Growing - listed companyhlntechnologies.listedcompany.com/misc/ar2005.pdf · PT Polymertech...

HLN TECHNOLOGIES LIMITEDAnnual Report 2005

from Strength to StrengthGrowing

T a b l e o f c o n t e n t s

C o r p o r a t e p r o f i l e

HLN Technologies Limited

HLN Micron Pte Ltd

HLN RubberProducts Pte Ltd

100%

100%

Process InnovationTechnology Pte Ltd

100%

100%HLN (Suzhou) Rubber

Products Co., Ltd

99.9%PT Polymertech

Rubberindo Tanahmas(1)

60%HLN Technologies Sdn Bhd

(1) For the purpose of satisfying Indonesian legal requirements that an Indonesian company must have at least two shareholders, our Chief Executive Officer and Executive Director, Mr Wa Kok Liang, Leslie, is the registered holder of one share in PT Polymertech Rubberindo Tanahmas

G r o u p s t r u c t u r e

HLN Technologies Limited (“HLN Tech”) was incorporated in Singapore on 26 February 2004 and subsequently listed on 25 November2005. It is involved in the manufacture and sale of a wide range of customized precision elastomeric and polymeric components,which are used in a variety of industries principally in the office automation, consumer electronics and automotive industries. HLNTech has in-house material formulation and compounding facilities where it blends the mixture of elastomers and other ingredientsto make rubber compound, a raw material used in the production of its precision elastomeric and polymeric components.

Apart from manufacture and sale of customized precision elastomeric and polymeric components, HLN Tech also specializes inproviding precision polymeric die-cutting services according to customers’ specification and requirements. As part of its enhancedcorporate vision to be a preferred Global One-Stop Solutions Provider for Integrated Mechanical Components, HLN Tech expandedinto the precision machining (Metallic) business. The Metallic business unit has recently launched its foray into the Memory StorageIndustry and have started supplying components to this new market segment.

HLN Tech’s business model now comprises three core engines of growth:

• Precision molding of elastomeric components;• Precision die-cutting and converting of polymeric components;• Precision machining and turning of metallic components.

Our Vision, Mission and Core Values 01 • Letter to Shareholders 02 • Operating and Financial Review 05 • Financial Highlights 07 • Board of Directors 08 •Senior Management 11 • Consolidated Financial Statements 13 • Corporate Governance Report 17 • Report of the Directors 29 • Statement of Directors 32 •Auditors’ Report to the Members 33 • Balance Sheets 34 • Consolidated Income Statements 35 • Statements of Changes in Equity 36 • Consolidated Cash FlowStatements 38 • Notes to Financial Statements 39 • Statistics of Shareholdings 65 • Notice of Annual General Meeting 67 • Proxy Form

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We envision being a preferred GLOBAL One-Stop Solutions

Provider for Integrated Mechanical Components.

We deliver our vision by being a LONG-TERM partner to our customers

with the provision of QUALITY products, COMPETITIVE pricing, ON-TIME

delivery and RESPONSIVE service through continuous investment in

technology and active involvement in customers’ product development.

O u r m i s s i o n

We aim to be a SOCIALLY-RESPONSIBLE corporate citizen by REDUCING,

RECYCLING and RE-USING relevant resources in order to be accountable to

the environment.

We aim to be a PEOPLE DEVELOPER by inculcating a sense of affiliation and

belonging amongst the management and workers. We value PEOPLE AS

ASSETS and will continuously provide an environment of personal learning

and upgrading.

O u r c o r e v a l u e s

O u r v i s i o n

L e t t e r t o s h a r e h o l d e r s

25 NOVEMBER 2005 marked a significant milestone for HLN Group as we gained official admission to the Stock Exchange ofSingapore Dealing and Automated Quotation System (SGX-SESDAQ). The successful listing has raised our Group’s profile andstrengthened our financial position, paving the way for our expansion and long-term growth. We raised about $3.8 million, thesubstantial part of which would go toward capacity expansion in Singapore, Indonesia and the People's Republic of China to meetanticipated increased demand and higher business volume from existing and new customers.

The competitive landscape remains challenging, characterized by borderless globalization, volatile technology cycles, rising energyand material prices and constant threats of terrorism and spread of infectious diseases. Notwithstanding the difficult economicand operating conditions, we are pleased that we performed well in FY2005.

Group turnover grew by 25.1%, from $11.3 million in FY2004 to $14.1 million in FY2005 and net profit grew 0.7% from$3.49 million to $3.51 million, with a stellar net profit margin of 25%. This is achieved despite higher factory overheads due toour Batam expansion and higher operating expenses in FY2005. Net operating cash flow more than doubled from $1.2 millionto $2.6 million, boosting cash and cash equivalents at the end of the year to $7.1 million.

To share the success of the Group and in appreciation of the support from our shareholders, we are pleased to propose a first andfinal dividend of 1.1 cents per share, yielding a payout of 30.7% of our FY2005 net profit. We will continue to improve shareholdervalue through paying healthy dividends in line with the anticipated growth of the Group.

During the year in review, our Automotive segment received a boost when our wholly owned subsidiary, HLN Rubber Products PteLtd, was appointed as Brembo S.p.A’s New Strategic Supplier for Technical Rubber Components. Milan-listed Brembo is a worldleader known for their high performance braking and fuel injection systems for Porsche, Ferrari, Chrysler, Mercedes, BMW and Fiat.The first orders from Brembo are expected in the first half of FY2006.

The growing trend of outsourcing by US and European MNCs into Asia is expected to benefit the Group's operations in China andother countries in which we have a presence. Their search for low-cost and competitive producers of customized precision elastomericand polymeric components is fuelling demand for our products and services.

Our strategy of operating in lower cost economies allow us to mitigate the threat of rising energy and material prices while at thesame time maintain proximity to our customers. To manage the challenge of ever shorter and quicker technology cycle, we planto increase our R&D investments with a view to boost product differentiation in the light of stiffer competition. To ensure resourcesare optimized and wastage is kept to the minimum, we plan to implement an Enterprise Resource Planning system in FY2006.

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In January 2006, we announced our expansion into the precision machining business by setting up

HLN Technologies Sdn Bhd in Johor, Malaysia through our newly formed subsidiary, HLN Micron Pte

Ltd. HLN Technologies Sdn Bhd, in which HLN Micron holds a 60% interest, has commenced operations

and is now serving customers primarily in the Memory Storage & Telecommunications sectors.

This exciting new business arm was established in response to customer-driven demand as well as to

strengthen our competitive advantage through product differentiation, by providing integrated product

solutions to our customers. This strategy affords us the opportunity to cross-sell our products and help

us to deepen market penetration. We call our Elastomeric, Polymeric and Metallic businesses our three

turbo engines of growth, ready to take flight and land in any target market.

For this coming year, the Group plans to make additional investments to increase production capacity

in anticipation of stronger demand and higher business activity. We expect new customer contracts

as well as new projects from existing customers in key business segments, namely, Office Automation,

Consumer Electronics and Automotive. In addition, we will ride on the opportunities presented to us

in an evolving marketplace. We hope to expedite the Group's progress and development through

organic growth as well as strategic alliances, joint ventures and partnerships.

We believe our strong business fundamentals and our experienced management team will help the

Group weather any economic storm. We believe with the concerted effort of everyone, accompanied

by a more favorable business outlook, we are confident of a profitable FY2006.

We take this opportunity to thank our shareholders, customers, suppliers, business associates, our

directors and staff for their valuable contribution and continued support.

Chow Kok Kee Wa Kok Liang, Leslie

Chairman Chief Executive Officer and Executive Director

We believe with the concerted effort ofeveryone, accompanied by a more favorable

business outlook, we are confident of anotherprofitable FY2006.

We aim to further develop our metallic business to better provide our customers with complete and integrated mechanical

component manufacturing solutions.

OPERATING REVIEW

The Group envisions being a preferred global one-stop solutions provider for integrated mechanical components. Towards thatend, the Group offers an array of customized precision elastomeric, polymeric and metallic precision machining components toits customers in various industries including office automation, consumer electronics, automotive, industrial applications and otherbusiness segments.

The Group organizes its operations into the three business units to serve the targeted business segments from its manufacturingfacilities strategically located in Singapore, Malaysia, Indonesia and the People’s Republic of China (“the PRC”).

REVENUE

Total sales grew $2.8 million or 25.1% year-on-year to$14.1 million in FY2005 with sales to the consumerelectronics segment contributing approximately $2.1 millionto the increase and the office automation segment about$0.7 million. In office automation segment which representsapproximately 55.8% (FY2004: 63.8%) of our Group sales,our products go into leading office automation productssuch as printers through reputable contract manufacturers including the Flextronics Group, Cal-Comp Group, Venture Group andSamsung Asia. We manufacture various parts like bumpers, pads, rollers and labels used in printers. We also supply wiper stripsused in vacuum cleaners, vibration dampeners used in mobile phones, gaskets for solar casings and rubber tubes for coffee makers,to major customers including SIMM, Escatec and the Schneider Group under the consumer electronics segment, which is our secondlargest revenue source contributing approximately 30.8% to our Group sales in FY2005 (FY2004: 19.6%).

Our operations are primarily based in Asia. Sales to our customers in the South East Asia segment represents approximately 82.5%(FY2004: 84.0%) of our Group FY2005 sales, followed by sales to the North and East Asia segment which contributed another14.2% (FY2004: 10.6%). Malaysia and Singapore remained our two largest revenue contributors, accounting for 76.7% (FY2004:72.2%) of our Group FY2005 sales, followed by sales to the PRC market which has almost quadrupled from $0.5 million in FY2004to $1.9 million in FY2005.

MANUFACTURING CAPACITY

In 2005, we expanded our Batam operations by setting up a second production plant in Panbil Industrial Estate after securing amajor order from a renowned MNC for production of miniature rubber holders used for motor vibrators in mobile phones such asNokia, Sony-Ericsson and Motorola. We re-organised our Batam operations to offer dedicated facility for this customer and tocapitalize on the competitiveness and proximity advantages offered in Batam.

CUSTOMER CONFIDENCE AND SERVICE EXCELLENCE

We continued to acquire new customers in 2005 and increased salesfrom existing customers. This was achieved by designing our productionprocess flow to suit the stringent requirements of our major customers.We offer dust-free and fiber-free production environment, tightly controlledprocesses from material preparation to molding, and automated de-flashing of rubber parts using cryogenic machines. With our extensive

knowledge in rubber formulation, we have met and exceeded customers' expectation on requirements such as Coefficient of Frictionand solvent resistant properties.

QUALITY ASSURANCE

Our elastomeric business unit achieved the highly accredited ISO 14001 in 2005, a manifestation of our environmental awarenessand our corporate value to be a socially responsible corporate citizen. We have also commenced our TS 16149 audit and we targetto achieve the certification in 2006. TS 16149 is a pre-requisite to serving customers in the automotive sector.

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O p e r a t i n g a n d F i n a n c i a l r e v i e w

FINANCIAL REVIEW

For the financial year ended 31 December 2005, we recorded increase of $24,000 or 0.7% in net profit after tax to $3.51 million(FY2004: $3.49 million).

Our gross profit increased $1.0 million or 16.2% to $7.2 million in FY2005. However, gross profit margin declined from 54.8%to 50.8% in FY2005 as we diversified into the more competitive consumer electronics segment, in addition to higher manufacturingoverheads arising from our Batam expansion.

We also incurred higher sales related expenses, staff costs and depreciation costs in FY2005 due to the higher sales. As a result,our net profit before tax grew marginally by $47,000 to $4.5 million. Our Group income tax also increased slightly by $23,000 to$1.0 million but our income tax rate remained constant at 22.5% (FY2004: 22.2%).

Whilst net profit after tax may have increased marginally, our cash generated from operations more than doubled from $1.8 millionin FY2004 to $3.8 million in FY2005 due to effective working capital management. Although our Group income taxes paid inFY2005 amounted to $1.2 million (FY2004: $0.6 million), net cash generated from operating activities more than doubled from$1.2 million in FY2004 to $2.6 million in FY2005, reflecting our strong profitability and cash flow.

Further, we repaid approximately $0.2 million of interest-bearing borrowings and incurred capital expenditure of approximately$1.4 million on plant and machinery investments in our Singapore and Batam operations in line with higher sales.

Overall, our Group net cash and cash equivalents increased by approximately $1.1 million in FY2005 compared to a negative$40,000 in FY2005, before net proceeds of $3.8 million in December 2005 and dividends paid of $0.6 million in FY2004. Aftertaking into account the IPO proceeds, the net increase was approximately $4.9 million compared to a negative $0.7 million inFY2004 (after dividends paid). As at 31 December 2005, our Group cash and cash equivalents stood at approximately $7.1 millionwhich puts us in a financially strong position to execute our strategies listed in our IPO Prospectus dated 15 November 2005,necessary to propel us to our next phase of growth as an integrated mechanical components solutions provider.

OUR GROWTH FOCUS AND PROSPECTS

Our Group recently set up precision machining operations in Johor, Malaysia through its newly incorporated wholly owned subsidiary,HLN Micron Pte. Ltd. (“HLN Micron”), as we expanded into the metallic precision machining business to complement our twoexisting core elastomeric and polymeric businesses. HLN Technologies Sdn Bhd, in which we hold a 60% majority stake, manufacturesprecision turned metallic components for the memory storage market. This marks a significant milestone for the newly-establishedbusiness unit. The memory storage business has stringent product quality requirements but offers correspondingly higher margins. This business unit is already supplying to customers such as Quantum. The machine utilization is nearing full capacity and thebusiness unit is planning for capacity expansion in anticipation of increased orders. We aim to further develop our metallic businessto better provide our customers with complete and integrated mechanical component manufacturing solutions.

We believe our industry outlook is bright and we will continue to enjoy demand growth for our products over the next few yearsdue to the increasing trend of MNCs and electronics manufacturers relocating and/or outsourcing their production facilities toregions with competitive costs of production such as South East Asia and the PRC. In addition, the significant increase in thefrequency of new product introduction and technical innovation in the consumer electronics industry will similarly bring about anincrease in demand for our products. The prospects in the automotive industry is just as rosy as the consumer electronics industy.Our wholly owned subsidiary, HLN Rubber Products Pte Ltd, has successfully clinched a two-year supply contract worth no less than1.53 million eruos from Brembo S.p.A., the world’s No. 1 car brake system manufacturer headquartered in Italy. Brembo alsoexpressed keen interest to purchase metallic precision turned and machining components from HLN Micron. This is another milestoneof an effective cross-selling of products among the different business units within the Group. We are confident of more similarcross-selling activities to other customers in the coming years with the objective to deepen penetration into our existing customerbase. As far as market development is concerned, the Group is targeting Europe as well as the vast domestic Chinese market.After establishing a presence in Suzhou, we plan to expand our market reach to other parts of China.

O p e r a t i n g a n d f i n a n c i a l r e v i e w

We will continue to expand our operations to lower cost countries to maintain our cost competitiveness amidst pressure on operatingmargins due to the more challenging competitive landscape, quicker electronics cycle, constant threats of escalating oil prices andterrorism.

Recognising the importance and strategic value of human resources (HR) and information resources, we intend to implement anEnterprise Resource Planning (ERP) system and strengthen our HR framework. We believe the ERP would sharpen our competitiveedge and improve our operational efficiency. We would also employ a regional HR manager to invigorate and enhance the Group’sorganizational vitality.

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Revenue by Business Segments (%)

FY2004 FY2005

6320

89

5531

59

Revenue by Geographical Segments (%)

84

5

FY2004

82

FY2005

11 1431

Office AutomationConsumer ElectronicsAutomotive IndustriesOthers

South-East AsiaNorth-East AsiaEuropeOthers

O p e r a t i n g a n d f i n a n c i a l r e v i e w

Proforma ActualFY2004 FY2005

S$million S$million

Turnover 11.3 14.1Gross Profit 6.2 7.2Profit Before Tax 4.5 4.5Net Profit 3.5 3.5

F i n a n c i a l h i g h l i g h t s

TurnoverS$ million

14

12

10

8

6

4

2

02004 2005

11.3

14.1

Gross ProfitS$ million

8

6

4

2

02004 2005

6.27.2

Profit Before TaxS$ million

6

4

2

02004 2005

4.5 4.5

Net ProfitS$ million

4

2

02004 2005

3.5 3.5

B o a r d o f d i r e c t o r s

Standing from left to right: Hein Ke Long, Henry Vice-Chairman and Executive DirectorWa Kok Liang, Leslie Chief Executive Officer and Executive Director Ng Khoon Seng Executive Director

Seating from left to right: Kong Yim Pui, Susan Independent DirectorChow Kok Kee Chairman and Non-Executive Director Jovenal R. Santiago Independent Director

Mr Chow Kok Kee, 54, was appointed as a Non-Executive Director and the Chairman of our Company on 5 March 2004. Mr Chow servesas a member of our Audit Committee and Nominating Committee. Mr Chow is currently the Managing Director of ACTA Investment & ServicesPte Ltd (“ACTA”), which provides business and financial related services to companies. He also holds directorships in other Singapore listedcompanies namely; Sing Lun Holdings Limited, Singapore Food Industries Limited, Thai Village Holdings Limited, Innovalues Precision Limited,Chosen Holdings Limited, Meiban Group Limited, Tuan Sing Holdings Limited and China Cast Communication Holdings Limited. Within the lastthree years, he was director of PCA Technology Limited, Oakwell Engineering Limited and NM Holdings Limited. Mr Chow worked in thegovernment administrative service for six years from 1976, holding management positions in the Ministry of Defence and Ministry of Educationbefore joining DBS Bank in 1982. He has 15 years of extensive experience in the financial services industry. A Colombo Plan scholar, Mr Chowholds a first class honours Bachelor of Engineering degree and a Bachelor of Commerce degree from the University of Newcastle, Australia anda MBA degree from the National University of Singapore. Mr Chow is a Member of the Institute of Engineers, Australia, an Associate of theInstitute of Chartered Secretaries and Administrators, United Kingdom, and a Fellow of the Singapore Institute of Directors.

Mr Hein Ke Long, Henry, 50, was appointed as a Director and the Vice-Chairman of our Company on 5 March 2004 and became our ExecutiveDirector on 23 March 2005. Mr Hein serves as a member of our Remuneration Committee. He was a Non-Executive Director of InnovaluesPrecision Limited, a company listed on the SGX Main Board, engaged in the production of high precision turned parts and components, metalcomponents machining, plating services and the assembly of rubber rollers and mechanical devices from February 2004 to November 2004 andan Executive Director from June 1998 to January 2004. As Executive Director of Innovalues Precision Limited, Mr Hein was responsible for thestrategic marketing and sales functions of the Group. Mr Hein has more than 23 years of experience in the precision engineering industry. FromDecember 1981 to January 1997, Mr Hein was Executive Director and then Managing Director of TNH Metal Pte Ltd. Mr Hein left TNH MetalPte Ltd in January 1997. In June 1997, Mr Hein co-founded Innovalues Precision Limited and became its Executive Director.

Mr Wa Kok Liang, Leslie, 35, was appointed as Executive Director and Chief Executive Officer of our Company since its incorporation on26 February 2004 (Date of next re-election: 21 April 2006). As our CEO, Mr Wa is responsible for our Group’s strategic marketing and financialplanning and market development. He has been spearheading the expansion and growth of our Group, including the expansion of our Group’sproduction facilities and services in the region and in the PRC. Mr Wa has more than 10 years of experience in the elastomeric and polymericproducts industry. Following his graduation in 1995, Mr Wa joined HLN Rubber in November 1995 as a Business Development Manager. Hesubsequently became Managing Director of HLN Rubber. Mr Wa holds a MBA (International Management) degree and a Bachelor of Businessin Business Administration degree from the RMIT University, Australia. Mr Wa also holds a Diploma in Business Administration from the SingaporePolytechnic and a Certificate in Rubber Technology from Akron University, USA. Mr Wa has been a member of the Plastics and Rubber Instituteof Singapore since April 2004.

Mr Ng Khoon Seng, 49, was appointed as Executive Director of our Company since its incorporation on 26 February 2004 (Date of next re-election: 21 April 2006). As Executive Director, Mr Ng is responsible for overseeing the production operations of our Group’s business units inSingapore, Indonesia and the PRC and for ensuring that optimal production efficiency is achieved. Being in charge of the production operationsof our Group, Mr Ng is also responsible for production planning and strategic production decision making of our Group. Mr Ng is also responsiblefor the maintenance of relations with certain of our Group’s key customers. Mr Ng has more than 27 years of experience in the stamping anddie-cutting industry. Mr Ng is also a Non-Executive Director of Pro-stamping Industrial, a company engaged in providing subcontracting servicesfor the punching of printed circuit boards, which he founded in March 1992 together with his family members. From May 2003 to June 2004,Mr Ng was the owner of Pro-stamping Enterprise, a sole proprietorship engaged in the business of stamping printed circuit boards. From August1981 to January 1990, Mr Ng has worked as a senior supervisor and technician in metal stamping industry. Mr Ng holds a Diploma in BusinessEfficiency and Productivity (Production Management) from the NPB Institute for Productivity Training.

Ms Kong Yim Pui, Susan, 45, was appointed as an Independent Director of our Company on 30 September 2005 (Date of next re-election:21 April 2006). She also serves as Chairperson of our Nominating and Remuneration Committees. Ms Kong is currently the Managing Directorof Compass LLC, a law corporation incorporated in Singapore which she founded in February 2004. Within the last three years, Ms Kong wasa director of UOB Radansin plc.

Except for a brief period of two years (from April 1991 to September 1993), Ms Kong has been in active legal practice since 1985. She foundedthe legal practice of Compass LLC in February 2004. Ms Kong’s legal practice covers corporate, banking and finance, as well as corporaterestructuring and insolvency.

Ms Kong holds a Bachelor of Law (Honours) degree from the National University of Singapore.

Mr Jovenal R. Santiago, 68, was appointed as an Independent Director of our Company on 30 September 2005 (Date of next re-election:21 April 2006). Mr Santiago also serves as the Chairman of our Audit Committee and a member of our Nominating and Remuneration Committees.He also holds directorships in other Singapore listed companies namely; Fastech Synergy Limited, Ionics EMS, Inc., Giant Wireless TechnologyLimited and Willas-Array Electronics (Holdings) Limited. Within the last three years, he was director of Ipco International Limited and NM HoldingsLimited.

A Certified Public Accountant, Mr Santiago has more than 40 years of experience in the accounting and auditing profession in Singapore andthe Philippines before his retirement in 1998. From 1971 to 1998, he was an audit principal of an international accounting firm in Singaporewhere he was in charge of audit engagements of a wide portfolio of clients including several public listed companies. Mr Santiago holds aBachelor of Science degree in Commerce from the University of Santo Tomas, Philippines and a MBA degree from New York University, USA.

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To increase our geographical reach, the Group is targeting Europe and expanding

its China presence.

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S e n i o r m a n a g e m e n t

Mr Ee Teck Siew, 38, is our Group Financial Controller. He is responsible for the overall management of the financialmatters of our Group. Mr Ee served as the Chief Financial Officer of FoodBex Global Pte Ltd, a general importer and distributorof food and beverage products from January 2004 to December 2004. From October 2002 to January 2004, Mr Ee was theGroup Finance Manager of Hup Seng Huat Co. Ltd, an industrial stockist with interests in industrial property which is listedon the SGX Main Board. Mr Ee left NatSteel Limited as the Assistant Vice President (Finance) in October 2002 after havingserved as Finance Manager and Deputy General Manager (Finance) respectively in two of its subsidiaries, Eastern Steel ServicesPte Ltd, an off-site steel fabricator and trader of steel and related products from April 2000 to October 2002, and Wuxi JinyangMetal Products Co. Ltd, a PRC manufacturer of pre-stressed concrete strand and steel products from February 1997 to April2000. From June 1995 to October 1996, Mr Ee served as the Deputy General Manager (Finance) of Tianjin Fuyuan FoodIndustries Inc., a PRC integrated poultry farm and animal feed producer. From May 1994 to June 1995, Mr Ee worked inDeloitte & Touche Singapore as an Audit Assistant. Mr Ee holds a Bachelor of Accountancy (Second Upper Class Honours)degree from the Nanyang Technological University and a Specialist Diploma in Supply Chain Management from the NanyangPolytechnic. Mr Ee is a non-practising member of the Institute of Certified Public Accountants, Singapore.

Ms Wa Sock Yin, Yvonne, 33, is our General Manager and Head of our Elastomeric Business Unit and General Managerof Batam, Indonesia operations. She is responsible for supervising the daily operations, cost budgeting and customer accountsmanagement of HLN Rubber. Ms Wa is also responsible for ensuring that the overseas subsidiaries of our Group keep toplanned sales targets and cost budgets. Ms Wa is also the General Manager of our subsidiary, PT Polymertech. Ms Wa joinedour Group in April 1996 as an accounts executive. She became a marketing manager in July 1999 and the General Managerof HLN Rubber in January 2004. Prior to joining our Group in April 1996, Ms Wa was an assistant accountant at DBS AssetManagement Limited, a fund management company from May 1993 to March 1996. Ms Wa holds a Diploma in Accountancywith Merit from Ngee Ann Polytechnic.

Ee Teck Siew

Wa Sock Yin, Yvonne Ng Koon Chuan, Francis

Tan Chong Hwa, Christopher

Loke Oi LinNg Lian Hong, Elsie

S e n i o r m a n a g e m e n t

Mr Ng Koon Chuan, Francis, 44, is our General Manager and Head of our Polymeric Business Unit. He is responsible for the

daily operations of Process Innovation including materials sourcing and planning, sales, customer relationship management, public

relations and inventory control. After completing his secondary level education, Mr Ng served in the Armour Unit of the Singapore

Armed Forces and the Intelligence Unit of the Ministry of Defence from January 1977 to August 1989. From August 1989 to

September 2001, Mr Ng worked as a shipbroker in several local shipbroking companies such as MT Maritime Management Pte

Ltd, SHINC Shipbroking Pte Ltd and Sea-Pac Shipbroking Pte Ltd. As a shipbroker, Mr Ng was responsible for the operations,

chartering and the sale and purchase of shipping vessels. Mr Ng joined Process Innovation as an Operations Director in September

2001.

Mr Tan Chong Hwa, Christopher, 35, is our General Manager of our Suzhou, PRC operations. He is responsible for the general

management and operations of HLN (Suzhou) and for developing our Group’s businesses in East Asia. Mr Tan has more than 10

years of sales and marketing experience. Prior to joining our Group in July 2003, Mr Tan was an assistant sales manager at Nitto

Denko (S) Pte Ltd, a company engaged in the manufacture of tapes and electronic components from April 1997 to June 2003.

From January 1994 to March 1996, Mr Tan was a sales and marketing executive at Futaba Denshi (S) Pte Ltd, a company engaged

in the manufacture of vacuum fluorescent displays. Mr Tan holds a Bachelor of Science degree in Economics and Management

from the University of London.

Ms Loke Oi Lin, 33, is our Group Finance Manager and is responsible for our Group’s accounting functions. Ms Loke has more

than 10 years of experience in accounting and auditing. Prior to joining our Group in March 2004, Ms Loke was an assistant

finance manager at Eu Yan Sang International Ltd, a company listed on the SGX-ST which is engaged in the retail and manufacture

of traditional Chinese medicine from October 1997 to March 2004. From December 1995 to October 1997, Ms Loke worked as

an audit semi-senior at Soh, Wang & Partners, a local public accounting firm. Ms Loke holds a Bachelor of Accountancy degree

from the Nanyang Technological University, Singapore and is a non-practising member of the Institute of Certified Public Accountants,

Singapore.

Ms Ng Lian Hong, Elsie, 46, is our Finance Manager. She is responsible for the preparation of the management accounts, human

resource management, purchasing and general administration of Process Innovation. Ms Ng is currently also a non-executive

director of Pro-stamping Industrial, a company engaged in providing subcontracting services for the punching of printed circuit

boards, which she founded in March 1992 together with her family members including our Executive Director, Mr Ng Khoon Seng.

Ms Ng holds a Higher Accounting and Business Statistics Certificate from the London Chamber of Commerce and Industry.

HLN Technologies LimitedBlk 16 Kallang PlaceKallang Basin Industrial Estate#01-18Singapore 339156Tel: (65) 6746 1366Fax: (65) 6295 6080Website: www.hlntech.com HLN Rubber Products Pte LtdBlk 16 Kallang PlaceKallang Basin Industrial Estate#01-16/18Singapore 339156Tel: (65) 6746 1366Fax: (65) 6295 6080

HLN Micron Pte. Ltd.Blk 16 Kallang PlaceKallang Basin Industrial Estate#01-16/18Singapore 339156Tel: (65) 6746 1366Fax: (65) 6295 6080

Process Innovation Technology Pte LtdBlk A Tong Lee Building35 Kallang Pudding Road#01-05Singapore 349314Tel: (65) 6226 1051Fax: (65) 6841 9279

PT Polymertech Rubberindo TanahmasLot 307/308 Jln ANgsanaBatamindo Industrial ParkMuka Kuning, Batam IslandIndonesiaTel: (62) 770 612 008Fax: (62) 770 612 886 HLN Technologies Sdn BhdNo. 1 Jalan TarukaTampoi Industrial EstateJohor Bahru 80350MalaysiaTel: (60) 7 237 0780Fax: (60) 7 236 6779

BOARD OF DIRECTORSChow Kok Kee Chairman and Non-executive DirectorHein Ke Long, Henry Vice Chairman / Executive DirectorWa Kok Liang, Leslie Chief Executive Officer / Executive DirectorNg Khoon Seng Executive DirectorKong Yim Pui, Susan Independent DirectorJovenal R. Santiago Independent Director

NOMINATING COMMITTEEKong Yim Pui, Susan ChairpersonChow Kok Kee MemberJovenal R. Santiago Member

REMUNERATION COMMITTEEKong Yim Pui, Susan ChairpersonHein Ke Long, Henry MemberJovenal R. Santiago Member

AUDIT COMMITTEEJovenal R. Santiago ChairmanChow Kok Kee MemberKong Yim Pui, Susan Member

COMPANY SECRETARYTan Siok Kheng

REGISTERED OFFICEBlk 16 Kallang Place#01-18 Kallang Basin Industrial EstateSingapore 339156

SHARE REGISTRARLim Associates (Pte) Ltd10 Collyer Quay#19-08 Ocean BuildingSingapore 049315

AUDITORSRSM-Chio Lim & Associates18 Cross Street#09-01 Marsh & McLennan CentreSingapore 048423

PARTNER-IN-CHARGEMr Peter Jacobsince financial year ended 31 December 2004

C o r p o r a t e i n f o r m a t i o n

C o r p o r a t e a d d r e s s e s

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C o n s o l i d a t e d f i n a n c i a l s ta tements

HLN Technologies Limited (“the Company”) was incorporated on 26 February 2004. The proforma consolidated financial statements for the year ended 31 December 2004 included in this report as comparative information illustrates what the financial results and financial position of the Company and its subsidiaries (“Group”) would have been if the Group had been in existence during the period ended 31 December 2004. The bases of preparation of the proforma financial information can be found on the Appendix A-3 of the Company’s prospectus dated 15 November 2005.

PROFORMA CONSOLIDATED BALANCE SHEETS Group 2005 2004ASSETS $’000 $’000

Current assets:Cash and cash equivalents 7,106 2,179Trade and other receivables 4,165 3,806Inventories 1,547 537

Total current assets 12,818 6,522

Non-current assetsPlant and equipment 3,012 1,959

Total non-current assets 3,012 1,959

Total assets 15,830 8,481

LIABILITIES AND EQUITYCurrent liabilities:Trade and other payables 1,705 1,532Current tax payable 998 1,138Current portion of long-term borrowings - 25Current portion of finance leases 126 76

Total current liabilities 2,829 2,771

Non-current liabilitiesDeferred tax liabilities 93 49Long-term borrowings - 41Finance leases - 192

Total non-current liabilities 93 282

Total liabilities 2,922 3,053

Equity attributable to equity holders of the parent 12,908 5,428

Total liabilities and equity 15,830 8,481

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PROFORMA CONSOLIDATED INCOME STATEMENTS

Group 2005 2004 $’ 000 $’000

Revenue 14,099 11,281Cost of sales (6,927) (5,097)

Gross profit 7,172 6,184Financial income 27 199Financial expense (24) (88)Distribution costs (684) (244)Administrative expenses (1,968) (1,491)Other credits / (charges) 9 (75)

Profit before tax 4,532 4,485Income tax expense (1,020) (997)

Profit for the year 3,512 3,488


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PROFORMA STATEMENTS OF CHANGES IN EQUITY

Total equity $’000

Balance at 1 January 2004 2,466Changes in equity for 2004Foreign currency translation differences (93)

Net income recognised directly in equity (93)Profit for the year 3,488

Total recognised income and expense for the year 3,395Issue of shares 17Dividends (450)

Balance at 31 December 2004 5,428Proforma adjustments for:-- Disposal of plant and equipment within the Group 199- Deferred tax on disposal of plant and equipment within the Group (31)

168

Actual balance at 31 December 2004 5,596

Balance at 1 January 2005 5,596Changes in equity for 2005Foreign currency translation differences (32)

Net income recognised directly in equity (32)Profit for the year 3,512

Total recognised income and expense for the year 3,480Issue of shares 3,832

Balance at 31 December 2005 12,908

PROFORMA CONSOLIDATED CASH FLOW STATEMENTS 2005 2004 $’000 $’000

Cash flows from operating activities :Profit before tax 4,532 4,485Adjustments for : Depreciation expense 464 210 Interest income (27) (28) Interest expense 20 20 (Gain)/loss on disposal of property, plant and equipment (9) 16 Waiver of interest-bearing borrowings - (152)

Operating profit before working capital changes 4,980 4,551 Trade and other receivables (356) (1,561) Inventories (1,010) (419) Trade and other payables 170 (802)

Cash generated from operations 3,784 1,769 Interest expense (20) (20) Interest income 27 28 Income tax paid (1,163) (581)

Net cash generated from operating activities 2,628 1,196

Cash flows from investing activities :Purchase of plant and equipment (1,396) (1,075)Proceeds from disposal of plant and equipment 58 -

Net cash used in investing activities (1,338) (1,075)

Cash flows from financing activities :Issue of shares 3,832 17Decrease in borrowings (66) (54)Decrease in finance leases (142) (107)Dividends paid - (606)

Net cash generated from / (used in) financing activities 3,624 (750)

Net effect of exchange rate changes in consolidating subsidiaries 13 (33)

Net increase / (decrease) in cash and cash equivalents 4,927 (662)

Cash at beginning of year 2,179 2,841

Cash at end of year 7,106 2,179


C o r p o r a t e g o v e r n a n c e repor t

The Board of Directors and Management are committed to ensuring high standards of corporate governance for the protection of shareholders’ interests and value and to promote investors’ confidence. We have taken steps, as far as practicable, towards the compliance of the recommendations in the Code of Corporate Governance (“the Code”) issued by the Singapore Exchange Securities Trading Limited.

This report outlines the Company’s corporate governance structure, policies and practices that took place since the listing of the Company in November 2005 with specific reference to the relevant provisions of the Code.

BOARD MATTERS

The Board’s Conduct of Its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the Company

The Board consists of 6 members, comprising three executive directors and three non-executive directors, two of whom are independent. Together, these directors bring a wide range of business, legal and financial experience relevant to the Group.

Chow Kok Kee Chairman and Non-Executive DirectorHein Ke Long, Henry Vice-Chairman and Executive DirectorWa Kok Liang, Leslie Chief Executive Officer and Executive DirectorNg Khoon Seng Executive DirectorKong Yim Pui, Susan Non-Executive and Independent DirectorJovenal R. Santiago Non-Executive and Independent Director

Since the listing of the Company to the date of this report, the Board met a number of times, both formally and informally, to discuss and approve the Group’s mission, objectives, strategies, policies and practices. The details of attendance of the formal meetings by individual Directors are as follows:

Number of meetings Number of meetings held while a member attended

Chow Kok Kee 2 2Hein Ke Long, Henry 2 2Wa Kok Liang, Leslie 2 2Ng Khoon Seng 2 2Kong Yim Pui, Susan 2 2Jovenal R. Santiago 2 2

The Board is entrusted with the responsibility of the overall management of the Company. The principal functions of the Board are:

a) Approving corporate objectives, plans, strategies, policies and financial objectives of the Group and monitoring the performance of Management;

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b) Overseeing the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance;

c) Approving nominations and appointments of Board directors, committee members and key personnel; andd) Approving annual budgets, investments, capital expenditures, major acquisitions and divestments proposals.

The Company has adopted internal guidelines on matters such as annual budget and transactions relating to investment, financing, treasury, legal and corporate secretarial and the parameters of such matters which require the Board’s approval. The Board will review the guidelines on a periodic basis to ensure their relevance to the operations of the Company.

Board members are apprised of the business and operations of the Company on a regular basis either through formal or informal meetings and discussions. They are also encouraged to attend seminars and receive training to improve themselves in the discharge of their duties as directors. The Company works closely with professionals to provide its directors with changes to relevant laws, regulations and accounting standards.

Board Composition And Balance

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making

The Company endeavours to maintain a strong and independent element on the Board. As at the date of this report, one-third of the Board members are independent directors. The independent directors have confirmed that they do not have any relationship with the Company or its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment in the best interest of the Company. The Nominating Committee (“NC”) has reviewed and determined that the said directors are independent. The independence of each director is reviewed annually by the NC.

The Board is of the opinion that its current size of 6 Board members is both effective and efficient. This conclusion was drawn after taking into consideration the nature and size of operations and the statistics drawn from the Singapore Board of Directors Survey 2001 on Board composition published by the Singapore Institute of Directors.

Together, the Board members possess a balanced field of core competencies to lead the Company. Details of the Board members’ qualifications and experience are presented in this Annual Report under the heading “Board of Directors”.


Chairman And Chief Executive Officer

Principle 3: There should be a clear division of responsibilities at the top of the Company – the working of the Board and the executive responsibility of the Company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

The offices of the Chairman and Chief Executive Officer (“CEO”) respectively are held by separate persons. This is to ensure an appropriate balance in decision making powers and accountability. No individual or small group of individuals dominates the Board’s decision making process. The CEO and Management regularly consult with and seek the advice of members of the Board (individually and collectively) through meetings, telephone calls as well as by electronic mail.

The Chairman, who is non-executive, is responsible for the proper functioning of the Board and is free to act independently in the best interests of the Company and its shareholders. The Chairman ensures that each member of the Board works well together with the Management by engaging Management in constructive discussions over various matters including strategic issues, business planning processes and succession planning.

The CEO has full executive responsibilities over the running of the Group’s businesses, the business direction and operational decisions of the Group.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals.

The Nominating Committee (“NC”) comprises 3 non-executive directors, the majority of whom, including the Chairperson of the Committee, are independent directors.

Chairperson Kong Yim Pui, Susan Member Chow Kok Kee Member Jovenal R. Santiago

The NC is established for the purposes of ensuring that there is a formal and transparent process in the selection and appointment of new Board members as well as their subsequent re-nomination/re-election. The NC will carry out the process approved by the Board for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual. It has adopted written terms of reference defining its membership, administration and duties. As the committee is newly constituted, one meeting was held since the listing of the Company to the date of this report and attended by all members.

The duties of the NC are as follows:

a) Annual review of the terms of reference of NC, the composition of NC, the size of the Board with a view to determining the impact of the number upon effectiveness, and make recommendation to the Board on the appropriate size for the Board to facilitate effective decision making, the required expertise of the directors as a group to ensure that they as a group have adequate relevant core competencies of the directors to discharge the functions of an effective and balanced Board;


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b) Annual assessment of the effectiveness of the Board as a whole and of individual directors;c) Evaluation of the Board’s performance;d) Review and make recommendations on all nomination of appointments and re-nomination/re-election; ande) Annual determination of directors’ independence.

The Articles of Association of the Company currently require one-third of the directors to retire and subject themselves to re-election by the shareholders in every Annual General Meeting. In addition, all directors of the Company (including the CEO) shall retire from office at least once every three years.

The NC has not adopted any internal guidelines on the issue of multiple board representation. Based on the attendance and valued contributions made by the Directors, the NC is of the view that multiple board representation will not hinder the effectiveness of the director. However, the NC will review this issue annually.

The details of the Board members’ qualifications and experience including the dates of initial appointment and re-election are presented in this Annual Report under the heading “Board of Directors.

Board Performance

Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

The NC is newly constituted and is currently establishing the process for assessing the effectiveness of the Board as a whole. The NC will set qualitative and quantitative indicators during the course of the current financial year to enable such an evaluation to be carried out.

Access To Information

Principle 6: In order to fulfill their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

The Board is furnished with Board papers prior to any Board meeting. These papers are issued in sufficient time to enable the Directors to obtain additional information or explanations from the Management, if necessary. The Board papers include minutes of the previous meeting, reports relating to investment proposals, budgets, financial results announcements, and reports from committees and external auditors.

The Directors may communicate directly with the Management team and the Company Secretary on all matters whenever they deem necessary. This ensures that there is separate and independent access to these decision makers. The Company Secretary attends all Board meetings, is responsible for recording of the proceedings as well as oversees all processes and practices relating to company secretarial matters.

The Company currently does not have a formal procedure for Directors to seek independent and professional advice for the furtherance of their duties. However, directors may, on a case-to-case basis, propose to the Board for such independent and professional advice, the cost of which will be borne by the Company.


The Company has a transparent policy wherein directors are welcomed to request further information or informal discussions and make recommendations on any aspects of the Company’s operations or business issues.

REMUNERATION MATTERS

Procedures For Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

The Remuneration Committee (“RC”) has been established and comprises 3 members, the majority of whom are non-executive independent directors, including the Chairperson of the Committee.

Chairperson : Kong Yim Pui, Susan Member : Hein Ke Long, HenryMember : Jovenal R. Santiago

Although no member of the RC has direct expertise in the field of executive compensation, in their own business areas, they possess direct experience managing groups of staff working under them, and hence would invariably have to deal with compensation issues from time to time in the course of their work. In addition, the Chairman of the Board is knowledgeable in human resource management including executive compensation. Furthermore, the RC will seek professional advice when necessary in discharging its duties and responsibilities. The RC has also assisted the Company in hiring a HR Manager in 2006 to strengthen the human resource management for the Company.

The RC is established for the purpose of ensuring that there is a formal and transparent framework for determination of appropriate remuneration packages of individual directors and key executives. The overriding principle is to ensure that the level of remuneration should be appropriate to attract, retain and motivate the directors and key executives needed to run the Company successfully and ensure that they are fairly rewarded for their individual contributions to overall performance. The RC will also work within the principle that the remuneration should be structured so as to link rewards to corporate and individual performance. It has adopted written terms of reference that defines its membership, roles, functions and administration.

The RC held two meetings since the listing of the Company to the date of this report and attended by all members. The details of the attendance are as follows:


Kong Yim Pui, Susan 2 2Jovenal R. Santiago 2 2Hein Ke Long, Henry 2 2


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The duties of the RC are as follows:

a) To review and make recommendations to the Board a framework of remuneration and the specific remuneration packages of each director (executive and non-executive) and CEO;

b) To review and make recommendations to the Board the Company’s compensation policies, structures and service contracts, based on proposal by the CEO; and

c) To review and make recommendations to the Board the Company’s compensation policies, structures and service contracts as proposed by the Company’s CEO, for relatives of a Director and/or a substantial shareholder who are employed in managerial positions by the Company, or any of its subsidiaries.

Level of Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A proportion of the remuneration, especially those of executive directors, should be linked to performance.

The Company will be adopting a remuneration policy for staff comprising a fixed component and a variable component. The fixed component is in the form of a base salary which reflects market worth. The variable component comprises both short-term incentive and longer-term incentives.

Non-executive directors will be paid a fee for their board services and appointment to board committees and share options pursuant to the Company’s Share Option Scheme. Directors’ fees for non-executive directors are subject to the approval of shareholders at AGMs.

The Company has adopted an employee share option scheme known as the “HLN Technologies Employee Share Option Scheme” (“the Scheme”). The basis of allocation of the number of options for Directors (who are not controlling shareholders) takes into account a director’s contributions and additional responsibilities at board committees and where appropriate, other board appointments at subsidiary level.


Disclosure on Remuneration

Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedures for setting remuneration, in the Company’s annual report.

Remuneration of Directors of the Company

Fee (1) Salary & fixed allowance (2)

Bonus & incentives (2)

Other benefits

Total

Below S$250,000Chow Kok Kee 100% - - - 100%Hein Ke Long, Henry 17% 60% 23% - 100%Wa Kok Liang, Leslie - 65% 29% 6% 100%Ng Khoon Seng - 68% 32% - 100%Kong Yim Pui, Susan 100% - - - 100%Jovenal R. Santiago 100% - - - 100%

(1) Directors’feesarepayablein2006afterapprovalbyshareholdersintheAGM(2) Salary&fixedallowanceandbonus&incentivesshownareinclusiveofemployerCPF

The Company had entered into separate service agreements (the “Service Agreement”) with the CEO and Executive Director, Mr Wa Kok Liang, Leslie and the Executive Director, Mr Ng Khoon Seng, for a period of two years with effect from 1 October 2005 (unless otherwise terminated by either party giving not less than three months’ notice to the other). The Service Agreements cover the terms of employment including scope of duties and remuneration.

Amongst other clauses in the Service Agreement, both Mr Wa Kok Liang, Leslie and Mr Ng Khoon Seng shall be paid a fixed monthly salary of S$15,000 and S$12,000 respectively (excluding Central Provident Fund contributions) and annual performance/incentive bonus. In addition, both Mr Wa Kok Liang, Leslie and Mr Ng Khoon Seng are given a monthly car allowance of S$4,000 each. The incentive bonus is calculated based on the consolidated net profit before tax, extraordinary items, exceptional items and minority interests of the Group (“NPBT”) as shown in the audited consolidated accounts of the Group. The detail of the incentive bonus is disclosed in the Prospectus dated 15 November 2005.

The Company had also entered into a Consultancy services agreement (the “Agreement”) with the Vice-Chairman and Executive Director, Mr Hein Ke Long, Henry, for a period of one year with effect from 1 April 2005. The Agreement covers the terms of employment including scope of duties and remuneration.

Amongst other clauses in the Agreement, Mr Hein Ke Long, Henry, shall be paid a fixed monthly salary of S$6,000 (excluding Central Provident Fund contributions) and annual performance bonus to be decided at the absolute discretion of the Board and/or the Remuneration Committee. In January 2006, in consideration of Mr Hein Ke Long, Henry’s expanded job scope and devoting full time service to the Company as Executive Director, the Company revised the monthly salary to S$12,000 (excluding Central Provident Fund contributions) and a monthly car allowance of S$4,000.


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Remuneration of Top 5 Executives of the Company

Salary & fixed allowance (1)

Bonus & incentives (1)

Other benefits

Total

Below S$250,000Ee Teck Siew 85% 15% - 100%Wa Sock Ying, Yvonne (2) 75% 9% 16% 100%Ng Koon Chuan, Francis (3) 86% 14% - 100%Tan Chong Hwa, Christopher 92% 8% - 100%Loke Oi Lin 89% 11% - 100%

(1) Salary&fixedallowanceandbonus&incentivesshownareinclusiveofemployerCPF(2) MsWaSockYing,Yvonne,isthesisterofourChiefExecutiveOfficerandExecutiveDirector,MrWaKok

Liang,Leslie(3) MrNgKoonChuan,Francis,isthebrotherofourExecutiveDirector,MrNgKhoonSeng

For the financial year ended 31 December 2005, there is no employee in the Group, being an immediate family member of a Director or the CEO, whose annual remuneration exceeded S$150,000.

The Board is of the opinion that the information as disclosed above would be sufficient for shareholders to have an adequate appreciation of the Company’s compensation policies and practices and therefore does not intend to issue a separate remuneration report, the contents of which would be largely similar.

ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The Board is accountable to the shareholders while the Management is accountable to the Board.

For the financial performance reporting via the SGXnet announcement to SGX-ST and the Annual Report to the shareholders, the Board has a responsibility to present a fair assessment of the Group’s financial position including the prospects of the Group.

The Board ensures that the Management maintains a sound system of internal controls to safeguard shareholders’ interests and the Group’s assets.

The Management will provide all members of the Board with a monthly management report and Board papers are given prior to any Board meeting to facilitate effective discussion and decision making.


Audit Committee

Principle 11: The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out its authority and duties.

The Audit Committee comprises of 3 members, all non-executives, the majority of whom, including the Chairman are independent directors.

Chairman Jovenal R. Santiago Member Chow Kok Kee Member Kong Yim Pui, Susan

The Chairman, Mr Jovenal R. Santiago, has many years of experience in the accounting and auditing profession in Singapore and the Philippines before his retirement in 1998. The other members of the AC posses experience in finance, legal and business management. At least two members have the appropriate accounting or related financial management expertise and experience.

The Board is of the opinion that the members of the AC have sufficient financial management expertise and experience in discharging their duties.

The role of the AC is to assist the Board with discharging its responsibility to safeguard the Company’s assets, maintain adequate accounting records and develop and maintain effective systems of internal controls.

In accordance with the terms of reference adopted by the AC on 17 January 2006, the AC shall review, appraise and report to the Board on:

a) The discussion with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of the audit;

b) The review with external auditors, their evaluation of the system of internal controls, the Management Letter and Management’s response thereto;

c) The discussion of problems and concerns, if any, arising from the interim and final audits and any matters that the external auditors may wish to discuss with the AC in the absence of the Management;

d) The review of non-audit services provided by the external auditors to the company;e) The review of the objectivity and independence of the external auditors and nomination of their re-appointment as external

auditors of the Company;f) The review of the internal audit program including the scope and results of the internal audit;g) The review of interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX-ST);h) The review of interim and full year financial results and recommendation to the Board for release to the SGX-ST via

SGXnet; andi) Any other functions that are requested by the Board, as may be required by statutes or the Listing Manual.

In discharging the above duties, the AC confirms that it has full access to and co-operation from Management and is given full discretion to invite any Director or Executive Director to attend its meetings. In addition, the AC has also been given reasonable resources to enable it to perform its functions properly.


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The AC has conducted an annual review of the volume of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before recommending their re-nomination to the Board.

The AC has met once with the external auditors, without the presence of Management during the year.

From the date of the listing to the date of this report, the AC met 2 times and the detail of attendance is as follows:


Jovenal R. Santiago 2 2Chow Kok Kee 2 2Kong Yim Pui, Susan 2 2

Internal Control and Internal Audit

Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

Principle 13: The Company should establish an internal audit function that is independent of the activities it audits.

The Board recognizes its responsibilities for maintaining a system of internal control processes to safeguard shareholders’ investments and the Group’s assets and business.

The AC has selected an internal audit firm in 2006 and is in the process of defining its scope of work, including the development of key risk management policies and processes.

Communication with Shareholders

Principle 14: Companies should engage in regular, effective and fair communication with shareholders.

The Company endeavours to communicate regularly, effectively and fairly with its shareholders.

The interim and full year results are published via SGXnet and are usually followed by a news release which is available on the website. Annual reports are also available on the Company’s website.

Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the mandatory period and are available on the Company’s website. The Company does not practice selective disclosure.


The Company communicates with its shareholders through its corporate website http://www.hlntech.com. In addition, the Company has engaged a public relations firm to assist in its communication with shareholders.

Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the Company.

Annual reports and notices of AGM are sent to all shareholders. The notice is also published in the local newspapers and made available on the SGXnet. At the AGM, the shareholders are given the opportunity to express their views and raise any queries regarding the Company.

Each item of special business included in the notice of meeting will be accompanied by the relevant explanatory notes. This is to enable the shareholders to understand the nature and effect of the proposed resolutions.

In addition, the Chairpersons of the respective committees and the external auditors will be present at the AGM to address any queries from the shareholders.

SECURITIES TRADING CODE

The Company has devised and adopted its own internal Code of Conduct on dealing in the securities of the Company. The Code was modeled on the Best Practices Guide in the Listing Manual of the SGX-ST. This code will provide guidance to the Group’s directors and employees on their dealings in its securities. Officers of the Group are required to confirm their compliance with the Code of Best Practices annually.

The Company has complied with the principles of the Best Practices Guide in the Listing Manual in the financial year ended 31 December 2005.

INTERESTED PERSON TRANSACTIONS

The Company has adopted internal guidelines in respect of any transaction with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions as disclosed in the Prospectus dated 15 November 2005. The main objective is to ensure that all interested person transactions are conducted on arm’s length basis and on normal commercial terms and will not be prejudicial to our shareholders.

The Company monitors all its interested person transactions closely and all interested person transactions are subject to review by the Audit Committee on a quarterly basis.


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The aggregate value of interested person transactions entered into during the year is as follows:-

Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920

Aggregate value of all interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than S$100,000)

Nil NA NA

MATERIAL CONTRACTS

On 19 January 2006, the Company announced it has, through its wholly-owned subsidiary, HLN Micron Pte. Ltd. (“HLN Micron”), entered into a joint venture agreement with Mr Jeffrey Tiong Sin Lip (“TSL”) to set up precision machining operations in Johor Bahru, Malaysia. The joint venture company, HLN Technologies Sdn Bhd (“HLN-SB”), will design and manufacture precision turned and machined components and subassemblies for the office automation, memory storage and automotive industries. The initial issued and paid up capital of HLN-SB will be RM2.2 million, of which HLN Micron will hold 60% while TSL will hold the remaining 40%. The Company has, on 24 February 2006, announced that HLN Micron has completed the acquisition and subscription of the 60% interest in HLN-SB.

Save as disclosed above, there is no other material contract entered into between the Company and any of its subsidiaries with the Chief Executive Officer or any Director or Controlling Shareholder at the end of the financial year ended 31 December 2005.

CODE OF CORPORATE GOVERNANCE

The Ministry of Finance has issued a revised Code of Corporate Governance (“2005 Code”) on 14 July 2005 which will supersede the current Code of Corporate Governance (“2001 Code”). The 2005 Code will take effect for Annual General Meetings held on or after 1 January 2007. Listed companies which hold their annual General Meetings on or after 1 January 2007 will be required to disclose in their annual reports their corporate governance practices with reference to the 2005 Code.

The corporate governance practices of the Company set out in this report are with reference to the 2001 Code. The Company will adopt 2005 Code in the annual reports subsequent to this report.


The directors of the company are pleased to present their report together with the audited financial statements of the company and of the group for the financial year ended 31 December 2005.

1. DIRECTORS AT DATE OF REPORT

The directors of the company in office at the date of this report are:

Wa Kok Liang, Leslie Ng Khoon Seng Chow Kok Kee Hein Ke Long, Henry Kong Yim Pui, Susan (appointed on 30 September 2005) Jovenal R Santiago (appointed on 30 September 2005)

2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.

3. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

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

Direct Interest Deemed Interest

Name of directors and companies in which interests are held

At beginning of year or dateof appointment

if later At end of year

At beginningof year or date of appointment

if later At end of year

Ordinary shares

Company $1 each $0.05 each $1 each $0.05 each

Wa Kok Liang, Leslie 1,878,336 37,566,720 468,034 9,360,680Ng Khoon Seng 280,877 6,029,540 120,375 2,407,500Chow Kok Kee 112,532 2,250,640 – – Hein Ke Long, Henry 190,700 3,814,000 – – Kong Yim Pui, Susan – 50,000 – –

By virtue of section 7 of the Companies Act, Mr Wa Kok Liang, Leslie, is deemed to have an interest in the company and in all the related corporations of the company.

The directors’ interests as at 21 January 2006 were the same as those at the end of the year.

R e p o r t o f t h e d i rec tors

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4. CONTRACTUAL BENEFITS OF DIRECTORS

Since the beginning of the financial year, no director of the company has received or become entitled to receive a benefit which is required to be disclosed under section 201(8) of the Companies Act, Cap 50, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

There were certain transactions shown in the financial statements with corporations in which certain directors have an interest.

5. OPTIONS TO TAKE UP UNISSUED SHARES

During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted.

6. OPTIONS EXERCISED

During the financial year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares.

7. UNISSUED SHARES UNDER OPTION

At the end of the financial year, there were no unissued shares under option or any company in the group under option.

8. AUDIT COMMITTEE

The members of the audit committee at the date of this report are as follows:

Jovenal R Santiago (Chairman of audit committee and Independent Director) Chow Kok Kee (Non-executive Director) Kong Yim Pui, Susan (Independent Director)

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

• Reviewed with the external auditors the external audit plan;

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

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

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


8. AUDIT COMMITTEE (Cont’d)

Other functions performed by the audit committee are described in the report on corporate governance included in the annual report and it includes an explanation of how auditor objectivity and independence is safeguarded when the auditors provide non-audit services.

The audit committee has recommended to the board of directors that the auditors, RSM Chio Lim, be nominated for re-appointment as auditors at the next annual general meeting of the company.

9. AUDITORS

The auditors, RSM Chio Lim, have expressed their willingness to accept re-appointment. This audit firm was known as Chio Lim & Associates before 11 January 2006.

10 SUBSEQUENT DEVELOPMENTS

There are no significant developments subsequent to the release of the group’s and the company’s preliminary financial statements, as announced on 9 February 2006, which would materially affect the group’s and the company’s operating and financial performance as of the date of this report.

ON BEHALF OF THE DIRECTORS

Wa Kok Liang, LeslieDirector

Ng Khoon SengDirector

28 February 2006


30pg31

In the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view of the state of affairs of the company and of the group as at 31 December 2005 and of the changes in equity of the company and of the group, and of the results and cash flows of the group for the financial year then ended and at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

ON BEHALF OF THE DIRECTORS

Wa Kok Liang, LeslieDirector

Ng Khoon SengDirector

28 February 2006

S t a t e m e n t o f d i rec tors

We have audited the accompanying financial statements of HLN Technologies Limited set out on pages 34 to 64 for the year ended 31 December 2005. These financial statements are the responsibility of the company’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 and perform 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 as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company are properly drawn up in accordance with the provisions of the Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the group and of the company as at 31 December 2005 and the results, changes in equity and cash flows of the group and the changes in equity of the company for the year ended on that date; and

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

RSM Chio Lim Certified Public Accountants

Singapore28 February 2006

Partner in charge of audit: Peter JacobEffective from year ended 31 December 2004

A u d i t o r s ’ r e p o r t t o t h e m e m b e r s o f HLN Techno log ies L imi ted

32pg33

Group Company Notes 2005 2004 2005 2004ASSETS $’000 $’000 $’000 $’000

Current assets:Cash and cash equivalents 4 7,106 2,179 5,065 –Trade and other receivables 5 4,165 3,809 2 –Inventories 6 1,547 537 – –

Total current assets 12,818 6,525 5,067 –

Non-current assetsInvestments in subsidiaries 7 – – 3,750 3,750Plant and equipment 8 3,012 2,158 – –Goodwill on consolidation 9 – – – –

Total non-current assets 3,012 2,158 3,750 3,750

Total assets 15,830 8,683 8,817 3,750

LIABILITIES AND EQUITYCurrent liabilities:Trade and other payables 10 1,705 1,535 123 12Current tax payable 998 1,138 – –Current portion of long-term borrowings 11 – 25 – –Current portion of finance leases 12 126 76 – –

Total current liabilities 2,829 2,774 123 12

Non-current liabilitiesDeferred tax liabilities 20 93 80 – –Long-term borrowings 11 – 41 – –Finance leases 12 – 192 – –

Total non-current liabilities 93 313 – –

Total liabilities 2,922 3,087 123 12

Equity attributable to equity holders of the parent:Share capital 13 7,582 3,750 7,582 3,750Reserves 5,326 1,846 1,112 (12)

Total equity 12,908 5,596 8,694 3,738

Total liabilities and equity 15,830 8,683 8,817 3,750

See accompanying notes to financial statements.

Ba lance sheets As a t 31 Decembe r 2005

Group Notes 2005 2004 $’000 $’000

Revenue 14 14,099 10,013Cost of sales (6,927) (5,190)

Gross profit 7,172 4,823Financial income 15 27 197Financial expense 15 (24) (78)Distribution costs (684) (217)Administrative expenses (1,968) (1,378)Other credits / (charges) 16 9 (504)

Profit before tax 17 4,532 2,843Income tax expense 20 (1,020) (869)

Profit for the year 3,512 1,974

Attributable to:Equity holders of the company 3,512 1,950Minority interest – 24

3,512 1,974

Earnings per share for profit attributable to the equity holders of the company during the year (expressed in cents per share)

Basic 22 4.54 2.60

Diluted 22 4.54 2.60


Conso l i da ted i n come s ta tementsYea r ended 31 Decembe r 2005

34pg35

Attributable to equity holders of the parent

Foreign currency

Share Share translation Retained Total

Group capital premium reserve earnings equity

$’000 $’000 $’000 $’000 $’000

Balance at 26 February 2004 * – – – *Changes in equity for 2004Foreign currency translation differences – – (104) – (104)Net income recognised directly in equity – – (104) – (104)Profit for the period – – – 1,950 1,950Total recognised income and expense for

the period – – (104) 1,950 1,846Issue of shares (Note 13) 3,750 – – – 3,750Balance at 31 December 2004 3,750 – (104) 1,950 5,596

Balance at 1 January 2005 3,750 – (104) 1,950 5,596Changes in equity for 2005Foreign currency translation differences – – (32) – (32)Net income recognised directly in equity – – (32) – (32)Profit for the year – – – 3,512 3,512Total recognised income and expense for the year – – (32) 3,512 3,480Issue of shares (Note 13) 1,150 2,682 #b – – 3,832Balance at 31 December 2005 4,900 2,682 #a (136) #a 5,462 12,908

#a Unrealisedandnotavailablefordistributionascashdividends.

#b Netoflistingexpensesofapproximately$998,000.Thisincludesprofessionalfeesof$120,000paidtothe

company’sauditorsforthepurposesofactingasReportingAuditorsinthelistingexercise.

* Lessthan$1,000

S ta temen t s o f changes i n equ i tyYea r ended 31 Decembe r 2005

Share Share Retained Total

Company capital premium earnings equity

$’000 $’000 $’000 $’000

Balance at 26 February 2004 * – – *Net loss for the period – – (12) (12)Issue of shares (Note 13) 3,750 – – 3,750Balance at 31 December 2004 3,750 – (12) 3,738

Balance at 1 January 2005 3,750 – (12) 3,738Net profit for the year – – 1,124 1,124Issue of shares (Note 13) 1,150 2,682#b – 3,832Balance at 31 December 2005 4,900 2,682 #a 1,112 8,694

#a Unrealisedandnotavailablefordistributionascashdividends.

#b Netoflistingexpensesofapproximately$998,000.Thisincludesprofessionalfeesof$120,000paidtothe

company’sauditorsforthepurposesofactingasReportingAuditorsinthelistingexercise.

* Lessthan$1,000


S ta temen t s o f changes i n equ i tyYea r ended 31 Decembe r 2005

36pg37

2005 2004 $’000 $’000

Cash flows from operating activities :Profit before tax 4,532 2,843Adjustments for : Depreciation expense 464 236 Goodwill written off – 484 Interest income (27) (26) Interest expense 20 17 (Gain)/loss on disposal of plant and equipment (9) 6 Waiver of interest-bearing borrowings – (152)

Operating profit before working capital changes 4,980 3,408 Trade and other receivables (356) (1,462) Inventories (1,010) 213 Trade and other payables 170 (314)

Cash generated from operations 3,784 1,845 Interest paid (20) (17) Interest received 27 26 Income tax paid (1,163) (582)

Net cash from operating activities 2,628 1,272

Cash flows from investing activities :Acquisition of additional shares in a subsidiary – (150)Purchase of plant and equipment (1,396) (981)Proceeds from disposal of plant and equipment 58 –Net cash inflow on acquisition of subsidiaries (Note 23) – 2,234

Net cash (used in)generated from investing activities (1,338) 1,103

Cash flows from financing activities :Issue of shares (Note 13) 3,832 *Decrease in borrowings (66) (52)Decrease in finance leases (142) (78)

Net cash generated from / (used in) financing activities 3,624 (130)

Net effect of exchange rate changes in consolidating subsidiaries 13 (66)

Net increase in cash 4,927 2,179Cash at beginning of year 2,179 –

Cash at end of year (Note 4) 7,106 2,179

*Lessthan$1,000


Conso l i da ted ca sh f l ow s ta tementsYear ended 31 December 2005

1. GENERAL

The company is incorporated in Singapore. The financial statements are presented in Singapore dollars. They are drawn up in accordance with the provisions of the Companies Act, Cap. 50 and the Singapore Financial Reporting Standards. The financial statements were approved and authorised for issue by the board of directors on 28 February 2006.

The company is an investment holding company. It is listed on the Stock Exchange Of Singapore Dealing and Automated Quotation System (“SESDAQ”).

The principal activities of the subsidiaries are described in note 7 to the financial statements.

The registered office is : 16 Kallang Place #01-18, Kallang Basin Industrial Estate Singapore 339156. The company is domiciled in Singapore.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING CONVENTION – The financial statements are prepared in accordance with the historical cost convention, modified to include the revaluation of financial assets and financial liabilities as disclosed where appropriate in these notes.

BASIS OF PRESENTATION – The consolidation accounting method is used for the consolidated financial statements which include the financial statements made up to balance sheet date each year of the company and of those companies in which it holds, directly or indirectly through subsidiaries, over 50 percent of the shares and voting rights. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intergroup balances and transactions including income, expenses and dividends, are eliminated in full on consolidation. The results of the investees acquired or disposed of during the financial year are consolidated from the respective dates of acquisition or up to the dates of disposal. On disposal the attributable amount of unamortised goodwill is included in the determination of the gain or loss on disposal.

BASIS OF PREPARATION – The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.

CASH AND CASH EQUIVALENTS – Cash and cash equivalents include bank and cash balances and any highly liquid debt instruments purchased with an original maturity of three months or less. Cash for the cash flow statement includes cash and cash equivalents less bank overdrafts payable on demand that form an integral part of cash management and cash subject to restriction.

Notes t o f i nanc i a l s ta tements31 Decembe r 2005

38pg39

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

TRADE RECEIVABLES – After initial recognition at fair value, trade receivables are measured at amortised cost using the effective interest method but short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant. Trade receivables are stated after provision for impairment. A trade receivable amount is regarded as impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition and that loss event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. The carrying amount of trade receivables are assumed to approximate their fair value. The amount of the provision is recognised in the income statement. Normally no interest is charged on trade receivables.

LOANS AND OTHER RECEIVABLES – Loans and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, not held for trading, not designated as available for sale and are not substantially recoverable other than because of credit deterioration which are classified as available for sale. Items with a short duration are not discounted. After initial recognition such financial assets, including derivatives that are assets, are measured at their fair values, without any deduction for transaction costs that may be incurred on sale or other disposal, except for the non-current financial assets that are loans and receivables which are measured at amortised cost using the effective interest method less provision for impairment. These items are included in the balance sheet in trade and other receivables as current assets or as non-current assets where the maturities are greater than 12 months after the balance sheet date.

INVENTORIES – Inventories are measured at the lower of cost (first-in-first-out) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. A write down on cost is made for where the cost is not recoverable or if their selling prices have declined.

SUBSIDIARIES – A subsidiary is an entity including unincorporated and special purpose entities that are controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. In the company’s own separate financial statements, the investments in subsidiaries are stated at cost less any provision for impairment in value. The net book values of the subsidiaries are not necessarily indicative of the amounts that would be realised in a current market exchange.

GOODWILL – Goodwill or negative goodwill arising on acquisition is based on the purchase method. Goodwill arising on consolidation represents the excess of the cost of acquisition over the acquirer’s interest in the fair value of the identifiable assets and liabilities of the subsidiary, associate or jointly controlled entity acquired as at the date of acquisition. Goodwill is carried at cost less any accumulated impairment losses.

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

MINORITY INTERESTS – Any minority interest in the acquiree (subsidiary) is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.



PLANT AND EQUIPMENT – Depreciation is provided on a straight-line basis to allocate the gross carrying amounts less their residual values over their estimated useful lives of each part of an item of plant and equipment. The annual rates of depreciation are as follows:

Plant and equipment – 10% to 331/3%

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements.

Plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses. The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. The gain or loss arising from the derecognition of an item of plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in income statement.

IMPAIRMENT OF NON-FINANCIAL ASSETS – At each reporting date an assessment is made whether there is any indication that a depreciable or amortisable asset may be impaired. If any such indication exists, an estimate is made of the recoverable amount of the asset. Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in the income statement unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each reporting date non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

IMPAIRMENT OF FINANCIAL ASSETS – All financial assets except those measured at fair value through profit or loss are subject to review for impairment. A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised.


40pg41


FINANCIAL LIABILITIES – Financial liabilities including bank and other borrowings when recognised initially are measured fair value plus, in the case items not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial liability. After initial recognition these are measured at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, are measured at fair value. Liabilities are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

LIABILITIES AND PROVISIONS – A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These include trade and other payables and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

BORROWING COSTS – All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds costs are recognised as an expense in the period in which they are incurred except for borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

LEASES AS A LESSEE – A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. At the commencement of the lease term, a finance lease is recognised as an asset and as liability in the balance sheet at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents shall be charged as expenses in the periods in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.



SHARE CAPITAL – Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. Where the company reacquires its own equity instruments as treasury shares, the consideration paid, including any directly attributable incremental cost is deducted from equity attributable to the company’s equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders and no gain or loss is recognised in the income statement.

FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying values of current financial assets and financial liabilities including cash, accounts receivable, short-term borrowings, accounts payable approximate their fair values due to the short-term maturity of these instruments. The fair values of long-term debts are not disclosed unless there are significant items as at the end of the year and are disclosed in the relevant notes.

REVENUE RECOGNITION – The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the period arising from the course of the ordinary activities of the entity and it is shown net of related tax, estimated returns, discounts and volume rebates. Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Interest revenue is recognised on a time-proportion basis using the effective interest rate that takes into account the effective yield on the asset.

FOREIGN CURRENCY TRANSACTIONS – The functional currency is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in Singapore dollars at the rates ruling at the dates of the transactions. At each balance sheet date, recorded monetary balances and balances measured at fair value that are denominated in foreign currencies are reported at the rates ruling at the balance sheet and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in the income statement.

FOREIGN CURRENCY FINANCIAL STATEMENTS – The foreign entities determine the appropriate functional currency as it reflects the primary economic environment in which the entities operate. In translating the financial statements of a foreign entity for incorporation in the combined financial statements the assets and liabilities denominated in currencies other than the functional currency of the company are translated at year end rates of exchange and the income and expense items are translated at average rates of exchange for the year. The resulting translation adjustments (if any) are accumulated in a separate component of equity until the disposal of the foreign entity.


42pg43


INCOME TAX – The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all taxable temporary differences, unless the deferred tax amount arises from (a) goodwill for which amortisation is not deductible for tax purposes; or (b) the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability is not recognised for all taxable temporary differences associated with investments in subsidiaries because (a) the company is able to control the timing of the reversal of the temporary difference; and (b) it is probable that the temporary difference will not reverse in the foreseeable future.

EMPLOYEE BENEFITS – Certain subsidiaries operate a defined contribution provident fund scheme, in which employees are entitled to join upon fulfilling certain conditions. The assets of the fund are not held separately from those of the entity in an independently administered fund. The entity contributes an amount equal to a fixed percentage of the salary of each participating employee. Contributions are charged to the income statement in the period to which they relate. This plan is in addition to the contributions to government managed retirement benefit plans such as the Central Provident Fund in Singapore which specifies the employer’s obligations which are dealt with as defined contribution retirement benefit plans. For employee leave entitlement the expected cost of short-term employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and in the case of non-accumulating compensated absences, when the absences occur.

CRITICAL JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES

There were no critical judgements made in the process of applying the entity’s accounting policies that have the most significant effect on the amounts recognised in the financial statements. There were no key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

RISK MANAGEMENT POLICIES FOR FINANCIAL INSTRUMENTS

GENERAL RISK MANAGEMENT PRINCIPLES - The entity’s financial instruments comprise borrowings, some cash and liquid resources, and various items, such as trade and other receivables, trade and other payables, that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the entity’s operations. The main risks arising from the entity’s financial instruments are credit risk, interest risk, liquidity risk and foreign currency risk. The management reviews and agrees policies for managing each of these risks and they are summarised below.



CREDIT RISK ON FINANCIAL ASSETS – Financial assets that are potentially subject to concentrations of credit risk consist principally of cash, cash equivalents and trade and other accounts receivable. The directors believe that the financial risks associated with these financial instruments are minimal. The cash and cash equivalents are placed with high credit quality institutions. An ongoing credit evaluation is performed of the debtors’ financial condition and a provision for impairment is maintained based upon the expected collectibility of all accounts receivable. There is no significant concentration of credit risk, as the exposure is spread over a large number of counterparties and customers unless otherwise disclosed in the note to the financial statements.

OTHER RISKS ON FINANCIAL INSTRUMENTS – The interest, foreign exchange risks, and changes in fair values from time to time are monitored and any gains and losses are included in the income statement. There is exposure to interest rate price risk for financial instruments with a fixed interest rate and to interest rate or cash flow risk for financial instruments with a floating interest rate that is reset as market rates change. There is also exposure to changes in foreign exchange rates and liquidity of businesses. Forward contracts or other arrangements are not utilised to minimise these risks and these forward contracts or other arrangements are not used trading or speculative purposes. From time to time, there may be borrowing and foreign exchange arrangements or interest swap contracts or similar instruments entered into as hedges against changes in interest rates or the fair value of the liabilities. These arrangements are not used for trading or speculative purposes. At 31 December 2005 there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

OTHER BUSINESS RISK AND UNCERTAINTIES – There is exposure to a number of risks including the development and marketing of unproven products, the need to maintain adequate financing, better capitalised competitors and dependence on essential personnel. The industry is characterised by rapid technological developments, frequent products introductions, evolving industry standards, changes in customer requirements and short product life cycles. Significant technological changes or the emergence of competitive products with new capabilities could adversely affect the business plan and operating results of the company.

3. RELATED PARTY TRANSACTIONS

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

3.1 Related companies

Related companies in these financial statements refer to subsidiaries of the company.


44pg45

3. RELATED PARTY TRANSACTIONS (cont’d)

Some of the company’s transactions and arrangements are between members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are without fixed repayment terms and interest unless stated otherwise. For non-current balances an interest is imputed based on the cost of borrowing less the interest rate if any provided in the agreement for the balance.

Intragroup transactions and balances that have been eliminated in the consolidated financial statements are not disclosed as related party transactions and balances below.

3.2 Other related parties

There are transactions and arrangements between the company and related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The current related party balances are unsecured without fixed repayment terms and interest unless stated otherwise. For non-current balances interest is imputed based on the cost of borrowing less the interest rate if any provided in the agreement for the balance.

Significant related party transactions:

In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following:

Group Related parties Related parties 2005 2004 $’000 $’000

Sales of goods (64) (106) Purchase of goods 64 64 Rental expense 31 26 Transport charges – 3 Purchase of plant and equipment – 5 Technical and advisory fees 110 37


3. RELATED COMPANY TRANSACTIONS (Cont’d)

3.3 Key management compensation 2005 2004 $’000 $’000

Salaries and other short-term employee benefits 1,074 719

The above amount is included under employee benefits expense.

Key management personnel are directors and those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly. The above amount for key management compensation is for all the executive directors and other key management personnel.

Further information about the remuneration of individual directors is provided in the report on corporate governance.

3.4 Other receivables from and other payables to related parties

The trade receivables and payables balances arising from sales and purchases of goods and services are disclosed elsewhere in the notes to the financial statements.

There were no other receivables from and other payables to related parties as at balance sheet date.

4. CASH AND CASH EQUIVALENTS Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Not restricted in use 7,106 2,179 5,065 –

Analysis of above amount denominated in foreign currency:

Euro 247 170 – – United States dollar 783 1,183 – –

The rate of interest for the cash on interest earning accounts is between 0.75% and 3.02% (2004: 0.2% and 3.0%) per annum. The effective interest rate is 0.38% (2004: 0.14% and 1.80%).

CASH AND CASH EQUIVALENTS IN THE CASH FLOW STATEMENT: Group 2005 2004 $’000 $’000

As shown above 7,106 2,179


46pg47

5. TRADE AND OTHER RECEIVABLES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Trade receivables: Outside parties 3,889 3,080 – – Related parties (Note 3) 4 20 – – Less provision for impairment – – – –

Other receivables and prepayments: Deposits 197 160 – – Other receivables 21 8 – – Prepayments (a) 54 541 2 –

4,165 3,809 2 –

Movements in above position: Balance at beginning of year – – – – Arising from acquisition of subsidiaries – 19 – – Reversed to income statement – (19) – –

Balance at end of year – – – –

Analysis of above amount denominated in foreign currency: United States dollar 2,587 1,590 – –

The average credit period generally taken by trade receivable customers is about 90 days (2004 : 90 days).

Current receivables with a short duration are not discounted and the carrying values are assumed to approximate the fair value.

Group 2005 2004 $’000 $’000

Concentration of trade receivable customers Top 1 customer 1,009 458 Top 2 customers 1,497 816 Top 3 customers 1,860 1,155

(a) Included in prepayments in 2004 was an amount of $375,752 which represented expenditure, stated at cost, incurred in connection with the listing of the shares of the company on the Singapore Exchange Securities Trading Limited. This expenditure had been set off against equity upon listing.


6. INVENTORIES Group 2005 2004 $’000 $’000

At cost: Raw materials 548 153 Work in process 50 23 Finished goods 949 361

1,547 537

7. INVESTMENTS IN SUBSIDIARIES Company 2005 2004 $’000 $’000

Unlisted equity shares at cost to company 3,750 3,750

The following is a listing of all the subsidiaries held by the company and its subsidiaries.

Name of subsidiary, country of incorporation, Cost in books Percentage place of operations and principal activities of company of equity held 2005 2004 2005 2004 $’000 $’000 % %

HLN Rubber Products Pte. Ltd. (a) 2,813 2,813 100 100 Singapore Manufacturer of rubber products

Process Innovation Technology Pte Ltd (a) 937 937 100 100 Singapore Manufacture and repair of electronic products and general wholesale trade

HLN Micron Pte. Ltd. (b) Investment holding company (c) – 100 – Incorporated on 22 December 2005


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7. INVESTMENTS IN SUBSIDIARIES (Cont’d)

Name of subsidiary, country of incorporation, Cost in books Percentage place of operations and principal activities of company of equity held 2005 2004 2005 2004 $’000 $’000 % %

Held through HLN Rubber Products Pte. Ltd.:

PT PolymerTech Rubberindo Tanahmas (d) 910 910 100 100 Indonesia Manufacturer of rubber products

HLN (Suzhou) Rubber Products Co., Ltd (e) 839 591 100 100 People’s Republic of China Manufacturer of rubber products

(a) Audited by RSM Chio Lim, Singapore. (b) Not audited as it is immaterial.(c) Cost of investment is less than $1,000.(d) The statutory auditors of PT Polymertech Rubberindo Tanahmas are Drs Sukimto Sjamsuli. However for the purpose

of the preparation of the consolidated financial statements for the year ended 31 December 2005, RSM Chio Lim were engaged to audit these financial statements.

(e) Other auditors. Audited by firms of accountants other than member firms of RSM International of which RSM Chio Lim in Singapore is a member.


8. PLANT AND EQUIPMENT

Group Plant and equipment $’000

Cost: Arising from acquisition of subsidiaries 2,612 Foreign exchange adjustments (88) Additions 981 Disposals (25)

At end of year 31 December 2004 3,480

Accumulated depreciation: Arising from acquisition of subsidiaries 1,133 Foreign exchange adjustments (27) Depreciation for the year 236 Disposals (20)


Net book value: At end of year 31 December 2004 2,158

Group Plant and equipment $’000

Cost: At beginning of year 1 January 2005 3,480 Foreign exchange adjustments (44) Additions 1,396 Disposals (105)

At end of year 31 December 2005 4,464,727

Accumulated depreciation: At beginning of year 1 January 2005 1,322 Foreign exchange adjustments (10) Depreciation for the year 464 Disposals (61)


Net book value: At end of year 31 December 2005 3,012

Certain motor vehicles are under finance lease agreements (see Note 12).


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9 GOODWILL 2004 $’000

Cost: Arising from acquisition of subsidiaries (Note 23) 453 Arising from acquisition of additional shares in a subsidiary 31 Amount written off (a) (484)

At end of year 31 December 2004 –

(a) The goodwill was written off in 2004 as a result of adjustments to the fair values of the assets of the subsidiaries acquired.

10 TRADE AND OTHER PAYABLES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Trade payables : Outside parties and accrued liabilities 1,574 1,530 36 9 Related parties (Note 3) 7 1 – –

Other payables : Other payables 124 4 87 3

1,705 1,535 123 12

Analysis of above amount denominated in foreign currency: United States dollar 436 442 – –

The average credit period taken by the group to settle payables is about 85 days (2004 : 108 days). The other payables are with short-term durations. The notional amount is deemed to reflect the fair value.


11 LONG-TERM BORROWINGS Group 2005 2004 $’000 $’000

Bank loan – unsecured – 66

The borrowings are repayable as follows: Amount due within a year – 25 Due within 2 to 5 years – 41

– 66

The bank loan was fully repaid in December 2005 after the listing of the company. Thereafter, the joint and several guarantees from a director of a subsidiary company and a related party were discharged.

12 FINANCE LEASES LIABILITIES

Group Minimumpayments

Financecharges

Presentvalue

2005 $’000 $’000 $’000

Minimum lease payments payable:Due within one year * 152 (26) 126Total 152 (26) 126

Net book value of plant and equipment under finance leases 100

Minimumpayments

Financecharges

Presentvalue

2004 $’000 $’000 $’000

Minimum lease payments payable:Due within one year 88 (12) 76Due within 2 to 5 years 182 (29) 153Due after 5 years 49 (10) 39Total 319 (51) 268

Net book value of plant and equipment under finance leases 373

*FinanceleasesarefullyrepaidinJanuary2006.


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12 FINANCE LEASES LIABILITIES (cont’d)

It is the group’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 2-8 years (2004: 2 to 8 years). The rate of interest for the finance leases was between 2.63% to 7.30% (2004: 2.63% to 7.30%) during the year. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in S$. The obligations under finance leases are secured by the lessor’s charge over the leased assets.

The fair value of the lease obligations approximates to their carrying amount.

13 SHARE CAPITAL

Ordinary shares: Number of shares

Issued share capital$’000

Balance at date of incorporation 26 February 2004 2 *Issue of shares at $1 each (Note 23) 3,750,294 3,750Additional number of shares arising from sub-division of one share of $1 each into

20 shares of $0.05 each 71,255,624 – Balance at end of year 31 December 2004 75,005,920 3,750Issue of shares at $0.21 each #a 23,000,000 4,830IPO expenses – (998)Balance at end of year 31 December 2005 98,005,920 7,582

* Lessthan$1,000

#a.WiththechangestotheCompaniesAct,Cap50,effectivefrom30January2006,thereistheremoval

of the concept of par value and authorised capital and there is no share premium account. The

companyhadasharepremiumaccountbalanceof$2,682,000attheendoftheyear.Thisamounthas

nowbeenincludedinsharecapitalasrequiredbythechangestotheCompaniesAct.

At an extraordinary general meeting held on 23 September 2005, the shareholders of the company approved, inter alia, the following:- (a) the increase in authorised share capital of the company from $50,000,000 comprising 50,000,000 ordinary shares

of $1.00 each to $60,000,000 comprising 60,000,000 ordinary share of $1.00 each by the creation of 10,000,000 new ordinary shares of $1.00 each;

(b) the sub-division of one share of $1.00 each in the authorised and issued and paid-up share capital of the company into 20 shares of $0.05 each;

(c) the conversion of the company into a public limited company;


13 SHARE CAPITAL (cont’d)

(d) the change of its name to “HLN Technologies Limited”;(e) the adoption of a new set of articles of association of the company and(f) the allotment and issue of 23,000,000 new ordinary shares of $0.05 each for a cash consideration of $0.21 each

by way of public offer and placement.

The new ordinary shares rank pari passu in all respects with the existing shares of the company.

The company was admitted to the official list of the Stock Exchange of Singapore Dealing and Automated Quotation System (“SESDAQ”) on 25 November 2005.

14 REVENUE Group 2005 2004 $’000 $’000

Sale of goods 14,098 10,001 Sundry income 1 12

14,099 10,013

15 FINANCIAL INCOME AND (EXPENSE) Group 2005 2004 $’000 $’000

Interest income from a director – 22 Interest income from others 27 4 Reversal of provision for doubtful debts on trade receivables – 19 Waiver of interest-bearing borrowings by a director – 152 Foreign exchange adjustment loss (4) (61) Interest expense to outside parties (20) (17)

3 119

Presented in the income statement as: Financial income 27 197 Financial expense (24) (78)

Financial income and (expense) net 3 119


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16 OTHER CREDITS / (CHARGES) Group 2005 2004 $’000 $’000

Goodwill written off (Note 9) – (484) Gain/(loss) on disposal of plant and equipment 9 (6) Plant and equipment written off – (14)

9 (504)

17 ITEMS IN THE INCOME STATEMENT

In addition to the charges and credits disclosed elsewhere in the notes to the financial statements, this item includes the following charges/(credits):-

Group 2005 2004 $’000 $’000

Non-audit fees – auditors of the company 5 5 Directors’ remuneration – directors of the company 491 235 – other directors 213 239 Directors’ fees 58 – Change in inventories of finished goods and work in process 615 384 Raw materials and consumables used 3,320 2,389

18 EMPLOYEE BENEFITS EXPENSE Group 2005 2004 $’000 $’000

Employee benefits expense including directors 2,789 2,069 Contributions to defined contribution plan 192 144

Total employee benefits expense 2,981 2,213


19 DIRECTORS’ REMUNERATION

The number of directors in remuneration bands are as follows: Group 2005 2004

Below $250,000 6 4

Total 6 4

20 INCOME TAX Group 2005 2004 $’000 $’000

Current tax expense 1,007 832 Deferred tax expense 13 37

Total tax expense 1,020 869

The income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax rate of 20% (2004 : 20%) to profit before income tax as a result of the following differences:-

Group 2005 2004 $’000 $’000

Profit before tax 4,532 2,843

Income tax expense at the statutory rate 906 568 Non-allowable items 146 153 Effect of different tax rates in other countries 26 34 Tax exemptions and reliefs (48) (17) Deferred tax assets not recognised – 8 (Over)/under provision in prior years (11) 123 Others 1 1

Total income tax expense 1,020 869


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20 INCOME TAX (cont’d)

The deferred tax amounts are as follows:

Net change in income Balance sheet statement 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Deferred tax liabilities: Excess of net book value of plant and equipment (93) (80) 13 37

Total deferred tax liabilities (93) (80) 13 37

Presented in the balance sheet as follows: Deferred tax liabilities (93) (80) Net total of deferred tax liabilities (93) (80)

There are no income tax consequences of dividends to shareholders of the company.

21. DIVIDEND

In respect of the current year, the directors propose that a final dividend of 1.1 cents per share totaling $1,078,065 be paid to shareholders after the annual general meeting. There are no income tax consequences. This dividend is subject to approval by shareholders at the next annual general meeting and has not been included as a liability in these financial statements. The proposed dividend for 2005 is payable in respect of all ordinary shares in issue at the balance sheet date and including the new shares issued up to the date the dividend becomes payable.

22. EARNINGS PER SHARE

The basic and fully diluted earnings are calculated based on profit atttributable to shareholders of $3,512,000 (2004: $1,950,000) and the weighted average number of ordinary shares in issue during the financial year of 77,337,427 shares (2004: 75,005,920).


23 NET CASH INFLOW ON ACQUISITION OF SUBSIDIARIES

The company acquired 100% of HLN Rubber Products Pte. Ltd. and 100% of Process Innovation Technology Pte Ltd on 1 March 2004. The transaction was accounted for by the purchase method of accounting.

The fair values of net assets acquired were as follows: Group 2005 2004 $’000 $’000

Cash – 2,234 Trade and other receivables – 2,346 Inventories – 750 Plant and equipment – 1,479 Goodwill (Note 9) – 453 Trade and other payables – (1,849) Income tax payable – (887) Long-term borrowings – (282) Finance leases – (346) Deferred tax – (44) Minority interests – (104)

Consideration satisfied by share issue (Note 13) – 3,750

Net cash inflow on acquisition – 2,234

The contributions from the subsidiaries for the period between the date of acquisition and the balance sheet date were as follows:

Revenue – 10,013 Profit before income tax – 2,843

The revenue and net profit of the subsidiaries acquired in 2004 as though the acquisition date effected during 2004 had

been the beginning of the year were as follows: Group 2005 2004 $’000 $’000

Revenue - 11,281 Profit before income tax - 4,485

24. CONTINGENT LIABILITIES Group 2005 2004 $’000 $’000

Performance guarantees – unsecured 47 37


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25 CAPITAL COMMITMENTS Group 2005 2004 $’000 $’000

Estimated amounts committed for future capital expenditure but not provided for in the financial statements 217 102

26 OPERATING LEASE PAYMENT COMMITMENTS

At the balance sheet date the commitments in respect of operating leases with a term of more than one year were as follows:

Group 2005 2004 $’000 $’000

Within one year 399 412 Within 2 to 5 years 326 438 More than 5 years 29 -

Rental expense for the year 433 338

Operating lease payments represent rentals payable for office and factory premises. The lease rental terms are negotiated for average terms of two to five years and rentals are subject to review and revision from time to time. Such revisions are not included in the above amounts.

27. SEGMENTAL INFORMATION

A segment is a distinguishable component of the group that is engaged either in providing products (business segment), or in providing products within a particular economic environment (geographical segment), 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 primary format, business segments, is based on the group’s management and internal reporting structure.

Inter-segment pricing is determined on the terms agreed between segments.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total costs incurred during the year to acquire segment assets that are expected to be used or more than one year.


27. SEGMENTAL INFORMATION (cont’d)

For management purposes, the group’s operating businesses are organised into four operating divisions : office automation segment, consumer electronics segment, automotive segment and others. These divisions are the basis on which the group reports its primary segment information.

Office automation segment – The products in office automation segment include mainly boots for scanners, isolators, bumpers and rollers for printers, and switch buttons for facsimile machines.

Consumer electronics segment – The products in consumer electronics segment include mainly wiper strips for vacuum cleaners, seals for pressure cookers, gaskets for solar casings, microphone holder and seal receivers for speaker phones, mobile phone holders and volume control switch buttons for mobile phones.

Automotive segment – The products in automotive segment include mainly hose for exhaust, multi-cushion for suspension and socket for bulb holder.

Others segment– The products in others segment include mainly vacuum cups for robotic arms, rubber timber for water tap, rubber washers for water meters and main frame display seal for bio-tech apparatus.

Business segments

Office Consumer Consolidated

2005 automation electronics Automotive Others total

$’000 $’000 $’000 $’000 $’000

Segment revenue toexternal parties 7,867 4,347 681 1,204 14,099

Cost of sales (3,865) (2,136) (334) (592) (6,927)Gross profit 4,002 2,211 347 612 7,172Financial income 27Financial expense (24)Distribution costs (684)Administrative expenses (1,968)Other credits 9Profit before tax 4,532Income tax expense (1,020)

Profit after tax 3,512


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27. SEGMENTAL INFORMATION (cont’d)

Business segments (cont’d)

Office Consumer Consolidated

2004 automation electronics Automotive Others total

$’000 $’000 $’000 $’000 $’000

Segment revenue toexternal parties 6,214 2,119 780 900 10,013

Cost of sales (3,225) (1,099) (405) (461) (5,190)Gross profit 2,989 1,020 375 439 4,823Financial income 197Financial expense (78)Distribution costs (217)Administrative expenses (1,378)Other charges (504)Profit before tax 2,843Income tax expense (869)Profit after tax 1,974

Geographical segments

Revenue by geographical segments are based on location of the group’s customers:

2005 2004 $’000 $’000

South East Asia 11,618 8,357 North & East Asia 2,008 1,120 Europe 385 516 Others 88 20

Total 14,099 10,013

Based on current operating structure, allocation of assets and liabilities, capital expenditure, depreciation and other operating expenses by business and geographical segments will not be meaningful.


28 SUBSEQUENT EVENTS

On 18 January 2006, the company, through its wholly owned subsidiary, HLN Micron Pte. Ltd (“HLN Micron”) entered into a joint agreement with Mr Jeffrey Tiong Sin Lip (“TSL”) to set up a joint venture company, HLN Technologies Sdn. Bhd. (“HLN-SB”) in Malaysia. HLN-SB will design and manufacture precision turned and machined components and sub assemblies for office automation, memory storage and automotive industries. The initial issued and paid up capital of HLN-SB will be RM2.2 million, of which HLN Micron will hold 60% while TSL will hold the remaining 40%.

On 27 January 2006, the company subscribed for 999,998 new shares in HLN Micron. HLN Micron increased its issued and paid up share capital from S$2 to S$1,000,000 through the issue of 999,998 new shares of S$1 each at par for cash to the company.

29 CHANGES AND ADOPTION OF FINANCIAL REPORTING STANDARDS

For the year ended 31 December 2005 the following Singapore Financial Reporting Standards were adopted for the first time:

FRS 1 (revised 2004) Presentation of Financial Statements FRS 2 (revised 2004) Inventories FRS 8 (revised 2004) Accounting Policies, Changes in Accounting Estimates and Errors FRS 10 (revised 2004) Events after the Balance Sheet Date FRS 16 (revised 2004) Property, Plant and Equipment FRS 17 (revised 2004) Leases FRS 21 (revised 2004) The Effects of Changes in Foreign Exchange Rates FRS 24 (revised 2004) Related Party Disclosures FRS 27 (revised 2004) Consolidated and Separate Financial Statements FRS 28 (revised 2004) Investments in Associates (*) FRS 32 (revised 2004) Financial Instruments: Disclosure and Presentation FRS 33 (revised 2004) Earnings per Share FRS 36 (revised 2004) Impairment of Assets FRS 38 (revised 2004) Intangible Assets FRS 39 (revised 2004) Financial Instruments: Recognition and Measurement FRS 41 Agriculture (*) FRS 102 Share-based Payments FRS 103 Business Combinations FRS 104 Insurance Contracts (*) FRS 105 Non-current assets held for sale and discontinued operations (*)

(*)Notapplicabletotheentity.

The new standards did not require material modification of the measurement method or the presentation in the financial statements.


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30. CHANGES IN ACCOUNTING POLICIES, RECLASSIFICATIONS AND COMPARATIVE FIGURES

Effective from 1 January 2005 certain Singapore Financial Reporting Standards were adopted as mentioned in Note 29. Adoption of the standards has resulted in some changes in the detailed application of the accounting policies and some modifications to financial statements presentation and these changes are summarised below:

After Before

reclassification reclassification Difference

$’000 $’000 $’000

2004 Income statement:Revenue 10,013 10,001 12Other income – 38 (38)Financial income 197 – 197Financial expense (78) – (78)Finance costs – (17) 17Other credits / (charges) (504) (394) (110)

31. FUTURE CHANGES IN ACCOUNTING STANDARDS

The following Singapore Financial Reporting Standards that have been issued will be effective in future. The transfer to the new standards from the effective dates is not expected to have a material impact on the financial statements.

FRS 40 Investment Property, effective from 1.1.2007 (*) FRS 106 Exploration for and Evaluation of Mineral Resources effective from 1.1.2006 (*) FRS 107 Financial Instruments: Disclosures, effective from 1.1.2007

(*)Notapplicabletotheentity.

32 COMPARATIVE FIGURES

The financial statements for 2004 cover the financial year from 26 February 2004 (date of incorporation) to 31 December 2004. The financial statements for 2005 cover the twelve months ended 31 December 2005. Therefore, the comparative amounts for the income statement, statement of changes in equity, cash flow statement and related notes are not entirely comparable.


Issued and fully paid : SGD 4,900,296Number of shares : 98,005,920Class of shares : ordinary sharesVoting rights : one vote per share

DISTRIBUTION OF SHAREHOLDINGS

NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % NO. OF SHARES %

1 - 999 0 0.00 0 0.00 1,000 - 10,000 220 53.40 1,180,000 1.20 10,001 - 1,000,000 177 42.96 17,709,540 18.07 1,000,001 and above 15 3.64 79,116,380 80.73

TOTAL 412 100.00 98,005,920 100.00

TWENTY LARGEST SHAREHOLDERS

NAME NO. OF SHARES %

1. WA KOK LIANG, LESLIE 37,566,720 38.332. WA SWEE BEE 6,412,940 6.543. NG KHOON SENG 6,029,540 6.154. YAN XIU YUN 4,012,960 4.095. HEIN KE LONG, HENRY 3,814,000 3.896. HO CHEE CHIN 3,767,120 3.847. KIM ENG SECURITIES PTE. LTD. 3,551,000 3.628. TAN SU HONG 2,947,740 3.019. CHOW KOK KEE 2,250,640 2.3010. LOO TIAN SZE, MELVIN 2,008,480 2.0511. ARMSTRONG INDUSTRIAL CORPORATION LTD 1,859,000 1.9012. HO SU CHIN 1,500,000 1.5313. OCBC SECURITIES PRIVATE LTD 1,146,000 1.1714. WA SOCK LING 1,125,120 1.1515. WA SOCK YIN, YVONNE 1,125,120 1.1516. NG KOON CHUAN, FRANCIS 802,500 0.8217. NG LIAN HONG 802,500 0.8218. NG SIEW HONG 802,500 0.8219. MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 700,000 0.7120. NGIO JIA YEE 694,000 0.71

TOTAL 82,917,880 84.60

S ta t i s t i c s o f shareho ld ingsAs a t 8 Ma r ch 2006

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SUBSTANTIAL SHAREHOLDERS

Name of shareholders Direct interest % of shares Deemed interest % of shares No. of shares No. of shares

Wa Kok Liang, Leslie (1) 37,566,720 38.33 9,360,680 9.55

Ng Khoon Seng (2) 6,029,540 6.15 2,407,500 2.46

Wa Swee Bee (3) 6,412,940 6.54 40,514,460 41.34

Tan Su Hong (3) 2,947,740 3.01 43,979,660 44.87

Notes :-

1) Mr Wa Kok Liang, Leslie, is the son of Mr Wa Swee Bee and Mdm Tan Su Hong. Mr Wa Kok Liang, Leslie, considers himself interested in the aggregate of 9,360,680 shares held by his father, Mr Wa Swee Bee and his mother, Mdm Tan Su Hong, which represents approximately 9.5% of the share capital in the Company.

2) Mr Ng Khoon Seng, Mr Ng Khoon Chuan, Francis, Ms Ng Lian Hong, Elsie and Ms Ng Siew Hong are siblings. They consider themselves interested in the shares held by each other.

3) Mr Wa Swee Bee and Mdm Tan Su Hong are husband and wife. They are deemed to be interest in the shares held by the other. Additionally, they consider themselves interested in the 37,566,720 shares held by their son, Mr Wa Kok Liang, Leslie, which represents approximately 38.3% of the issued share capital of the Company.

S ta t i s t i c s o f shareho ld ingsAs a t 8 Ma r ch 2006

NOTICE IS HEREBY GIVEN that the 2006 Annual General Meeting of the members of the Company will be held at 18 Cross Street 8th Floor Marsh & McLennan Centre Singapore 048423 on 21 April 2006 at 10.30 a.m. to transact the following businesses:

AS ORDINARY BUSINESS

1. To receive and adopt the audited financial statements of the Company and the Reports of the Directors and Auditors for the year ended 31 December 2005.

Resolution 1

2. To declare a first and final dividend of 1.10 cents per ordinary share (one-tier) for the year ended 31 December 2005.

Resolution 2

3. To re-elect the following directors retiring pursuant to the Company’s Articles of Association :

Wa Kok Liang (Article 115)Ng Khoon Seng (Article 115)Kong Yim Pui, Susan (Article 119)Jovenal R. Santiago (Article 119)

[Note: Ms Kong Yim Pui, Susan shall, upon re-election as Director of the Company, remain as Chairperson of the Remuneration Committee and Nominating Committee and as a member of the Audit Committee. Ms Kong Yim Pui, Susan shall be considered independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.]

[Note: Mr Jovenal R. Santiago shall, upon re-election as Director of the Company, remain as Chairman of the Audit Committee and member of the Remuneration Committee and Nominating Committee. Mr Jovenal R. Santiago shall be considered independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.]

Resolution 3Resolution 4Resolution 5Resolution 6

4. To approve the Directors’ fees of SGD 57,500 for the year ended 31 December 2005. Resolution 7

5. To re-appoint Messrs RSM Chio Lim as the Auditors for the ensuing year and to authorise the Directors to fix their remuneration.

Resolution 8

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Resolution as Ordinary Resolution, with or without amendments:

6. “That pursuant to Section 161 of the Companies Act, Chapter 50 and the Listing Manual of the Singapore Exchange Securities Trading Limited, authority be given to the Directors to allot and issue shares in the Company (whether by way of rights, bonus or otherwise) and convertible securities at any time and from time to time thereafter to such persons and on such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided always that the aggregate number of shares and convertible securities to be issued shall not exceed 50% of the issued share

Resolution 9

Not i c e o f annua l gene ra l meet ing

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capital of the Company, of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to existing shareholders shall not exceed 20% of the issued share capital of the Company (the percentage issued share capital being based on the Company’s issued share capital at the time this Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding at the time this Resolution is passed and any subsequent consolidation or sub-division of shares) and unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.”

[See Explanatory Note (i)]

7. “That approval be and is hereby given to the Directors to offer and grant options in accordance with the provisions of the HLN Technologies Employee Share Option Scheme (“the Scheme”), and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time such number of ordinary shares in the Company as may be required to be issued pursuant to the exercise of the options under the Scheme provided always that the aggregate number of ordinary shares to be issued pursuant to the Scheme shall not exceed 15 per cent of the total issued share capital of the Company at any time and from time to time.”

[See Explanatory Note (ii)]

Resolution 10

8. And to transact any other business which may be properly transacted at an Annual General Meeting.

Explanatory Notes:

(i) The Ordinary Resolution proposed in item 6 above, if passed, will empower the Directors of the Company from the date of the above meeting until the next Annual General Meeting to issue shares in the Company up to the limit as specified in the Resolution for such purposes as they consider would be in the interests of the Company. This authority will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.

(ii) The Ordinary Resolution proposed in item 7 above, if passed, will empower the Directors of the Company to offer and grant options under the Scheme and to allot and issue shares pursuant to the exercise of options under the Scheme, subject to the terms of the resolution.

NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and Register of Members of the Company will be closed on 3 May 2006 for the purpose of determining shareholders’ entitlements to the proposed first and final dividend of 1.10 cents per ordinary share (one-tier) in respect of the financial year ended 31 December 2005 (the “Proposed Final Dividend”).

Duly completed transfers received by the Company’s Registrars, Lim Associates (Pte) Ltd at 10 Collyer Quay #19-08 Ocean Building Singapore 049315 up to 5.00 p.m. on 2 May 2006 will be registered before entitlements to the Proposed Final Dividend is determined. The Proposed Final Dividend, if approved by shareholders at the 2006 Annual General Meeting, will be paid on 15 May 2006.


Members whose Securities Accounts with The Central Depository (Pte) Limited (“CDP”) are credited with shares at 5.00 p.m. on 2 May 2006 will be entitled to the Proposed Final Dividend.

In respect of shares in Securities Accounts with CDP, the said dividend will be paid by the Company to CDP which will in turn distribute the dividend entitlements to such holders of shares in accordance with its practice.

By Order Of the Board

TAN SIOK KHENGSecretary

Date : 5 April 2006

Notes :

a) A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company.

b) If a proxy is to be appointed, the form must be deposited at the registered office of the Company at 16 Kallang Place #01-18 Singapore 339156 not less than 48 hours before the meeting.

c) The form of proxy must be signed by the appointor or his attorney duly authorised in writing.d) In the case of joint shareholders, all holders must sign the form of proxy.


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Th i s page i s i n t en t i ona l l y l e f t b l ank .

PROXY FORM

HLN TECHNOLOGIES LIMITED

I/We

of being a member(s) of HLN TECHNOLOGIES LIMITED (the “Company”), hereby appoint

Name Address NRIC/Passport Number

Proportion of Shareholdings

and/or (delete as appropriate)

Name Address NRIC/Passport Number

Proportion of Shareholdings

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll at the 2006 Annual General Meeting of the Company to be held at 18 Cross Street 8th Floor Marsh & McLennan Centre Singapore 048423 on Friday, 21 April 2006 at 10.30 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 the notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against1 Directors’ Report and Audited Accounts for the year ended 31 December 20052 Declaration of a first and final dividend of 1.10 cents per ordinary share (one-tier) for the year

ended 31 December 20053 To re-elect Mr Wa Kok Liang as Director4 To re-elect Mr Ng Khoon Seng as Director5 To re-elect Ms Kong Yim Pui, Susan as Director6 To re-elect Mr Jovenal R. Santiago as Director7 To approve Directors’ fees for the year ended 31 December 20058 To re-appoint Messrs RSM Chio Lim as Auditors and authorise the directors to fix their

remuneration9 To authorise the directors to allot and issue shares and convertible securities pursuant to

Section 161 of the Companies Act, Chapter 5010 Authorise Directors to offer and grant options and issue shares in accordance with the HLN

Technologies Employee Share Option Scheme

Dated this _________ day of ______________ 2006

Total number of Shares held

__________________________________Signature(s) of member(s) or common seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

IMPORTANT

1. This Annual Report is also forwarded to investors who have used their CPF monies to buy shares in the Company at the request of their CPF Approved Nominees, and is sent solely for their information only.

2. The Proxy form is, therefore, not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

70pg71

NOTES :

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or duly authorised officer.

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

6. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certified copy thereof, must be deposited at the registered office of the Company at 16 Kallang Place #01-18 Singapore 339156 not later than 48 hours before the time set for the Annual General Meeting.

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

HLN Technologies Limited(Company Registration No. 200402180C)

Blk 16 Kallang PlaceKallang Basin Industrial Estate#01-18Singapore 339156Tel: (65) 6746 1366Fax: (65) 6295 6080Website: www.hlntech.com

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