The Company acts as an investment holding company and also trades electrical and electronic products.

The principal activities of the principal subsidiaries and associates are set out in Notes 55 and 56 to the financial statements, respectively.

The results of the Group for the year ended December 31, 2011 are set out in the consolidated statement of comprehensive income on page 52.

An interim dividend of HK5.00 cents (approximately US0.64 cent) per share amounting to approximately US$10,347,000 was paid to the shareholders during the year.

The directors now recommend the payment of a final dividend of HK7.75 cents (approximately US1.00 cent) per share to the shareholders on the register of members on May 25, 2012, amounting to approximately US$15,976,000.

The Group continued to expand its business and during the year spent approximately US$16,879,000 on moulds and tooling and acquired office equipment, furniture and fixtures for approximately US$12,279,000 and plant and machinery for approximately US$15,709,000. Details of these and other movements in the property, plant and equipment of the Group and the Company during the year are set out in Note 17 to the financial statements.

Details of movements during the year in the share capital of the Company are set out in Note 44 to the financial statements.

A total of 5,516,500 ordinary shares of HK$0.10 each were repurchased by the Company during the year at prices ranging from HK$4.62 to HK$6.33 per share. The aggregate amount paid by the Company for such repurchases amounting to US$3,817,000 was charged to the retained earnings.

The repurchased shares were cancelled and the issued share capital and the capital redemption reserve of the Company was reduced and increased respectively by the par value of those cancelled shares.

The repurchase of the Company’s shares during the year were effected by the directors pursuant to the mandate from shareholders received at the previous annual general meeting, with a view to benefiting shareholders as a whole by enhancing the net asset value per share and earnings per share of the Company.

The directors of the Company during the year and up to the date of this report were:

Group Executive Directors:Mr Horst Julius Pudwill, Chairman
Mr Joseph Galli Jr, Chief Executive Officer
Mr Kin Wah Chan
Mr Chi Chung Chan
Mr Stephan Horst Pudwill

Non-executive Directors:Prof Roy Chi Ping Chung BBS JP (re-designated as a Non-executive Director with effect from July 1, 2011)
Mr Vincent Ting Kau Cheung

Independent Non-executive Directors:Mr Joel Arthur Schleicher
Mr Christopher Patrick Langley OBE
Mr Manfred Kuhlmann
Mr Peter David Sullivan

In accordance with Article 103 of the Company’s Articles of Association, Messrs. Chi Chung Chan, Stephan Horst Pudwill, Vincent Ting Kau Cheung and Manfred Kuhlmann will retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

No director proposed for re-election at the forthcoming Annual General Meeting has a service contract which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

The term of office for each of the Non-executive Directors and Independent Non-executive Directors is the period up to his retirement by rotation in accordance with Article 103 of the Company’s Articles of Association.

As at December 31, 2011, the interests and short positions of the directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) which have been notified to the Company pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such director or chief executive was taken or deemed to have under such provisions of the SFO) or as recorded in the register required to be kept under section 352 of the SFO or otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“the Listing Rules”) and as adopted by the Company, were as follows:

Save as disclosed above, none of the directors and the chief executive of the Company was interested or had any short position in any shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV or the SFO) as at December 31, 2011.

Scheme adopted on March 28, 2002 (“Scheme C”)Scheme C was adopted pursuant to a resolution passed on March 28, 2002 for recognition of the contribution to the development and growth of the Group by the eligible persons. This scheme expired on March 27, 2007. Under Scheme C, the Board of Directors of the Company may grant share options to the following eligible persons (and their wholly owned companies) of the Company, its subsidiaries and any companies in which the Group holds any equity interest, to subscribe for shares in the Company:

1. (i)employees; or
2. (ii)Non-executive Directors (including Independent Non-executive Directors); or
3. (iii)suppliers or customers; or
4. (iv)any person or entity that provides research, development or other technological support; or
5. (v)shareholders.

Share options granted must be taken up within 21 days of the date of grant upon payment of HK$1.00 in cash by way of consideration for the grant thereof. Share options may be exercised at any time from the date of grant to the fifth anniversary thereof. The subscription price is set at the highest of: the closing price of the shares on the date of offer of the share option; or the average closing price of shares as stated in the daily quotation sheets issued by the Stock Exchange for the five trading days immediately preceding the date of offer; or the nominal value of shares on the date of offer.

The maximum number of shares in respect of which share options may be granted under Scheme C is not permitted to exceed 30.00% of the issued share capital of the Company from time to time or 10.00% of shares in issue as at the adoption date of Scheme C. No person shall be granted an option which exceeds 1.00% of the shares in issue as at the date of offer in any 12-month period up to the date thereof.

Scheme adopted on May 29, 2007 (“Scheme D”)Following the termination of Scheme C, a new share option scheme was adopted pursuant to a resolution passed on May 29, 2007 for recognition of the contribution to the development and growth of the Group by the eligible persons. This scheme will expire on May 28, 2017. Under Scheme D, the Board of Directors of the Company may grant share options to the following eligible persons (and their wholly owned companies) of the Company, its subsidiaries and any companies in which the Group holds any equity interest, to subscribe for shares in the Company:

1. (i)employees; or
2. (ii)Non-executive Directors (including Independent Non-executive Directors or Officers); or
3. (iii)secondees, or
4. (iv)business partners, agents, consultants; or
5. (v)suppliers or customers; or
6. (vi)any person or entity that provides research, development or other technological support; or
7. (vii)shareholders.

Share options granted must be taken up within 21 days of the date of grant, upon payment of HK$1.00 in cash by way of consideration for the grant thereof. Share options may be exercised at any time from the date of grant to the tenth anniversary thereof. The subscription price is set at the highest of: the closing price of the shares on the date of offer of the share option; or the average closing price of shares as stated in the daily quotation sheets issued by the Stock Exchange for the five trading days immediately preceding the date of offer; or the nominal value of shares on the date of offer.

The maximum number of shares in respect of which share options may be granted under Scheme D is not permitted to exceed 30.00% of the issued share capital of the Company from time to time or 10.00% of shares in issue as at the adoption date of Scheme D. No person shall be granted an option which exceeds 1.00% of the shares in issue as at the date of offer in any 12-month period up to the date thereof.

The following table discloses movements in the Company’s share options during the year:

The weighted average closing prices of shares on the options grant date during 2011 and 2010 were HK$9.70 and HK$7.49 respectively.

The closing price of the Company’s shares immediately before various dates of grant ranged from HK$7.30 to HK$10.04.

The weighted average closing prices of the Company’s shares immediately before various dates during 2011 and 2010 on which the share options were exercised were HK$10.10 and HK$8.15 respectively.

The fair values of the share options granted in 2011 and 2010 measured at various dates of grant ranged from HK$1.92 to HK$2.58 and HK$1.89 to HK$2.14 per option respectively.

Other than as disclosed above, at no time during the year was the Company, or any of its subsidiaries, a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate and neither the directors or the chief executive, nor any of their spouses or children under the age of 18, had any right to subscribe for the securities of the Company, or had exercised any such right.

No contract of significance, to which the Company, or any of its subsidiaries, was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

As at December 31, 2011, the interests and short positions of the following persons, other than directors and chief executive of the Company, in the shares, underlying shares and debentures of the Company which have been disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO have been recorded in the register kept by the Company pursuant to section 336 of the SFO:

Save as disclosed, no other person was interested in or had a short position in the shares, underlying shares and debentures of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of the Part XV of the SFO as at December 31, 2011.

The Company has maintained a sufficient public float throughout the year ended December 31, 2011.

During the year, the Group made charitable and other donations totalling US$305,000.

A resolution will be submitted to the Annual General Meeting to re-appoint Messrs Deloitte Touche Tohmatsu as auditor of the Company.

On behalf of the Board

Horst Julius Pudwill
Chairman
Hong Kong

March 22, 2012