Message from Executive Chairman

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present Juken Technology Limited’s annual report for the financial year ended 31 December 2011 (“FY2011”). FY2011 has been a challenging year. Our businesses were affected by two natural disasters, namely, March 11 Tsunami in Japan and the severe flood in Thailand causing severe disruptions to our supply chain. In addition, we were also confronted with the global uncertainties especially the debt crisis in Eurozone, the volatility of US dollar and regional currencies, the fluctuation of oil prices as well as the inflationary pressure in China. Despite these difficulties and uncertainties, our resilience and our focus have enabled us to remain profitable.

In FY2011, the Group’s full-year revenue rose by 4% to reach $79.8 million. The net profit after tax of $3.1 million showed a decrease of 68% over the $9.7 million achieved in FY2010. This was due largely to a one-off negative goodwill of $4.7 million in FY2010 arising from the acquisitions of businesses from The Swatch Group Switzerland. Excluding this negative goodwill, the Group’s operating net profit in FY2011 of $3.1 million was 38% lower than that of FY2010.

For the year ahead in 2012, we expect the business conditions to remain challenging. Our performance in FY2012 may continue to be affected by the volatility of the US dollar and regional currencies, the fluctuation of oil prices as well as the inflationary pressures in China and South East Asia. We also expect the supply chain disruptions caused by the flood in Thailand to continue into the first quarter of FY2012.

On the positive side, our automotive industry sector, which is our largest contributor by revenue, is likely to continue to grow in Asia, particularly in China and India, albeit at a slower rate. Our existing presence in China and India allows us to tap into the growth opportunities in these two countries. On a medium to longer term basis, we remain confident with our outlook of the automotive industry.

On 14 September 2011, the Company and Frencken Group Limited (“Frencken”) jointly announced that both parties had entered into an indicative term sheet (“Term Sheet”) relating to the proposed acquisition by Frencken of all the issued and paid up ordinary shares in the capital of the Company by way of a scheme of arrangement (the “Proposed Scheme”). In the latest update announcement dated 14 March 2012, the Term Sheet lapsed in accordance with the terms thereof on 15 March 2012 and both parties did not extend the term of the Term Sheet. However, both parties are in continuing discussions on a non-exclusive basis to explore the proposed acquisition of the Company by Frencken. The Company will make an appropriate announcement in the event there are any material developments.

In view of the difficulties and uncertainties ahead, it is prudent for us to conserve our cash to weather any unexpected risks. The directors therefore do not propose to pay any dividend for FY2011.

May I take this opportunity to thank our shareholders for their unrelenting trust and faith in the Company and our customers and business associates for their unwavering support. I would also like to thank our management and staff for their dedication and commitment and to our directors for their valuable guidance and advice.
With your continuous support and understanding, the Group has been able to remain profitable despite a very difficult and challenging year.

Executive Chairman
March 2012
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