technology group rolling returns

Roaring OpportunitiesRolling Returns

CHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITEDANNUAL REPORT 2010

WWW.CHINA-TAISAN.COM

CHINA TAISAN TECHNOLOGY GROUPCo. Reg. No.: 200711836D

Singapore Registered Address:80 Robinson Road #17-02SIngapore 068898

Singapore Offi ce Address:101 Cecil StreetTong Eng Building #13-11Singapore 069533Tel: (65) 6492 0948

Principal Place of Business:Zhengdong Development Area 362271DongCheng, Dongshi TownJinjiang City, Fujian ProvicePeople’s Republic of ChinaTel: (86) 595 8550 7565Fax: (86) 595 8558 7422

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Annual Report 2010

oc01_06_11-China Taisan AR2010-Cover-FA.indd 1oc01_06_11-China Taisan AR2010-Cover-FA.indd 1 4/5/2011 11:43:24 PM4/5/2011 11:43:24 PM

BOARD OF DIRECTORSChoi Cheung Kong Non-Executive ChairmanLin Wen Chang CEO and Executive DirectorYang Shun Fu Executive DirectorTsang Siu For Thomas Independent directorNg Weng Wei Independent directorDr. Fu Xiao Bin Independent director

AUDIT COMMITTEETsang Siu For Thomas (Chairman)Ng Weng WeiDr. Fu Xiao Bin

NOMINATING COMMITTEEDr. Fu Xiao Bin (Chairman)Choi Cheung KongTsang Siu For Thomas

REMUNERATION COMMITTEENg Weng Wei (Chairman)Choi Cheung KongDr. Fu Xiao Bin

SINGAPORE REGISTERED ADDRESS80 Robinson Road #17-02Singapore 068898

SINGAPORE OFFICE ADDRESS101 Cecil Street Tong Eng Building #13-11Singapore 069533Tel: (65) 6492 0948Email: [email protected]

PRINCIPAL PLACE OF BUSINESSZhengdong Development Area 362271Dongcheng, Dongshi TownJinjiang City, Fujian ProvincePeople’s Republic of ChinaTel: (86) 595 8550 7565Fax: (86) 595 8558 7422Email: [email protected]

COMPANY SECRETARYTan Swee Gek (LLB Hons)

EXTERNAL AUDITORSMazars LLP133 Cecil Street#15-02 Keck Seng TowerSingapore 069535Partner-in-charge: Chang Fook Kay(Appointed on 17 December 2007 with effect from fi nancial year ended 31 December 2007)

SHARE REGISTRAR AND SHARE TRANSFER OFFICEM & C Services Private Limited138 Robinson Road#17-00 The Corporate Offi ceSingapore 068906

PRINCIPAL BANKERSAgricultural Bank of ChinaDongshi Town BranchNo. 35 Renhe East RoadDongshi Town, Jinjiang, Fujian ProvincePeople’s Republic of China

China Construction BankJinjiang BranchQingyang, Zengjing Sub-districtJinjiang, Fujian ProvincePeople’s Republic of China

Xiamen International BankXiamen International Bank Building8-10 Lu Jiang Road, XiamenPeople’s Republic of China

Overseas Chinese Bank Corporation Limited65 Chulia StreetOCBC CentreSingapore 049513

INVESTOR RELATIONSInvestor Relations ConsultantsKathy Zhang kathy@fi nancialpr.com.sgKamal Samuel Ryan kamal@fi nancialpr.com.sgTel: (65) 6438 2990

corporate information

corporate profi le 01chairman & ceo message 02operations & fi nancial review 05risk management policies & processes 08research & development 10prospects & future plans 11communication with stakeholders 12board of directors 14

company management 16corporate governance 17fi nancial statements 35 statistics of shareholdings 69 notice of agm 71 proxy form corporate information

With great optimism and increasing opportunities ahead, we create value to our stakeholders through positive brand equity.

contents



China Taisan Technology Group Holdings Limited is one of the leading producers of knitted performance fabrics in the PRC. It is engaged in the knitting, dyeing and finishing of fabrics under its own “Lianjie” (连捷) brand as well as the provision of fabric-processing services.

It is one of the few approved suppliers of performance fabrics used in the manufacture of sportswear and casual wear for reputable international and domestic brands including the likes of Metersbonwe (美特斯邦威), Li-Ning (李宁), Adidas, 361°, Nike, Umbro, Anta (安踏), Xtep (特步), Kappa, Lotto, Wanjielong (万杰隆), E•Land, Reebok, FILA, Mizuno, Diadora, Erima, Qiaodan (乔丹(中国)), Septwolves (七匹狼), Lilang (利郎) and K-boxing (劲霸).

Our Chief Executive Officer and co-founder, Mr. Lin Wen Chang, is a Taiwanese and has more than 20 years’ experience in the textile industry. Key positions in factory management and sales & marketing are also mostly occupied by Taiwanese. Our product R&D is staffed by a strong team of 12 R&D personnel, who are mostly Taiwanese with more than 10 over years of experience in textile industry. As Taiwan is a global leader in textile-manufacturing technology using synthetic fibre, China Taisan is able to leverage on this strong Taiwanese connection to maintain its technological edge over other PRC competitors.

The Group’s production facility is strategically located in Jinjiang City, Fujian Province, otherwise known as the Sports Hub of the PRC – giving us access to the entire production chain for sports and leisure apparel in the PRC. It is therefore able to respond more quickly to customers’ demands and develop long lasting relationships with many of its local customers such as Anta and Xtep.

The facility has a built-up area of about 37,586 sqm and is installed with equipment incorporating advanced technologies from France, Germany, Japan and Taiwan. The facility is fully integrated and is able to support the whole fabric production process from knitting and dyeing to finishing. With an annual production capacity of about 24,150 tonnes, China Taisan is one of the largest producers of performance fabrics in the PRC. As a testament to our product quality, our products are able to conform to international standards such as AATTC, ASTM, DIN, BSI and JIS. We are also one of the few to become certified as Öko-Tex Standard 100 compliant since 2005. We are accredited by the CICC Conformity Assessment Services Co., Ltd (中国检验认证集团质量认证有限公司) with ISO9001:2000 and ISO14001:2004. In September 2008, our subsidiary, Jinjiang Lianjie, has been awarded the title of “Fabrics China Sportswear Fabrics Pioneer Plant” (“国家运动服装面料开发基地”) under The Fabrics China Project, which was initiated by China Textiles Development Center (中国纺织工业协会) and China Textile Information Center (国家纺织产品开发中心) in 1999.

corporate profile

CHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITEDANNUAL REPORT 2010 01

oc01_06_11-China Taisan AR2010-Editorial-FA.indd 1 4/4/11 12:52 PM

Lin Wen Chang Chief Executive Officer

Choi Cheung Kong Non-executive Chairman

message fromchairman & ceo

With several major international sporting events in the pipeline, including the Shenzhen World University Games (2011), World Swimming Championships (Shanghai 2011), and Youth Olympic Game (Nanjing 2014), we expect our business to grow as Chinese citizens become more aware of sporting apparel and its functional uses.



Dear Shareholders,

On behalf of the Board, we are pleased to present to you the annual report of the Group for the financial year ended 31 December 2010 (“FY2010”).

FY2010 was an excellent year for China Taisan which saw the Group bounce back from the doldrums of FY2009. Sales volumes, average selling prices and margins all steadily moved up throughout the year which resulted in the Group generating record revenues and profit.

Record-breaking year in 2010Driven by rising demand for sportswear with China’s hosting of sports events like the Guangzhou 2010 Asian Games, both sales volume and average selling price rose to push up our revenue to a record high of RMB1,357.4 million in FY2010, up 63.0% year-on-year (“yoy”) compared to RMB832.6 million in FY2009. In particular, we benefited from the increase in demand for our high value added knitted performance fabrics.

As such, we were also able to lift our gross profit margin from 19.4% in FY2009 to 26.4% in FY2010, due to the higher capacity utilization rate throughout the year and contributions from our newly launched products, which usually commanded margins in excess of 30%.

Amidst these favourable operating conditions, the Group ended the year with its highest ever net profit of RMB252.0 million, a 136.3% yoy jump from RMB106.7 million registered in FY2009.

Consequently our earnings per share more than doubled from RMB11.50 cents in FY2009 to RMB25.40 cents in FY2010, as a combined effect of higher earnings and a larger weighted average share base due to the Taiwanese Depository Receipt (“TDR”) issue in October 2010.

Optimistic Outlook With several major international sporting events in the pipeline, including the Shenzhen World University Games (2011), World Swimming Championships (Shanghai 2011), and Youth Olympic Game (Nanjing 2014), we expect our business to grow as Chinese citizens become more aware of sporting apparel and its functional uses.

Fundamentally, with the Chinese population experiencing a higher per capita income, along with Government campaigns promoting quality of life, demand for up-market sport & casual wears is bound to increase.

Indeed, we have seen renowned domestic brands like Lining, 361° and Meters/bonwe expand their outlets across China over the past year. As one of the top suppliers of knitted performance fabric to these brands, we look set to ride high on the robust demand from customers.

We also look forward to an enlarged market share of chemical fibers, especially polyester, versus cotton amongst the demand for domestic textile fibers, in view of the continuing cotton price hikes since January 2010.

message fromchairman & ceo (cont’d)

03CHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITEDANNUAL REPORT 2010


Lin Wen Chang Chief Executive Officer

Choi Cheung Kong Non-executive Chairman

message fromchairman & ceo (cont’d)

Investing in the futureConsiderable efforts were spent in 2010 to prepare the Company for a secondary listing on the Taiwan Stock Exchange and this culminated in an issuance of Taiwan Depository Receipts (“TDR”) in October 2010, marking an important corporate milestone for the Group. We embraced the secondary listing in a bid to raise necessary funds for further expansions as well as attract an even larger shareholder base.

The Group raised a total of RMB161.5 million in the exercise, and we have earmarked it for our RMB700.0 million capital expenditure plan. Over the next two years, we plan to expand our production capacity through two stages. In the first half of 2011, we will add 3,500 tonnes of production capacity to our existing annual capacity of 24,150 tonnes. Secondly, we are also applying for a new piece of land near to our current production facility to build a new plant with a designed production capacity of 12,000 tonnes per annum.

Motivated by higher pricing and better gross margins of new products, we will continue to focus on our in-house R&D resources and collaboration with institutes in China to launch 3-5 new performance fabric products every year. Our proven track record of product innovation over the years has allowed us to gain a competitive edge over our peers.

We are also looking to expand into apparel design by tying up with an apparel manufacturer, so that we can improve the demand of our products and secure more downstream orders.

Rewards for shareholdersTo reward our shareholders, the Board of Directors has proposed a final dividend of 2.27 RMB cents per share for FY2010, subject to the approval of shareholders at the Annual General Meeting to be held on 29 April 2011. Shareholders may also get access to new shares in lieu of cash dividend by joining our Scrip Dividend Scheme.

Given the opportunities available for growth and the Group’s expansion plans, we believe our investments in expansion will ultimately benefit shareholders when they come to fruition.

AppreciationOn behalf of the Board, we would like to extend our utmost appreciation to our management and staff, shareholders, business partners and customers for their dedication and commitment. Without your professionalism and loyalty, China Taisan would not be able to achieve what it has done so far. We will continue to put in our best efforts to deliver value to all our stakeholders.



Financial PerformanceThe Group’s revenue for the full year ended 31 December 2010 (“FY2010”) surged 63.0% to RMB1,357.4 million from RMB832.6 million in FY2009 as contributed by improved demand from customers; increased selling prices to reflect higher raw materials costs and launch of new products. Accordingly, the sales quantity and selling prices of our products have both improved as compared to FY2009. The revenue achieved in FY2010 is a record high in the Group’s history and fourth quarter remains the best performing quarter in FY2010 as well.

On a full year basis, gross profit margin improved by 7.0 percentage point to 26.4% in FY2010 from 19.4% in FY2009. FY2010 experienced a recovery of the gross profit margins on the back of improved market demand, product mix with better margins and high capacity utilization rate throughout the year.

Despite higher sales, distribution costs were lower by 17.2% from RMB2.2 million in FY2009 compared to RMB1.8 million in FY2010 as the trade fair and exhibition expenses incurred in FY2009 did not repeat in FY2010.

Administrative expenses rose 30.8% from RMB11.7 million in FY2009 to RMB15.3 million in FY2010 as the Group saw higher expenses incurred for union fees, utility bills allocated to administrative office and corporate expenses relating to listing and investors’ relation activities. The Group also accrued for CEO’s variable performance bonus upon net profit target achieved, which was not incurred in previous year.

The Group’s other operating expenses for FY2010, up by 76.0% from FY2009, comprised mainly the amortization of other asset of RMB4.0 million.

As a result of higher revenue and gross profit margin, the Group’s profit attributable to shareholders jumped by 136.3% to RMB252.0 million in FY2010 from RMB106.7 million in FY2009.

The Group’s performance ratios were improved as a result of strong sales and earnings. The Group’s Return on Equity (ROE) rose from 14.0% to 25.3% and Return on Capital Employed (ROCE) leapt from 12.8% to 24.3%. Higher capacity utilization sets up a higher Return on Assets (ROA) of 19.9%, up from 11.0% in FY2009.

operations & financial review

Earnings per Share (RMB cents)

Revenue (in RMB’000)

Operating Cash Flow (in RMB’000)

Net Profit attributable to shareholders (in RMB’000)

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

300,000

250,000

200,000

150,000

100,000

50,000

0

250,000

200,000

150,000

100,000

50,000

0

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0

222,084

37,400

6,623

5.31

810,868

182,693

103,119

25.92

1,180,143

251,965

205,047

30.28

832,641

106,679

225,860

11.50

1.357,430

252,046

235,681

25.40

2006 2008 20102007 2009

2006 2008 20102007 2009

2006 2008 20102007 2009

2006 2008 20102007 2009



operations & financial review (cont’d)

Financial Results HighlightRMB’000 2006 2007 2008 2009 2010Revenue 222,084 810,868 1,180,143 832,641 1,357,430Gross profit 54,607 253,672 376,646 161,667 358,891Profit before income tax 50,521 249,646 343,127 144,780 340,196Net profit attributable to equity holders 37,400 182,693 251,965 106,679 252,046Dividend per share (RMB cents) – – 8.15 3.45 2.27*

* Dividendproposedforfinancialyearended31December2010issubjecttoshareholders’approvalintheAnnualGeneralMeetingtobeheldon29April2011.

Cash Flow ManagementApart from managing costs, the Group continued to focus on effective cash management. The Group’s cash conversion cycle improved from 54 days in FY2009 to 27 days in FY2010 as it was able to ensure faster collection from customers while continued to pace the repayment period to suppliers under improved industry conditions. The average inventory holding period has been reduced from 29 days in FY2009 to 24 days in FY2010 in view of more timely delivery.

With effective cash management, the Group continued to generate net cash from operations of RMB235.7 million in FY2010 versus RMB225.9 million in FY2009.

Overall Profit Margin (in %)

Gross profit Margin Net profit margin

24.6%

16.8%

22.5% 21.4%

12.8%

18.6%

31.3% 31.9%

19.4%

26.4%

2006 2008 20102007 2009

Sales Quantity (in tonnes)

Performance Fabrics Total

1,640

12,107 10,220

18,245

14,245

20,467

10,695

15,886

16,416

22,373

2006 2008 20102007 2009

Average Selling Price per Tonne (in RMB’000)

Performance Fabrics Overall

18.3

68.2 74.0

79.7

74.4

44.4

57.7

52.4

64.5

83.1

2006 2008 20102007 2009

Measurement of Returns (in %)

Returns on Assets Returns on EquityReturns on Capital Employed

2006 2008 20102007 2009

20.6%

29.2%36.1%

89.6%

46.9%

66.2%

30.3%

11.0%

19.9%24.3%25.3%

36.1%41.6%

12.8%14.0%



operations & financial review (cont’d)

2006 2007 2008 2009 2010

Current Ratio (times) 1.82 1.73 3.14 3.18 4.03Quick Ratio (times) 1.70 1.54 2.95 2.94 3.79Cash Conversion Cycle (days)* 35 31 41 54 27Average Inventory Turnover Days* 25 18 21 29 24Average Trade Payables Days* 89 21 60 77 66Average Trade Receivables Days* 99 63 80 103 69Operating Cash Flow/Sales (in %) 3.0% 12.7% 17.4% 25.9% 17.4%

*Usingaverageofrelevantyear-endbalancesforthecalculation.

Stable Liquidity & Cash Flows

The Group continued to invest heavily in FY2010. The Group paid up RMB18.8 million for a new piece of land in order to build a new factory to expand our production capacity by 2012. Meanwhile, we have also ordered new production equipment to be installed in the current factory by second quarter of 2011 and accordingly a deposit RMB63.3 million for these production equipment. Another RMB10.0 million for the second and final installment for the 5 year R&D collaboration with Wuhan Textile University was paid during FY2010 as well.

During FY2010, the Group has raised net proceeds of about RMB189.9 million though issuance of 30 million new shares at $0.195 to an investment funds and 125 million new shares at $0.255 for the listing of our Taiwan Depositary Receipts. The payment of the first and final dividend for FY2009 was RMB9.2 million as majority of the shareholders opted for scrip dividend in lieu of cash dividend.

As a result of the above events, cash and bank balances increased by RMB313.7 million or 74.7% from RMB419.8 million as at 31 December 2009 to RMB733.4 million as at 31 December 2010.

Financial PositionThe Group’s financial position continues to improve in this spectacular year. Our shareholders’ equity stood at RMB1,226.6 million as of 31 December 2010, up 54.3% from RMB794.9 million as of 31 December 2009.

Net asset value per share rose by 24.98 RMB cents to 110.64 RMB cents as at 31 December 2010 contributed by new capital raised and strong net profits earned in FY2010. Net cash per share rose to 69.38 RMB cents as of 31 December 2010 from 40.28 RMB cents as of 31 December 2009 as a result of healthy operating cash inflows and net proceeds from new shares issued during FY2010.

The Group’s total liabilities are kept as low as 20.1% of our total assets as of 31 December 2010, down marginally from 22.2% as of 31 December 2009. Our cash and cash equivalents have also exceeded our total liabilities since FY2008. We believed that our healthy financial position would be advantageous in pursuing further growth.

Cash and cash EquivalentTotal Liabilities

2010

200631,254

112,458

200789,399

271,154

2009419,764

226,906

733,438

309,431

2008364,111

259,968

2010

2009

2008

2007

2006

Total Liabilities As % Of Total Assets

51.5%

47.9% 52.1%

48.5%

74.6%

77.8%

79.9%

25.4%

22.2%

20.1%

Total Assets Total Liabilities

Net Asset / Net Cash per Share

2007 36.19(-0.03)

2006 17.36(-0.24)

2008 82.3232.29

2009 85.6640.28

2010 69.38 110.64

Net Asset per Share Net Cash per Share



risk management policies and processes The Management regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The following sets out an overview of China Taisan’s approach to risk management and business control with a brief discussion of the nature and the extent of its exposure to these risks. The risk overview, however, is not exhaustive:

Market RiskThe Group’s principal business is focused in a single geographical market which is the People’s Republic of China. All our direct customers, the apparel manufacturers and/or fabric traders, are distributed in various regions of the mainland China, mainly in Fujian Province, Guangdong Province and Jiangsu Province. Though we supply to our direct customers within mainland China, our products could be indirectly exported outside China in the forms of their finished products, i.e. the apparels, as instructed by respective end-customers, the apparel brands. Such indirect diversification implies that our market risk may not necessarily be concentrated in mainland China.

However, majority of our products are still consumed in the mainland China, which is in line with China Taisan’s strategy. The management is of the view that the presence of political stability, government’s policies in broad terms and strong economic growth are favourable factors to the market development. The Group also carries its business with a well diversified group of direct customers and end customers in this market.

Nevertheless, the Group will be susceptible to any unforeseen changes in the government policies, industry regulations and market conditions. The management consistently keeps updated in order to anticipate or respond to any adverse changes in an efficient and timely manner.

Business RiskThe manufacture of textile products would result in water pollution by nature. Therefore, the Group has to consistently keep up with industry regulations on environmental protection. Our factory is equipped with a reliable waste water treatment system which is constantly monitored and upgraded in accordance with local authority’s requirement.

Our main raw materials are synthetic yarns like polyester and spandex which are by-products from crude oils. The costs of the raw materials are therefore indirectly affected by the fluctuation in crude oil prices. However, we manufacture our products based on “order-to-make” business model, where our products pricing accepted by customers has taken into account of the current raw material costs. Most of our raw materials are acquired only, when orders are received, at the prices incorporated in our costings for agreed selling prices.

Operational RiskOperational risk is the potential loss caused by a breakdown in internal process, deficiencies in people and management, or operational failure arising from external events. The operational risk management process is to mitigate unexpected losses and manage expected loss.

The Group is presently operating in a single principal business location at Jinjiang City of Fujian Province, where almost all of the Group’s assets are located. While the Group is growing organically, its operational processes are constantly reviewed through ISO audits and internal audit exercises so as to ensure proper internal controls are in place and business is operated efficiently. The Group also develops its people constantly to ensure that the right people are in place for the operation.

Product RiskOur Group’s success is dependent on the acceptability of its products by its customers. The Group has focused on the manufacture and sales of performance fabrics for apparel products since 2007 and has achieved record sales and profitability since then. The management is of the view that apparel products are part of the necessity for living and commonly demanded products regardless of the economic conditions. China Taisan sells more than 20 types of broadly-categorised performance fabrics, branded under “连捷” and is not reliant on the sale of any particular type of performance fabrics.



One of our key strategies is to develop new products continuously to meeting the ever-changing market demands. China Taisan emphasises and invests adequately in its product R&D. We have tied up with Wuhan Textile University since the end of 2009 to co-develop new products for at least the next 5 years as a move to strengthen our product development capabilities. The Group targets to launch at least 3 to 5 new products each year as one of the key drivers for our growth and competitiveness.

Investment RiskThe Group grows its businesses through organic growth of its existing activities, development of new products and capabilities and through potential acquisitions of operating business entities. Investment activities are evaluated through performing due diligence exercise and are supported by external professional advices. All business proposals are reviewed by the Company’s Board of Directors and its senior management before obtaining final Board approval.

Foreign Exchange RiskThe foreign exchange risk of the Group arises from the Company’s transactions and the translation of cash deposits denominated in currencies other than Chinese Renminbi. The currencies giving rise to this risk are primarily Singapore dollars and U.S. dollars.

The Group does not have any formal hedging policy against foreign exchange fluctuations. However, it continuously monitors the exchange rates of major currencies and enters into currency hedging contracts with banks from time to time whenever the management detects any movements in the respective exchange rates which may impact the Group’s profitability.

The Group’s exposure to foreign exchange exposure is minimal as the cash and bank balances kept in foreign currencies accounts are insignificant as at 31 December 2010. These cash and bank balances are converted to the respective presentation currencies of the Group’s companies on a need-to basis only.

Credit RiskCredit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group as and when they fall due.

Credit risk is managed through the application of credit approvals, setting credit limits, background search and monitoring procedures. Cash terms and advance payments are required for customers with lower credit standing. For customers exceeding their credit terms, we would meet these customers to resolve the payment. In deciding whether an extension in credit terms would be granted. The management takes into consideration of factors such as long-term relationships, payment history, creditworthiness and financial position of the customers. As we practice strict credit control policies, the Group does not expect to incur material credit losses on its receivables or other financial instrument, if any.

Interest Rate RiskThe Group aims to manage the extent to which the Group’s results could be affected by the movement in interest rate.

As at 31 December 2010, the Group’s cash and cash equivalents stood at RMB 733.4 million. The Group’s cash balances are placed with reputable banks and financial institutions. Additional financing, required, can be obtained through banking facilities and finance lease arrangements. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure.

Liquidity Risk The Group manages its liquidity of funds available in order to meet the contractual and financial obligations as and when they fall due.

The Group monitors its net operating cash flow and maintains a level of cash and cash equivalents deemed adequate by management for working capital purposes so as to mitigate the effect of fluctuations in cash flows. The Group has minimal liquidity risk as it maintains adequate working capital to meet its obligations as and when they fall due.

Derivative Financial Instrument RiskThe Group does not hold or issue derivative financial instruments for trading purposes.

risk management policies and processes (cont’d)



research & developmentChina Taisan’s success as one of the leading producers of knitted performance fabrics in the PRC is founded on a relentless pursuit of manufacturing and technical excellence. We provide a one-stop solution to our customers on fabric design and manufacturing, combining the latest fabric technology with our dedication to quality and service, thus meeting total customer satisfaction.

China Taisan‘s experienced and dedicated R&D team is constantly:• Formulating and improving the proportion

and mix of chemicals and additives utilized in our production process to achieve the desired functions/characteristics of our performance fabrics;

• Improving on our existing processing methods and production techniques to satisfy the ever-changing market demand; and

• Developing new processing methods and production techniques to improve efficiency and enhance product quality.

Our R&D team comprises of:

Technical Advisor – Professor Yeh Jen Taut (叶正涛教授)• Renowned academic, researcher and expert in

the fields of high performance fibre and textile

products, negative ion polymer material, anti-bacterial / anti odour polymer material and anti-electromagnetic wave polymer material;

• Professor at National Taiwan University of Science and Technology, Taiwan (台湾科技

大学) and Wuhan Textile University (武汉纺

织大学); • Textile industry sector head in the Taiwan

National Science Committee

R&D Department• Headed by our CEO, Mr Lin Wen Chang who

has more than 20 years of practical experience in textile industry

• A team of 12 personnel who are mostly Taiwanese with more than 10 over years of experience in textile and fabric manufacture

Over the years, in addition of building up a strong R&D team, China Taisan invests strategically in both hardware and software to enhance our R&D capabilities. We have also collaborated with strong technological partners such as the Wuhan Textile University to develop new technologies for performance fabrics and aims to produce 3 to 5 new products each year.

In FY2010, new products aged less than 2 years accounted for about 27.8% of the Group’s revenue.



The Group is looking for merger and acquisitions opportunities in its down-streams. We believe that synergies would be derived by becoming vertically-integrated as we could have an edge over our competitors by being capable of providing much integrated services to the brands.

prospects & future plans

CAPEX Plan

Production Capacity

Time Line

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0Current 2Q2011

211.2

4Q2011

> 500.03

The Group’s CAPEX plan for the next two years could be financed by its present cash balance, operating cash inflow and, if necessary, bank borrowings.

1. The Group has ordered and paid up deposits amounting to RMB63.3 million for these machineries. Please refer to our announcement dated 6/1/2011 for further details.

2. The Group has paid up a deposit of RMB18.8 million and is still in the process of obtaining the land-use right of the 166,700 sqm land involved.

3. Including the cost of land-use rights, buildings construction and new machineries.

06Apparel Brands

05Apparel

Manufacturing and Sales

04Fabric

Finishing03

FabricProcessing

02Fabric

Production

01Fibre/YarnProduction

CAPEX (RMB ‘mil):

Towards Vertically-Integrated

24,150

27,650

3,5001

12,0002

39,650



communication with stakeholders

China Taisan seeks to enhance shareholder value not only through our focus on sound business performance and practices, but also through responsible and effective communication with its stakeholders. Since our listing on the SGX Main Board on 6 June 2008, China Taisan has adopted a pro-active stance on the engagement of market participants.

Meetings with Investors and ShareholdersWe held quarterly results briefing to update shareholders and potential investors on the company’s current developments and future plans. Such briefings are usually helmed by our Chief Executive Officer Mr. Lin Wen Chang and Chief Financial Officer Mr. Patrick Kan. This is supported by our timely financial results announcements that place emphasis on responsible financial reporting, business updates and prospects.

China Taisan regularly attends conference calls, one-on-one meetings or road-shows to better communicate its business positioning and outlook to fund managers and analysts on a face-to-face basis. Through these activities, China Taisan consistently communicates with investors/shareholders from Singapore, Taiwan, Hong Kong and Mainland China.

Plant VisitsThe Group hosted several separate plant visits this year for fund managers and analysts to its manufacturing plant in Jinjiang City, Fujian Province. Through these visits, fund managers and analysts can develop a better understanding of China Taisan’s business and operations.

Media CoverageThe Group also makes it a point to engage the local media to update the investment community. Our CEO and CFO, Mr. Lin and Mr. Patrick Kan, have both been featured in various media publications such as The Edge Singapore, INVEST magazine, The Pulse Magazine, as well as online investor portal – NextInsight (http://www.nextinsight.net).



communication with stakeholders (cont’d)

Investor-centric WebsiteThe Group’s website is a key information portal for our stakeholders as well as a reference of our credibility. Thus, we launched a new corporate website (accessible online at http://www.china-taisan.com) in January 2010 in an attempt to improve the user experience.

We have made the effort to upgrade the website with aesthetic design and improved user-function, that incorporates the latest Group’s corporate information and business updates. We will be updating the website on a regular basis. We have also added new charts and diagrams that we hope will enhance users’ appreciation and understanding of our business.

About China Taisan’s Taiwan Depositary Receipt (“TDR”)China Taisan has successfully launched its TDR on Taiwan Stock Exchange (“TWSE”) on 6 October 2010. The Taiwanese investors have indicated

strong interests in the Company due to attractive business and financial fundamental presented to them and the Company’s positioning to supply for the consumer goods in Mainland China. Altogether, the Company has raised net proceeds of about RMB161.5 million, which shall be used for the development of a new plant with about 12,000 tonnes of annual production capacity by 2012.

Having the Company’s TDR trading in TWSE, China Taisan wishes that it would be a better platform to attract investors from the region and thereby increases the interests on the Company’s shares and TDR.

Going ForwardChina Taisan would continue to engage the shareholders/investors through various activities. The Company would also evaluate the circumstances and explore any opportunity to enhance the shareholders’ value.



board of directors

Choi Cheung Kong (蔡长江) is our co-founder and Non-Executive Chairman and was appointed to our Board on 8 October 2007. Since the establishment of our subsidiary, Jinjiang Lianjie Textile Printing & Dyeing Industrial Co., Ltd (“Lianjie”), he only acted in a non-executive role within Lianjie and is not involved in the daily operations of Lianjie. Prior to the founding of our Group, Mr. Choi was involved in various businesses, including the manufacturing of umbrella, property development and running of restaurants, for which he founded several companies and assumed an executive role. Since 2003 to date, Mr. Choi has been engaged in the business of granite quarrying through Ganzhou Leijie Stone Co., Ltd, a company founded by him. Mr. Choi is the

vice chairman of Hong Kong Dong Shi Town Fraternal Association Ltd (香港东石镇同乡联谊会) and the Honorary Chairman of the Dongshi Chamber of Commerce (晋江东石商会).

Lin Wen Chang (林文章) is our co-founder and CEO, overseeing the daily operations of Lianjie as well as helming the production, R&D, procurement, administration and HR departments. He was appointed to our Board on 14 January 2008. Mr. Lin has more than 20 years of experience in the textile industry. He graduated from Oriental Academy of Industry, Taiwan (亚东

工业专科学校) (presently know as Oriental Institute of Technology, Taiwan (亚东技术学院) in 1983 with a certificate in dyeing and finishing for fabrics. Prior to the founding of our Group, Mr. Lin had worked in various fabric manufacturing and dyeing companies in Taiwan: from 1992 to 1996, he served as a senior engineer in Jiewen Dyeing Company (捷稳染整公司); from 1988

to 1991, he served as a senior engineer in Nan Yang Dyeing & Finishing Co., Ltd (南洋染整公司); and from 1986 to 1988, he was the team leader of the technical department of Far East Textile Co., Ltd (远东纺织印染公司). Mr. Lin is the Chairman of Taiwan Fund Enterprises Institution, Jinjiang City, Fujian Province (福建省晋江市台资企业协会) and the vice chairman of Taiwan Fund Enterprises Institution, Quanzhou City, Fujian Province (福建省泉州市台资企业协会).

Yang Shun Fu (杨顺福) is our Executive Director and has been with our Group since October 2004, overseeing our finance department. He was appointed to our Board on 14 January 2008. Mr. Yang graduated with a diploma in 1993 from Quanzhou City Li-ming Vocational College (泉州市黎明职业大

学). From1997 to 2004, he worked as an accounting manager in Jinjiang City Jin-fang Spinning and Dyeing Co., Ltd (晋江市晋纺印染织造有限公司). From 1993 to 1997, Mr. Yang provided freelance accounting services.



board of directors (cont’d)

Tsang Siu For Thomas (曾兆科) is our Independent Director and was appointed to our Board on 14 April 2008. He is also the Chairman of our Audit Committee. He has more than 15 years of audit experience with professional accounting firms such as KPMG, Ernst & Young, PricewaterhouseCoopers in Hong Kong, Beijing and Singapore. He has managed various portfolios of clients comprising multinational corporations and was responsible for the entire management of audit of clients from planning, directing and complete handling of administrative matters. He is currently a partner in charge of initial public offering assignments, audit of listed companies and financial due diligence with LTC LLP in Singapore. Mr Tsang is currently a practicing member of the

Institute of Certified Public Accountants of Singapore, and a fellow member of Association of Chartered Certified Accountants (ACCA). He has also been an associate member of Hong Kong Institute of Certified Public Accountants since 1997. Mr Tsang graduated with a Diploma in Accountancy from Chai Wan Technical Institute in Hong Kong in 1990 and thereafter, in 2003, he completed his MBA degree from the University of Warwick, England. Mr Tsang also obtained a Diploma in International Financial reporting from ACCA in 2005.

Ng Weng Wei (伍荣伟) is our Independent Director and was appointed to our Board on 14 April 2008. He is also the Chairman of our Remuneration Committee. He is currently the executive director of Group Finance and Administration of Santak Holdings Limited, a listed company in Singapore. Mr Ng joined Santak in 2000 where he oversees the accounting, corporate finance, human resources and administrative functions as well as information systems in the Santak group of companies. Before that, he was an audit manager in PricewaterhouseCoopers, an international accounting firm in Singapore. Prior to that, he worked as a Senior Accountant at Price Waterhouse in Sydney from 1994 to 1996. Mr Ng graduated with a Bachelor of Accountancy (Honours)

Degree from Nanyang Technological University in 1993. He is both a Chartered Accountant and Certified Public Accountant of The Institute of Chartered Accountants in Australia since 1996 and The Institute of Certified Public Accountants of Singapore since 1999 respectively. He is also a member of the Singapore Institute of Directors since 2004.

Dr. Fu Xiao Bin (傅小斌博士) is our Independent Director and was appointed to our Board on 14 April 2008. He is also the Chairman of our Nominating Committee. He is currently the assistant general manager of China Potevio Shanghai Industrial Park Development Company (中国普天信息产业上海

工业园发展公司). Between 2004 and 2005, Dr Fu was the assistant general manager of China Marketing Media Holdings, Inc where he was tasked with managing investing and overseas financing. Between 2003 and 2004, he was the assistant general manager of Shenzhen Youyi Co. (深圳友谊有限

公司) and was responsible for the implementation of a management and employee buy-out. Dr Fu graduated from Xi’an Jiaotong University (西安交

通大学) with a Bachelor of Technology Economy Degree in 1994 before obtaining his Master Degree for System Engineering from Xi’an Jiaotong University (西安交通大学) in 1997. In 2003, he completed his Ph.D. in Management in the aforesaid university.



company management

Cai Bing Huang (蔡炳煌)is our General Manager and has been with our Group since the establishment of Lianjie in 1996. He is responsible to oversee the operations of administration, human resources and procurement departments. Prior to August 2010, he was the sales and marketing manager and assisted in the running of the sales & marketing department.

Patrick Kan (陈炜旭)is our Chief Financial Officer and has been with our Group since January 2008. He is responsible for the financial and accounting, corporate finance and investor relations functions of our Group. Mr. Kan has spent several years with a few international public accounting firms. Prior to joining our Group, he was Audit Assistant Manager of Deloitte & Touche, where he was managing a portfolio of audit engagements including SGX-listed companies and initial public offerings. Before that, he had worked in other large public accounting firms, namely Baker Tilly TFWLCL and RSM Chio Lim. Mr Kan graduated with Bachelor of Business from Nanyang Technological University in 1999. Patrick is presently a member of the Association of Chartered Certified Accountants and a Certified Public Accountant Singapore.

Tseng Ching An (曾庆安)is our General Factory Manager and has been with our Group since 2005. He is responsible to oversee the overall operation of the factory, particularly in the dyeing and finishing section. He also participates in our research & development team as he has the expertise in the application of chemical additives. He has more than 20 years in the textile industry. Prior to joining our Group, he was working as factory manager in Fuqing Hong Liong Textile Tech Co., Ltd for about 3 years. Mr Tseng graduated from Provincial Taipei Institute of Technology (Presently known as National Taipei Institute of Technology), Department of Applied Chemistry.

Chen Jia Ji (陈家籍)is our Procurement Manager and has been with our Group since the establishment of Lianjie in 1996. He is responsible for sourcing and procuring the raw materials used in our production process. Mr Chen is also a director of our subsidiary, Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd.

Cai Jin Ding (蔡金頂)is our Sales & Marketing Manager and has been with our Group since the establishment of Lianjie in 1996. He currently runs the sales & marketing department. He is responsible for developing sales and marketing strategies, recommending products to existing customers, maintaining customer relationships and providing our customers with after sales services, securing new customers and monitoring and analysing market and industry trends.



BOARD OF DIRECTORSChoi Cheung Kong Non-Executive ChairmanLin Wen Chang CEO and Executive DirectorYang Shun Fu Executive DirectorTsang Siu For Thomas Independent directorNg Weng Wei Independent directorDr. Fu Xiao Bin Independent director

AUDIT COMMITTEETsang Siu For Thomas (Chairman)Ng Weng WeiDr. Fu Xiao Bin

NOMINATING COMMITTEEDr. Fu Xiao Bin (Chairman)Choi Cheung KongTsang Siu For Thomas

REMUNERATION COMMITTEENg Weng Wei (Chairman)Choi Cheung KongDr. Fu Xiao Bin

SINGAPORE REGISTERED ADDRESS80 Robinson Road #17-02Singapore 068898

SINGAPORE OFFICE ADDRESS101 Cecil Street Tong Eng Building #13-11Singapore 069533Tel: (65) 6492 0948Email: [email protected]

PRINCIPAL PLACE OF BUSINESSZhengdong Development Area 362271Dongcheng, Dongshi TownJinjiang City, Fujian ProvincePeople’s Republic of ChinaTel: (86) 595 8550 7565Fax: (86) 595 8558 7422Email: [email protected]

COMPANY SECRETARYTan Swee Gek (LLB Hons)

EXTERNAL AUDITORSMazars LLP133 Cecil Street#15-02 Keck Seng TowerSingapore 069535Partner-in-charge: Chang Fook Kay(Appointed on 17 December 2007 with effect from fi nancial year ended 31 December 2007)

SHARE REGISTRAR AND SHARE TRANSFER OFFICEM & C Services Private Limited138 Robinson Road#17-00 The Corporate Offi ceSingapore 068906

PRINCIPAL BANKERSAgricultural Bank of ChinaDongshi Town BranchNo. 35 Renhe East RoadDongshi Town, Jinjiang, Fujian ProvincePeople’s Republic of China

China Construction BankJinjiang BranchQingyang, Zengjing Sub-districtJinjiang, Fujian ProvincePeople’s Republic of China

Xiamen International BankXiamen International Bank Building8-10 Lu Jiang Road, XiamenPeople’s Republic of China

Overseas Chinese Bank Corporation Limited65 Chulia StreetOCBC CentreSingapore 049513

INVESTOR RELATIONSInvestor Relations ConsultantsKathy Zhang kathy@fi nancialpr.com.sgKamal Samuel Ryan kamal@fi nancialpr.com.sgTel: (65) 6438 2990

corporate information

corporate profi le 01chairman & ceo message 02operations & fi nancial review 05risk management policies & processes 08research & development 10prospects & future plans 11communication with stakeholders 12board of directors 14

company management 16corporate governance 17fi nancial statements 35 statistics of shareholdings 69 notice of agm 71 proxy form corporate information

With great optimism and increasing opportunities ahead, we create value to our stakeholders through positive brand equity.

contents



corporate governance

The Board of Directors and management are committed to maintaining a high standard of corporate governance by complying with the principles and guidelines of the new Code of Corporate Governance 2005 (the “Code”) issued by the Corporate Governance Committee. Good corporate governance is an integral element of a sound corporation as it promotes corporate transparency and protects and enhances shareholders’ interest. This statement outlines the main corporate governance practices and processes that were in place since the financial year beginning on 1 January 2010.

(A) BOARD MATTERS

Board’s Conduct of its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with management to achieve this and the management remains accountable to the Board.

The Board of Directors (the “Board”) comprises two executive directors, a non-executive director, and three independent directors, all having the right core competencies and diversity of experience which enable them to effectively contribute to the Company.

The Board’s primary role is to provide entrepreneurial leadership, set strategic aims and ensure that the necessary financial and human resources are in place for the Group to meet its objectives as well as to protect and enhance long-term shareholder value. It sets the overall strategy for the Group and review management performance. To fulfill this role, the Board is responsible for the overall corporate governance of the Group including establishing a framework of prudent and effective controls, setting its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Board ProcessesTo assist in the execution of its responsibilities, the Board has established a number of Board Committees including a Nominating Committee, a Remuneration Committee and an Audit Committee. The effectiveness of each committee is also constantly monitored. The Board has also established a framework for the management of the Group including a system of internal control.

The Board currently holds at least four scheduled meetings each year. In addition, it holds additional meetings at such other times as may be necessary to address any specific significant matters that may arise.

The agenda for meetings is prepared in consultation with the Chief Executive Officer (“CEO”). Standing items include the management report, financial reports, strategic matters, governance, business risk issues and compliance. Executives are regularly invited to attend Board meetings to provide updates on operational matters.

Board and Board Committee Meetings From 1 January 2010 to the date of this report, the Board held six meetings and the attendance of each Director at every Board and Board Committee meeting is as follows:


ChinaTaisan_AR10_FS_2.indd 17 4/4/11 12:35 PM

corporate governance (cont’d)

Name

Board AuditCommittee

NominatingCommittee

Remuneration Committee

No. of meetings

held

No. of meetings attended

No. of meetings

held

No. ofmeetingsattended

No. ofmeetings

held


No. ofmeetings

held


Mr. Choi Cheung Kong(Non-executive Director & Chairman)

6 5 5 5* 2 2 2 2

Mr. Lin Wen Chang (Executive Director & CEO) 6 6 5 5* 2 2* 2 2*

Mr. Lin Yung Hsiang (1)

(Executive Director) 6 5 5 5* 2 2* 2 2*

Mr. Yang Shun Fu(Executive Director) 6 5 5 5* 2 2* 2 2*

Mr. Tsang Siu For Thomas(Independent Director) 6 6 5 5 2 2 2 2*

Mr. Ng Weng Wei(Independent Director) 6 6 5 5 2 2* 2 2

Dr. Fu Xiao Bin(Independent Director) 6 6 5 5 2 2 2 2

(1) Mr. Lin Yung Hsiang has ceased to be a director effective from 16 March 2011.

* Attendance by invitation.

Matters Requiring Board ApprovalThe Board’s approval is required for matters such as corporate restructuring, mergers and acquisitions, major investments, material acquisitions and disposals of assets, major corporate policies on key areas of operations, the release of the Group’s quarterly and annual results, interested person transactions of a material nature, and declaration of interim dividends and proposal of final dividends. All other matters are delegated to committees whose actions are reported to and monitored by the Board.

Training of DirectorsDirectors receive appropriate induction training and coaching to develop individual skills as required. The Directors are also provided with updates on the relevant new laws, regulations and changing commercial risks in the Group’s operating environment through regular presentations and meetings; and they also have the opportunity to visit the Group’s operational facilities and meet with management to gain a better understanding of business operations.

Board Composition and Balance

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

The Board comprises six directors of which three are independent directors. The independent directors are Mr. Tsang Siu For Thomas, Mr. Ng Weng Wei and Dr. Fu Xiao Bin. The criterion of independence is based on the definition given in the Code. The Board considers an “independent” director as one who has no relationship with the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent judgment of the conduct of the Group’s affairs.




The composition of the Board is determined in accordance with the following principles:

• TheBoardshouldcompriseasufficientnumberofdirectorstofulfillitsresponsibilitiesandwhoasagroupprovidecore competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning experience and customer-based experience or knowledge;

• TheBoardshouldcompriseamajorityofnon-executivedirectors,withatleastone-thirdoftheBoardmadeupofindependent non-executive directors; and

• TheBoardshouldhaveenoughdirectorstoserveonvariouscommitteesoftheBoardwithoutover-burdeningthedirectors or making it difficult for them to fully discharge their responsibilities.

With three out of six directors deemed to be independent, the Board is able to exercise independent judgment on corporate affairs and provide management with a diverse and objective perspective on issues. Furthermore, the Board will be able to interact and work with the management team through a robust exchange of ideas and views to help shaping the Company’s strategic direction.

The composition of the Board is reviewed on an annual basis by a Nominating Committee to ensure that the Board has the appropriate mix of expertise and experience, and collectively possess the necessary core competencies for effective functioning and informed decision-making. When a vacancy arises under any circumstance, or where it is considered that the Board would benefit from the services of a new director with particular skills, the Committee, in consultation with the Board, determines the selection criteria and selects candidates with the appropriate expertise and experience for the position.

The role of the non-executive and independent directors is particularly important in reviewing and monitoring the performance of executive management in meeting the Group’s agreed goals and objectives and ensuring that the strategies proposed by the executive management are fully discussed and rigorously examined taking into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers and the many communities in which the Group conducts business. The Board considers its non-executive and independent directors to be of sufficient calibre and number and their views to be of sufficient weight that no individual or small group can dominate the Board’s decision-making processes. The non-executive and independent directors have no financial or contractual interests in the Group other than by way of their fees and shareholdings as set out in the Report of the Directors.

The Board is of the view that its current composition of six directors is appropriate taking into account the scope and nature of the operations of the Company and of the Group.

Chairman and Chief Executive Officer (“CEO”)

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

Mr. Choi Cheung Kong, who is the Non-executive Chairman and Mr. Lin Wen Chang the CEO of the Company are not related to each other. Mr Lin is responsible for the day-to-day management of the affairs of the Company and the Group. He leads in business development and expansion of the Group and ensures that the Board is kept updated and informed of the Group’s business.

The Chairman’s responsibilities include:• schedulingmeetingsandleadingtheBoardtoensureitseffectivenessandapprovestheagendaofBoardmeetings

in consultation with the CEO;• reviewingkeyproposalsandensuresthatBoardmembersareprovidedwithaccurateandtimelyinformation;• ensuringthatBoardmembersengagemanagementinconstructivedebateonvariousmattersincludingstrategic

issues and business planning processes; and• promotinghighstandardsofcorporategovernance.




Board Membership

Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.

The Nominating Committee (“NC”) comprises Dr. Fu Xiao Bin as the chairman, and Mr. Tsang Siu For Thomas and Mr. Choi Cheung Kong as members, the majority of whom are independent.

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

(a) To make recommendations to the Board on the appointment of new executive and non-executive directors, including making recommendations on the composition of the Board generally and the balance between executive and non-executive Directors appointed to the Board.

(b) To regularly review the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary.

(c) To determine the process for search, nomination, selection and appointment of new board members and be responsible for assessing nominees or candidates for appointment or election to the Board, determining whether or not such nominee has the requisite qualifications and whether or not he/she is independent.

(d) To make plans for succession, in particular for the Chairman and Chief Executive.

(e) To determine, on an annual basis, if a Director is independent. If the NC determines that a Director, who has one or more of the relationships mentioned under the Code is in fact independent, the Company should disclose in full, the nature of the Director’s relationship and bear responsibility for explaining why he should be considered independent. The NC may at its discretion determine a Director as non-independent even if he has no business or, other relationships with the Company, its related companies or its officers.

(f) To make recommendations to the Board for the continuation (or not) in services of any Director who has reached the age of seventy (70) years, where appropriate.

(g) To recommend Directors who are retiring by rotation to be put forward for re-election.

(h) To decide whether or not a Director is able to and has been adequately carrying out his/her duties as a Director of the Company, particularly when he/she has multiple board representations.

The NC shall recommend to the Board internal guidelines to address the competing time commitments faced by directors who serve on multiple boards.

(i) To be responsible for assessing the effectiveness of the Board as a whole and for assessing the effective contribution and commitment of each individual Director to the effectiveness of the Board. The results of the performance evaluation will be reviewed by the Chairman and the assessment shall be disclosed annually.

The directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. The Company’s Articles and Association provides that one third of the Board (1), or the number nearest to one third is to retire by rotation at every Annual General Meeting (“AGM”). In addition, the Company’s Articles of Association also provides that newly appointed directors are required to submit themselves for re-nomination and re-election at the next AGM of the Company.




The dates of appointment and last re-election of each director are set out below:

Name of Director Date of Appointment

Date of LastRe-election

Directorship in Listed Company

Present Past Preceding 3 years

Choi Cheung Kong 8 Oct 2007 31 Mar 2009 China Taisan Technology Group Holdings Limited Nil

Lin Wen Chang 14 Jan 2008 Not Applicable (1) China Taisan Technology Group Holdings Limited Nil

Yang Shun Fu 14 Jan 2008 23 April 2010 China Taisan Technology Group Holdings Limited Nil

Tsang Siu For, Thomas 14 Apr 2008 31 Mar 2009

China Taisan Technology Group Holdings LimitedContel Corporation LimitedYong Xin International Holdings Ltd

Nil

Ng Weng Wei 14 Apr 2008 31 Mar 2009China Taisan Technology Group Holdings LimitedSantak Holdings Limited

Nil

Dr. Fu Xiao Bin 14 Apr 2008 31 Mar 2009

China Taisan Technology Group Holdings LimitedGreater China Precision Components Limited

Nil

(1) In accordance with the Company’s Articles of Association, our Chief Executive Officer, Mr. Lin Wen Chang, is not subject to retirement by rotation while he is the managing director of the Company and continues to hold that position, and he shall not be taken into account in determining the rotation of retirement of directors.

Other key information on the individual directors of the Company is set out in pages 14 to 15 of this Annual Report. Their shareholdings in the Company are also disclosed in the Report of the Directors. None of the directors hold shares in the subsidiary of the Company.

Board Performance

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

The NC has established a process for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual director. The performance criteria for the Board evaluation includes an evaluation of the size and composition of the Board, the Board’s access to information, accountability, Board processes, Board performance in relation to discharging its principal responsibilities.

The Board and the NC have endeavoured to ensure that directors appointed to the Board possess the experience, knowledge and skills critical to the Group’s business, so as to enable the Board to make sound and well-considered decisions.

Access to Information

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




Directors receive a regular supply of information from management about the Group so that they are equipped to play as full a part as possible in Board meetings. Detailed Board papers are prepared for each meeting of the Board. The Board papers include sufficient information from management on financial, business and corporate issues to enable the directors to be properly briefed on issues to be considered at Board meetings. Information provided includes background or explanatory information relating to matters to be brought before the Board, copies of disclosure documents, budgets, forecasts and internal financial statements.

All directors have unrestricted access to the Company’s records and information and receive detailed financial and operational reports from senior management during the year to enable them to carry out their duties. Directors also liaise with senior management as required, and may consult with other employees and seek additional information on request.

All directors have separate and independent access to the company secretary. The company secretary administers, attends and prepares minutes of all Board meetings, and assists the Chairman in ensuring that Board procedures are followed and reviewed so that the Board functions effectively, and the Company’s Bye-laws and relevant rules and regulations, including requirements of the Companies Act and the Singapore Exchange Securities Trading Limited (SGX-ST), are complied with.

Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties the cost of such professional advice will be borne by the Company.

(B) REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

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

The Remuneration Committee (“RC”) comprises non-executive directors, Mr. Ng Weng Wei as the chairman, and Dr. Fu Xiao Bin and Mr. Choi Cheung Kong as members, the majority of whom, including the chairman, are independent.

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

(a) To review and recommend to the Board, a framework of remuneration and to determine the specific remuneration packages and terms of employment for:

• eachDirector;• theCEO(orexecutiveofequivalentrank)iftheCEOisnotaDirector;• seniormanagementoftheGroup;and• employeesrelatedtodirectorsor,substantialshareholdersoftheGroup.

(b) Meetings of the RC will be held as the RC deems appropriate. The RC should meet at least once a year and meetings should be organized so that attendance is maximised. A meeting may be called, at any other time, by the Chairman or any member of the RC. Director or Management may be invited to the meetings.

(c) The Secretary of the RC shall be the Company Secretary for the time being or, such other person as may be nominated by the RC.

(d) The Secretary shall attend all meetings and minute the proceedings thereof.

(e) Minutes of all meetings shall be confirmed by the Chairman of the meeting and circulated to all members of the RC.

(f) If the Chairman of the RC so decides, the minutes shall be circulated to other members of the Board. Any Director may, provided there is no conflict of interest and with the agreement of the Chairman, obtain copies of the minutes of RC meetings.




(g) The notice of each meeting of the RC, confirming the venue, date and time and enclosing an agenda of items to be discussed, shall other than under exceptional circumstances, be forwarded to each member of the RC at least three (3) working days prior to the date of the meeting.

(h) To recommend to the Board, the Share Option Schemes or any other performance bonus schemes which may be set up from time to time and to do all acts necessary in connection therewith.

(i) To carry out its duties in the manner that it deems expedient, subject always to any regulations or restrictions that may be imposed upon the RC by the Board of Directors from time to time.

(j) As part of its review, the RC shall ensure that:

i. all aspects of remuneration including directors’ fees, salaries, allowances, bonuses, options and benefits-in-kind should be covered.

ii. the remuneration packages should be comparable within the industry and comparable companies and shall include a performance-related element.

iii. the remuneration package of employees related to directors or controlling shareholders of the Group are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scopes and levels of responsibility.

The members of the RC do not participate in any decision concerning their own remuneration.

Level and Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.

The Group’s remuneration policy is to provide compensation packages appropriate to attract, retain and motivate the Directors and key personnel required to run the Group successfully.

The remuneration of the Chief Executive Officer Lin Wen Chang, is based on the service agreement entered into between Mr Lin Wen Chang and the Company on 1 January 2008. The service agreement has been renewed on the same terms for a period of 3 years, effective from 1 January 2011 and renewable thereafter.

In determining the remuneration of the non-executive Directors, the RC ensures that the level of remuneration is appropriate to the level of contribution, taking into account factors such as effort and time spent and responsibilities of the non-executive Directors.

The RC ensures that non-executive Directors are not over-compensated to the extent that their independence may be compromised. The Board will, if necessary, consult experts on the remuneration of non-executive Directors. The Board will recommend the remuneration of the non-executive Directors for approval at the AGM.




Disclosure on Remuneration

Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

Details of remuneration paid to the Directors and top 5 executives are set out below:

Remuneration band and Name Fees Salary Bonus Others Total

DirectorsBelow S$250,000

Mr. Lin Wen ChangMr. Choi Cheung KongMr. Lin Yung HsiangMr. Yang Shun FuMr. Tsiang Siu For ThomasMr. Ng Weng WeiDr. Fu Xiao Bin

––––

100%100%100%

46%–

81%97%

–––

53%––––––

1%–

19%3%–––

100%–

100%100%100%100%100%

ExecutivesBelow S$250,000

Mr. Kan Wei Shiu PatrickMr. Tseng Ching AnMr. Cai Bing HuangMr. Chen Jia JiMr. Cai Jin Ding

––– ––

74%86%95%90%90%

17%––––

9%14%5%10%10%

100%100%100%100%100%

The Company does not have any employees who are immediate family members of a Director or the CEO, whose remuneration exceeded S$150,000 during the financial year ended 31 December 2010.

The Company does not have any employee share schemes.

(C) ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

Our Company announces its financial results on a quarterly basis and other information via SGXNET in accordance with the requirement of SGX-ST. The Company aims to provide the shareholders with a detailed analysis, explanation and assessment of the Group’s financial position and prospects.

Audit Committee

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




The Audit Committee (“AC”) comprises non-executive directors, Mr. Tsang Siu For Thomas as the chairman, and Mr. Ng Weng Wei and Dr. Fu Xiao Bin as members, all of them whom, including the chairman, are independent. The AC will assist the Board of Directors in discharging their responsibility to safeguard the assets, maintain adequate accounting records, and develop and maintain effective systems of internal control, with the overall objective of ensuring that management creates and maintains an effective control environment in the Company. The AC will provide a channel of communication between the Board of Directors, the management, the internal and external auditors of the Company on matters relating to audit.

The Board has approved the written terms of reference of the AC. Specifically, the AC’s duties include the following:

(a) To review the audit plans of the external auditors and our internal auditors, including the results of our external and internal auditors’ review and evaluation of our system of internal controls;

(b) To review the annual consolidated financial statements and the external auditors’ report on those financial statements, and discuss any significant adjustments, major risk areas, changes in accounting policies, compliance with Singapore Financial Reporting Standards, concerns and issues arising from their audits including any matters which the auditors may wish to discuss in the absence of management, where necessary, before submission to our Board of Directors for approval;

(c) To review the periodic consolidated financial statements comprising the income statement and the balance sheets and such other information required by the Listing Manual, before submission to our Board of Directors for approval;

(d) To review and discuss with external and internal auditors (if any), any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on our Group’s operating results or financial position and our management’s response;

(e) To review the co-operation given by our Company’s management and officers to the external auditors;

(f) To undertake such other reviews and projects as may be requested by our Board of Directors, and will report to our Board its findings from time to time on matters arising and requiring the attention of our AC;

(g) To review and evaluate our administrative, operating and internal accounting controls and procedures;

(h) To review the procedures by which employees of our Group may, in confidence, report to the Chairman of the AC, possible improprieties in matters of financial reporting or other matters and ensure that there are arrangements in place for independent investigation and follow-up actions in relation thereto;

(i) To review and establish procedures for receipt, retention and treatment of complaints received by our Group regarding inter alia, criminal offences involving our Group or our employees, questionable accounting, auditing, business, safety or other matters that may impact negatively on our Group;

(j) To review and ratify any interested person transactions falling within the scope of Chapter 9 of the Listing Manual;

(k) To review any potential conflicts of interests;

(l) To consider and recommend the appointment and re-appointment of the external auditors and matters relating to the resignation or dismissal of auditors;

(m) (On a half-yearly basis) to review all transactions (if any) between Xiamen Decheng Trading Co., Ltd and Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd (“Lianjie”);

(n) To review all transactions (if any) between Xiamen Lianjiesheng Trading Co., Ltd and Lianjie;

(o) (On an annual basis) to review the terms of the consultancy agreement between Mr Cai Chang Jing and our Group;




(p) To review the appointments of and (on an annual basis) review the remuneration of persons occupying managerial positions who are related to a director, CEO or a substantial shareholder of our Company;

(q) To generally undertake such other functions and duties which may be required by statute or the rules of the SGX-ST Listing Manual, and by such amendments made thereto from time to time;

(r) To review all transactions (if any) between our Group and Mr Cai Chang Jing and/or his associate;

(s) (On a regular basis) to review the adequacy and quality of the Company’s financial reporting function, internal controls and processes; the aforesaid review shall cover, inter alia, the adequacy of the Company’s accounts and financial reporting resources and the performance of the Chief Financial Officer and other senior management in the Finance Department and the results of such review shall be disclosed in the Company’s annual report;

(t) To ensure that all internal control weaknesses are satisfactorily and properly rectified;

(u) To evaluate the independence of the external auditors;

(v) To review the adequacy of the internal audit function and ensuring that a clear reporting structure is in place between the AC and the internal auditors; and

The AC is authorised to investigate any matter within its terms of reference, and has full access to the management and resources which are necessary to enable it to discharge its functions properly. It also has full discretion to invite any executive director or executive management to attend its meetings.

The AC has reviewed the Company’s financial reporting function, internal controls and processes and is satisfied with the adequacy and quality of the same. The AC is satisfied with the adequacy of the Company’s accounts and financial reporting resources and the performance of the Chief Financial Officer and other senior management in the Finance Department.

The AC has reviewed the arrangements by which the employees of the Company may, in confidence, raise concerns about the possible improprieties in matters of financial reporting or other matters within the Group, with the objectives of ensuring that arrangements are put in place for independent investigation of such matters and for appropriate follow-up action as and when the need arise. The Group has put in place the Whistle-blowing Policy for this purpose.

The AC has also reviewed all non-audit services provided by the external auditors which amounted to RMB14,000 for services rendered. The non-audit service was in relation to the facilitation of the review by the reporting accountant in connection with the Company’s listing of its Taiwan Depository Receipt. The AC confirmed that these non-audit services would not affect that independence and objectivity of the external auditors.

The AC recommends to the Board the nomination of Mazars LLP as external auditors at the forthcoming AGM of the Company.

Internal Control

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

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

Risk assessment and evaluation takes place as an integral part of the annual strategic planning cycle. Having identified the risks to the achievement of their strategic objectives, each business is required to document the management and mitigating actions in place and proposed in respect of each significant risk. The Board is of the view that there is proper system of internal controls in place within the Group.




Internal Audit

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

The Company has outsourced its internal audit functions to RSM Nelson Wheeler (“RSM”). RSM, who reports directly to the AC, commenced its internal audit for the Group in 2009, which includes reviews and examinations covering different business processes. From 1 March 2011, the Company has set up its own internal audit department, which would report directly to AC and would provide reports to AC on a timely basis. The AC is of the view that the Company has an adequate internal audit function.

(D) COMMUNICATION WITH SHAREHOLDERS

Communication with Shareholders

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

In line with continuous disclosure obligations of the Company, pursuant to the SGX-ST’s Listing Rules and the Singapore Companies Act, the Board’s policy is that shareholders are informed of all major developments that impact the Group.

Information is communicated to shareholders on a timely basis. Where there is inadvertent disclosure made to a selected group, the Company will make the same disclosure publicly as soon as practicable. Communication is made through:

• annualreportsthatarepreparedandissuedtoallshareholders.TheBoardmakeseveryefforttoensurethattheannual report includes all relevant information about the Group, including future developments and other disclosures required by the Companies Act and the relevant accounting standards;

• quarterlyfinancialstatementscontainingasummaryofthefinancialinformationandaffairsoftheGroupfortheperiod;

• noticesofandexplanatorymemorandaforannualgeneralmeetingsandextraordinarygeneralmeetings;

• analystbriefingsfortheGroup’squarterlyandannualresultsaswellasotherbriefings,asappropriate;

• pressreleasesonmajordevelopmentsoftheGroup;

• disclosurestotheSGX-ST;and

• theGroup’swebsitesathttp://www.china-taisan.com at which shareholders can access information on the Group. The website provides, inter alia, products information and profile of the Group.

Greater Shareholder Participation

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

In addition, shareholders are encouraged to attend the AGM to ensure a high level of accountability and to stay informed of the Group’s strategy and goals. The Directors regard AGMs as an opportunity to communicate directly with shareholders and encourage greater shareholder participation.

The notice of the AGM is despatched to shareholders, together with explanatory notes or a circular on items of special business, at least 14 days before the meeting. The Board welcomes questions from shareholders who have an opportunity to raise issues either informally or formally before or at the AGM. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the meeting to answer those questions relating to the work of these committees. The Company’s external auditors will also be present to assist the Directors in addressing queries by shareholders.




Each item of special business included in the notice of the meeting is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting.

(E) DEALING IN SECURITIES

The Company adopts the following policies in relation to dealings in its securities:

Officers are not to deal in its securities during the period commencing two weeks before the announcement of the Company’s financial statements for each of the first three quarters of the year and one month before the announcement of the Company’s financial statements for the full year, and ending on the date of the announcement of the relevant results; and

In addition, the Company reminds its officers to observe the laws on insider trading at all times, even during the window periods for them to deal in its securities.

(F) MATERIAL CONTRACTS

Save for the service agreements between the executive directors and the Company, there were no material contracts of the Company or its subsidiary involving the interest of any director or controlling shareholders subsisting at the end of the financial year ended 31 December 2010.

(G) INTERESTED PERSON TRANSACTIONS

The Company has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its shareholders. In order to achieve this objective, the Board and AC meets quarterly to review whether the Company or the member in the Group is entering or intended to enter into any potential interested person transactions so as to ensure the Company complies with Chapter 9 of the Singapore Exchange Listing Manual on interested person transactions.

Save as the on-going interested person transactions disclosed below, no interested person transaction was entered into during the financial year under review:

Name of interested person and nature of transactions

Aggregate value of all interested person transaction during the financial year under review (in RMB)

Corporate guarantee provided by Jinjiang Suisheng Spinning Industrial Co., Ltd in favour of China Construction Bank, Jinjiang Sub-Branch to secure bank loans provided to subsidiary, Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd

Nil ¹

Personal guarantee provided by Mr. Cai Chang Jing in favour of China Construction Bank, Jinjiang Sub-Branch to secure bank loans provided to subsidiary, Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd

Nil ²

Personal guarantee provided by Mr. Lin Wen Chang in favour of China Construction Bank, Jinjiang Sub-Branch to secure bank loans provided to subsidiary, Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd

Nil ³

Payment of management consultancy fee to Mr. Cai Chang Jing 180,000




¹ The value of the amount at risk to the Company is nil as the corporate guarantee provided by Jinjiang Suisheng Spinning Industrial Co., Ltd is free of charge and the value of the bank loans guaranteed by this corporate guarantee is RMB32.0 million.

² Mr. Cai Chang Jing had provided guarantees in favour of China Construction Bank, Jinjiang Sub-Branch to guarantee certain bank loans granted to the Group which amounts to RMB45.0 million (the bank loans of RMB32.0 million secured by the corporate guarantee provided by Jinjiang Suisheng Spinning Industrial Co. Ltd as described above were also secured by personal guarantee provided by Mr. Cai Chang Jing). The value of the amount at risk to the Company is nil as the personal guarantee provided by Mr. Cai Chang Jing is free of charge. In May 2010, China Construction Bank, Jinjiang Sub-Branch discharged Mr. Cai Chang Jing’s guarantee and requested that Mr. Lin Wen Chang guarantees the aforesaid bank loans instead.

³ The value of the amount at risk to the Company is nil as the personal guarantee provided by Mr. Lin Wen Chang is free of charge and the value of the bank loans guaranteed by this personal guarantee is RMB45.0 million. The bank loans of RMB32.0 million secured by the corporate guarantee provided by Jinjiang Suisheng Spinning Industrial Co., Ltd are also secured by the personal guarantee provided by Mr. Lin Wen Chang.

(H) USE OF IPO PROCEEDS

The Net IPO proceeds (after deducting expenses for professional fees, underwriting and placement commissions and other transaction expenses related to the IPO amounting to approximately S$4.4 million) are approximately S$49.2 million. As at the date of this annual report, the Net IPO proceeds have been utilized as follows:

AmountAllocated

S$’000

AmountUtilisedS$’000

AmountBalanceS$’000

Intended Use Of Proceeds

Acquisition and installation of the following new equipment as well as hiring of additional staff to operate the same:

46,303 37,842 * 8,461

(a) multi-track electronic tubular knitting machines

(b) fabric face finishing and processing equipment

(c) computerised jacquard knitting machines

General marketing and advertising expenses 87 87 –

General working capital 2,775 2,775 –

49,165 40,704 8,461

* The amount utilized includes the deposit paid for acquisition of new equipment.



C O N T E N T S

Report of the Directors 31Statement by the Directors 33Report of the Independent Auditors 34Consolidated Statement of Comprehensive Income 35Statements of Financial Position 36Consolidated Statement of Changes in Equity 37Statement of Changes in Equity 38Consolidated Statement of Cash Flows 39Notes to the Financial Statements 40

financial statements


We are pleased to present this annual report to the members of the Company together with the audited financial statements of the Company and consolidated financial statements of the Company and its subsidiary (the “Group”) for the financial year ended 31 December 2010.

DIRECTORS

The directors of the Company in office at the date of this report are as follows:

Choi Cheung Kong (Non-executive Chairman)Lin Wen Chang (Chief Executive Officer and Executive Director)Yang Shun Fu (Executive Director)Tsang Siu For Thomas (Independent Director)Ng Weng Wei (Independent Director)Dr. Fu Xiao Bin (Independent Director)

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50, except as disclosed, none of the directors of the Company who held office at the end of the financial year (including those held by their spouses and infant children) had an interest in shares of the Company and in related corporations (other than wholly-owned subsidiary), either at the beginning or at the end of the financial year:

Held in the name of the Directors or nomineesName of the company and director in which interests are held At beginning of the year At end of the year

At 21 days after end of the year

The CompanyOrdinary share with no par value

Choi Cheung Kong 484,659,200 378,942,211 378,942,211Lin Wen Chang 101,476,800 105,388,605 105,388,605

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Mr. Choi Cheung Kong is deemed to have interests in the wholly-owned subsidiary of the Company at the beginning and at the end of the financial year.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit which is required to be disclosed by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in the accompanying financial statements. Certain directors received remuneration from a related corporation in their capacity as directors and/or executives of the related corporation.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares or options of the Company or of related corporations either at the beginning or at the end of the financial year.

Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objective is, to enable the directors of the company to acquire benefits through the acquisition of shares in or debentures of the Company or any other body corporate.

report of the directors



report of the directors (cont’d)

SHARE OPTIONS

(a) No options were granted by the Company or any of its subsidiary during the financial year to subscribe for unissued shares of the Company or its subsidiary.

(b) No shares were issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiary.

(c) There were no unissued shares of the Company or its subsidiary under option at the end of the financial year.

AUDIT COMMITTEE

The Audit Committee of the Company, consisting all non-executive directors, is chaired by Mr. Tsang Siu For Thomas, an independent director, and includes Mr. Ng Weng Wei, an independent director and Dr. Fu Xiao Bin, an independent director. The Audit Committee performs the functions specified in Section 201B of the Act, the SGX listing manual and the Code of Corporate Governance. The Audit Committee has met four times since the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant, with the directors and external and internal auditors of the Company:

(a) evaluation of the Group’s systems of internal accounting controls;

(b) the Group’s financial and operating results and accounting policies;

(c) the financial statements of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors’ report on those financial statements;

(d) quarterly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;

(e) the co-operation and assistance given by the management to the Group’s independent auditors;

(f) the re-appointment of the external auditors of the Group; and

(g) interested person transactions (as defined in Chapter 9 of the SGX listing manual).

The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, Mazars LLP, Public Accountants and Certified Public Accountants, be nominated for re-appointment as external auditors at the forthcoming AGM of the Company.

INDEPENDENT AUDITORS

Mazars LLP, Public Accountants and Certified Public Accountants, have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

Choi Cheung Kong Lin Wen Chang Director Director

31 March 2011



In our opinion,

(a) the accompanying financial statements are drawn up so as to give a true and fair view of the state of affairs of Group and of the Company as at 31 December 2010 and of the results of the business, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) 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.

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

On behalf of the Board of Directors

Choi Cheung Kong Lin Wen Chang Director Director

31 March 2011

statement by the directors



Report on the Financial Statements

We have audited the accompanying financial statements of CHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITED (the “Company”) and its subsidiary (the “Group”) which comprise the statements of financial position of the Group and the Company as at 31 December 2010, the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated statement of cash flows of the Group and statement of changes in equity of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 68.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for 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 accounts and balance sheets and to maintain accountability of assets.

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 auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal controls 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 controls. 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, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, 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.

MAZARS LLP PUBLIC ACCOUNTANTS AND CERTIFIED PUBLIC ACCOUNTANTS

Chang Fook KayPartner-in-charge

Singapore: 31 March 2011

report of the independent auditors



GroupNote 2010 2009

RMB’000 RMB’000

Revenue 3 1,357,430 832,641

Cost of sales (998,539) (670,974)

Gross profit 358,891 161,667

Other income 4 4,892 2,006

Distribution costs (1,787) (2,159)

Administrative expenses (15,327) (11,714)

Other operating expenses (4,100) (2,329)

Finance costs 5 (2,373) (2,691)

Profit before income tax 6 340,196 144,780

Income tax expense 9 (88,150) (38,101)

Profit for the year attributable to equity holders of the Company

252,046 106,679

Other comprehensive income – –

Total comprehensive income for the year attributable to equity holders of the Company 252,046 106,679

Earnings per share for profit attributable to equity holders of the Company (RMB cents)

- Basic and diluted 10 25.40 11.50

consolidated statement of comprehensive incomefor the year ended 31 december 2010

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




statements of financial positionas at 31 december 2010

Group CompanyNote 2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

AssetsNon-current assetsProperty, plant and equipment 11 273,553 290,310 15 22Intangible assets 12 109 111 – –Investment in a subsidiary 13 – – 83,732 80,998Other asset 14 16,000 10,000 – –

289,662 300,421 83,747 81,020

Current assetsIntangible assets - current portion 12 2 2 – –Inventories 15 74,459 54,937 – –Trade and other receivables 16 438,447 246,653 20,942 29,969Amounts owing by subsidiary 17 – – 307,979 261,443Cash and cash equivalents 18 733,438 419,764 173,826 1,293

1,246,346 721,356 502,747 292,705

Total assets 1,536,008 1,021,777 586,494 373,725

Equity and liabilitiesEquity attributable to equity

holders of the CompanyShare capital 19 551,535 337,799 551,535 337,799Treasury shares 20 (1,028) – (1,028) –Merger reserve 21 11,491 11,491 – –Statutory reserves 22 93,174 80,243 – –Accumulated profits 571,405 365,338 34,952 34,151Total equity 1,226,577 794,871 585,459 371,950

Current liabilitiesTrade and other payables 23 233,640 159,253 1,035 720Amount owing to a related party 24 – 1,002 – 1,002Interest-bearing liabilities 25 45,000 45,000 – –Provision for taxation 30,791 21,651 – 53

309,431 226,906 1,035 1,775Total liabilities 309,431 226,906 1,035 1,775

Total equity and liabilities 1,536,008 1,021,777 586,494 373,725




consolidated statement of changes in equityfor the year ended 31 december 2010

Attributable to equity holders of the Company

Share Treasury Merger Statutory Accumulated TotalGroup Note Capital Shares Reserve Reserves Profits Equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2009 337,799 – 11,491 74,655 339,871 763,816

Total comprehensive income for the year – – – – 106,679 106,679

Dividend paid 29 – – – – (75,624) (75,624)

Transfer from accumulated profits to statutory reserves 21 – – – 5,588 (5,588) –

At 31 December 2009 337,799 – 11,491 80,243 365,338 794,871

At 1 January 2010 337,799 – 11,491 80,243 365,338 794,871

Total comprehensive income for the year – – – – 252,046 252,046

New shares allotted and issued for cash, net of expenses 19 189,851 – – – – 189,851

Scrip issued in lieu of dividends 19, 29 23,885 – – – (23,885) –

Dividend paid 29 – – – – (9,163) (9,163)

Purchase of treasury shares 20 – (1,028) – – – (1,028)

Transfer from accumulated profits to statutory reserves

21– – – 12,931 (12,931) –

At 31 December 2010 551,535 (1,028) 11,491 93,174 571,405 1,226,577




statement of changes in equityfor the year ended 31 december 2010

Share Treasury TotalCompany Note Capital Shares Profits Equity

RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2009 337,799 – 79,148 416,947

Total comprehensive income for the year – – 30,627 30,627

Dividend paid 29 – – (75,624) (75,624)

At 31 December 2009 337,799 – 34,151 371,950

At 1 January 2010 337,799 – 34,151 371,950

Total comprehensive income for the year – – 33,849 33,849

New shares allotted and issued for cash, net of expenses 19 189,851 – – 189,851

Scrip issued in lieu of dividends 19, 29 23,885 – (23,885) –

Dividend paid 29 – – (9,163) (9,163)

Purchase of treasury shares 20 – (1,028) – (1,028)

At 31 December 2010 551,535 (1,028) 34,952 585,459



GroupNote 2010 2009

RMB’000 RMB’000

Operating activitiesProfit before income tax 340,196 144,780Adjustments for:

Depreciation of property, plant and equipment 11 32,110 30,501Amortisation of land use rights 12 2 3Amortisation of other asset 14 4,000 –Bad debts written off 6 – 346Loss from disposal of property, plant and equipment 6 – 630Interest expense 5 2,373 2,691Interest income 4 (3,881) (1,651)

Operating profit before working capital changes 374,800 177,300

Changes in working capital:Inventories (19,522) (3,410)Trade and other receivables (118,855) 72,102Trade and other payables 74,387 20,129

Cash generated from operations 310,810 266,121Interest received 3,881 1,651Income taxes paid (79,010) (41,912)

Cash flows generated from operating activities 235,681 225,860

Investing activitiesPurchases of property, plant and equipment (6,194) (32,569)Proceeds from disposal of property, plant and equipment – 57Deposits paid for application of land-use right 16 (18,750) –Deposits paid for purchase of plant and equipment (63,348) –Payment for other asset 10 (10,000) (10,000)

Cash flows used in investing activities (98,292) (42,512)

Financing activitiesRepayment of bank loans (45,000) (45,000)Proceeds from bank loans 45,000 45,000Payment of amount owing to a related party (1,002) (49,380)Purchase of treasury shares (1,028) –Dividend paid 29 (9,163) (75,624)Interest paid (2,373) (2,691)Net proceeds from issue of shares 19 189,851 –

Cash flows generated from/(used in) financing activities 176,285 (127,695)

Net increase in cash and cash equivalents 313,674 55,653Cash and cash equivalents at the beginning of the year 419,764 364,111Cash and cash equivalents at the end of the year 18 733,438 419,764

During the financial year ended 31 December 2010, the Group acquired plant and equipment with an aggregate cost of approximately RMB15,353,000 (2009: RMB115,080,000) by utilising RMB9,159,000 (2009: RMB82,511,000) of the deposits of RMB29,736,000 (2009: RMB112,247,000) paid in the previous financial year with cash payment of RMB6,194,000 (2009: RMB32,569,000).


consolidated statement of cash flowsfor the year ended 31 december 2010



These notes form an integral part of and should be read in conjunction with the accompanying financial statements. The Board of directors has authorised the financial statements for issue on 31 March 2011.

1. DOMICILE AND ACTIVITIES

China Taisan Technology Group Holdings Pte. Ltd., is incorporated in the Republic of Singapore on 2 July 2007. On 16 April 2008, the Company was converted into a public limited company and changed its name to China Taisan Technology Group Holdings Limited (the “Company”) from that date.

The Company’s registered office is at 80 Robinson Road #17-02, Singapore 068898. The principal activity of the Company is that of investment holding. The principal activity of its subsidiary, Jinjiang Lianjie Textile & Printing Dyeing Industrial Co., Ltd (晋江连捷纺织印染实业有限公司), is set out in Note 13 to the consolidated financial statements. The principal place of business of the subsidiary is at Zhendong Development Area, Dongcheng, Dongshi Town, Jinjiang City, Fujian Province, People’s Republic of China (“PRC”) (福建省晋江市东石镇东埕振东开发区).

The consolidated financial statements relate to the Company and its subsidiary (herein referred to as the “Group”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

During the year, the Group and the Company adopted the new or revised FRS and Interpretations to FRS (INT FRS) that are mandatory for application from that date. Changes to the Group’s and Company’s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS.

On 1 January 2010, the Group and the Company have adopted the applicable FRS or INT FRS as follows:

FRS 27 (revised 2008) Consolidated and Separate Financial Statements which became effective as of 1 July 2009 requires an entity to account for acquisitions and disposals that do not result in a change of control as equity transactions. Transactions resulting in a loss of control would cause a gain or loss to be recognised in profit or loss notwithstanding a residual interest remains in the acquiree after the disposal. Losses applicable to non-controlling interests, including negative other comprehensive income are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a negative balance.

FRS 103 (revised 2009) Business Combinations which became effective as of 1 July 2009 requires the acquirer to expense all acquisition related costs in a business combination in the period as incurred, with contingent consideration acquired to be measured at fair value at acquisition date and subsequently re-measure through profit or loss. The acquirer can elect to measure any non-controlling interest at fair value at the acquisition date, or at its proportionate interest in the fair value of the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis. When an acquisition is achieved in successive share purchases (step acquisition), the identifiable assets and liabilities of the acquiree are recognised at fair value when control is obtained; and a gain or loss is recognised in profit or loss for the difference between the fair value of the previously held equity interest in the acquiree and its carrying amount. Any amount relating to previously held equity interests in the acquiree that was recognised directly in other comprehensive income is reclassified and included in the calculation of gain or loss recognised in profit or loss. Acquisitions of additional non-controlling equity interests after the business combinations are accounted for as equity transactions. Disposals of equity interests while retaining control are accounted for as equity transactions. Transactions resulting in a loss of control result in a gain or loss being recognised in profit or loss. The gain or loss includes a remeasurement to fair value of any retained equity interest in the investee.

notes to the financial statements



notes to the financial statements (cont’d)

Amendments to FRS 7 Cash Flow Statements (effective for annual periods beginning on or after 1 January 2010) Under the amendment, only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Previously, such expenditure could be classified as investing activities in the statement of cash flows. The adoption of the above FRS did not have any significant impact on the Group’s accounting policy and financial statements.

The financial statements have been prepared on a historical cost basis except as disclosed in the significant accounting policies set out below. The financial statements are presented in Renminbi (RMB thousands unless otherwise stated).

Critical accounting estimates, assumptions and judgements

The preparation of consolidated financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. 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.

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Apart from information disclosed elsewhere in these consolidated financial statements, the following summarises estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year and significant judgements made in the process of applying the Group’s accounting policies:-

(i) Impairment of receivables

The Group makes allowance for impairment based on an assessment of the recoverability of trade and other receivables. Allowance is applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful receivables requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying amount of trade and other receivables and the allowance for impairment in the financial year in which such estimate has been changed. The carrying amount of the Group’s trade and other receivables as at 31 December 2010 was approximately RMB438,447,000 (2009: RMB246,653,000).

(ii) Depreciation of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their economic useful lives estimated to be within 5-20 years, net of residual value. The carrying amount of the Group’s property, plant and equipment as at 31 December 2010 was approximately RMB273,553,000 (2009: RMB290,310,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation could be revised.

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

2.1 Basis of preparation (cont’d)




(iii) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitor actions in response to severe industry cycles. Management will reassess the estimations at the end of the reporting period. The carrying amount of the Group’s inventories as at 31 December 2010 was approximately RMB74,459,000 (2009: RMB54,937,000).

(iv) Income taxes

The Group is subject to income taxes in different jurisdictions. Significant judgement is required in determining the capital allowance and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimation of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the year in which such determination is made. The carrying amount of the Group’s provision for taxation as of 31 December 2010 was approximately RMB30,791,000 (2009: RMB21,651,000).

2.2 Basis of consolidation

Business combinations

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognized as expenses in the periods in which the costs are incurred and the services are received. When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with FRS 39 - Financial Instruments – Recognition and Measurement- either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognized in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognized on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree identifiable net assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill (if any). In instances where the latter amount exceeds the former, the excess is recognized as gain on bargain purchase in profit or loss on the acquisition date.


2.1 Basis of preparation (cont’d)

Critical accounting estimates, assumptions and judgements (cont’d)





2.2 Basis of consolidation (cont’d)

Subsidiary

A subsidiary is a company controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. The Company generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the Board of Directors. The financial statements of the subsidiary used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. The financial statements of subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Transactions eliminated on consolidation

Intra-group balance and transactions, and any realised and unrealised income or expenses arising from intra-group transactions, are eliminated in full when preparing the consolidated financial statements.

Accounting for subsidiary by the Company

Investments in subsidiary are stated in the Company’s separate financial statements at cost less impairment losses.

2.3 Functional and presentation currency

The individual financial statements of each entity within the Group are presented in the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the Company, and the subsidiary is the RMB and the consolidated financial statements are presented in RMB. All financial information presented in RMB has been rounded to the nearest thousand (“RMB’000”) unless otherwise stated.

2.4 Foreign currencies transactions

Transactions in foreign currencies are translated at foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into RMB at foreign exchange rates ruling at that date. Foreign exchange differences arising from translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in a foreign currency are translated using exchange rates at the date of the transaction. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to RMB at foreign exchange rates ruling at the dates the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in foreign operations (refer to Note 2.6).

2.5 Foreign operations

The assets and liabilities of foreign operations are translated to RMB at exchange rates prevailing at the end of the reporting period. The income and expenses of foreign operations are translated to RMB at exchange rates prevailing at the dates of the transactions.

Foreign currency differences are recognised in the foreign currency translation reserves. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserves is transferred to profit or loss as part of the gain or loss on disposal of the foreign operation.





2.6 Net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations are recognised in the Company’s profit or loss. Such exchange differences are reclassified to the foreign currency translation reserve on consolidation in the financial statements. When the hedged net investment is disposed of, the cumulative amount in the foreign currency translation reserve on consolidation is transferred to profit or loss as an adjustment to profit or loss arising on disposal.

2.7 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue is recognised when goods are delivered at the customers’ premises or collected by the customers at the Group’s premises which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership.

(ii) Rendering of services

Revenue is recognised when services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual services provided as a proportion of the total services to be performed.

(iii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method.

(iv) Government grant

Government grants are not recognised until there is reasonable assurance that the grants will be received and that the Group will comply with conditions applying to them. Grants are recognised in profit or loss on a systematic basis matching them with the related costs for which the grants are intended to compensate.

2.8 Operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

2.9 Employee benefits

Contributions to defined contribution plans including Central Provident Fund (“CPF”) contributions are recognised as an expense in profit or loss as incurred.

Short term benefits

Salaries, wages, allowances, bonuses and social security contributions are recognised as an expense in the financial year in which the services are rendered by the employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlements to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Non-monetary benefits such as medical care and other staff related expenses are charged to profit or loss as and when incurred.



notes to the fi nancial statements (cont’d)


2.9 Employee benefi ts (cont’d)

Defi ned contribution plans

The Group participates in the national pension schemes as defi ned by the laws of the countries in which it has operations. Contributions to national pension schemes are recognised as an expense in the period in which the related service is performed. Companies incorporated in the PRC are required to provide certain staff pension benefi ts for their employees under existing PRC legislation. Pension contributions are provided at rates stipulated by the PRC legislation and are contributed to a pension fund managed by government agencies, which are responsible for paying pensions to the retired employees. These benefi ts are accounted for on an accrual basis and charged to profi t or loss when incurred.

These national pension schemes are dealt with as payments to defi ned contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defi ned contribution retirement benefi t plan.

2.10 Research and development costs

Expenditure on research activities, undertaken with the prospect of gaining new scientifi c or technical knowledge and understanding, is recognised in profi t or loss as an expense when it is incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the products or processes are technically and commercially feasible, future economic benefi t are probable, and the Group intends to and has suffi cient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of material, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.

Other development expenditure is recognised in profi t or loss as an expense when it is incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation in respect of the prepayment for research and development collaboration fee is charged to profi t or loss for every successful product developed by the PRC university that has been delivered to the Group. Development expenditure is amortised during the fi nancial year due to the limited short product life cycle for performance fabric.

2.11 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event where it is probable that it will result in an outfl ow of economic benefi ts that can be reasonably estimated.

2.12 Impairment

Impairment of fi nancial assets

A fi nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash fl ows of that asset. An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash fl ows discounted at the original effective interest rate.

Individually signifi cant fi nancial assets are tested for impairment on an individual basis. The remaining fi nancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profi t or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For fi nancial assets measured at amortised cost, the reversal is recognised in profi t or loss.


ChinaTaisan_AR10_FS_2.indd 45ChinaTaisan_AR10_FS_2.indd 45 4/4/2011 9:19:19 PM4/4/2011 9:19:19 PM



2.12 Impairment (cont’d)

Impairment - non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories are reviewed at each end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

Impairment losses are recognised in profit or loss unless they reverse a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Calculations of recoverable amount

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generated largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortisation, if no impairment loss had been recognised.

2.13 Finance costs

Interest expense and similar charges are expensed to profit or loss in the period in which they are incurred.

The interest component of interest-bearing liabilities is recognised in profit or loss using the effective interest method.

2.14 Income tax

Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.





2.15 Deferred tax

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets or liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is, however, not recognised on temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and differences relating to investment in subsidiary to the extent that it is probable that they will not reverse in the foreseeable future and the timing of reversal of the temporary differences can be controlled by the Group. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets or liabilities, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

2.16 Property, plant and equipment

(a) Owned assets

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

(b) Depreciation

Depreciation is provided on the straight-line basis so as to write off the cost of property, plant and equipment over their estimated useful lives net of estimated residual value on the cost of the asset as follows:

Leasehold buildings 20 years Plant and machinery 5 - 10 years Office equipment 5 years Motor vehicles 10 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at the end of each reporting period.

(c) Cost

Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Fully depreciated assets are retained in the consolidated financial statements until they are no longer in use. The gain or loss on disposal or retirement of an item of property, plant and equipment recognised in profit or loss is the difference between the net sale proceeds and the carrying amount of the relevant asset.

(d) Subsequent measurement

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.





2.17 Intangible assets

Land use rights

The cost of acquisition of land use rights is capitalised and amortised on a straight-line basis over the lease terms of the land of 50 years. The portion of the land use rights to be amortised over the next 12 months is reflected as current assets. The amortisation expense is recognised in profit or loss.

2.18 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined on the weighted average formula and comprises all cost of purchases, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised in profit or loss in the period in which the reversal occurs.

2.19 Trade and other receivables

Trade and other receivables and amounts owing by subsidiary are classified as loans and receivables financial assets, and are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any impairment loss.

2.20 Cash and cash equivalents

Cash and cash equivalents are classified as loans and receivables financial assets, and comprise cash on hand and bank balances with financial institutions. Cash and cash equivalent are short-term, highly liquid investments readily convertible to known amounts of cash and subject to an insignificant risk of changes in value and have a short-maturity of generally within three months when acquired.

2.21 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from the share capital account, net of any tax effects.

2.22 Treasury Shares

When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the consideration paid including any directly attributable incremental cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or re-issued. When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company.

When treasury shares are subsequently sold or re-issued pursuant to the employee share option scheme, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or re-issue, net of any directly attributable incremental transaction costs and related income tax, is recognised in capital reserve.





2.23 Merger reserve

In applying the pooling-of-interest method, the financial statements of the entities under common control are consolidated as if the current structure of the Group has been in existence since date of incorporation of the Company. The statement of comprehensive income and statement of cash flows include the results of operations and cash flows of the entities under common control. The assets and liabilities are brought into the statements of financial position at their existing carrying amounts. Any difference between the paid-up capital of the Company and the amount of share capital acquired is adjusted against equity as a merger reserve.

2.24 Statutory reserves

The statutory reserves of the Group comprise the following:

(a) Statutory common reserve

In accordance with relevant PRC regulations, the subsidiary is required to transfer a portion of its net profit to the statutory common reserve until the reserve reaches 50% of its registered capital. The transfer to this reserve must be made before the payment of dividends to shareholders.

The statutory common reserve can only be used to set off against losses or to increase the capital of the subsidiary. The subsidiary may convert its statutory common reserve into share capital provided that the remaining balance of such reserve is not less than 25% of the registered capital of the subsidiary.

(b) Statutory welfare reserve

In accordance with relevant PRC regulations, the subsidiary is encouraged to transfer a portion of its net profit to the statutory welfare reserve.

2.25 Liabilities and interest-bearing liabilities

Trade and other payables and amounts owing to a related party are classified as financial liabilities measured at amortised cost, and are recognised initially at fair value and subsequently at amortised cost using the effective interest method. Interest-bearing liabilities are recognised initially at cost less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on effective interest basis.

2.26 Financial instruments

Financial assets

Financial assets within the scope of FRS 39 Financial Instruments: Recognition and Measurement (“FRS 39”) are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial assets are recognised on the statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each year-end. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset.





2.26 Financial instruments (cont’d)

Financial assets (cont’d)

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

Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Trade and other receivables, amount owing by subsidiary, cash and cash equivalents of the Group are classified as loans and receivables.

Financial liabilities

Financial liabilities within the scope of FRS 39 are classified as either financial liabilities measured at amortised costs such as trade and other payables, amount owing to a related party and interest-bearing liabilities.

Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

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 and payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instruments or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments other than those financial instruments “at fair value through profit or loss”.

Derecognition of financial assets and liabilities

(a) Financial assets

Financial assets are derecognised from the statement of financial position when the Group has transferred substantially all risks and rewards of ownership.

(b) Financial liabilities

A financial liability is derecognised from the statement of financial position when the obligation under the liability is discharge, cancelled or expired.

2.27 Operating segment

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses relate to transaction with any of the Group’s other component. Operating results from operating segments are reviewed regularly by the Group’s Chief Executive Officer, who is the chief operating decision maker, to make decision about resources to be allocated and assess its performance, and for which discrete financial information is available.





2.28 Related parties

A party is related to the Group if:

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

(b) the party is an associate of the Group; (c) the party is a joint venture in which the Group is a venturer; (d) the party is a member of the key management personnel of the Group or its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); (f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which

significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or

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

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group.

2.29 Future changes in FRS

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

Description Effective for annual periods beginning

on or after

Amendment to FRS 32 Financial Instruments: Presentation Classification of 1 February 2010 Rights Issues

INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments 2 1 July 2010

Revised FRS 24 Related Party Disclosures 1 January 2011

Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement 1 January 2011

INT FRS 115 Agreements for the Construction of Real Estate 1 January 2011

Amendments to FRS 101 Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 July 2011

Amendments to FRS 107 Disclosures – Transfers 1 July 2011

The Conceptual Framework for Financial Reporting 2010 (Chapters 1 and 3) 1 March 2011

Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012

Except for the revised FRS 24, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 24 is described below.




2.29 Future changes in FRS (cont’d)

Revised FRS 24 Related Party Disclosures

The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that person’s family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the definition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group or the Company when implemented in 2011.

3. REVENUEGroup

2010 2009RMB’000 RMB’000

Manufacturing and sale of performance fabrics 1,311,957 795,256Fabric processing services 45,473 37,385

1,357,430 832,641

4. OTHER INCOMEGroup

2010 2009RMB’000 RMB’000

Interest income from cash with banks 3,881 1,651Government grants 843 31Exchange gain (net) 89 –Sales of scrap 79 324

4,892 2,006

Government grants relate to (i) monetary incentives received from governmental agencies in the PRC as incentives for pollution prevention and control measures and, (ii) amount received under the jobs credit scheme in Singapore.

5. FINANCE COSTSGroup

2010 2009RMB’000 RMB’000

Interest expense on bank loans at amortised cost 2,373 2,691

The effective interest rate of the bank loans was 5.44% (2009: 5.98%) per annum.





6. PROFIT BEFORE INCOME TAX

The following items have been charged / (credited) in arriving at profi t before income tax:

GroupNote 2010 2009

RMB’000 RMB’000

Amortisation of land use rights 12 2 3Amortisation of other asset 14 4,000 –Bad debts written off – 346Cost of inventories recognised as expenses 621,715 583,616Depreciation of property, plant and equipment 11 32,110 30,501Directors’ fee – directors of the Company 530 415Directors’ remuneration 8 3,025 1,748Exchange (gain)/loss (net) (89) 1,338Government grants 4 (843) (31)Loss from disposal of property, plant and equipment – 630Operating lease expense 133 16Staff costs 7 15,883 15,581

7. STAFF COSTSGroup

Note 2010 2009RMB’000 RMB’000

Salaries and bonus (excluding directors’ remuneration) 12,801 13,256Staff welfare 2,096 1,461

14,897 14,717

Staff costs – key management personnel 8 986 86415,883 15,581

Salaries and bonus include payment to defi ned contribution plan (national pension schemes) amounting to approximately RMB2,144,000 (2009: RMB1,651,000).

8. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel consist of the directors of the Company and its subsidiary, fi nancial controller and sales & marketing manager of the subsidiary, and their remuneration are disclosed as follows:

Group2010 2009

RMB’000 RMB’000Directors’ remuneration

Directors’ of the Company- Salaries and bonuses 3,022 1,745- Defi ned contribution plan 3 3

Directors’ remuneration 3,025 1,748


ChinaTaisan_AR10_FS_2.indd 53ChinaTaisan_AR10_FS_2.indd 53 4/4/2011 9:19:11 PM4/4/2011 9:19:11 PM


8. KEY MANAGEMENT PERSONNEL COMPENSATION (cont’d)

Group2010 2009

RMB’000 RMB’000Other key management personnel compensation

Other key management personnel- Salaries and bonuses 934 816- Defined contribution plan 52 48

986 864

4,011 2,612

9. INCOME TAX EXPENSE Group

2010 2009RMB’000 RMB’000

Current tax expenseCurrent year 88,150 38,048Under-provision in prior year – 53Total income tax expense 88,150 38,101

The tax expense on the results for the financial years differs from the amount of income tax determined by applying statutory income tax rates of the respective countries to profit before income tax as a result of the following:

Group2010 2009

RMB’000 RMB’000

Profit before income tax 340,196 144,780

Tax using the PRC tax rate of 25% 85,049 36,195

Tax effect of:Non-deductible item 1,161 1,060Under-provision in prior year – 53Effect of different tax rate in other country * 1,940 793Income tax expense 88,150 38,101

* The Company operates in a tax jurisdiction with lower tax rates.

Pursuant to the PRC Enterprise Income Tax Law (中华人民共和国企业所得税法) which was promulgated on 16 March 2007 and went into effect on 1 January 2008, the income tax law of the PRC on foreign-invested enterprises and foreign enterprises was abolished and the income tax for both domestic and foreign-invested enterprise will be unified at 25% effective from 1 January 2008. However, there will be a transition period for enterprises that currently receive preferential tax treatments granted by the tax authorities. Enterprises that are subject to an enterprise income tax rate lower than 25% may continue to enjoy the lower rate and gradually transfer to the new tax rate within five years after the effective date of the new enterprise income tax law. Enterprises that are currently entitled to exemptions or reductions from the standard income tax rate for a fixed term may continue to enjoy such treatment until the fixed term expires.




9. INCOME TAX EXPENSE (cont’d)

Pursuant to the PRC Enterprise Income Tax Law (中华人民共和国企业所得税法) which was promulgated on 22 February 2008, dividends distributed by PRC entities for profits generated before 1 January 2008 are exempt from withholding tax. Dividend paid in respect of profits generated on or after 1 January 2008 will be subject to a withholding tax of 5%.

10. EARNINGS PER SHAREGroup

2010 2009RMB’000 RMB’000

Basic earnings per share is based on:(i) Net profit attributable to equity holders of the Company 252,046 106,679

Group2010 2009

No. of shares No. of shares’000 ’000

(ii) Weighted average number of ordinary shares 992,303 927,900

No diluted earnings per share are presented as there is no dilutive instrument issued as at the end of the financial years ended 31 December 2010 and 2009.

The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

11. PROPERTY, PLANT AND EQUIPMENT

Leasehold Plant and Office MotorGroup buildings machinery equipment vehicles Total

2010 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000CostAt 1 January 2010 31,785 358,877 1,026 2,966 394,654Additions 149 14,805 6 393 15,353At 31 December 2010 31,934 373,682 1,032 3,359 410,007

Accumulated DepreciationAt 1 January 2010 14,137 88,865 617 725 104,344Depreciation for the year 1,924 29,553 139 494 32,110At 31 December 2010 16,061 118,418 756 1,219 136,454

Net Carrying ValueAt 31 December 2010 15,873 255,264 276 2,140 273,553




11. PROPERTY, PLANT AND EQUIPMENT (cont’d)

Leasehold Plant and Office MotorGroup buildings machinery equipment vehicles Total

2009 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000CostAt 1 January 2009 24,195 252,252 1,001 2,966 280,414Additions 7,590 107,465 25 – 115,080Disposal – (840) – – (840)At 31 December 2009 31,785 358,877 1,026 2,966 394,654

Accumulated DepreciationAt 1 January 2009 12,898 60,535 253 310 73,996Depreciation for the year 1,239 28,483 364 415 30,501Disposal – (153) – – (153)At 31 December 2009 14,137 88,865 617 725 104,344

Net Carrying ValueAt 31 December 2009 17,648 270,012 409 2,241 290,310

Company Office equipment2010 RMB’000CostAt 1 January 2010 25Additions 6At 31 December 2010 31

Accumulated DepreciationAt 1 January 2010 3Depreciation for the year 13At 31 December 2010 16

Net Carrying ValueAt 31 December 2010 15

Company Office equipment2009 RMB’000CostAdditions during the year and balance at 31 December 2009 25

Accumulated DepreciationDepreciation for the year and balance at 31 December 2009 3

Net Carrying ValueAt 31 December 2009 22

Other than office equipment held by the Company, all items of property, plant and equipment held by the Group are located at Zhendong Development Area, Dongcheng, Dongshi Town, Jinjiang City, Fujian Province, PRC (福建省晋江东石镇东埕振东开发区).

The Group has pledged property, plant and equipment having net carrying value of approximately RMB5,199,000 (2009: RMB5,863,000) to secure borrowings granted to the Group (Note 25).




11. PROPERTY, PLANT AND EQUIPMENT (cont’d)

The Group is in the process of applying for the property ownership certificate in respect of certain leasehold buildings of the subsidiary from the relevant PRC authorities with an aggregated carrying amount of approximately RMB22,304,000 (2009: RMB20,894,000).

As at 31 December 2010, the estimated costs of applying for the property ownership certificate and land use rights (Refer to Note 16 to the financial statements) from the PRC authorities is RMB5,000 (2009: RMB5,000) and RMB124,000 (2009: RMB124,000) respectively.

12. INTANGIBLE ASSETS

Group Company2010 2009 2010 2009

Land use rights RMB’000 RMB’000 RMB’000 RMB’000

At beginning of the year 113 116 – –Amortisation (2) (3) – –At end of the year 111 113 – –

Amortisation due within:Next 12 months – current portion 2 2 – –More than 12 months – non-current portion 109 111 – –

111 113 – –

The land use rights represent medium-term land use rights situated in the PRC. The Group has pledged its land use rights to secure borrowings granted to the Group (Note 25). Amortisation is provided to write off the land use rights over a period of 50 years.

13. INVESTMENT IN A SUBSIDIARY Company

2010 2009RMB’000 RMB’000

Unquoted shares, at cost 83,732 80,998

The following information relates to the subsidiary:

Name of Company Principal activities

Place ofbusiness/

Country ofIncorporation

Percentage of equity held Cost of investment

2010 2009 2010 2009% % RMB’000 RMB’000

Jinjang Lianjie Textile & Printing Dyeing IndustrialCo., Ltd *(晋江连捷纺织印染实业有限公司)

Manufacture of knitted textile, printing and dyeing of fabrics and engaged in the knitting and weaving of high quality fabrics

PRC 100 100 83,732 80,998

* Audited by Mazars LLP, Singapore for inclusion in the consolidated financial statements of the Group.




14. OTHER ASSETGroup Company

2010 2009 2010 2009RMB’000 RMB’000 RMB’000 RMB’000

Prepayment for research and development collaboration fee

At 1 January 10,000 – – –Additions 10,000 10,000 – –Amortisation (4,000) – – –At 31 December 16,000 10,000 – –

The subsidiary has entered into an agreement with a PRC university to embark on a research and development collaboration from 2010 onwards whereby the university would deliver 25 product research and development results over a period of at least 5 years for a total fee of RMB20,000,000. (Refer to Note 2.10).

15. INVENTORIESGroup Company

2010 2009 2010 2009RMB’000 RMB’000 RMB’000 RMB’000

Finished goods 23,668 33,789 – –Raw materials 45,188 18,870 – –Work-in-progress 5,603 2,278 – –

74,459 54,937 – –

16. TRADE AND OTHER RECEIVABLES

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Trade receivables – third parties 316,560 196,622 – –Other receivables 37,961 20,295 364 233Deposits 83,926 29,736 20,578 29,736

438,447 246,653 20,942 29,969

Trade and other receivables that are denominated in foreign currencies at end of the reporting period are as follows:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Singapore dollar 364 233 364 233US dollar 20,578 29,736 20,578 29,736

Trade receivables are non-interest bearing and are generally up to 90 days’ credit term. All trade receivables are denominated in RMB.

Other receivable consists of a payment to obtain land use rights for land occupied by the subsidiary amounting to approximately RMB18,874,000 (2009: RMB124,000). The Group is in the process of obtaining the land use rights from the relevant PRC authorities.




16. TRADE AND OTHER RECEIVABLES (cont’d)

Deposits relate to amounts placed by the Group to acquire new plant and machinery amounting to approximately RMB83,926,000 (2009: RMB29,736,000) (Note 27).

Impairment losses

The ageing of trade receivables at the end of the reporting period was:

Gross Impairment Gross ImpairmentGroup 2010 2010 2009 2009

RMB’000 RMB’000 RMB’000 RMB’000

Not past due 313,128 – 196,622 –Past due 0 – 90 days 3,432 – – –

316,560 – 196,622 –

Based on historical default experience, the Group believes that no impairment allowance is necessary in respect of the trade receivables due to the good payment track record of its customers.

17. AMOUNTS OWING BY SUBSIDIARYCompany

2010 2009RMB’000 RMB’000

Advances 170,706 160,023Deposit for capital application – 1,002Dividend receivable 137,273 100,418

307,979 261,443

The amount owing by subsidiary is unsecured, interest-free and repayable on demand.

Amount owing by subsidiary that are denominated in foreign currencies at the end of the reporting date is as follows:

Company2010 2009

RMB’000 RMB’000

Singapore dollar 18,120 16,752

18. CASH AND CASH EQUIVALENTS

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Cash on hand 68 135 –.* –.*Cash with banks 733,370 419,629 173,826 1,293

733,438 419,764 173,826 1,293

* The amount is less than RMB1,000.




The effective interest rate on cash with banks is 1.35% (2009: 1.17%) per annum.

Cash and bank balances that are denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

New Taiwan dollar 287 – 287 –Singapore dollar 10,362 1,293 10,362 1,293

The RMB is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for foreign currencies through banks that are authorised to conduct foreign exchange business.

19. SHARE CAPITALGroup and Company

2010 2009No. of shares RMB’000 No. of shares RMB’000

Issued and fully paid up ordinary share with no par value:At 1 January 927,900,000 337,799 927,900,000 337,799- issue of new shares for cash 155,000,000 189,851 – –- issue of shares for scrip dividend 26,687,735 23,885 – –At 31 December 1,109,587,735 551,535 927,900,000 337,799

All issued ordinary shares are fully paid. There is no par value for these ordinary shares. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.

A Scrip Dividend Scheme was declared and the directors had determined that the Scrip Dividend Scheme would be applicable to the final dividend in which shareholders entitled to this dividend may elect to receive either cash or an allotment of ordinary shares in the Company credited as fully paid in lieu of cash. As a result, 26,687,735 shares amounting to approximately RMB23,885,000 were allotted to eligible shareholders who have elected to participate in the Scrip Dividend Scheme in respect of the final dividend paid for the year ended 31 December 2009 in 2010. Details of the proposed final dividend for the year ended 31 December 2009 are included in note 29 to the financial statements.

On 13 May 2010, the Company has issued 30 million of new shares to a third party for a consideration of RMB28,333,000; the allotted shares have been fully paid for. On 6 October 2010, the Company has issued 125 million of new shares for the successful Taiwan Depository Receipts (TDR) listing at Taiwan stock exchange. The new TDR shares have been allotted, issued and fully paid for a consideration of RMB161,518,000. The total share issue expenses amounted to RMB2,547,000 for the year, which includes non-audit fees of RMB14,000 paid to external auditors.

18. CASH AND CASH EQUIVALENTS (cont’d)


ChinaTaisan_AR10_FS_2.indd 60ChinaTaisan_AR10_FS_2.indd 60 4/5/2011 10:21:25 AM4/5/2011 10:21:25 AM


20. TREASURY SHARESGroup and Company

2010 2009No. of shares RMB’000 No. of shares RMB’000

At 1 January – – – –Purchase during the year 1,000,000 1,028 – –At 31 December 1,000,000 1,028 – –

Treasury shares relate to ordinary shares of the Company that are purchased and held by the Company. Pursuant to the share buy back mandate approved by shareholders at the Annual General Meeting held on 23 April 2010, the Company purchased 1,000,000 (2009: Nil) shares by way of on-market purchase at S$0.20 (2009: Nil). The total amount paid to purchase the shares was RMB1,028,000 (2009: Nil).

21. MERGER RESERVE

The merger reserve represents the difference between the paid-up share capital of the Company and the share capital of the subsidiary acquired in financial year 2007 under the pooling-of-interests method of accounting.

22. STATUTORY RESERVES

The statutory reserves represent amounts transferred from profit after tax of the subsidiary established in the PRC under the PRC laws and regulations.

23. TRADE AND OTHER PAYABLES

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Trade payables 206,253 142,797 – –Accrued operating expenses 18,503 6,879 1,035 720Value-added tax payable 8,884 9,577 – –

233,640 159,253 1,035 720

Trade payables are non-interest bearing and are normally settled on 60 to 90 days’ credit term.

Accrued operating expenses that are denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Singapore dollar 1,035 988 1,035 720




24. AMOUNT OWING TO A RELATED PARTY

Group CompanyNote 2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000Due within 12 monthsAmounts owing to:- A shareholder – non-trade (a) – 1,002 – 1,002

(a) This relates to non-trade amounts owing to the Non-executive Chairman which is denominated in RMB, unsecured, interest-free and is repayable on demand within 12 months from the end of the reporting period.

25. INTEREST-BEARING LIABILITIES

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Bank loans – secured 45,000 45,000 – –

The bank loans are secured by a legal mortgage over certain leasehold buildings and land use rights with a net carrying value of RMB5,199,000 and RMB111,000 (2009: RMB5,863,000 and RMB113,000) respectively, and guaranteed by a company owned by a relative of the Non-executive Chairman and a director.

The carrying amounts of the bank loans approximate their fair values due to the relative short term to maturity. The Group’s bank loans are denominated in RMB. The effective interest rate for the bank loans is 5.44% (2009: 5.43%) per annum. All bank loans are repayable within one year from end of the reporting date.

26. SIGNIFICANT RELATED PARTY TRANSACTIONS

In addition to disclosures made elsewhere in the consolidated financial statements, the following significant transactions were carried out between the Group and its related parties on terms agreed between the parties as follows:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Payment of consultancy fee to a related party 180 180 – –

During 2009 and 2010, the Group engaged Mr. Cai Chang Jing, brother of Non-executive Chairman, as a management consultant and paid him a consultancy fee of RMB180,000 annually.

27. CAPITAL COMMITMENTS

Except as disclosed in this report, the capital commitments of the Group and the Company are as follows:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000Capital expenditure contracted but not provided

for in the consolidated financial statements:- Commitments in respect of the purchase of

property, plant and equipment 154,123 12,184 – –- Commitments in respect of the purchase of

land-use right 43,750 – – –197,873 12,184 – –




28. OPERATING LEASE ARRANGEMENT

At the end of the reporting period, the Group has outstanding commitments under non-cancellable operating leases, which fall due as follows:

Group2010 2009

RMB’000 RMB’000

Within one year 126 130Within two to five years – 119

126 249

Operating lease payments represent rental payable by the Group for its Singapore office. Lease is negotiable for an average term of two years and rental is fixed for the same period.

29. DIVIDENDS Group Company

2010 2009 2010 2009RMB’000 RMB’000 RMB’000 RMB’000

Final dividend paid 33,048 75,624 33,048 75,624

Final dividend was paid in respect of the year ended 31 December 2009 of 3.45 RMB cents per ordinary share, tax exempt totalling RMB33,048,000 comprising cash payments of approximately RMB9,163,000 and scrip dividend of approximately RMB23,885,000.

On 16 March 2011, the Company proposed a final tax exempt (one-tier) dividend of 2.27 RMB cents per ordinary share or approximately RMB25,165,000. The proposed dividend is subject to approval by shareholders of Company at its Annual General Meeting. The financial statements do not reflect the proposed dividend, which will be accounted for in the shareholders’ equity as an appropriation of retained earnings for the financial year ending 31 December 2011.

30. OPERATING SEGMENT

The Group is essentially a single operating segment by itself under FRS 108 Operating Segments, and no separate segment information is presented. As there is only one single operating segment, information on the reconciliation of the reportable segment as required under FRS 108 does not apply.

The entity-wide disclosures applicable to a single operating segment are as follows:

- all the revenue of the Group are from external customers who are domiciled in the PRC.- the majority of the assets of the Group are employed in PRC. - segment assets employed by the Group in a country other than the PRC as at 31 December 2010 was

approximately RMB31,606,000 (2009: RMB31,287,000). There are no non-current assets deployed outside of the PRC.

- no single external customer accounted for 10% or more of the Group’s revenue for the years ended 31 December 2009 and 2010.

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.




Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The Group prepares cash flows projections on a regular basis for its core operations to ensure as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. In addition, the Group has access to external borrowings (Note 25).

The table below analyses the maturity profile of the Group’s and Company’s financial liabilities based on contractual undiscounted cash flows as follows:

Less than 1 yearGroup RMB’000At 31 December 2010Trade and other payables 233,640Interest-bearing liabilities 45,000

278,640

Less than 1 yearGroup RMB’000At 31 December 2009Trade and other payables 159,253Amount owing to a related party 1,002Interest-bearing liabilities 45,000

205,255

Less than 1 yearCompany RMB’000At 31 December 2010Trade and other payables 1,035

Less than 1 yearCompany RMB’000At 31 December 2009Trade and other payables 720Amount owing to a related party 1,002

1,722

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or counter-party to settle its financial and contractual obligations to the Group, as and when they fall due.

The Group has established credit limits for customers and monitors their balances. Cash are placed with banks and financial institutions which are regulated. The Group minimises its credit risk exposure by trading with established and credit-worthy customers.

As at 31 December 2010, the Group’s trade receivables comprise 8 debtors (2009: 10 debtors) that individually represented more than 5% of trade receivables. The Group’s primary exposure to credit risk arises relating to trade receivables is limited due to the Group’s many varied customers. These customers are engaged in a wide spectrum of distribution and manufacturing activities, and sell in a variety of end markets.

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)




Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the end of the reporting date was:

Group Company2010 2009 2010 2009

RMB’000 RMB’000 RMB’000 RMB’000

Trade and other receivables 438,447 246,653 20,942 29,969Amounts owing by subsidiary – – 307,979 261,443Cash and cash equivalents 733,438 419,764 173,826 1,293 1,171,885 666,417 502,747 292,705

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet indentified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. No allowance for specific or collective impairment was made based on past experience.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Currency risk

Currency risk arises when transactions are denominated in currencies other than entities’ functional currencies (“foreign currency”). The Group is exposed to currency risk on its deposits denominated in US dollar relate to amounts placed to acquire new plant and machinery and cash deposits denominated in Singapore dollar.

At present, the Group does not have any formal policy for hedging against exchange exposure.

The carrying amounts of foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Group2010 2009

Singaporedollar US dollar

New Taiwan dollar


New Taiwan dollar


Trade and other receivables 364 20,578 – 233 29,736 –Cash and cash equivalent 10,362 – 287 1,293 – –Trade and other payable (1,035) – – (988) – –

9,691 20,578 287 538 29,736 –





Company2010 2009


New Taiwan dollar


New Taiwan dollar


Trade and other receivables 364 20,578 – 233 29,736 –Amounts owing by subsidiary 18,120 – – 16,752 – –Cash and cash equivalent 10,362 – 287 1,293 – –Trade and other payable (1,035) – – (720) – –

27,811 20,578 287 17,558 29,736 –

If the foreign currency changes against the RMB by 10% with all other variables including tax rate being held constant, the increase/(decrease) in profi t after tax and equity of the Group arising from the net fi nancial liability/asset position will be as follows:

2010 2010 2009 2009 Profi t after tax Equity Profi t after tax Equity

RMB’000 RMB’000 RMB’000 RMB’000GroupUS dollar against RMB- strengthened 2,058 2,058 2,974 2,974- weakened (2,058) (2,058) (2,974) (2,974)

Singapore dollar against RMB- strengthened 969 969 54 54- weakened (969) (969) (54) (54)

2010 2010 2009 2009 Profi t after tax Equity Profi t after tax Equity

RMB’000 RMB’000 RMB’000 RMB’000CompanyUS dollar against RMB- strengthened 2,058 2,058 2,974 2,974- weakened (2,058) (2,058) (2,974) (2,974)

Singapore dollar against RMB- strengthened 2,781 2,781 1,756 1,756- weakened (2,781) (2,781) (1,756) (1,756)





Fair values

The fair values of fi nancial assets and fi nancial liabilities, together with the carrying amounts shown in the statements of fi nancial position, are as follows:

Group Group2010 2009

RMB’000 RMB’000Carrying Fair Carrying Fairamounts values amounts values

Trade and other receivables 438,447 438,447 246,653 246,653Cash and cash equivalents 733,438 733,438 419,764 419,764Interest-bearing liabilities 45,000 45,000 45,000 45,000Trade and other payables 233,640 233,640 159,253 159,253Amount owing to a related party - current – – 1,002 1,002

Company Company2010 2009

RMB’000 RMB’000Carrying Fair Carrying Fairamounts values amounts values

Trade and other receivables 20,942 20,942 29,969 29,969Amounts owing by subsidiary 307,979 307,979 261,443 261,443Cash and cash equivalents 173,826 173,826 1,293 1,293Trade and other payables 1,035 1,035 720 720Amount owing to a related party – – 1,002 1,002

The notional amounts of fi nancial assets and fi nancial liabilities with a maturity of less than one year (including trade and other receivables, amount owing by subsidiary, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair value.

The Group does not hold financial assets nor derivative asset or liabilities carried at fair value or at valuation. Accordingly, the disclosure requirement of the fair value hierarchy (Levels 1, 2 & 3) under FRS 107 Financial Instruments Disclosures does not apply.

Interest rate risk

The Group is exposed to interest rate risk through the impact of interest rate changes on interest-bearing fi nancial liabilities. The Group’s policy is to maintain all its borrowings in fi xed rate instruments.

The following table sets out the carrying amount, by maturity, of the Group’s fi nancial instruments that are exposed to interest rate risk.

Group 2010 2009As at 31 December RMB’000 RMB’000

Within 1 yearFixed rate

Bank loans 45,000 45,000





Interest on fi nancial instruments subject to fi xed interest rates is contractually repriced at intervals of 12 months. Interest on fi nancial instruments at fi xed rates is fi xed until the maturity of the instrument. The other fi nancial instruments of the Group are not subjected to signifi cant interest rate risks.

For its fi xed rate interest-bearing liabilities, a change in 100 basis points (“bp”) in interest rate at the end of the reporting period would increase / (decrease) profi t after tax and equity by the amount shown below:

Increase or (decrease) inProfi t or loss / equity

100bp increase 100bp decreaseRMB’000 RMB’000

Year ended 31 December 2010

Interest-bearing liabilities (338) 338

Year ended 31 December 2009

Interest-bearing liabilities (338) 338

Capital management

The Group’s objectives when managing capital are to ensure the Group’s ability to continue as a going concern and to maintain an overall capital structure that delivers adequate short-term and optimal long term return on equity to the shareholders. The Group considers the cost of capital and the risks associated with each class of capital and balance its overall capital structure through the payment of dividends, new share issues and buy back of issued shares as well as the issue of new debts or the redemption of existing debts.

Management monitors capital based on the return on shareholders’ fund. The return on shareholders’ fund is calculated by taking net profi t attributable to the equity holders of the Company divided by average shareholders’ equity. The return on shareholders’ fund was 25.3% for current fi nancial year ended 31 December 2010 (2009: 14.0%) per annum.

The Group is not subject to any externally imposed capital requirements for the financial year ended 31 December 2010 and 2009.




Issued and fully paid-up capital : S$112,120,824Total number of issued shares excluding treasury shares : 1,108,587,735Total number of treasury shares : 1,000,000Class of shares : Ordinary sharesVoting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS

SIZE OFSHAREHOLDINGS

NO. OF SHAREHOLDERS

% OFSHAREHOLDERS

NO. OFSHARES

% OF ISSUEDSHARE CAPITAL

1 - 999 19 0.54 9,412 0.00

1,000 - 10,000 861 24.24 6,014,631 0.54

10,001 - 1,000,000 2,635 74.18 207,384,242 18.69

1,000,001 AND ABOVE 37 1.04 896,179,450 80.77

TOTAL 3,552 100.00 1,109,587,735 100.00

statistics of shareholdings as at 16 march 2011



TWENTY LARGEST SHAREHOLDERS

No. Name of Shareholder No. of Shares % of Issued Share Capital

1 UNITED OVERSEAS BANK NOMINEES PTE LTD 254,055,893 22.90

2 RAFFLES NOMINEES (PTE) LTD 167,101,336 15.06

3 HSBC (SINGAPORE) NOMINEES PTE LTD 86,699,863 7.81

4 UOB KAY HIAN PTE LTD 68,052,314 6.13

5 CIMB SECURITIES (SINGAPORE) PTE LTD 64,307,438 5.80

6 PHILLIP SECURITIES PTE LTD 48,626,254 4.38

7 KIM ENG SECURITIES PTE. LTD. 29,792,324 2.69

8 CITIBANK NOMINEES SINGAPORE PTE LTD 22,773,640 2.05

9 CHOI CHEUNG KONG 20,770,975 1.87

10 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 19,150,075 1.73

11 DBS NOMINEES PTE LTD 16,315,606 1.47

12 ONG KIM HUAT FELIX 16,088,000 1.45

13 OCBC SECURITIES PRIVATE LTD 14,897,481 1.34

14 MORGAN STANLEY ASIA (SINGAPORE) PTE LTD 10,320,000 0.93

15 FOO FATT KONG 7,000,000 0.63

16 SUNFIELD PTE LTD 6,000,000 0.54

17 LIM & TAN SECURITIES PTE LTD 5,514,000 0.50

18 TAN BOY TEE 5,200,000 0.47

19 GRALF MAX HANS SIEGHOLD 3,000,000 0.27

20 TAN YEW BOCK 2,800,000 0.25

TOTAL 868,465,199 78.27

SUBSTANTIAL SHAREHOLDERS (as recorded in the Register of Substantial Shareholders as at 16 March 2011)

Direct Interest Deemed Interest

Name of Substantial Shareholders No. of Shares % No. of Shares %

Choi Cheung Kong 20,770,975 1.87 358,171,236 32.31

Lin Wen Chang – – 105,388,605 9.50

SHAREHOLDERS HELD IN HANDS OF PUBLIC

Based on information available to the Company as of 16 March 2011, approximately 56.32% of the issued ordinary shares of the Company are held by the public and therefore Rule 723 of the Listing Manual of SGX-ST is complied with.

statistics of shareholdings (cont’d)



NOTICE IS HEREBY GIVEN that the Annual General Meeting of China Taisan Technology Group Holdings Limited will be held at Meeting Room 311, Level 3 Suntec Singapore International Convention & Exhibition Centre, 1 Raffles Boulevard, Suntec City, Singapore 039593 on 29 April 2011 at 3.00 p.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts for the financial year ended 31 December 2010 together with the Reports of the Directors and the Auditors of the Company.

2. To declare a final dividend of 2.27 RMB cents per ordinary share (tax exempt one tier) for the financial year ended 31 December 2010.

3. To re-elect the following Directors retiring pursuant to Article 96 of the Articles of Association of the Company:

(a) Mr Choi Cheung Kong

Mr Choi Cheung Kong will, upon re-election as a Director of the Company, remain an Non-Executive Chairman of the Company, a member of the Nominating Committee and a member of the Remuneration Committee.

(b) Dr Fu Xiao Bin

Dr Fu Xiao Bin will, upon re-election as a Director of the Company, remain an Independent Director of the Company, the Chairman of the Nominating Committee, a member of the Remuneration Committee and a member of the Audit Committee.

4. To approve the payment of Directors’ fees of S$105,000 to the Directors of the Company for

the financial year ended 31 December 2010. 5. To re-appoint Mazars LLP as Auditors of the Company and to authorise the Directors to fix their

remuneration.

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

AS SPECIAL BUSINESS

7. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications:

“Resolved that

(a) pursuant to Section 161 of the Companies Act, Cap. 50 (the “Act”) and Rule 806(2) 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 allot and issue shares and convertible securities in the Company 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 provided that the aggregate number of shares and convertibles securities to be issued pursuant to this Resolution does not exceed more than 50% of the total number of issued shares (excluding treasury shares), of which the aggregate number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders must be not more than 20% of the total number of issued shares (excluding treasury shares);

notice of annual general meeting

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)



(b) for the purpose of determining the aggregate number of shares that may be issued under (a) above, the percentage of issued share capital is based on the issued share capital of the Company (excluding treasury shares) at the time of the passing of this Resolution, after adjusting for:

(i) new shares arising from the conversion or exercise of convertible securities;

(ii) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual; and

(iii) any subsequent bonus issue, consolidation or subdivision of shares; and

(c) unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting 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 (i)]

8. To consider and, if thought fit, pass the following ordinary resolution with or without any modifications:

“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 all powers of the Company to purchase or otherwise acquire Shares, not exceeding in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be determined by the Directors from time to time up to the Maximum Price (as hereinafter defined), whether by way of:

(i) market purchase(s) (each a “Market Purchase”) transacted on the SGX-ST through the ready market or as the case may be, any other stock exchange on which the Shares may for the time being be listed and quoted, through 1 or more duly licensed stockbrokers appointed by the Company for the purpose; or

(ii) off-market purchase(s) (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access scheme(s) as may be determined or formulated by the directors of the Company as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by 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 varied or revoked by the Company in general meeting, the authority conferred on the Directors 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 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

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

notice of annual general meeting (cont’d)

(Resolution 7)



(c) in this Resolution:

“Prescribed Limit” means 10% of the number of issued Shares as at the date of passing of this Resolution; and

“Maximum Price” in relation to a Share to be purchased or acquired, means an amount (excluding brokerage, commission, stamp duties, applicable goods and services tax, clearance fees and other related expenses) not exceeding:

(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 pursuant to an equal access scheme, 115% of the Average Closing Price of the Shares;

where:

“Average Closing Price” means the average of the closing market prices of a Share over the last five market days on which transactions in the Shares were recorded on the SGX-ST immediately preceding the date of the Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant five-day period; and

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from holders of Shares, stating therein the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

the Directors and each of them be and are hereby authorised to deal with the shares purchased by the Company, pursuant to the Share Purchase Mandate in any manner as they think fit, which is allowable under the Companies Act.

the Directors and each 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 or he may consider necessary, desirable or expedient to give effect to the transactions contemplated by this Resolution.”

[See Explanatory Note (ii)]

By Order of the Board

Tan Swee GekCompany Secretary

13 April 2011


(Resolution 8)



Explanatory Notes:

(i) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of this Annual General Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company up to an amount not exceeding, in total, 50% of the issued share capital of the Company (excluding treasury shares); at the time of passing of this resolution, of which up to 20% may be issued other than on a pro-rata basis to shareholders. For the purpose of determining the aggregate number of shares which may be issued, the percentage of share capital shall be based on the Company’s issued share capital (excluding treasury shares) at the time this Ordinary Resolution is passed, after adjusting for (a) new shares arising from the conversion or exercise of convertible securities, (b) new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Ordinary Resolution is passed and (c) any subsequent consolidation or subdivision of shares.

(ii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors of the Company, from the date of this Annual General Meeting until the date the next annual general meeting is to be held or is required by law to be held, whichever is the earlier, to make purchases (whether by way of Market Purchases or Off-Market Purchases on an equal access scheme) from time to time of up to 10 per cent. of the total number of issued Shares excluding any Shares which are held as treasury shares by the Company, at prices up to but not exceeding the Maximum Price. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of financing and the financial effects of the purchase or acquisition of Shares by the Company pursuant to the Share Purchase Mandate are set out in greater detail in the Letter to Shareholders dated 13 April 2011.

Notes:

1) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company.

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

3) The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 80 Robinson Road, #17-02, Singapore 068898 at least 48 hours before the time of the Annual General Meeting.




failing which, the Chairman of the Meeting, as my/our proxy/proxies to attend and vote for me/us on my/our behalf at the second Annual General Meeting of the Company, to be held at Meeting Room 311, Level 3 Suntec Singapore International Convention & Exhibition Centre, 1 Raffles Boulevard, Suntec City, Singapore 039593 on 29 April 2011 at 3.00 p.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

No. Resolutions Relating To: For Against

Ordinary Business

1. Adoption of Reports and Audited Accounts

2. To declare a final dividend of 2.27 RMB cents per ordinary share (tax exempt one-tier) for the financial year ended 31 December 2010

3. Re-appointment of Mr Choi Cheung Kong

4. Re-appointment of Dr Fu Xiao Bin

5. Approval of Directors’ Fees for the financial year ended 31 December 2010

6. Re-appointment of Auditors

Special Business

7. Authority to allot and issue new shares

8. Renewal of Share Purchase Mandate

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.)

Dated this day of 2011.

Signature of Member(s) or Common Seal

Important: Please read notes overleaf

I/We (Name)

of (Address)being a member/members of China Taisan Technology Group Holdings Limited (the “Company”) hereby appoint

Proxy FormCHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITED(Incorporated in the Republic of Singapore)(Company Registration No: 200711863D)

Name Address NRIC/ Passport No.

Proportion of my/our Shareholding

No. of shares %

Name Address NRIC/ Passport No.

Proportion of my/our Shareholding

No. of shares %

Total number of Shares held

and/or (delete as appropriate)


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, Cap. 50), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares registered in your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.

3. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. A proxy need not be a member of the Company.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 80 Robinson Road, #17-02, Singapore 068898 at least 48 hours before the time of the Annual General Meeting.

6. 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 attorney or a duly authorised officer.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney 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.

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


Roaring OpportunitiesRolling Returns


WWW.CHINA-TAISAN.COM

CHINA TAISAN TECHNOLOGY GROUPCo. Reg. No.: 200711836D

Singapore Registered Address:80 Robinson Road #17-02SIngapore 068898

Singapore Offi ce Address:101 Cecil StreetTong Eng Building #13-11Singapore 069533Tel: (65) 6492 0948

Principal Place of Business:Zhengdong Development Area 362271DongCheng, Dongshi TownJinjiang City, Fujian ProvicePeople’s Republic of ChinaTel: (86) 595 8550 7565Fax: (86) 595 8558 7422

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Annual Report 2010


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