MICRO-MECHANICS (HOLDINGS) LTD. 
By Minutes of the Sixteenth Annual General Meeting of the Company held at NTUC Centre, Level 8, Room 801, One Marina Boulevard, Singapore 018989 on Monday, 29 October 2012 at 3.00 p.m.
OPENING & PRESENTATION
The Chairman, Ms Sumitri Menon chaired the Annual General Meeting ("AGM") and as a quorum was present, the meeting was called to order. Ms Menon welcomed all who attended the AGM.
After the Directors introduced themselves to the shareholders, the Chairman invited the Chief Executive Officer, Mr Christopher Borch to present the full year results. Prior to his presentation, the shareholders were shown a short video on the Company's 24/7 Machining Line, a highly- automated system for around-the-clock machining of complex parts which was developed in partnership with Makino. Following that, the CEO together with the Chief Operating Officer, Mr Low Ming Wah and the Chief Financial Officer, Mr Chow Kam Wing went through the presentation slides which covered "Corporate Highlights", "Financial Review" and "Outlook" that touched on Operating Environment and Key Focus Areas in Q1 of FY2013. These presentation slides are available from the announcement made by the Company after the AGM.
During the presentation, the CEO elaborated on the 3 Key Focus Areas in FY2013 for increasing the business of the Group. The CFO added that the Company's strong balance sheet would enable the Company to carry out the initiatives outlined by the CEO. On cost challenges, the COO commented that besides minimum wage implementation, overall labour costs in Asia have increased. As for the latest work pass requirements set down by the Ministry of Manpower ("MOM"), it would not affect the Group which has less than 20% foreign employees i.e. less than the DRC set by MOM. In fact, the Group had at the outset 29 years ago, adopted a practice of hiring only local employees but had been obliged to start hiring foreigners 2 years ago due to the acute shortage of local manpower.
Q&A on the Annual Report:-
Question: Should the 24/7 Machining Line fail as it might be difficult to fully automate the manufacture of custom made precision components, whether the Company has a contingency plan to mitigate the problem.
Reply:
CEO thanked the shareholder for his concern. He noted that the Group had done a great deal of research and investigation before a decision was made on the 24/7 machining. Based on such research, management thought it was possible to run 24/7 manufacturing in a relatively high volume environment. The research team also looked into the problems faced by other companies and the Company had addressed possible problems by putting certain fundamentals in place.
Question: Whether the Group could improve turnover and profitability by operating with less manpower in fewer locations and by delivering parts to customers from a centralised location through courier services.
Reply:
CEO replied that the Group recognised the need to streamline manpower and the implementation of 24/7 machining would have this advantage. Since last year, the Group had reduced headcount by about 20% with a current workforce of 476 employees. Based on the current business model,
the Company must be close to the customers in order to make quick and reliable delivery of parts
and achieve customer service efficiency. It would be very difficult to provide fast and effective support to the Group's customers from a centralised location. Further, the Group carried out some R&D in each location.
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The same shareholder who posed the above question, noted from page 2 of the Annual Report that each of the Group's gross profit and profit before tax declined by S$2.8 million despite a
14.4% (S$6.5 million) drop in Group revenue. He complimented Management on keeping a tight rein on costs. He continued with another question :-
Question : What is the reason for recording a lower net profit of S$4.2 million in FY2012 compared to a net profit of S$8.9 million in FY2008 despite the same turnover of S$38 million as shown in the Income Statement Summary on page 5 of the Annual Report.
Reply:
CEO noted that the Board was concerned and had looked into the same question. In May 2008, upon the successful acquisition of a US company, the Group's first US plant for CMA business commenced operations. The building of a new business with new customers and new products in USA took a toll on resources and has been a drag on profits. Nevertheless, the Board was of the view that the investment in CMA was required and moving forward, the Board hoped to see growth with the roll out and implementation of 24/7 machining.
CFO added that the running cost of the US company was based on local currency and the exchange rate depreciated almost 25% from FY2008 to FY2012. Accordingly, the bottom line was affected.
Question : The reason for the past 2 years' losses suffered by USA and the loss recorded by
Thailand despite it being profitable in FY2011 as shown in the segment results on pages 65 and
66 of the Annual Report.
Reply :
The CEO explained that the US company could not recover quickly as planned and thus cost went up. However, he hoped that with 24/7 machining, it would put the Company in a stronger position in future. He also appealed to shareholders to be patient as the Company needed more time to
bring its business plans to fruition.
For Thailand, the CFO reported that the loss in FY 2012 was mainly due to the flood and some customers have not resumed operations. The Company would continue to monitor the situation.
Prior to the discussion of the formal business, the Chairman reminded the meeting that all resolutions to be put to the vote at the AGM would be voted on by way of a poll as stated in the Notice of AGM. The meeting then proceeded to discuss the formal business of the AGM. With permission from the members, the Notice of AGM was taken as read.
1.1 The following Ordinary Resolution No. 1 was duly proposed by Mr Manohar and seconded by Mr Ting Teck Beng:-
"It was resolved that the Directors' Report and Audited Accounts for the financial year ended 30 June 2012 and the Auditors' Report thereon be received and adopted."
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1.2 The Chairman called for a poll on the resolution. She also announced that TS Tay Public Accounting Corporation was appointed the scrutineers for the purpose of the poll. The shareholders were requested to exercise their votes on Ordinary Resolution No. 1 by completing the poll voting slips and to retain the voting slips in order to cast their votes for the rest of the resolutions.
2. Declaration of Final dividend
2.1 The following Ordinary Resolution No. 2 was duly proposed by Ms Ellen Lim Soon Boey and seconded by Mr Kam Kwee Kiong:-
"It was resolved that a final dividend of 2.0 cents per ordinary share one-tier tax exempt for the financial year ended 30 June 2012 be paid on 22 November 2012 to members registered in the books of the Company on 8 November 2012."
2.2 Q&A on Ordinary Resolution 2:
2.2.1 Question: Whether the proposed dividend rate would be sustainable.
2.2.2 Reply: Chairman commented that perhaps the track record of the Company could speak for itself.
2.3 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 2 by completing the poll voting slips.
3.1 The following Ordinary Resolution No. 3 was proposed by Mr Don Ng Kam Wah and seconded by Mr Karl Zurfluh:-
"It was resolved that Mr Chow Kam Wing retiring in accordance with Article 91 of the Company's Articles of Association, but being eligible and offering himself for re-election, be re-elected as Director of the Company."
3.2 Q&A on Ordinary Resolution 3:
3.2.1 Question: Query on the term of office upon the re-election of a director at the AGM.
3.2.2 Reply: Chairman informed that one-third of the directors would be required to retire at the
AGM every year.
3.3 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 3 by completing the poll voting slips.
As the fourth item on the agenda related to the re-election of the Chairman who retired by rotation under the Company's Articles of Association, as director of the Company, she handed over the chair to CEO for proceedings on resolution no. 4.
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4. Re-election of Director
4.1 The following Ordinary Resolution No. 4 was proposed by Mr Herman Phua and seconded by Ms Lisa Heng:-
"It was resolved that Ms Sumitri Mirnalini Menon @ Rabia retiring in accordance with Article 91 of the Company's Articles of Association, but being eligible and offering herself for re-election, be re-elected as Director of the Company."
4.2 The CEO called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 4 by completing the poll voting slips.
After completion of the poll voting slips by shareholders on resolution no. 4, CEO handed over the chair back to the Chairman who continued with the proceedings of the meeting.
5.1 The following Ordinary Resolution No. 5 was proposed by Ms Winnie Soon Li Lik and seconded by Ms Caroline Calixton:-
"It was resolved that a sum of S$208,200/- be approved for payment as Directors' fees for the financial year ended 30 June 2012."
5.2 Q&A on Ordinary Resolution 5:
5.2.1 Question: Query on the number of directors who would be paid the directors' fees
5.2.2 Reply: Chairman replied that should this item be approved at the AGM, all directors would receive the directors' fees.
5.3 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 5 by completing the poll voting slips.
6.1 The following Ordinary Resolution No. 6 was proposed by Mr Kam Kwee Kiong and seconded by Ms Sharon Lim Kim Yoik:-
"It was resolved that KPMG LLP be re-appointed Auditors of the Company to hold office until the conclusion of the next Annual General Meeting and that the Directors be authorized to fix their remuneration."
6.2 Q&A on Ordinary Resolution No. 6 :
6.2.1 Question: Whether the auditors increase their fee for FY2012.
6.2.2 Reply: The audit fee for the auditors of the Company for FY2012 is slightly lower than last year as stated under "Other expenses" on page 56 of the Annual Report.
6.3 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 6 by completing the poll voting slips.
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SPECIAL BUSINESS 7. Authority to allot and issue shares in the capital of the Company
7.1 The following Ordinary Resolution No. 7 was duly proposed by Mr Loy Jiunn Jiu and seconded by Mr Ow Leong Chuan:-
"It was resolved that pursuant to Section 161 of the Companies Act, Chapter 50 (Act), the Articles of Association and the listing rules of the Singapore Exchange Securities Trading Limited (SGX-ST), authority be and is hereby given to the directors of the Company to:-
(a) (i) allot and issue shares in the capital of the Company (Shares) (whether by way of rights, bonus or otherwise); and/or
(ii) make or grant offers, agreements, or options (collectively, Instruments) that might or would require Shares to be issued, including but not limited to the creation and issue of warrants, debentures or other instruments convertible into Shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the directors may in their absolute discretion deem fit; and
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instruments made or granted by the directors while this Resolution was in force,
provided that:
(1) the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of the total number of issued Shares (excluding treasury shares, if any) at the time of the passing of this Resolution (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares issued other than on a pro-rata basis to existing shareholders (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 10% of the Company's total number of issued Shares (excluding treasury shares, if any) (as calculated in accordance with sub-paragraph (2) below); and
(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above, the total number of issued Shares (excluding treasury shares, if any) shall be calculated based on the total number of issued Shares (excluding treasury shares, if any) at the time of the passing of this Resolution, after adjusting for:-
(a) new Shares arising from the conversion or exercise of convertible securities;
(b) new Shares arising from the exercise of share options or vesting of share awards outstanding or subsisting at the time this Resolution is passed, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the SGX-ST Listing Manual; and
(c) any subsequent bonus issue, consolidation or subdivision of Shares;
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(3) in exercising the authority conferred by this Resolution, the Company shall comply with the requirements imposed by the SGX-ST from time to time and the provisions of the listing rules of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and
(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is earlier."
7.2 Q&A on Ordinary Resolution 7:
7.2.1 Question: Whether the Company has any plans to raise funds after the AGM.
7.2.2 Reply: Chairman replied that there were no plans to raise funds after the AGM.
7.3 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 7 by completing the poll voting slips.
8. Authority to allot and issue shares under Micro-Mechanics Performance Share Plan
8.1 The following Ordinary Resolution No. 8 was proposed by Mr Herman Phua and seconded by Ms Collen Kuan May Foong:-
"It was resolved that the Directors of the Company be and are hereby authorised to offer and grant awards (the Awards) in accordance with the provisions of the Micro-Mechanics Performance Share Plan and to deliver existing Shares, including treasury shares, and to allot and issue from time to time such number of Shares in the capital of the Company as may be required to be allotted and issued pursuant to the vesting of Awards under the Micro-Mechanics Performance Share Plan, provided that the aggregate number of new Shares to be allotted and issued pursuant to the Micro-Mechanics Performance Share Plan shall not exceed five per cent of the total number of issued Shares in the capital of the Company (excluding treasury shares) from time to time."
8.2 Q&A on Ordinary Resolution 8:
8.2.1 Question: Query on the maximum number of shares that can be issued pursuant to the Micro-Mechanics Performance Share Plan (the "Plan") and whether the Company holds any treasury shares.
8.2.2 Reply: The aggregate number of new shares to be issued pursuant to the Plan shall not exceed 5% of the total number of issued shares in the capital of the Company. The Company does not have any treasury shares presently. The Company would consider the shareholder's suggestion to use treasury shares, if any, for purposes of the Plan in future.
8.3 The Chairman reminded the meeting that the directors and employees who were shareholders and eligible to participate in the Plan should abstain from voting on Ordinary Resolution No. 8.
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8.4 The Chairman called for a poll on the resolution. The shareholders were requested to exercise their votes on Ordinary Resolution No. 8 by completing the poll voting slips. Thereafter, the scrutineers collected all the poll voting slips for counting.
9. Results of the Poll9.1 Less than half an hour later, the scrutineers submitted their report to the Chairman. Based on the scrutineers' report, the results of the poll are as follows:-
Annual General Meeting | For | Against |
Annual General Meeting | Number of Shares | Number of Shares |
Ordinary Business | ||
Resolution 1 Adoption of Reports and Accounts | 94,216,087 | NIL |
Resolution 2 Declaration of final dividend | 94,216,087 | NIL |
Resolution 3 Re-election of Mr Chow Kam Wing as director | 91,405,087 | NIL |
Resolution 4 Re-election of Ms Sumitri Mirnalini Menon @ Rabia as director | 94,216,087 | NIL |
Resolution 5 Approval of directors' fees | 94,216,087 | NIL |
Resolution 6 Re-appointment of KPMG LLP as auditors | 94,216,087 | NIL |
Special Business | ||
Resolution 7 Authority to allot and issue new shares | 94,216,087 | NIL |
Resolution 8 Authority to allot and issue shares under Micro-Mechanics Performance Share Plan | 47,094,506 | NIL |
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9.2 Accordingly, the Chairman declared :-
9.2.1. Ordinary Resolution No. 1 carried unanimously.
9.2.2. Ordinary Resolution No. 2 carried unanimously.
9.2.3. Ordinary Resolution No. 3 carried unanimously.
9.2.4. Ordinary Resolution No. 4 carried unanimously.
9.2.5. Ordinary Resolution No. 5 carried unanimously.
9.2.6. Ordinary Resolution No. 6 carried unanimously.
9.2.7. Ordinary Resolution No. 7 carried unanimously.
9.2.8. Ordinary Resolution No. 8 carried unanimously.
There being no further business, the meeting ended at 4.35 p.m.
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