ANNUAL REPORT

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ANNUAL REPORT Powered By Docstoc
					Corporate ContentS
2    Profile and Mission Statement
3    Group Structure
4    Corporate Information
5    Chief Executive Officer’s Statement
6    Board of Directors
7    Executive Management
8    Operations Review
9    Corporate Governance
16   Others




finanCial ContentS
17   Directors’ Report
20   Statement by Directors
21   Independent Auditors’ Report
23   Balance Sheets
24   Consolidated Statement of Comprehensive Income
25   Consolidated Statements of Changes in Equity
26   Consolidated Statement of Cash Flow
27   Notes to the Financial Statements
72   Statistics of Shareholdings
73   Notice of Annual General Meeting
     Proxy Form




digiland international limited     1       ANNUAL REPORT 2011
profile and miSSion Statement

profile

Digiland International Limited (“Digiland”) is a Singapore incorporated company listed on the main-board of
Singapore Exchange Securities Trading Ltd. It is principally engaged in the promotion, marketing, sale and
distribution of electronic and information technology (“IT”) products. Additionally, it provides value added IT
services and solutions, serving as a one-stop shop for its customers.

Headquartered in Singapore, Digiland operates a network of offices and service centres in the region, allowing
the Group to be closer to its valued customers and partners in order to meet their needs in a more timely and
efficient manner.


miSSion Statement

To be a leading global company in technology products and services and in supply chain management by
delivering value exceeding customer expectations.




ANNUAL REPORT 2011      2    digiland international limited
group StruCture


Infonet Systems and         100%   Digilandmall.com             100%    Digiland (Hong Kong)         99.9%
Services Pte Ltd                   Pte Ltd (currently inactive)         Limited (currently inactive)

Digiland (Thailand) Ltd     100%   Digiland Pty Ltd              100%   Digiland Japan Co., Ltd       100%
                                   (currently inactive)                 (under liquidation)
Digiland Distribution       100%
(M) Sdn. Bhd.                      DG Shanghai                   100%   Digiland (Singapore)          100%
(currently inactive)               International Trading                Pte Ltd (under liquidation)
                                   Co Ltd (currently inactive)
                                                                        Digiland Vietnam              100%
                                                                        Pte Ltd (under liquidation)



Head offiCe
digiland international limited
21 Serangoon North Avenue 5
Ban Teck Han Building #05-02
Singapore 554864
Tel: (65) 6603 9898
Fax: (65) 6603 9896
Website: www.digiland.com.sg


SuBSidiarieS
infonet Systems and Services       digilandmall.com pte ltd             digiland (Hong Kong) limited
pte ltd                            21 Serangoon North Avenue 5          20th Floor, Euro Trade Centre
21 Serangoon North Avenue 5        Ban Teck Han Building #05-02         21-23 Des Voeux Road Central
Ban Teck Han Building #05-02       Singapore 554864                     Hong Kong
Singapore 554864                   Tel: (65) 6603 9898                  Tel: (852) 2521 6692
Tel: (65) 6603 9878                Fax: (65) 6603 9896                  Fax: (852) 2810 4468
Fax: (65) 6603 9896
Website: www.infonet.com.sg

digiland (thailand) ltd            digiland pty ltd                     digiland Japan Co., ltd.
86 Win Win Tower 9 Floor           21 Ellingworth Parade                Akasaka Tokyu Plaza 12F
Ratchadapisek Rd, Chankasem        Box Hill Victoria 3128               2-14-3, Nagata-cho
Jatujak Bangkok 10900              Melbourne                            Chiyoda-ku, Tokyo
Tel: (662) 930 7998                Australia                            Japan
Fax: (662) 930 7919                Tel: (613) 9896 7788                 Tel: (813) 3581 1975
Website: www.digiland.co.th        Fax: (613) 9896 7780                 Fax: (813) 5512 9893

digiland distribution (m)          dg Shanghai                          digiland (Singapore) pte ltd
Sdn. Bhd.                          international trading Co ltd         21 Serangoon North Avenue 5
Level 7, Menara Milenium           R4G No 28                            Ban Teck Han Building #05-02
Jalan Damanlela                    North Caoxi Road                     Singapore 554864
Pusat Bandar Damansara             People’s Republic of China           Tel: (65) 6603 9898
Damansara Heights                  Tel: (8621) 6486 9659                Fax: (65) 6603 9896
50490 Kuala Lumpur                 Fax: (8621) 5424 1136
Malaysia                                                                digiland Vietnam pte ltd
Tel: (603) 2095 7077                                                    21 Serangoon North Avenue 5
Fax: (603) 2095 0292                                                    Ban Teck Han Building #05-02
                                                                        Singapore 554864
                                                                        Tel: (65) 6603 9898
                                                                        Fax: (65) 6603 9896



                                             digiland international limited      3     ANNUAL REPORT 2011
Corporate information

Board of direCtorS                        CompanY SeCretarY              prinCipal BanKerS
                                          Mr Lim Koon Hock               Citibank N.A.
exeCutiVe direCtor &                                                     CIMB Bank Berhad
CHief exeCutiVe offiCer                                                  Overseas-Chinese Banking
Mr Teo Chee Hong                          regiStered offiCe              Corporation Ltd
                                          21 Serangoon North Avenue 5
exeCutiVe direCtor                        Ban Teck Han Building #05-02
Dr Poh Siew Chuan, Philip                 Singapore 554864               exeCutiVe
                                          Tel: (65) 6603 9898            management
independent & non-exeCutiVe               Fax: (65) 6603 9896            Mr Teo Chee Hong
direCtorS                                 www.digiland.com.sg            Chief Executive Officer
Ms Ong Beng Hong
Dr Robert Henry Keith Sloan
                                                                         Dr Poh Siew Chuan, Philip
Mr Wong Tat Hei
                                          SHare regiStrar                Executive Director
                                          B.A.C.S. Private Limited
                                          63 Cantonment Road             Mr Lim Koon Hock
audit Committee                           Singapore 089758               Chief Financial Officer
Dr Robert Henry Keith Sloan (Chairman)
Ms Ong Beng Hong                                                         Dr Long Ming Fai, Edwin
Dr Poh Siew Chuan, Philip                                                General Manager
                                          auditorS
Mr Wong Tat Hei
                                          Ernst & Young LLP
                                          Certified Public Accountants
                                          1 Raffles Quay #18-01
nominating Committee                      North Tower
Ms Ong Beng Hong (Chairman)               Singapore 048583
Dr Robert Henry Keith Sloan               Engagement Partner:
Dr Poh Siew Chuan, Philip                 Ms Lim Siew Koon
Mr Wong Tat Hei                           (Since financial year 2011)


remuneration
Committee
Ms Ong Beng Hong (Chairman)
Dr Robert Henry Keith Sloan
Dr Poh Siew Chuan, Philip
Mr Wong Tat Hei




ANNUAL REPORT 2011    4     digiland international limited
CHief exeCutiVe offiCer’S Statement

Digiland increased its revenue by 22% from US$48M in FY2010 to US$59M in FY2011. With the improved
political stability in Thailand, business sentiments improved and the fourth quarter ended 30 June 2011 saw
improved results compared with the corresponding period in 2010. The Company announced the signing of
a placement agreement in December 2010 and following that, issued and allotted placement shares on 23
February 2011. This injection of US$6.67M strengthened the balance sheet during the financial year. The
Group’s net asset value improved from US$1.357M as at 30 June 2010 to US$7.105M as at 30 June 2011.

The Company announced on 13 May 2011, its proposed investment in a coke plant company in Thailand. This
is a new business dimension for the Group. In the said announcement, the Company stated that it had entered
into a Sales and Purchase Agreement that day, to purchase 15% in Thai General Nice Coal and Coke Co., Ltd
(“Thai GNCC”), plus an option to purchase another 15%. The Thai entity is in the business of producing coke
from coal. This investment is expected to provide more stable returns for the Group with better margins than
the current business in distribution.

During the year, the Group continues to introduce new products and offerings and adjust its product mix
to improve margins. One such example is the supply of set-top boxes to M1, a local telecommunications
company. This business is done in conjunction with the Company’s business partners.

On 31 August 2011, the Company announced a proposed renounceable non-underwritten rights issue of
shares to raise up to US$16.7M on the basis of two rights shares for every one share held by shareholders.
The rights issue proceeds are intended to fund the cost of acquisitions to improve the Group’s profitability.
Proceeds in excess of US$12.5M will be used for working capital. As a show of confidence in the Group,
a substantial shareholder of the Company, Fortune Woods Global Investment Limited, has undertaken to
subscribe for its entitlement and to further subscribe for additional shares so that a minimum of US$5.0M gross
would be raised through this rights exercise. This exercise will further strengthen its balance sheet and enable
the Group to work towards the acquisition of Thai GNCC.

In the coming year, the current economic climate in the United States and Europe may adversely impact growth
in Asia. Whilst the Group evaluates new businesses and seeks greener pastures, for instance, in the new
coke business, to increase shareholder value, its strategy is to continue maintaining and growing its existing
business. For new acquisitions, the Company will seek shareholders' approval where required. In addition to
acquisitions, new business ventures, new products and offerings, and constant tweaking of its product mix to
improve margins, the Group will continue to exercise prudence in cost management.

The management team is committed and will remain focused on businesses that in its opinion, maximizes
returns to shareholders. With careful evaluation of new business options and a steadfast, cautious approach
on negotiations into new business ventures, management aims to obtain good value to advance the Group.

On behalf of the Board, I thank all our shareholders, customers, business partners and employees for their
support, confidence and trust.




teo Chee Hong
Chief Executive Officer




                                                digiland international limited        5    ANNUAL REPORT 2011
Board of direCtorS

mr teo Chee Hong
Executive Director & Chief Executive Officer
Chee Hong joined Digiland as Chief Executive Officer and Executive Director on 29 September 2004.

He has more than 20 years experience in various fields of the Information Technology Industry spanning both private
and public listed companies.

Chee Hong graduated from the National University of Singapore with a Bachelor of Engineering degree (Electrical
Engineering). He later obtained a Master of Business Administration degree from the Cranfield Institute of Technology
of UK.


dr poh Siew Chuan, philip
Executive Director
Philip Poh was appointed a Non-Executive Director on 26 December 2006 and an Executive Director on 21 February
2007. He has about 30 years experience holding Senior Management positions in both private and public listed
companies, as well as professional and educational establishments.

Philip holds a Master of Business Administration degree from Henley Management College and from Brunel University
of West London, and a Doctor of Philosophy (Honoris Causa) in Business Administration from Honolulu University.
He is a recipient of the 2004 Garner-Themoin Award, the highest award conferred by the International Federation of
Purchasing and Supply Management.


ms ong Beng Hong
Independent and Non-Executive Director
Beng Hong joined the Board as an Independent Director on 13 July 2004. She is currently a Director of Wong Tan
and Molly Lim LLC.

Beng Hong graduated with a Degree in Law from King’s College, London, and is an Advocate and Solicitor of the
Supreme Court of Singapore and the Malaysian Bar. She is also a Solicitor of the Supreme Court of England and
Wales.


dr robert Henry Keith Sloan
Independent and Non-Executive Director
Keith Sloan was appointed an Independent Director on 26 January 2007. He is a Fellow of CPA Australia and
an Associate Fellow of the Singapore Institute of Purchasing and Materials Management. He holds a Doctor of
Philosophy, Master of Commerce and Bachelor of Commerce degrees from the University of New South Wales.

Keith has more than 25 years of research, consulting and teaching experience in the areas of value chain management,
international finance and economics, investment analysis and portfolio management, and corporate finance.
He has been a frequent speaker at international conferences in the UK, Canada, South Africa and Australia.

Keith is currently an Associate Professor in the Southern Cross Business School, Southern Cross University
(Australia).


mr Wong tat Hei
Independent and Non-Executive Diector
Tat Hei was appointed an Independent Director on 1 June 2011. He has more than 25 years of experience combined,
in the fields of engineering and finance. In the latter, his diverse experience includes portfolio risk management, and
in financial product, investment, financial advisory and consulting businesses.

Tat Hei holds a Master of Business Administration from Northwestern University, a Master of Science Electrical
Engineering from Cornell University and a Bachelor of Science, Electrical Engineering from University of Illinois.

He is currently Director of 3 companies based in China and Hong Kong.


ANNUAL REPORT 2011        6    digiland international limited
exeCutiVe management

mr teo Chee Hong
Chief Executive Officer
Please refer to write-up under “Board of Directors”


dr poh Siew Chuan, philip
Executive Director
Please refer to write-up under “Board of Directors”


mr lim Koon Hock
Chief Financial Officer
Koon Hock joined Digiland as Chief Financial Officer on 1 November 2004.

His career of more than 20 years spans auditing, finance, accounts and corporate functions in both private and
public listed companies.

Koon Hock has a Bachelor of Commerce (Accountancy) degree from the University of Auckland, and a Master
of Business Administration degree from the National University of Singapore. He is a Fellow Certified Public
Accountant of Singapore.


dr long ming fai, edwin
General Manager
Edwin Long joined Digiland in December 2006 to head operations, product development and OEM
marketing.

Edwin has more than 20 years of experience in the product development and business management of IT
electronics and consumer electronics products.

He was also instrumental in starting up various electronics companies developing and marketing IT products
and appliances.

Edwin holds a Bachelor of Engineering in Mechanical Engineering (Hons) from Strathclyde University and a
Doctor of Philosophy in Engineering from California University.




                                                digiland international limited      7    ANNUAL REPORT 2011
operationS reVieW

The Digiland Group managed to grow its existing business in distribution during the financial year. Improved
political stability in Thailand led to better business sentiments in the second half of the financial year, and as a
result, business in Thailand, a major contributor to the Group, improved. In addition, new product offerings and
constant adjustments to product mix helped to increase revenue and margins. Notwithstanding the uncertain
economic climate in the United States and Europe, the Group is cautiously optimistic that its strategy of
continually introducing new products and adjusting of product mix, coupled with new investments will improve
the Group’s revenue and bottom line.


financial performance

For the financial year ended 30 June 2011, Group revenue increased by 22% from US$48.27M to US$59.04M.
Purchases increased by 33% from US$44.27M to US$59.07M due to stocking up in anticipation of higher
sales in the coming year. Personnel expenses increased 18% from US$1.39M to US$1.65M due to increased
business volume. During the year, the Group continued to benefit from exchange gains on non-US$ assets
as the US$ continued weakening. Other operating expenses increased by 25% from US$1.47M to US$1.84M
due to share placement costs and higher sales-related variable costs on a higher sales turnover. Financial
expenses increased by 42% from US$0.24M to US$0.35M as interest rates on bank borrowings increased.
The Group managed to trim its losses for the year by 11% from US$0.88M to US$0.79M.

The balance sheet of the Group was strengthened by the share placement during the year. The equivalent
of US$6.67M was raised in the placement. Inventories, Trade receivables, Trade payables and Borrowings
increased along with the increase in sales turnover and level of operations. Other receivables and deposits
increased as S$5.00M was placed as a deposit for an investment in Thailand.




ANNUAL REPORT 2011       8    digiland international limited
Corporate goVernanCe

Digiland is committed to maintaining a high standard of corporate governance to protect the interest as well
as to enhance the long-term value of its shareholders. This is in line with the Code of Corporate Governance
(the “Code”) issued by the Ministry of Finance. This statement describes the corporate governance policies
and practices that had been adopted by the Company together with appropriate explanations where there are
deviations from the Code.

principle 1: the Board’s Conduct of its affairs
The Board holds regular scheduled meetings throughout the year, with additional meetings and ad hoc
teleconferences as warranted by particular circumstances. The Articles of Association of the Company
allows Directors to participate in a meeting of the Board by means of a conference, telephone or similar
communications equipment.

In the last financial year ended 30 June 2011, the Board met at four scheduled meetings. All Board members
were present at the meetings, either in person or via teleconferencing.

The Board is entrusted with the overall management of the business affairs of the Company, and sets the
overall strategy and policies on the Group’s business direction.

The principal functions of the Board include:
(a) Approving the overall policies, strategic plans, key operational initiatives, major investments and funding
     decisions;
(b) Approving the budget and monitoring the performance of the business;
(c) Approving the financial results of the Group for release to shareholders;
(d) Ensuring the implementation of appropriate control systems to manage the Group’s business and financial
     risks; and
(e) Considering and approving the nominations and re-nominations to the Board as well as the appointment
     of key personnel.

In the discharge of its function, the Board is supported by specialty Board Committees that provide independent
oversight on Management, and which also serve to ensure that there are appropriate checks and balances.
The key committees are the Audit Committee, Nominating Committee and Remuneration Committee.

All newly appointed Directors are given briefings by Management on the history and business operations of the
Group. The Company will, if necessary, organise briefing sessions or circulate memoranda to the Directors
to enable them to keep pace with regulatory changes, where such changes have a material bearing on the
Group.

principle 2: Board Composition and guidance
As at 30 June 2011, the Board of Directors comprised five members, two of whom were non-independent
executive directors. The other three were independent non-executive directors. Independent non-executive
directors form the majority in each specialty Board Committee.

The Board is of the view that, given the scope and nature of the Group’s operations, the present size of the
Board is appropriate in facilitating effective decision-making.

The independent and non-executive members of the Board comprise seasoned professionals with management,
legal, financial, accounting and industry backgrounds. This enables the Management to benefit from their
external and objective perspectives of issues that are brought before the Board.




                                                digiland international limited       9    ANNUAL REPORT 2011
Corporate goVernanCe

The Nominating Committee assesses the suitability of each new Director based on the standing, character and
relevance of a candidate’s expertise, skills and experience to the Group, before recommending the appointment
to the Board.

A Director who is not an employee of the Group and who has no relationship with the Group or its officers
that could interfere, or be reasonably perceived to interfere, with the exercise of his independent business
judgement in the best interests of the Company, is considered to be independent.

Principle 3: Chairman and Chief Executive Officer
There is a distinct separation of responsibilities between the Chairman and the Chief Executive Officer (“CEO”)
to ensure an appropriate balance of power and authority at the top of the Company and no one individual has
considerable concentration of power. The Board has not appointed a replacement Chairman since Dr Vincent
Tan resigned from the Board on 24 September 2007. With the absence of a Board Chairman, Board meetings
are chaired by a Director other than the CEO.

The CEO is responsible for the day-to-day management of the Group’s affairs. He executes the strategic
plans set by the Board and ensures that the Directors are kept updated and informed of the Group’s business
through Management reports.

principle 4: Board membership

principle 5: Board performance
The Company’s Articles of Association provides for regular retirement of Directors by rotation. At each Annual
General Meeting (“AGM”), one third of the Directors, with the exception of the Managing Director, will submit
themselves for re-nomination and re-election.

The Nominating Committee comprises the following members:
- Ms Ong Beng Hong (Chairman; Independent and Non-executive Director)
- Dr Robert Henry Keith Sloan (Independent and Non-executive Director)
- Mr Wong Tat Hei (Independent and Non-executive Director)
- Dr Poh Siew Chuan, Philip (Executive Director)

The Nominating Committee has written Terms of Reference that describe the responsibilities of its members.
The duties are as follows:
(a) To recommend all Board appointments, including making recommendations to the composition of the
     Board generally and the balance between Executive and Non-executive Directors appointed to the
     Board;
(b) To recommend to the Board re-nomination of Directors for re-election at the Company’s Annual General
     Meetings, having considered the Directors’ contribution and performance. All Directors are required to
     submit themselves for re-nomination and re-election at regular intervals and at least once every three
     years;
(c) To determine the independence of Directors;
(d) To ensure that Directors who have multiple board representations give sufficient time and attention to the
     Company’s affairs;
(e) To assess the contribution of each individual Board member to the effectiveness of the Board;
(f) To determine and implement the process of assessing the effectiveness of the Board as a whole; and
(g) To ensure complete disclosure of information of Directors as required under the Code.




ANNUAL REPORT 2011     10    digiland international limited
Corporate goVernanCe

The Nominating Committee evaluates the contribution and performance of the Board members based on
assessment parameters set out in a Director Evaluation Form. The evaluation covers a range of qualities
and factors, and takes into consideration the knowledge and experience of Directors, their attendance and
participation at meetings of the Board and Committees, and availability for consultation.

The Nominating Committee has assessed the independence of the Non-executive Directors and is satisfied
that there are no relationships which would deem any of the Non-executive Directors not to be independent.

The Nominating Committee has formulated internal guidelines to address the conflict of competing time
commitments that are faced by Directors with multiple board representations. The Nominating Committee
considers whether adequate time and attention have been devoted to the Company for Directors with multiple
board representation.

Key information on Directors of the Company can be found on Page 6 of this Annual Report. The Board has
set up a formal assessment process to evaluate the effectiveness of the Board as a whole based on input from
the individual Board members.

The Board is of the view that the financial indicators set out in the Code as performance criteria for the
evaluation of Directors’ performance are more a measure of Management’s performance and hence less
appropriate for Non-executive Directors and the Board’s performance as a whole.

In the financial year ended 30 June 2011, the Nominating Committee met once.

principle 6: access to information
Management provides Board members with complete, adequate and timely information prior to Board
meetings. In addition, all relevant information on budgets, forecasts, monthly internal financial statements,
material events and transactions complete with background and explanations are circulated to Directors as
and when they arise.

The Directors have separate and independent access to the Company’s senior Management and the advice
and services of the Company Secretary, who also attends meetings of the Board and Committees. The
Company Secretary is responsible for ensuring that Board procedures are followed. He also ensures that the
Company complies with the requirements of all applicable rules and regulations. Directors may, in appropriate
circumstances, seek independent professional advice concerning the Company’s affairs.

principle 7: procedures for developing remuneration policies

principle 8: level and mix of remunerations

principle 9: disclosure on remuneration
The Remuneration Committee comprises the following members:
-    Ms Ong Beng Hong (Chairman; Independent and Non-executive Director)
-    Dr Robert Henry Keith Sloan (Independent and Non-executive Director)
-    Mr Wong Tat Hei (Independent and Non-executive Director)
-    Dr Poh Siew Chuan, Philip (Executive Director)

In circumstances where the Remuneration Committee does not comprise entirely of Non-executive Directors,
the majority of members including the Chairman would be independent. The Remuneration Committee
is empowered to engage from time to time human resource professional firms to advise on executive
remuneration.




                                               digiland international limited      11    ANNUAL REPORT 2011
Corporate goVernanCe

The Remuneration Committee’s Terms of Reference are primarily to determine and recommend to the Board the
framework of remuneration and terms of employment for the Executive Director and Executive Management.

In reviewing and recommending Directors’ remuneration, the Committee adopts a framework based on the
guidelines recommended by the Singapore Institute of Directors. This comprises a base fee as well as
fees for chairing Board Committees, taking into consideration the amount of time and effort that each Board
member may be required to devote to the role and the fees paid in comparable companies. A proportion of
the remuneration is linked to performance. For the financial year ended 30 June 2011 the Group’s financial
strength was considered by the Remuneration Committee when they recommended Directors’ remuneration.

The Company adopts a remuneration policy for staff comprising a fixed component and a variable component.
The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus
that is linked to the performance of the Company and the individual. A variable component is the shares
granted to staff under the Digiland Share Option Plan (“DSOP”). This seeks to align the interests of the staff
with that of shareholders.

Another variable component is the shares awarded under the Digiland Performance Share Plan (“DPSP”),
where participants receive fully paid Company shares, its equivalent in cash value or combinations thereof
upon achieving prescribed performance targets.

The Remuneration Committee oversees the DSOP and DPSP and determines the eligibility of employees to
participate in each, and the number of options and awards to be granted to each employee.

For the financial year ended 30 June 2011, no option was granted under the DSOP and no award was made
under the DPSP.

The Directors are paid Director’s fees, subject to approval at the Company’s Annual General Meeting.

In the financial year ended 30 June 2011, the Remuneration Committee met once.

Details of remuneration for the financial year ended 30 June 2011 paid and/or payable to the Directors are set
out below:

 directors remuneration Band           Salary & Cpf            fee             Bonus              total
                                            %                   %                %                 %
 S$250,000 to below S$500,000
 Teo Chee Hong                               100                 -                -                100

 Below S$250,000
 Robert Henry Keith Sloan                     -                100                -                100
 Ong Beng Hong                                -                100                -                100
 Poh Siew Chuan, Philip                      100                -                 -                100

Given the highly competitive industry conditions and the sensitivity and confidentiality of staff remuneration
matters, the Company believes that the disclosure of remuneration of individual executives as recommended
by the Code, would be disadvantageous to the Group’s interests.




ANNUAL REPORT 2011     12    digiland international limited
Corporate goVernanCe

Details of remuneration for the financial year ended 30 June 2011 paid to the top two executives who are not
Directors are set out below:

 Key executives remuneration Band                       Salary & Cpf           Bonus               total
                                                             %                   %                  %
 Below S$250,000
 2 Key Executives                                             100                 -                 100

There are no employees who are immediate family members of the Directors and CEO and who earn in excess
of S$150,000 per year.

The Board is of the view that it is not necessary to present the remuneration policy at the Annual General
Meeting for shareholders’ approval.

principle 10: accountability and audit
The Board recognises that it is accountable to shareholders and aims to provide shareholders with a balanced
and understandable assessment of the Company’s performance. Review of performance and prospects are
provided to shareholders on a quarterly basis.

For effective monitoring of the Group’s business and affairs, Management reports are provided to the Board
on a regular basis.

principle 11: audit Committee

principle 12: internal Controls
risk management
Annually, the Company carries out a risk assessment of its business and operations. The objectives of the
continuous risk assessment are to identify and rank the processes most critical to the business and formulate
plans to address the risks relating to these processes.

The exercise also aims to establish a proactive risk management environment. The risk assessment covers
business operation risk, financial risk, legal risk and reputation risk.

A risk map is used to rank the risks of these critical processes. Risks of high significance that may threaten
the achievement of the Company’s objectives are classified as primary risks and rated high on priority in
addressing them. Steps are taken to reduce or eliminate them with preventive controls which are subject to
regular evaluation and testing.

The Company also routinely reviews many non-financial factors, such as the quality of corporate governance;
employee, vendor and customer management processes; crisis management processes; the Company’s use
of technology; and its deployment of best practices. Early identification of trends gives Management time to
react before the problems manifest itself.

Numerous tools and mechanisms for measuring operational risks are already in use such as the ISO 9000
certification processes, compilation of best practices and benchmarking by Internal Audit and scenario planning,
all of which are designed to provide insights beyond pure financial results. They add value by translating the
information generated by these tools into an understanding of operational risks and provide a comprehensive
early-warning mechanics for trends in operational risk factors.

For a more detailed discussion of financial risk Management, please refer to Note 30 in the Notes to the
Financial Statements on page 62.




                                                digiland international limited        13   ANNUAL REPORT 2011
Corporate goVernanCe

principle 13: internal audit
The Audit Committee comprises the following members:
-    Dr Robert Henry Keith Sloan (Chairman; Independent and Non-executive Director)
-    Ms Ong Beng Hong (Independent and Non-executive Director)
-    Mr Wong Tat Hei (Independent and Non-executive Director)
-    Dr Poh Siew Chuan, Philip (Executive Director)

The Board is of the opinion that the members of the Audit Committee are appropriately qualified to discharge
their responsibilities.

The Audit Committee has full access to the external auditors and the internal auditor without the presence of
the Management of the Company.

The Audit Committee has explicit authority to investigate any matter within its Terms of Reference, full
access to and co-operation by the Management of the Company and full discretion to invite any Director or
Management of the Company to attend its meetings, and reasonable resources to enable it to discharge its
functions properly.

The Audit Committee has written Terms of Reference that describe the responsibilities of its members.

The duties are as follows:
(a) To review with the external auditors the audit plan (including the nature and scope of the audit before the
     audit commences), and to pay full attention to any material weaknesses reported and the recommendations
     proposed by the external auditors. The Audit Committee also reviews Management’s response and
     ensure that the Group maintains a sound system of internal controls;
(b) To review the interim and annual financial statements before submission to the Board for approval;
(c) To discuss problems and concerns, if any, arising from the interim and final audits, and any matters which
     the external auditors may wish to discuss without the presence of Management at least twice a year;
(d) To review the scope and results of the audit and its cost effectiveness and the independence and
     objectivity of the external auditors annually. Where the auditors also supply a substantial volume of non-
     audit services to the Company, to review the nature and extent of such services in order to balance the
     maintenance of objectivity and value for money, and to ensure that the provision of such services would
     not affect the independence of the auditors. The Audit Committee also reviews the independence of the
     external auditors annually;
(e) To review and discuss with the external auditors, any suspected fraud or irregularity, or suspected
     infringement of any Singapore law, rules or regulations, which has or is likely to have a material impact
     on the Company’s operating results or financial position, and Management’s response;
(f) To investigate any matter within its Terms of Reference, having full access to and co-operation by
     Management and full discretion to invite any Director or executive officer to attend its meetings, and
     reasonable resources to enable it to discharge its functions properly;
(g) To review transactions falling within the scope of Chapter 9 of the SGX-ST Listing Manual; and
(h) To consider the appointment/re-appointment of the external auditors, the audit fee and matters relating to
     the resignation or dismissal of the auditors.

The Audit Committee has undertaken a review of all non-audit services provided by the auditors and is of the
opinion that the provision of such services will not affect the independence of the auditors.




ANNUAL REPORT 2011     14    digiland international limited
Corporate goVernanCe

The Audit Committee reviews the effectiveness of the Company’s material internal controls, including financial,
operational and compliance controls, and risk management annually. The Board is satisfied that the internal
controls are adequate.

The Group has not had an internal audit department since 19 August 2004. Since that date, internal audit
functions are randomly carried out by the Finance Department.

principle 14: Communications with Shareholders

principle 15: Shareholders participation at annual general meeting
The Company is committed to keeping shareholders informed of material developments in the Group. This is
done through appropriate announcements on the SGXNET in accordance with the Listing Manual as well as
the Company’s web site at www.digiland.com.sg where the public can access information on the Group. The
Company does not practice selective disclosures.

At general meetings, shareholders are given the opportunity to communicate their views and direct questions
to the Board and Management relating to the business affairs of the Group. The external auditors are also
present to assist the Directors in addressing any relevant queries by shareholders.

Resolutions to be passed at general meetings are always separate and distinct in terms of issue so that
shareholders are better able to exercise their right to approve or deny the issue or motion. Shareholders can
also exercise their right to vote in absentia by the use of proxies.




                                                digiland international limited      15    ANNUAL REPORT 2011
otHerS

intereSted perSon tranSaCtionS

Based on Rule 907 of SGX’s Listing Manual, there were none for financial year ended 30 June 2011.


uSe of SHare plaCement proCeedS

Total proceeds of S$8,525,995 (equivalent to US$6.672M) were fully utilised for the following:

                                                                           uS$
Purchases                                                              2.092 million
Personal expenses                                                      0.307 million
Administrative expenses                                                0.308 million
Deposit for investment                                                 3.965 million
Total                                                                  6.672 million


dealingS in CompanY’S SeCuritieS

All staff of the Group are reminded to abstain from dealing in securities of the Company two weeks before
the announcement of the quarterly results of the Group and one month before the announcement of the full
year results of the Group.




ANNUAL REPORT 2011     16    digiland international limited
direCtorS' report

The Directors present their report to the members together with the audited consolidated financial statements
of Digiland International Limited (“the Company”) and its subsidiaries (collectively, the “Group”) and the balance
sheet and statement of changes in equity of the Company for the financial year ended 30 June 2011.


directors

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

Teo Chee Hong
Poh Siew Chuan, Philip
Ong Beng Hong
Robert Henry Keith Sloan
Wong Tat Hei


arrangements to enable directors to acquire shares and debentures

Except for the Digiland Share Plans as described below, neither at the end of nor at any time during the
year was the Company a party to any arrangement whose object is to enable the Directors of the Company
to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body
corporate.


directors’ interests in shares and debentures

The following Directors, who held office at the end of the financial year, had, according to the register of
directors’ shareholdings required to be kept under section 164 of the Singapore Companies Act, an interest in
shares of the Company and related corporations as stated below:

                                       direct interest                             deemed interest
                                 at          at                               at          at
                            beginning       end        at 21 July        beginning       end     at 21 July
name of director            of the year of the year       2011           of the year of the year    2011

the Company

Teo Chee Hong           25,000,000 25,000,000 25,000,000                          –              –             –
Poh Siew Chuan, Philip   7,272,000 10,372,000 15,372,000                  3,100,000              –             –
Robert Henry Keith Sloan 1,750,000  1,750,000  1,750,000                          –              –             –


Directors’ contractual benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no Director of
the Company has received or become entitled to receive a benefit (other than directors’ fees or a benefit or
any fixed salary of a full-time employee of the Company included in the aggregate amount of emoluments
shown in the financial statements) 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.




                                                 digiland international limited        17    ANNUAL REPORT 2011
direCtorS' report

Share plans

Digiland Share Option Plan (“DSOP”)

The DSOP enables Directors and certain classes of employees of the Company and its subsidiaries to
subscribe for ordinary shares in the capital of the Company from time to time. Other information regarding the
DSOP is set out below:

(a)   The exercise price of the option can be set at a discount to the market price not exceeding 20% of the
      market price in respect of options granted at the time of grant; and
(b)   There were no outstanding DSOP grants as at the year end.

Digiland Performance Share Plan (“DPSP”)

The DPSP was approved by the Company during the Extraordinary General Meeting on 31 October 2006. The
DPSP contemplates the awarding of fully paid-up shares, their equivalent cash value or combinations thereof,
free of payment to selected employees of the Company and its subsidiaries and its associate companies,
including Executive Directors of the Company.

The total numbers of new ordinary shares in the Company which may be issued in respect of:

(a)   all awards granted under the DPSP; and
(b)   all options granted under the DSOP

will not exceed 15% of the number of issued shares in the capital of the Company from time to time.

There were no other unissued shares in the Company or its subsidiaries under option and award at the end of
the financial year.

No options and awards have been granted to Directors, controlling shareholders of the Company or their
associates and no Directors or employees of the Company have received 5% or more of the total options
available under the DPSP and DSOP.

The options and awards do not entitle the holder to participate, by virtue of the options and awards, in any
share issue of any other corporation.


audit committee

The Audit Committee performed the functions specified in the Companies Act. The functions performed are
as follows:

1.    To review with the external auditors the audit plan (including the nature and scope of the audit before the
      audit commences) and to pay full attention to any material weaknesses reported and the recommendations
      proposed by the external auditors. The Audit Committee also reviews Management’s response and
      ensure that the Group maintains a sound system of internal controls;

2.    To review the interim and annual financial statements before submission to the Board for approval;




ANNUAL REPORT 2011      18    digiland international limited
direCtorS' report

audit committee (cont’d)

3.   To discuss problems and concerns, if any, arising from the interim and final audits, and any matters which
     the external auditors may wish to discuss without the presence of Management at least twice a year;

4.   To review the scope and results of the audit and its cost effectiveness and the independence and
     objectivity of the external auditors annually. Where the auditors also supply a substantial volume of non-
     audit services to the Company, to review the nature and extent of such services in order to balance the
     maintenance of objectivity and value for money, and to ensure that the provision of such services would
     not affect the independence of the auditors. The Audit Committee also reviews the independence of the
     external auditors annually;

5.   To review and discuss with the external auditors, any suspected fraud or irregularity, or suspected
     infringement of any Singapore law, rules or regulations, which has or is likely to have a material impact
     on the Company’s operating results or financial position, and Management’s response;

6.   To investigate any matter within its Terms of Reference, having full access to and co-operation by
     Management and full discretion to invite any Director or executive officer to attend its meetings, and
     reasonable resources to enable it to discharge its functions properly;

7.   To review transactions falling within the scope of Chapter 9 of the SGX-ST Listing Manual; and

8.   To consider the appointment/re-appointment of the external auditors, the audit fee and matters relating to
     the resignation or dismissal of the auditors.

The Audit Committee has undertaken a review of all non-audit services provided by the auditors and is of the
opinion that the provision of such services would not affect the independence of the auditors.

Further details regarding the Audit Committee are disclosed in the Report on Corporate Governance.


auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.




On behalf of the Board of Directors,




Teo Chee Hong
Director




Poh Siew Chuan, Philip
Director

Singapore
28 September 2011




                                               digiland international limited       19    ANNUAL REPORT 2011
Statement BY direCtorS

We, Teo Chee Hong and Poh Siew Chuan, Philip, being two of the Directors of Digiland International Limited,
do hereby state that, in the opinion of the Directors,

(a)   the accompanying balance sheets, consolidated statement of comprehensive income, statements of
      changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as
      to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011 and
      the results of the business, changes in equity and cash flows of the Group and the changes in equity of
      the Company for the year ended on that date, and

(b)   at the date of this statement, there are reasonable grounds to believe that the Company will be able to
      pay its debts as and when they fall due.




On behalf of the Board of Directors,




Teo Chee Hong
Director




Poh Siew Chuan, Philip
Director

Singapore
28 September 2011




ANNUAL REPORT 2011      20    digiland international limited
independent auditorS’ report
to the members of digiland international limited


report on the Consolidated financial Statements

We have audited the accompanying consolidated financial statements of Digiland International Limited (“the
Company”) and its subsidiaries (collectively, the “Group”), which comprise the balance sheets of the Group
and the Company as at 30 June 2011, the statements of changes in equity of the Group and the Company and
the consolidated statement of comprehensive income and cash flow statement of the Group for the year then
ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated financial statements

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

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




                                                digiland international limited      21    ANNUAL REPORT 2011
independent auditorS’ report
to the members of digiland international limited


opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of
changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and
Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group
and of the Company as at 30 June 2011 and the results, changes in equity and cash flows of the Group and
the changes in equity of the Company for the year ended on that date.

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 and by those
subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance
with the provisions of the Act.




Ernst & Young LLP
Public Accountants and Certified Public Accountants
Singapore

28 September 2011




ANNUAL REPORT 2011     22    digiland international limited
BalanCe SHeetS
as at 30 June 2011



                                           note                 group                              Company
                                                        2011              2010              2011                2010
                                                         $                  $                $                    $
non-current assets
Property, plant and equipment                3           75,022            86,277            2,920                9,916
Intangible assets                            4                –                 –                –                    –
Investment in subsidiaries                   5                –                 –          765,226              598,975
Other investments                            6                1                 1                1                    1
Fixed deposits                              27        1,408,909                 –                –                    –
                                                      1,483,932            86,278          768,147              608,892

Current assets

Inventories                                  7       3,706,098         1,127,195                 –                 –
Trade receivables                            8       6,525,567         4,910,952           315,369           302,925
Other receivables and deposits               9       5,339,611         1,261,480         4,105,655            21,335
Prepayments                                            120,762            34,278            15,396            14,664
Due from subsidiaries (trade)               10               –                 –           142,108           124,281
Due from subsidiaries (non-trade)           10               –                 –         2,740,637         2,710,398
Loan to subsidiaries                        10               –                 –         1,466,798            18,290
Fixed deposits                              27       1,326,927           616,654                 –                 –
Cash and bank balances                      27       3,107,038         2,267,726         1,261,569         1,369,906
                                                    20,126,003        10,218,285        10,047,532         4,561,799

Current liabilities

Trade payables                              11       8,929,618         5,179,871            23,788           293,294
Other payables                              12         348,166           314,195            47,619            52,491
Accrued operating expenses                  13         515,589           501,562           354,975           363,875
Due to subsidiaries (trade)                 10               –                 –         2,256,806         2,256,806
Due to related party (non-trade)            10               –                 –           187,172           175,563
Provision for income tax                               119,533            26,004                 –                 –
Borrowings                                  14       4,592,311         2,925,885                 –             4,157
                                                    14,505,217         8,947,517         2,870,360         3,146,186

net current assets                                    5,620,786        1,270,768         7,177,172        1,415,613

non-current liabilities
Loan from a subsidiary                      10                –                –         4,234,618         3,770,592
                                                      7,104,718        1,357,046         3,710,701        (1,746,087)

equity
Share capital                               15      29,677,235        23,005,355        29,677,235       23,005,355
Reserves                                           (22,572,517)      (21,648,309)      (25,966,534)     (24,751,442)
                                                     7,104,718         1,357,046         3,710,701       (1,746,087)




The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


                                                   digiland international limited          23      ANNUAL REPORT 2011
ConSolidated Statement
of CompreHenSiVe inCome
for the year ended 30 June 2011

                                                                              note                 group
                                                                                           2011                 2010
                                                                                            $                    $

Revenue                                                                        16      59,041,565        48,266,462
Other income                                                                   17         473,651           609,288
Changes in inventories                                                                  2,414,583        (3,662,677)
Purchases                                                                             (59,068,059)      (44,270,896)
Personnel expenses                                                             18      (1,645,200)       (1,388,833)
Depreciation of property, plant and equipment                                   3         (38,995)          (28,418)
Exchange gain                                                                             428,428           151,092
Allowance for receivables, net                                                 19        (114,610)          (98,176)
(Allowance for)/write back of inventories, net                                 20          (7,559)        1,291,875
Other operating expenses                                                       17      (1,844,827)       (1,473,171)

operating loss                                                                            (361,023)        (603,454)
Financial expenses                                                             21         (345,193)        (242,785)
Financial income                                                               22           22,860           11,519

loss before tax                                                                           (683,356)        (834,720)
Income tax                                                                     23         (104,353)         (50,053)

loss for the year                                                                         (787,709)        (884,773)

other comprehensive income
Foreign currency translation                                                              (136,499)             (20,301)

total comprehensive income for the year                                                   (924,208)        (905,074)

loss attributable to:
Owners of the parent                                                                      (787,709)        (884,773)

total comprehensive income attributable to:
Owners of the parent                                                                      (924,208)        (905,074)

Basic loss per share (cents)                                                   25            (0.009)             (0.010)
Fully diluted loss per share (cents)                                           25            (0.009)             (0.010)




The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


ANNUAL REPORT 2011       24    digiland international limited
ConSolidated StatementS of CHangeS in equitY
for the year ended 30 June 2011



                                                             Share             translation        accumulated
group                                                       Capital (1)         reserve (2)          losses            total equity
                                                               $                    $                   $                    $

Balance as at 1 July 2009                                  23,005,355              716,210        (21,459,445)          2,262,120

Loss for the year                                                      –                   –          (884,773)           (884,773)
Other comprehensive income – foreign
 currency translation                                                  –           (20,301)                    –           (20,301)

Total comprehensive income for the year                                –           (20,301)           (884,773)           (905,074)

Balance as at 30 June 2010                                 23,005,355              695,909        (22,344,218)          1,357,046

Balance 1 July 2010                                        23,005,355              695,909        (22,344,218)          1,357,046

Share issuance, representing total
 contribution by and distribution to owners                 6,671,880                                                   6,671,880
Loss for the year                                                   –                      –          (787,709)          (787,709)
Other comprehensive income – foreign
 currency translation                                                  –          (136,499)                    –          (136,499)

Total comprehensive income for the year                                –          (136,499)           (787,709)           (924,208)

Balance as at 30 June 2011                                 29,677,235              559,410        (23,131,927)          7,104,718

                                                                                 Share            accumulated
Company                                                                         Capital (1)          losses            total equity
                                                                                   $                    $                    $

Balance as at 1 July 2009                                                      23,005,355         (23,626,245)            (620,890)

Loss for the year, representing total comprehensive
 income for the year                                                                       –       (1,125,197)         (1,125,197)

Balance as at 30 June 2010                                                     23,005,355         (24,751,442)         (1,746,087)

Balance as at 1 July 2010                                                      23,005,355         (24,751,442)         (1,746,087)

Share issuance, representing total contribution by and
 distribution to owners                                                         6,671,880                               6,671,880
Loss for the year, representing total comprehensive
 income for the year                                                                       –       (1,215,092)         (1,215,092)

Balance as at 30 June 2011                                                     29,677,235         (25,966,534)          3,710,701
(1)
      The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one
      vote per share without restriction. The ordinary shares have no par value.

(2)
      The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
      operations whose functional currencies are different from that of the Group’s presentation currency.




The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


                                                           digiland international limited                25     ANNUAL REPORT 2011
ConSolidated Statement of CaSH floW
for the year ended 30 June 2011



                                                                              note                 group
                                                                                           2011                 2010
                                                                                            $                    $
Cash flows from operating activities
Loss from operations before tax                                                           (683,356)        (834,720)
Adjustments for:
 Depreciation of property, plant and equipment                                  3           38,995            28,418
 Finance expense                                                               21          345,193          242,785
 Finance income                                                                22          (22,860)          (11,519)
 Gain on disposal of property, plant and equipment                                          (2,348)           (2,364)
 Allowance for doubtful debts, net                                             19          114,610            98,176
 Allowance for/(write back of) inventories, net                                20            7,559       (1,291,875)
 Exchange difference                                                                       132,106          133,393

Operating cash flows before working capital changes                                        (70,101)      (1,637,706)
(Increase)/decrease in:
  Inventories                                                                           (2,586,462)       3,548,572
  Trade receivables                                                                     (1,729,225)        (935,205)
  Other receivables, deposits and prepayments                                           (4,164,615)        (288,058)
Increase/(decrease) in:
  Trade payables                                                                         3,749,747          127,693
  Other payables and accruals                                                               47,998           22,584

Cash (used in)/generated from operations                                                (4,752,658)         837,880
Finance expense                                                                21         (345,193)        (242,785)
Finance income                                                                 22           22,860           11,519
Income tax paid                                                                            (13,856)         (61,932)

Net cash flows (used in)/from operating activities                                      (5,088,847)         544,682

Cash flows from investing activities
Acquisition of property, plant and equipment                                    3          (21,217)             (81,206)
Proceeds from sale of property, plant and equipment                                          2,348                2,364

Net cash flows used in investing activities                                                (18,869)             (78,842)

Cash flows from financing activities
Proceeds from share placement                                                            6,671,880                –
Proceeds from/(repayment of) short term loans                                            1,400,553         (902,395)
Repayment of finance lease obligations                                                      (4,157)          (5,992)
Pledged fixed deposits                                                                  (2,426,763)               –

Net cash flows from/(used in) financing activities                                       5,641,513         (908,387)

Net increase/(decrease) in cash and cash equivalents                                       533,797         (442,547)
Cash and cash equivalents at beginning of the year                                       2,575,307        3,014,077
Effect of exchange differences                                                              (2,066)           3,777

Cash and cash equivalents at end of the year                                   27        3,107,038        2,575,307




The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


ANNUAL REPORT 2011       26    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


1.   Corporate information

     The Company is a limited liability company incorporated and domiciled in the Republic of Singapore
     and is listed on Singapore Exchange Securities Trading Limited (SGX-ST). The registered office and
     principal place of business is at 21 Serangoon North Avenue 5, Ban Teck Han Building #05-02, Singapore
     554864.

     The principal activities of the Company are the trading of computers, computer peripherals and accessories.
     The principal activities of the subsidiaries are described in Note 5 to the financial statements.

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


2.   Summary of significant accounting policies

2.1 Basis of preparation

     The consolidated financial statements of the Group and the balance sheet and statement of changes in
     equity of the Company have been prepared in accordance with Singapore Financial Reporting Standard
     (FRS).

     The financial statements have been prepared on a historical cost basis. The accounting policies have
     been consistently applied by the Group and the Company are consistent with those used in the previous
     financial year except as disclosed in Note 2.2 below.

     The financial statements are presented in United States Dollars (USD or $).

2.2 Changes in accounting policies

     The accounting policies adopted are consistent with those of the previous financial year except in the
     current financial year, the Group has adopted all the new and revised standards and Interpretations of
     FRS (INT FRS) that are effective for annual periods beginning on or after 1 July 2010. The adoption of
     these standards and interpretations did not have any effect on the financial performance or position of
     the Group and the Company.

2.3 Standards issued but not yet effective

     The Group has not adopted the following standards and interpretations that have been issued but not yet
     effective:
                                                                                 Effective for annual periods
     Description                                                                        beginning on or after

     – Revised FRS 24 Related Party Disclosures                                                 1 January 2011
     – Amendments to INT FRS 114 Prepayments of a Minimum Funding                               1 January 2011
       Requirement
     – INT FRS 115 Agreements for the Construction of Real Estate                               1 January 2011
     – Amendments to FRS 107 Disclosures – Transfers of Financial Assets                            1 July 2011
     – Amendments to FRS 101 – Severe Hyperinflation and Removal of
       Fixed Dates for First-time Adopters                                                         1 July 2011
     – Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets                        1 January 2012




                                                digiland international limited       27    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.3 Standards issued but not yet effective (cont’d)

     Except for the revised FRS 24, the directors expect that the adoption of the 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.

     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 when
     implemented in 2012.

2.4 Significant accounting estimates and judgement

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

     (a)   Key sources of estimation uncertainty

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

     (i)   income taxes

     The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in
     determining the group-wide provision for income taxes. There are certain transactions and computations
     for which the ultimate tax determination is uncertain during the ordinary course of business. The Company
     recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.
     Where the final tax outcome of these matters is different from the amounts that were initially recognised,
     such differences will impact the income tax and deferred tax provisions in the period in which such
     determination is made. The carrying amount of the Group’s tax payables at 30 June 2011 was $119,533
     (2010: $26,004).




ANNUAL REPORT 2011       28    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.4 Significant accounting estimates and judgement (cont’d)

     (a)   Key sources of estimation uncertainty (cont’d)

     (i)   income taxes (cont’d)

     As at 30 June 2011, the Group and Company had unutilised tax losses of approximately $53,452,000
     (2010: $50,918,000) and $33,854,000 (2010: $32,881,000) respectively and the Group and Company
     had unabsorbed capital allowances of approximately $837,000 (2010: $780,000) and $325,000
     (2010: $317,000) respectively, for which no deferred tax asset is recognised due to uncertainty of their
     recoverability. These unutilised tax losses and capital allowances may be available for offset against
     future taxable profits of the companies in which the losses arose subject to compliance with the relevant
     provisions of the Income Tax Act and agreement with the relevant tax authorities in the respective
     countries.

     (b)   Critical judgements made in applying accounting policies

     The Group follows the guidance of FRS 36 in determining when an asset is other than temporarily
     impaired. This determination requires significant judgement. The Group evaluates, among other factors,
     the duration and extent to which the fair value of an asset is less than its cost; and the financial health of
     and near-term business outlook for the asset, including factors such as industry and sector performance,
     change in technology and operational and financing requirements. Other information on impairment of
     assets is disclosed in Notes 3 and 5.

2.5 Foreign currency

     The Group’s consolidated financial statements are presented in United States Dollars, which is also the
     Company’s functional currency. Each entity in the Group determines its own functional currency and
     items included in the financial statements of each entity are measured using that functional currency.

     (a)   transactions and balances

     Transactions in foreign currencies are measured in the respective functional currencies of the Company
     and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates
     approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
     currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary
     items that are measured in terms of historical cost in a foreign currency are translated using the exchange
     rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
     currency are translated using the exchange rates at the date when the fair value was determined.

     Exchange differences arising on the settlement of monetary items or on translating monetary items at
     the end of the reporting period are recognised in profit or loss except for exchange differences arising on
     monetary items that form part of the Group’s net investment in foreign operations, which are recognised
     initially in other comprehensive income and accumulated under foreign currency translation reserve in
     equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group
     on disposal of the foreign operation.




                                                 digiland international limited        29    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.5 Foreign currency (cont’d)

     (b)   Consolidated financial statements

     For consolidation purpose, the assets and liabilities of foreign operations are translated into United States
     Dollars at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated
     at the exchange rates prevailing at the date of the transactions. The exchange differences arising on
     the translation are recognised in other comprehensive income. On disposal of a foreign operation, the
     component of other comprehensive income relating to that particular foreign operation is recognised in
     profit or loss.

     In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation,
     the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-
     controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly
     controlled entities that are foreign operations, the proportionate share of the accumulated exchange
     differences is reclassified to profit or loss.

2.6 Basic of consolidation and business combinations

     (a)   Basis of consolidation

     Basis of consolidation from 1 July 2009

     The consolidated financial statements comprise the financial statements of the Company and its
     subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries 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.

     All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-
     group transactions and dividends are eliminated in full.

     Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains
     control, and continue to be consolidated until the date that such control ceases.

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

     A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
     transaction. If the Group loses control over a subsidiary, it:

     -     De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying
           amounts at the date when controls is lost;
     -     De-recognises the carrying amount of any non-controlling interest;
     -     De-recognises the cumulative translation differences recorded in equity;
     -     Recognises the fair value of the consideration received;
     -     Recognises the fair value of any investment retained;
     -     Recognises any surplus or deficit in profit or loss;
     -     Re-classifies the Group’s share of components previously recognised in other comprehensive
           income to profit or loss or retained earnings, as appropriate.



ANNUAL REPORT 2011      30     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.6 Basic of consolidation and business combinations (cont’d)

     (a)   Basis of consolidation (cont’d)

     Basis of consolidation prior to 1 July 2009

     Certain of the above-mentioned requirements were applied on a prospective basis. The following
     differences, however, are carried forward in certain instances from the previous basis of consolidation:

     - Acquisition of non-controlling interests prior to 1 July 2009, were accounted for using the parent entity
     extension method, whereby, the difference between the consideration and the book value of the share of
     the net assets acquired were recognised in goodwill.

     - Losses incurred by the Group were attributed to the non-controlling interest until the balance was
     reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had
     a binding obligation to cover these. Losses prior to 1 July 2009 were not reallocated between non-
     controlling interest and the owners of the Company.

     - Upon loss of control, the Group accounted for the investment retained at its proportionate share of net
     asset value at the date control was lost. The carrying value of such investments as at 1 July 2009 have
     not been restated.

     (b)   Business combinations

     Business combinations from 1 July 2009

     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 recognised 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 recognised at fair value at the
     acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed
     to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a
     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 recognised in profit
     or loss.

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




                                                   digiland international limited        31    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.6 Basic of consolidation and business combinations (cont’d)

     (b)   Business combinations (cont’d)

     Business combinations prior to 1 July 2009

     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. In instances where the latter amount exceeds the former, the excess is
     recognised as gain on bargain purchase in profit or loss on the acquisition date.

     In comparison to the above mentioned requirements, the following differences applied:

     Business combinations are accounted for by applying the purchase method. Transaction costs directly
     attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly
     known as minority interest) was measured at the proportionate share of the acquiree’s identifiable net
     assets.

     Business combinations achieved in stages were accounted for as separate steps. Adjustments to those
     fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any
     additional acquired share of interest did not affect previously recognised goodwill.

     When the Group acquired a business, embedded derivatives separated from the host contract by the
     acquiree were not reassessed on acquisition unless the business combination resulted in a change in the
     terms of the contract that significantly modified the cash flows that otherwise would have been required
     under the contract.

     Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic
     outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to
     the contingent consideration were recognised as part of goodwill.

2.7 Subsidiaries

     A subsidiary is an entity over which the Group has the power to govern the financial and operating policies
     so as to obtain benefits from its activities.

     In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost
     less impairment losses.

2.8 Property, plant and equipment

     All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of
     replacing part of the property, plant and equipment and borrowing costs that are directly attributable to
     the acquisition, construction or production of a qualifying property, plant and equipment. The accounting
     policy for borrowing costs is set out in Note 2.15. The cost of an item of property, plant and equipment is
     recognised as an asset if, and only if, it is probable that future economic benefits associated with the item
     will flow to the Group and the cost of the item can be measured reliably.

     Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less
     accumulated depreciation and any accumulated impairment losses.


ANNUAL REPORT 2011      32    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.8 Property, plant and equipment (cont'd)

     Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as
     follows:

     Plant and equipment                             2 to 5 years
     Computer systems and software                   2 to 5 years
     Furniture, fittings and renovation              3 to 10 years
     Motor vehicles                                  2 to 5 years
     Office equipment                                2 to 5 years

     The carrying values of property, plant and equipment are reviewed for impairment when events or changes
     in circumstances indicate that the carrying value may not be recoverable.

     The residual value, useful life and depreciation method are reviewed at each financial year-end, and
     adjusted prospectively, if appropriate.

     An item of property, plant and equipment is derecognised upon disposal or when no future economic
     benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included
     in profit or loss in the year the asset is derecognised.

2.9 Intangible assets

     Intangible assets acquired separately are measured initially at cost. The cost of intangible assets
     acquired in a business combination is their fair value as at the date of acquisition. Following initial
     acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated
     impairment losses. Internally generated intangible assets, excluding capitalised development costs,
     are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is
     incurred.

     The useful lives of intangible assets are assessed as either finite or indefinite.

     Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for
     impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
     period and the amortisation method are reviewed at least at each financial year-end. Changes in the
     expected useful life or the expected pattern of consumption of future economic benefits embodied in the
     asset is accounted for by changing the amortisation period or method, as appropriate, and are treated
     as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is
     recognised in profit or loss in the expense category consistent with the function of the intangible asset.

     Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,
     or more frequently if the events and circumstances indicate that the carrying value may be impaired either
     individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life
     of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful
     life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is
     made on a prospective basis.

     Gains or losses arising from derecognition of an intangible asset are measured as the difference between
     the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when
     the asset is derecognised.



                                                 digiland international limited           33   ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.9 Intangible assets (cont’d)

     The amortisation periods in use are as follows:

     Distribution rights

     Distribution rights are stated at cost less accumulated amortisation and any identified impairment loss.
     The cost of distribution rights is amortised on a straight-line basis over their estimated useful lives of 3
     years.

2.10 Financial assets

     initial recognition and measurement

     Financial assets are recognised when, and only when, the Group becomes a party to the contractual
     provisions of the financial instrument. The Group determines the classification of its financial assets at
     initial recognition.

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

     Subsequent measurement

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

     (a)   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. Subsequent to initial recognition, loans and receivables
     are measured at amortised cost using the effective interest method, less impairment. Gains and losses
     are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through
     the amortisation process.

     (b)   Available-for-sale financial assets

     Available-for-sale financial assets include equity and debt securities. Equity investments classified as
     available-for sale are those, which are neither classified as held for trading nor designated at fair value
     through profit or loss. Debt securities in this category are those which are intended to be held for an
     indefinite period of time and which may be sold in response to needs for liquidity or in response to
     changes in the market conditions.

     After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any
     gains or losses from changes in fair value of the financial assets are recognised in other comprehensive
     income, except that impairment losses, foreign exchange gains and losses on monetary instruments and
     interest calculated using the effective interest method are recognised in profit or loss. The cumulative
     gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or
     loss as a reclassification adjustment when the financial asset is de-recognised.

     Investments in equity instruments whose fair value cannot be reliably measured are measured at cost
     less impairment loss.



ANNUAL REPORT 2011         34   digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.10 Financial assets (cont’d)

     derecognition

     A financial asset is derecognised where the contractual right to receive cash flows from the asset has
     expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount
     and the sum of the consideration received and any cumulative gain or loss that had been recognised in
     other comprehensive income is recognised in profit or loss.

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

2.11 Impairment of non-financial assets

     The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
     If any indication exists, or when an annual impairment testing for an asset is required, the Group makes
     an estimate of the asset’s recoverable amount.

     An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to
     sell and its value in use and is determined for an individual asset, unless the asset does not generate cash
     inflows that are largely independent of those from other assets or group of assets. Where the carrying
     amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered
     impaired and is written down to its recoverable amount. In assessing value in use, the estimated future
     cash flows expected to be generated by the asset 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. In determining fair value less costs to sell, recent market transactions are taken into account,
     if available. If no such transaction can be identified, an appropriate valuation model is used. These
     calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries
     or other available fair value indicators.

     The Group bases its impairment calculation on detailed budgets and forecast calculations which are
     prepared separately for each of the Group’s cash-generating units to which the individual assets are
     allocated. These budgets and forecast calculations are generally covering a period of five years. For
     longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth
     year.

     Impairment losses of continuing operations are recognised in profit or loss in those expense categories
     consistent with the function of the impaired asset, except for assets that are previously revalued where
     the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised
     in other comprehensive income up to the amount of any previous revaluation.

     For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any
     indication that previously recognised impairment losses may no longer exist or may have decreased. If
     such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A
     previously recognised impairment loss is reversed only if there has been a change in the estimates used
     to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is
     the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot
     exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
     been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at
     revalued amount, in which case the reversal is treated as a revaluation increase.

                                                 digiland international limited        35    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.12 Impairment of financial assets

     The Group assesses at each end of the reporting period whether there is any objective evidence that a
     financial asset is impaired.

     (a)   financial assets carried at amortised cost

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

     If there is objective evidence that an impairment loss on financial assets carried at amortised cost has
     incurred, the amount of the loss is measured as the difference between the asset’s carrying amount
     and the present value of estimated future cash flows discounted at the financial asset’s original effective
     interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss
     is the current effective interest rate. The carrying amount of the asset is reduced through the use of an
     allowance account. The impairment loss is recognised in profit or loss.

     When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced
     directly or if an amount was charged to the allowance account, the amounts charged to the allowance
     account are written off against the carrying value of the financial asset.

     To determine whether there is objective evidence that an impairment loss on financial assets has incurred,
     the Group considers factors such as the probability of insolvency or significant financial difficulties of the
     debtor and default or significant delay in payments.

     If in a subsequent period, the amount of the impairment loss decreases and the decrease can be
     related objectively to an event occurring after the impairment was recognised, the previously recognised
     impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its
     amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

     (b)   Available-for-sale financial assets

     In the case of equity investments classified as available-for-sale, objective evidence of impairment include
     (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an
     adverse effect that have taken place in the technological, market, economic or legal environment in
     which the issuer operates, and indicates that the cost of the investment in equity instrument may not be
     recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs.
     ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the
     period in which the fair value has been below its original cost.

     If an available-for-sale financial asset is impaired, an amount comprising the difference between its
     acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any
     impairment loss previously recognised in profit or loss, is transferred from other comprehensive income
     and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not
     recognised in profit or loss; increase in their fair value after impairment are recognised directly in other
     comprehensive income.


ANNUAL REPORT 2011      36     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.12 Impairment of financial assets (cont’d)

     (b)   Available-for-sale financial assets (cont’d)

     In the case of debt instruments classified as available-for-sale, impairment is assessed based on the
     same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment
     is the cumulative loss measured as the difference between the amortised cost and the current fair value,
     less any impairment loss on that investment previously recognised in profit or loss. Future interest income
     continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest
     used to discount the future cash flows for the purpose of measuring the impairment loss. The interest
     income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument
     increases and the increases can be objectively related to an event occurring after the impairment loss
     was recognised in profit or loss, the impairment loss is reversed in profit or loss.

2.13 Cash and cash equivalents

     Cash and cash equivalents comprise cash on hand and fixed deposits.

2.14 Inventories

     Inventories are valued at the lower of cost and net realisable value.

     Cost is determined on the weighted-average basis. Cost includes cost of all materials and all direct
     expenditure.

     Allowance is made for deteriorated, damaged, obsolete and slow-moving inventories.

     Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the
     carrying value of inventories to the lower of cost and net realisable value.

     Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
     necessary to make the sale.

2.15 Borrowing costs

     Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to
     the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences
     when the activities to prepare the asset for its intended use or sale are in progress and the expenditures
     and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially
     completed for their intended use or sale.

     All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and
     other costs that an entity incurs in connection with the borrowing of funds.




                                                 digiland international limited        37    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.16 Financial liabilities

     initial recognition and measurement

     Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual
     provisions of the financial instrument. The Group determines the classification of its financial liabilities at
     initial recognition.

     All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair
     value through profit or loss, directly attributable transaction costs.

     Subsequent measurement

     After initial recognition, financial liabilities are subsequently measured at amortised cost using the
     effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are
     derecognised, and through the amortisation process.

     derecognition

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

2.17 Provisions

     Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a
     result of a past event, it is probable that an outflow of resources embodying economic benefits will be
     required to settle the obligation and the amount of the obligation can be estimated reliably.

     Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best
     estimate. If it is no longer probable that an outflow of economic resources will be required to settle the
     obligation, the provision is reversed. If the effect of the time value of money is material, provisions are
     discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability.
     When discounting is used, the increase in the provision due to the passage of time is recognised as a
     finance cost.

2.18 Employee benefits

     Defined contribution plan

     The Group participates in the national pension schemes as defined by the laws of the countries in which
     it has operations. In particular, the Singapore companies in the Group make contributions to the Central
     Provident Fund scheme in Singapore, a defined contribution pension schemes.

     Contributions to national pension schemes are recognised as an expense in the period in which the
     related service is performed.




ANNUAL REPORT 2011       38     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.18 Employee benefits (cont'd)

     Retirement benefits

     One of the subsidiary company operates a defined benefit pension plan which is unfunded. The cost of
     providing benefits under the defined benefit plan is determined using the projected unit credit actuarial
     valuation method. Actuarial gain or loss is recognised as income or expense in the profit or loss. The gain
     or loss is recognised over the expected average remaining working lives of the employees participating
     in the plan.

     The past service cost is recognised as an expense on a straight-line basis over the average period until
     the benefits become vested. If the benefits are already vested immediately following the introduction of,
     or changes to, a pension plan, past service cost is recognised immediately.

     The defined benefit liability is the aggregate of the present value of the defined benefit obligation and
     actuarial gains and losses not recognised, reduced by past service cost not yet recognised.

     This subsidiary company’s right to be reimbursed of some or all of the expenditure required to settle
     a defined benefit obligation is recognised as a separate asset at fair value when and only when
     reimbursement is virtually certain.

     Employee leave entitlement

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

2.19 Leases

     The determination of whether an arrangement is, or contains a lease is based on the substance of
     the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a
     specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered
     into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the
     transitional requirements of INT FRS 104.

     as lessee

     Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership
     of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if
     lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the
     amount capitalised. Lease payments are apportioned between the finance charges and reduction of the
     lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
     charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in
     which they are incurred.

     Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and
     the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the
     lease term.

     Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the
     lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of
     rental expense over the lease term on a straight-line basis.


                                                 digiland international limited         39    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.20 Financial guarantee

     A financial guarantee contract is a contract that requires the issuer to make specified payments to
     reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
     accordance with the terms of a debt instrument.

     Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that
     are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial
     guarantees are recognised as income in profit or loss over the period of the guarantee. If it is probable
     that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded
     at the higher amount with the difference charged to profit or loss.

2.21 Government grants

     Government grants are recognised at their fair value where there is reasonable assurance that the grant
     will be received and all attaching conditions will be complied with. Where the grant relates to an asset,
     the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or
     loss over the expected useful life of the relevant asset by equal annual instalments.

2.22 Revenue

     Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
     the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured
     at the fair value of consideration received or receivable, taking into account contractually defined terms
     of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine
     if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its
     revenue arrangements. The following specific recognition criteria must also be met before revenue is
     recognised:

     Sale of goods

     Revenue is recognised net of goods and services tax and discounts upon the transfer of significant risks
     and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not
     recognised to the extent where there are significant uncertainties regarding recovery of the consideration
     due, associated costs or the possible return of goods.

     Interest

     Interest income is recognised using the effective interest method.

     Rendering of services

     Where the contract outcome can be reliably measured:

     -    Revenue from provision of e-business solutions/services is recognised on an individual contract
          basis by reference to the stage of completion. The stage of completion is measured by the proportion
          that costs incurred for work performed to date bears to estimated total contract costs.

     -    Revenue from maintenance service is recognised on a time proportion basis based on the contract
          period.



ANNUAL REPORT 2011       40    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.22 Revenue (cont'd)

     Where the contract outcome cannot be reliably measured:

     -     Revenue is recognised only to the extent of the expenses recognised which are recoverable.

     Billings in relation to maintenance services that have yet been rendered are recognised as deferred
     revenue. The deferred revenue is credited to profit or loss on a straight line basis over the period of the
     contract.

2.23 Taxes

     (a)   Current income tax

     Current income tax assets and liabilities for the current and prior periods are measured at the amount
     expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
     compute the amount are those that are enacted or substantively enacted by the end of the reporting
     period, in the countries where the Group operates and generates taxable income.

     Current income taxes are recognised in profit or loss except to the extent that the tax relates to items
     recognised outside profit or loss, either in other comprehensive income or directly in equity. Management
     periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
     regulations are subject to interpretation and establishes provisions where appropriate.

     (b)   deferred tax

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

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

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

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

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

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

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


                                                  digiland international limited         41    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.23 Taxes (cont’d)

     (b)   deferred tax (cont’d)

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

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

     Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
     tax items are recognised in correlation to the underlying transaction either in other comprehensive income
     or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on
     acquisition.

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

     (c)   Sales tax

     Revenues, expenses and assets are recognised net of the amount of sales tax except:

     -     Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
           authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or
           as part of the expense item as applicable; and

     -     Receivables and payables that are stated with the amount of sales tax included.

     The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
     receivables or payables in the balance sheet.

2.24 Segment reporting

     For management purposes, the Group is organised into operating segments based on their products
     and services which are independently managed by the respective segment managers responsible for the
     performance of the respective segments under their charge. The segment managers report directly to
     the management of the Company who regularly review the segment results in order to allocate resources
     to the segments and to assess the segment performance. Additional disclosures on each of these
     segments are shown in Note 32, including the factors used to identify the reportable segments and the
     measurement basis of segment information.

2.25 Share capital and share issuance expenses

     Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs
     directly attributable to the issuance of ordinary shares are deducted against share capital.



ANNUAL REPORT 2011      42     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


2.   Summary of significant accounting policies (cont’d)

2.26 Contingencies

     A contingent liability is:

     (a)   a possible obligation that arises from past events and whose existence will be confirmed only by the
           occurrence or non-occurrence of one or more uncertain future events not wholly within the control
           of the Group; or

     (b)   a present obligation that arises from past events but is not recognised because:

           (i)    It is not probable that an outflow of resources embodying economic benefits will be required to
                  settle the obligation; or
           (ii)   The amount of the obligation cannot be measured with sufficient reliability.

     A contingent asset is a possible asset that arises from past events and whose existence will be confirmed
     only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
     control of the Group.

     Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for
     contingent liabilities assumed in a business combination that are present obligations and which the fair
     values can be reliably determined.

2.27 Related parties

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

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

     (b)   The party is an associate;

     (c)   The party is a jointly-controlled entity;

     (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); or

     (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 the employees of the Group, or of any
           entity that is a related party of the Group.




                                                   digiland international limited         43    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


3.   property, plant and equipment

                                             Computer
                                             systems furniture,
                                   plant and   and    fittings and     motor       Office
     group                        equipment software renovation       vehicles   equipment    total
                                       $        $           $            $           $          $

     Cost
     Balance at 1 July 2009           1,967    142,612     427,369    122,072     183,091     877,111
     Additions                            –      1,183      60,773     18,705         545      81,206
     Disposals                            –          –     (10,564)   (98,054)          –    (108,618)
     Translation differences              –        293      23,172      2,603       7,462      33,530

     Balance at 30 June 2010
       and 1 July 2010                1,967    144,088     500,750     45,326     191,098    883,229
     Additions                            –        743      19,829          –         645     21,217
     Disposals                            –          –           –    (26,602)          –    (26,602)
     Translation differences              –        495      34,748      2,591      10,674     48,508

     Balance at 30 June 2011          1,967    145,326     555,327     21,315     202,417    926,352

     accumulated
      depreciation
     Balance at 1 July 2009           1,967    141,618     397,637    122,072     182,692     845,986
     Charge for the year                  –        830      26,119      1,030         439      28,418
     Disposals                            –          –     (10,564)   (98,054)          –    (108,618)
     Translation differences              –        267      20,886      2,574       7,439      31,166

     Balance at 30 June 2010
       and 1 July 2010                1,967    142,715     434,078     27,622     190,570    796,952
     Charge for the year                  –      1,133      33,252      4,418         192     38,995
     Disposals                            –          –           –    (26,602)          –    (26,602)
     Translation differences              –        433      30,546        375      10,631     41,985

     Balance at 30 June 2011          1,967    144,281     497,876      5,813     201,393    851,330

     net book value
     At 30 June 2011                      –       1,045     57,451     15,502       1,024     75,022

     At 30 June 2010                      –       1,373     66,672     17,704        528      86,277




ANNUAL REPORT 2011     44      digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


3.   property, plant and equipment (cont’d)

                                          Computer
                                          systems furniture,
                                plant and   and    fittings and       motor          Office
     Company                   equipment software renovation         vehicles      equipment       total
                                    $        $           $              $              $             $

     Cost
     Balance at 1 July 2009        1,967      128,602       9,780      26,602           36,642    203,593
     Additions                         –        1,183      13,674           –                –     14,857

     Balance at 30 June 2010
       and 1 July 2010             1,967      129,785      23,454      26,602           36,642    218,450
     Additions                         –          743           –           –                –        743
     Disposals                         –            –           –     (26,602)               –    (26,602)

     Balance at 30 June 2011       1,967      130,528      23,454              –        36,642    192,591

     accumulated
      depreciation
     Balance at 1 July 2009        1,967      128,593       9,779      26,602           36,641    203,582
     Charge for the year               –          394       4,558           –                –      4,952

     Balance at 30 June 2010
       and 1 July 2010             1,967      128,987      14,337      26,602           36,641    208,534
     Charge for the year               –          902       6,837           –                –      7,739
     Disposals                         –            –           –     (26,602)               –    (26,602)

     Balance at 30 June 2011       1,967      129,889      21,174              –        36,641    189,671

     net book value
     At 30 June 2011                   –          639       2,280              –            1       2,920

     At 30 June 2010                   –          798       9,117              –            1       9,916


4.   intangible assets

     group and Company                                                              distributorship rights
                                                                                              $

     Cost
     Balance at 1 July 2009, 30 June 2010, 1 July 2010 and 30 June 2011                     1,500,000

     accumulated amortisation
     Balance at 1 July 2009, 30 June 2010, 1 July 2010 and 30 June 2011                     1,500,000

     net book value
     Balance at 1 July 2009, 30 June 2010, 1 July 2010 and 30 June 2011                            –




                                              digiland international limited       45    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


5.   investment in subsidiaries

                                                                                                 Company
                                                                                          2011             2010
                                                                                           $                 $

     Unquoted equity investments - at cost
     Cost                                                                            26,700,010        26,533,759
     Less: Allowance for impairment in investment value                             (25,934,784)      (25,934,784)

     Carrying amount                                                                   765,226             598,975

     Analysis of impairment loss in investment in value:
     Balance at beginning and end of year                                           25,934,784         25,934,784

     Details of the subsidiaries at the end of the financial year are as follows:

                                                           Country of   effective
                                                         incorporation equity held
                                                          and place of   by the              Cost of investment
     name of subsidiary             principal activities   business      group                by the Company
                                                                       2011 2010              2011        2010
                                                                        %      %                $          $
     Held by the Company

     Infonet Systems and            Trading and             Singapore       100     100          331,953    331,953
     Services Pte Ltd (1)           providing technical
                                    and consultancy
                                    services in high
                                    technology products

     Digiland (Thailand) Ltd. (2)   Trading of               Thailand       100     100     2,119,140 1,952,889
                                    computers and
                                    related accessories

     Digiland Distribution (M)      Trading of               Malaysia       100     100     3,766,035 3,766,035
     Sdn. Bhd. (2)                  computers and
                                    accessories,
                                    and provision
                                    of computer-
                                    related services
                                    (currently inactive)

     Digiland Japan Co Ltd (4)      Sales and marketing       Japan         100     100           85,669     85,669
                                    of computer
                                    peripherals and
                                    equipment, and etc
                                    (in the process of
                                    winding up)

     Digilandmall.com Pte Ltd       Internet-retailing      Singapore       100     100          573,643    573,643
     (1)
                                    of computers and
                                    related accessories
                                    (currently inactive)



ANNUAL REPORT 2011      46     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


5.   investments in subsidiaries (cont’d)

     Details of the subsidiaries at the end of the financial year are as follows:

                                                              Country of   effective
                                                            incorporation equity held
                                                             and place of   by the                        Cost of investment by
     name of subsidiary                principal activities   business      group                             the Company
                                                                          2011 2010                         2011        2010
                                                                           %      %                           $           $
     Held by the Company
     Digiland Pty Ltd (3)             Wholesaling of                 Australia         100     100        10,967,395 10,967,395
                                      computer hardware
                                      (currently inactive)

     DG Shanghai International Trading of                            People’s          100     100          400,000       400,000
     Trading Co., Ltd (3)      computers,                           Republic of
                               computer                               China
                               peripherals and
                               accessories
                               (currently inactive)

     Digiland (Hong Kong)             Trading of computer           Hong Kong          99.9 99.9          2,530,293     2,530,293
     Limited (3)                      and computer
                                      components
                                      (currently inactive)

     Digiland (Singapore) Pte         Trading of                    Singapore          100     100        5,747,126     5,747,126
     Ltd (4)                          computers,
                                      computer
                                      peripherals and
                                      accessories
                                      (in the process of
                                      winding up)

     Digiland Vietnam Pte Ltd         Trading of                    Singapore          100     100          178,756       178,756
     (4)
                                      computers,
                                      computer
                                      peripherals and
                                      accessories
                                      (in the process of
                                      winding up)
                                                                                                          26,700,010 26,533,759

     Held by subsidiaries
     Infonet Systems and              Trading and                    Malaysia          100     100                  -              -
     Services (M) Sdn Bhd (3)         providing technical
                                      and consultancy
                                      services in high
                                      technology products
                                      (currently inactive)
     (1)
           Audited by Ernst & Young LLP, Singapore.
     (2)
           Audited by member firms of Ernst & Young Global in the respective countries of incorporation.
     (3)
           The foreign subsidiary company is not significant in the context of clause 717 of the Singapore Exchange Securities Trading
           Limited (“SGX-ST”) Listing Manual.
     (4)
           Not required to be audited as companies are in the process of winding up.




                                                        digiland international limited               47     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


6.   other investments

                                                                                   group and Company
                                                                                    2011        2010
                                                                                   $’000        $’000
     Available for sale
     Unquoted shares at cost                                                                1               1


7.   inventories

                                                                                            group
                                                                                    2011             2010
                                                                                     $                $

     Trading stocks                                                              3,516,911        1,127,195
     Goods-in-transit                                                              189,187                –
     Trading inventories at lower of cost and net realisable value               3,706,098        1,127,195

     During the financial year, the Group and the Company wrote back $2,836 (2010: $1,301,924) of inventories
     written down previously as these inventories were subsequently sold.

     The Group’s and Company’s inventories at net realisable value are stated net of allowance for inventory
     obsolescence of $34,300 and $23,392 (2010: $63,884 and $25,010) respectively.


8.   trade receivables

                                                           group                           Company
                                                    2011               2010         2011             2010
                                                     $                  $            $                 $

     Trade receivables                           9,615,882           7,783,453     593,103          580,659
     Less: Allowance for doubtful
           receivables                           (3,090,315)     (2,872,501)      (277,734)         (277,734)

     Balance at year end                         6,525,567           4,910,952     315,369          302,925

     Trade receivables are non-interest bearing and are generally on 30 to 60 days’ terms. They are recognised
     at their original invoice amounts which represents their fair values on initial recognition.

     As at 30 June, the following currency denominated amounts are included in the trade receivables of the
     Group and Company:

                                                           group                           Company
                                                    2011               2010         2011             2010
                                                     $                   $           $                 $

     - In Singapore Dollar                          21,804              14,790       4,891            2,402
     - In United States Dollar                     334,144             302,212     310,478          300,523
     - In Thai Baht                              6,169,619           4,593,950           –                –

                                                 6,525,567           4,910,952     315,369          302,925




ANNUAL REPORT 2011     48    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


8.   trade receivables (cont’d)

     Trade receivables that are past due but not impaired

     The Group has trade receivables amounting to $152,581 (2010: $412,342) that are past due at the
     balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at
     the balance sheet date is as follows:

                                                                                          group
                                                                                  2011             2010
                                                                                   $                 $
     Trade receivables past due

     30 to 60 days                                                                 63,516          19,839
     61 to 90 days                                                                 22,314          13,035
     91 to 180 days                                                                18,309         379,468
     181 to 360 days                                                               48,442               –

                                                                                  152,581         412,342

     Trade receivables that are impaired

     Trade receivables that are determined to be impaired at the balance sheet date relate to debtors that
     are in financial difficulties and have defaulted on payments. These receivables are not secured by any
     collateral or credit enhancements.

                                                            group                        Company
                                                   2011             2010          2011             2010
                                                    $                $             $                 $
     Trade receivables that are impaired

     Gross amount                               3,427,177        3,263,474        227,734          277,734
     Less: Allowance for doubtful debts        (3,090,315)      (2,872,501)      (227,734)        (277,734)

                                                  336,862           390,973              –                –

     The above represents an allowance for individually impaired trade receivables whose carrying values
     aggregate $3,427,177 (2010: $3,263,474) as at year end. The individually impaired trade receivables are
     not expected to be recovered except for an amount assessed as recoverable. The Group does not hold
     collateral or other credit enhancements over these balances.

     Allowance for doubtful debts

     For the year ended 30 June 2011, an impairment loss of $44,766 (2010: $44,155) was recognised in the
     consolidated statement of comprehensive income of the Group subsequent to a debt recovery assessment
     performed on trade receivables as at 30 June 2011. The impairment loss is recognised in the “Allowance
     for receivables, net” line in the consolidated statement of comprehensive income.




                                              digiland international limited      49     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


8.   trade receivables (cont’d)

     Movements in the allowance for doubtful debts

                                                          group                           Company
                                                   2011            2010            2011             2010
                                                    $                $              $                 $

     At 1 July 2010                             2,872,501        4,134,195        277,734         277,734
     Charge for the year                           44,766           44,155              –               –
     Written off against allowance                 (3,543)      (1,544,330)             –               –
     Exchange differences                         176,591          238,481              –               –

     At 30 June 2011                            3,090,315       2,872,501         277,734         277,734


9.   other receivables and deposits

                                                          group                           Company
                                                   2011            2010            2011             2010
                                                    $               $               $                $

     Deposits
     - purchase of investment (Note 1)          4,080,000                –       4,080,000               –
     - others                                     477,406          434,234          25,655          21,335
     Input tax recoverable                        120,946          486,615               –               –
     Sales incentive recoverable                  550,893          191,474               –               –
     Other receivables                            864,355          828,772         571,862         571,862
     Less: Allowance for doubtful debts          (753,989)        (679,615)       (571,862)       (571,862)

                                                 5,339,611      1,261,480        4,105,655          21,335

     Note 1
     On 13 May 2011, the Company entered into a Sale and Purchase Agreement (“SPA”) with TianJin General
     Nice Coke & Chemicals Co., Ltd (“TGNCC”) to purchase 15% interest of Thai General Nice Coal and
     Coke Co., Ltd (“Thai GNCC”), an investment in a coke plant in Thailand. In addition to the SPA, TGNCC
     has granted the Company an option to purchase up to an additional 15% interest of Thai GNCC.

     The completion of the purchase 15% of interest in Thai GNCC is subject to various conditions precedent
     including shareholders approval at an extraordinary general meeting, satisfactory due diligence, and the
     determination of acceptable fair market value pursuant to a valuation report.

     A refundable deposit of $4,080,000 (S$5,000,000) was placed for the purchase of 15% interest. In the
     event of this SPA is terminated for any reason whatsoever, the refundable deposit (including interest
     thereon at 4% per annum) shall be refunded to the Company within 14 days of the termination of the
     SPA.




ANNUAL REPORT 2011     50    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


9.   other receivables and deposits (cont'd)

     As at 30 June, the following currency denominated amounts are included in the other receivables and
     deposits of the Group and Company:

                                                            group                           Company
                                                    2011             2010            2011             2010
                                                     $                 $              $                 $

     - In Singapore Dollar                        4,107,439          21,341        4,105,655           21,335
     - In Thai Baht                               1,232,172       1,240,139                –                –

                                                  5,339,611       1,261,480        4,105,655           21,335

     Movement in the allowance for doubtful debts

     At 1 July 2010                                 679,615         624,884          571,862         571,862
     Charge for the year                             71,701          54,021                –               –
     Write back of allowance                         (1,857)              –                –               –
     Exchange differences                             4,530             710                –               –

     At 30 June 2011                                753,989         679,615          571,862         571,862


10. due to subsidiaries (non-trade)
    due from/(to) subsidiaries (trade)/(non-trade)
    loan to/(from) subsidiaries
    due to related party (non-trade)

     The balances, loans to subsidiaries and due to related party are unsecured, interest-free and are repayable
     on demand. These amounts are to be settled in cash.

     The non-trade amounts due from/(to) subsidiaries came from payments made on behalf of/(by) the
     subsidiaries of the Group. The balances are unsecured, interest free and repayable on demand. These
     amounts are to be settled in cash.

     A loan from a subsidiary denominated in SGD has no repayment terms and is repayable only when the
     cash flows of the borrower permits. Accordingly, the fair value of the loan is not determinable as the
     timing of the future cash flows arising from the loan cannot be estimated reliably. The loan is unsecured
     and is interest free. The loan is to be settled in cash.




                                                digiland international limited       51     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


10. due to subsidiaries (non-trade) (cont'd)
    due from/(to) subsidiaries (trade)/(non-trade)
    loan to/(from) subsidiaries
    due to related party (non-trade)

                                                                      Company
                                                               2011             2010
                                                                $                 $
    Due from subsidiaries (trade)
    - In Singapore Dollar                                      37,373        19,546
    - In United States Dollar                                 104,735       104,735

                                                              142,108       124,281

    Due from subsidiaries (non-trade)
    - In Singapore Dollar                                      672,285       590,590
    - In United States Dollar                                2,068,352     2,119,808

                                                             2,740,637     2,710,398

    Loan to subsidiaries
    - In United States Dollar                                   18,290          18,290
    - In Thai Baht                                           1,448,508               –

                                                             1,466,798          18,290

    Due to subsidiaries (trade)
    - In United States Dollar                                2,256,806     2,256,806

    Due to related party (non-trade)
    - In United States Dollar                                 187,172       175,563

    Loan from a subsidiary
    - In Singapore Dollar                                    3,818,618     3,354,592
    - In United States Dollar                                  416,000       416,000

                                                             4,234,618     3,770,592




ANNUAL REPORT 2011    52    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


11. trade payables

                                                        group                           Company
                                                 2011            2010            2011             2010
                                                  $                $              $                 $

    External parties                           8,929,618       5,179,871         23,788         293,294

    Trade payables are non-interest bearing and are normally settled on 30 to 90 days terms.

    As at 30 June, the following currency denominated amounts are included in the trade payables of the
    Group and Company:

                                                        group                           Company
                                                 2011            2010            2011             2010
                                                  $                $              $                 $

    -   In Singapore Dollar                       12,858           7,663          2,343           2,058
    -   In United States Dollar                1,082,932       1,034,959         21,445         291,236
    -   In Thai Baht                           7,825,635       4,129,721              –               –
    -   In Malaysian Ringgit                       8,193           7,528              –               –

                                               8,929,618       5,179,871         23,788         293,294


12. other payables

    Other payables are unsecured, non-interest bearing and have an average term of 1 month.

    As at 30 June, the following currency denominated amounts are included in the other payables of the
    Group and Company:

                                                        group                           Company
                                                 2011            2010            2011             2010
                                                  $               $               $                 $

    -   In Singapore Dollar                       86,686         72,945           43,611          37,465
    -   In United States Dollar                  182,970        185,901            4,008           7,008
    -   In Thai Baht                              72,891         54,480                –           8,018
    -   In other currencies                        5,619            869                –               –

                                                 348,166        314,195          47,619           52,491




                                             digiland international limited      53     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


13. accrued operating expenses

                                                           group                           Company
                                                   2011             2010            2011             2010
                                                    $                 $              $                 $

    Accrued purchases                              124,669           7,200          124,669           7,200
    Accrued operating expenses                     274,435         396,668          135,338         284,906
    Accrued personnel expenses                     116,485          87,213           94,968          71,769
    Deferred income                                      –          10,481                –               –

                                                   515,589         501,562          354,975         363,875


14. Borrowings

                                                           group                           Company
                                                   2011             2010            2011             2010
                                                    $                 $              $                 $
    Current
    Finance lease obligation                             –            4,157                –           4,157
    Loan from a director                           469,320                –                –               –
    Promissory notes
    - Thai Baht                                  4,122,991       2,921,728                 –                –

                                                 4,592,311       2,925,885                 –           4,157

    Loan from a director

    Loan from a director is due for repayment in cash by 30 September 2011. The loan is unsecured and
    interest free.

    Promissory notes

    A subsidiary drew down $4,122,991 (Baht 125,000,000) from a $5,000,000 (Baht 155,000,000) credit
    facility granted by a commercial bank. This facility has a tenure of 3 months and is secured by a corporate
    guarantee for Baht 155,000,000 from the Company. The bank loan bears floating interest rates ranging
    from 7% to 9.5% (2010: 6.25% to 7.50%) per annum which are also the effective interest rates. These
    interest rates are contractually repriced at intervals of less than 12 months.


15. Share capital

                                                             group and Company
                                               2011            2010         2011                     2010
                                                 number of shares            $                         $

    Issued and fully paid:
    At beginning and of year
    - Ordinary shares                     8,525,997,117       8,525,997,117     23,005,355       23,005,355
    - Share placement                     1,705,199,000                   –      6,671,880                –

    At end of year                       10,231,196,117       8,525,997,117     29,677,235       23,005,355




ANNUAL REPORT 2011    54    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


16. revenue

                                                                                            group
                                                                                    2011             2010
                                                                                     $                 $

    Sales of goods                                                               58,759,165      48,040,845
    Sales of services                                                               282,400         225,617

                                                                                 59,041,565      48,266,462


17. operating loss

    Operating loss is stated after charging/(crediting) the following:

                                                                                            group
                                                                                    2011             2010
                                                                                     $                $
    Other income
    - Vendors rebates                                                              (443,274)        (578,063)
    - Gain on disposal of fixed assets                                               (2,348)          (2,364)
    - Miscellaneous income                                                          (28,029)         (28,861)

                                                                                   (473,651)        (609,288)

    Other operating expenses
    - Advertising expenses                                                          39,053          143,889
    - Selling expenses                                                             293,859          188,055
    - Delivery expenses                                                            122,686          117,409
    - Establishment expenses                                                       313,138          285,074
    - Professional expenses                                                        257,520          232,192
    - Non-audit fees paid to the auditors of the Company                            15,000           14,655
    - Administrative expenses                                                      298,118          169,968
    - Miscellaneous expenses                                                       505,453          321,929

                                                                                  1,844,827       1,473,171


18. personnel expenses

                                                                                            group
                                                                                    2011             2010
                                                                                     $                $

    Salaries, wages and bonuses                                                   1,488,646       1,281,784
    Central Provident Fund and other defined contribution plans                      93,580          81,009
    Other personnel expenses                                                         62,974          26,040

                                                                                  1,645,200       1,388,833

    Personnel expenses include directors and key executive officers’ remuneration as disclosed in Note 29.




                                                digiland international limited      55     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


19. allowance for receivables, net

                                                                       group
                                                                2011           2010
                                                                 $               $

    Allowance for doubtful debts – trade receivables             44,766         44,155
    Allowance for doubtful debts – other receivables             69,844         54,021

                                                                114,610         98,176


20. allowance for/(write-back of) inventory obsolescence, net

                                                                       group
                                                                2011           2010
                                                                 $               $

    Allowance for inventory obsolescence                         10,395        10,049
    Write-back of allowance for inventory obsolescence           (2,836)   (1,301,924)

                                                                  7,559    (1,291,875)


21. financial expenses

                                                                       group
                                                                2011           2010
                                                                 $               $

    Interest expense on
    - bank borrowings                                           312,408        240,394
    - finance lease                                                 608          1,048
    - bank overdraft                                                519          1,099
    - others                                                     31,658            244

                                                                345,193        242,785


22. financial income

                                                                       group
                                                                2011           2010
                                                                 $               $

    Interest income on
    - bank balances                                               3,856            631
    - fixed deposits                                              9,464         10,888
    - others                                                      9,540              –

                                                                 22,860         11,519




ANNUAL REPORT 2011    56   digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


23. income tax

    Major components of income tax expense for the year ended 30 June were:

                                                                                          group
                                                                                  2011             2010
                                                                                   $                 $

    Income tax expense recognised in profit or loss                              104,353           50,053

    A reconciliation between tax expense and the product of accounting loss multiplied by the applicable
    corporate tax rate for the years ended 30 June is as follows:

                                                                                          group
                                                                                  2011             2010
                                                                                   $                 $

    Accounting loss before income tax                                            (683,356)        (834,720)

    Tax at the domestic rates applicable to profits/losses in the concerned
     countries                                                                   (116,171)        (141,902)
    Tax effect of expenses not deductible for tax purposes                        148,906           68,011
    Non-taxable income                                                           (104,912)        (340,817)
    Tax effect of different tax rate in other countries                             9,296           12,066
    Deferred tax assets not recognised                                            167,234          452,695

    Income tax expense recognised in profit or loss                              104,353           50,053

    As at 30 June 2011, the Group and Company had unutilised tax losses of approximately $53,452,000
    (2010: $50,918,000) and $33,854,000 (2010: $32,881,000) respectively and the Group and Company
    had unabsorbed capital allowances of approximately $837,000 (2010: $780,000) and $325,000
    (2010: $317,000) respectively, for which no deferred tax asset is recognised due to uncertainty of their
    recoverability. These unutilised tax losses and capital allowances may be available for carrying forward
    and offsetting against future taxable profits of the companies in which the losses arose subject to the
    agreement of the tax authorities and compliance with certain provisions of the tax legislation of the
    respective countries in which the companies operate.

    deferred income tax assets

    Deferred income tax assets not recognised as at 30 June related to the following:

                                                          group                          Company
                                                   2011            2010           2011             2010
                                                    $                $             $                 $

    Unabsorbed capital allowances                 151,000          140,000         55,000          54,000
    Unabsorbed tax losses                      10,094,000        9,496,000      5,755,000       5,590,000

                                               10,245,000        9,636,000      5,810,000       5,644,000




                                              digiland international limited      57     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


24. directors’ remuneration

    The number of directors of the Company whose emoluments fall within the following bands:

                                                                                   2011            2010

    S$250,000 to below S$500,000                                                          1               1
    Below S$250,000                                                                       3               3

                                                                                          4               4


25. loss per share

    Basic loss per share amounts are calculated by dividing the net loss from operations attributable to
    ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding
    during the year.

    The following reflects the profit or loss and share data used in the computation of basic earnings per
    share from operations for the years ended 30 June:

                                                                                        group
                                                                               2011               2010
                                                                                $                   $

    Loss from operations attributable to ordinary equity holders of the
     Company used in computation of basic earnings per share                    (787,709)         (884,773)

    Weighted average number of ordinary shares for basic earnings and
     loss per share computation                                       9,123,984,712           8,525,997,117

    There is no dilutive effect for loss per share as there were no options granted under the Digiland Share
    Option Plan.


26. Employee benefits

    Digiland Share Option Plan (“DSOP”)

    The DSOP enables directors and certain classes of employees of the Company and its subsidiaries to
    subscribe for ordinary shares of S$0.15 each in the capital of the Company. The additional ordinary
    shares to be allotted and issued pursuant to the Plan shall not exceed 15% of the issued share capital of
    the Company. Other information regarding the Plan is set out below:

    (i)    The exercise price of the option can be set at a discount to the market price not exceeding 20% of
           the market price in respect of options granted at the time of grant; and

    (ii)   The shares under option are to be exercised in pre-determined blocks of shares ranging from 5,000
           to 2,000,000 thereof on the payment of the exercise price.

    There were no outstanding DSOP grants as at the year end.




ANNUAL REPORT 2011     58    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


26. Employee benefits (cont’d)

    Digiland Performance Share Plan (“DPSP”)

    The DPSP was approved by the Company during the Extraordinary General Meeting on 31 October 2006.
    The DPSP contemplates the awards of fully paid-up shares, their equivalent cash value or combinations
    thereof will be granted, free of payment to selected employees of the Company and its subsidiaries,
    including executive directors of the Company.

    The total number of new ordinary shares in the Company which may be issued in respect of:

    (i)    all awards granted under the DPSP; and

    (ii)   all options granted under the DSOP

    will not exceed 15% of the number of shares issued share capital of the Company on the day preceding
    the relevant award.

    There has been no award and no option granted during the financial year. There were no outstanding
    DPSP grants as at the year end.


27. Cash and cash equivalents

    Cash and cash equivalents included in the consolidated statement of cash flows comprise:

                                                           group                          Company
                                                    2011           2010            2011             2010
                                                     $               $              $                 $

    Fixed deposits                                       –        307,581                –               –
    Pledged fixed deposits - current             1,326,927        309,073                –               –
                           - non current         1,408,909              –                –               –
                                                 2,735,836        616,654                –               –
    Cash and bank balances                       3,107,038      2,267,726        1,261,569       1,369,906

                                                 5,842,874      2,884,380        1,261,569       1,369,906
    Less: Pledged fixed deposits                (2,735,836)      (309,073)               –               –

    Cash and cash equivalents                    3,107,038      2,575,307        1,261,569       1,369,906

    The cash and cash equivalents of the Group include an amount of $2,735,836 (2010: $309,073) pledged
    as security in respect of bank guarantees.




                                                digiland international limited     59     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


27. Cash and cash equivalents (cont’d)

    As at 30 June, the following currency denominated amounts are included in the cash and cash equivalents
    of the Group and Company:

                                                           group                           Company
                                                 2011              2010             2011              2010
                                                  $                  $               $                  $

    -   In Singapore Dollar                    1,148,515       1,037,254        1,020,592            935,896
    -   In Malaysian Ringgit                       6,428           2,185                –                  –
    -   In United States Dollar                  268,038         545,259          240,977            434,010
    -   In Thai Baht                           4,415,374       1,290,002                –                  –
    -   In other currencies                        4,519           9,680                –                  –

                                               5,842,874       2,884,380        1,261,569           1,369,906


28. Commitments

    (a)    finance lease commitments

    The Group and Company have finance lease for certain items of office equipment (Note 3). The lease
    terms for these office equipment are 5 years with options to purchase at the end of the lease term. The
    lease terms do not contain restrictions concerning dividends, additional debt or further leasing. In 2010,
    the effective interest rates per annum on finance lease for the Group and Company were 6.451% and
    6.451% per annum respectively. The finance lease was fully repaid in current financial year.

    Future minimum lease payments under finance leases together with the present value of the net minimum
    lease payments are as follows:

                                                group                                 Company
                                  minimum                    present      minimum                     present
                                    lease      finance       value of       lease      finance        value of
                                  payments     charges      payments      payments     charges       payments
                                      $           $             $             $           $              $
    2010
    Repayable
    - Not later than one year        4,851         (694)       4,157        4,851           (694)        4,157

    (b)    operating lease commitments

    The Group and the Company has various operating lease agreements for renting of office premises and
    warehouses. Most leases have an average life of between 2 and 3 years and contain renewable options.
    Lease terms do not contain restrictions on the Group and Company’s activities concerning dividends,
    additional debt or further leasing.

    Operating lease payments recognised in the consolidated statement of comprehensive income during the
    year amount to $165,189 (2010: $214,357)




ANNUAL REPORT 2011      60    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


28. Commitments (cont’d)

    (b)   operating lease commitments (cont’d)

    Future minimum lease payments payable under non-cancellable operating leases as at 30 June are as
    follows:
                                                    group                         Company
                                             2011           2010             2011           2010
                                               $              $               $               $

    Not later than one year                       210,640         207,029          107,640           87,663
    Later than one year and not later than
     five years                                   155,931           32,874         150,931           32,874

                                                  366,571         239,903          258,571         120,537

    (c)   Corporate guarantees

    As at 30 June 2011, the Company had issued corporate guarantee of approximately $8.3 million (2010:
    $2.9 million) for banking facilities granted to a subsidiary.


29. related party transactions

    Compensation of key management personnel

                                                                                           group
                                                                                   2011             2010
                                                                                    $                 $

    Short-term employee benefits                                                   739,832         615,230
    Central Provident Fund and other defined contribution plans                     27,454          19,197

    Total compensation paid to key management personnel                            767,286         634,427

    Comprise amounts paid to:
    Directors of the Company                                                       407,841         333,085
    Directors of the subsidiaries                                                   92,788          86,452
    Other key management personnel                                                 266,657         214,890

                                                                                   767,286         634,427

    The remuneration of key management personnel are determined by the remuneration committee having
    regard to the performance of individuals and market trends.

    The directors are of the opinion that all the transactions above have been entered in the normal course of
    business and have been established on terms and conditions that are not materially different from those
    obtainable in transactions with unrelated parties.




                                              digiland international limited       61     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


30. financial risk management objectives and policies

    The Group and the Company is exposed to financial risks arising from its operations and the use of
    financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign
    currency risk. The Board reviews and agrees policies for managing each of these risks, which are
    executed by the Chief Financial Officer. The Audit Committee provides independent oversight to the
    effectiveness of the risk management process. It has, and has been throughout the current and previous
    financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging
    instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge
    accounting.

    The following sections provide details regarding the Group’s and Company’s exposure to the above
    mentioned financial risks and the objectives, policies and processes for the management of these risks:

    (a)   Credit risk

    Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
    default in its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from
    trade and other receivables. For other financial assets (including investment securities and cash and
    cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit
    rating counterparts and financial institutions.

    The Group’s objective is to seek continual growth and minimising losses incurred due to increased credit
    risk exposure. In addition, receivable balances are monitored on an ongoing basis with the result that the
    Group’s exposure to bad debts is not significant.

    Exposure to credit risk

    At the end of the reporting period, the Group and the Company’s maximum exposure to credit risk is
    represented by:

    -     The carrying amount of each class of financial assets recognised in the balance sheets.

    -     Corporate guarantee of approximately $8.3 million (2010: $2.9 million) for banking facilities granted
          to a subsidiary.

    Information regarding credit enhancements for trade and other receivables is disclosed in Notes 8
    and 9.




ANNUAL REPORT 2011      62    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


30. financial risk management objectives and policies (cont’d)

    (a)   Credit risk (cont’d)

    Credit risk concentration profile

    The Group determines the concentration of credit risk by monitoring the country of its trade receivables
    on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the balance
    sheet date is as follows:

                                                                             group
                                                             2011                              2010
                                                     $              % of total         $              % of total

    group
    By Country

    Singapore                                       48,033                  1        21,058                   1
    Asean (excludes Singapore)                   6,477,534                 99     4,889,894                  99

                                                 6,525,567                100     4,910,952                 100

    Company
    By Country

    Singapore                                        4,006                  1          1,517                  1
    Asean (excludes Singapore)                     311,363                 99        301,408                 99

                                                   315,369                100        302,925                100

    At the balance sheet date, approximately:

    -     23% (2010: 29%) of the Group’s trade receivables were due from 5 major customers who are multi-
          industry conglomerates located in Thailand.

    (b)   liquidity risk

    Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial
    obligations due to the shortage of funds. The Group’s and the Company’s exposure to liquidity risk
    arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the
    Company’s objective is to maintain a balance between continuity of funding and flexibility through the use
    of stand-by credit facilities.




                                                digiland international limited       63    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


30. financial risk management objectives and policies (cont’d)

    (b)   liquidity risk (cont’d)

    Analysis of financial instruments by remaining contractual maturities

    The table below summarises the maturity profile of the Group’s and the Company’s financial assets and
    liabilities at the balance sheet date based on contractual undiscounted repayment obligations.

                                       <––––––––––– 2011 –––––––––––> <––––––––––– 2010 –––––––––––>
                                        1 year or  1 to 5              1 year or  1 to 5
                                           less    years      total       less    years      total
                                             $        $         $           $        $         $
    group

    financial assets
    Other investments                          –         1         1            –          1         1
    Trade receivables                  6,525,567         – 6,525,567    4,910,952          – 4,910,952
    Other receivables and
      deposits                         5,339,611         – 5,339,611    1,261,480          – 1,261,480
    Fixed deposits                     1,363,591 1,630,713 2,994,304      622,820          –   622,820
    Cash and bank balances             3,107,038         – 3,107,038    2,267,726          – 2,267,726

    Total undiscounted financial
      assets                     16,335,807 1,630,714 17,966,521        9,062,978          1 9,062,979

    financial liabilities
    Trade payables                     8,929,618         – 8,929,618    5,179,871          – 5,179,871
    Other payables                       348,166         –   348,166      314,195          –   314,195
    Accrued operating
      expenses                           515,589         –   515,589      491,081          –   491,081
    Borrowings                         4,983,995         – 4,983,995    3,167,622          – 3,167,622

    Total undiscounted financial
      liabilities                14,777,368              – 14,777,368   9,152,769          – 9,152,769

    Total net undiscounted
      financial assets/(liabilities)   1,558,439 1,630,714 3,189,153      (89,791)         1     (89,790)




ANNUAL REPORT 2011      64     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


30. financial risk management objectives and policies (cont’d)

    (b)   liquidity risk (cont’d)

                                    <––––––––––– 2011 –––––––––––> <––––––––––– 2010 –––––––––––>
                                     1 year or  1 to 5              1 year or  1 to 5
                                        less    years      total       less    years      total
                                          $        $         $           $        $         $
    Company

    financial assets
    Other investments                       –           1           1           –           1          1
    Trade receivables                 315,369           –     315,369     302,925           –    302,925
    Other receivables and
      deposits                      4,105,655           –   4,105,655      21,335           –      21,335
    Due from subsidiaries
      (trade)                         142,108           –     142,108     124,281           –    124,281
    Due from subsidiaries
      (non-trade)                   2,740,637           –   2,740,637   2,710,398           – 2,710,398
    Loan to subsidiaries            1,466,798               1,466,798      18,290                18,290
    Cash and bank balances          1,261,569           –   1,261,569   1,369,906           – 1,369,906

    Total undiscounted financial
      assets                     10,032,136             1 10,032,137    4,547,135           1 4,547,136

    financial liabilities
    Trade payables                     23,788           –      23,788     293,294           –    293,294
    Other payables                     47,619           –      47,619      52,491           –     52,491
    Accrued operating
      expenses                        354,975           –     354,975     363,875           –   363,875
    Due to subsidiaries (trade)     2,256,806           –   2,256,806   2,256,806           – 2,256,806
    Due to related party (non-
      trade)                          187,172         –   187,172        175,563         –   175,563
    Loan from a subsidiary                  – 4,234,618 4,234,618              – 3,770,592 3,770,592
    Borrowings                              –         –         –          4,851         –     4,851

    Total undiscounted financial
      liabilities                   2,870,360 4,234,618     7,104,978   3,146,880 3,770,592 6,917,472

    Total net undiscounted
      financial assets /
      (liabilities)                 7,161,776 (4,234,617) 2,927,159     1,400,255 (3,770,591) (2,370,336)

    In the management of liquidity risk, the Group monitors and maintains a level of cash and bank balances
    deemed adequate by the management to finance the Group’s operations and mitigate the effects of
    fluctuations in cash flows.

    Short-term funding is obtained from bank overdraft facilities and short-term trade financing. Long-term
    funding is through bank borrowings and finance leases.




                                                digiland international limited   65    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


30. financial risk management objectives and policies (cont’d)

    (c)   interest rate risk

    Interest rate risk is the risk that fair value or future cash flows of the Group’s and the Company’s financial
    instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s
    exposure to interest rate risk arises primarily from their loans and borrowings.

    The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts where
    possible.

    Sensitivity analysis for interest rate risk

    At the balance sheet date, if the market price for interest rate is 50 basis points (2010: 50 basis point)
    lower/higher with all other variables held constant, the Group’s loss for the year will be $20,615 (2010:
    $14,609) lower/higher, arising mainly as a result of lower/higher interest expense on floating rate loans
    and borrowings.

    (d)   foreign currency risk

    The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign
    currencies and purchases that are denominated in currencies other than the respective functional
    currencies of Group entities, primarily Singapore Dollar (SGD) and Thai Baht (THB). Approximately 1.2%
    (2010: 0.1%) of the Group’s sales are denominated in foreign currencies while 98.8% (2010: 99.9%) are
    denominated in the respective functional currencies of the group entities. The Group’s trade receivable
    and trade payable balances at the balance sheet date have similar exposures.

    Sensitivity analysis for foreign currency risk

    The following table demonstrates the sensitivity at the balance sheet date to a reasonably possible
    change in the exchange rate of Singapore Dollar and Thai Baht, with all other variables held constant, of
    the Group’s net of tax (due to changes in the fair value of monetary assets and liabilities):

                                                                                      2011             2010
                                                                                    loss net         loss net
                                                                                     of tax           of tax
                                                                                       $                 $

    Thai Baht/United States Dollar
    - Strengthened 10% (2010: 10%)                                                       3,405          (18,526)
    - Weakened 10% (2010: 10%)                                                          (3,405)          18,526

    Singapore Dollar/United States Dollar
    - Strengthened 10% (2010: 10%)                                                    583,631          100,006
    - Weakened 10% (2010: 10%)                                                       (583,631)        (100,006)




ANNUAL REPORT 2011      66     digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


31. financial instruments

    (a)   Fair value of financial instruments

    The carrying amounts of each of the categories of financial instruments as at the balance sheet are as
    follows:

                                          note             group                           Company
                                                    2011           2010             2011             2010
                                                     $               $               $                 $

    Available-for-sale financial assets
    - Other investments                    6               1              1                1                1
    loans and receivables
    - Trade receivables                    8      6,525,567      4,910,952          315,369        302,925
    - Other receivables and deposits       9      5,339,611      1,261,480        4,105,655         21,335
    - Due from subsidiaries (trade)       10              –              –          142,108        124,281
    - Due from subsidiaries
       (non-trade)                        10              –              –        2,740,637       2,710,398
    - Loan to subsidiaries                10              –              –        1,466,798          18,290
    - Fixed deposits                      27      2,735,836        616,654                –               –
    - Cash and bank balances              27      3,107,038      2,267,726        1,261,569       1,369,906

                                                 17,708,053      9,056,813    10,032,137          4,547,136

    financial liabilities
      at amortised cost
    - Trade payables                      11      8,929,618      5,179,871           23,788         293,294
    - Other payables                      12        348,166        314,195           47,619          52,491
    - Accrued operating expenses          13        515,589        491,081          354,975         363,875
    - Due to subsidiaries (trade)         10              –              –        2,256,806       2,256,806
    - Due to related party (non-trade)    10              –              –          187,172         175,563
    - Loan from a subsidiary              10              –              –        4,234,618       3,770,592
    - Borrowings                          14      4,592,311      2,921,728                –               –

                                                 14,385,684      8,906,875        7,104,978       6,912,621

    The fair value of a financial instrument is the amount at which the instrument could be exchanged or
    settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced
    or liquidation sale.

    Financial instruments whose carrying amount approximate fair value

    The carrying amounts of cash and cash equivalents, current trade and other receivables, current trade
    and other payables, amounts due from/to subsidiaries and related party and loans and borrowings, based
    on their notional amounts, reasonably approximate their fair values because these are mostly short term
    in nature or are repriced frequently.




                                                 digiland international limited     67     ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


31. financial instruments (cont’d)

    (b)    interest rate risk

    The following tables sets out the carrying amount, by maturity, of the Group’s and the Company’s financial
    instruments that are exposed to interest rate risk.

                                                     total       Within 1 year     1 to 5 years     after 5 years
                                                       $               $                 $                $
    group

    2011

    Floating rate
    Promissory notes                              (4,122,991)      (4,122,991)               –                 –
    Fixed deposits                                 2,735,836        1,326,927        1,408,909                 –

    2010

    Fixed rate
    Finance lease obligation                          (4,157)           (4,157)               –                –

    Floating rate
    Promissory notes                              (2,921,728)      (2,921,728)                –                –
    Fixed deposits                                   616,654          616,654                 –                –

    Company

    2010

    Fixed rate
    Finance lease obligation                          (4,157)           (4,157)               –                –

    The range of effective interest rate of short term deposits is from 0.6% to 1.2% (2010: 0.5% to 1%) per
    annum for the Group and Company. Interest on promissory notes is subject to floating interest rates and
    is contractually re-priced at intervals of less than a month. Interest on fixed deposits is subject to floating
    interest rates and is contractually re-priced at intervals of less than 12 months. Interest on financial
    instruments at fixed rates is fixed until the maturity of the instrument. The other financial instruments
    of the Group and the Company that are not included in the above tables are not subject to interest rate
    risks.




ANNUAL REPORT 2011      68      digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


32. Segment information

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

    -     PC/notebook/server segment are served by several major vendors while the consumer electronics/
          e-services segment are served by more varied manufacturers.

    -     Consumer electronics/e-services segment include networking and storage products, accessories
          and supplies.

    The Group generally accounts for intersegment sales and transfers as if the sales or transfers were
    to third parties at current market prices. Revenues are attributed to geographical areas based on the
    location of the assets producing the revenues. Segment assets consist primarily of fixed assets, current
    assets, intangibles, operating cash and exclude investment in associated company. Segment liabilities
    comprise mainly of operating liabilities and exclude income tax liabilities and interest bearing liabilities.

                                               pCs /            Consumer
                                            notebooks /         electronics
                                             Servers           and Services        elimination          note        group
                                               $’000               $’000              $’000                         $’000
    2011
    Revenue – solely external
     customers                                    50,803               8,239                   –                      59,042

    results
    Capital expenditure                                18                  3                   –                           21
    Depreciation                                       30                  9                   –                           39
    Other non-cash expenses                           254                 52                   –         A                306
    Financial expenses                                299                 46                   –                          345
    Financial income                                  (20)                (3)                  –                          (23)
    Segment loss / (gain)                             791                 (3)                  –                          788

    Segment assets                                19,110               2,500                   –                      21,610

    Segment liabilities                           12,425               2,080                   –                      14,505

    2010
    Revenue – solely external
     customers                                    37,726             10,540                    –                      48,266

    results
    Capital expenditure                               51                  30                   –                          81
    Depreciation                                      21                   7                   –                          28
    Other non-cash expenses                        1,346                   –                   –         A             1,346
    Financial expenses                               187                  56                   –                         243
    Financial income                                 (10)                 (2)                  –                         (12)
    Segment loss                                     846                  39                   –                         885

    Segment assets                                  8,119              2,185                   –                      10,304

    Segment liabilities                            7,106               1,841                   –                       8,947

    Note A: Other non-cash expenses consist of net allowance for stock obsolescence, net allowance for doubtful debts and foreign
    exchange gain.




                                                      digiland international limited               69    ANNUAL REPORT 2011
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


32. Segment information (cont’d)

    geographical segment

    Revenue and non-current assets information based on the geographical location of customers and assets
    respectively are as follows:

                                                              turnover                       assets
                                                      2011               2010        2011             2010
                                                      $’000              $’000       $’000            $’000

    Singapore                                          4,512              3,799       5,928             1,983
    Asia (excludes Singapore)                         54,530             44,467      15,680             8,313
    Australia                                              –                  –           2                 8

                                                      59,042             48,266      21,610           10,304

    There is no sale made to any major customer arising from any business segment.


33. Capital management

    The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
    concern and to maintain a capital structure to support its business and maximise shareholder value. To
    maintain or adjust the capital structure, the Group may issue new shares, obtain new borrowings or sell
    assets to reduce borrowings. No changes were made in the objectives, policies or processes during the
    years ended 30 June 2011 and 2010.

    The Group monitors capital using a gearing ratio, which is a net debt divided by the total capital plus
    net debt. The Group’s policy is to keep a healthy gearing ratio. The Group maintains within net debt,
    loans and borrowings, trade or other payables, other liabilities, less cash and cash equivalents. Capital
    includes net equity attributable to the owners of the parent.

                                                                                             group
                                                                                     2011             2010
                                                                                      $                 $

    Borrowings (Note 14)                                                           4,592,311      2,925,885
    Trade payables (Note 11)                                                       8,929,618      5,179,871
    Other payables (Note 12)                                                         348,166        314,195
    Accrued operating expenses (Note 13)                                             515,589        501,562
    Less: Cash and bank balances (Note 27)                                        (5,842,874)    (2,884,380)

    Net debt                                                                       8,542,810      6,037,133

    Equity attributable to the owners of the parent                                7,104,718      1,357,046

    Capital and net debt                                                          15,647,528      7,394,179

    Gearing ratio                                                                       55%              82%




ANNUAL REPORT 2011    70    digiland international limited
noteS to tHe finanCial StatementS
for the year ended 30 June 2011


34. event occurring after the reporting period

    On 31 August 2011, the Company announced a proposed renounceable non-underwritten rights issue of
    up to 20,462,392,234 new ordinary shares (“Rights Shares”) in the Company, at an issue price of S$0.001
    for each Rights Shares on the basis of two Rights Shares for every one Share held by all shareholders
    as at a book closure date to be determined by the directors of the Company (“Rights Issue”).

    The Company will be seeking specific approval from shareholders of the Company for the Rights Issue
    at an Extraordinary General Meeting (“EGM”) to be convened.


35. Authorisation of financial statements

    The financial statements for the year ended 30 June 2011 were authorised for issue in accordance with
    a resolution of the directors on 28 September 2011.




                                             digiland international limited      71    ANNUAL REPORT 2011
StatiStiCS of SHareHoldingS
as at 19 September 2011



Issued and fully paid-up capital            :    S$44,998,773
Class of shares                             :    Ordinary share
Voting rights                               :    One vote per ordinary share
Ordinary shares held as treasury shares     :    NIL


diStriBution of SHareHoldingS

                                           no. of
                                        Shareholders             %             no. of Shares           %

1 - 999                                          2,694          9.13             1,248,848            0.01
1,000 - 10,000                                  11,542         39.11            38,470,661            0.38
10,001 - 1,000,000                              14,033         47.55         3,031,259,480           29.63
1,000,001 and above                              1,243          4.21         7,160,217,128           69.98
Total                                           29,512        100.00        10,231,196,117          100.00


tWentY largeSt SHareHolderS aS at 19 SeptemBer 2011

no. name                                                                       no. of Shares           %

1    FORTUNE WOODS GLOBAL INVESTMENT LIMITED                                 1,105,199,000           10.80
2    SMARTFUL GLOBAL HOLDINGS LIMITED                                          600,000,000            5.86
3    TAN KIM YONG                                                              385,182,750            3.77
4    DBS NOMINEES PTE LTD                                                      197,395,496            1.93
5    UNITED OVERSEAS BANK NOMINEES (PTE) LTD                                   158,413,935            1.55
6    OCBC SECURITIES PRIVATE LTD                                               125,494,737            1.23
7    TAN KIM WAH                                                               123,206,000            1.21
8    CITIBANK NOMINEES SINGAPORE PTE LTD                                       117,604,807            1.15
9    OCBC NOMINEES SINGAPORE PTE LTD                                           104,297,721            1.02
10   PHILLIP SECURITIES PTE LTD                                                102,403,983            1.00
11   RAFFLES NOMINEES (PTE) LTD                                                100,349,600            0.98
12   KIM ENG SECURITIES PTE. LTD.                                               87,807,805            0.86
13   ONG TECK BENG (WANG DEMING)                                                70,000,000            0.68
14   BANK OF SINGAPORE NOMINEES PTE LTD                                         65,620,000            0.64
15   UOB KAY HIAN PTE LTD                                                       61,499,460            0.60
16   DBS VICKERS SECURITIES (S) PTE LTD                                         47,426,400            0.46
17   HSBC (SINGAPORE) NOMINEES PTE LTD                                          41,904,705            0.41
18   NG NGEE HUNG                                                               32,046,000            0.31
19   CHUA BOON HIONG                                                            31,982,000            0.31
20   MAYBAN NOMINEES (S) PTE LTD                                                31,952,500            0.31
                                                                             3,589,786,899           35.08



puBliC float

Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited requires that at least 10%
of the equity securities (excluding preference shares and convertible equity securities) of a listed company in
a class that is listed is at all times held by the public. The Company has complied with this requirement. As
at 19 September 2011 approximately 82.93% of its shares listed on Singapore Exchange Securities Trading
Limited were held in the hands of the public.



ANNUAL REPORT 2011     72    digiland international limited
notiCe of annual general meeting

digiland international limited
(Company Registration No. 199400571K)
(Incorporated in Singapore with limited liability)


NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of digiland international
limited (“the Company”) will be held at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Function Room 1
(Level 1), Singapore 568046 on Thursday, 27 October 2011 at 10.00 a.m. for the following purposes:


aS ordinarY BuSineSS

1.   To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the financial
     year ended 30 June 2011 together with the Auditors’ Report thereon.                (resolution 1)

2.   (a)   To re-elect the following Director retiring pursuant to Article 97 of the Company’s Articles of
           Association:

           Mr Wong Tat Hei (retiring under Article 97)                                        (resolution 2)

           Mr Wong Tat Hei will, upon re-election as Director of the Company, remain as Non-Executive Director
           and a member of the Audit, Nominating and Remuneration Committees. He will be considered
           independent.

     (b)   To note the retirement of Dr Poh Siew Chuan, Philip and Dr Robert Henry Keith Sloan in accordance
           with Article 91 of the Company’s Articles of Association at the conclusion of this Annual General
           Meeting. Both Dr Poh Siew Chuan, Philip and Dr Robert Henry Keith Sloan have decided not to
           seek re-election.

3.   To approve the payment of Directors’ fees of S$87,500 for the financial year ending 30 June 2012 to be
     paid quarterly in arrears (2011: S$84,000).                                             (resolution 3)

4.   To re-appoint Ernst & Young LLP as the Company’s Auditors and to authorise the Directors to fix their
     remuneration.                                                                      (resolution 4)

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




                                                     digiland international limited   73   ANNUAL REPORT 2011
notiCe of annual general meeting

aS SpeCial BuSineSS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any
modifications and subject to Proviso 1 below:

6.   authority to allot and issue shares

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

     (a)   shares; and/or
     (b)   convertible securities (including options, warrants and debentures); and/or
     (c)   additional securities issued pursuant to Rule 829 of the Listing Rules; and/or
     (d)   shares arising from the conversion of securities in (b) and (c) above

     in the Company (whether by way of rights, bonus or otherwise) 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 securities convertible into shares that may
     be issued must not exceed 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 not be more than 20% of the total number of issued shares excluding treasury
     shares. For the purpose of determining the aggregate number of shares and convertible securities that
     may be issued under this Resolution, the percentage of the total number of issued shares excluding
     treasury shares is based on the total number of issues shares excluding treasury shares at the time this
     Resolution is passed after adjusting for:

     (a)   New shares arising from the conversion or exercise of convertible securities;
     (b)   New shares arising from exercising share options or vesting of share awards outstanding or
           subsisting at the time of the passing of this Resolution; and
     (c)   Any subsequent bonus issue, consolidation or subdivision of shares.

     [See Explanatory Note (i)]                                                               (resolution 5)

7.   authority to allot and issue shares under the digiland Share option plan

     That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the
     SGX-ST, the Directors be authorised to offer and grant options under the Digiland Share Option Plan
     (“DSOP”) and to allot and issue shares in the Company to all the holders of options granted by the
     Company under the DSOP, whether granted during the subsistence of this authority or otherwise, upon
     the exercise of such options and in accordance with the terms and conditions of the DSOP, provided
     always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the
     DSOP when added to the number of new shares issued and issuable in respect of all awards granted
     under the DPSP (defined below) and options granted under the DSOP shall not exceed 15% of the issued
     shares excluding treasury shares in the capital of the Company from time to time.

     [See Explanatory Note (ii)]                                                              (resolution 6)




ANNUAL REPORT 2011      74    digiland international limited
notiCe of annual general meeting

8.     authority to allot and issue shares under the digiland performance Share plan

       That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of
       the SGX-ST, the Directors be authorised to grant awards under the Digiland Performance Share Plan
       (“DPSP”) and to allot and issue shares in the Company as may be required pursuant to the vesting
       of awards granted under the DPSP, provided always that the aggregate number of additional ordinary
       shares to be allotted and issued pursuant to the DPSP when added to the number of new shares issued
       and issuable in respect of all awards granted under the DPSP and all options granted under the DSOP
       shall not exceed 15% of the issued shares excluding treasury shares in the capital of the Company from
       time to time.

       [See Explanatory Note (iii)]                                                              (resolution 7)




By Order of the Board




Lim Koon Hock
Company Secretary

Singapore, 12 October 2011

proviso 1

Unless revoked or varied by the Company in a 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 earlier.


explanatory notes:

(i)    The Ordinary Resolution 5 proposed in item 6 above, if passed, will empower the Directors of the
       Company, effectively to allot and issue shares and convertible securities in the Company, up to a number
       not exceeding, in total, 50% of the total number of issued shares excluding treasury shares in the capital
       of the Company 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.

(ii)   The Ordinary Resolution 6 proposed in item 7 above, if passed, will empower the Directors of the
       Company, to allot and issue shares in the Company pursuant to the exercise of options under DSOP
       of up to a number which when added to the number of new shares issued and issuable in respect of all
       awards granted under the DPSP and all options granted under the DSOP does not exceed in total 15%
       of the issued shares excluding treasury shares in the capital of the Company from time to time.

(iii) The Ordinary Resolution 7 proposed in item 8 above, if passed, will empower the Directors of the
      Company, to allot and issue shares in the Company pursuant to the vesting of awards granted under the
      DPSP of up to a number which when added to the number of new shares issued and issuable in respect
      of all awards granted under the DPSP and all options granted under the DSOP does not exceed in total
      15% of the issued shares excluding treasury shares in the capital of the Company from time to time.




                                                 digiland international limited       75    ANNUAL REPORT 2011
notiCe of annual general meeting

notes:

1.   A Member entitled to attend and vote at the Annual General Meeting (“Meeting”) is entitled to appoint one
     or two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2.   The instrument appointing a proxy must be deposited at the Registered Office of the Company at 21
     Serangoon North Avenue 5, Ban Teck Han Building #05-02, Singapore 554864 not less than forty-eight
     (48) hours before the time appointed for holding the Meeting.




ANNUAL REPORT 2011     76    digiland international limited
digiland international limited                                          important:
                                                                        1. For investors who have used their CPF monies to buy Digiland International
(Company Registration No. 199400571K)                                      Limited’s shares, this Proxy Form is forwarded to them at the request of the
(Incorporated In Singapore with limited liability)                         CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
                                                                        2. This Proxy Form is not valid for use by CPF investors and shall be
                                                                           ineffective for all intents and purposes if used or purported to be used by
                                                                           them.
proxY form                                                              3. CPF investors who wish to attend the Meeting as an observer must submit
                                                                           their requests through their CPF Approved Nominees within the time
annual general meeting (“meeting”)                                         frame specified. If they also wish to vote, they must submit their voting
(Please see Notes below before completing this form)                       instructions to the CPF Approved Nominees within the time frame specified
                                                                           to enable them to vote on their behalf.



I/We,

of

being a member/members of DIGILAND INTERNATIONAL LIMITED (“the Company”), hereby appoint :

name                                                          nriC/passport number                       proportion of Shareholding
                                                                                                       no. of Shares          %
address



and/or (delete as appropriate)
name                                                          nriC/passport number                       proportion of Shareholding
                                                                                                       no. of Shares          %
address



or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/proxies
to vote for me/us on my/our behalf at the Meeting of the Company to be held at The Grassroots Club, 190 Ang Mo Kio Avenue
8, Function Room 1 (Level 1), Singapore 568046 on Thursday, 27 October 2011 at 10.00 a.m. and at any adjournment thereof.
I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no
specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof,
the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to
join in demanding a poll and to vote on a poll.

(please indicate your vote “for” or “against” with a tick [√] within the box provided.)

     no.      resolutions relating to:                                                                                           for       against
      1       Directors’ Report and Audited Accounts for the financial year ended 30 June 2011.
      2       Re-election of Mr Wong Tat Hei as a Director.
      3       Approval of Directors’ fees amounting to S$87,500 for the financial year ending 30 June
              2012 to be paid quarterly in arrears.
     4        Re-appointment of Ernst & Young LLP as Auditors.
     5        Authority to allot and issue shares.
     6        Authority to allot and issue shares under the Digiland Share Option Plan.
     7        Authority to allot and issue shares under the Digiland Performance Share Plan.

Dated this                            day of                          2011

                                                                                 total number of Shares in:                     no. of Shares
                                                                                 (a) CDP Register
Signature of Shareholder(s)                                                      (b) Register of Members
or, Common Seal of Corporate Shareholder


notes :
1.         Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register
           (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have
           Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered
           against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert
           the aggregate number of Shares 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 of the Company entitled to attend and vote at the Meeting of the Company is entitled to appoint one or two proxies to
           attend and vote in his/her stead. A proxy need not be a member of the Company.
3.         Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her
           shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4.    Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting.
      Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event,
      the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.
5.    The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 21 Serangoon North
      Avenue 5, Ban Teck Han Building #05-02, Singapore 554864 not less than forty-eight (48) hours before the time appointed for the
      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 seal or under
      the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney
      on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.
7.    A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to
      act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

general:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or
where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing
a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument
appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the
Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository
(Pte) Limited to the Company.


Please fold here




Please fold here




                                                                                                                                 AFFIX
                                                                                                                                 STAMP



                                                    The Company Secretary
                                   digiland international limited
                                               21 Serangoon North Avenue 5
                                               Ban Teck Han Building #05-02
                                                    Singapore 554864
This page has been intentionally left blank.
This page has been intentionally left blank.
    Digiland International Limited
       21 Serangoon North Avenue 5
       Ban Teck Han Building #05-02
            Singapore 554864
 Tel: +65 6603 9898 | Fax: + 65 6603 9896
        URL: www.digiland.com.sg
Company Registration Number: 199400571K

				
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