

2001 2000$ $

Balance at beginning of financial year 38,884 -Arising from acquisition of subsidiary companies - 38,884Charged for the financial year 49,800 -Written off against provision (24,134) -


The Group’s club memberships with a net book value at the balance sheet date of $134,312 (2000: $175,642) areregistered in the names of the Directors and certain employees of one of the subsidiary companies who are holdingthe club memberships in trust for the Group.




6. Subsidiary companiesThe Company

2001 2000$ $

Unquoted shares in corporations, at cost 4,433,357 4,433,357

The particulars of the subsidiary companies are as follows:-

Name of company(Country ofincorporation/ Principal Percentage Cost ofplace of business) activities equity held investment

2001 2000 2001 2000% % $ $

Chemitec Industrial Distributor of specialty 100 100 # (1) # (1)

Private Limited * (1) chemical products and(Singapore) consumable materials for

the electronic industry

Hi-Tech Distribution Distributor of equipment 100 100 1,301,400 1,301,400Pte Ltd * (1) and consumable materials(formerly known as for the electronic industryHi-Tech Materials Pte Ltd)

(Singapore)

Startech Power Pte Ltd * (1) Distributor of power 80 80 # (2) # (2)

(formerly known as transmission productsPV Power Pte Ltd)

(Singapore)

Startech Manufacturing Contract manufacturing 100 100 2,565,336 2,565,336Pte Ltd * (1)

(formerly known as PV Startech Pte Ltd)

(Singapore)

PV Startech Marketing Marketing and 100 100 2 2Limited * (2) trading in electronic

(British Virgin Islands) components

Switech Systems & Designer, assembler, 100 100 566,619 566,619Marketing Pte Ltd * (1) supplier and installer

(Singapore) of electricalswitch boxes




6. Subsidiary companies (cont’d)Name of company(Country ofincorporation/ Principal Percentage Cost ofplace of business) activities equity held investment

2001 2000 2001 2000% % $ $

Weinixing Electronics Contract manufacturing 100 100 # (3) # (3)

(Shenzhen) Co., Ltd(People’s Republic of

China) * (3)

4,433,357 4,433,357

# The cost of investments in these subsidiary companies have been eliminated in the preparation of the group consolidatedfinancial statements.

# (1) Subsidiary company of Hi-Tech Distribution Pte Ltd (formerly known as Hi-Tech Materials Pte Ltd).# (2) Subsidiary company of Switech Systems & Marketing Pte Ltd.# (3) Subsidiary company of Startech Manufacturing Pte Ltd (formerly known as PV Startech Pte Ltd).* (1) Audited by BDO International, Singapore.* (2) No audit required under the Laws of its country of incorporation, but an audit is carried out by BDO International, Singapore

for the purpose of inclusion in the financial statements of the Group.* (3) Audited by Bei Cheng Certified Public Accountants, Shenzhen, and reviewed by Sammy K. K. Ng, Certified Public Accountant

for compliance with International Accounting Standard.

7. Stock and work-in-progressThe Group

2001 2000$ $

Stock held for resale, at cost 6,691,377 5,956,964Work-in-progress, at cost 23,046 122,567

Less:-Provision for stock obsolescence 2,132 2,132

6,712,291 6,077,399

Representing:-

Stock held for resale, at net realisable value 6,689,245 5,954,832Work-in-progress, at cost 23,046 122,567

6,712,291 6,077,399




7. Stock and work-in-progress (cont’d)

Movement in provision for stock obsolescence during the financial year was as follows:-

The Group2001 2000

$ $

Balance at beginning of financial year 2,132 -Arising from acquisition of subsidiary companies - 2,132


8. Trade debtorsThe Group The Company

2001 2000 2001 2000$ $ $ $

Trade debtors 14,344,552 11,178,914 1,893,990 -Less:-

Provision for doubtful trade debts 542,631 65,643 - -

13,801,921 11,113,271 1,893,990 -

Included in trade debtors is $Nil (2000: $9,849) in relation to a retention sum.

Movements in provision for doubtful trade debts during the financial year were as follows:-

The Group2001 2000

$ $

Balance at beginning of financial year 65,643 -Arising from acquisition of subsidiary companies - 89,309Charged for the financial year 489,754 16,940Provision written back - (35,900)Amount utilised (12,766) (4,706)





9. Other debtors, deposits and prepaymentsThe Group The Company

2001 2000 2001 2000$ $ $ $

Other debtors 30,529 24,559 - -Deposits 15,820 5,495 - -Staff Loan 250 - - -Prepaid operating expenses 9,021 114,812 - 98,624

55,620 144,866 - 98,624

Other debtors comprise mainly tax recoverable.

10. Due by subsidiary companiesThe Company

The amounts due are non-trade in nature, unsecured, interest-free and with no fixed terms of repayment.

11. Due by related partiesThe Group

2001 2000$ $

Trade - 1,740Non-trade - 2,000

- 3,740

In the previous financial year, the amount due on trade transactions was unsecured, interest-free and repayable withintrade credit terms.

In the previous financial year, the amount due on non-trade transactions was unsecured, interest-free and with nofixed terms of repayment.

12. Fixed deposits with banksThe Group

The above are pledged to the bank as collateral to secure banking facilities granted to the subsidiary companies asdisclosed in Note 18.




13. Other creditors and accrualsThe Group The Company

2001 2000 2001 2000$ $ $ $

Other creditors 24,899 194,011 - -Accrued operating expenses 743,332 480,117 306,094 2,732

768,231 674,128 306,094 2,732

Other creditors of the Group comprise mainly payables for professional services, transport and freight charges.

14. Finance lease creditorsObligations under finance lease contracts are as follows:-

The Group2001 2000

$ $

Minimum finance lease instalments payable- within one year 501,972 507,285- after one year but within five years 989,130 1,387,271

1,491,102 1,894,556Finance charges allocated to future periods (167,163) (264,696)

1,323,939 1,629,860

Disclosed in the balance sheet as follows:-Payable within one year 432,048 436,243

Payable after one year 891,891 1,193,617

15. Due to related partyThe Group

The amount due is non-trade in nature, unsecured, interest-free and with no fixed terms of repayment.




16. Due to a corporate shareholderThe Group The Company

2001 2000 2001 2000$ $ $ $

Trade - 38,953 - -Non-trade (1,292,629) (1,211,262) - (1,490)

(1,292,629) (1,172,309) - (1,490)

The amount due on trade transactions comprises mainly sale transactions in the ordinary course of business. Theamount is unsecured, interest-free and repayable within trade credit terms.

The amount due on non-trade transactions is unsecured, interest-free and with no fixed terms of repayment.

17. Due to DirectorsThe Group

The amounts due are non-trade in nature, unsecured, interest-free and have no fixed terms of repayment.

18. Bank borrowingsThe Group The Company

2001 2000 2001 2000$ $ $ $

Payable within one year:-Bank overdraft - unsecured 164,464 - - -

- secured 1,109,450 280,788 928,435 -Term loans - secured 1,800,000 2,284,402 - -Trust receipts - unsecured 150,211 - 150,211 -

- secured 5,098,581 4,534,544 - -

8,322,706 7,099,734 1,078,646 -Payable after one year:-

Term loans - secured 2,198,957 3,824,012 - -

10,521,663 10,923,746 1,078,646 -




18. Bank borrowings (cont’d)

The Group and The Company

The bank overdraft, term loan and other facilities amounting to $14,536,457 (2000: $15,830,000) granted to theCompany and its subsidiary companies are secured by:-

(i) a fixed and floating charge over all the assets of a subsidiary company by way of first open debenture,(ii) pledge of the fixed deposits of certain subsidiary companies of the Group,(iii) corporate guarantees given by one of the subsidiary companies of the Group, and a corporate shareholder, and(iv) guarantees provided by certain Directors and former Directors of the Company jointly and severally.

The bank term loans are repayable over 37 monthly instalments commencing November 2000. Interest charged on thebank loans during the year ended 31 December 2000 was approximately 8% (2000: 8%) per annum. The portionrepayable 12 months after the balance sheet date is disclosed under non-current liabilities.

Subsequent to the balance sheet date, the corporate guarantee given by a corporate shareholder and a subsidiarycompany of the Group, and the joint and several guarantee by certain Directors and former Directors of the Companyhave been discharged.

19. Redeemable convertible loan - unsecuredThe Group and The Company

In the previous financial year, the above loan was supported by a joint and several personal guarantee by a Directorand certain shareholders of the Company. The loan carried an option for conversion to ordinary shares in the Companyduring an option period from drawdown to repayment, which was from June 2000 to June 2001. The conversion ratewas based on a fixed pre-determined formula.

Interest was to be payable on the convertible loan at a rate of 3% above the prime lending rate of a bank if theconversion did not take place. Interest has not been provided in the financial statements as the loan had beenconverted upon receipt of in-principle approval of the listing of the Company’s shares.

20. Deferred taxationThe Group

2001 2000$ $

Balance at beginning of financial year 13,847 -Arising from acquisition of subsidiary companies - 26,847Transferred from/(to) profit and loss account (Note 26) 25,000 (13,000)


The deferred tax comprises mainly the excess of net book value over tax written down value of the fixed assetscalculated at statutory tax rate.




21. Share capitalThe Group

andThe Company

2001 2000$ $

Authorised:-7,000,000 ordinary shares of $1.00 each at

beginning of financial year 7,000,000 7,000,000Increase in authorised share capital by the creation

of an additional 13,000,000 ordinary sharesof $1.00 each (2000: Nil) 13,000,000 -

Sub-division of par value of $1.00 per shareinto $0.10 per share in respect of 20,000,000ordinary shares of $1.00 each (2000: Nil) - -

200,000,000 ordinary shares of $0.10 each(2000: 7,000,000 ordinary shares of $1.00 each)at end of financial year 20,000,000 7,000,000

Issued and fully paid:-4,433,359 (2000: 4) ordinary shares of $1.00 each at

beginning of financial year 4,433,359 4892,253 (2000: Nil) ordinary shares of $1.00 each

per share issued for the conversion of RedeemableConvertible Loan (“RCL”) 892,253 -

Bonus issue of 1,607,747 (2000: Nil) ordinary sharesof $1.00 each from the capitalisation of sharepremium arising from conversion of RCL 1,607,747 -

Sub-division of par value of $1.00 per share into$0.10 per share of 6,933,359 ordinary sharesof $1.00 each (2000: Nil) - -

13,000,000 ordinary shares of $0.10 per shareissued at $0.32 per share by way of initialpublic offer (2000: Nil) 1,300,000 -

4,433,355 ordinary shares of $1.00 each issued asconsideration for acquisition of subsidiary companies - 4,433,355

82,333,590 ordinary shares of $0.10 each(2000: 4,433,359 ordinary shares of $1.00 each)at end of financial year 8,233,359 4,433,359

These newly issued shares rank pari passu in all respects with the existing shares already in issue.




22. Share premium accountThe application of the share premium account is governed by Section 69-69F of the Singapore Companies Act, Chapter50 and is not distributable. Initial Public Offering (“IPO”) expenses written off against share premium included feespaid to auditors of the Company amounting to $100,000 for acting as reporting accountants for the IPO.

In accordance with SAS 1 (Revised 1999), movements in reserves for the Group and the Company are set out in theconsolidated statement of changes in equity and the statement of changes in equity respectively.

23. RevenueThe above represents invoiced value of goods sold and services rendered less goods returned and discounts allowednet of goods and services tax, after eliminating inter-company transactions. Revenue is analysed as follows:-

The Group The Company2001 2000 2001 2000

$ $ $ $

Revenue from:-

Sale of products 35,563,765 41,320,471 1,886,375 -Revenue from maintenance

services rendered 14,417 30,960 - -Revenue from installation contracts 2,113,435 2,521,381 - -Management and administrative fees - - 504,990 -

37,691,617 43,872,812 2,391,365 -




24. Operating profit/(loss)The above is arrived at:-


$ $ $ $

After charging:-Amortisation of intangible asset (Note 4) 4,000 4,000 - -Auditors’ remuneration

- current year 42,300 30,000 18,000 1,000- prior year (6,343) 1,500 - -

Bad trade debts written off 182,273 16,658 - -Depreciation of fixed assets (Note 3) 1,165,521 1,048,548 1,470 980Directors’ remuneration

- Directors of the Company 409,950 350,299 409,950 -- other directors of subsidiary companies 369,705 365,200 - -

Directors’ fees- Directors of the Company 60,000 - 60,000 -

Fees paid/payable for non-audit servicesrendered by auditors of the Company 3,000 6,050 500 -

Foreign exchange loss - 100,280 - -Loss on disposal of fixed assets 2,356 2,360 - -Loss on disposal of other non-current assets 12,230 - - -Marketing expenses paid to a former Director - 36,400 - -Operating leases

- rental of premises 508,101 430,992 - -- rental of copier 920 - - -

Pre-operating expenses written off - 4,973 - 3,283Provision for diminution in

value of other non-current assets (Note 5) 49,800 - - -Provision for doubtful trade debts (Note 8) 489,754 16,940 - -Staff costs 3,047,385 3,249,977 - -Stock written off 3,093 - - -

and crediting:-Bad trade debts recovered 2,476 - - -Foreign exchange gain 227,597 - - -Gain on disposal of fixed assets 36,900 - - -Interest income

- bank current account 21,863 44,533 - -- fixed deposits 75,560 - - -

Provision for doubtful trade debts nolonger required, now written back (Note 8) - 35,900 - -




25. Finance costsThe Group The Company

2001 2000 2001 2000$ $ $ $

Interest expense- bank overdraft 32,429 599,940 4,970 -- finance lease 112,401 49,239 - -- term loan 455,024 70,464 - -- trust receipt 378,390 156,988 - -- others 1,173 745 - -

979,417 877,376 4,970 -

26. TaxationThe Group

2001 2000$ $

Taxation based on profit for the financial year- Current 184,500 901,300- Deferred (Note 20) 25,000 (13,000)

Recoupment of tax benefits arising fromcapital allowances brought forward - (435,000)

Prior years’ taxation under/(over) provided 157,784 (4,291)

367,284 449,009

The actual rate of taxation is lower than the statutory corporate tax rate applicable to the Group’s profit mainly due tothe effect of tax exemption granted for certain chargeable income and the utilisation of capital allowances available.

In the previous financial year, the actual rate of taxation was higher than the statutory corporate tax rate applicable tothe Group’s profit mainly due to certain expenses not being deductible for taxation purposes.

As at the balance sheet date, the Group had the following unabsorbed tax losses and unutilised capital allowancessubject to agreement by the Singapore tax authorities:-

The Group2001 2000

$ $

Unabsorbed tax losses 97,000 6,000Unutilised capital allowance 6,700 700

103,700 6,700




26. Taxation (cont’d)

Tax benefit arising from the unabsorbed tax losses and unutilised capital allowances amounting to approximately$25,300 (2000: $1,700) are available for set-off against any future profits provided that the companies in the groupalso comply with the provisions of the Singapore Income Tax Act in that there is no substantial change in the compositionof the shareholders and their shareholdings in the companies at the relevant dates when the unabsorbed tax lossesand unutilised capital allowances are utilised.

27. Financial risk management objectives and policiesThe main risks arising from the Group’s and the Company’s financial instruments are interest rate risk, foreign currencyrisk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarisedbelow.

Net fair value of financial assets and liabilities

The net fair value of all financial assets and liabilities approximates their carrying values.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in thebalance sheets and in the notes to the financial statements.

Foreign currency risk

The Group’s and the Company’s foreign currency exposure arises from foreign currency denominated transactions andbalances. The currencies giving rise to foreign currency risk is primarily US dollars.

The Group and the Company do not actively adopt any hedging strategies to cover foreign exchange exposure. Thecommercial efficacy of such hedging strategies will be evaluated on a case-to-case basis, taking into consideration theexpenses of such exercises and the extent of foreign exchange risks.

Credit risk

Management has a credit policy in place and the exposure to credit risk is monitored on an on going basis.

At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk isrepresented by the carrying amount of each financial asset in the balance sheet.

Interest rate exposures

The Group’s and the Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value willfluctuate as a result of changes in market interest rates, is as follows:-

The credit facility extended is subject to floating interest rates at 0.5% to 2.5% above prime rate applicable for eachinterest period. Each interest period of the Company’s bank facility is between 30 to 360 days.




28. Earnings per shareThe earnings per share is calculated by dividing the Group’s profit attributable to shareholders by the weighted averagenumber of shares in issue during the financial year as follows:-

The Group2001 2000

Earnings per share of $0.10 each 0.95 cents 3.58 cents

The calculation of the earnings per share is based on:-

Profit attributable to shareholders $598,504 $2,480,530

Weighted average number of fully-paid sharesof $0.10 each in issue during the financial year(2000: Pre-invitation share capital of $0.10 each) 62,791,923 69,333,590

29. Prior year adjustmentDuring the financial year, the Group and the Company adopted Statement of Accounting Standard 34 “IntangibleAssets” issued by the Institute of Certified Public Accountants of Singapore. Under this new standard, all preliminaryand pre-operation expenses should be recognised as an expense as and when they are incurred and charged to theprofit and loss account. This change has been made retrospectively and resulted in a restatement of the retainedprofits/(accumulated losses) of the Group and of the Company as at 1 January 2000 by $9,635 and $9,635 respectivelyand 1 January 2001 by $49,763 and $14,898 respectively.

Accordingly, the 31 December 2000 comparative figures have been restated as follows:-

2000 balance2000 balance as previously

as restated statedThe Group $ $

Balance sheetDeferred expenditure - 49,763Retained profits at end of financial year 2,470,895 2,520,658

Profit and loss accountOther operating expenses (4,533,711) (4,493,583)Profit before taxation and minority interest 2,928,092 2,968,220Profit after taxation but before minority interest 2,479,083 2,519,211




29. Prior year adjustment (cont’d)2000 balance

2000 balance as previouslyas restated stated

The Company $ $

Balance sheetDeferred expenditure - 14,898Accumulated losses at end of financial year (14,898) -

Profit and loss accountOther operating expenses (5,263) -Loss before taxation (5,263) -Loss after taxation (5,263) -

30. Significant related party transactionsIn addition to the related parties information disclosed elsewhere in the financial statements, the following weresignificant related party transactions between the Group and the Company and their related parties during the financialyear at agreed rates and terms:-


$ $ $ $

Corporate shareholderLoan interest income - 7,000 - -Purchase of subsidiary companies - - - 4,433,355Reimbursement of utilities and

other expenses paid on behalf 402,315 426,902 - -Rental expense 463,560 430,992 - -Sale of goods 43,821 315,779 - -Sales of club memberships 42,300 - - -

Related partiesPurchase of goods - 11,124 - -




31. Operating lease commitmentsAs at the balance sheet date, the Group was committed to making the following payments in respect of operatingleases with a term of more than one year:-

The Group2001 2000

$ $

Leases which expire:-

Within one year 463,519 457,560After one year but within five years - 419,430

32. Capital commitmentAs at the balance sheet date, capital commitment not provided for in the financial statements is as follows:-

The Group2001 2000

$ $

Capital contribution towards investment in subsidiary company - 416,735

33. Segment reportingBusiness segments

The Group is organised into three main business segments. The sub-groups are the basis on which the Group reportsits primary segment information. Segment assets consist primarily of fixed assets, stock, receivables and cash balances.Segment liabilities comprise operating liabilities. Capital expenditure comprises additions to fixed assets.

Electronics Switchgearmanufacturing design

2001 services Distribution and assembly The Group$ $ $ $

SEGMENT REVENUE:Total revenue from external customers 29,384,476 6,165,949 2,141,192 37,691,617

Segment results 1,563,827 464,563 (199,712) 1,828,678Interest expenses (979,417)Interest income 97,423

Profit before taxation 946,684Taxation (367,284)

Profit after taxation 579,400Minority interests 19,104

Net profit for the financial year 598,504




33. Segment reporting (cont’d)

Business segments (cont’d)



Capital expenditure 550,558 114,909 23,765 689,232

Depreciation expense 1,054,798 96,094 14,629 1,165,521

Amortisation expense - 4,000 - 4,000

ASSETS AND LIABILITIES2001

Segment assets 24,692,431 5,145,752 1,298,010 31,136,193Unallocated assets 17,287

31,153,480

Segment liabilities 12,188,500 5,314,263 556,603 18,059,366Unallocated liabilities 120

18,059,486



SEGMENT REVENUETotal revenue from external customers 33,716,370 7,217,820 2,938,622 43,872,812

Segment results 2,830,640 772,132 171,694 3,774,466Unallocated corporate expenses (13,531)

3,760,935Interest expenses (877,376)Interest income 44,533

Profit before taxation 2,928,092Taxation (449,009)

Profit after taxation 2,479,083Minority interests 1,447

Net profit for the financial year 2,480,530




33. Segment reporting (cont’d)

Business segments (cont’d)




Depreciation expense 936,495 98,534 13,519 1,048,548

Amortisation expense - 4,000 - 4,000

ASSETS AND LIABILITIES2000Segment assets 21,024,593 5,915,973 1,761,053 28,701,619

Segment liabilities 14,803,957 5,999,703 984,499 21,788,159Unallocated liabilities 9,206

21,797,365

Geographical segments

The Group’s business segments operate in three main geographical areas. Sales revenue is based on the country inwhich the customer is located. Segment assets consist primarily of fixed assets, stock and work-in-progress, receivables,fixed deposits with banks and cash and bank balances. Capital expenditure comprises additions to fixed assets. Segmentassets and capital expenditure are shown by the geographical area in which the assets are located.

United States2001 Singapore Europe of America Consolidated

$ $ $ $

Total revenue from external customers 14,312,077 12,612,129 10,767,411 37,691,617

Segment assets 11,493,375 10,605,674 9,054,431 31,153,480


United States2000 Singapore Europe of America Consolidated

$ $ $ $

Total revenue from external customers 26,998,148 5,885,861 10,988,803 43,872,812

Segment assets 18,179,046 3,670,260 6,852,313 28,701,619





34. Directors’ remunerationNumber of Directors of the Company in remuneration bands for the financial year ended 31 December 2001 are as follows:-

Executive Non-ExecutiveDirectors Directors Total

$500,000 and above - - -$250,000 to $499,999 - - -Below $250,000 2 4 6

Total 2 4 6

35. Contingent liabilities - unsecuredThe CompanyAs at the balance sheet date, there were contingent liabilities in respect of the following:-

a) guarantees given by the Company to banks in connection with bank facilities granted to subsidiary companiesamounting to $13,555,000 (2000 : Nil). The amount of facilities utilised by the subsidiary companies at financialyear end amounted to $5,279,596 (2000 : Nil); and

b) guarantees given by the Company to finance lease creditors to secure finance lease facilities to a subsidiarycompany amounting to $1,487,500 (2000 : Nil).

In the opinion of the Directors, no loss is anticipated.

36. Events subsequent to the balance sheet dateSubsequent to the balance sheet date, the Company issued corporate guarantees amounting to $15,400,000 to itssubsidiary companies’ bankers for banking facilities extended. Consequently, the corporate guarantee given by acorporate shareholder and a subsidiary company of the Group, and the joint and several guarantee by certain Directorsand former Directors of the Company have been discharged.

37. Comparative figuresCertain comparative figures have been reclassified to conform with current financial year’s presentation and also beenrestated due to adjustments resulting from the change in accounting policy as disclosed in Note 2(h) and 29 to thefinancial statements.





56STA T I S T I C S O F S H A R E H O L D I N G Sas at 15 April 2002

Authorised Share Capital : 20,000,000Issued and Fully-paid Share Capital : S$8,233,359Class of Shares : Ordinary Shares of S$0.10 eachVoting Rights : One vote per share

Distribution of ShareholdingsSize of Shareholdings No. of Shareholders % No. of Shares %

1 - 1,000 95 8.70 87,710 0.101,001 - 10,000 500 45.79 2,715,200 3.3010,001 - 1,000,000 491 44.96 29,449,580 35.771,000,001 and above 6 0.55 50,081,100 60.83

Total 1,092 100.00 82,333,590 100.00

Twenty Largest ShareholdersNo. Name No. of Shares %

1 Pacific Vinitex Private Limited 22,557,628 27.402 Ng Chee Fatt 9,821,740 11.933 Keppel Bank Nominees Pte Ltd 8,392,132 10.194 Saw Chee Keang 5,094,350 6.195 OCBC Securities Private Ltd 3,127,000 3.806 Choo Tian Wang 1,088,250 1.327 Phillip Securities Pte Ltd 887,000 1.088 Oversea-Chinese Bank Nominees Pte Ltd 779,000 0.959 Mayban Nominees (S) Pte Ltd 666,000 0.8110 Teow Chun Weng 629,000 0.7611 J M Sassoon & Co (Pte) Ltd 622,000 0.7612 Kim Eng Ong Asia Securities Pte Ltd 582,000 0.7113 Yap Soo Kiat 565,980 0.6914 Yong Kuen Shoo 555,980 0.6815 DBS Nominees Pte Ltd 554,000 0.6716 Lee Chew Seng 522,850 0.6417 HKS Properties Pte Ltd 500,000 0.6118 Low Ee Heng 500,000 0.6119 Tan Wan Theng 500,000 0.6120 United Overseas Bank Nominees Pte Ltd 467,000 0.57

Total 58,411,910 70.98

Substantial Shareholders as at 15 April 2002 (as recorded in the Company’s Register of Substantial Shareholders)

Name No. of Shares %

Pacific Vinitex Private Limited (1) 30,949,760 37.59Chua Boon Tat (2) 30,949,760 37.59Wee Beng Sing, Roland (3) 30,949,760 37.59Ng Chee Fatt 9,821,740 11.93Saw Chee Keang 5,094,350 6.19Notes(1) Out of the 30,949,760 shares, 8,392,132 shares are registered in the name of Keppel Bank Nominees Pte Ltd.(2) Mr Chua Boon Tat is deemed to have an interest in the shares held by Pacific Vinitex Private Limited as he owns 38.94% of the issued shares of Pacific

Vinitex Private Limited.(3) Mr Wee Beng Sing Roland is deemed to have an interest in the shares held by Pacific Vinitex Private Limited as he owns 38.94% of the issued shares of

Pacific Vinitex Private Limited.



N O T I C E O F T H I R D A N N U A L G E N E R A L M E E T I N G

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of the Company will be held at Jurong Country Club,The Theatrette, 9 Science Centre, Singapore 609078 on Wednesday, the 29th day of May 2002 at 10.00 a.m. for thefollowing purposes :-

As Ordinary Business1. To receive and adopt the Directors’ Report and the Audited financial statements for the financial year ended 31 December

2001, together with the Auditors’ Report thereon. (Resolution 1)

2. To approve Directors’ fees of S$60,000 for the financial year ended 31 December 2001.(Resolution 2)

3. To approve Directors’ fees of S$180,000 for the financial year ending 31 December 2002 (see note to Resolution 3).(Resolution 3)

4. To re-elect Mr Wong Kwan Seng, Robert as Director under Article 107. (Resolution 4)

5. To re-elect Mr Ong Kian Min as Director under Article 107. (Resolution 5)

6. To re-elect Mr Teo Boon Tieng as Director under Article 107. (Resolution 6)

7. To re-elect Mr Choo Tian Wang as Director under Article 103. (Resolution 7)

8. To re-appoint Messrs BDO International as auditors and to authorise the Directors to fix their remuneration.(Resolution 8)

9. To transact any other business that may be transacted at an Annual General Meeting.

As Special BusinessTo consider and, if thought fit, to pass the following resolution as Ordinary Resolution, with or without modifications :-

10. “That pursuant to Section 161 of the Companies Act, Cap. 50 and the Listing Rules of the Singapore Exchange SecuritiesTrading Limited, authority be and is hereby given to the Directors to issue shares in the Company (whether by way ofrights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such personsas the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issuedpursuant to this Resolution does not exceed 50% of the issued share capital of the Company for the time being, of whichthe aggregate number of shares to be issued other than on a pro-rata basis to shareholders of the Company does notexceed 20% of the issued share capital of the Company for the time being, and, unless revoked or varied by the Companyin general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of theCompany or the date by which the next Annual General Meeting of the Company is required by law to be held, whicheveris the earlier.” (Resolution 9)



58N OT I C E O F T H I R D A N N U A L G E N E R A L M E E T I N G

11. “That approval be and is hereby given to the Directors to offer and grant options in accordance with the provisions of theStartech Share Option Scheme (the “Scheme”), and, pursuant to Section 161 of the Companies Act, Cap. 50 to allot andissue from time to time such amount of shares in the capital of the Company as may be required to be issued pursuantto the exercise of options under the Scheme, provided always that the aggregate number of shares to be issued pursuantto the Scheme shall not exceed 15% of the issued share capital of the Company at any time and from time to time.”

(Resolution 10)

BY ORDER OF THE BOARD

SAW CHEE KEANGExecutive ChairmanSingapore, 13 May 2002

Notes:1. A Member of the Company entitled to attend and vote may appoint not more than two proxies to attend and vote instead of him. A

proxy need not be a member.

2. If a proxy is to be appointed, the form must be deposited at the registered office of the Company at 13 Woodlands Walk, Singapore738318 not less than 48 hours before the time fixed for holding the Meeting.

Note to Resolution 3Under Resolution 3, shareholders will be requested to approve a sum of S$180,000 as Directors’ fees for the financial year ending 31December 2002. These fees, if approved, will be paid only after 31 December 2002.

Note to Resolution 4Mr Wong Kwan Seng, Robert, if re-elected, will continue to serve as an independent member and Chairman of the Audit Committee.

Note to Resolution 5Mr Ong Kian Min, if re-elected, will continue to serve as an independent member of the Audit Committee.

Note to Resolution 6Mr Teo Boon Tieng, if re-elected, will continue to serve as an independent member of the Audit Committee.

Explanatory Notes on Special Business to be TransactedNote to Resolution 9The proposed Resolution 9, if passed, will empower the Directors of the Company from the date of the above meeting until the next AnnualGeneral Meeting to issue shares in the Company up to and not exceeding in total 50% of the issued share capital of the Company for thetime being for such purposes as they consider would be in the interests of the Company, subject to the listing rules of the SingaporeExchange Securities Trading Limited. This authority will continue in force until the next Annual General Meeting of the Company, unlesspreviously revoked or varied at a general meeting.

Note to Resolution 10The proposed Resolution 10, if passed, will empower the Directors of the Company to offer and grant options under the Startech ShareOption Scheme (the “Scheme”) which was approved at the Extraordinary General Meeting of the Company held on 17 July 2001 and to allotand issue shares pursuant to the exercise of options under the Scheme, subject to the terms of the resolution.


*I/We, ___________________________________________________________________________________________of _____________________________________________________________________________________________being *member/members of STARTECH ELECTRONICS LTD (Registration No: 199906220H) (the “Company”), hereby appoint

P R O X Y F O R MIMPORTANT1. For investors who have used their CPF monies to buy

shares in the capital of Startech Electronics Ltd(Registration No: 199906220H), this report isforwarded to them at the request of their CPF ApprovedNominees and is sent solely FOR INFORMATION ONLY.

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

Total Number ofOrdinary Shares Held

* NRIC/ Percentage ofName Address Passport Number Shareholdings (%)

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Third AnnualGeneral Meeting of the Company, to be held at Jurong Country Club, The Theatrette, 9 Science Centre, Singapore 609078 onWednesday, the 29th day of May 2002 at 10.00 a.m. and at any adjournment thereof.(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as set out in theNotice of Third Annual General Meeting. In the absence of specific directions, the *proxy/proxies will vote or abstain as *he/they think fit,as *he/they will on any other matter arising at the Third Annual General Meeting.)

No. Resolutions For Against

1. To receive and adopt the Directors’ Report and the Audited financial statements for thefinancial year ended 31 December 2001, together with the Auditors’ Report thereon.

2. To approve Directors’ fees of S$60,000 for the financial year ended 31 December 2001.

3. To approve Directors’ fees of S$180,000 for the financial year ending 31 December 2002.

4. To re-elect Mr Wong Kwan Seng, Robert as Director under Article 107.

5. To re-elect Mr Ong Kian Min as Director under Article 107.

6. To re-elect Mr Teo Boon Tieng as Director under Article 107.

7. To re-elect Mr Choo Tian Wang as Director under Article 103.

8. To re-appoint Messrs BDO International as auditors and to authorise the Directorsto fix their remuneration.

9. To approve ordinary resolution to authorise Directors to issue shares pursuant toSection 161 of the Companies Act, Cap. 50.

10. To authorise Directors to offer and grant options and to issue shares pursuant tothe grant of the options.

* and/or (delete as appropriate)

Signature(s) of member(s)/Common Seal

Startech Electronics Ltd(Registration No: 199906220H)

(Incorporated in the Republic of Singapore)

Dated this ___________ day of ___________ 2002.

✄


Notes:-

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or two proxies to attend andvote in his/her stead. A proxy need not be a member of the Company and where there is more than one proxy, the proportion ofShares to be represented by each proxy must be stated.

2. Where a member appoint two proxies, the appointments shall be invalid unless he specified the proportion (expressed as a percentageof the whole) of his shareholding to be represented by each proxy.

3. This instrument of proxy must be signed by the appointor or his/her duly authorised attorney or, if the appointor is a body corporate,signed by a duly authorised officer or its attorney or affixed with its common seal thereto.

4. A body corporate which is a member may also appoint by resolution of its directors or other governing body an authorised representativein accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore to act on behalf of suchbody corporate.

5. This instrument appointing a proxy or proxies, (together with the power of attorney (if any) under which it is signed or a certified copythereof), must be deposited at the registered office of the Company at 13 Woodlands, Singapore 738318 not less than 48 hours beforethe time fixed for holding the Annual General Meeting.

6. Please insert the total number of shares held by you. If you have shares entered against your name on the Depository Register (asdefined in Section 130A or the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have sharesentered against your name in the Depository Register and registered in your name in the Register of Members, you should insert theaggregate number of shares. If no number is inserted, this instrument of proxy will be deemed to relate to all the shares held by you.

7. The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed or illegible or where the trueintentions of the appointor are not ascertainable from the instructions of the appointor specified in this instrument of proxy. Inaddition, in the case of members whose shares are deposited with The Central Depository (Pte) Limited (“CDP”), the Company mayreject any instrument of proxy lodged if such member is not shown to have shares entered against his name in the DepositoryRegister as at 48 hours before the time appointed for the holding of the Annual General Meeting as certified by CDP to the Company.


Startech Electronics Ltd

(Reg No: 1999/06220H)

13 Woodlands Walk,

Singapore 738318

Tel: (65) 6 756 1602

Fax: (65) 6 756 7300

Email: [email protected]

URL: www.startechgrp.com


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