TIME WATCH INVESTMENTS LIMITED ANNUAL REPORT 2009timewatch.com.sg/images/TWIAR09FA.pdfLimited (Hong Kong) and Tick Tack AG (Switzerland). Supporting the Group’s manufacturing and

TIME WATCH INVESTMENTS LIMITED

ANNUAL REPORT 2009

Corporate ProfileTime Watch Investments Limited (“Time Watch” or “the Group”, Bloomberg Code: TWIN.SP) is a leading manufacturer and retailer of branded watches in the People’s Republic of China (“PRC”).

Time Watch’s proprietary brand “Tian Wang” has been established in the PRC since 1988 and is consistently one of the top 4 local watch brands in the PRC by sales volume, as ranked by the Chinese National Commercial Information Centre.

Time Watch’s other in-house watch brand “Balco”, is introduced in 2001 and caters to middle upper PRC consumers who are willing to pay a premium for the precision and prestige of Swiss-made timepieces.

Adopting a vertically integrated business model, “Tian Wang” watches are designed, manufactured and assembled in the Group’s manufacturing operations in Shenzhen, PRC. “Balco” watches are imported into PRC from Switzerland.

Both brands are sold through 858 retail outlets in more than 35 cities throughout the PRC. In addition, the Group is also the PRC distributor of watches and accessories for the renowned Italian brand “Police”, with a total of 36 stores as at 30 June 2009.

The Group is also the original equipment manufacturer for international brands such as Aigner, Marie Claire and POLICE through its 2 manufacturing subsidiaries, East Base Limited (Hong Kong) and Tick Tack AG (Switzerland).

Supporting the Group’s manufacturing and retailing operations, the Group has an operating subsidiary, Winning Metal Products Manufacturing Company Limited (“WMP”) that has a successful track record as a major trader of watch movements in Hong Kong since 1980. WMP currently distributes over 700 models of watch movements from major global manufacturers including Seiko, Citizen, Timex, Swatch, Epoch and ISA. WMP’s established customer base comprises of over 230 watch manufacturers and distributors from all across the world.

For more information, please refer to the corporate website, www.timewatch.com.sg

ContentsCorporate Profile 01 • Chairman’s Statement 04 • Board of Directors 08 Group Stucture 12 • Financial Highlights 14 • Corporate Governance 15 Report of the Directors 24 • Independent Auditors’ Report 28 • Balance Sheets 29 Consolidated Profit and Loss Statement 31 • Statements of Changes in Equity 32Consolidated Cash Flow Statement 35 • Notes to Financial Statements 37 Statement of Directors 87 • Statistics of Shareholdings 88 • Notice of Fourteenth Annual General Meeting 90 • Notice of Book Closure 95 • Addendum to Notice of Annual General Meeting 96 • Proxy Form 109 • Corporate Information

Just as every chorological creation

is made up of intricate movements

working in synergy, Time Watch’s

strong management team continues to

forge closer ties with our staff, business

partners, customers and shareholders,

working together to propel the Group

toward greater heights.

TimeManagement

2

TIM

E W

AT

CH

IN

VE

ST

ME

NT

S L

IMIT

ED

|

AN

Nu

AL

RE

PO

RT

20

09

Business segment PerformanceIn FY2009, we saw strong contributions from two key business segments – manufacturing, trading of proprietary brands and retailing business of watches which grew 72.0% and manufacturing and resale of OEM watches which grew 6.5%. The Group had made the strategic move to shift from our high-volume watch movement trading business which was not growing as fast despite contributing 26.1% to our FY2009 revenue.

Manufacturing & Retail business for the Group’s house brands, “Tian Wang” (“ ”) and Swiss-imported brand “Balco”, as well as retailing business of watches contributed HK$526.3 million in sales, up 72.0% from HK$306.0 million a year ago. underscoring this growth was the rising brand awareness for all our products, particularly ‘Tian Wang’, ‘Balco’ and ‘Police’ in line with our comprehensive marketing strategies and retail expansion. In FY2009, we opened 130 new stores, giving us a total of 894 points of sale across 35 cities in PRC. This enlarged market presence raised this business segment’s contribution to the Group’s total revenue to 46.7%.

Shareholders should note that, as part of our expansion strategy, we formed a new joint-venture in Suzhou in October 2008 to protect our own existing sales network while leveraging on the network of our partner in the fast-growing Jiangsu Province. For the year under review the Group was able to recognise nine-months of financial performance of this new joint-venture. This latest collaboration follows the incorporation of our flagship retail store in Tshimshatsui, Hong Kong in FY2008 which targets the strong PRC tourism spending in Hong Kong and retails our proprietary “Tian Wang” and “Balco” brands as well as other international brands such as Omega, Piaget, Surich, Perrelet, Juvenia and Enicar. The investments in these two joint-ventures are part of our expansion strategy and we believe that we will continue to reap further fruits from FY2010 onwards.

OEM Manufacturing business – which makes watches for international brands such as ‘Police’, ‘Swiss Military’ and ‘Aigner’ – generated HK$292.5 million in sales in FY2009, up from HK$274.7 million the previous year. Contribution to Group’s total revenue was 26.0% in FY2009.

Watch Movements Trading business contributed HK$294.6 million in sales in FY2009, down from HK$352.8 million a year ago. This decrease was expected as part of the Group’s long-term strategy to shift from low-margin volume business to high-margin business. Revenue contribution from this business unit stood at 26.1% in FY2009 from 37.4% a year ago.

Dear Shareholders,It is with great pleasure that I present to you the annual report for Time Watch Investment Limited (“Time Watch”) and its group of companies (the “Group”) for the financial year ended 30 June 2009 (“FY2009”).

Business reviewFY2009 was a challenging year as we felt the impact of the global economic downturn and resultant credit crunch which dampened consumer confidence in the PRC. We are heartened that despite these challenging conditions, the Group remained resilient and achieved a commendable 19.3% increase in total revenue to HK$1,126.5 million compared to HK$944.3 million in FY2008.

Beyond battling the headwinds of a turbulent global economy, we are also pleased to report to shareholders that our efforts to enhance margins have borne fruit. In line with the Group’s strategic alignment of its business focus away from the high-volume Watch Movement Trading business towards a high-value, high-performance strategy, gross profit grew 41.6% to HK$408.2 million, significantly outpacing revenue growth. As a result, gross profit margin expanded 5.7 percentage points to 36.2% in FY2009 from 30.5% in FY2008. In tandem with the revenue growth, net profit attributable to ordinary equity holders of the company grew 4.9% y-o-y to HK$ 62.1 million.

TUNG KOON MINGCHAIRMAN AND CEO

Chairman’s Statement

4

TIM

E W

AT

CH

IN

VE

ST

ME

NT

S L

IMIT

ED

|

AN

Nu

AL

RE

PO

RT

20

09

Balco Watches storefront in Shanghai

Tian Wang Watches storefront in Xi An

The Group is also pleased to report that we have received sustained contributions from our Zijingshan Department Store in Zhengzhou, Henan province acquired in FY2007. This business unit contributed HK$13.1 million in sales in FY2009, making a 1.2% contribution to Group revenue for the year.

ProsPects and outlookFY2009 has been one of the most turbulent years in recent memory with shockwaves from the financial sector spreading across all aspects of the global economy. Against this economic backdrop, the PRC successfully hosted the Beijing 2008 Olympic Games which created immense consumer-related opportunities among the mainland’s rising middle-income segment. In addition, the PRC central government has recognised the need for macro-economic stimulus measures to further mitigate a slowing economy and spur domestic consumption. Riding on the success of these measures, which included a RMB4.0 trillion stimulus package, China’s retail sales expanded at its fastest pace in nine years, growing 21.7% to RMB5.97 trillion in the first seven months of 2009, based on statistics released by the PRC’s National Bureau of Statistics.

Chairman’s Statement (cont’d)

While near-term market uncertainty remains, the Group is confident that China still offers immense opportunities for players in the retail industry over the longer term. Based on market statistics released in a 2009 report by McKinsey & Company, China’s retail sales are predominately driven by high disposable income earners under the age of 32. This segment has traditionally been Time Watch’s target market and we will actively expend efforts to further enhance our mindshare and positioning in this segment. In addition, the number of wealthy households (with annual incomes exceeding RMB250,000) is expected to grow at an annual rate of 16% over the next seven years, rising to four million wealthy households by 2015. This growing mass of affluent households will continue to drive demand for timepieces and contribute to the Group’s continued development over the longer term.

Leveraging on the long term prospects of the Chinese retail sector, the Group has initiated the following multi-prong high-value, high-performance strategy to augment our competitive advantages and drive the Group’s sustained development:• Brand development• Enhance market penetration• Vertical integration• Strategic alliances

Brand develoPment Brand development and product differentiation is fundamental for the continued success of our high-margin retail business. Across our business operations, we continue to raise the bar through the provision of high-quality products and after-sales service unmatched by any of our competitors. Building on the success of our proprietary “Tian Wang” brand which is one of China’s top local watch brands, we will continue to augment the brand equity and mind share of our three top brands namely “Tian Wang”, “Balco” and “Police” through focused marketing campaigns and strict product quality control measures. In addition, we will continue to build on our exclusive distribution rights to the Police brand of fashion apparels by introducing additional products such as sunglasses, leather goods, jewellery and other accessories in the PRC. We will also bring in other international brands that are specifically targeted at satisfying the lifestyle and fashion needs of our growing base of young, affluent and discerning customers.

enhance market PenetrationThe continued drive to expand our retail network and market penetration stems from our understanding that despite growing affluence, the PRC consumer is largely confined within fixed geographical boundaries. In FY2009, we opened 130 new stores, giving us a total of 894 points of sales across 35 cities in China. Moving forward we will endeavour to maintain this pace of growth for new points of sales across China. We will also continue to explore alliances or joint-ventures as with the two joint-ventures concluded recently for Hong Kong and Jiangsu Province. The Group also intends to offer accessories in some of these retail outlets.

vertical integrationOur OEM Manufacturing business segment continues to be a key revenue contributor accounting for 26.0% of the Group’s FY2009 revenue. Capitalising on the Group’s quality track record for the OEM of international brands such as ‘Police’, ‘Swiss Military’ and ‘Aigner’, the Group initiated a series of strategic initiatives to further enhance collaborations with international brands. In 2008 and 2009, the Group was appointed by international brands French Connection “FCuK” and Cerruti respectively to be the original design manufacturer (“ODM”) for certain watch collection introduced during this period. This latest appointment by an international brand stands testament to Time Watch’s growing maturity as a designer and manufacturer of quality timepieces and will serve as a key launchpad for the Group’s continued penetration into the ODM business for other international brands.

Balco Watches storefront in Zheng Zhou

6

TIM

E W

AT

CH

IN

VE

ST

ME

NT

S L

IMIT

ED

|

AN

Nu

AL

RE

PO

RT

20

09

Tian Wang Watches storefront in Chong Qing

strategic alliancesIn May 2009, we announced the acquisition of an initial 13% equity interest in three companies namely Fortune Concept Limited, pe.timedesign GmbH and Swiss Fashion Time GmbH which are principally engaged in the distribution and sale of timepieces and other related accessories. This acquisition will enable the Group to expand its portfolio from the manufacturing, distributing and selling of watches to the distribution of other accessories such as costume jewellery, genuine jewellery and manual writing utensils. In addition, the Group will be able to widen its geographical reach outside the People’s Republic of China into significant new retail markets such as Europe and the Far East and Asia Pacific region.

Recent news reports and government forecasts indicate that the world’s top economies in Europe and Asia appear to be heading for recovery. While we continue to watch the economic signals carefully, we believe that the underlying consumer growth demand in the PRC remains healthy. The Group will continue to manage our business and operations prudently. As always, we will maintain a conservative balance sheet. Where necessary, we shall review and undertake cost containment measures while still making strategic investments so as to strengthen our foundation for growth. Barring unforeseen circumstances, the Group aims to maintain profitability in FY2010.

corPorate governanceCorporate transparency and timely disclosure of information to shareholders is of key importance to Time Watch. The Group is committed to maintaining high standards of Corporate Governance and proactively seek to engage the investment community to facilitate the understanding of our Group’s business strategies and growth potentials. We will continue to ensure that all shareholders are provided with timely and accurate information through announcements and investor relations activities.

a word of thanksThe Group was able to remain resilient against the effects of the economic downturn and weakening of consumer demand to report yet another year of growth. Our success would not have been possible if not for the unyielding support of our loyal stakeholders. In appreciation of your support, the Board of Directors has proposed a final, tax-exempt dividend of 0.35 Singapore cents per ordinary share.

As we enter yet another year ahead, I look forward to your continued support and the greater heights that we will scale together.

tung koon mingChairman & CEO

mr dennis tung koon kwok Executive Director

Mr Tung was appointed Executive Director of the Group on November 8, 2005. He has been involved in the manufacturing and trading of watches for more than 25 years. His responsibilities include overseeing the trading of watch movements as well as assisting the Chairman in the overall operations of the Group. He was a former director of the Federation of Hong Kong Watch Trades & Industries Limited.

mr tung wai kit Executive Director

Mr Tung was appointed Executive Director on November 8, 2005. He is currently the General Manager responsible for the overall operations and business development of “Balco” brand of watches. During the current year, he is also appointed assistant manager of Fortune Silver Holdings Limited, subsidiary of Time Watch Investments Limited, to oversee the promotion of the Group’s house brand, Balco, in the Hong Kong flagship store in Tshimshatsui. He was a former director of the Federation of Hong Kong Watch Trades & Industries Limited.

mr tung koon ming Chairman & CEO

Following the completion of the reverse take-over of WMP on November 8, 2005, he was appointed Chairman and CEO of Time Watch Investments Limited. He is responsible for the overall management, strategic planning and business development of the Group. Mr Tung has been the Chairman and CEO of Winning Metal Products Manufacturing Company Limited (“WMP”) since its incorporation on May 30, 1980. He has more than 25 years of experience in the business of manufacturing and trading of watches. He was awarded the “Most Outstanding Foreign Investor” by the Guangdong Provincial Government in 1996. He was also a member of both the 8th and 9th Hunan Provincial Committees.

Board of Directors

8

TIM

E W

AT

CH

IN

VE

ST

ME

NT

S L

IMIT

ED

|

AN

Nu

AL

RE

PO

RT

20

09

mr hoon tai meng Independent Director

Mr Hoon was appointed Independent Director on December 15, 2004. He is the Chairman of the Audit Committee and sits on the Nominating and Remuneration Committees. He was last re-elected as Independent Director on October 26, 2006. Mr Hoon will stand for re-election at this forthcoming AGM.

An advocate and solicitor by training, he is currently a Partner with M/s KhattarWong. Besides having more than 13 years of experience in law practice, Mr Hoon also has around 20 years of experience in financial planning and management, audit, tax and corporate secretarial work. Mr Hoon holds a Bachelor of Commerce Degree in Accountancy and LLD (Hons) from the university of London. He is a Fellow of Chartered Institute of Management Accountants (united Kingdom), a Fellow of the Association of Chartered Certified Accountants (united Kingdom), a Fellow Certified Public Accountant (Singapore) and a Barrister-at-Law (Middle Temple). Mr Hoon also holds directorships in Chip Eng Seng Corporation Ltd, Federal International (2000) Ltd, Intraco Limited, Dynamic Colours Limited, China Video Surveillance Limited, Yangtze China Investment Limited, Middle East Development Singapore Ltd and Sin Ghee Huar Corporation Ltd.

mr tan song koon Independent Director

Mr Tan has been an Independent Director of the Group since February 15, 2001. He is a member of the Audit Committee, Nominating Committee and Remuneration Committees. He was last re-elected as Independent Director on October 26, 2006. Mr Tan will stand for re-election at this forthcoming AGM.

He has been an Executive Director of Fuji Offset Plates Manufacturing Ltd (FOPM) since 1987, with main responsibilities in marketing and business development as well as overseeing finance, corporate planning, new business set-ups and investments at the holding company level. He currently holds directorships in the subsidiaries of FOPM, Super Vending Pte Ltd and its subsidiary, TMC Bakelite Sdn Bhd. Mr Tan also holds directorships in Middle East Development Singapore Ltd, Fujian Zhenyun Plastic Industry Co Ltd and Jurong Technologies Industrial Corporation Ltd. He holds a Bachelor of Commerce from Nanyang university in Singapore, majoring in Economics, Banking and Finance

mr meyrick wong wing keungIndependent Director

Mr Wong was appointed Independent Director on November 8, 2005 upon the completion of the reverse take-over exercise. He is the Chairman of the Nominating Committee and Remuneration Committee and a member of the Audit Committee. He was last re-elected an Independent Director on October 28, 2008.

He holds a Bachelor of Laws from the university of London. Since 1990, Mr Wong has been practicing as Barrister-at-law in Hong Kong. He passed the Council of Engineering and Electrical Engineering in 1980 and 1982 respectively. His professional qualifications include Chartered Engineer, Member of the Energy Institute, Member of the Institution of Mechanical Engineers, Member of the Institution of Electrical Engineers and Member of the Hong Kong Bar Association. He is currently a board member of Grace Name Limited and Worldwin Asia Company Limited.

10

T

IME

WA

TC

H I

NV

ES

TM

EN

TS

LIM

ITE

D

| A

NN

uA

L R

EP

OR

T 2

00

9

Time Watch remains resilient in today’s

changing times by staying grounded to its

values. Despite the challenging economic

climate, we seek to identify new areas

of growth and capitalise on new market

opportunities that lay ahead.

All InGood Time

Group Structure

12

T

IME

WA

TC

H I

NV

ES

TM

EN

TS

LIM

ITE

D

| A

NN

uA

L R

EP

OR

T 2

00

9

13%Swiss Fashion Time GmbH

Germany

13%pe.timedesign

GmbHGermany

13%Fortune

Concept LimitedHong Kong

100% Wee Fong Construction Pte Limited

Singapore

100% Columbia Education & Consultancy

Services Pte LimitedSingapore

100% Grand Ocean

Industrial Limited

Hong Kong

100% Perfect Fame Investments

LimitedBVI

100% Stategrace

Group LimitedBVI

100% AimFar Holdings

LimitedBVI

100% Win Ford (BVI) Investments

LimitedBVI

100% Fine Jade

International Limited

BVI

51%Fortune Silver

Holding LimitedHong Kong

100% Tian Wang Electronics Company Limited

PRC

100% Goldford


BVI

100% Balco Electronic

(Zhuhai) Company Limited

PRC

100% Goldford

International (Malaysia)

LimitedMalaysia

51%Tick Tack AGSwitzerland

51%East Base Limited

Hong Kong

51%Semtek Limited

Hong Kong

100% China City

Trading LimitedHong Kong

TIMe WATCh InveSTMenTS LIMITeDSingapore

100% Time Watch Singapore Pte Ltd

Singapore

100% Winning Metal Products

Manufacturing Company LimitedHong Kong

100% Gold Reach Investments

LimitedHong Kong

100% Top World

Trading LimitedHong Kong

100% Win Sun


Hong Kong

100%Ye Guang Li Electronics (Meizhou)

Company LimitedPRC

100% Gold Joy

Investments Limited

Hong Kong

51% Suzhou Bao Li Chen Watch

Trading Company Limited

PRC

100% Master Wave

LimitedBVI

100% Skyrex

Investment Limited

Hong Kong

84%Time Watch (ZhengZhou)

Business Consultancy

Co., Ltd PRC

100% Winning Asia

Holdings Group Limited

BVI

100% Sky Sun

Investments Limited

Hong Kong

100% Tian Wang Electronics (Shenzhen)

Company LimitedPRC

Profit and loss statement (HK$’000)

Balance sheet (HK$’000)Net assetsTurnover Profit attributable to shareholders

fy2006 fy2007 FY2008 FY2009

Profit and loss statement

HK$’000 HK$’000 HK$’000 HK$’000

(Loss)/profit before tax (47,077) 101,616 82,988 105,805Profit after tax (50,378) 83,061 70,162 79,269

Balance sheet HK$’000 HK$’000 HK$’000 HK$’000Current assets 233,902 355,209 497,880 525,080Current liabilities 144,931 219,769 348,749 338,241Net current assets 88,971 135,440 149,131 186,839

financial ratiosGross margin (%) 15.9% 21.2% 30.5% 36.2%Net margin (%) (7.0%) 9.7% 7.4% 7.0%Net margin (%)

(excluding change in fair value of investment properties, impairment of goodwill and loss on dilution of shareholding in a subsidiary)

4.6% 6.4% 7.0% 6.9%

EPS (cents)- Basic (15.44) 20.92 15.84 16.61- diluted - 20.77 15.38 16.06Net assets per share (cents) 20.07 54.15 78.20 91.50

revenue By segment

26.1% Trading watch

movements

1.2% Leasing of a shopping mall

46.7% Manufacturing &

trading of watches

26.0% Manufacturing & resale of OEM watches

Financial highlights

14

T

IME

WA

TC

H I

NV

ES

TM

EN

TS

LIM

ITE

D

| A

NN

uA

L R

EP

OR

T 2

00

9

2006 2007 20092008

721,730

855,859

1,126,526944,380

2006 2007 20092008

68,253

202,561

342,284

292,504

2006 2007 20092008

35,192

45,376

61,66954,985

(excluding change in fair value of investment properties, impairment of goodwill and loss on dilution of shareholding in a subsidiary)

Corporate Governance

The board of directors (the “Board”) of Time Watch Investments Limited (the “company” or “Time Watch”) is committed to maintaining high standards of corporate governance to safeguard the interest of its shareholders and maximise the long-term shareholder value. Whilst no effort had been spared in ensuring compliance with the Code of Corporate Governance 2005 (the “Code”), the Board endeavours to continuously seek and put in place those processes and procedures to ensure full compliance with the Code.

This report describes the company’s Corporate Governance processes and practices that were in place throughout the financial year ended 30 June 2009 (“FY2009”), with specific reference made to each of the principles of the Code. In areas where the company deviates from the Code, the rationale has been provided.

1. THE BOARD’S CONDUCT OF AFFAIRS (PRINCIPlE 1)

The company is headed by an effective Board which leads and oversees the business affairs of the company. Apart from their statutory duties, the Board is responsible for Corporate Governance and also for the setting of business direction for the group, monitoring and reviewing the financial performance of the group, safeguarding the group’s assets, establishing and overseeing internal controls and setting and approving the group’s strategic plans. These functions are carried out either directly by the Board or through the various Board committees that have been set up to cover specific functions of the Board, namely the Audit Committee, the Nominating Committee and the Remuneration Committee. Each of these Board committees is chaired by an Independent director.

The company has in place programs to provide appropriate training for new directors (including his or her duties as a director and how to discharge those duties). The training also includes orientation program to ensure that the incoming directors are familiar with the company’s business and governance practices. The existing directors are updated on relevant new laws, regulations and changing commercial risks from time to time. Additional training for the directors will be provided as and when necessary.

The Board conducts regular meetings and meets at least four times a year. Ad-hoc meetings, in addition to the scheduled meetings, are convened when circumstances require. To facilitate the Board’s decision-making process, the company’s Articles of Association provides for directors to participate in Board meetings by conference telephone and similar communications equipment, and for Board resolutions to be passed in writing, including electronic means. The attendance of the directors at Board meetings during FY2009 are disclosed below:

Number of meetings heldName of director (during the tenure of office) Attendance

Tung Koon Ming 4 4Dennis Tung Koon Kwok 4 4Tung Wai Kit 4 1Hoon Tai Meng 4 4Tan Song Koon 4 3Meyrick Wong Wing Keung 4 3

15

A

NN

uA

L R

Epo

RT

20

09

Corporate Governance (cont’d)

2. BOARD COMPOSITION AND GUIDANCE (PRINCIPlE 2)

The current Board comprises six directors who are also directors in FY2009. The directors are as follows:

Tung Koon Ming (Chairman & Chief Executive officer) Dennis Tung Koon Kwok (Executive Director) Tung Wai Kit (Executive Director) Hoon Tai Meng (Independent Director) Tan Song Koon (Independent Director) Meyrick Wong Wing Keung (Independent Director)

out of the total six directors, three are Independent Directors. There is, therefore, a strong independent element in the Board with half of its members made up of Independent Directors. As a group, the Board comprises directors with core competencies essential to the company and the group, such as, finance and accounting, legal, business and management experience, industry knowledge and strategic planning experience.

The Non-Executive Directors who are also the Independent Directors have participated actively to help develop proposals on the group’s strategy, business and corporate affairs. They have reviewed the performance of the management (“Management”) in meeting goals and objectives of the group, and help to monitor the reporting of performance.

The Board, taking into account the nature of operations of the group, considers its current size and composition appropriate for the nature and scope of the group’s operations. The profile and key information of the directors as at the date of this report are set out on pages 8 and 9 of the Annual Report.

3. CHAIRMAN AND CHIEF EXECUTIVE OFFICER (PRINCIPlE 3)

The Chairman leads the Board to ensure its effectiveness on all aspects of its role. The Chairman is also responsible for the scheduling of meetings to enable the Board to perform its duties effectively, setting meeting agenda in consultation with the directors and company secretary, exercising control over the accuracy, flow and timeliness of the information between Management and the Board, and ensuring compliance with the company’s guidelines on corporate governance.

The Chairman is also the Chief Executive officer (“CEo”) who is responsible for the implementation of the Board’s strategic directions and day-to-day management of the group’s operations. The roles of the Chairman and CEo are assumed by Mr Tung Koon Ming. This deviates from the Code which states that the roles of Chairman and CEo should in principle be separate to ensure appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making. The Board however feels that the separation of the roles of Chairman and CEo is not necessary as Mr Tung is able to discharge his roles and responsibilities as Chairman and CEo effectively. Furthermore the Board feels that there are adequate safeguards like having a strong independent element in the Board to ensure a balance of power and authority such that no individual represents a concentration of power. All major decisions made by Mr Tung are reviewed by the AC which consists wholly of the Independent directors.

16

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


4. BOARD MEMBERSHIP (PRINCIPlE 4)

Key information of the Board and Committee Appointments:

Date firstappointed

as a director

Date of lastre-election

as a directorCommittees served on

Director Board Audit Nominating Remuneration

Tung Koon Ming Executive Chairman N.A. N.A. N.A. Nov 8, 2005 oct 30, 2007

Dennis Tung Koon Kwok

Executive N.A. N.A. N.A. Nov 8, 2005 oct 30, 2007

Tung Wai Kit Executive N.A. N.A. N.A. Nov 8, 2005 oct 28, 2008

Hoon Tai Meng Independent Director Chairman Member Member Dec 15, 2004 oct 26, 2006

Tan Song Koon Independent Director Member Member Member Feb 15, 2001 oct 26, 2006

Meyrick Wong Wing Keung

Independent Director Member Chairman Chairman Nov 8, 2005 oct 28, 2008

The Nominating Committee (“NC”) comprises three Independent Directors. They are Meyrick Wong Wing Keung as the NC

Chairman, Hoon Tai Meng and Tan Song Koon.

The NC’s key responsibilities include:

(a) making recommendations on appointments and re-nomination of directors, having regard to the directors’ contribution and performance;

(b) determining annually whether or not a director is independent, bearing in mind the circumstances set forth in Guidance Note 2.1 of the Code and any other salient factors; and

(c) considering whether or not a director who has multiple board representations is able to and has been carrying out his or her duties as a director of the company.

New directors are appointed by the Board after the recommendation by the NC. All new directors must submit themselves for re-nomination and re-election at the next Annual General Meeting (“AGM”) of the company following their appointment. pursuant to the company’s Articles of Association, at least one-third of the directors for the time being, including the Managing director (or any director holding an equivalent appointment) shall retire from office by rotation at each AGM provided that all the directors shall retire from office at least once every three (3) years. A retiring director shall be eligible for re-election.

The number of NC meetings held and attendance at the meetings during FY2009 are set out below:


Meyrick Wong Wing Keung (Chairman) 1 1

Hoon Tai Meng 1 1

Tan Song Koon 1 1

17

A

NN

uA

L R

Epo

RT

20

09


5. BOARD PERFORMANCE (PRINCIPlE 5)

The Board has adopted a system for assessing the effectiveness of the Board as a whole. The assessment process adopts a comprehensive set of criteria, both quantitative and qualitative, and considers, among other things, the company’s share price performance, return on assets and return on equity as criteria for assessment of the Board’s performance.

NC, in considering the re-nomination of any director for appointment, evaluates the director’s performance and contributions, including his attendance and participation at meetings of the Board and Board committees (where applicable), and any other special considerations.

6. ACCESS TO INFORMATION (PRINCIPlE 6)

In order to ensure that the Board is able to fulfill its responsibilities, Management has provided adequate and timely information to the Board on the affairs of the company and the group in the form of on-going reports relating to the operational and financial performance of the group. Board papers are sent to all the directors in advance of each meeting to ensure that the directors are properly informed of matters to be discussed and/or approved.

The Board has separate and independent access to the company’s senior management and the company secretary. The company secretary attends all the Board and the Board committee meetings and is responsible to ensure that Board procedures are followed and compliance with applicable rules and regulations including the Companies Act, Cap. 50 and the Singapore Exchange’s Listing Manual.

The Board, either individually or collectively, in the furtherance of their duties, has access to independent professional advice, if necessary, at the company’s expense.

7. PROCEDURES FOR DEVElOPING REMUNERATION POlICIES (PRINCIPlE 7)

The Remuneration Committee (“RC”) comprises three Independent Directors, namely, Meyrick Wong Wing Keung as the RC Chairman, Hoon Tai Meng and Tan Song Koon.

The RC’s main responsibilities include:-

(a) recommending to the Board a formal and transparent procedures for determining the remuneration packages of the Board members and key executives;

(b) reviewing the specific remuneration packages for executive directors and the CEo; (c) reviewing the appropriateness of the remuneration of non-executive directors, taking into consideration the level of their

contribution and responsibilities; (d) reviewing the terms of service agreements of executive directors and key executives; and (e) considering the disclosure requirements for the remuneration of directors and key executives as required by the

Singapore Exchange.

The RC’s recommendations are made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board. The members of the RC do not participate in any decisions concerning their own remuneration. The RC has the authority to seek expert advice inside and/or outside the company on remuneration of all directors.

18

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


The number of RC meetings held and attendance at the meetings during the FY2009 are set out below:


Meyrick Wong Wing Keung (Chairman) 1 1

Hoon Tai Meng 1 1

Tan Song Koon 1 1

8. lEVEl AND MIX OF REMUNERATION (PRINCIPlE 8)

The RC assists the Board in ensuring that the executive directors and the key executives of the company and group are fairly remunerated for their performance and individual contribution to the overall performance of the group, taking into account the performance of the group and the individual directors respectively. The performance related elements of compensation are designed to align the interests of the executive directors with those of the shareholders. In the furtherance of their duties, the RC may obtain independent legal and other professional advice as it deems necessary, at the expense of the company.

All independent and non-executive directors have no service agreements with the company. They are paid directors’ fees, which is recommended by the RC based on effort, time spent and responsibilities of each individual director. The fees are subject to approval by the shareholders at the AGM.

The annual review of the compensation of directors are carried out by the RC to ensure that the remuneration of the executive directors and senior management commensurate with their performance.

During FY2009, the company adopted 2 share incentive plans, the Time Watch Employee Share option Scheme 2008 (“TimeWatch ESoS”) and the Time Watch performance Share plan 2008 (“TimeWatch pSp”). The objectives of these share plans are, inter alia, to compensate and give recognition to employees who have contributed significantly to the growth and performance of the group. The adoption of more than one share-based compensation scheme will provide the company with greater flexibility to give such eligible employees an opportunity to have a stake in the company and aligh their interests with those of the shareholders. Both TimeWatch ESoS and TimeWatch pSp are administered by the RC. There was no grant of options or award of shares under the respective TimeWatch ESoS and TimeWatch pSp during FY2009.

19

A

NN

uA

L R

Epo

RT

20

09


9. DISClOSURE ON REMUNERATION (PRINCIPlE 9)

The directors’ remuneration for FY2009 is set out below:

BonusFees % Salary % Fixed% Variable% Other Benefits %

S$1,000,000 to below S$1,250,000

Tung Koon Ming 36 6 48 10 -

Below S$250,000

Dennis Tung Koon Kwok 27 70 - 3 -

Tung Wai Kit 54 46 - - -

Hoon Tai Meng 100 - - - -

Tan Song Koon 100 - - - -

Meyrick Wong Wing Keung 100 - - - -

The top 5 key Executives of the group are as follows:

Name of Executives Position Name of company

Janice Low Mui Kee Chief Financial officer Time Watch Investments Limited

Eleanor Tam Fung Hung Marketing Manager Winning Metal products ManufacturingCompany Limited

Hou Qinghai General Manager Tian Wang Electronics (Shenzhen)Company Limited

Deng Guanglei Assistant General Manager Tian Wang Electronics (Shenzhen)Company Limited

Christian Mercel Frommherz Managing Director East Base LimitedTick Tack AG

20

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


Top 5 Key Executives within each band of remuneration are as follows:

Remuneration Band No. of Executives

S$500,000 to below S$750,000 1

Below S$250,000 4

In FY2009, none of the employees who are immediate family members of a director or the CEo has received remuneration exceeding S$150,000.

There were no options granted by the company to subscribe for unissued shares in the company under the Time Watch Employee

Share option Scheme 2008 or award of right to be issued or transferred shares in the capital of the company under the Time Watch performance Share plan 2008 during FY2009.

10. ACCOUNTABIlITY (PRINCIPlE 10)

The Board is responsible for presenting a balanced and understandable assessment of the company’s performance, position and prospects.

The Management provides all members of the Board with management accounts which present a balanced and understandable assessment of the company’s performance, position and prospects on a regular basis.

11. AUDIT COMMITTEE (PRINCIPlE 11)

The Audit Committee (“AC”) comprises three directors, all of whom are independent. As of the date of this report, the members of the AC are Hoon Tai Meng as the Chairman of the AC, Meyrick Wong Wing Keung and Tan Song Koon.

During FY2009, the AC had performed the following functions: (a) review with the external auditors, their audit plans, evaluation of the accounting controls, audit reports and any matters

which the external auditors wish to discuss;

(b) review the assistance given by the company’s officers to the external auditors;

(c) review the adequacy of the internal control procedures and evaluates the effectiveness of the overall internal control system, including financial, operational and compliance controls and risk management;

(d) review the effectiveness of the company’s internal audit function;

(e) review the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the company and any formal announcements relating to the company’s financial performance and affairs released to the shareholders and SGX-ST;

(f) review the interested person transactions and ensure the company complies with the listing rules with respect to announcements, disclosures and seeking shareholders’ approval;

(g) review the independence and objectivity of the external auditors, and the nature and extent of the non-audit services provided by the external auditors, if any;

21

A

NN

uA

L R

Epo

RT

20

09


(h) make recommendations to the Board on the appointment, re-appointment and removal of the external auditors, and reviewing their fees and terms of engagement;

(i) review any whistle-blowing; and

(j) report to the Board on all AC meetings and the AC’s decisions and recommendations made during these meetings.

The AC has explicit authority to investigate any matter within its terms of reference, and has full access to and cooperation by the Management. The AC has full discretion to invite any director or executive officer to attend its meetings, and access to reasonable resources to enable it to discharge its functions properly.

The AC meets with the external auditors at least once annually, without the presence of the Management.

During FY2009, the company has established a whistle-blowing policy for the group as reviewed and recommended by the AC.

The number of AC meetings held and attendance at the meetings during FY2009 are set out below:

Number of meetings heldName of director (during tenure of office) Attendance

Hoon Tai Meng (Chairman) 4 4

Meyrick Wong Wing Keung 4 3

Tan Song Koon 4 3

12. INTERNAl CONTROlS (PRINCIPlE 12)

The Board has put in place a system of internal controls for the company and group to reasonably safeguard the shareholders’ investments and the company’s assets.

The AC is responsible for the adequacy and effectiveness of the company’s internal controls, including financial, operational and compliance controls, and risk management policies and systems established by Management (collectively “internal controls”).

The AC, with the assistance of the internal auditors, has reviewed the internal controls. The Board is satisfied with the adequacy of the internal control system put in place for the company and group.

13. INTERNAl AUDIT (PRINCIPlE 13)

During FY2009, the audit function was outsourced to Lawrence Cheng CpA Company Limited (the “Internal Auditor”), a certified public accountant incorporated in Hong Kong. prior to its formal appointment, the Internal Auditor had assisted the group in internal audit function on an ad hoc basis. AC, having regard to its past working experience with the Internal Auditor, is satisfied that the Internal Auditor is adequately resourced to perform the internal audit function. The Internal Auditor is independent of the activities it audits.

The Internal Auditor reports directly to the Chairman of the AC on audit matters and administratively to the CEo. The Internal Auditor assists the AC in monitoring and assessing the effectiveness of the group’s material internal controls. The Internal Auditor also assists Management in identifying operational and business risks and provides recommendations to address those risks.

22

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


14. COMMUNICATION WITH SHAREHOlDERS (PRINCIPlES 14 AND 15)

The company endeavours to provide material information to its shareholders in a timely manner. It provides the shareholders with a detailed and balanced explanation and analysis of the company’s and group’s performance, position and prospects via its quarterly and full-year results announcements on SGXNET. The Board is also mindful of the obligation to provide shareholders with updates of all major developments that affect the group in accordance with the Singapore Exchange Listing Rules and the Singapore Companies Act, Cap.50. All material and price-sensitive information is publicly released via the SGXNET promptly.

At AGMs, all shareholders are given the opportunity to air their views and raise questions regarding the company and the group to the Board. The chairpersons or members of the various Board committees and the external auditors will be present at the AGM to address, or to assist the directors in addressing, any relevant queries by the shareholders. To promote greater shareholders’ participation, the company’s Articles of Association provide that a member entitled to attend and vote may appoint one or two proxies to attend and vote at general meetings on his/her behalf. The proxy so appointed need not be a member of the company.

15. DEAlING WITH SECURITIES

The company has adopted an internal policy modelled on SGX-ST’s best practices recommendations in relation to dealings in the company’s securities. Directors and staff are reminded to refrain from dealing in the company’s securities during the periods commencing two weeks before the release the company’s results for each of the first three quarters of its financial year and one month before the release of the company’s full year results up to the date of the announcement of the respective results. Staff are cautioned against dealing in the company’s securities while in possession of unpublished material price-sensitive information of or concerning the company or the group.

16. INTERESTED PERSON TRANSACTIONS AND MATERIAl CONTRACTS

The company has adopted an internal policy in respect of any transactions with interested person and has set out the procedures for review and approval of the company’s interested person transactions. All interested person transactions are presented and reviewed by the AC.

The company has also set up procedures governing entry into material contracts to ensure that they are carried out at arm’s length basis, on normal commercial terms, and will not prejudice the interests of the company and its shareholders.

Except as disclosed in Notes 6 & 7 to the financial statements, there were no interested person transactions which are required to be disclosed under the SGX-ST Listing Manual during FY2009.

23

A

NN

uA

L R

Epo

RT

20

09

REPORT OF THE DIRECTORS

The directors present their report together with the audited consolidated financial statements of the group and balance sheet and statement of changes in equity of the company for the financial year ended June 30, 2009.

1 DIRECTORS

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

Tung Koon Ming


Tung Wai Kit

Meyrick Wong Wing Keung

Hoon Tai Meng

Tan Song Koon

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

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

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

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

Shareholdingsregistered in

the names of directors

Shareholdingsin which directors are

deemed to have interestsNames of directorsand company in whichinterests are held

Atbeginning

of yearAt

end of yearAt

July 21, 2009

Atbeginning

of yearAt

end of yearAt

July 21, 2009

Time Watch Investments limited- the company (Ordinary shares)

Tung Koon Ming (1) - - - 217,960,320 223,960,320 223,960,320

(1) By virtue of Section 7 of the Singapore Companies Act, the director is deemed to have an interest in the company and all the related corporations of the company.

24

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (CONT’D)

Shareholdingsregistered in

the names of directors

Shareholdingsin which directors are

deemed to have interestsNames of directorsand company in whichinterests are held

Atbeginning

of yearAt

end of yearAt

July 21, 2009

Atbeginning

of yearAt

end of yearAt

July 21, 2009

Winning International limited- the holding company(Ordinary shares)

Tung Koon Ming 9,545 9,545 9,545 - - -Dennis Tung Koon Kwok 455 455 455 - - -

4 DIRECTORS’ RECEIPT AND ENTITlEMENT TO CONTRACTUAl BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, 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 except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations.

5 SHARE OPTIONS

a) Options to take up unissued shares

(i) Call option

In 2006, in connection with the loan facilities granted by a bank to a subsidiary of the company, the company had also entered into a call option agreement with the bank pursuant to which the company had granted the bank a right (the “Call option”) from time to time for a period of three years beginning from January 2, 2006 (“Availability Date”) to subscribe for such number of shares of the company as determined by dividing the S$ equivalent of uS$3,000,000 with the exercise price of S$0.015 each, subject to the maximum of 600,000,000 new shares. on January 24, 2007, the company restructured the share capital such that every 50 ordinary shares in the capital of the company were consolidated into one share. As such, the exercise price has changed to S$0.75 per share, subject to the maximum of 12,000,000 new shares (“Availability option Shares”).

According to the call option agreement, during the period commencing on, and including, the Availability Date and expiring on the market date (a day on which the Singapore Exchange Securities Trading Limited is open for trading in securities) falling immediately before the first anniversary of the Availability Date (“First option period”), the maximum number of share which can be allotted and issued upon the exercise of the Call option shall be 50% of the total Available option Shares.

The unexercised Call option during the First option period may be exercised any time after the first anniversary of the date of the Availability Date.

The Call option expired without being exercised during the current financial year.

REPORT OF THE DIRECTORS (cont’d)

25

A

NN

uA

L R

Epo

RT

20

09

5 SHARE OPTIONS (CONT’D)

a) Options to take up unissued shares (cont’d)

(ii) Convertible Loan Notes

on April 4, 2007, the company issued S$5 million convertible loan notes to a financial institution. The notes are convertible into ordinary shares of the company at any time after six months from the issue date to their settlement date (April 3, 2010) at the option of the holder. on issue, the loan notes can be converted to 18,181,818 shares at the exercise price of S$0.275 per share.

As at June 30, 2009 and 2008, the loan notes remained unconverted.

Except for the above mentioned (i) and (ii), during the financial year, no other options to take up unissued shares of the company or any corporation in the group were granted.

b) 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.

c) Unissued shares under options

At the end of the financial year, there were no unissued shares of the company or any corporation in the group under options except as described in paragraph 5(a) above.

6 AUDIT COMMITTEE

The Audit Committee (“AC”) comprises three directors, all of whom are independent directors. As of the date of this report, they are Hoon Tai Meng as the Chairman of the AC, Tan Song Koon and Meyrick Wong Wing Keung as members. The AC has met four times since the last Annual General Meeting.

The main functions of the AC are to:

a) review the annual audit plan and reports of the company’s external auditors;

b) review the co-operation given by the company’s officers to the external auditors;

c) review the audit plan and results of the internal auditors’ examination and evaluate the adequacy of the system of internal controls, including accounting controls;

d) review the financial statements of the company and the consolidated financial statements of the group before their submission to the Board for approval for release of the results on SGXNET;

e) review the quarterly, half year and full year results announcements as well as related press releases on the results and financial position of the company and the group;

f) review all interested person transactions to ensure that they have been conducted at arm’s length basis, if any;


26

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

6 AUDIT COMMITTEE (CONT’D)

g) review the independence of the external auditors and to make recommendations to the Board regarding the nomination of the external auditors for re-appointment;

h) review any whistle-blowing; and

i) consider other matters as requested by the Board.

The AC is authorised to investigate any matter in its terms of reference, and has full access to and co-operation of the management. The AC has full discretion to invite any director or executive officer to attend its meetings, as well as reasonable resources to enable it to discharge its functions properly.

Annually, the AC meets with the external auditors separately, without the presence of the management to review the adequacy of audit arrangements of the auditors, the scope and quality of their audits and the independence and objectivity of the auditors.

The AC meets with the external auditors at least twice a year.

The AC has recommended to the directors the nomination of Deloitte & Touche LLp for re-appointment as external auditors of the group at the forthcoming Annual General Meeting of the company.

7 AUDITORS

The auditors, Deloitte & Touche LLp, have expressed their willingness to accept re-appointment.

oN BEHALF oF THE DIRECToRS

Tung Koon Ming


SingaporeSeptember 29, 2009


27

A

NN

uA

L R

Epo

RT

20

09

We have audited the accompanying financial statements of Time Watch Investments Limited (the company) and its subsidiaries (the group) which comprise the balance sheets of the group and the company as at June 30, 2009, the profit and loss statement, statement of changes in equity and cash flow statement of the group and the statement of changes in equity of the company for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 29 to 86.

MANAGEMENT’S RESPONSIBIlITY FOR THE FINANCIAl STATEMENTS

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBIlITY

our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion,

a) the consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the group and of the company as at June 30, 2009 and of the results, changes in equity and cash flows of the group and 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 have been properly kept in accordance with the provisions of the Act.

public Accountants andCertified public Accountants


INDEPENDENT AUDITORS’ REPORTTO THE MEMbERS OF TIME WATCH INvESTMENTS LIMITED

28

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

Group CompanyNote 2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

ASSETS

Current assets

Cash and bank balances 8 82,117 64,760 213 1,993pledged bank deposits 9 5,000 6,246 - - Trade receivables 10 150,845 164,665 - - other receivables, deposits and prepayments 11 33,391 31,035 44,706 43,568Inventories 12 253,727 231,174 - - Total current assets 525,080 497,880 44,919 45,561

Non-current assets

Goodwill 13 15,037 15,182 - - Intangible assets 14 392 580 - - Investments in subsidiaries 15 - - 386,043 381,668Deposits for acquisition of investments 16 12,956 3,000 - - other receivables and deposits 17 1,730 6,981 - - property, plant and equipment 18 40,679 36,810 109 164Investment properties 19 204,228 166,666 - - Total non-current assets 275,022 229,219 386,152 381,832

Total assets 800,102 727,099 431,071 427,393

lIABIlITIES AND EQUITY

Current liabilities

Borrowings 20 169,888 179,185 - - Convertible loan notes 21 26,724 - 26,724 - Trade payables 22 81,806 108,784 - - other payables and accruals 23 48,528 54,226 3,732 5,351Current portion of finance leases 24 104 114 - - Income tax payable 11,191 6,440 - - Total current liabilities 338,241 348,749 30,456 5,351

Non-current liabilities

Borrowings 20 12,701 8,941 - - Convertible loan notes 21 - 28,596 - 28,596Finance leases 24 170 275 - - provision for long service payments 25 3,520 1,031 - - Deferred tax liabilities 26 18,846 14,004 - - Total non-current liabilities 35,237 52,847 - 28,596

bALANCE SHEETSJUNE 30, 2009

29

A

NN

uA

L R

Epo

RT

20

09

Group CompanyNote 2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Capital and reserves

Share capital 27 570,051 570,051 570,051 570,051Capital reserve 2 (432,677) (432,677) - - other reserve 28 116 116 116 116Shareholder’s contribution 28 544 544 - - property revaluation reserve 28 5,291 5,430 - - Currency translation reserve 43,043 44,828 - - Accumulated profits (losses) 155,916 104,212 (169,552) (176,721)Equity attributable to equity holders of the company 342,284 292,504 400,615 393,446Minority interests 84,340 32,999 - - Total equity 426,624 325,503 400,615 393,446

Total liabilities and equity 800,102 727,099 431,071 427,393

See accompanying notes to financial statements.

bALANCE SHEETS (cont’d)JUNE 30, 2009

30

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

GroupNote 2009 2008

HK$’000 HK$’000

Revenue 29 1,126,526 944,380Cost of sales (718,336) (656,019)Gross profit 408,190 288,361

other operating income 31 8,568 4,285Change in fair value of investment properties 19 7,807 5,700Distribution costs (201,295) (123,879)Administrative expenses (105,325) (83,052)Finance costs 32 (7,701) (8,427)Loss on dilution of shareholding in a subsidiary 33 (4,439) -

Profit before tax 105,805 82,988Income tax expense 34 (26,536) (12,826)

Profit for the year 35 79,269 70,162

Attributable to:

Equity holders of the company 62,148 59,260

Minority interests 17,121 10,902 79,269 70,162

Earning per share (cents) 37

Basic 16.61 15.84

Diluted 16.06 15.38


CONSOLIDATED PROFIT AND LOSS STATEMENTYEAR ENDED JUNE 30, 2009

31

A

NN

uA

L R

Epo

RT

20

09

AttributableProperties Currency to equity

Share Capital Other Shareholder’s revaluation translation Accumulated holders of MinorityNote capital reserve reserve contribution reserve reserve profits the company interests Total

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

Balance as at July 1, 2007 570,051 (432,677) 116 544 4,301 5,382 54,844 202,561 19,647 222,208

Gain on revaluation of leasehold land and buildings 18 - - - - 1,237 - - 1,237 - 1,237Realisation of property revaluation reserve - - - - (108) - 108 - - - Exchange differences arising on translation of foreign operations - - - - - 39,446 - 39,446 - 39,446Net income recognised directly in equity - - - - 1,129 39,446 108 40,683 - 40,683profit for the year - - - - - - 59,260 59,260 10,902 70,162

Total recognised income for the year - - - - 1,129 39,446 59,368 99,943 10,902 110,845Contribution from minority shareholders to a non-wholly owned subsidiary (Note a) - - - - - - - - 2,450 2,450Dividends 36 - - - - - - (10,000) (10,000) - (10,000)

Balance as at June 30, 2008 570,051 (432,677) 116 544 5,430 44,828 104,212 292,504 32,999 325,503


Realisation of property revaluation reserve - - - - (139) - 139 - - -Exchange differences arising on translation of foreign operations - - - - - (1,785) - (1,785) - (1,785)Net (expense) income recognised directly in equity - - - - (139) (1,785) 139 (1,785) - (1,785)profit for the year - - - - - - 62,148 62,148 17,121 79,269

Total recognised (expense) income for the year - - - - (139) (1,785) 62,287 60,363 17,121 77,484Dilution of shareholding in a subsidiary (Note b) - - - - - - - - 24,163 24,163Dividend paid to minority shareholder of a subsidiary - - - - - - - - (1,136) (1,136)Contribution from minority shareholders to a non-wholly owned subsidiary - - - - - - - - 11,193 11,193Dividends 36 - - - - - - (10,583) (10,583) - (10,583)

STATEMENTS OF CHANGES IN EQUITYYEAR ENDED JUNE 30, 2009


Note (a): The amount represented the share capital contributed by the minority shareholders of a subsidiary, Fortune Silver Holdings Limited.

Note (b): on September 24, 2008, Time Watch (Zhengzhou) Business Consultancy Co., Ltd [“Time Watch (Zhengzhou)”], a subsidiary of the company, has increased its registered capital by RMB 18,200,000 (the “Transaction”), which was fully contributed by Henan Heng Sheng Watch Trading Company Limited, an independent third party. Time Watch (Zhengzhou) was owned at 16% by the minority shareholder after the Transaction. The amount represents the minority interests in the net assets of Time Watch (Zhengzhou) as at the date of Transaction.

32

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

AttributableProperties Currency to equity

Share Capital Other Shareholder’s revaluation translation Accumulated holders of MinorityNote capital reserve reserve contribution reserve reserve profits the company interests Total

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


Gain on revaluation of leasehold land and buildings 18 - - - - 1,237 - - 1,237 - 1,237Realisation of property revaluation reserve - - - - (108) - 108 - - - Exchange differences arising on translation of foreign operations - - - - - 39,446 - 39,446 - 39,446Net income recognised directly in equity - - - - 1,129 39,446 108 40,683 - 40,683profit for the year - - - - - - 59,260 59,260 10,902 70,162

Total recognised income for the year - - - - 1,129 39,446 59,368 99,943 10,902 110,845Contribution from minority shareholders to a non-wholly owned subsidiary (Note a) - - - - - - - - 2,450 2,450Dividends 36 - - - - - - (10,000) (10,000) - (10,000)



Realisation of property revaluation reserve - - - - (139) - 139 - - -Exchange differences arising on translation of foreign operations - - - - - (1,785) - (1,785) - (1,785)Net (expense) income recognised directly in equity - - - - (139) (1,785) 139 (1,785) - (1,785)profit for the year - - - - - - 62,148 62,148 17,121 79,269

Total recognised (expense) income for the year - - - - (139) (1,785) 62,287 60,363 17,121 77,484Dilution of shareholding in a subsidiary (Note b) - - - - - - - - 24,163 24,163Dividend paid to minority shareholder of a subsidiary - - - - - - - - (1,136) (1,136)Contribution from minority shareholders to a non-wholly owned subsidiary - - - - - - - - 11,193 11,193Dividends 36 - - - - - - (10,583) (10,583) - (10,583)


Note (a): The amount represented the share capital contributed by the minority shareholders of a subsidiary, Fortune Silver Holdings Limited.

Note (b): on September 24, 2008, Time Watch (Zhengzhou) Business Consultancy Co., Ltd [“Time Watch (Zhengzhou)”], a subsidiary of the company, has increased its registered capital by RMB 18,200,000 (the “Transaction”), which was fully contributed by Henan Heng Sheng Watch Trading Company Limited, an independent third party. Time Watch (Zhengzhou) was owned at 16% by the minority shareholder after the Transaction. The amount represents the minority interests in the net assets of Time Watch (Zhengzhou) as at the date of Transaction.

STATEMENTS OF CHANGES IN EQUITY (cont’d)YEAR ENDED JUNE 30, 2009

33

A

NN

uA

L R

Epo

RT

20

09

Share Other AccumulatedNote capital reserve losses Total

HK$’000 HK$’000 HK$’000 HK$’000

Company

Balance as at July 1, 2007 570,051 116 (181,568) 388,599

profit for the year - - 14,847 14,847

Dividends 36 - - (10,000) (10,000)

Balance as at June 30, 2008 570,051 116 (176,721) 393,446

profit for the year - - 17,752 17,752

Dividends 36 - - (10,583) (10,583)

Balance as at June 30, 2009 570,051 116 (169,552) 400,615


STATEMENTS OF CHANGES IN EQUITY (cont’d)YEAR ENDED JUNE 30, 2009

34

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

2009 2008HK$’000 HK$’000

Operating activities

profit before income tax 105,805 82,988Adjustments for:

Depreciation of property, plant and equipment 9,915 6,804Amortisation expense on convertible loan notes 128 132Amortisation of intangible assets 188 188Allowance for bad and doubtful debts 7,439 221Allowance for obsolete inventories 4,437 4,302Loss on disposal of plant and equipment 2,532 1,082Loss on dilution of shareholding in a subsidiary 4,439 - Change in fair value of investment properties (7,807) (5,700)unrealised exchange difference arising from convertible loan notes (2,000) 3,202Increase in provision for long services payments 2,489 780Interest income (416) (638)Write back of other payables (1,699) -Interest expense 7,701 8,427

operating cash flows before movements in working capital 133,151 101,788

Trade receivables 13,680 (43,981)other receivables, deposits and prepayments (1,403) (11,371)Inventories (26,990) (63,400)Trade payables (26,978) 21,840other payables and accruals 8,172 7,237

Cash generated from operations 99,632 12,113

Interest received 416 638Income tax paid (16,556) (11,906)

Net cash from operating activities 83,492 845

Investing activitiespurchase of investment properties (Note a) (42,330) (5,926)purchase of plant and equipment (Note b) (17,386) (19,939)proceeds on disposal of plant and equipment 477 5Decrease in pledged bank deposits 1,246 594Deposit paid for acquisition of investments (Note 16) (12,956) (3,000)

Net cash used in investing activities (70,949) (28,266)

CONSOLIDATED CASH FLOW STATEMENTYEAR ENDED JUNE 30, 2009

35

A

NN

uA

L R

Epo

RT

20

09

Note 2009 2008HK$’000 HK$’000

Financing activitiesInterest paid (7,701) (8,427)Dividends paid (10,583) (10,000)Dividends paid to minority shareholder of a subsidiary (1,136) - Repayment of bank borrowings (456,502) (367,229)proceeds from bank borrowings 450,965 420,228Capital contribution from minority shareholders of subsidiaries 30,917 2,450Repayment of obligations under finance lease (114) (148)

Net cash from financing activities 5,846 36,874

Net increase in cash and bank balances 18,389 9,453Cash and cash equivalents at beginning of the year 64,760 51,814Effect of exchange rate changes on the balance of

cash held in foreign currencies (1,032) 3,493Cash and cash equivalents at end of the year (Note 8) 82,117 64,760

Notes:

a) As at June 30, 2008, RMB10,677,000 (equivalent to HK$12,172,000) pertaining to the purchase of investment properties was unpaid (Note 23). The amount was fully paid during the current financial year.

b) During the financial year ended June 30, 2008, the group acquired plant and equipment with an aggregate cost of HK$20,393,000 whereby plant and equipment with an aggregate cost of HK$454,000 were financed via finance leases. The cash outflow of acquisition of plant and equipment amounted to HK$19,939,000.


CONSOLIDATED CASH FLOW STATEMENT (cont’d)YEAR ENDED JUNE 30, 2009

36

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

1 GENERAl

The company (Registration No. 199502355R) is incorporated in Singapore with its principal place of business and registered office at 17 Carpenter Street, #02-01, Singapore 059906. The company is listed on the main board of Singapore Stock Exchange (“SGX”). The financial statements are expressed in Hong Kong dollars.

The principal activity of the company is that of an investment holding company. The principal activities of the subsidiaries are disclosed in Note 15 to the financial statements.

The consolidated financial statements of the group and balance sheet and statement of changes in equity of the company for the year ended June 30, 2009 were authorised for issue by the Board of Directors on September 29, 2009.

2 REVERSE ACQUISITION IN PRIOR YEAR

on November 8, 2005, the company acquired the entire share capital of Winning Metal products Manufacturing Company Limited (“WMp”), a company incorporated in Hong Kong, for a consideration of S$68 million (equivalent to HK$318 million) satisfied by the issuance of 13.6 billion ordinary shares in the capital of the company at an issue price of S$0.005 per share to the former shareholder of WMp.

Due to the relative values of the companies, the former shareholder of WMp became the majority shareholder, controlling approximately 80% of the enlarged share capital of the company at that time. Further, the company’s operations and executive management were substantially those of WMp. Accordingly, the substance of the business combination is that WMp acquired the company in a reverse acquisition under FRS 103 “Business Combinations”. WMp became the parent of the enlarged group for accounting purposes.

The amount recognised as issued equity (share capital and capital reserve) in the consolidated financial statements immediately after the business combination was determined by adding to the issued equity of WMp, the legal subsidiary immediately before the business combination, and the cost of the combination amounting to HK$79,065,000. However, the equity structure appearing in the consolidated financial statements (i.e. the number and type of equity instruments issued) reflects the equity structure of the company, the legal parent, including the equity instruments issued by the company to effect the combination. Accordingly, a capital reserve of HK$432,677,000 (debit balance) was created in the shareholders’ equity in the accounting for the reverse acquisition.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POlICIES

BASIS oF ACCouNTING - The financial statements have been prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

ADopTIoN oF NEW AND REVISED STANDARDS – In the current financial year, the group and the company have adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after July 1, 2008. The adoption of these new/revised FRSs and INT FRSs does not result in change to the group’s and company’s accounting policies and has no material effect on the amounts reported for the current or prior year.

NOTES TO FINANCIAL STATEMENTSJUNE 30, 2009

37

A

NN

uA

L R

Epo

RT

20

09

3 SUMMARY OF SIGNIFICANT ACCOUNTING POlICIES (CONT’D)

At the date of authorisation of these financial statements, the following FRSs that are relevant to the group and the company were issued but not effective:

FRS 1 - Presentation of Financial Statements (Revised)

FRS 23 - Borrowing Costs (Revised)

FRS 27 - Consolidated and Separate Financial Statements (Revised)

FRS 103 - Business Combinations (Revised)

FRS 107 - Financial Instruments: Disclosures (Revised)

FRS 108 - Operating Segments

FRS 1 – Presentation of Financial Statements (Revised)

FRS 1 (Revised) will be effective for annual periods beginning on or after January 1, 2009, and will change the basis for presentation and structure of the financial statements. It does not change the recognition, measurement or disclosure of specific transactions and other events required by other FRSs.

FRS 23 – Borrowing Costs (Revised) FRS 23 (Revised) will be effective for annual periods beginning on or after January 1, 2009 and eliminates the option available under

the previous version of FRS 23 to recognise all borrowing costs immediately as an expense. An entity shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. As the change in accounting policy is to be applied prospectively, there will be no impact on amounts reported for 2009.

FRS 27 (Revised) – Consolidated and Separate Financial Statements and FRS 103 (Revised) – Business Combinations

FRS 27 (Revised) is effective for annual periods beginning on or after July 1, 2009. FRS 103 (Revised) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after July 1, 2009.

Apart from matters of presentation, the principal amendments to FRS 27 that will impact the group concern the accounting treatment for transactions that result in changes in a parent’s interest in a subsidiary. It is likely that these amendments will significantly affect the accounting for such transactions in future accounting periods, but the extent of such impact will depend on the detail of the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption.

Similarly, FRS 103 is concerned with accounting for business combination transactions. The changes to the Standard are significant, but their impact can only be determined once the detail of future business combination transactions is known. The amendments to FRS 103 will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatement will be required in respect of transactions prior to the date of adoption.

NOTES TO FINANCIAL STATEMENTS (cont’d)JUNE 30, 2009

38

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


FRS 107 (Revised) – Financial Instruments: Disclosures

Amendments to FRS 107 will be effective on or after January 1, 2009, and will result in enhancement in disclosures about fair value measurement and liquidity risks. It does not change the recognition, measurement or disclosure of specific transactions and other events required by other FRSs.

FRS 108 – Operating Segments

FRS 108 will be effective for annual financial statements beginning on or after January 1, 2009 and supersedes FRS 14 – Segment Reporting. FRS 108 requires operating segments to be identified on the basis of internal reports about components of the group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, FRS 14 requires an entity to identify two sets of segments (business and geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. As a result, following the adoption of FRS 108, the identification of the group’s reportable segments may change.

Consequential amendments were also made to various standards as a result of these new/revised standards.

Management anticipates that the adoption of other FRSs, INT FRSs and the amendments to FRSs in future periods will not have a material impact on the financial statements of the company and of the group in the period of their initial adoption.

BASIS oF CoNSoLIDATIoN - The consolidated financial statements incorporate the financial statements of WMp, the parent of the enlarged group for accounting purpose and entities controlled by WMp (its subsidiaries for accounting purposes). Control is achieved where WMp has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover its share of those losses.

In the company’s financial statements, investments in its subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in the profit and loss statement.


39

A

NN

uA

L R

Epo

RT

20

09


BuSINESS CoMBINATIoNS - The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for the control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated profit and loss statement.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

FINANCIAL INSTRuMENTS - Financial assets and financial liabilities are recognised on the group’s and the company’s balance sheet when the group and the company become a party to the contractual provisions of the instrument.

Financial assets

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest rate basis for debt instruments.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash at bank that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Loans and receivables

Trade and other receivables that have fixed or determinable payments are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.


40

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


Financial assets (cont’d)

Impairment of financial assets (cont’d)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables where the carrying amount is reduced through the use of an allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of financial assets

The group and the company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or they transfer the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group and the company neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the transferred asset, the group and the company recognise its retained interest in the asset and an associated liability for amounts they may have to pay. If the group and the company retain substantially all the risks and rewards of ownership of a transferred financial asset, the group and the company continue to recognise the financial asset and also recognise a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the group and the company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Interest-bearing loans are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs (see below).

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount of obligation under the contract recognised as a provision in accordance with FRS 37 - provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance with FRS 18 Revenue.


41

A

NN

uA

L R

Epo

RT

20

09


Convertible loan notes

Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured.

Derecognition of financial liabilities

The group and the company derecognise financial liabilities when, and only when, the group’s and the company’s obligations are discharged, cancelled or they expire.

LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The group as lessee

Assets held under finance leases are recognised as assets of the group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Leasehold land and buildings

The land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification unless the lease payments cannot be allocated reliably between the land and buildings elements, in which case, the entire lease is classified as a finance lease or operating lease as mentioned above.


42

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


INVENToRIES - Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

pRopERTY, pLANT AND EQuIpMENT - Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on the revaluation of land and buildings is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged to the profit and loss statement. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the property revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged to profit or loss. on subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the property revaluation reserve is transferred directly to accumulated profits.

plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method, on the following bases:

Number of years

Leasehold land and buildings over the estimated useful lives of 50 years or terms of the lease, whichever is shorter Leasehold improvements 5 to 10 years or terms of the lease, whichever is shorter plant and machinery 5 to 10 Furniture, fixtures and equipment 5 to 10 Motor vehicles 5 to 10 Light box 3

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purposes as well as self-constructed investment property. property that is being constructed or developed for future use as an investment property is classified as property, plant and equipment and carried at cost less recognised impairment loss until construction or development is complete, at which time it is reclassified to and subsequently accounted for as investment property. Any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.


43

A

NN

uA

L R

Epo

RT

20

09


The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit and loss statement.

INVESTMENT pRopERTIES - Investment properties held to earn rentals and for capital appreciation are stated at periodic valuation on an open market value for existing use basis.

on initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in the profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated profit and loss statement in the year in which the item is derecognised.

GooDWILL - Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

on disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

INTANGIBLE ASSETS - Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets with definite useful lives are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

IMpAIRMENT oF TANGIBLE AND INTANGIBLE ASSETS EXCLuDING GooDWILL - At each balance sheet date, the group and company review the carrying amounts of their assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.


44

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


Intangible assets with indefinite useful lives are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and 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.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit and loss statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

pRoVISIoNS - provisions are recognised when the group and the company have a present obligation (legal or constructive) as a result of a past event, it is probable that the group and the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

REVENuE RECoGNITIoN - Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• thegrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods;

• thegroupretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontrol over the goods sold;

• theamountofrevenuecanbemeasuredreliably;

• itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;and

• thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.


45

A

NN

uA

L R

Epo

RT

20

09


Rental income

Rental income under operating lease is recognised on a straight line basis over the respective lease term.

Dividend income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

BoRRoWING CoSTS - All borrowing costs are recognised in the profit and loss statement in the period in which they are incurred.

RETIREMENT BENEFIT CoSTS - payments to defined contribution retirement benefit plans are charged as an expense as they fall due. payments made to state-managed retirement benefit schemes, such as the Singapore Central provident Fund and Hong Kong Mandatory provident Fund Scheme, are dealt with as payments to defined contribution plans where the group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

The group’s pRC subsidiaries and a Switzerland subsidiary are required to make contributions to the state-managed retirement schemes operated by respective local governments based on certain percentage of the monthly salaries of their current employees to fund the benefits. The employees are entitled to retirement pension calculated with reference to their basic salaries on retirement and their length of service in accordance with the relevant government regulations. The only obligation of these subsidiaries with respect to the state-managed schemes is to make the specified contributions.

LoNG SERVICE pAYMENTS – under the labour laws in certain jurisdictions where the group entities operate, employees are entitled to receive long service payments upon termination of employment subject to completion of certain minimum service period. provision is made in the financial statements based on the length of services rendered by qualifying employees and the obligation arises when the services are rendered.

EMpLoYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

INCoME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the profit and loss statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the company and subsidiaries operate at the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.


46

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

FoREIGN CuRRENCY TRANSACTIoNS AND TRANSLATIoN - The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the group and the financial statements of the company are presented in Hong Kong dollar, which is the functional currency of the company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign operations (including comparatives) are expressed in Hong Kong dollar using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the group’s translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

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


47

A

NN

uA

L R

Epo

RT

20

09

4 CRITICAl ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the group’s and the company’s accounting policies, which are described in Note 3, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the entity’s accounting policies

Management is of the opinion that there are no critical judgements involved that have a significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).

Key sources of estimation uncertainty

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

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash- generating unit to which goodwill has been allocated. The value in use calculation requires the group to estimate the future cash flows expected to arise from the cash-generating unit (“CGu”) and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, an impairment loss may arise. As at June 30, 2009, the carrying amount of goodwill was HK$15,037,000 (2008: HK$15,182,000). Details of the recoverable amount calculation are disclosed in Note 13.

Allowances for inventories

Management of the group reviews the inventory aging analysis at each balance sheet date and identifies the slow-moving inventory items that are no longer suitable for use in production or sales. Management estimates the net realisable value for such inventories based primarily on the latest invoice prices and current market conditions. In addition, the group carries out an inventory review on a product-by-product basis at balance sheet date and makes the necessary allowance if the net realisable value is below the cost. The carrying amount of inventories is disclosed in Note 12.

Allowances for bad and doubtful debts

The allowance policy for bad and doubtful debts of the group is based on the evaluation of collectibility and aging analysis of accounts and on management’s judgment. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including the current credit worthiness and the past collection history of each customer. If the financial conditions of customers of the group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The carrying amount of trade and other receivables are disclosed in Notes 10 and 11 respectively.


48

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

4 CRITICAl ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONT’D)

Estimation of fair value of investment properties

Certain investment properties were revalued at the balance sheet date on market value existing use basis by an independent professional valuer. Such valuation was based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. In making the judgement, the group considers information from current prices in an active market for similar properties and uses assumptions that are mainly based on market conditions existing at each balance sheet date. Details of the valuation of investment properties are disclosed in Note 19.

Financial guarantee contracts

The company has provided financial guarantees to banks for certain financing facilities granted to its subsidiaries. FRS 39 requires certain financial guarantee contracts to be recognised and measured initially at fair value. Management used the rate of 1.56% (2008: 1.50%) of the financing facilities amount to calculate the fair value of financial guarantee contracts. The rate used is deemed reasonable by management.

useful lives of property, plant and equipment

As described in Note 3, the group reviews the estimated useful lives and residual values of property, plant and equipment at the end of each annual reporting period. During the financial year, the directors determined that there was no change in useful lives from last year.

5 FINANCIAl INSTRUMENTS, FINANCIAl RISKS AND CAPITAl RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the balance sheet date:

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000Financial Assets

Loans and receivables (including cash and cash equivalents) 263,406 267,926 44,901 45,542

Financial liabilities

Amortised cost 339,753 379,493 30,456 33,947

(b) Financial risk management policies and objectives

The group’s major financial instruments include trade receivables, other receivables, deposits, pledged bank deposits, bank balances and cash, trade and other payables, borrowings, obligations under finance leases and convertible loan notes. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.


49

A

NN

uA

L R

Epo

RT

20

09

5 FINANCIAl INSTRUMENTS, FINANCIAl RISKS AND CAPITAl RISKS MANAGEMENT (CONT’D)

(b) Financial risk management policies and objectives (cont’d)

(i) Foreign exchange risk management

The group transacts business in various foreign currencies, including the united States dollar, Swiss franc, Singapore dollar, Chinese renminbi, Hong Kong dollar and Japanese yen and therefore is exposed to foreign exchange risk.

At the reporting date, the carrying amounts of significant monetary assets and monetary liabilities denominated in currencies other than the respective group entities’ functional currencies are as follows:

Group CompanyAssets liabilities Assets liabilities

2009 2008 2009 2008 2009 2008 2009 2008HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

united States dollar 49,510 78,744 - 43,617 - - - - Swiss franc 2,140 37 9,017 6,837 - - - - Singapore dollar 286 2,055 30,564 33,947 286 2,194 30,397 33,947Chinese renminbi 962 1,895 303 839 - - - - Hong Kong dollar 7,126 26 - - - - - - Japanese yen - - 5,240 5,799 - - - -

The company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The group does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations.

Foreign currency sensitivity

The following table details the sensitivity to a 5% (2008: 5%) increase and decrease in the relevant foreign currencies against the functional currency of each group entity. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the group where they gave rise to an impact on the group’s profit or loss. Since the exchange rate of Hong Kong dollar is pegged with united States dollar, there is no currency risk on the balances denominated in the united States dollar.

If the relevant foreign currency weakens by 5% against the functional currency of each group entity, profit will increase (decrease) by:

Hong Kongdollar impact

Swiss francimpact

Singaporedollar impact

Chineserenminbi impact

Japaneseyen impact

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

profit or loss - group (356) (1) 344 340(i) 1,514 1,595(ii) (33) (53) 262 290 - company - - - - (i) 1,506 1,588(ii) - - - -


50

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED



(i) Foreign exchange risk management (cont’d)

If the relevant foreign currency strengthens by 5% against the functional currency of each group entity, profit will increase (decrease) by:

Hong Kongdollar impact

Swiss francimpact

Singaporedollar impact

Chineserenminbi impact

Japaneseyen impact

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

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

profit or loss

- group 356 1 (344) (340) (i) (1,514) (1,595) (ii) 33 53 (262) (290)

- company - - - - (i) (1,506) (1,588) (ii) - - - -

(i) This mainly pertains to the foreign currency denominated borrowings at the current and prior years end in the group.

(ii) This is mainly attributable to the exposure outstanding on receivables, payables and convertible loan notes at current and prior years end in the group.

(ii) Interest rate risk management

Summary quantitative data of the group’s interest-bearing financial instruments can be found in section (iv) of this Note. The group has not used any interest rate swaps in order to mitigate its exposure associated with fluctuations relating to interest cash flows. However, management will consider hedging significant interest rate exposure should the need arise.

Interest rate sensitivity

The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point (2008: 50 basis point) increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the group's and the company’s profit for the year ended June 30, 2009 would decrease/increase by HK$561,000 (2008: HK$912,000) and HK$139,000 (2008: HK$135,000) respectively. This is mainly attributable to the group's and the company’s exposure to interest rates on its variable rate borrowings.


51

A

NN

uA

L R

Epo

RT

20

09



(iii) Credit risk management

The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

In order to minimise the credit risk, management of the group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, management considers that the group’s credit risks are significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

other than concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings, the group does not have any other significant concentration of credit risk. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.

The company does not have any significant concentration of credit risk except for the significant balance due from the subsidiaries as disclosed in Note 11.

(iv) Liquidity risk management

In the management of the liquidity risk, the group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the group’s operations and mitigate the effects of fluctuations in cash flows. Management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

liquidity and interest risk analysis

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the balance sheet.


52

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED



(iv) Liquidity risk management (cont’d)

Weighted Onaverage demand Withineffective or within 2 to

interest rate 1 year 5 years Adjustment Total% HK$’000 HK$’000 HK$’000 HK$’000

Group

2009

Non-interest bearing - 130,166 - - 130,166Finance lease liability (fixed rate) 3.25 118 192 (36) 274Variable interest rate instruments 3.26 198,366 14,069 (3,122) 209,313

328,650 14,261 (3,158) 339,753

2008

Non-interest bearing - 162,382 - - 162,382Finance lease liability (fixed rate) 3.25 129 310 (50) 389Variable interest rate instruments 3.78 186,251 40,033 (9,562) 216,722

348,762 40,343 (9,612) 379,493

Company

2009

Non-interest bearing - 3,732 - - 3,732Variable interest rate instruments 2.58 27,251 - (527) 26,724

30,983 - (527) 30,456

2008

Non-interest bearing - 5,351 - - 5,351Variable interest rate instruments 3.48 - 30,740 (2,144) 28,596

5,351 30,740 (2,144) 33,947

(v) Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, borrowings, convertible loan notes and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.


53

A

NN

uA

L R

Epo

RT

20

09



(v) Fair value of financial assets and financial liabilities (cont’d)

The fair values of financial assets and financial liabilities are determined as follows:

• thefairvalueoffinancialassetsandfinancialliabilitieswithstandardtermsandconditionsandtradedonactiveliquidmarkets are determined with reference to quoted market bid prices and ask prices respectively; and

• thefairvalueofotherfinancialassetsandfinancialliabilitiesaredeterminedinaccordancewithgenerallyacceptedpricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.

Management considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values.

(c) Capital risk management policies and objectives

The group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the group consists of debt, which includes the borrowings disclosed in Notes 20, 21 and 24, and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated profits.

The group’s management reviews the capital structure on a continuous basis taking into account the cost of capital and the risk associated with the capital. The group will balance its overall capital structure through new share issues, payment of dividends and the raise of bank borrowings or the repayment of the existing bank borrowings.

The group’s overall strategy remains unchanged from 2008.

6 HOlDING COMPANY AND RElATED COMPANY TRANSACTIONS

Following the reverse acquisition on November 8, 2005, the company became a subsidiary of Winning International Limited, incorporated in British Virgin Islands, which is also the company’s ultimate holding company. Related companies in these financial statements refer to members of the holding company’s group of companies.

Some of the group’s transactions and arrangements are between members of the group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.

Transactions between the company and its subsidiaries, which are related companies of the company, have been eliminated on consolidation and are not disclosed in this note. There are no transactions between the group and other related companies.


54

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


7 RElATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

(i) During the current financial year, the group paid consultancy fee and salary remuneration to a minority shareholder of a subsidiary of approximately HK$4,680,000 (2008: HK$1,200,000) and HK$Nil (2008: HK$1,344,000) respectively.

(ii) During the current financial year, the group paid rental expense to a director amounting to HK$228,000 (2008: HK$216,000) in respect of the lease of office building.

(iii) During the current financial year, the group obtained a loan of HK$3 million (Note 20) from a minority shareholder of a subsidiary and interest paid thereon was HK$180,000 during the current financial year.

(iv) During the financial year ended June 30, 2008, the group incurred legal fee to a legal firm amounting to HK$2,031,798,

where a director is the partner of the legal firm, in respect of handling the claims on behalf of the company as disclosed in Note 38.

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year was as follows:

Group2009 2008

HK$’000 HK$’000

Short-term benefits 13,565 11,991

post-employment benefits 24 2413,589 12,015

The remuneration of directors and key management is determined by the Remuneration Committee having regard to the performance of individuals and market trends.

55

A

NN

uA

L R

Epo

RT

20

09


8 CASH AND BANK BAlANCES

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Cash at bank 80,569 63,160 210 1,991Cash on hand 1,548 1,600 3 2

82,117 64,760 213 1,993

At June 30, 2009, the group’s cash and bank balances of HK$46,796,660 (2008 : HK$40,065,265) was denominated in Chinese renminbi, which is not freely convertible into other currencies.

The short-term bank deposits are with an original maturity of three months or less and bear prevailing market interest rates of 0.01% to 1.35% (2008: 0.01 % to 1.71%) per annum.

The group’s and company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Chinese renminbi 24 63 - - Euro 289 304 - - Hong Kong dollar 2,126 25 - - Singapore dollar 213 1,987 213 1,987Swiss franc 421 37 - - united States dollar 8,514 12,752 - -

9 PlEDGED BANK DEPOSITS

The amounts represented deposits pledged to banks to secure banking facilities granted to the group. The pledged bank deposits will be released within 12 months upon settlement of the relevant bank borrowings.

Bank deposits bear interest at rates ranging from 0.17% to 3.28% (2008: 2.45% to 5.21%) per annum and for a tenure of approximately 180 days (2008: 61 days).

The group’s pledged bank deposits that are not denominated in the functional currencies of the respective entities are as follows:

Group2009 2008

HK$’000 HK$’000

Hong Kong dollar 5,000 - united States dollar - 6,246

56

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


10 TRADE RECEIVABlES

Group2009 2008

HK$’000 HK$’000

outside parties 152,781 167,364Less: Allowance for doubtful trade receivables (1,936) (2,699)

150,845 164,665

The average credit period on the sales of goods is 30 to 60 days (2008: 30 to 60 days). No interest is charged on the amounts overdue. Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Before accepting any new customer, the group assesses the potential customer’s credit quality and defines credit limits by customer. Limits are reviewed on an ongoing basis.

The allowance for estimated irrecoverable amount has been determined based on on-going evaluation of collectibility and aging analysis of individual receivables by reference to their past default experience. Included in the group’s trade receivable balance are debtors with a carrying amount of HK$29,123,000 (2008: HK$8,138,000) which are past due at the reporting date for which the group has not provided as there has been subsequent settlement or no historical default of payments by the respective customers and the amounts are still considered recoverable. The group does not hold any collateral over these balances. The average age of these receivables are 91 days (2008: 85 days).

Aging of receivables that are past due but not impaired:

Group2009 2008

HK$’000 HK$’000

60 to 90 days 10,570 3,99290 to 365 days 17,003 3,276over 365 days 1,550 870

29,123 8,138

Movement in the allowance for doubtful debts

Balance at beginning of the year 2,699 2,803Amounts written off during the year (902) (479)Increase in allowance recognised in profit or loss 140 221Exchange differences (1) 154Balance at end of the year 1,936 2,699

In determining the recoverability of a trade receivable, including the debts which are not past due and not impaired, the group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, management believes that there is no further credit provision required in excess of the allowance for doubtful debts.

57

A

NN

uA

L R

Epo

RT

20

09


10 TRADE RECEIVABlES (CONT’D)

The group’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows:

Group2009 2008

HK$’000 HK$’000

Chinese renminbi 938 543Swiss franc 1,719 - united States dollar 40,996 59,746

11 OTHER RECEIVABlES, DEPOSITS AND PREPAYMENTS

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Loan receivables (1) 1,201 6,981 - -Less: Allowance for doubtful debts (1,201) - - -

- 6,981 - -

Amount owing by subsidiaries (2) - - 46,212 45,069Less: Allowance for doubtful debts - - (1,579) (1,569)

- - 44,633 43,500

Loan to minority shareholder of a subsidiary (3) 5,673 - - - Deposits 9,546 9,162 35 38prepayments 9,677 5,761 18 19other receivable 8,495 9,131 20 11

Total 33,391 31,035 44,706 43,568

Movement in the allowance for doubtful debts

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Balance at beginning of the year - 656 1,569 5,644Amounts written off during the year - (656) - (5,644)Increase in allowance recognised in profit or loss 1,201 - 119 1,483Exchange differences - - (109) 86Balance at end of the year 1,201 - 1,579 1,5695

8

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED


11 OTHER RECEIVABlES, DEPOSITS AND PREPAYMENTS (CONT’D)

(1) Before the group entered into the Restructuring Agreement with Zhengzhou Government in FY2007 as described in Note 19, the former owners of the Department Store (“Former owner”) made loans of HK$13,244,200 to certain tenants (“Borrowers”). According to the Restructuring Agreement, the group, the Former owner and the Borrowers compromised to transfer the title of these loans from the Former owner to the group and the group agreed to pay the Former owner the equal amounts. The group, the Former owner and the Borrowers have entered into loan transfer agreements to formalise this arrangements. As at June 30, 2009, the loan receivables from the Borrowers was HK$340,380 (2008: HK$10,007,000), which is net of the allowance for doubtful debt of HK$7,299,302 (2008: HK$Nil). As at June 30, 2009, the loan receivables are interest free. As at June 30, 2008, amount of HK$990,660 was interest bearing at 8% per annum.

The loan receivables are classified as follows:

Group2009 2008

HK$’000 HK$’000

Non-current portion 6,438 6,981Less: Allowance for doubtful debts (6,098) - Subtotal (Note 17) 340 6,981

Current portion 1,201 3,026Less: Allowance for doubtful debts (1,201) - Subtotal - 3,026

Total 340 10,007

(2) Included in amount owing by subsidiaries was an amount of HK$12,305,000 (2008: HK$18 million) pertaining to the dividend receivable from WMp.

(3) The amount is secured by the minority interest in the subsidiary. The loan is interest-free and is repayable in November 2009.

The group’s and company’s other receivables that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Chinese renminbi - 1,289 - - Singapore dollar 73 68 73 207

59

A

NN

uA

L R

Epo

RT

20

09


12 INVENTORIES

Group2009 2008

HK$’000 HK$’000

Raw materials 24,979 42,150Work-in-progress 27,742 15,253Finished goods 201,006 173,771

253,727 231,174

During the current financial year, an allowance of HK$4,437,000 (2008: HK$4,302,000) was charged to profit or loss by management for slow-moving inventories.

13 GOODWIll

GroupHK$’000

Cost: At July 1, 2007 98,265 Exchange differences 416 At June 30, 2008 98,681 Exchange differences (145) At June 30, 2009 98,536

Impairment: At July 1, 2007, June 30, 2008 and 2009 83,499

Carrying amount: At June 30, 2009 15,037

At June 30, 2008 15,182

The group tests goodwill annually for impairment, or more frequently if there are indications that the goodwill might be impaired.

The goodwill of HK$83,499,270 (2008: HK$83,499,270) arising on the reverse acquisition was written off to the profit and loss statement in prior year as management was of the opinion that there were no future benefits accruing from the goodwill arising from the reverse acquisition.

60

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


13 GOODWIll (CONT’D)

As explained in Note 30, the group uses business segments as its primary segment for reporting segment information. For the purposes of impairment testing, goodwill amounting to HK$15,037,565 (2008: HK$15,181,862) has been allocated to three individual cash generating units (“CGus”). Management considered that each subsidiary represents a separate CGu, one in manufacturing, trading of own branded and retailing business of watches segment (“unit 1”) and two are in manufacturing and resales of original equipment manufacturer (‘oEM”) watches segment (“units 2 & 3”). Details of the respective carrying amounts are stated as follows:

Group2009 2008

HK$’000 HK$’000

Manufacturing, trading of own branded and retailing business of watches - unit 1 4,016 4,017Manufacturing and resales of oEM watches - units 2 & 3 11,021 11,165Balance at end of the year 15,037 15,182

During the year ended June 30, 2009, management of the group determined that there is no impairment of any of its CGus (unit 1 and units 2 & 3) containing goodwill with indefinite useful lives.

The recoverable amount of these units has been determined based on a value in use calculation. That calculation uses cash flow projections of unit 1 and units 2 & 3 based on financial budgets approved by management covering a three-year period based on estimated growth rate of 2.30% (2008: 5.00%) and 2.30% (2008: 5.00%) respectively and discount rates of 8.70% (2008: 10.82%) and 8.50% (2008: 10.82%) respectively. Cash flows for future years are extrapolated at the same growth rate. The growth rates used do not exceed the average long-term growth rate for the relevant market.

Management believes that any reasonable possible change in any of these key assumptions would not cause the carrying amount to exceed its recoverable amount.

14 INTANGIBlE ASSETS

GroupHK$’000

Cost: At July 1, 2007, June 30, 2008 and 2009 940

Accumulated amortisation: At July 1, 2007 172 Charge for the year 188 At June 30, 2008 360 Charge for the year 188 At June 30, 2009 548

Carrying amount: At June 30, 2009 392

At June 30, 2008 580

The intangible assets pertain to the customer base arising from the acquisition of subsidiaries in FY2007 and is amortised on a straight-line method over the period of 5 years.

61

A

NN

uA

L R

Epo

RT

20

09


15 INVESTMENTS IN SUBSIDIARIES

Company2009 2008

HK$’000 HK$’000

unquoted equity shares, at cost 375,985 375,985Add: Deemed investment 13,385 9,010Less: Accumulated allowance for impairment (3,327) (3,327)

386,043 381,668

The above investment represents the company’s investment in Winning Metal products Manufacturing Company Limited, Columbia Education & Consultancy Services pte Ltd, Wee Fong Construction pte Ltd and Time Watch Singapore pte Ltd.

The deemed investment arose from fair value adjustment on the financial guarantee contracts provided by the company to various banks in respect of loans borrowed by certain subsidiaries.

WMp is a private limited company incorporated in Hong Kong on May 30, 1980 with its principal place of business and registered office at units D-G, 5th Floor, Wah Lik Industrial Centre, 459-469 Castle peak Road, Tsuen Wan, New Territories, Hong Kong.

The listing of the subsidiaries including WMp and its subsidiaries at June 30, 2009 are as follows:

Name of subsidiary

Country of incorporation

(or registration) and operation

Proportionof ownership

interest/voting power held Principal activities

2009 2008% %

Held by WMP

Time Watch Investments Limited (1)(6) Singapore 100 100 Investment holding

Grand ocean Industrial Limited (2) Hong Kong 100 100 Investment holding

Goldford International Limited (2) British Virgin 100 100 Investment holding Islands/

Hong Kong

Goldford International Malaysia 100 100 Trading of own branded electronic watches (Malaysia) Limited (2)

Stategrace Group Limited (2) British Virgin 100 100 Investment holding Islands/

Hong Kong

Ye Guang Li Electronics (Meizhou) pRC 100 100 Assembling and trading of electronic watches Company Limited (2)

62

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


15 INVESTMENTS IN SUBSIDIARIES (CONT’D)

Name of subsidiary





2009 2008% %

Win Ford (BVI) British Virgin 100 100 Investment holding Investments Limited (2) Islands/

Hong Kong

Tian Wang Electronics pRC 100 100 Assembling and trading of own branded (Shenzhen) Company Limited (2) electronic watches

Tian Wang Electronics pRC 98.17 98.17 In the process of liquidation Company Limited (2)

Balco Electronic (Zhuhai) pRC 100 100 Trading of own branded electronic watches Company Limited (2)

Tick Tack AG (2) Switzerland 51 51 Assembling and resale of oEM watches

East Base Limited (2) Hong Kong 51 51 Assembling and resale of oEM watches

Fine Jade International Limited (2) British Virgin 100 100 Investment holding Islands/

Hong Kong

Master Wave Limited (2) British Virgin 100 100 Investment holdingIslands/

Hong Kong

Skyrex Investment Limited (2) Hong Kong 100 100 Investment holding

Time Watch (Zhengzhou) pRC 84 100 property investment Business Consultancy Co., Ltd (2) (4)

China City Trading Limited (2) Hong Kong 100 100 Trading of watches

Aimfar Holdings Limited (2) Hong Kong 100 100 Inactive

perfect Fame Investments Limited (2) British Virgin 100 100 Investment holding Islands/

Hong Kong

Fortune Silver Holdings Limited (2) Hong Kong 51 51 Trading of watches

Win Sun International Limited (2) Hong Kong 100 100 Trading of watches

63

A

NN

uA

L R

Epo

RT

20

09


15 INVESTMENTS IN SUBSIDIARIES (CONT’D)

Name of subsidiary





2009 2008% %

Sky Sun Investments Limited (2) Hong Kong 100 100 Investment holding

Winning Asia Holdings Hong Kong 100 100 Inactive Group Limited (2)

Gold Joy Investments Limited (2) Hong Kong 100 100 Investment holding

Semtek Limited(2) Hong Kong 51 - Design house

Suzhou Bao Li Chen Watch Trading pRC 51 - Trading of watches Company Limited (2)

Gold Reach Investments Limited (2) Hong Kong 100 - Inactive

Top World Trading Limited (2) Hong Kong 100 - Inactive

Held by Time Watch Investments limited

Columbia Education & Consultancy Singapore 100 100 In the process of striking off Services pte Ltd (5)

Wee Fong Construction pte Ltd (5) Singapore 100 100 In the process of liquidation

Time Watch Singapore pte Ltd (3) Singapore 100 100 Trading of watches

Notes:

(1) Audited by Deloitte & Touche LLp, Singapore.

(2) Audited by overseas practices of Deloitte Touche Tohmatsu for consolidation purposes.

(3) Not material to the group’s consolidated financial statements. Audited by Goh Ngiap Suan & Company, Singapore. The Audit Committee (“AC”) has reviewed the size, availability and experience of the professional staff of the auditors and considers them as suitable pursuant to Rule 716 of the SGX-ST’s Listing Manual.

(4) There was a dilution of shareholding during the current year as a result of new shares issued by the subsidiary to a minority shareholder. The loss on dilution was HK$4,439,000 (Note 33).

pursuant to an agreement entered into between the group and the minority shareholder of Time Watch (Zhengzhou) (“pRC Investor”), the operation of Time Watch (Zhengzhou) was sub-contracted to the immediate holding company of Time Watch (Zhengzhou), Skyrex Investment Limited (“Skyrex”), for a sub-contracting period of 5 years. The pRC Investor was entitled to a fixed sum of sub-contracting fee of RMB2 million per year by Skyrex. Skyrex is entitled to 100% of the results of Time Watch (Zhengzhou) during the sub-contracting period.

(5) Not audited as the subsidiaries are dormant and are in the process of striking off/liquidation.

(6) Due to the reverse acquisition in prior year as described in Note 2, Time Watch Investments Limited became the subsidiary of WMp for accounting purpose.

64

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


16 DEPOSIT FOR ACQUISITION OF INVESTMENTS

As at June 30, 2009, the amount represented the deposit paid to a related party for acquisition of 13% equity interest in Fortune Concept Limited (“Fortune Concept”), incorporated in Hong Kong. The related party is the minority shareholder of a subsidiary. The acquisition was completed subsequent to the balance sheet date (Note 42).

As at June 30, 2008, the amount represented the deposit of HK$3,000,000 paid for the contribution of 51% registered capital of Sino-foreign joint venture, Suzhou Bao Li Chen Watch Trading Company Limited (“Suzhou Bao Li Chen”), which was established in the pRC in August 2008. The deposit paid in FY2008 became the registered share capital of Suzhou Bao Li Chen during the current financial year, which was eliminated in the group consolidation.

17 OTHER RECEIVABlES AND DEPOSITS

Group2009 2008

HK$’000 HK$’000

Deposits paid to consignees for consignment goods 1,390 - other receivables (Note 11) 340 6,981Total 1,730 6,981

18 PROPERTY, PlANT AND EQUIPMENT

leaseholdland andbuildings

Constructionin progress

leaseholdimprovements

Plant andmachinery

Furniture,fixtures

andequipment

Motorvehicles light box Total

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

Group

Cost or valuation: At July 1, 2007 7,922 - 6,014 2,676 4,061 4,881 11,053 36,607 Additions - 386 5,141 373 4,456 4,238 5,799 20,393 Exchange differences - - 642 197 538 248 1,485 3,110 Disposals - - (1,471) (1,228) (1,350) (281) (6,626) (10,956) Revaluation increase 578 - - - - - - 578 At June 30, 2008 8,500 386 10,326 2,018 7,705 9,086 11,711 49,732 Additions - - 1,141 247 4,590 1,211 10,197 17,386 Exchange differences - - (84) (49) (86) (18) (318) (555) Disposals - - (52) (34) (189) (1,257) (6,576) (8,108) Reclassified to investment properties (Note 19)

- (386) - - - - - (386)

At June 30, 2009 8,500 - 11,331 2,182 12,020 9,022 15,014 58,069 65

A

NN

uA

L R

Epo

RT

20

09


18 PROPERTY, PlANT AND EQUIPMENT (CONT’D)

leaseholdland andbuildings

Constructionin progress

leaseholdimprovements

Plant andmachinery

Furniture,fixtures

andequipment

Motorvehicles light box Total

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

Comprising: At June 30, 2008 At cost - 386 10,326 2,018 7,705 9,086 11,711 41,232 At valuation 8,500 - - - - - - 8,500

8,500 386 10,326 2,018 7,705 9,086 11,711 49,732

At June 30, 2009 At cost - - 11,331 2,182 12,020 9,022 15,014 49,569 At valuation 8,500 - - - - - - 8,500

8,500 - 11,331 2,182 12,020 9,022 15,014 58,069

Accumulated depreciation: At July 1, 2007 473 - 2,105 1,970 2,326 2,568 5,958 15,400 Charge for the year 186 - 1,350 347 905 810 3,206 6,804 Exchange differences - - 157 90 154 157 688 1,246 Disposals - - (1,250) (1,208) (1,309) (281) (5,821) (9,869) Elimination on revaluation (659) - - - - - - (659) At June 30, 2008 - - 2,362 1,199 2,076 3,254 4,031 12,922 Charge for the year 218 - 2,119 272 2,042 958 4,306 9,915 Exchange differences - - (11) (28) (25) (5) (279) (348) Disposals - - (52) (17) (159) (448) (4,423) (5,099) At June 30, 2009 218 - 4,418 1,426 3,934 3,759 3,635 17,390

Carrying amount: At June 30, 2009 8,282 - 6,913 756 8,086 5,263 11,379 40,679

At June 30, 2008 8,500 386 7,964 819 5,629 5,832 7,680 36,810

a) The fair value of the group’s leasehold land and buildings has been arrived at on the basis of a valuation carried out at that date by Knight Frank Hong Kong Limited, an independent qualified professional valuer not connected with the group. The valuation, which conforms to Hong Kong Institute of Surveyors Valuation Standards on properties, was arrived at by reference to comparable market transactions and rental yield for similar properties. During the year ended June 30, 2009, there is no change in the fair value of leasehold land and buildings. During the year ended June 30, 2008, surplus of HK$1,237,000 was credited to properties revaluation reserve for the fair value change on leasehold land and building.

b) The allocation between the land and buildings elements cannot be made reliably according to the valuation report issued by Knight Frank Hong Kong Limited.

c) At June 30, 2009, had the above leasehold land and buildings been carried at historical cost less accumulated depreciation, their carrying amount would have been approximately HK$2,991,000 (2008: HK$3,069,000).

66

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


18 PROPERTY, PlANT AND EQUIPMENT (CONT’D)

d) At June 30, 2009, the carrying amount of the group’s motor vehicles includes an amount of HK$371,000 (2008: HK$417,000) in respect of assets held under finance leases.

e) Details of the group’s leasehold land and buildings are as follows:

location DescriptionSite area

(sq ft)

Gross floor area

(sq ft) Tenure

units D-G & p-R, 5th Floor, Car parking Space No. 1 and Lorry parking Space No. 19, 1st Floor, Wah-Lik Industrial Centre, 459-469 Castle peak Road, Tsuen Wan, New Territories, Hong Kong

office buildingand warehouse

9,916 9,562 50 years fromyear 1997

Furniture,leasehold fixtures

improvements and equipment TotalHK$’000 HK$’000 HK$’000

Company

Cost: At July 1, 2007 16 196 212 Additions 1 50 51 Exchange differences 2 27 29 At June 30, 2008 19 273 292 Additions - 8 8 Exchange differences (1) (19) (20) At June 30, 2009 18 262 280

Accumulated depreciation: At July 1, 2007 2 60 62 Depreciation 6 49 55 Exchange differences 1 10 11 At June 30, 2008 9 119 128 Depreciation 6 46 52 Exchange differences (1) (8) (9) At June 30, 2009 14 157 171

Carrying amount: At June 30, 2009 4 105 109

At June 30, 2008 10 154 164

67

A

NN

uA

L R

Epo

RT

20

09


19 INVESTMENT PROPERTIES

GroupHK$’000

At July 1, 2007 136,000Additions 5,926Exchange differences 19,040Fair value gain 5,700At June 30, 2008 166,666Additions 30,158Reclassified from property, plant and equipment (Note 18) 386Exchange differences (789)Fair value gain 7,807At June 30, 2009 204,228

on April 27, 2007, the group entered into a restructuring agreement (“Restructuring Agreement”) with Zhengzhou Bureau of Commerce and State-owned Assets Supervision and Administration Committee of Zhengzhou Municipal people’s Government (collectively referred to as “Zhengzhou Government”) to purchase investment properties (the “Department Store”) comprising a basement, bicycle parking, 1st to 5th floors [excluding gross floor area of 1,703.14 sqm of the 1st floor (“Remaining portion”)], the respective land use rights, together with the equipment for the maintenance of the Department Store. The Department Store is situated inside Zijingshan Department Store Building, located in Zhengzhou City of the pRC, which was declared to be bankrupt by the Zhengzhou Intermediate people’s Court of the pRC on November 30, 2005 (the “Bankruptcy”). Total consideration for the purchase of the Department Store was RMB96,000,000, which will be used by the Zhengzhou Government to settle the existing and contingent liabilities arising from the Bankruptcy.

During the year ended June 30, 2009, the group has acquired the Remaining portion at a consideration of RMB18,200,000.

The fair value of the group’s investment properties at June 30, 2009 have been arrived at on the basis of a valuation carried out on that date by LCH (Asia-pacific) Surveyors Limited, independent qualified professional valuers not connected with the group. The valuation, which conforms to Hong Kong Institute of Surveyors (“HKIS”) Valuation Standards on properties was arrived based on the income approach by taking into account net rental income with due allowance for the reversionary income. During the year ended June 30, 2009, HK$7,807,000 (2008: HK$5,700,000) was credited to the profit and loss statement as fair value change on investment properties.

All of the group’s property interests held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties. The tenure of the land use right is for a period of 40 years.

The property rental income from the group’s investment properties which are all leased out under operating leases, amounted to HK$13,069,000 (2008: HK$10,882,000). Direct operating expenses (including repairs and maintenance) of the group arising from the investment properties amounted to HK$5,339,000 (2008: HK$5,866,000).

68

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


19 INVESTMENT PROPERTIES (CONT’D)

Details of the group’s investment properties are as follows:

Site area Gross floor arealocation Description (sq meter) (sq meter)

Whole of level 1 to 5, and whole of basement,Zijingshan Department Store, No. 1 Zijingshan Road, Jinshui District, Zhengzhou City, Henan province, The people’s Republic of China

Department Store 36,409 28,243

20 BORROWINGS

Group2009 2008

HK$’000 HK$’000

Trust receipts loans 72,482 73,170Bank loans 107,107 114,956other borrowing from a minority shareholder of a subsidiary (Note 7) 3,000 -

182,589 188,126

Secured 21,502 42,765unsecured 161,087 145,361

182,589 188,126

The borrowings are repayable as follows: on demand or within one year 169,888 179,185 More than one year but not more than five years 12,701 8,941

182,589 188,126Less: Amount due for settlement within 12 months (shown under current liabilities) (169,888) (179,185)Amount due for settlement after 12 months 12,701 8,941

The group’s borrowings that are not denominated in the functional currencies of the respective entities are as follows:

Group2009 2008

HK$’000 HK$’000

united States dollar - 42,765Swiss franc 9,017 6,837Japanese yen 5,240 5,799

The group obtained general banking facilities from various banks upon the following securities:

i) pledged bank deposits of WMp group (Note 9); and

ii) corporate guarantees by the company and WMp group.

69

A

NN

uA

L R

Epo

RT

20

09

20 BORROWINGS (CONT’D)

All bank borrowings (trust receipt loans and bank loans) were arranged at floating rates of approximately 3.36% (2008: 3.83%), thus exposing the group to cash flow interest rate risk. Management estimates that the carrying values of the group’s bank borrowings approximate their fair values.

As at June 30, 2009, other borrowing represented loan due to a minority shareholder of a subsidiary, which bears interest at 3% per annum and is repayable in January 2010.

The group’s principal bank borrowings comprise:

a) Loans of HK$5,000,000 (2008: HK$5,000,000) and HK$4,000,000 (2008: HK$4,000,000). These loans were raised on November 9, 2007 and December 17, 2007 respectively. These are revolving loans and unsecured.

b) Loans of HK$5,000,000 (2008: HK$Nil), HK$2,000,000 (2008: HK$2,000,000), HK$3,000,000 (2008: HK$3,000,000) and HK$10,000,000 (2008: HK$10,000,000). These loans were raised on June 29, 2009, November 9, 2007, December 17, 2007 and March 31, 2008 respectively. These are revolving loans and unsecured.

c) Loans of HK$6,000,000 (2008: HK$Nil), HK$3,000,000 (2008: HK$3,000,000) and HK$4,000,000 (HK$4,000,000). These loans were raised on September 16, 2008, January 21, 2008 and May 9, 2008 respectively. These are revolving loans and unsecured.

d) A loan of HK$6,921,729 (2008: HK$13,658,019). The loan was raised on June 8, 2007. It is a term loan and unsecured. The loan will be paid by 36 equal and consecutive monthly instalments.

e) Loans of HK$5,000,000 (2008: HK$5,000,000) and HK$5,000,000 (2008: HK$5,000,000). These loans was raised on July 31, 2006 and August 11, 2006 respectively. These are revolving loans and unsecured.

f) A loan of HK$3,000,000 (2008: HK$3,000,000). The loan was raised on June 29, 2006. It is a revolving loan and unsecured.

g) Loans of HK$6,000,000 and HK$6,000,000. These loans were raised on June 15, 2009 and June 30, 2009 respectively. These are term loans and unsecured. one loan will be paid by 36 equal and consecutive monthly instalments, while the other will be paid by 60 equal and consecutive monthly instalment.

h) A loan of HK$5,000,000. This loan was raised on November 11, 2008. This is a revolving loan and unsecured.

i) A loan of HK$5,698,015. This loan was raised on April 24, 2009. This is a term loan and unsecured. The loan will be paid by 36 equal and consecutive monthly instalments.

j) A loan of HK$42,765,042 as at June 30, 2008 was fully repaid during the year. The loan was raised on December 20, 2005 and quarterly repayments commenced on April 3, 2006 and continued until January 5, 2009. The loan was secured. In connection with this loan, the company has granted a call option to the bank which expired during the year. Details are set out in Note 41.


70

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

21 CONVERTIBlE lOAN NOTES

The convertible loan notes were issued to a financial institution on April 4, 2007. The notes are convertible into ordinary shares of the company at any time after six months from the issued date to their settlement date (April 3, 2010) at the option of the holder. on issue, the loan notes can be converted to 18,181,818 million shares at S$0.275 per share.

If the notes are not converted, they will be redeemed on April 3, 2010 at par. Interest at the floating rate of Singapore Dollars Swap Rate (“SoR”) plus 1.25% per annum will be paid quarterly until settlement date.

The net proceed received from the issue of the convertible loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the group, as follows:

Group and Company HK$’000

Nominal value of convertible loan notes issued 25,510Less: Transaction cost (255)Net amount 25,255Equity component (116)Liability component at date of issue 25,139Interest charged 1,448Interest paid (1,193)Exchange differences 3,202At June 30, 2008 28,596Interest charged (Note 37) 841Interest paid (713)Exchange differences (2,000)At June 30, 2009 26,724

The interest charge for the year is calculated by applying an effective interest rate of 2.58% (2008: 3.48%) to the liability component.

Management estimates the fair value of the liability component of the convertible loan notes at June 30, 2009 to be approximately HK$26,724,000 (2008: HK$28,596,000). This fair value has been calculated by discounting the future cash flows at the market rate prevailing at balance sheet date.


71

A

NN

uA

L R

Epo

RT

20

09

22 TRADE PAYABlES

Group2009 2008

HK$’000 HK$’000

outside parties 81,806 108,784

The average credit period on the purchases of the goods ranges from 30 to 60 days (2008: 30 to 60 days). No interest is charged on the amounts overdue.

The group’s trade payables that are not denominated in the functional currencies of the respective entities are as follows:

Group2009 2008

HK$’000 HK$’000

Chinese renminbi 303 839

23 OTHER PAYABlES AND ACCRUAlS

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Amount due to ultimate holding company (Note 6) 3 3 3 3Amount due to subsidiaries (Note 6) - - 56 60Deposits received 474 1,080 - - Advance received from customers 168 628 - - Value added tax payable 6,691 7,248 - - Accrued expenses - advertising 7,470 4,006 - - Accrued expenses - staff costs 4,151 4,649 - - Accrued expenses - urban Real Estate tax 1,450 1,045 - - Accrued expenses - sub-contractor fee - 1,525 - - Accrued expenses - others 17,583 13,474 3,673 5,288Consultancy fee payable to minority shareholder of a subsidiary 1,345 - - - Investment property payable (1) - 12,172 - - other payables 9,193 8,396 - -

48,528 54,226 3,732 5,351

(1) This pertained to the unpaid consideration in respect of the purchase of investment properties (Note 19) in prior year. The amount was fully paid during the current financial year.


72

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

23 OTHER PAYABlES AND ACCRUAlS (CONT’D)

The group’s and company’s other payables and accruals that are not denominated in the functional currencies of the respective entities are as follows:

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

united States dollar - 852 - - Singapore dollar 3,840 5,351 3,673 5,351

24 OBlIGATIONS UNDER FINANCE lEASES

GroupMinimum

lease paymentsPresent value

of minimum lease payments2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Amounts payable under finance leases: Within one year 118 129 104 114 In the second to fifth year inclusive 192 310 170 275

310 439 274 389Less: Future finance charges (36) (50) - - present value of lease obligations 274 389 274 389Less: Amount due for settlement within 12 months (shown as current liabilities) (104) (114)Amounts due for settlement after 12 months 170 275

The group has leased certain of its motor vehicles under finance leases. The average lease term is 3.6 years. For the year ended June 30, 2009, the average effective borrowing rate was 3.25% (2008 : 3.25%) per annum. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and do not contain contingent rental payments. All lease obligations are denominated in Hong Kong dollar.

The fair value of the group’s lease obligations approximates their carrying amount.

The group’s obligations under finance leases are secured by the lessor’s charge over the leased assets (see Note 18).


73

A

NN

uA

L R

Epo

RT

20

09

25 PROVISION FOR lONG SERVICE PAYMENTS

Group2009 2008

HK$’000 HK$’000

Balance at beginning of the year 1,031 251Additional provision in the year 2,489 780Balance at end of the year 3,520 1,031

The provision represents management’s best estimate of the probable future payments which have been earned by the employees from their service to the group up to the balance sheet date. The amount recognised represents the present value of future payments.

26 DEFERRED TAX lIABIlITIES

The following are the deferred tax liabilities recognised by the group and the movements thereon, during the current and prior year:

Acceleratedtax depreciation

Revaluationof investment

properties

Withholdingtax arisen from PRC subsidiary Total

HK$’000 HK$’000 HK$’000 HK$’000

At July 1, 2007 1,035 9,327 - 10,362Exchange differences - 1,306 - 1,306Charged to profit and loss statement for the year (Note 34) 911 1,425 - 2,336At June 30, 2008 1,946 12,058 - 14,004Exchange differences - (57) - (57)Charged to profit and loss statement for the year (Note 34) (853) 1,952 3,800 4,899At June 30, 2009 1,093 13,953 3,800 18,846

27 SHARE CAPITAl

Group and Company2009 2008 2009 2008

Number of ordinary shares HK$’000 HK$’000

Issued and paid up: At beginning and end of year 374,061,627 374,061,627 570,051 570,051

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the company.


74

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

28 OTHER RESERVE, SHAREHOlDER’S CONTRIBUTION AND PROPERTY REVAlUATION RESERVE

other reserve

This pertains to equity component of convertible loan notes, see details in Note 21.

Shareholder’s contribution

This pertains to the acquisition of additional equity interest in a subsidiary which was owned by the spouse of a director in prior year. The consideration paid was lower than the amount of net assets acquired thus the difference was credited to shareholder contribution.

property revaluation reserve

The property revaluation pertains to the revaluation of leasehold land and buildings. Where revalued leasehold land or buildings are sold, the portion of the property revaluation reserve that relates to the asset, and is effectively realised, is transferred to accumulated profits.

29 REVENUE

Group2009 2008

HK$’000 HK$’000

Sales of goods 1,113,457 933,487Leasing of a shopping mall 13,069 10,882project revenue - 11

1,126,526 944,380

30 BUSINESS AND GEOGRAPHICAl SEGMENTS

Business segments

For management purposes, the group is currently organised into four operating divisions - i) trading watch movements; ii) manufacturing, trading of own branded and retailing business of watches; iii) manufacturing and resales of oEM watches and (iv) leasing of a shopping mall. These divisions are the basis on which the group reports its primary segment information.

Segment revenue and expense: Segment revenue and expense are the operating revenue and expense reported in the group’s profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital additions include the total cost incurred to acquire property, plant and equipment, investment properties and intangible assets directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of accounts payable and accruals.

Inter-segment transfers: Segment revenue and expenses included transfers between business segments. Inter-segment sales are charged at prevailing market prices. These transfers are eliminated on consolidation.


75

A

NN

uA

L R

Epo

RT

20

09

30 BUSINESS AND GEOGRAPHICAl SEGMENTS (CONT’D)

profit and loss statement for the year ended June 30, 2009:

Trading watch

movements

Manufacturing,trading of

own branded and retailing business of

watches

Manufacturing and resales of OEM watches

leasing of a shopping

mall Eliminations ConsolidatedHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

RevenueExternal sales 294,633 526,305 292,519 13,069 - 1,126,526Inter-segment sales 15,591 27,784 59,419 - (102,794) - Total revenue 310,224 554,089 351,938 13,069 (102,794) 1,126,526

ResultSegment result 73 91,678 34,742 430 - 126,923

Change in fair value of investment properties - - - 7,807 - 7,807Loss on dilution of shareholding in a subsidiary - - - (4,439) - (4,439)unallocated expense (16,785)Finance costs (7,701)profit before taxation 105,805Taxation (26,536)profit for the year 79,269

Balance sheet as at June 30, 2009:

Trading watch

movements



watches



mall Others ConsolidatedHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

AssetsSegment assets 64,891 322,118 115,251 206,985 - 709,245unallocated assets 90,857Consolidated total assets 800,102

liabilitiesSegment liabilities 23,179 74,583 24,444 4,556 - 126,762unallocated liabilities 246,716Consolidated total liabilities 373,478


76

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


other information for the year ended June 30, 2009:

Trading watch

movements



watches




Additions of property, plant and equipment 76 15,767 1,497 38 8 17,386Additions of investment properties - - - 30,158 - 30,158Depreciation of property, plant and equipment 703 8,118 777 265 52 9,915Loss on disposal of property, plant and equipment 163 2,129 - 240 - 2,532Amortisation of intangible assets - - 188 - - 188Allowance for bad and doubtful debts (trade) 140 - - - - 140Allowance for bad and doubtful debts (non-trade) - - - 7,299 - 7,299Allowance for obsolete inventories 650 3,442 345 - - 4,437

profit and loss statement for the year ended June 30, 2008:

Trading watch

movements



watches



mall Others Eliminations ConsolidatedHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

RevenueExternal sales 352,797 305,979 274,711 10,882 11 - 944,380Inter-segment sales 18,497 9,551 31,171 - - (59,219) - Total revenue 371,294 315,530 305,882 10,882 11 (59,219) 944,380

ResultSegment result 2,947 66,434 28,488 5,015 (176) - 102,708

Change in fair value of investment properties - - - 5,700 - - 5,700unallocated expense (16,993)Finance costs (8,427)profit before taxation 82,988Taxation (12,826)profit for the year 70,162


77

A

NN

uA

L R

Epo

RT

20

09


Balance sheet as at June 30, 2008:

Trading watch

movements



watches




AssetsSegment assets 97,663 219,080 140,199 186,308 501 643,751unallocated assets 83,348Consolidated total assets 727,099

liabilitiesSegment liabilities 37,098 44,668 52,875 21,728 59 156,428unallocated liabilities 245,168Consolidated total liabilities 401,596

other information for the year ended June 30, 2008:

Trading watch

movements



watches




Additions of property, plant and equipment 583 15,742 969 3,049 50 20,393Additions of investment properties - - - 5,926 - 5,926Depreciation of property, plant and equipment 729 5,311 533 176 55 6,804Loss on disposal of property, plant and equipment 271 811 - - - 1,082Amortisation of intangible assets - - 188 - - 188Allowance for bad and doubtful debts (trade) - - 221 - - 221Allowance for obsolete inventories 1,000 2,957 345 - - 4,302


78

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED


Geographical segments

For the activities of trading watch movements, manufacturing and trading of own branded and retailing business of watches and leasing of a shopping mall, they are mainly based in the pRC and the revenue of these activities are substantially derived from the pRC. The manufacturing and resales of oEM watches are mainly based in the pRC and Western Europe and the relevant revenue for both years are derived mainly from the pRC and Western Europe.

The following table provides an analysis of the group’s sales by geographical market.

2009 2008HK$’000 HK$’000

Hong Kong and pRC 925,537 765,496Western Europe 200,769 178,632Singapore 220 252

1,126,526 944,380

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

Carrying amount ofsegment assets

Additions to property,plant and equipment and

investment properties2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong and pRC 629,625 568,661 46,621 25,088Western Europe 78,585 73,292 915 897Singapore 1,035 1,798 8 334

709,245 643,751 47,544 26,319

31 OTHER OPERATING INCOME

Group2009 2008

HK$’000 HK$’000

Bank interest income 416 638Watch repair 869 694Net foreign exchange gain 3,279 1,883Write back of other payables 1,699 - others 2,305 1,070

8,568 4,285


79

A

NN

uA

L R

Epo

RT

20

09

32 FINANCE COSTS

Group2009 2008

HK$’000 HK$’000

Interest expense on:

Loans 7,686 8,408Finance leases 15 19

7,701 8,427

33 lOSS ON DIlUTION OF SHAREHOlDING IN A SUBSIDIARY

The amount represented the excess of the carrying value of the minority interest in the net asset of Time Watch (Zhengzhou) over the consideration received from the minority shareholder for its equity interest in Time Watch (Zhengzhou) as at the date of transaction.

34 INCOME TAX EXPENSE

Group2009 2008

HK$’000 HK$’000

Current tax 23,873 11,597Deferred tax (Note 26) 4,899 2,336overprovision of income tax in prior years (2,236) (1,107)Income tax expense for the year 26,536 12,826

Domestic income tax is based on the Hong Kong tax rate of 16.5% (2008: 16.5%) of the estimated net assessable profit for the year. Taxation for other jurisdiction is calculated at the rates prevailing in the relevant jurisdictions.


80

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

34 INCOME TAX EXPENSE (CONT’D)

The total charge for the year can be reconciled as follows:

Group2009 2008

HK$’000 HK$’000

profit before taxation 105,805 82,988

Tax at the domestic income tax rate of 16.5% (2008: 16.5%) 17,458 13,693Tax effect of expenses not deductible for tax purposes 11,881 5,196Tax effect of income not taxable for tax purposes (869) (4,920)Effect of different tax rates of subsidiaries operating in other jurisdictions 8,332 6,060Income tax concession (12,010) (6,476)Deferred tax benefits not recognised 199 372overprovision in prior years (2,236) (1,107)Deferred tax on withholding tax arising from pRC subsidiaries 3,800 - others (19) 8Tax charge for the year 26,536 12,826

The group has tax loss carryforwards available for offsetting against future taxable income as follows:

Group2009 2008

HK$’000 HK$’000

Amount at beginning of year 33,997 23,504Adjustment on opening balance 582 1,118

34,579 24,622Amount in current year 1,172 2,064Exchange differences (2,409) 7,311Amount at end of year 33,342 33,997

Deferred tax benefit on above unrecorded 5,668 6,119

No deferred tax asset has been recognised in respect of the above due to the unpredictability of future profit streams for the entities within the group which have tax losses carried forward.

The realisation of the future income tax benefits from tax loss carryforwards is available for an unlimited future period subject to the conditions imposed by law including the retention of majority shareholders as defined.

pursuant to the relevant laws and regulations in the pRC, three subsidiaries, Tian Wang Electronics (Shenzhen) Company Limited (“TW”), Balco Electronic (Zhuhai) Company Limited (“Balco”) and Ye Guang Li Electronics (Meizhou) Company Limited (“Ye Guang Li”) are entitled to an exemption from pRC income tax for the two years starting from their first profit-making year, followed by a 50% tax relief for the next three years. The tax charge provided has been made after taking these tax incentives into account. TW and Balco commenced their first profit making year for the financial year ended December 31, 2004. Ye Guang Li commenced its first profit making year for the financial year ended December 31, 2007 and the applicable tax rate for the period from January 1, 2009 to December 31, 2009 is 12.5%. The applicable tax rate for TW & Balco for the period from January 1, 2009 to December 31, 2009 is 20% (January 1, 2008 to December 31, 2008 is 9%).


81

A

NN

uA

L R

Epo

RT

20

09

34 INCOME TAX EXPENSE (CONT’D)

on March 16, 2007, the pRC promulgated the Law of pRC on Enterprise Income Tax (the “New Law”) by order No. 63 of the president of the pRC. on December 6, 2007, the State Council of the pRC issued Implementation Regulations of the New Law. The New Law and Implementation Regulations changes the pRC Enterprise Income Tax rate to 25% and will affect the pRC subsidiaries of the Group from January 1, 2008.

35 PROFIT FOR THE YEAR

profit for the year has been arrived after charging (crediting):

Group2009 2008

HK$’000 HK$’000

Directors’ remuneration: of the company 1,310 1,435 of the subsidiaries 6,666 5,729Employees benefit expense (including directors’ remuneration) 108,455 74,267Audit fees: paid to auditors of the company 337 420 paid to other auditors 1,350 1,430Non-audit fees: paid to auditors of the company 54 - paid to other auditors 130 114Loss on disposal of plant and equipment 2,532 1,082Allowance for bad and doubtful debts (trade) 140 221Allowance for bad and doubtful debts (non-trade) 7,299 - Cost of inventories recognised as expense 718,336 656,019Allowance for obsolete inventories 4,437 4,302Net foreign exchange gain (3,279) (1,897)Depreciation of property, plant and equipment 9,915 6,804Amortisation expense on convertible loan notes 128 132Amortisation of intangible assets 188 188provision for long service payments 2,489 780

36 DIVIDENDS

on November 23, 2007, a first and final dividends of 0.60 Singapore cents per ordinary shares less 18% tax (total dividends of HK$10 million) was paid to shareholders.

on November 20, 2008, a one-tier tax exempt first and final dividend of 0.55 Singapore cents per ordinary share for the financial year ended June 30, 2008 (total dividends of HK$10,583,000) was paid to shareholders.

In respect of the current year, the directors propose a one-tier tax-exempt first and final dividend of 0.35 Singapore cents (equivalent to HK$1.88 cents) per share. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend is payable to all shareholders at the Register of members on November 23, 2009. The total estimated dividend to be paid is HK$7,038,000.


82

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

37 EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the company is based on the following data:

Group2009 2008

HK$’000 HK$’000

Earnings

profit for the year attributable to equity holders of the company for the purpose of basic earnings per share 62,148 59,260Effect of dilutive potential ordinary shares: Interest on convertible loan notes (Note 21) 841 1,069Earnings for the purpose of diluted earnings per share 62,989 60,329

Group2009 2008‘000 ‘000

Number of shares

Weighted average number of ordinary shares for the purpose of basic earnings per share 374,062 374,062Effect of dilutive potential ordinary shares from convertible loan notes 18,182 18,182Weighted average number of ordinary shares for the purpose of diluted earnings per share 392,244 392,244

38 CONTINGENT lIABIlITIES

During the prior financial year, in connection with the disposal of Wee poh Construction Co. (pte.) Ltd (“WpC”), the purchaser exercised the option (“put options”) to require Time Watch Investments Limited to purchase WpC’s equity interest in certain companies at a price of S$361,000.

Put options

Clause 3.2 of put option Agreement (“poA”) states that the option shall allow the Grantee (“WpC”) at any time within the next 12 months from completion (but no earlier than two months after completion) to sell the Grantee’s equity interests in o.V.M. prestress Co. pte Ltd, ThaiSing Training Centre Co. Limited and Wee poh International Inc. (the “option Companies) to the Grantor (Wee poh Holdings Limited, now known as Time Watch Investments Limited) at their respective audited net book values as at June 30, 2004 set out in the audited accounts of the Grantee for the financial year ended June 30, 2004.

Management is of the opinion that the net book values of the option Companies were not stated in the audited accounts of Grantee for the financial year ended June 30, 2004. Due to above ambiguous clause in poA, the High Court of Singapore has requested that an independent expert (a CpA Firm) to be appointed and agreed by both parties to look at this clause.


83

A

NN

uA

L R

Epo

RT

20

09

38 CONTINGENT lIABIlITIES (CONT’D)

per the letter from the Singapore High Court dated January 16, 2008, if the independent expert determines that the purchase price is not set out in the audited accounts of WpC for the financial year ended June 30, 2004 (‘WpC Accounts”), WpC shall not transfer and the group shall not be required to accept any transfer of the option Companies, and no payment shall be made by the group to Ho Lee or WpC. If the independent expert determines that the purchase price is set out in WpC Accounts, WpC shall transfer the option Companies to the group, and the group shall pay to WpC the purchase price up to and not exceeding S$271,282.50 (equivalent to HK$1.5 million). The information usually required by FRS 37 provisions, Contingent Liabilities and Contingent Assets, is not disclosed by the company on the grounds that it can be expected to prejudice seriously the outcome of the claims.

39 OPERATING lEASE ARRANGEMENTS

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

The group and the company as lessee

Minimum lease payments under operating leases recognised as an expense in the year 10,680 7,078 194 199

At the balance sheet date, the group and the company have outstanding commitments under non-cancellable operating leases, which fall due as follows:

Group Company2009 2008 2009 2008

HK$’000 HK$’000 HK$’000 HK$’000

Within one year 6,231 6,166 120 207In the second to fifth year inclusive 6,826 11,213 - 129After five years 34 71 - -

13,091 17,450 120 336

operating lease payments represent rental payable by the group and the company for its office premises. Leases are negotiated for an average term of two to six years with fixed rentals.

The group as lessor

At the balance sheet date, the group has contracted with tenants for the following minimum lease payments.

Group2009 2008

HK$’000 HK$’000

Within one year 12,481 6,840In the second to fifth year inclusive 58,999 - over five years 161,680 -

233,160 6,840


84

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

39 OPERATING lEASE ARRANGEMENTS (CONT’D)

The group leases its investment properties under operating lease arrangements. The investment properties are leased to the lessee who then sublets to other tenants for a term of 15 years from January 1, 2009 (2008: one year and five months). According to the signed lease agreement, the group is also entitled to a contingent rental if the net subletting rental generated by the lessee exceeded the fixed rental.

40 COMMITMENTS

(i) Capital commitments

2009 2008HK$’000 HK$’000

Capital expenditure in respect of property, plant and equipment contracted for but not provided in the consolidated financial statements - 1,046

(ii) on May 19, 2009, the group has entered into sales and purchase agreements with an independent third party (the “Vendor”) to acquire 13% equity interest in Swiss Fashion Time GmbH (“Swiss Fashion Time”), Fortune Concept and pe.timedesign GmbH (“pe.timedesign”) with the total consideration of approximately HK$14.6 million, out of which, an amount of HK$11.3 million has been paid as at current year end, resulting in a commitment of approximately HK$3.3 million as at year end. The completion of the acquisitions was subject to the fulfillment of certain conditions as stipulated in the sales and purchase agreements. The acquisitions were subsequently completed in July 2009 (Note 42).

41 SHARE OPTIONS

on December 20, 2005, WMp entered into a uS$7,000,000 multi-currency term and revolving facilities agreement with a bank to finance WMp’s long-term funding requirements and for working capital purposes.

In connection with the above agreement, the company has also entered into a call option agreement with the bank during the prior financial year pursuant to which the company has granted the bank a right (the “Call option”) from time to time for a period of three years beginning from January 2, 2006 (“Availability Date”) to subscribe such number of shares of the company as determined by dividing the S$ equivalent of uS$3,000,000 with the exercise price of S$0.015 each, subject to the maximum of 600,000,000 new shares. on January 24, 2007, the company restructured the share capital such that every 50 ordinary shares in the capital of the company were consolidated into one share. As such, the exercise price has changed to S$0.75 per share, subject to the maximum of 12,000,000 new shares (“Availability option Shares”).

According to the call option agreement, during the period commencing on, and including, the Availability Date and expiring on the market date (a day on which the SGX is open for trading in securities) falling immediately before the first anniversary of the Availability Date (“First option period”), the maximum number of shares which can be allotted and issued upon the exercise of the Call option shall be 50% of the total Available option Shares.

The unexercised Call options during the First option period may be exercised any time after the first anniversary of the date of the Availability Date.

Management is of the opinion that the fair value of the Call options was insignificant at the date of grant.

The Call option expired without being exercised during the current financial year.


85

A

NN

uA

L R

Epo

RT

20

09

42 EVENT AFTER THE BAlANCE SHEET DATE

Subsequent to June 30, 2009, the group has acquired 13% equity interests in Swiss Fashion Time, pe.timedesign and Fortune Concept (the “Investees”) from the Vendor. The transactions were completed on July 31, 2009 upon fulfillment of certain conditions as stipulated in the sales and purchase agreements. The aggregate acquisition costs amounted to approximately HK$14.6 million. Apart from the 13% equity interests, the group was also granted call options to acquire a further 36% in aggregate of all the issued shares of each of the Investees. pursuant to the Shareholders’ Agreements signed at time of completion of the transactions on July 31, 2009, the group was, at the same time, granted put options to sell all the shares in the Investees back to the Vendors at 110% of the total consideration that the group has paid for acquiring the relevant shares in the Investees. These put options are exercisable upon grant.


86

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

In the opinion of the directors, the consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company as set out on pages 29 to 86 are drawn up so as to give a true and fair view of the state of affairs of the group and of the company as at June 30, 2009, and of the results, changes in equity and cash flows of the group and changes in equity of the company 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

Tung Koon Ming



STATEMENT OF DIRECTORS

87

A

NN

uA

L R

Epo

RT

20

09

No. of Shares : 374,061,627Class of Shares : ordinary Voting Rights : one vote per ordinary share

The company does not have any treasury shares

DISTRIBUTION OF SHAREHOlDINGS

SIZE OF SHAREHOlDINGSNO. OF

SHAREHOlDERS % NO. OF SHARES %

1 - 999 2,656 39.70 649,668 0.171,000 - 10,000 2,726 40.75 10,235,812 2.7410,001 - 1,000,000 1,292 19.31 82,694,721 22.111,000,001 AND ABoVE 16 0.24 280,481,426 74.98

ToTAL: 6,690 100.00 374,061,627 100.00

Based on information available to the company as at 17 September 2009, approximately 37.88% of the issued ordinary shares of the company is held in the hands of the public and the company has complied with Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited.

TWENTY lARGEST SHAREHOlDERS

NO. NAME NO. OF SHARES %

1. CIMB-GK SECuRITIES pTE. LTD. 215,610,940 57.642. uoB KAY HIAN pTE LTD 17,102,878 4.573. KoH WEE MENG 9,000,000 2.414. TuNG LEE FoNG 8,420,000 2.255. oCBC SECuRITIES pRIVATE LTD 7,703,140 2.066. uNITED oVERSEAS BANK NoMINEES pTE LTD 4,422,244 1.187. CHIA ENG KooN 3,300,000 0.888. DBS NoMINEES pTE LTD 2,757,085 0.749. KIM ENG SECuRITIES pTE. LTD. 2,203,542 0.5910. MAYBAN NoMINEES (S) pTE LTD 1,998,739 0.5311. pHILLIp SECuRITIES pTE LTD 1,880,516 0.5012. Ho LEE CoNSTRuCTIoN pTE LTD 1,699,222 0.4513. TAY CHANG MoNG 1,295,960 0.3514. NG KoK HuE 1,069,000 0.2915. pIAK BooN SENG 1,009,130 0.2716. DBS VICKERS SECuRITIES (S) pTE LTD 1,009,030 0.2717. KIW SIN WA 973,000 0.2618. oCBC NoMINEES SINGApoRE pTE LTD 913,731 0.2419. TAN KEE CHENG 881,000 0.2420. NG KAH SEEN, STEpHEN 827,000 0.22

ToTAL: 284,076,157 75.94

STATISTICS OF SHAREHOLDINGSAS AT 17 SEPTEMbER 2009

88

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

SUBSTANTIAl SHAREHOlDERSas at 17 September 2009

Number of Ordinary SharesDirect Interest % Deemed Interest %

Winning International Limited 221,960,320 59.34 NIL 0.00

Tung Koon Ming NIL 0.00 223,960,320 59.87

Note:

By virtue of Section 7 of the Companies Act, Cap. 50, Mr Tung Koon Ming is deemed to be interested in all the shares held by Winning International Limited and 2,000,000 shares held by Worthpro Investments Limited in the Company.

STATISTICS OF SHAREHOLDINGS (cont’d)AS AT 17 SEPTEMbER 2009

89

A

NN

uA

L R

Epo

RT

20

09

NOTICE OF FOURTEENTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting of TIME WATCH INVESTMENTS LIMITED (the “Company”) will be held on Tuesday, 27 october 2009 at 10.00 a.m. at Suntec Singapore International Convention & Exhibition Centre, Meeting Room 307, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Accounts for the year ended 30 June 2009 together with the Auditors’ Report thereon. (Resolution 1)

2. To approve the payment of Directors’ Fees of S$225,000/- for the year ended 30 June 2009 (2008: S$225,000/-). (Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 103 of the Articles of Association of the Company:

i) Mr Tan Song Koon (Resolution 3) ii) Mr Hoon Tai Meng (Resolution 4)

(Notes: Mr Tan Song Koon will, upon re-election as Director, remain as a member of the Audit Committee as well as the Nominating and the Remuneration Committees. Mr Hoon Tai Meng will, upon re-election as Director, remain as the Chairman of the Audit Committee as well as a member of the Nominating and the Remuneration Committees. Messrs Tan Song Koon and Hoon Tai Meng are considered as independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”).)

4. To declare a First and Final Dividend of 0.35 Singapore cents per ordinary share for the year ended 30 June 2009. (Resolution 5)

5. To re-appoint Deloitte & Touche LLp as Auditors and to authorise the Directors to fix their remuneration. (Resolution 6)

AS SPECIAl BUSINESS

To consider and if thought fit, to pass the following resolutions as ordinary Resolutions, with or without any modifications:

6. AUTHORITY TO ISSUE SHARES

“That pursuant to Section 161 of the Companies Act, Cap.50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to:

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

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

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

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

90

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

pRoVIDED THAT:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted to this Resolution) does not exceed 50% (100% for a pro-rata renounceable rights issue) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro-rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below)

(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the percentage of issued shares shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and

(ii) any subsequent bonus issue or consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.”

[See Explanatory Note (1) below] (Resolution 7)

7. AUTHORITY TO AllOT AND ISSUE SHARES OTHER THAN ON A PRO-RATA BASIS TO SHAREHOlDERS AT A DISCOUNT EXCEEDING 10% BUT NOT MORE THAN 20%

“That, conditional upon the passing of Resolution 7 above, but without limiting the effect of the authority in Resolution 7 above, authority be and is hereby given to the Directors to issue new shares and convertible securities in the capital of the Company (whether in pursuance of any offer, agreement or option made or granted by the Directors or otherwise) other than on a pro-rata basis to shareholders of the Company at an issue price per new share which shall be determined by the Directors in their absolute discretion provided that such price may represent a discount exceeding 10% but not more than 20% (or such other discount as may be permitted by the SGX-ST from time to time) to the price per share determined in accordance with the requirements of the SGX-ST.”


8. AUTHORITY TO AllOT AND ISSUE SHARES PURSUANT TO TIME WATCH EMPlOYEE SHARE OPTION SCHEME 2008

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to allot and issue shares of the Company to all the holders of options granted by the Company, whether granted during the subsistence of this authority or otherwise, under the Time Watch Employee Share option Scheme 2008 (the “Scheme”) upon the exercise of such options and in accordance with the terms and conditions of the Scheme, provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.


NOTICE OF FOURTEENTH ANNUAL GENERAL MEETING (cont’d)

91

A

NN

uA

L R

Epo

RT

20

09

9. AUTHORITY TO AllOT AND ISSUE SHARES PURSUANT TO TIME WATCH PERFORMANCE SHARE PlAN 2008

That pursuant to Section 161 of the Companies Act (Cap. 50), the Directors be authorised and empowered to allot and issue such number of fully paid-up shares as may be required to be issued pursuant to the vesting of the awards (“Awards”) under the Time Watch performance Share plan 2008 (the “Share plan”) whether granted during the subsistence of this authority or otherwise, provided that the aggregate number of shares issued and issuable pursuant to the Share plan and any other existing share-based incentive schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.


10. PROPOSED RENEWAl OF THE SHARE PURCHASE MANDATE That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 (the “Companies Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (“Shares”) not exceeding in aggregate the Maximum percentage (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum price (as hereafter defined), whether by way of:

(i) market purchases (“Market Purchase”) transacted through the SGX-ST trading system and/or through one or more duly licensed dealers appointed by the Company for the purpose; and/or

(ii) off-market purchases (“Off-Market Purchase”), otherwise than on the SGX-ST, effected pursuant to an equal access scheme or schemes defined in Section 76C of the Companies Act.

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share purchase Mandate”);

(b) unless otherwise varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held or required by law to be held;

(ii) the date on which the purchases or acquisitions of Shares pursuant to the Share purchase Mandate have been carried out to the full extent mandated; and

(iii) the date on which the authority conferred by the Share purchase Mandate is varied or revoked in a general meeting.

(c) In this Resolution: (i) “Average Closing Price” means the average of the last dealt prices of a Share for the five (5) consecutive Market

Days on which the Shares are transacted on the SGX-ST immediately preceding the date of the Market purchase by the Company or, as the case may be, the date of making of the offer pursuant to the off-Market purchase, and deemed to be adjusted, in accordance with the Listing Manual, for any corporate action that occurs after the relevant five-day period; and

(ii) “Date of making of the offer” means the date on which the Company announces its intention to make an offer for an off-Market purchase, stating the purchase price (which shall not be more than Maximum price calculated on the foregoing basis) and the relevant terms of the equal access scheme for effecting the off-Market purchase.


92

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

(iii) “Maximum Percentage” means that number of issued Shares representing 10% of the total number of issued Shares as at the date of passing of this Resolution (excluding any Shares which are held as treasury shares as at that date); and

(iv) “Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax, stamp duties and other related expenses) which shall not exceed:

(1) in the case of a Market purchase, 105% of the Average Closing price of the Shares; and

(2) in the case of an off-Market purchase, 110% of the Average Closing price of the Shares; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution.”


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

BY oRDER oF THE BoARD

Dorothy Ho/Wong Juar MingCompany Secretaries

Singapore: 9 october 2009

Notes:

(a) A shareholder of the Company entitled to attend and vote at the Annual General Meeting (“AGM”) is entitled to appoint not more than two proxies to attend and vote on his behalf. A shareholder of the Company which is a corporation is entitled to appoint its authorised representative or proxy to vote on its behalf. A proxy need not be a shareholder of the Company.

(b) The proxy Form must be deposited at the registered office of the Company at 17 Carpenter Street #02-01, Singapore 059906 not less than 48 hours before the time fixed for holding the AGM in order to be entitled to attend and to vote at the AGM.

(c) A Depositor’s name must appear on the Depository Register maintained by The Central Depository (pte) Limited as at 48 hours before the time fixed for holding the AGM in order to be entitled to attend and vote at the AGM.

Explanatory Notes:

(1) ordinary Resolution 7 proposed in item 6 above, if passed, will empower the Directors from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments as follows:

(i) in the case of pro-rata renounceable rights issues, up to a number not exceeding, in total, 100 per cent of the total number of issued shares (excluding treasury shares) in the capital of the Company;

(ii) in other pro-rata cases for issue of shares (other than pro-rata renounceable rights issue), up to a number not exceeding, in total 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company; and


93

A

NN

uA

L R

Epo

RT

20

09

(iii) in any issue of shares other than on a pro-rata basis to existing shareholders of the Company, up to a number not exceeding 20 percent of the total number of issued shares (excluding treasury shares) in the capital of the Company.

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

The authority for 100% pro-rata renounceable rights issue in Note (1)(i) above is proposed pursuant to the SGX news release of 19 February 2009 which introduced further measures to accelerate and facilitate listed issuers’ fund raising efforts (“SGX News Release”).

(2) ordinary Resolution 8 proposed in item 7 above, if passed, will empower the Directors of the Company to issue shares in the capital of the Company from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier to issue such number of new ordinary shares, on a non pro-rata basis pursuant to Resolution 7 at a discount exceeding 10 per cent but not more than 20 per cent of the price as determined in accordance with the Listing Manual of the SGX-ST. This ordinary Resolution is proposed pursuant to the SGX News Release.

(3) ordinary Resolution 9 proposed in item 8 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting, or the date by which the next Annual General Meeting is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue shares in the Company of up to a number not exceeding in total 10% of the total number of issued ordinary shares (excluding treasury shares) in the capital of the Company from time to time pursuant to the exercise of the options under the Scheme.

(4) ordinary Resolution 10 proposed in item 9 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting, or the date by which the next Annual General Meeting is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue shares in the Company under the Share plan provided that the total number of shares issued and issuable pursuant to the Share plan and any other existing share-based incentive schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company.

(5) ordinary Resolution 11 proposed in item 10 above, is to renew the mandate to empower Directors of the Company to make purchases or otherwise acquire the Company’s issued ordinary shares from time to time subject to and in accordance with the guidelines set out in the Addendum accompanying this Notice. This authority will expire at the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.


94

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

NoTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 10 November 2009 for the purpose of determining Members’ entitlements to the First and Final Dividend to be proposed at the Annual General Meeting of the Company to be held on 27 october 2009.

Duly completed registrable transfers of shares in the Company (the “Shares”) received up to the close of business at 5.00 p.m. on 9 November 2009 by the Company’s Share Registrar, Boardroom Limited, 3 Church Street #08-01 Samsung Hub, Singapore 049483, will be registered to determine Members’ entitlements to the proposed Dividend. Subject to the aforesaid, Members whose Securities Accounts with The Central Depository (pte) Ltd are credited with the shares as at 10 November 2009 will be entitled to the proposed Dividend.

The proposed First and Final Dividend, if approved at the Annual General Meeting, will be paid on 23 November 2009.

BY oRDER oF THE BoARD

Dorothy Ho/Wong Juar Ming Company Secretaries

Dated: 9 october 2009

NOTICE OF bOOKS CLOSURE

95

A

NN

uA

L R

Epo

RT

20

09

ADDENDUM TO NOTICE OF ANNUAL GENERAL MEETING

PROPOSED RENEWAl OF THE SHARE PURCHASE MANDATE

The Singapore Exchange Securities Trading Limited assumes no responsibility for the accuracy of any of the statements made or opinions expressed or reports contained in this Addendum.

1. INTRODUCTION

on 28 october 2008, the Company obtained shareholders’ approval at the Extraordinary General Meeting of the Company (“2008 EGM”) to authorise the Directors to exercise all powers of the Company to purchase or acquire its issued ordinary shares in the capital of the Company (the “Shares”) (“Share Purchase Mandate”) on the terms of the Share purchase Mandate which has taken effect from the date of the 2008 EGM until the date on which the next annual general meeting (“AGM”) of the Company is held or is required by applicable law to be held, whereupon it will lapse unless renewed at such meeting. Shareholders’ approval for the renewal of the Share purchase Mandate will be sought at the Fourteenth AGM (“2009 AGM”) to be held on 27 october 2009

Since the approval of the renewal of the Share purchase Mandate at the 2008 AGM, the Company has not purchased or acquired any Shares under the Share purchase Mandate.

2. DEFINITIONS

In this Addendum, the following definitions apply throughout unless otherwise stated:

“Articles” : The Articles of Association of Time Watch Investments Limited

“Award” : A contingent award of Shares granted under the TW pSp

“Companies Act” : The Companies Act, Chapter 50 of Singapore or as amended from time to time

“Council” : The Securities Industry Council of Singapore

“Directors” : The Directors of the Company for the time being

“EPS” : Earnings per Share

“FY 2009” : Financial year ended 30 June 2009

“latest Practicable Date” : 29 September 2009, being the latest practicable date prior to the printing of this Addendum

“listing Manual” : The Listing Manual of the SGX-ST

“Market Day” : A day on which the SGX-ST is open for trading in securities

“New Shares” : The new Shares which may be allotted and issued from time to time pursuant to the vesting of Awards granted under the TW pSp

“NTA” : Net tangible assets of the Company

“NTA per Share” : Net tangible assets of the Company divided by the number of issued Shares

96

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

2. DEFINITIONS (CONT’D)

“SGX-ST” or : Singapore Exchange Securities Trading Limited“Singapore Exchange”

“Shareholders” : Registered holders of the Shares, except that where the registered holder is CDp, the term “Shareholders” shall, where the context admits, mean the Depositors whose Securities Accounts are credited with Shares

“Share Plans” : Time Watch Employee Share option Scheme 2008 or TW pSp

“Share Purchases” : The purchases or acquisitions of Shares pursuant to the Share purchase Mandate

“Shares” : ordinary shares in the share capital of the Company

“TW PSP” : Time Watch performance Share plan 2008, as modified or altered from time to time

“TW” or the “Company” : Time Watch Investments Limited

“TW Group” or the “Group” : The Company and its subsidiaries

“S$”, “$” or the “cents” : Singapore dollars and cents respectively

“Takeover Code” : The Singapore Code on Take-overs and Mergers

“%” or the “per cent.” : per centum or percentage

Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations.

Any reference in this Addendum to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or any statutory modification thereof and not otherwise defined in this Addendum shall have the same meaning assigned to it under the Companies Act or any statutory modification thereof, as the case may be.

Any reference to a time of day in this Addendum is made by reference to Singapore time unless otherwise stated.

Any discrepancies in the tables in this Addendum between the listed amounts and the totals therefore are due to rounding.

ADDENDUM TO NOTICE OF ANNUAL GENERAL MEETING (cont’d)

97

A

NN

uA

L R

Epo

RT

20

09

3. RENEWAl OF THE SHARE PURCHASE MANDATE

3.1 Rationale for Share Purchase Mandate

The renewal of the Share purchase Mandate will give the Company the flexibility to undertake Share purchases up to the 10% limit (described in paragraph 3.2 below) when and if the circumstances permit, subject to market conditions, during the period when the Share purchase Mandate is in force.

The rationale for the Company to undertake the purchase or acquisition of its issued Shares as previously stated in the Company’s Circular to Shareholders dated 10 october 2008 is as follows:

(a) A share buyback at the appropriate price level is one of the ways through which the return on equity of the Group may be enhanced. Share purchases provide the Company with an easy mechanism to facilitate the return of surplus cash over and above the ordinary capital requirements, in an expedient and cost efficient manner. Share purchases also allow the Directors to exercise control over the Company’s share structure and may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the EpS and/or NTA per Share.

(b) The Share purchase Mandate will enable the Company to undertake purchases of Shares and to hold such Shares in treasury. Treasury shares may be used in the manner prescribed by the Companies Act (set out in paragraph 3.4 below.)

The Directors, when approving any Share purchase pursuant to the Share purchase Mandate, will take into account the impact the Share purchase may have on the liquidity of the Shares. The Directors are committed to ensuring that any Share purchased or acquired by the Company will not have a material adverse impact on the free float or the liquidity of the Shares.

While the Share purchase Mandate would authorise a purchase or acquisition of Shares of up to 10% of the total number of issued Shares as at the date of passing of the resolution relating to the Share purchase Mandate, Shareholders should note that Share purchases might not be carried out to the full 10% limit as authorised and no Share purchases would be made in circumstances which would have or may have a material adverse effect on the financial position of the Company or the Group.

3.2 Authority and limits on the Share Purchase Mandate

3.2.1 Maximum Number of Shares

As at the Latest practicable Date, the share capital of the Company comprised 374,061,627 issued Shares. The Company will only purchase or acquire Shares which are issued and fully paid-up. The total number of Shares which may be purchased or acquired pursuant to the Share purchase Mandate shall not exceed 10% of the total number of issued Shares as at the date on which the Share purchase Mandate is passed at the 2009 AGM.

For illustration purposes only, on the basis of 374,061,627 Shares in issue as at the Latest practicable Date, and assuming that no further Shares are issued on or prior to the 2009 AGM, not more than 37,406,162 Shares (representing 10% of the total number of issued Shares as at that date) may be purchased or acquired by the Company pursuant to the proposed Share purchase Mandate.

3.2.2 Duration of Authority

The Company may purchase its Shares at any time and from time to time, on and from the date of the EGM at which the Share purchase Mandate is approved up to the earlier of:

(i) the date on which the next annual general meeting of the Company is held or required by law to be held;

(ii) the date on which Share purchases have been carried out to the full extent mandated; and


98

TI

ME

WA

TCH

IN

VES

TMEN

TS L

IMIT

ED

3. RENEWAl OF THE SHARE PURCHASE MANDATE (CONT’D)

3.2 Authority and limits on the Share Purchase Mandate (cont’d)

3.2.2 Duration of Authority (cont’d)

(iii) the date on which the authority conferred by the Share purchase Mandate is varied or revoked in a general meeting.

The Share purchase Mandate may be renewed at each annual general meeting or other general meeting of the Company.

3.2.3 Manner of Purchases or Acquisitions of Shares

Share purchases may be made by way of:

(i) on-market purchases (“Market Purchase”) transacted through the SGX-ST trading system and/or through one or more duly licensed dealers appointed by the Company for the purpose; and/or

(ii) off-market purchases (“Off-Market Purchase”), otherwise than on the SGX-ST, effected pursuant to an equal access scheme or schemes defined in Section 76C of the Companies Act.

The Directors may impose such terms and conditions which are not inconsistent with the Share purchase Mandate, the Listing Manual and the Companies Act, as they consider fit in the interests of the Company in connection with or in relation to any equal access scheme or schemes.

under the Companies Act, an equal access scheme must satisfy all of the following conditions:

(i) offers for the purchase or acquisition of Shares shall be made to every person who holds Shares to purchase or acquire the same percentage of their Shares;

(ii) all of those persons shall be given a reasonable opportunity to accept the offers made; and

(iii) the terms of all the offers shall be the same, except that there shall be disregarded:

(a) differences in consideration attributable to the fact that offers may relate to Shares with different accrued dividend entitlements;

(b) if applicable, differences in consideration attributable to the fact that offers relate to Shares with different amounts remaining unpaid; and

(c) differences in the offers introduced solely to ensure that each person is left with a whole number of Shares.

In addition, the Listing Manual provides that, in making an off-Market purchase in accordance with an equal access scheme, the Company will issue an offer document containing at least the following information:

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances and

(iii) the information required under Rule 883(2), (3), (4) and (5) of the Listing Manual.


99

A

NN

uA

L R

Epo

RT

20

09


3.2 Authority and limits on the Share Purchase Mandate (cont’d)

3.2.4 Purchase Price

The purchase price (excluding brokerage, commission, applicable goods and services tax, stamp duties and other related expenses (“Related Expenses”)) to be paid for a Share shall be determined by the Directors and shall not exceed:

(i) in the case of a Market purchase, 105% of the Average Closing price of the Shares; and

(ii) in the case of an off-Market purchase, 110% of the Average Closing price of the Shares,

in either case, excluding Related Expenses of the Share purchases (“Maximum Price”).

For the above purposes:

“Average Closing Price” means the average of the last dealt prices of a Share for the five (5) consecutive Market Days on which the Shares are transacted on the SGX-ST immediately preceding the date of the Market purchase by the Company or, as the case may be, the date of making of the offer pursuant to the off-Market purchase, and deemed to be adjusted, in accordance with the Listing Manual, for any corporate action that occurs after the relevant five-day period; and

“Date of making of the offer” means the date on which the Company announces its intention to make an offer for an off-Market purchase, stating the purchase price (which shall not be more than Maximum price calculated on the foregoing basis) and the relevant terms of the equal access scheme for effecting the off-Market purchase.

3.3 Status of Purchased Shares

A Share purchased or acquired by the Company is deemed cancelled immediately on purchase or acquisition, and all rights and privileges attached to the Share will expire on cancellation unless such Share is held by the Company as a treasury share. Accordingly, the total number of issued Shares will be diminished by the number of Shares purchased or acquired by the Company which are not held as treasury shares.

3.4 Treasury Shares Held by the Company

Shares purchased or acquired by the Company may be held or dealt with as treasury shares. The main provisions on treasury shares under the Companies Act are summarized below:

(a) Maximum Holdings

The number of Shares held as treasury shares cannot at any time exceed 10% of the total number of issued Shares and the Company shall be entered in the Register of Members as the member holding those Shares.

(b) Voting and other Rights

The Company cannot exercise any right in respect of treasury shares. In particular, the Company cannot exercise any right to attend or vote at meetings and for the purposes of the Companies Act, the Company shall be treated as having no right to vote and the treasury shares shall be treated as having no voting rights.


10

0

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED


3.4 Treasury Shares Held by the Company (cont’d)

(b) Voting and other Rights (cont’d)

In addition, no dividend may be paid, and no other distribution of the Company’s assets may be made to the Company in respect of treasury shares. However, the allotment of shares as fully paid bonus shares in respect of treasury shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation is the same as before.

(c) Disposal and Cancellation

Where Shares are held as treasury shares, the Company may at any time:

(i) sell the treasury shares for cash; (ii) transfer the treasury shares for the purposes of or pursuant to any employees’ share option or award scheme; (iii) transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of

a person; (iv) cancel the treasury shares; or (v) sell, transfer or otherwise use the treasury shares for such other purposes as the Minister for Finance may prescribe.

3.5 Source of Funds

The Company will use its internal sources of funds and/or external borrowings to finance Share purchases. The Directors do not propose to exercise the authority in the Share purchase Mandate in a manner and to such extent that the liquidity and capital adequacy of the Group would be materially and adversely affected.

3.6 No Shares Purchased In the Previous 12 Months

The Company did not undertake any Share purchases in the twelve (12) months preceding the Latest practicable Date.

3.7 Financial Effects

3.7.1 General

If the purchased Shares are cancelled, the issued share capital of the Company will be reduced by the corresponding total purchase price of the Share purchases. If, on the other hand, the purchased Shares are not cancelled but held in treasury, then there will be no change to the Company’s issued share capital. Where the consideration paid by the Company for Shares purchases is out of profits, such consideration (excluding Related Expenses) will correspondingly reduce the amount available for the Company’s distribution of cash dividends. Where the consideration paid by the Company for the Share purchases is out of capital, the amount available for the distribution of cash dividends will not be reduced.

The financial effects on the Company and the Group arising from Share purchases will depend, inter alia, on the number of Shares purchased or acquired, the price paid for such Shares, the manner in which the purchase or acquisition is funded and whether the Shares are cancelled or held in treasury. It is, therefore, not possible for the Company to realistically calculate or quantify the impact on the NTA and EpS of Share purchases.

The Directors do not propose to exercise the Share purchase Mandate to the extent that the liquidity and capital adequacy of the Group would be materially and adversely affected. The Directors will be prudent in exercising the Share purchase Mandate only to such extent which the Directors believe will enhance shareholder value giving consideration to the prevailing market conditions, the financial position of the Group and other relevant factors.


10

1

AN

Nu

AL

REp

oR

T 2

00

9


3.7 Financial Effects (cont’d)

3.7.2 Number of Shares that may be Acquired or Purchased

Based on 374,061,627 Shares in issue as at the Latest practicable Date and assuming no further Shares are issued on or prior to the 2009 AGM, not more than 37,406,162 Shares (representing 10% of the total issued Shares as at that date) may be purchased by the Company pursuant to the Share purchase Mandate.

3.7.3 Maximum Price that may be paid for Shares Acquired or Purchased

In the case of Market purchases, assuming that the Company purchases or acquires 37,406,162 Shares at the Maximum price of S$0.147 for each Share (being the price equivalent to 5% above the Average Closing prices of the Shares for the five (5) consecutive Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest practicable Date), the maximum amount of funds required for the purchases or acquisitions of 37,406,162 Shares (excluding Related Expenses) is approximately S$5,498,706 (equivalent to HK$29,884,272).

In the case of off-Market purchases, assuming that the Company purchases or acquires 37,406,162 Shares at the Maximum price of S$0.154 for each Share (being the price equivalent to 10% above the Average Closing price of the Shares for the five (5) consecutive Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest practicable Date), the maximum amount of funds required for the purchases or acquisitions of 37,406,162 Shares (excluding Related Expenses) is approximately S$5,760,549 (equivalent to HK$31,307,332).

3.7.4 Illustrative Financial Effects

For illustration purposes only, on the basis of the assumptions set out in paragraphs 3.7.1 and 3.7.2 above, and assuming that the Share purchases are financed entirely out of the Company’s distributable profits, the financial effects of:

(a) the purchase of 37,406,162 Shares by the Company in a Market purchase or an off-Market purchase pursuant to the

Share purchase Mandate and held as treasury shares; and

(b) the purchase of 37,406,162 Shares by the Company in a Market purchase or an off-Market purchase pursuant to the Share purchase Mandate and cancelled;


10

2

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED



3.7.4 Illustrative Financial Effects (cont’d)

on the audited consolidated financial statements of the Company and the Group for FY2009 are set out below:

(a) Share Purchases made entirely out of capital and held as treasury shares

Group Company

(HK$’000)Before Share

Buyback

After Share Buyback assuming Market

Purchase

After Share Buyback assuming

Off-Market Purchase

Before Share Buyback


Purchase


Off-Market Purchase

Shareholders’ fund 342,284 312,400 310,977 400,615 370,731 369,308NTA(1) 326,855 296,971 295,548 400,615 370,731 369,308Current assets 525,080 510,138 509,427 44,919 15,035 13,612Current liabilities 338,241 338,241 338,241 30,456 30,456 30,456Working capital 186,839 171,897 171,186 14,463 (15,421) (16,844)Total borrowings 209,587 224,529 225,241 26,724 26,724 26,724Cash and short term

deposits82,117 67,175 66,464 213 213 213

Number of Shares (4) 374,062 374,062 374,062 374,062 374,062 374,062

Financial RatiosNTA per Share (cents) 87.38 88.21 87.79 107.10 110.12 109.70EpS (cents) 16.61 18.31 18.30 4.75 5.27 5.27Gearing ratio (times)(2) 0.61 0.72 0.72 0.07 0.07 0.07Current ratio (times)(3) 1.55 1.51 1.51 1.47 0.49 0.45

Notes:

(1) NTA equals Shareholders’ funds less intangible assets.

(2) Gearing ratio equals total borrowings divided by Shareholders’ funds.

(3) Current ratio equals current assets divided by current liabilities,

(4) Based on 374,061,627 Shares in issue as at the Latest practicable Date.


10

3

AN

Nu

AL

REp

oR

T 2

00

9



3.7.4 Illustrative Financial Effects (cont’d)

(b) Purchases made entirely out of capital and cancelled

Group Company

(HK$’000)Before Share

Buyback


Purchase


Off-Market Purchase

Before Share Buyback


Purchase


Off-Market Purchase

Shareholders’ fund 342,284 312,400 310,977 400,615 370,731 369,308NTA(1) 326,855 296,971 295,548 400,615 370,731 369,308Current assets 525,080 510,138 509,427 44,919 15,035 13,612Current liabilities 338,241 338,241 338,241 30,456 30,456 30,456Working capital 186,839 171,897 171,186 14,463 (15,421) (16,844)Total borrowings 209,587 224,529 225,241 26,724 26,724 26,724Cash and short term

deposits82,117 67,175 66,464 213 213 213

Number of Shares (4) 374,062 336,656 336,656 374,062 336,656 336,656

Financial RatiosNTA per Share (cents) 87.38 88.21 87.79 107.10 110.12 109.70EpS (cents) 16.61 18.31 18.30 4.75 5.27 5.27Gearing ratio (times)(2) 0.61 0.72 0.72 0.07 0.07 0.07Current ratio (times)(3) 1.55 1.51 1.51 1.47 0.49 0.45

Notes:

(1) NTA equals Shareholders’ funds less intangible assets.

(2) Gearing ratio equals total borrowings divided by Shareholders’ funds.

(3) Current ratio equals current assets divided by current liabilities,

(4) Based on 374,061,627 Shares in issue as at the Latest practicable Date.

Shareholders should be aware that the financial effects set out above are for illustration purposes only. In particular, it is important to note that the above analysis is based on the respective aforementioned assumptions, and historical FY2009 numbers, and are not necessarily representative of future financial performance. In addition, the actual impact will depend on the actual number and price of Shares to be acquired or purchased by the Company, the purchase prices paid at the relevant time, the amount borrowed (if any) to fund the Share Purchases and whether the Shares to be acquired or purchased are cancelled or held in treasury.

Although the Share purchase Mandate would authorise the Company to purchase or acquire up to 10% of the total issued Shares, the Company may not necessarily purchase or acquire or be able to purchase or acquire the entire 10% of the total issued Shares. In addition, the Company may cancel all or part of the Shares purchased or hold all or part of the Shares purchased in treasury.


10

4

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED



The Company may take into account both financial and non-financial factors (for example, stock market condition and the performance of the Shares) in assessing the relative impact of a Share purchase before execution.

3.8 Requirements in the listing Manual

(a) The Listing Manual states that a listed company shall report all purchases or acquisitions of its shares to the SGX-ST not later than 9.00 a.m.: (i) in the case of a Market purchase, on the Market Day following the day on which the Market purchase was effected, and (ii) in the case of an off-Market purchase on an equal access scheme, on the second Market Day after the close of acceptances of the offer. The notification of such purchases or acquisitions to the SGX-ST shall be in such form, and shall include such details, as may be prescribed by the SGX-ST in the Listing Manual.

(b) The Listing Manual does not expressly prohibit any purchase or acquisition of shares by a listed company during any particular time(s). However, as the Company would be regarded as an “insider” in relation to any proposed purchase or acquisition of its Shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the Share purchase Mandate in the following circumstances:

(i) at any time any matter or development of a price-sensitive nature has occurred or has been the subject of a decision of the Board until the price-sensitive information has been publicly announced; and

(ii) in the case of Market purchases, during the period commencing one month immediately before the announcement of the Company’s half-year or full-year results, as the case may be, and (if applicable) the period of two weeks before the announcement of the Company’s other interim results, as the case may be.

(c) The Listing Manual requires a company to ensure that at least 10% of equity securities (excluding treasury shares, preference shares and convertible equity securities) in a class that is listed are held by public Shareholders. The “public”, as defined under the Listing Manual, are persons other than the directors, chief executive officer, substantial shareholders or controlling shareholders of the Company and its subsidiaries, as well as the associates of such persons.

As at the Latest practicable Date, there are approximately 141,681,307 Shares in the hands of the public, representing approximately 37.88% of the issued Shares. Accordingly, the Company is of the view that there is, at present, a sufficient number of Shares held by public Shareholders which would permit the Company to undertake purchases and acquisitions of its Shares up to the full 10% limit pursuant to the proposed Share purchase Mandate, without adversely affecting the listing status of the Shares on the SGX-ST.

3.9 Take-over Code Implications

3.9.1 Obligations to Make a Take-over Offer

Any resultant increase in the percentage of voting rights held by a Shareholder and persons acting in concert with him, following any purchase or acquisition of Shares by the Company, will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code (“Rule 14’). Consequently, depending on the number of Shares purchased or acquired by the Company and the Company’s total issued Shares at that time, a Shareholder or group of Shareholders acting in concert with each other could obtain or consolidate effective control of the Company and could become obliged to make a take-over offer under Rule 14.


10

5

AN

Nu

AL

REp

oR

T 2

00

9


3.9 Take-over Code Implications (cont’d)

3.9.2 Persons Acting in Concert

under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or undertaking (whether formal or informal), co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate effective control of that company. unless the contrary is established, the persons, inter alia, who will be presumed to be acting in concert, include (i) a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts), and (ii) a company, its parent, subsidiaries and fellow subsidiaries, and their associated companies and companies of which such companies are associated companies, all with each other. For this purpose, a company is an associated company of another company if the second company owns or controls at least twenty per cent (20%) but not more than fifty per cent (50%) of the voting rights of the first-mentioned company.

3.9.3 Effect of Rule 14 and Appendix 2

The circumstances under which Shareholders (including Directors) and persons acting in concert with them respectively will incur an obligation to make a take-over offer under Rule 14 after a purchase or acquisition of Shares by the Company are set out in Rule 14 and Appendix 2 of the Take-over Code. In general terms, the effect of Rule 14 and Appendix 2 is that, unless exempted, Directors and persons acting in concert with them will incur an obligation to make a take-over offer for the Company under Rule 14 if, as a result of the Company purchasing or acquiring Shares, the voting rights of such Directors and their concert parties would increase to thirty per cent (30%) or more, or, if the voting rights of such Directors and their concert parties fall between thirty per cent (30%) and fifty per cent (50%) of the Company’s voting rights, the voting rights of such Directors and their concert parties would increase by more than one per cent (1%) in any period of six (6) months.

under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Shareholder would increase to thirty per cent (30%) or more, or, if such Shareholder holds between thirty per cent (30%) and fifty per cent (50%) of the Company’s voting rights, the voting rights of such Shareholder would increase by more than one per cent (1%) in any period of six (6) months. Such Shareholder need not abstain from voting in respect of the resolution authorizing the proposed Share purchase Mandate.

Shareholders who are in any doubt as to whether they would incur any obligations to make a take-over offer as a result of any purchase of Shares by the Company pursuant of proposed Share Purchase Mandate are advised to consult their professional advisers before they acquire any Shares in the Company during the period when the proposed Share Purchase Mandate is in force.

The aforesaid statements do not purport to be a comprehensive or exhaustive description of all implications that may arise under the Take-over Code. Shareholders are advised to consult their professional adviser and/or the Securities Industry Council and/or other relevant authorities at the earliest opportunity as to whether an obligation to make a take-over offer would arise by reason of any purchase or acquisition of Shares by the Company.


10

6

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED


3.10 Directors’ and Substantial Shareholders’ Interest

Based on the Register of Directors’ Shareholdings and the Register of Substantial Shareholders of the Company, as at the Latest practicable Date, the shareholdings of the Directors and of the Substantial Shareholders in the Company before and after the purchase of Shares pursuant to the proposed Share purchase Mandate, assuming (i) the Company purchases the maximum amount of 10% of the issued ordinary share capital of the Company, and (ii) there is no change in the number of Shares held by the Directors and Substantial Shareholders or which they are deemed to be interested in, will be as follows:

INTERESTS OF DIRECTORS AND SUBSTANTIAl SHAREHOlDERS

As at the Latest practicable Date, the interests of the Directors and Substantial Shareholders in the issued Shares of the Company are as follows:

Before Share Purchase (No. of shares)

(No. of shares) Percentage (%)

Direct Interest

Deemed

Interest Total Interest

Before Share Purchase

After Share Purchase (#)

Directors

Tung Koon Ming(1) - 223,960,320 223,960,320 59.87 66.53

Tung Koon Kwok, Dennis - - - - -

Tung Wai Kit - - - - -

Hoon Tai Meng - - - - -

Tan Song Koon - - - - -

Wong Wing Keung, Meyrick - - - - -

Substantial Shareholders (other than Directors)

Winning International Limited 221,960,320 - 221,960,320 59.33 65.93

Note:

(1) By virtue of section 7 of the Companies Act, Mr Tung Koon Ming is deemed to have an interest in all the Shares held by Winning International Limited and 2,000,000 shares held by Worthpro Investments in the Company.

(#) Assuming that the purchase shares are cancelled.


10

7

AN

Nu

AL

REp

oR

T 2

00

9

4. DIRECTORS’ RECOMMENDATIONS

The Directors are of the opinion that the proposed renewal of the Share purchase Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 11 , being the ordinary Resolution relating to the Share purchase Mandate, to be passed as Special Business at the 2009 AGM.


10

8

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED

TIME WATCH INVESTMENTS lIMITEDCompany Registration No.: 199502355R

Important

1. For investors who have used their CpF monies to buy the Company‘s shares, this Annual Report is forwarded to them at the request of CpF Approved Nominees and is sent solely FoR INFoRMATIoN oNLY.

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

I/We

of (full address) being a shareholder/shareholders of Time Watch Investments Limited (the “Company”) hereby appoint:

Name Address NRIC/Passport No.Proportion of

Shareholdings (%)

and/or (delete as appropriate)

or failing him, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf and if necessary to demand a poll at the Annual General Meeting of the Company to be held at Suntec Singapore International Convention & Exhibition Centre, Meeting Room 307, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 on Tuesday, 27 october 2009 at 10.00 a.m. and at any adjournment thereof. If you wish your proxy/proxies to vote for or against the resolutions set out in the Notice of Meeting of the Fourteenth Annual General Meeting (the “Meeting”) and summarised below, please indicate with an “X” in an appropriate box. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/her discretion, as he/she will on any other matters arising at the Meeting and at any adjournment thereof.

No. Resolutions relating to: For* Against*1. Directors’ Report and Accounts2. Approval of Directors’ Fees3. Re-election of Mr Tan Song Koon4. Re-election of Mr Hoon Tai Meng5. Declaration of First and Final Dividend6. Re-appointment of Deloitte & Touche LLp as Auditors7. Special Business: Authority to issue shares8. Special Business: Authority to allot and issue shares other than on a pro-rata basis to shareholders at a

discount exceeding 10% but not more than 20%9. Special Business: Authority to allot and issue shares pursuant to Time Watch Employee Share option

Scheme 200810. Special Business: Authority to allot and issue shares pursuant to Time Watch performance Share plan 200811. Renewal of Mandate for Share purchase

* If you wish to exercise all your votes “For” or “Against”, please indicate with an “X” within the box provided. Alternatively, please indicate the number of votes as appropriate.

Dated this day of 2009

Total Number of Shares in: No. of Shares(a) CDp Register(b) Register of MembersTotal

Signature(s) of member(s)/Common SealImportant: Please Read Notes Overleaf

PROXY FORMANNUAL GENERAL MEETING TO bE HELD ON 27 OCTObER 2009

10

9

AN

Nu

AL

REp

oR

T 2

00

9

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 of the Company, 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 shall be deemed to relate to all the shares held by you.

2. A shareholder entitled to attend and vote at the above 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. The instrument appointing a proxy or proxies must be deposited at the Company’s Registered office at 17 Carpenter Street #02-01, Singapore 059906 not less than 48 hours before the time appointed for holding the above meeting.

4. Where a shareholder appoints two proxies, the appointments shall be invalid unless he specifies the proportion (expressed as a percentage of the whole) of his holding to be represented by each proxy. If no such proportion or number is specified, the first-named proxy may be treated as representing 100% of the shareholding and any second-named proxy as alternate to the first-named.

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

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the power of attorney (or other authority) or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

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

8. The Company shall be entitled to reject the instrument of proxy 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 of proxy. In addition, in the case of shareholders whose shares are deposited with The Central Depository (pte) Limited (“CDp”), the Company may reject any instrument of proxy lodged if such shareholders are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the meeting as certified by CDp to the Company.

11

0

TIM

E W

ATC

H I

NV

ESTM

ENTS

LIM

ITED

Corporate Information

BOARD OF DIRECTORS

Mr Tung Koon MingChairman & CEO

Mr Dennis Tung Koon Kwok Executive Director

Mr Tung Wai KitExecutive Director

Mr Hoon Tai Meng Independent Director

Mr Tan Song Koon Independent Director

Mr Meyrick Wong Wing Keung Independent Director

AUDIT COMMITTEE

Mr Hoon Tai Meng (Chairman)Mr Tan Song KoonMr Meyrick Wong Wing Keung

NOMINATING COMMITTEE

Mr Meyrick Wong Wing Keung (Chairman)Mr Hoon Tai Meng Mr Tan Song Koon

REMUNERATION COMMITTEE

Mr Meyrick Wong Wing Keung (Chairman)Mr Hoon Tai Meng Mr Tan Song Koon

COMPANY SECRETARIES

Ms Dorothy HoMs Wong Juar Ming

REGISTERED OFFICE

17 Carpenter Street, #02-01Singapore 059906

Tel : (65) 6536 6564Fax : (65) 6536 7243Website: http://www.timewatch.com.sg

SHARE REGISTRAR

Boardroom Corporate & Advisory Services Pte Ltd3 Church Street#08-01 Samsung HubSingapore 049483

AUDITORS

Deloitte & Touche LLPCertifi ed Public Accountants6 Shenton Way, #32-00 DBS Building Tower TwoSingapore 066809

Partner-in-charge: Mr Xu Jun(Appointed since fi nancial year ended June 30, 2007)

PRINCIPAL BANKERS

DBS Bank Limited

Oversea-Chinese Banking Corporation Limited

Hang Seng Bank Limited

Standard Chartered Bank (Hong Kong) Limited

17 CARPENTER STREET #02-01

SINGAPORE 059906

TEL : (65) 6536 6564

FAX : (65) 6536 7243

www.timewatch.com.sg

Time Watch Investments Limited

Documents

TIME WATCH INVESTMENTS LIMITED ANNUAL REPORT 2009timewatch.com.sg/images/TWIAR09FA.pdfLimited (Hong Kong) and Tick Tack AG (Switzerland). Supporting the Group’s manufacturing and