LANTROVISION (S) LTD ANNUAL REPORT 2013
LanTroVision (S) Ltd (Co. Reg. No.: 199203374R) 8 Ayer Rajah Crescent Singapore 139939 Tel: 65 6778 1668 Fax: 65 6778 1778
Tackling
CHALLENGES Ahead
ANNUAL REPORT 2013
DIRECTORY OF LANTROVISION NETWORK
SINGAPORE
VIETNAM
HONG KONG
LANTROVISION (S) LTD LANTRO (S) PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6778 1668 Fax: (65) 6778 1778
LANTRO (VIETNAM) CO., LTD. 46 Phan Khiem Ich Street, Hung Gia 1 (R4), Tan Phong Ward, District 7, Ho Chi Minh City,Vietnam Tel: (84-8) 5410 3088 / 3089 / 3090 Fax: (84-8) 5410 3087
LANTRO (HK) LIMITED Units 401-403,4/F, Shui Hing Centre 13 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong 香港九龍灣常悅道13號瑞興中心401-403室 Tel: (852) 2789 3846 Fax: (852) 2789 3847
VRNET (S) PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6776 6618 Fax: (65) 6776 6638
LANTRO (VIETNAM) CO., LTD. Hanoi Rep. Office No.6, 1G Block, Trung Yen Resident Area Trung Kinh Str, Cau Giay Dist, Hanoi City,Vietnam Tel: (84-4) 3791 4889 / 4891 Fax: (84-4) 3791 4890
INFILAN PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6777 1638 Fax: (65) 6773 1638 APPSILAN ASIA PTE LTD 8 Ayer Rajah Crescent Singapore 139939 Tel: (65) 6578 7101 Fax: (65) 6773 1638 ALTRO SOLUTIONS PTE LTD 7030, Northstar@AMK #07-08, Ang Mo Kio Ave 5 Singapore 569880 Tel: (65) 6288 8310/8091 Fax: (65) 6288 8300
MALAYSIA LANTRO (MALAYSIA) SDN. BHD. 69, Jalan 3/23A Taman Danau Kota, Off Jalan Genting Kelang, 53300 Setapak, Kuala Lumpur, Malaysia Tel: (60-3) 4143 6177 Fax: (60-3) 4143 6443 LANTRO (MALAYSIA) SDN. BHD. Johor Bahru Branch Office No. 42G, Jalan Bestari 8/5, Taman Nusa Bestari, 81300 Skudai, Johor Bahru, Malaysia Tel: (60-7) 511 3177 Fax: (60-7) 511 3816 LANTRO (PENANG) SDN. BHD. 11-A, Lorong Mayang Pasir 5, Taman Sri Tunas, Bayan Baru, 11950 Penang, Malaysia Tel: (60-4) 643 5033 / 2033 Fax: (60-4) 643 3033
THAILAND LANTRO (THAILAND) CO., LTD. 1457 Soi Ladprao 94, Ladprao Road, Kwaeng Phlapphla, Khet Wangthonglang, Bangkok 10310, Thailand Tel: (66-2) 934 6143 / 6144 / 6145 Fax: (66-2) 934 5300 LANTRO (THAILAND) CO., LTD. Rayong Branch Office 267/319 Muangmai Maptaphut, Sukhumvit Road, Tambol Mapthaphut, Amphoe Muang, Rayong 21150, Thailand Tel: (66-38) 609 551 Fax: (66-38) 609 552 LANTRO (THAILAND) CO., LTD. Phuket Branch Office 9/5 Moo 8, Tumbol Pa-Klog, Ampur Talang, Phuket 83110, Thailand Tel: (66-76) 379 861 Fax: (66-76) 379 862
CAMBODIA
PHILIPPINES LANTRO PHILS. INC. LANTROVISION INC. Unit A, 18th Floor, Belvedere Tower, San Miguel Ave, Ortigas Center, Pasig City, Philippines 1605 Tel: (63-2) 638 3881 / 3882 Fax: (63-2) 638 3883
LANTRO CAMBODIA #258, St.448, Sangkat Phsar Deum Thkov, Khan Chamkamorn, Phnom Penh, Cambodia Tel: (855) 2399 3471 Fax: (855) 2399 3541
LANTRO PHILS. INC. Cebu Branch Unit 2-I Capitol Centrum Building, N. Escario St., Near Capitol, Cebu City, Philippines 6000 Tel: (63-32) 238 2297 Fax: (63-32) 238 2297
KOREA
TAIWAN
LANTROVISION KOREA CO., LTD. Unit 503, Seokchon City Bldg, 66-7 Bangyee-Dong, Songpa-Gu, Seoul, 138-050 Korea Tel: (82-2) 3431 8855 Fax: (82-2) 3431 8885
LANTRO (TAIWAN) LTD 3F, No 15, Lane 360 Neihu Road Section 1, Neihu, Taipei 114, Taiwan 114, 台北市內湖區內湖路一段360巷15號3樓 Tel: (886-2) 2658 1047 Fax: (886-2) 2627 9582
CHINA
INDIA
LANTRO (SHANGHAI) CO. LTD. 8F No. 58, Jiang Chang San Road, Industrial New Zone, ZhaBei District, Shanghai 200436, PRC 上海市闸北区市北工业园区江场三路58号8层 邮编：200436 Tel: (86-21) 6142 1866 Fax: (86-21) 6117 5220
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED 731, 7th Cross, III Block Koramangala, Behind BDA Complex, Bangalore 560034, India Tel: (91-80) 4126 4887
LANTRO (SHANGHAI) CO. LTD Beijing Branch Office Room 658, 6th Floor, JingXin Mansion, No.2, A, Dong San Huan Bei Road, ChaoYang District, Beijing, 100027, PRC 北京市朝阳区东三环北路甲2号京信大厦6层658室 邮编: 100027 Tel: (86-10) 8449 3275 / 3276 Fax: (86-10) 8449 3219 LANTRO CO. LTD (HANGZHOU) Rm. 519 Block #1 No. 23, HuangGushan Road, Xixi Software Zone, Hangzhou 310012, PRC 浙江省杭州市黄姑山路23号西溪软件园1号楼 519室 邮编：310012 Tel: (86-571) 5683 0535 / 0536 Fax: (86-571) 5683 0537 LANTRO (SHANGHAI) CO. LTD Guangzhou Branch Office Room 1108, Middle Tower, Times Square, 28 Tian He Bei Road, Guangzhou 510620, PRC 广州天河北路28号时代广场中座1108室 邮编：510620 Tel: (86-20) 3882 0658 Fax: (86-20) 3891 0489 LANTRO (SHANGHAI) CO. LTD. Chengdu Branch Office Unit 1801, Sha He Tower 2, No.18 South of JingSha Rd, JinJiang District, Chengdu 成都市锦江区静沙南路18号沙河壹号2幢 1801,1802室 邮编：610000 Tel: (86-28) 6501 3202 Fax: (86-28) 6501 3203
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Mumbai Branch Office Premises No. 3, Ground Floor, Hindustan Kohinoor Premises Co-Op Society Ltd. Lalbahadur Shastri Marg.,Vikroli (W) Mumbai 400083, India Tel: (91-22) 4215 4722 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Chennai Branch Office Ground Floor, New No. 18 A, Old No. 08, Rajalakshmi Nagar, 2nd Main,Velachery Chennai 600042, India Tel: (91-44) 4202 7390 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED New Delhi Branch Office Flat No 702, 7th Floor, Devika Towers, 6th Nehru Place, New Delhi 110019, India Tel: (91-11) 4063 4811 up to 18 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Hyderabad Branch Office 1-8-450/1/A4, First floor, Indian Airlines Colony, Begumpet Hyderabad 500033, India Tel: (91-40) 4221 6553
TACKLING CHALLENGES AHEAD
02
About Us
03
Chairman’s Statement
05
Managing Director’s Review
08
Board of Directors
10
Key Executives
11
Corporate Information
12
Group Structure
13
Corporate Governance Report
19
Directors’ Report
23
Statement by Directors
24
Independent Auditors’ Report
26
Balance Sheets
28
Consolidated Statement of Comprehensive Income
29
Consolidated Statement of Changes in Equity
30
Consolidated Statement of Cash Flows
32
Notes to the Financial Statements
85
Group Properties
86
Statistics of Shareholdings
88
Notice of Annual General Meeting Proxy Form
CONTENTS
CORPORATE INFORMATION
LANTROVISION ANNUAL REPORT 2013
ABOUT US LANTROVISION WAS ESTABLISHED BY OUR MANAGING DIRECTOR CHAN THYE YUAN AS A SOLE PROPRIETORSHIP IN 1990 TO SUPPLY AND INSTALL COMPUTER CABLING TO MEET CUSTOMERS’ INFORMATION AND TELECOMMUNICATION REQUIREMENTS. THE COMPANY WAS SUBSEQUENTLY INCORPORATED ON 27 JUNE 1992. ON 2 NOVEMBER 2001, THE COMPANY WAS LISTED ON THE OFFICIAL LIST OF SGX SESDAQ AND WAS SUBSEQUENTLY TRANSFERRED TO SGX MAINBOARD ON 15 JANUARY 2008.
OUR MISSION LANdmark provider of a Global Quality InfoComm Technology infrastructure TRO satisfying beyond the needs and growth of our Stakeholders VISION of pride in our work with continuous training, development and effective communication
OUR VISION To be the leading global Structured Cabling System Integrator 02
OUR CORPORATE CAPABILITY Lantrovision (S) Ltd is the only Public Listed Company in Asia with dual BiCSi accreditation of Prestige Corporate Platinum Contractor and Prestige Corporate Platinum Consultant status
TACKLING CHALLENGES AHEAD
CHAIRMAN’S STATEMENT
YEAR IN REVIEW “ FOR THE 12 MONTHS ENDED 30 JUNE 2013, THE GROUP HAS ACHIEVED A REVENUE OF S$133.5 MILLION. “ Amidst a year of volatility in the global economy c) Partially offset with the increased staff costs of S$0.5 million and and challenges, we are pleased to report a foreign exchange loss of S$0.3 million. net profit attributable to equity holders of S$9.1 million for the year ended 30 June 2013 The decrease in other comprehensive income by approximately (“FY2013”). S$0.3 million is attributable mainly to currency translation difference arising from a stronger Singapore dollar against the regional currencies during the year. Deferred tax assets has OUR SATISFACTORY PERFORMANCE decreased primarily due to utilisation of tax credit to offset DEMONSTRATES THE STABILITY AND against tax payable during the year. The increase in investment RESILIENCE OF THE GROUP - A POSITION WE in associates is due to new invesment in an associated company WILL ENDEAVOR TO STRIVE FOR IN MANY in Singapore and partially offset with the share of losses incurred by our associated companies. Inventories purchased MORE YEARS TO COME. in preparation for the upcoming projects resulted in an increase in Group’s inventories. Net amount due from customers for PROPOSED DIVIDEND contract work-in-progress was lower due mainly to timing of To r e w a r d o u r s h a r e h o l d e r s f o r t h e i r project completion. Trade receivables has decreased as a result continued support, the Board of Directors has of lower turnover in the quarter ended 30 June 2013 as well recommended for approval at the forthcoming as greater effort made by management to improve its debt Annual General Meeting, a first and final collection. The increase in other receivables by approximately dividend of S$0.02 for each ordinary share held S$0.6 million is mainly due to higher prepayments and interest as at a book closure date to be announced later. receivables as at year end. Non-controlling interest has increased by approximately S$0.7 million due to higher share of profits earned by subsidiaries. The reduction in trade payables of S$5.5 YEAR IN REVIEW million is due to lower purchases in the last quarter in line with For the 12 months ended 30 June 2013, the slowing economy as well as timing of normal trade settlement. Group has achieved a revenue of S$133.5 million. There is no significant change to the group revenue for the two financial year ended 2013 and 2012. General and administrative expenses has decreased by S$0.4 million mainly as a result of higher legal fees as well as allowance for impairment loss on non-trade receivables made in the prior financial year. The decrease in other operating expenses by approximately S$0.7 million was mainly due to the following factors: a) Provision of bank balances of S$0.8 million deposited in a Philippine bank that was placed under sudden receivership in previous year; b) Decrease in net provision for impairment of work-in-progress of S$0.6 million in the current year; and 03
CHAIRMAN’S STATEMENT
Higher accrued staff costs in the current financial year resulted in higher accruals and other payables. Amount due to a related party (non-trade) relates to the dividends payable to non-controlling interest. Net cash generated from operating activities have reduced by S$8.3 million during the year as a result of higher working capital requirements.
LANTROVISION ANNUAL REPORT 2013
THE GROUP WILL CONTINUE TO MAINTAIN FINANCIAL PRUDENCE AND TO RAISE PRODUCTIVITY TO MANAGE THE OPERATING COSTS OF THE GROUP.
By leveraging on our track records and regional business infrastructure, continually improving our products and services portfolio that are complementary to our core IT cabling infrastructure business, we strive to meet the OUTLOOK needs of our regional customers as well as to T h e e c o n o m i c o u t l o o k expand our customer bases, so as to improve continues to be uncertain. With a shrinking pool of the labour workforce, the imposition of minimum wages in certain regions, coupled with volatile raw material costs, the Group is expected to face pressure on its profit margins.
our profitability and add value to our shareholders.
APPRECIATION On behalf of the Board, I want to express my sincere gratitude to the management and staff, whose hard work made it possible for us to manage the effects of the uncertain global economy and achieve profitability in FY2013. Lastly, I want to thank our customers and business partners as well as our shareholders for your continued support.
LUM CHUE TAT Chairman 04
TACKLING CHALLENGES AHEAD
MANAGING DIRECTOR’S REVIEW
GOING FORWARD WE WILL REMAIN MINDFUL OF THE CONSTANT NEED TO IMPROVE AND ADAPT TO THE CHANGING ECONOMIC ENVIRONMENT TO FULFILL OUR GOALS AND OBJECTIVES AND TO DEVELOP AND MOTIVATE OUR STAFF WITH A CLEAR FOCUS IN EXECUTING OUR STRATEGY TO IMPROVE OUR TURNOVER AND MARGINS.
YEAR IN REVIEW We entered FY 2013 on a positive note despite global economic recovery remaining sluggish over a combination of factors such as the impending retraction of the US economy stimulus program, uncertainty of the Euro-zone economic recovery and the less than positive economic data from China.
It’s also a year where labour crunch and rising labor costs across the region posed a real challenge to our business. Moving on, given the strain on human resources, we will be more selective with projects, and prioritise our service delivery to achieve maximum values to both our valued customers and our shareholders.
Despite operating in such challenging conditions and pressures from ever increasing cost of operation, we are proud to announce that our team had done a great job to weather through these challenges. Our strategy of diversifying more into local Multi-National Corporations and Government projects, the sectors which we were not predominantly involved in, has delivered positive results.
GIVEN THE GENERAL UNCERTAINTY IN THE GLOBAL ECONOMY, WE WILL CONTINUE WITH OUR STRATEGY OF DIVERSIFYING OUR CLIENTS AND CUSTOMER BASE AND TO IMPROVE OUR TOP LINE BY OFFERING MORE VALUE ADDED PRODUCTS AND SERVICES TO OUR EXISTING AND NEW CUSTOMERS, WHILE CONSTANTLY BEING MINDFUL OF BALANCING OUR RESOURCES TO IMPROVE PRODUCTIVITY THROUGHOUT THE ORGANIZATION. 05
MANAGING DIRECTOR’S REVIEW
EXPANDING MARKET SEGMENT The ever-changing dynamics of the present economic environment had more than frequent derailed our expectations and affected the way business decisions were made. Customers are more conservative with their business expansion plans, leading to a reduction in IT infrastructure projects, both in numbers and sizes. As a result of such development, in addition to the traditionally predominant financial centres, the Group was able to use its experience and redeploy resources to other non-financial sectors, namely the manufacturing sector, high end residential and commercial developments, mega gaming and recreation centers, etc.
EXPANDING PRODUCT AND SERVICES We made substantial progress in strengthening and expanding our product portfolio. We experienced more than marginal success in the sale of products and services that are complementary to our IT cabling infrastructure business, namely products and services on IT infrastructure and power management; products and software for data center and enterprise communication rooms; security surveillance products, active and passive datacenter equipment and accessories as well as cabling routing support system.
LANTROVISION ANNUAL REPORT 2013
Data Center Infrastructure Management (“DCIM”) is the key trend. There are a multitude of new technologies products and services currently available which can complement our Structured Cabling business to meet the expectations and provide solutions to the data centers’ owners and operators in the areas of energy efficiency and savings over space cost.
AS AUTHORIZED PARTNERS, WE BELIEVE THAT OUR WELL ESTABLISHED REPUTATION AND GEOGRAPHICAL PRESENCE WILL CREATE A WINWIN SITUATION FOR BOTH THE GROUP AND THE VENDORS OF SUCH NEW TECHNOLOGIES.
MANAGING COSTS With inflationary pressures across the region, authorities are encouraging industries and companies to improve the minimum wages of lower income employees, which may pose a challenge to our margin. This is further compounded with pricing pressure from competition and clients’ expectation. As such, it is more compelling now for us to accelerate our productivity programs to remain competitive and relevant in the industry. We will continue to educate and motivate our staff on the relevance of productivity and operation cost management, as well as to seek new ways to improve our processes in order to optimise our resources, focusing on areas such as material usage, savings and sourcing.
FOCUS AND IMPROVE OUR COMPARATIVE ADVANTAGE I am also proud to mention that our Lantro Global Alliance Partnerships with the members from United States of America, Brazil, Europe, South Africa, Indonesia, Japan and Australia have taken roots and have enabled us to establish a strong global presence. In the short to medium term, this Alliance continues to enhance our marketing efforts in reaching out to potential clients through presentations and joint events. One of the key initiative is to develop processes and business portals to create a unique proposition that best meet our existing and prospective customers’ budgets and expectations. In the long run, this Alliance will provide us with a competitive edge over our competitors with access into different markets, and give us greater opportunity and confidence to meet our global clients transnational requirements. It is our intention to further enhance our partnership through more synergistic engagement among the Alliance members to create and seize new opportunities from our common global clientele and new prospects.
06
TACKLING CHALLENGES AHEAD
MANAGING DIRECTOR’S REVIEW
OUTLOOK Given the continuing uncertainty in the global economy, the Group is generally cautious about the outlook of growth acceleration. Without any clarity and stability in sight, the global business environment remains challenging for us. We will continue with our strategies of expanding and diversifying our market segment, increase our product and services portfolio by selling more to our existing and new customers.
WE WILL LEVERAGE ON OUR GLOBAL PRESENCE TO INCREASE OUR BUSINESS OPPORTUNITIES TO MITIGATE ANY SHORTCOMINGS ARISING FROM THE UNCERTAINTIES WE MAY FACE IN THE NEW FINANCIAL YEAR. In the last few years we have made concerted effort to streamline our operations and processes, focusing on manpower and resource management, financial prudence and credit management. We will continue to drive these initiatives and enhance our productivity to mitigate challenges from escalating costs and falling prices. We will also focus on customer profiling to identify value customers to maximise the use of our resources and business returns.
As the visibility of the economic environment remains hazy, we are cautiously optimistic about the market opportunities. We will adopt a prudent approach in managing such challenges. Similar to past experiences,we are confident that our strategies, experience and the resilient nature of our business will navigate us through the various
challenges we may encounter. We will remain mindful of the constant need to improve and adapt to the changing economic environment to fulfill our goals and objectives and to develop and motivate our staff with a clear focus in executing our strategy to improve our turnover and margins. 07
BOARD OF DIRECTORS
LANTROVISION ANNUAL REPORT 2013
LUM CHUE TAT
LIM WOON WAH
Chairman
Non-Executive Independent Director
Lum Chue Tat, one of the Group’s co-founders, was appointed to the Board in June 1992. Mr Lum is primarily responsible for the Group’s overall business development. He holds a Diploma in Electronics and Communication from the Singapore Polytechnic and has over 20 years of experience in structured cabling design and marketing.
Lim Woon Wah, a Non-Executive Independent Director, was appointed to the Board in December 2005. Ms Lim has extensive experience in the financial, compliance and special audit. She is the Chairman of the Audit and Nominating Committees as well as a member of the Remuneration Committee. Ms Lim is a Chartered Accountant with the New Zealand Institute of Chartered Accountants.
CHAN THYE YUAN RCDD
Managing Director
YEO JIEW YEW
Non-Executive Director Chan Thye Yuan, RCDD, one of the Group’s co-founders, is the Managing Director of the Company and is responsible for the strategic initiatives as well as the Group’s overall business development. He holds a Bachelor of Business in Business Administration and has been a Registered Communication Distribution Designer since 1999. Mr Chan has over 20 years of experience in structured cabling design and related telecommunications expertise. ANG EE TIONG, KENNETH RCDD
Yeo Jiew Yew, a Non-Executive Director, was appointed to the Board in August 2008. Mr Yeo has more than 40 years of extensive experience in electrical installation industry. From 1983 to 2006, he was the Managing Director of Magnus Energy Group Ltd (“Magnus”) (fka. Strike Engineering Limited) and was responsible for the overall management of Magnus. He left Magnus in May 2006. Currently, Mr Yeo is the Managing Director of Victrad Enterprise (Pte) Ltd.
Executive Director YEO KAN KIANG, ROY
Ang Ee Tiong, Kenneth, RCDD, an Executive Director of the Company, is responsible for operational and administrative matters as well as overseeing our overseas operations. He was appointed to the Board in November 2003. Mr Ang has been a Registered Communication Distribution Designer since 1999 and has more than 20 years of experience in structured cabling design and related design.
08
Non-Executive Independent Director Yeo Kan Kiang, Roy, a Non-Executive Independent Director, was appointed to the Board in August 2005. He graduated with a Bachelor of Laws (Honours) degree from the University of Bristol, UK and has been in legal practice for more than 15 years. Mr Yeo is active in community service in Tanjong Pagar GRC and is presently the Chairman of the Henderson Community Club Management Committee. For his active involvement and participation in grassroots/ community service in Singapore, Mr Yeo was awarded the Public Service Medal (PBM) by the President of the Republic of Singapore in 2011 National Day Awards.
GLOBAL PRESENCE
TACKLING CHALLENGES AHEAD
With regional offices across
11 25
countries and
cities,
together with our alliance partners in
7
countries,
we strive to fortify our service level capabilities, to capitalise on opportunities as well as to expand our footprint in the region that we are operating in, thereby strengthening our brand and improving our service standards to achieve higher growth.
09
KEY EXECUTIVES
10
LANTROVISION ANNUAL REPORT 2013
CHAN SOW HAR
LIM KHIA HUAT, VINCENT
Administrative Manager
Head of International Group
Chan Sow Har, our Administrative Manager, has been with the Group since 1992. Her main responsibilities are the management and supervision of administrative staff and she oversees the administrative functions of our Group such as payroll and personnel matters. She has a Certificate of Business Studies from the National Institute of Commerce in 1987.
Lim Khia Huat, Vincent, joined the Group as the Head of International Group in October 2003. He is responsible for overseeing regional strategic operations and developments. He obtained a Master of Business Administration (International Management) from the Royal Melbourne Institute of Technology in 1998.
LIM LEE CHOO
POH KHENG ANN RCDD
Group Financial Controller and Company Secretary
Senior Business Development Manager
Lim Lee Choo, our Group Financial Controller, has been with the Group since 2001. She is responsible for our overall financial accounting and corporate finance matters. She obtained a Bachelor of Accountancy degree from Nanyang Technological University in 1993 and is a Chartered Accountant (Singapore) with the Institute of Singapore Chartered Accountants.
Poh Kheng Ann, RCDD, our Senior Business Development Manager, has been with the Group since 1995. Mr Poh, a Registered Communication Distribution Designer, is mainly responsible for identifying and developing strategic customers with long term potential. Mr Poh has extensive experience in the data and network communications industry. He obtained his Diploma from Singapore Polytechnic in 1979.
TAN CHIN LIM
TAN KIM HIN
Senior Project Manager
Senior Project Manager
Tan Chin Lim is our Senior Project Manager and has been with the Group since 1994. He is responsible for the local and regional installation projects. He is also responsible for project management and supervises a team of project engineers in system implementation. He obtained his GCE ’O’ levels in 1977.
Tan Kim Hin is our Senior Project Manager and has been with the Group since 1992. He is responsible for site supervision and the deployment of manpower and technical resources such as testing equipment. He is also responsible for sales and project management, and has been involved in several significant projects for our Group. He completed his GCE ‘O’ levels in 1979.
CORPORATE INFORMATION
TACKLING CHALLENGES AHEAD
BOARD OF DIRECTORS
NOMINATING COMMITTEE
SHARE REGISTRAR
Executive
Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew Chan Thye Yuan
Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32 - 01 Singapore Land Tower Singapore 048623 Telephone: (65) 6536 5355 Facsimile: (65) 6536 1360
Lum Chue Tat (Chairman) Chan Thye Yuan (Managing Director) Ang Ee Tiong, Kenneth Non-Executive Lim Woon Wah (Independent) Yeo Jiew Yew (Non-Independent) Yeo Kan Kiang, Roy (Independent)
REMUNERATION COMMITTEE
Yeo Kan Kiang, Roy (Chairman) Lim Woon Wah Yeo Jiew Yew Ang Ee Tiong, Kenneth COMPANY SECRETARY
Lim Lee Choo
AUDIT COMMITTEE
REGISTERED OFFICE
Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew
8 Ayer Rajah Crescent Singapore 139939 Telephone: (65) 6778 1668 Facsimile: (65) 6778 1778
AUDITORS
Crowe Horwath First Trust LLP 8 Shenton Way #05 - 01 AXA Tower Singapore 068811 AUDIT PARTNERIN-CHARGE
Angeline Tan Lay Hong (Appointed since FY2012) 11
GROUP STRUCTURE
LANTROVISION ANNUAL REPORT 2013
LanTroVision (S) Ltd
MORE THAN 50% HOLDINGS LESS THAN 50% HOLDINGS
50% ALTRO SOLUTIONS PTE LTD
100% LANTRO (S) PTE LTD
100% LANTRO (MALAYSIA) SDN BHD
100% LANTRO (TAIWAN) SDN BHD 100%
100% LANTRO (HK) LIMITED
100% VRNET (S) PTE LTD
85%
LANTROVISION KOREA CO. LTD
70% 60%
LANTRO CO. LTD (HANGZHOU)
18%
LANTRO (SHANGHAI) CO. LTD
60% APPSILAN ASIA PTE LTD
60% INFILAN PTE LTD
60%
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED
51% LANTRO PHILS. INC.
25% LANTROVISION INC.
51% LANTRO (PENANG) SDN BHD 100%
49%
LANTRO (VIETNAM) CO. LTD
LANTRO (THAILAND) CO. LTD
100% LANTRO
(CAMBODIA) CO. LTD
12
Corporate Governance Report
TACKLING CHALLENGES AHEAD
Lantrovision (S) Ltd (“the Company”) is committed to achieving and maintaining high standards of corporate governance practices and processes in managing the business and affairs, so as to maintain performance and improve accountability and transparency of the Company.
BOARD MATTERS The Board of Directors (the “Board”) comprises three (3) Executive Directors, two (2) Independent Non-Executive Directors and one (1) Non-Executive Director. The Board is of the opinion that its current size is reasonably effective and efficient considering the nature and size of the Group’s activities. The Board’s principal role is to protect and enhance long-term shareholders’ value. It sets the corporate strategies of the Group and determines the strategic goals and directions for the Management. It supervises the overall management of the business and affairs of the Group, and monitors performance of these goals to enhance shareholders’ value. The Board is responsible for the overall corporate governance of the Group. Regular meetings are held to deliberate the strategic policies of the Company including significant acquisitions and disposals, review performance of the business and approve public release of periodic financial results. The Board has formed Board Committees namely the Audit Committee, the Nominating Committee and the Remuneration Committee to assist in carrying out and discharging its duties and responsibilities efficiently and effectively. Directors’ Attendance at Board and Board Committee Meetings Board
Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Yeo Jiew Yew Lim Woon Wah Yeo Kan Kiang, Roy
No of Meetings Held Attended 4 4 4 4 4 4 4 3 4 4 4 4
Audit Committee No of Meetings Held Attended – – – – – – 4 3 4 4 4 4
Nominating Committee No of Meetings Held Attended – – 1 1 – – 1 1 1 1 1 1
Remuneration Committee No of Meetings Held Attended – – – – 1 1 1 1 1 1 1 1
The Company’s Articles of Association (the “Articles”) allows Board meetings to be conducted by way of telephone. Where a decision has to be made before a Board meeting is convene, a Directors’ Resolution in writing is circulated in accordance with the Articles of the Company and the Directors are provided with all relevant information to allow them to make informed decisions. With Mr Chan Thye Yuan assuming the designation of Managing Director and Mr Lum Chue Tat as the Chairman of the Board, the Board believes that this separation of roles is in line with the recommendation of the Code of Corporate Governance to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision- making. The Chairman is responsible for, among others, exercising control over quality, quantity and timeliness of the flow of information between the Management of the Company and the Board, and assisting in ensuring compliance with the Company’s guidelines on corporate governance. In order to assist the Board in carrying out its responsibilities, training is provided when the need arises and any Board Member can seek independent professional advice, if necessary, at the Company’s expense, with the Chairman’s approval. 13
Corporate Governance Report
LANTROVISION ANNUAL REPORT 2013
Audit Committee (“AC”) The chairman of the AC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang,Roy and Non-Executive Director, Mr Yeo Jiew Yew. The AC’s key functions include, pursuant to its terms of reference, the review of (a) the effectiveness of the Company’s material internal control (b) scope and results of the external audit and its cost effectiveness (c) independence and objectivity of the external auditors and (d) the provision of non-audit services. The AC has explicit authority to investigate any matters within its terms of reference and possess reasonable resources to discharge its functions properly. The external auditors have unrestricted access to the AC. The AC had undertaken a review of all nonaudit services provided by the auditors and was of the opinion that the provision of such services would not affect the independence of the auditors. The AC has recommended the re-appointment of the external auditors at the forthcoming AGM. The Company has in place a whistle-blowing policy and procedures, which provide employees with well-defined and accessible channels within the Group through which they may, in confidence, raise concerns about possible improprieties. Employees have ready access to the Chairman and members of the Audit Committee to raise improprieties in matters of financial reporting and other operational matters. The Audit Committee shall ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow-up actions. Upon review by the AC on all interested parties transactions (“IPT”) during the financial year, the AC has noted all IPT were less than S$100,000 and is satisfied that these were carried out at arm’s length basis. In accordance with the requirement of Rule 716 of the SGX-ST Listing Manual, the AC and the Board are satisfied that the appointment of different auditors for certain of its subsidiaries would not compromise the standard and effectiveness of the audit of the Group. Control environment and internal audit process The key features of the control environment include the terms of reference for the Board’s sub-committees, a clear organisation structure and methods of assigning authority and responsibility, the management’s internal control systems, and defined procedures for the approval of major transactions. The Group’s internal control process is anchored by the Group’s corporate office which assists the Board to monitor its compliance with key internal controls procedures as well as the plan and performance of its subsidiaries and associated companies which is reported internally on a monthly basis. The Board shall consider expanding its internal audit resources as and when the need arises. There is also regular communication between executive Directors and operational Management with presentation being made by the Management of each principal operation on a regular basis. Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted. Nominating Committee (“NC”) The chairman of the NC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang, Roy, Non-Executive Director, Mr Yeo Jiew Yew and Managing Director, Mr Chan Thye Yuan.
14
Corporate Governance Report
TACKLING CHALLENGES AHEAD
The NC has adopted specific written terms of reference. Accordingly, the members of the NC are responsible for, among others, the review and recommendation of appointment and reappointment of Directors. In accordance with the Company’s Article of Association, each Director is required to retire at least once every three years by rotation and all newly appointed Directors will have to retire at the Annual General Meeting (“AGM”) following their appointment. The retiring Directors are eligible to offer themselves for re-election. The NC has recommended the re-appointment of two Directors, namely Mr Yeo Jiew Yew and Mr Yeo Kan Kiang, Roy at the forthcoming AGM. The Board has accepted the NC’s recommendation and these 2 Directors will be offering themselves for re-election. Other duties of the NC include the determination of Directors’ independence, ability of Directors to handle multiple board representations and effectiveness of the Board including the board size and composition. The NC has deemed the current board size and composition to be appropriate after taking into consideration the nature and scope of the Group’s operations. The review parameters for evaluating each Director include (a) attendance at board committee meetings; (b) intensity of participation at meetings; (c) quality of involvement in Management; (d) special contribution; and (e) availability for consultation and advice, when required. Remuneration Committee (“RC”) The Chairman of the RC is Mr Yeo Kan Kiang, Roy. The members are independent Non-Executive Director, Ms Lim Woon Wah, Non-Executive Director, Mr Yeo Jiew Yew and Executive Director, Mr Ang Ee Tiong, Kenneth. The main functions and responsibilities as set out in its written code of reference include (a) the setting up and implementation of formal and transparent processes by which the remuneration packages of all the executive Directors (in the form of service agreement) and the top Management executives are formulated and approved, (b) the approval of the Directors’ remuneration and service agreements which will be reviewed every three years and (c) the administration of the Lantrovision Share Option Scheme and Lantrovision Performance Share Plan. The RC will also have access to expert advice in remuneration matters when the need arises. A breakdown of the level and mix of remuneration paid to each Director in each remuneration bands are as follows:
Remuneration band and name of Director Between S$500,000 and S$749,999 Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Below S$250,000 Yeo Jiew Yew Yeo Kan Kiang, Roy Lim Woon Wah
Salaries %
Bonus %
Profit Sharing %
Benefits & Allowances %
Fees %
Total %
48.50 49.37 48.03
15.94 15.36 16.09
30.32 29.22 30.60
5.24 6.05 5.28
– – –
100 100 100
– – –
– – –
– – –
– – –
100 100 100
100 100 100
FY2013 5
FY2012 5
Remuneration of top 5 key executives Below $250,000
Although there are employees occupying managerial positions in the Group who are related to certain executive Directors of the Company, none of their remunerations exceeds S$150,000 for FY2013. The RC and the Board are of the opinion that the remuneration of the Directors are adequate but not excessive in order to attract, retain and motivate them to run the Company successfully. 15
Corporate Governance Report
LANTROVISION ANNUAL REPORT 2013
The Lantrovision Share Option Scheme 1.
The Lantrovision Share Option Scheme (“the Scheme”) approved by the then shareholders of the Company on 31 August 2001, is administered by the RC.
2.
Under the Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the share at the time of the grant of the option. The RC, may at its discretion, fix that subscription price at a discount of up to 20% off market price. The consideration for the grant of an option is S$1.00. Options granted with the subscription at the market price shall only be exercised after first anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of the grant of that option. Options granted with the subscription price set at a discount to the market price shall only be exercisable after the second anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Option will lapse when the option holder ceased to be a full-time employee of the Company or any Company within the Group, subject to certain exceptions at the discretion of the Company.
3.
Details of the number of shares under option to subscribe for ordinary shares of the Company are as follows:
Grant Date 10 Jan 2003 19 Jan 2004
Balance as at Expired during Balance as at 01.07.12 Adjustment* the year 30.06.13 7,015,000 (6,325,000) 690,000 – 4,751,000 (4,261,000) 490,000 490,000
Adjusted Exercise Price $0.5346 $0.5196
Expiry Date 9 Jan 2013 18 Jan 2014
*
Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year.
4.
Details of the options to subscribe for ordinary shares of the Company granted to Directors of the Company under the Scheme are as follows:
Name of participants Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Yeo Jiew Yew Yeo Kan Kiang, Roy Lim Woon Wah 5.
16
Aggregate options granted since commencement of scheme to end of financial year under review (adjusted for any Rights and those lapsed during the financial year) 110,000 110,000 110,000 – – –
Aggregate options exercised since commencement of scheme to end of financial year under review Nil Nil Nil NA NA NA
Aggregate options outstanding as at end of financial year under review 110,000 110,000 110,000 – – –
No options were granted to any controlling shareholders and their associates since the commencement of the Scheme.
TACKLING CHALLENGES AHEAD
Corporate Governance Report
6.
No participant other than the Executive Directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total options available under the Scheme.
7.
Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee falls, which is financial year 2003. Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not.
The Lantrovision Performance Share Plan 1.
The Lantrovision Performance Share Plan was approved by then shareholders of the Company at an Extraordinary General Meeting held on 31 October 2007. The Performance Share Plan is also administered by the RC.
2.
The purpose of adopting the Performance Share Plan (“the Plan”) in addition to the existing Lantrovision Share Option Scheme is to serve as a motivational tool to recruit, attract and retain Employees and Directors, motivate them to perform and contribute to the Group, instil loyalty and a stronger identification by them with the long-term prosperity of the Group and foster an ownership culture within the Group by aligning their interest with that of the Shareholders.
Since the commencement of the Plan, no awards have been granted. Some information on the Plan:1.
Awards over the Company’s ordinary shares may be granted to all executive Directors, non-executive Directors and executives of the Group, except those who are controlling shareholders, as may be determined by the RC from time to time.
2.
Under the Plan, awards represent the right of a participant to receive fully paid ordinary shares in the Company free of charge upon the participant achieving prescribed performance targets. The selection of a participant and the number of shares which are the subject of each award to be granted to a participant in accordance to the Plan shall be determined at the absolute discretion of the RC, which shall take into consideration criteria such as his rank, job performance and potential for future development, his contribution to the success and development of the Group and the extent of effort and resourcefulness required to achieve the performance target(s) within the performance period.
3.
The total number of new shares of the Company which may be issued pursuant to awards under the Plan, when added to the total number of new shares issued and issuable in respect of all awards granted under the Plan, and all options granted under the Lantrovision Share Option Scheme, shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company on the day preceding the relevant date of Award.
4.
Subject to prevailing legislation and SGX-ST guidelines, the Company will have the flexibility to deliver ordinary shares of the Company to participants under the Plan upon vesting of their awards by way of an issue of new ordinary shares; and/or deliver existing shares, whether acquired pursuant to a share purchase mandate or held as treasury shares; and/or pay the equivalent cash value, in lieu of the issue or delivery of all or some of the shares.
17
Corporate Governance Report
LANTROVISION ANNUAL REPORT 2013
Communication with Shareholders The Board is mindful of its obligation to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the SGX-ST. Results and other material information are released via SGXNET on a timely basis for dissemination to shareholders and the public. All shareholders will receive a copy of the annual report and the notice of AGM (“the AGM Notice”). The AGM Notice is also advertised in the newspapers and released via SGXNET. The Board welcomes the view of the shareholders on matters affecting the Company at shareholders’ meetings. At AGMs, shareholders are given the opportunity to air their view and to ask the Directors and Management questions regarding the Group. Material Contracts There were no material contracts entered into by the Company and its subsidiaries involving the interest of the Directors that subsisted at the end of the financial year or have been entered into since the end of the previous financial year. Use of proceeds arising from Rights Issue On 16 October 2012, the Company completed a renounceable and non-underwritten rights Issue of 248,992,464 new ordinary shares in the issued share capital of the Company (the “Rights Shares”) at an issue price of S$0.09 for each Rights Share. The gross proceeds from the Rights Issue were S$22,409,322 were utiised by the Group as follows: Utilisation of Rights Issue Proceeds General working capital (Payment to trade vendors for trade supplies and services) Payment for expenses incurred in connection with the Rights Issue Rights Issue proceeds fully utilised
S$’000 22,137 272 22,409
Dealings in Company’s securities The Company has adopted the SGX-ST Best Practice Guide to provide guidance to its Directors and officers on their dealings in its securities. Directors and officers are prohibited from dealing in the Company’s securities two weeks before the announcement of the Company quarters’ results, and one month before the announcement of the Company’s full year results. Directors and officers are also not allowed to deal in the Company’s securities on short-term considerations. Risk Management Policies and Processes The management of all forms of business risk continues to be an important part of ensuring that the Group creates and protects values for its shareholders. The main risk faced by the Group is credit risk which is primarily attributable to its trade receivables. Accordingly, stringent credit control policies and processes have been set up and closely monitored to ensure adequate prevention, early detection and resolution of potential bad debts. For further details on the risks faced by the Group, please refer to page 75 of the Annual Report.
18
DIRECTORS’ REPORT
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
The directors are pleased to present their report to the members together with the audited financial statements of Lantrovision (S) Ltd (the “Company”) and subsidiaries (collectively, the “Group”) for the financial year ended 30 June 2013 and the balance sheet of the Company as at 30 June 2013.
Directors The directors of the Company in office at the date of this report are as follows: Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Lim Woon Wah Yeo Kan Kiang, Roy Yeo Jiew Yew
Arrangements to enable directors to acquire benefits by means of the acquisition of shares and debentures Except for the Lantrovision Share Option Scheme as described in the Share options section, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was 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. Directors’ interests in shares or debentures According to the register of directors’ shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the “Act”), none of the directors of the Company holding office at the end of the financial year had any interests in the shares, share options, warrants or debentures of the Company or its related corporations except as follows:
Name of Directors
At 1 July 2012
Direct Interests At 30 June At 21 July 2013 2013
Deemed Interests At 1 July At 30 June At 21 July 2012 2013 2013
Ordinary shares in the Company Chan Thye Yuan Ang Ee Tiong, Kenneth Lum Chue Tat Yeo Jiew Yew
176,703,750 22,971,481 239,793,750 31,173,181 192,453,750 25,018,981 103,897,000 15,987,000
27,651,481 31,173,181 25,018,981 15,987,000
– – – –
– – – –
– – – –
110,000 110,000 110,000
865,000 – –
40,000 – –
40,000 – –
Options to subscribe for ordinary shares in the Company Chan Thye Yuan Ang Ee Tiong, Kenneth Lum Chue Tat
2,666,000 1,841,000 2,666,000
110,000 110,000 110,000
Directors’ contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors of those related corporations. 19
DIRECTORS’ REPORT
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
Share options The Lantrovision Share Option Scheme (the “Scheme”) approved by shareholders on 31 August 2001 is administered by the Remuneration Committee comprising the following members: Yeo Kan Kiang, Roy, Chairman Lim Woon Wah Yeo Jiew Yew Ang Ee Tiong, Kenneth All options issued under the Scheme to eligible employees, including executive directors, have a term no longer than 10 years and options issued to non-executive directors have a term no longer than 5 years. The exercise period of the options commences on the first anniversary of the date of the grant. Details of the options to subscribe for ordinary shares of the Company granted to eligible employees, including directors of the Group pursuant to the Scheme are as follows:
Date of Grant
Exercise period
Balance at 1 July 2012
10 January 2004 to 9 January 2013 19 January 2005 to 19 January 2004 18 January 2014 10 January 2003
*
Number of shares under option Expired during Balance at Adjusted Adjustment* the year 30 June 2013 Exercise price
7,015,000
(6,325,000)
690,000
–
$0.5346
4,751,000 11,766,000
(4,261,000) (10,586,000)
490,000 490,000
490,000 490,000
$0.5196
Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year.
Aggregate options granted during financial year ended 30 June 2013 Directors of the Company Chan Thye Yuan Ang Ee Tiong, Kenneth Lum Chue Tat
– – –
Number of shares under option Aggregate options Aggregate Aggregate cancelled due options options to adjustment/ granted since exercised since expired since Aggregate commencement commencement commencement options of the Scheme to of the Scheme to of the Scheme to outstanding as at 30 June 2013 30 June 2013 30 June 2013 30 June 2013 2,666,000 1,841,000 2,666,000
– – –
(2,556,000) (1,731,000) (2,556,000)
110,000 110,000 110,000
The aggregate number of options granted to directors and employees since the commencement of the Scheme is 42,072,000 (before adjustment of the Share Consolidation and Rights Issue). Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee fall s, which is financial year 2003. Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not. 20
DIRECTORS’ REPORT
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
Since the commencement of scheme to the end of the financial year, (a) (b)
No options have been granted to controlling shareholders of the Company or their associates (as defined in the Listing Manual of Singapore Exchange Securities Trading Limited); and No participant other than executive directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total number of shares under options available under the Scheme.
Except as disclosed above, there were: - - -
no options granted by the Company or subsidiaries to any person to take up unissued shares in the Company or subsidiaries; no shares issued by virtue of any exercise of option to take up unissued shares of the Company or subsidiaries; and no unissued shares of the Company or subsidiaries under option.
Audit committee The members of the Audit Committee at the end of the financial year are as follows: Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew The Audit Committee (“AC”) carried out its functions in accordance with section 201B(5) of the Act, the Listing Manual of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance. In performing those functions, the Audit Committee reviewed: - - - -
-
the audit plan of the Company’s independent auditors and any recommendations on internal accounting controls arising from the statutory audit; the assistance given by the Company’s management to the independent auditors; the periodic results announcements prior to their submission to the Board for approval; the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 30 June 2013 prior to their submission to the Board of Directors, as well as the independent auditors’ report on the balance sheet of the Company and the consolidated financial statements of the Group; and interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited).
The Audit Committee has recommended to the Board of Directors that the independent auditors, Crowe Horwath First Trust LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. The Audit Committee has conducted an annual review of non-audit services provided by the independent auditors to satisfy itself that the nature and extent of such services will not affect the independence and objectivity of the external auditors before confirming their re-nomination. In appointing the external auditors for the Company, subsidiaries and significant associated companies, we have complied with Rules 712, 715 and 716 of the Listing Manual of the Singapore Exchange Securities Trading Limited. Further details regarding the AC are disclosed in the Report on Corporate Governance set out in the Annual Report of the Company.
21
DIRECTORS’ REPORT
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
Internal control Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted.
Independent auditors The independent auditors, Crowe Horwath First Trust LLP, have expressed their willingness to accept re-appointment as auditors of the Company.
On behalf of the Board of Directors
CHAN THYE YUAN LUM CHUE TAT Director Director
25 September 2013
22
TACKLING CHALLENGES AHEAD
Statement by Directors
In the opinion of the directors, (a)
the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 26 to 84 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2013 and of the results, changes in equity and cash flows of the Group for the financial year then ended; 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
CHAN THYE YUAN LUM CHUE TAT Director Director
25 September 2013
23
InDepenDent aUDItorS’ report
LANTROVISION ANNUAL REPORT 2013
TO THE MEMBERS OF LANTROVISION (S) LTD
Crowe Horwath First Trust LLP Chartered Accountants of Singapore Member Crowe Horwath International 8 Shenton Way #05-01 AXA Tower Singapore 068811 +65 6221 0338 +65 6221 1080 Fax www.crowehorwath.com.sg report on the Financial Statements We have audited the accompanying financial statements of Lantrovision (S) Ltd (the “Company”) and subsidiaries (the “Group”) set out on pages 26 to 84, which comprise the consolidated balance sheet and the balance sheet of the Company as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation of the 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Crowe Horwath First Trust LLP (UEN: T08LL1312H) is an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A). 24
TACKLING CHALLENGES AHEAD
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF LANTROVISION (S) LTD
Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet 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 2013, and the results, changes in equity and cash flows of the Group for the financial year ended on that date.
Report on Other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company 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.
Crowe Horwath First Trust LLP Public Accountants and Chartered Accountants Singapore 25 September 2013
25
BALANCE SHEETS
LANTROVISION ANNUAL REPORT 2013
AS AT 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
Note 2013 $’000
2012 $’000
Company 2013 2012 $’000 $’000
3 4 5 6 7 8
6,052 – 643 90 – 127
6,495 – 577 90 – 249
3,832 3,877 784 1 – –
4,391 3,677 784 1 – –
9
7,025
6,493
–
–
10 11 7 12 12 13 13
12,939 26,894 2,252 – 228 55,498 20,611 125,447
14,041 29,524 1,623 – 121 31,264 35,590 118,656
– 191 340 13,465 4 40,000 7,475 61,475
141 1,540 164 12,868 1 17,042 23,397 55,153
132,359
126,067
69,969
64,006
59,307 (2,494) 747 (3) 45,397
37,170 (2,404) 648 (3) 57,142
59,307 – – (3) 7,738
37,170 – – (3) 23,955
Non-controlling interests
102,954 5,170
92,553 4,475
67,042 –
61,122 –
TOTAL EQUITY
108,124
97,028
67,042
61,122
ASSETS Non-current assets Property, plant and equipment Subsidiaries Associates Available for sale financial assets Other receivables Deferred tax assets Current assets Inventories Amount due from customers for contract work-in-progress Trade receivables Other receivables, deposits and prepayments Due from subsidiaries (non-trade) Due from associates (non-trade) Fixed deposits Cash and bank balances
TOTAL ASSETS
EQUITY Capital and reserves attributable to equity holders of the Company Share capital Translation deficit Statutory reserves Fair value reserve Retained earnings
14 15 16 17
Group
The accompanying notes are an integral part of the financial statements. 26
BALANCE SHEETS
TACKLING CHALLENGES AHEAD
AS AT 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
Note
LIABILITIES Non-current liabilities Other payables and accruals Finance lease liabilities Deferred tax liabilities Current liabilities Amount due to customers for contract work-in-progress Trade payables Other payables and accruals Due to a related party (non-trade) Due to directors (non-trade) Finance lease liabilities Income tax payable
TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES
Group
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
18 19 8
219 154 181
199 226 150
– 61 42
– 80 42
10 20 18 21 22 19
1,022 13,556 7,061 286 31 100 1,625 23,681
1,040 19,024 6,685 – 31 114 1,570 28,464
36 892 1,847 – 31 18 – 2,824
– 941 1,765 – 31 25 – 2,762
24,235
29,039
2,927
2,884
132,359
126,067
69,969
64,006
The accompanying notes are an integral part of the financial statements. 27
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
Note
Revenue Cost of sales
23
Gross profit 24
2013 $’000
2012 $’000
133,542 (93,275)
132,351 (91,835)
40,267
40,516 63 (2,991) (3,986) (22,251)
Other income Distribution and selling expenses General and administrative expenses Other operating expenses, net
25
10 (2,961) (3,618) (21,568)
Profit from operations
26
12,130
11,351
Finance income Finance expense Share of losses of associates
28 29
361 (84) (76)
365 (68) (48)
12,331
11,600
(2,107)
(2,137)
10,224
9,463
(116)
161
10,108
9,624
9,103 1,121
8,643 820
10,224
9,463
9,013 1,095
8,779 845
10,108
9,624
3.72
4.65
Profit before income tax Income tax expense
30
Profit for the year Other comprehensive (loss) / income Item that may be reclassified subsequently to profit or loss: Currency translation difference arising from consolidation Total comprehensive income for the year Profit attributable to: Equity holders of the Company Non-controlling interests
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests
Earnings per share (in cents) Basic and diluted
The accompanying notes are an integral part of the financial statements. 28
31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
Attributable to equity holders of the Company
Total $’000
Non -controlling interests $’000
Total equity $’000
57,142
92,553
4,475
97,028
–
9,103
9,103
1,121
10,224
–
–
–
(90)
(26)
(116)
(90)
–
–
9,103
9,013
1,095
10,108
22,137
–
–
–
–
22,137
–
22,137
– –
– –
– 99
– –
(20,749) (99)
(20,749) –
(460) –
(21,209) –
Total contributions by and distributions to owners
22,137
–
99
–
(20,848)
1,388
(460)
928
Changes in ownership interests in subsidiaries Cash contributed by noncontrolling interest for investment in a subsidiary
–
–
–
–
–
–
60
60
Balance at 30.6.2013
59,307
(2,494)
747
(3)
45,397
102,954
5,170
108,124
Balance at 1.7.2011
37,170
(2,540)
609
(3)
48,538
83,774
3,673
87,447
–
–
–
–
8,643
8,643
820
9,463
–
136
–
–
–
136
25
161
–
136
–
–
8,643
8,779
845
9,624
Dividends paid Transfer to statutory reserves
– –
– –
– 39
– –
– (39)
– –
(43) –
(43) –
Total contributions by and distributions to owners
–
–
39
–
(39)
–
(43)
(43)
37,170
(2,404)
648
(3)
57,142
92,553
4,475
97,028
Balance at 1.7.2012 Profit for the year Other comprehensive income, net of tax Currency translation differences arising from consolidation Total comprehensive income for the year
Share capital $’000
Translation deficit $’000
Statutory reserves $’000
37,170
(2,404)
648
–
–
–
Fair value reserve $’000
Retained earnings $’000
(3)
–
(90)
–
Contributions by and distributions to owners Issuance of shares (Note 14) Dividends paid (Note 32) Transfer to statutory reserves
Profit for the year Other comprehensive income, net of tax Currency translation differences arising from consolidation Total comprehensive income for the year Contributions by and distributions to owners
Balance at 30.6.2012
The accompanying notes are an integral part of the financial statements. 29
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
Note
2013 $’000
2012 $’000
12,331
11,600
907 (304) 93 109 (1) 1,207 (69) (1) – 30 (361) 77 – 450 (402) 76
1,222 (794) 300 20 34 1,240 23 (19) (34) 18 (365) – 156 152 230 48
Operating profit before working capital changes Inventories Amount due from customers for contract work-in-progress, net Trade receivables Other receivables, deposits and prepayments Trade payables Other payables and accruals
14,142 (1,060) 1,486 1,919 (609) (5,468) 404
13,831 194 9,274 (1,686) (175) (1,969) (336)
Cash generated from operations Interest paid Income tax paid
10,814 (30) (1,915)
19,133 (18) (1,914)
8,869
17,201
Cash flows from operating activities Profit before income tax Adjustments for: Allowance for impairment loss on trade receivables Allowance for impairment loss on trade receivables written back Allowance for impairment loss on non-trade receivables Bad trade debts written off Bad non-trade debts (written back) / written off Depreciation of property, plant and equipment Exchange differences Gain on disposal of property, plant and equipment Gain on disposal of an associate Interest expense Interest income Inventories written off Loss on liquidation of a subsidiary Provision for inventories obsolescence (Write back) / Provision for foreseeable losses in contract work-in-progress Share of losses of associates
Net cash generated from operating activities
The accompanying notes are an integral part of the financial statements. 30
TACKLING CHALLENGES AHEAD
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
Note Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash inflow on disposal of an associate Net cash outflow on liquidation of a subsidiary Interest received Investment in associates
A
Net cash used in investing activities Cash flows from financing activities Cash contributed by non-controlling interests for investment in a subsidiary Proceeds from Rights Issue Repayment of finance lease liabilities Dividends paid Dividend paid to non-controlling interests Pledge of fixed deposits Related parties’ non-trade balances, net Net cash generated from / (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Effects of exchange rate changes in cash and cash equivalents Cash and cash equivalents at end of financial year
13
2013 $’000
2012 $’000
(746) 6 – – 361 (130)
(661) 35 20 (156) 365 –
(509)
(397)
60 22,137 (117) (20,749) (165) (49) (202)
– – (100) – (357) (157) 7
915
(607)
9,275
16,197
66,694 (69)
50,329 168
75,900
66,694
Notes to Consolidated Statement of Cash Flows A.
During the year, the Group made the following cash payments to purchase property, plant and equipment: 2013 $’000
2012 $’000
Purchase of property, plant and equipment Financed by lease arrangements
778 (32)
827 (166)
Cash payments on purchase of property, plant and equipment
746
661
The accompanying notes are an integral part of the financial statements. 31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1.
GENERAL INFORMATION Lantrovision (S) Ltd (the “Company”) is a limited liability company domiciled and incorporated in Singapore and listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”). The registered office and principal place of business of the Company is 8 Ayer Rajah Crescent, Singapore 139939. The principal activities of the Company are those of investment holding and supplying, designing, installation and provision of consultancy services on network integration and structure cabling and those of electrical contractors and suppliers of electrical hardware and fittings. The principal activities of its subsidiaries are disclosed in Note 4 to the financial statements. The financial statements for the financial year ended 30 June 2013 were authorised for issue in accordance with a resolution of the Board of Directors on 25 September 2013.
2.
SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below and are drawn up in accordance with the Singapore Financial Reporting Standards (“FRS”). The financial statements are presented in Singapore dollar (“$”) and all values are rounded to the nearest thousand ($’000) as indicated. The preparation of financial statements in conformity with FRS requires management to exercise its judgment in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements and areas involving a higher degree of judgement or complexity are disclosed in this Note. Adoption of new and revised standards On 1 July 2012, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group’s accounting policies and had no material effect on the amounts reported for the current or prior financial years.
32
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Description
Effective for annual periods beginning on or after
Revised FRS 19 Employee Benefits FRS 113 Fair Value Measurement Amendments to FRS 107 Disclosures – Offsetting Financial Assets and Financial Liabilities Improvements to FRSs 2012 - Amendment to FRS 1 – Presentation of Financial Statements - Amendment to FRS 16 – Property, Plant and Equipment - Amendment to FRS 32 – Financial Instruments: Presentation Revised FRS 27 Separate Financial Statements Revised FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 111 Joint Arrangements FRS 112 Disclosure of Interests in Other Entities Amendments to FRS 110, 111 and 112: Transition Guidance Amendments to FRS 110, 112 and FRS 27: Investment Entities Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities Amendments to FRS 36 – Recoverable Amount Disclosures for Non-Financial Assets
1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014
Except for Improvements to FRSs 2012 – Amendment to FRS 1 and FRS 16, FRS 110, FRS 112 and Amendments to FRS 110, 111 and 112 and FRS 27, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of Improvements to FRSs 2012 – Amendment to FRS 1 and FRS 16, FRS 110, FRS 112 and Amendments to FRS 110, 111, 112 and FRS 27 are described below. Improvements to FRSs 2012 - Amendment to FRS 1 - Presentation of Financial Statements The Amendment clarifies that an entity must include comparative in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. However, unlike the voluntary comparative information, the related notes are not required to accompany the third balance sheet. Improvements to FRSs 2012 - Amendment to FRS 16 - Property, Plant and Equipment The Amendment provides clarification that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory.
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate Financial Statements FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated with the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. The Group is currently determining the impact of the changes to the control. FRS 112 Disclosure of Interests in Other Entities FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. The Group is currently determining the impact of the disclosure requirements including the related amendments (see below). As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014/ financial year 2015. Amendments to FRS 110, 111 and 112: Transition Guidance The Amendments provides clarification of retrospective applications and provides additional transition relief for initial application of FRS 110, 111 and 112. Amendments to FRS 110, 112 and FRS 27: Investment Entities The Amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. It also introduces new disclosure requirements for investment entities in FRS 112 and FRS 27. The Group is currently determining the impact of the Amendments and expects that it is likely that there are subsidiaries to be classified as Investment entities and be exempted from consolidation upon adoption of the Amendments in 2014 / financial year 2015. Group accounting (i) Subsidiaries (a)
Basis of consolidation From 1 July 2010 Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.
34
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Group accounting (Continued) (i)
Subsidiaries (Continued) (a)
Basis of consolidation (Continued) In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance. Prior to 1 July 2010 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: -
(b)
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 noncontrolling interest had a binding obligation to cover these. Losses prior to 1 July 2010 were not reallocated between non-controlling interest and the equity holders of the Company.
Acquisition of businesses From 1 July 2010 The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement. Acquisition-related costs, other than those associated with the issue of debt or equity securities, are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. 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 will not be remeasured until it is finally settled within equity.
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Group accounting (Continued) (i)
Subsidiaries (Continued) (b)
Acquisition of businesses (Continued) 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. For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation, the Group elects on an acquisition-by-acquisition basis whether to recognise them either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets, at the date of acquisition. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Prior to 1 July 2010 In comparison to the above-mentioned requirements, the following differences applied: -
-
-
(c)
Transactions costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interests were 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. 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.
Disposals of subsidiaries or businesses From 1 July 2010 The assets and liabilities of the subsidiary, including any goodwill, are derecognised when a change in the Company’s ownership interest in a subsidiary results in a loss of control over the subsidiary. Amounts recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard. Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained investment at the date when control is lost and its fair value is recognised in profit or loss. Subsequently, the retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
36
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Group accounting (Continued) (ii) Transactions with non-controlling interests Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Group. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised in a separate reserve within equity attributable to the equity holders of the Company. (iii) Associates Associates are entities over which the Group exercises significant influence, but not control, over the financial and operating policy decision, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any. Investments in associates are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associates represents the excess of the cost of acquisition of the associate over the Group’s share of the fair value of the identifiable net assets of the associate and is included in the carrying amount of the investments. In applying the equity method of accounting, the Group’s share of its associates’ post-acquisition profits or losses are recognised in profit or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions received from the associates are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associates, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associates. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associates have been changed where necessary to ensure consistency with the accounting policies adopted by the Group. Investments in associates are derecognised when the Group loses significant influence. Any retained interest in the entity is remeasured at its fair value. The difference between the carrying amount of the retained investment at the date when significant influence is lost and its fair value is recognised in profit or loss. Gains and losses arising from partial disposals or dilutions in investments in associates in which significant influence are returned are recognised in profit or loss. (iv)
Joint venture A joint venture is a contractual arrangement whereby the Group exercises joint control together with one or more parties. The Group’s interest in joint venture is accounted for in the consolidated financial statements using the equity method of accounting. There is no cost of investment in the joint venture. In applying the equity method of accounting, the Group’s share of its joint venture’s profit is recognised in the consolidated statement of comprehensive income.
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Subsidiaries and associates Investments in subsidiaries and associates are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associates, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. Currency translation (i)
Functional and presentation currency The individual financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements and the balance sheet of the Company are presented in Singapore dollar, which is the functional currency of the Company.
(ii)
Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) 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 balance sheet date. 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 balance sheet date 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 in the consolidated financial statements. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
(iii)
Translation of the Group’s financial statements The assets and liabilities of foreign operations are translated into Singapore dollar at the rate of exchange ruling at the balance sheet date 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 the 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 noncontrolling 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.
38
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of an item of property, plant and equipment including subsequent expenditure 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. When significant parts of property, plant and equipment is required to be replaced in intervals, the Group recognises such parts as individual assets with specific lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance expenses are recognised in profit or loss when incurred. After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment loss. All property, plant and equipment are depreciated using the straight-line method to write-off the cost of the assets less estimated residual value over their estimated useful lives. The estimated useful lives and residual values have been taken as follows: -
Freehold properties Leasehold land and buildings Renovations Computers and equipment Tools and equipment Furniture and fittings Motor vehicles
Useful lives (Years)
Estimated residual value as a percentage of cost (%)
30 10 to 30 (lease term) 4 to 10 3 to 10 4 to 10 4 to 10 5
– – – 0% to 10% 0% to 10% 0% to 10% 0% to 10%
The residual value, estimated useful life and depreciation method are reviewed, and adjusted as appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Fully depreciated assets are retained in the financial statements until they are no longer in use. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising on retirement or disposal is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss within “Other income (expenses)”. 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 such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of non-financial assets (Continued) 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 dependent on those from other 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, 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. Impairment losses 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 recoverable amount of an asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. This 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 the profit or loss. Financial assets (i)
Initial recognition and measurement Financial assets are recognised on the balance sheet when and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are initially recognised at fair value plus, in the case of financial assets classified as held-to-maturity, directly attributable transaction costs. The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the nature of the assets and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and for held-to-maturity investments, re-evaluates this designation at every balance sheet. As at the balance sheet date, the Group has no financial assets in the category of fair value through profit or loss and held-to-maturity investments.
(ii)
Subsequent measurement The subsequent measurement of financial assets depends on the classification as follows: (a)
Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables comprise cash and cash equivalents, trade and other receivables, including amounts due from related parties.
40
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial assets (Continued) (ii)
Subsequent measurement (Continued) (a)
Loans and receivables (Continued) Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate 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. Assets in this category are presented as noncurrent assets unless the investment matures or management intends to dispose all the assets within 12 months after the balance sheet date. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains or losses arising 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 derecognised. Investments in equity instruments whose fair value cannot be reliably measured are stated at cost less impairment loss.
(iii)
Derecognition Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On derecognition 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 the assets within the period generally established by regulation or convention in the marketplace concerned.
Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired.
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued) (i)
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. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and 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 the 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 been 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.
(ii) Available-for-sale financial assets Considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired include (i) a significant or prolonged decline in the fair value of the investment below its costs, (ii) significant financial difficulties of the issuer or obligor, and (iii) 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. ‘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. When the available-for-sale financial asset is impaired, the cumulative loss is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss previously recognised in the 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; increases in their fair value after impairment are recognised directly in other comprehensive income.
42
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued) (ii) Available-for-sale financial assets (Continued) For debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as the 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 and is accrued 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 the profit or loss, the impairment loss is reversed in profit or loss. Inventories Inventories are stated at the lower of cost and net realisable value. Raw materials comprise purchase costs accounted for on a first-in first-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to be incurred for selling and distribution. Contract work-in-progress When the outcome of a contract can be estimated reliably, contract revenue and contract costs associated with the contract are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date (the percentage of completion method). The outcome of a contract can be estimated reliably when: (i) total contract revenue can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates. When the outcome of a contract cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognised only to the extent of contract costs incurred that is probable to be recoverable and contract costs are recognised as an expense in the period in which they are incurred. An expected loss on the contract should be recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue. Contract revenue comprises the initial amount of revenue agreed in the contract and any variations in the contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they can be measured reliably. A variation or a claim is recognised as contract revenue when is probable that the customer will approve the variation or negotiations have reached an advanced stage such that it is probable that the customer will accept the claim.
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Contract work-in-progress (Continued) Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract. Costs that relate directly to a specific contract comprise: site labour costs (including site supervision); costs of materials used in construction; costs of design, and technical assistance that is directly related to the contract. Contract costs incurred during the financial year in connection with future activity on a contract are excluded from the costs incurred to date when determining the stage of completion of a contract. Such costs are shown as contract work-in-progress on the balance sheet unless it is not probable that such contract costs are recoverable from the customers, in which case, such costs are recognised as an expense immediately. The aggregate of costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the financial year end. Where costs incurred and recognised profit (less recognised losses) exceed progress billings, the balance is shown as amount due from customers for contract work. Where progress billings exceeds costs incurred and recognised profit (less recognised losses), the excess is shown as amount due to customers for contract work. Financial liabilities (i)
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. 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.
(ii)
Subsequent measurement Subsequent to initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when liabilities are derecognised, and through the amortisation process.
(iii) Derecognition A financial liability is derecognised when the obligation under the liability is discharged, 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 the profit or loss. Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 July 2006, the date of inception is deemed to be 1 July 2006 in accordance with the transitional requirements of INT FRS 104.
44
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (Continued) (i) As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in this Note. Contingent rents are recognised as revenue in the period in which they are earned. (ii) As lessee Finance leases, which transfers 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 item 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 directly to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised lease assets are depreciated over the shorter of the estimated useful life of the asset or the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the 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 straightline basis. Provisions A provision is recognised when the Group has a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date 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. Where the effect of the time value of money is material, the provision is 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. Share capital Proceeds from issuance of ordinary shares are classified as share capital in equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital. Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders.
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates and sales 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: (i)
Sale of products Revenue from sale of products is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the products are delivered to customers and title has passed, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
(ii)
Installation works Revenue from installation works is recognised by reference to the percentage-of-completion when this can be measured reliably. The percentage of completion is determined based on survey of work performed or the completion of a physical proportion of contract work. Where the contract outcome cannot be measured reliably, revenue is recognised to the extent of the expenses recognised that are recoverable.
(iii)
Maintenance services Maintenance income is recognised on a periodic basis over the term of the maintenance contract. Ad-hoc maintenance income is recognised upon the performance of the maintenance services and acceptance by customers.
(iv) Interest Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the effective interest rates applicable. (v) Dividend Dividend income is recognised when the Group’s right to receive payment is established. (vi) Rental income Rental income is accounted for on a straight line basis over the lease terms. The aggregate cost of incentives provided to the lessee is recognised as a reduction of rental income over the lease term on a straight line basis.
46
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Employees’ benefits (i) Retirement benefits As required by the relevant law of its country of incorporation, the Company and subsidiaries participates in the national schemes and make contributions under defined pension scheme, to the relevant defined contribution schemes. These contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution. (ii) Other long term benefits Hong Kong The subsidiary, incorporated and operating in Hong Kong, is required to provide for long service payments to be made to employees under the Hong Kong Employment Ordinance. The provision is based on the best estimate of the probable future payments which have been earned by the employees from their services to the subsidiary to the end of the report period. Philippines The subsidiary incorporated and operating in Philippines, net obligation in respect of their defined contribution plan is determined by the amounts to be contributed for that period. Consequently, no actuarial assumptions are required to measure the obligation or the expense and there is no possibility of any actuarial gain or loss. Moreover, the obligations are measured on an undiscounted basis, except where they do not fall due wholly within twelve months after the end of the period in which the employees render the related services. (iii) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance sheet date. (iv)
Share-based compensation The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense in the consolidated statement of comprehensive income with a corresponding increase in the share option reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets), on the date of grant. Non-market vesting conditions are included in the estimation of the number of options that are expected to become exercisable on vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market condition or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. In the case where the option does not vest as a result of a failure to meet a non-vesting condition that is within the control of the Group or the employee, it is accounted for as a cancellation. In such case, the amount of the compensation cost that otherwise would be recognised over the remainder of the vesting period is recognised immediately in profit or loss upon cancellation. The share option reserve is transferred to retained earnings upon expiry of the share options. 47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Employees’ benefits (Continued) (iv)
Share-based compensation (Continued) When the options are exercised, the proceeds received (net of any directly attributable transaction costs) and the related balances previously recognised in the share option reserve are credited to the share capital account, when new ordinary shares are issued, to the employees.
Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been substantially enacted by the balance sheet date 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. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow deferred tax assets to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
48
TACKLING CHALLENGES AHEAD
2.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SIGNIFICANT ACCOUNTING POLICIES (Continued) Related parties A related party is defined as follows: (a)
A person or a close member of that person’s family is related to the Group and the Company if that person: (i) (ii) (iii)
(b)
as control or joint control over the Company; H Has significant influence over the Company; or Is a member of the key management personnel of the Group or the Company or of a parent of the Company.
An entity is related to the Group and the Company if any of the following conditions applies: (i)
(ii) (iii) (iv) (v) (vi)
The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); Both entities are joint ventures of the same third party; One entity is a joint venture of a third entity and the other entity is an associate of the third entity; The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company; The entity is controlled or jointly controlled by a person identified in (a); A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand, deposits with financial institutions, and short term, highly liquid investments readily convertible to known amounts of cash and subjected to an insignificant risk of changes in value. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments. Critical accounting estimates and assumptions Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
2.
LANTROVISION ANNUAL REPORT 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) Critical accounting estimates and assumptions (Continued) Critical accounting estimates and assumptions (Continued) (a)
Impairment of loan and receivables Impairment of trade and non-trade debts is established when there is objective evidence that the Group will not be able to collect all amounts due according to original terms of receivables. An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer exist or may have decreased. Where the actual results differ from the amounts that were initially assessed, such differences will result in a material adjustment to the carrying amounts within the next financial year. The carrying amount of trade and other receivables, including due from related parties of the Group and Company at 30 June 2013 were approximately $29,374,000 and $14,000,000 (2012:Â $31,268,000 and $14,573,000) respectively, after allowance for impairment of approximately $2,925,000 and $1,154,000 (2012:Â $12,160,000 and $1,263,000) respectively.
(b)
Net realisable values of inventory An assessment of net realisable values is made periodically on inventory for excess inventory, obsolescence and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. These reviews require management to estimate future demand for the products. Possible changes in these estimates could result in revisions to the valuation of inventory. As at 30 June 2013, the total allowances for inventory is approximately $1,056,000 (2012: $635,000).
(c)
Contract work-in-progress The Group recognises contract revenue by reference to the stage of completion of the contract activity at the end of each reporting period, when the outcome of a construction contract can be estimated reliably. The stage of completion is determined taking into consideration the customer acceptance and expectation of the time and materials required to complete the contract. Significant assumptions are required to estimate the value of customer acceptance and the time and materials required to completion. In making the estimates, management has relied on past experience and knowledge of the project engineers. The carrying amounts of assets and liabilities arising from construction contracts at the end of each reporting period are disclosed in note 10 to the financial statements.
50
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
3. PROPERTY, PLANT AND EQUIPMENT
Group Cost As at 1.7.2011 Additions Disposals / Write-offs Translation adjustment
Freehold properties $’000
Leasehold Computers and office land and buildings Renovations equipment $’000 $’000 $’000
Tools and equipment $’000
Furniture and fittings $’000
Motor vehicles $’000
Total $’000
2,756 – –
2,999 – –
1,784 19 –
2,933 362 (23)
1,143 94 (16)
757 30 (3)
1,950 322 (82)
14,322 827 (124)
–
(10)
11
(6)
(2)
(2)
3
(6)
As at 30.6.2012
2,756
2,989
1,814
3,266
1,219
782
2,193
15,019
As at 1.7.2012 Additions Disposals / Write-offs Translation adjustment
2,756 – –
2,989 – –
1,814 214 (66)
3,266 209 (236)
1,219 159 –
782 25 (4)
2,193 171 (27)
15,019 778 (333)
–
(1)
8
(17)
–
(3)
(1)
(14)
As at 30.6.2013
2,756
2,988
1,970
3,222
1,378
800
2,336
15,450
1,334
795
891
1,957
532
331
1,533
7,373
92 –
215 –
153 –
401 (22)
107 (1)
62 (3)
210 (81)
1,240 (107)
–
(4)
8
3
4
1
6
18
As at 30.6.2012
1,426
1,006
1,052
2,339
642
391
1,668
8,524
As at 1.7.2012 Depreciation charge for the year Disposals / Write-offs Translation adjustment
1,426
1,006
1,052
2,339
642
391
1,668
8,524
92 –
215 –
185 (66)
366 (233)
109 –
65 (4)
175 (25)
1,207 (328)
–
(1)
3
(10)
2
(2)
3
(5)
As at 30.6.2013
1,518
1,220
1,174
2,462
753
450
1,821
9,398
Net carrying amount As at 30.6.2013
1,238
1,768
796
760
625
350
515
6,052
As at 30.6.2012
1,330
1,983
762
927
577
391
525
6,495
Accumulated depreciation As at 1.7.2011 Depreciation charge for the year Disposals / Write-offs Translation adjustment
As at 30 June 2013, the net carrying amount of motor vehicles of the Group and Company under finance leases amounted to $201,000 and $86,000 (2012: $247,000 and $115,000) respectively.
51
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
3. PROPERTY, PLANT AND EQUIPMENT (Continued)
Company
Freehold properties $’000
Leasehold Computers and office land and buildings Renovations equipment $’000 $’000 $’000
Tools and equipment $’000
Furniture and fittings $’000
Motor vehicles $’000
Total $’000
Cost As at 1.7.2011 Additions Disposals / Write-offs
2,756 – –
2,446 – –
1,196 3 –
1,348 4 (12)
525 – (525)
496 – –
672 93 –
9,439 100 (537)
As at 30.6.2012
2,756
2,446
1,199
1,340
–
496
765
9,002
As at 1.7.2012 Additions Disposals / Write-offs
2,756 – –
2,446 – –
1,199 – –
1,340 – (218)
– –
496 5 –
765 – –
9,002 5 (218)
As at 30.6.2013
2,756
2,446
1,199
1,122
–
501
765
8,789
1,334
573
442
928
246
148
593
4,264
92 –
197 –
105 –
124 (12)
3 (249)
49 –
38 –
608 (261)
As at 30.6.2012
1,426
770
547
1,040
–
197
631
4,611
As at 1.7.2012 Depreciation charge for the year Disposals / Write-offs
1,426
770
547
1,040
–
197
631
4,611
92 –
197 –
106 –
86 (218)
– –
49 –
34 –
564 (218)
As at 30.6.2013
1,518
967
653
908
–
246
665
4,957
Net carrying amount As at 30.6.2013
1,238
1,479
546
214
–
255
100
3,832
As at 30.6.2012
1,330
1,676
652
300
–
299
134
4,391
Accumulated depreciation As at 1.7.2011 Depreciation charge for the year Disposals / Write-offs
As at 30 June 2013, the net carrying amount of motor vehicles of the Company under finance leases amounted to $86,000 (2012: $115,000).
52
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
4. SUBSIDIARIES Company 2013 2012 $’000 $’000 Unquoted equity interest, at cost Accumulated impairment losses
3,877 –
3,787 (110)
3,877
3,677
During the financial year, the Group performed an impairment test on its subsidiary companies. The recoverable amount of the subsidiary company was determined based on value in use. The reversal of impairment charge in the year was $110,000 (2012: $145,000).
Name of Subsidiaries
Principal activities
Country of incorporation and place of business
Effective equity held by the Group 2013 2012 % %
Cost of investment 2013 2012 $’000 $’000
Held by the Company Lantro (S) Pte Ltd (i)
Supply, design, installation and provision of consultancy services on network integration and structured cabling
Singapore
100
100
500
500
Lantro (Malaysia) Sdn Bhd (ii)
Design and installation of computer cabling and trading of related accessories and peripherals
Malaysia
100
100
22
22
Lantro (Penang) Sdn Bhd (iii)
Provision of cabling infrastructure services and selling cabling accessories
Malaysia
51
51
11
11
Lantro (HK) Limited (iv)
Provision of system integration and network infrastructure services
Hong Kong
100
100
317
317
Lantro (Shanghai) Co. Ltd (v)
Provision of system integration and network infrastructure services
People’s Republic of China
60
60
1,208
1,208
Lantro Co. Ltd (Hangzhou) (v)
Manufacture and sale of structuralised cable laying system and multimedia technology
People’s Republic of China
60
60
48
48
53
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
4.
SUBSIDIARIES (Continued)
Name of Subsidiaries
Principal activities
Country of incorporation and place of business
Effective equity held by the Group 2013 2012 % %
Cost of investment 2013 2012 $’000 $’000
Held by the Company (Continued)
54
Lantro (Taiwan) Ltd #
Supply, design, installation and provision of consultancy services on network integration and structured cabling
Taiwan
100
100
326
326
VRnet (S) Pte Ltd (i)
Trading in computers, computer peripherals, all kinds of electronic components and products for various applications, planners, consultants, advisors and managers in relation to computer services
Singapore
100
100
110
110
Infilan Pte Ltd (i)
Provision of innovative solutions for testing, monitoring and analysis of enterprise and telecommunication networks
Singapore
60
60
120
120
Lantro Technologies India Private Limited (vi)
Provision of system integration and network infrastructure services
India
60
60
580
580
Lantrovision Korea Co. Ltd #
Provide installation, maintenance and support services for structured cabling systems and their components
Korea
85
85
251
251
Lantro Phils. Inc. (vii)
Provision of contracting services for voice, data and telecommunication
Philippines
51
51
294
294
Appsilan Asia Pte Ltd (i)(viii)
Distribution of power and energy management products and related services.
Singapore
60
–
90
–
3,877
3,787
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
4.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
SUBSIDIARIES (Continued) (iii) (iv) (v) (vi) (vii) (viii) (i)
(ii)
#
Audited by Crowe Horwath First Trust LLP, Singapore. Audited by Crowe Horwath AF1018, Kuala Lumpur, Malaysia. Audited by Crowe Horwath AF1018, Penang, Malaysia. Audited by BDO Limited, Hong Kong. Audited by BDO China Shu Lun Pan Certified Public Accountants LLP, Shanghai for local compliance. Audited by B. N. Subramanya & Co., India. Audited by BDO Makati City, Philippines. On 6 January 2013, the Company has subscribed for 60% of the equity interest, comprising of 90,000 shares in a newly incorporated subsidiary for a cash consideration of S$90,000. Not required to be audited under the laws of country of incorporation, these subsidiaries are not considered significant in accordance with Rule 718 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX”) on the definition of what constitutes a significant subsidiary.
5. ASSOCIATES Group 2013 $’000
2012 $’000
Company 2013 2012 $’000 $’000
Unquoted equity interest, at cost Group’s share of post-acquisition reserves, net of dividends Currency translation difference
921
1,213
784
1,205
(193) (85)
(539) (97)
– –
– –
Impairment loss
643 –
577 –
784 –
1,205 (421)
Net carrying amount
643
577
784
784
The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows: 2013 $’000
2012 $’000
Results: Revenue Loss for the year
6,650 (183)
6,543 (116)
Assets and liabilities: Total assets Total liabilities
4,425 (2,743)
4,447 (3,274)
Net assets
1,682
1,173
The Group’s cumulative share of unrecognised losses as at 30 June 2013 was nil (2012: $231,000). The Group has no obligation in respect of these losses.
55
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
5. ASSOCIATES (Continued)
Name of associates
Principal activities
Country of incorporation and place of business
Effective equity held by the Group 2013 2012 % %
Held by the Company Lantro (Thailand) Co. Ltd (i)
Design and installation of computer cabling and trading of related accessories and peripherals
D’aI Automation Ltd (vi) #
Provision of design and development of automation system; integrated structured infrastructure and cabling systems
Thailand
49
49
People’s Republic of China
–
40
Held through Subsidiaries Altro Solutions Pte Ltd (v) #
Provision of infrastructure engineering products and services
Singapore
50
–
Lantrovision Inc. (ii)
Provision of installation, system integration, maintenance services, and distribution of electrical, data/structured cabling
Philippines
13
13
Provide installation, maintenance and support services for structured cabling systems and their components Provide installation, maintenance and support services for structured cabling systems and their components
Vietnam
49
49
Cambodia
49
–
Subsidiary of an Associate Lantro (Vietnam) Co. Ltd (iii)
Lantro (Cambodia) Co. Ltd (iv) #
(iii) (iv) (i)
(ii)
(v)
(vi)
#
56
Audited by Crowe Horwath Thailand. Audited by BDO Makati City, Philippines. Audited by AFC Vietnam Auditing Company Ltd. On 7 February 2013, one of the Company’s associate incorporated a wholly owned subsidiary in Cambodia, comprising of 5,000 registered shares at par of US$10 each. On 15 March 2013, a wholly owned subsidiary formed a new associate by subscribing for 50% of the equity for a consideration of $100,000 with 2 individual parties. During the financial year, the associate has been liquidated. Not required to be audited as the associate is dormant. This associate is not considered significant in accordance with Rule 718 of the Listing Manual of SGX on the definition of what constitutes a significant associate.
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
6. AVAILABLE FOR SALE FINANCIAL ASSETS Available for sale financial assets include the following: Group
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
1
1
1
1
89 –
112 (23)
– –
23 (23)
89
89
–
–
90
90
1
1
Quoted Investment Equity shares, at fair value Unquoted Investment Equity shares, at cost Less: Accumulated impairment loss
Total
7. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Group
Non-current Other receivable Less: allowance for impairment loss
Current Other receivables Deposits Prepayments Staff loans *
*
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
292 (292)
292 (292)
292 (292)
292 (292)
–
–
–
–
767 493 795 197
576 533 417 97
246 23 69 2
51 37 74 2
2,252
1,623
340
164
Staff loans are unsecured and repayable on demand and certain staff loans bear interest ranging from 6.00% to 6.25% (2012: 3.00% to 6.25%) per annum.
57
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
8.
DEFERRED TAX ASSETS / (LIABILITIES) Group
At beginning of year Recognised in the profit or loss (Note 30) Currency translation differences At end of year Presented after appropriate offsetting as follows: Deferred tax assets, net Deferred tax liabilities, net
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
99 (148) (5)
122 (16) (7)
(42) – –
(166) 124 –
(54)
99
(42)
(42)
127 (181)
249 (150)
– (42)
– (42)
(54)
99
(42)
(42)
The components and movement of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Deferred tax liabilities of the Group
58
Tax over book depreciation $’000
Others $’000
Total $’000
2013 At beginning of year Recognised in the profit or loss Currency translation differences
(116) – –
(66) (28) (3)
(182) (28) (3)
At end of year
(116)
(97)
(213)
2012 At beginning of year Recognised in the profit or loss Currency translation differences
(216) 98 2
(85) 22 (3)
(301) 120 (1)
At end of year
(116)
(66)
(182)
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
8.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
DEFERRED TAX ASSETS / (LIABILITIES) (Continued) Deferred tax assets of the Group
Unutilised tax losses $’000
Provision $’000
Others $’000
Total $’000
2013 At beginning of year Recognised in the profit or loss Currency translation differences
254 (120) (2)
3 – –
24 – –
281 (120) (2)
At end of year
132
3
24
159
2012 At beginning of year Recognised in the profit or loss Currency translation differences
396 (136) (6)
5 – (2)
22 – 2
423 (136) (6)
At end of year
254
3
24
281
Tax over book depreciation $’000
Deferred tax liabilities of the Company
2013 At beginning of year Recognised in the profit or loss
(42) –
At end of year
(42)
2012 At beginning of year Recognised in the profit or loss
(166) 124 (42)
At end of year
The use of these balances is 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 in the Group operate.
9. INVENTORIES Group
Finished goods, at cost
2013 $’000
2012 $’000
7,025
6,493
Company 2013 2012 $’000 $’000 –
–
The cost of inventories recognised as expense and included in cost of sales amounted to approximately $68,383,000 (2012: $68,834,000), including provision for inventories obsolescence of approximately $450,000 (2012: $152,000).
59
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
10. AMOUNT DUE FROM / (TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS Group
Cost plus attributable profits Less: Progress billings Less: Provision for foreseeable losses
Presented as: Amount due from customers for contract work-inprogress Amount due to customers for contract work-inprogress
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
41,899 (29,982) –
74,756 (50,830) (10,925)
84 (120) –
6,278 (6,137) –
11,917
13,001
(36)
141
12,939
14,041
–
141
(1,022)
(1,040)
(36)
–
11,917
13,001
(36)
141
Movement in provision for foreseeable losses: Group
At beginning of the year Provision for foreseeable losses (written back) / made for the year Provision for foreseeable losses written off Currency translation differences At end of the year
2013 $’000
2012 $’000
10,925 (402) (10,540) 17
10,869 230 – (174)
–
10,925
The provision for foreseeable losses written back in the current financial year of $402,000 (2012:Nil) are recognised as income and included in other operating expenses.
60
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
11. TRADE RECEIVABLES Group
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
Non-related parties Less: allowance for impairment loss (Note 36(iv))
28,268 (2,212)
40,049 (11,446)
632 (441)
1,517 (550)
Due from subsidiaries Due from associates Less: allowance for impairment loss (Note 36(iv))
26,056 – 1,551 (713)
28,603 – 1,635 (714)
191 – 713 (713)
967 413 873 (713)
26,894
29,524
191
1,540
Trade receivables are non-interest bearing and are generally on 30 days terms. They are recognised at their original invoiced amounts which represent the fair values on initial recognition. Included in non-related parties trade receivables of the Group are retention monies receivables from customers of $249,000 (2012: $54,000).
12. DUE FROM SUBSIDIARIES / ASSOCIATES (NON-TRADE) Group
Due from subsidiaries Less: allowance for impairment loss
Due from associates Less: allowance for impairment loss
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
– –
– –
13,465 –
13,268 (400)
–
–
13,465
12,868
321 (93)
121 –
4 –
1 –
228
121
4
1
These balances are unsecured and interest-free, except for amounts due from subsidiaries of $400,000 in prior financial year which bear interest rate of 1.82% per annum. All balances are repayable on demand.
61
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
13. CASH AND CASH EQUIVALENTS Group
Fixed deposits Cash and bank balances Less: allowance for impairment loss
Less: Pledged fixed deposits
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
55,498 21,358 (747) 20,611
31,264 36,351 (761) 35,590
40,000 7,475 – 7,475
17,042 23,397 – 23,397
76,109 (209)
66,854 (160)
47,475 –
40,439 –
75,900
66,694
47,475
40,439
As at 30 June 2013, fixed deposits of approximately $209,000 (2012: $160,000) of the Group are pledged to a bank. Fixed deposits of $2,000 (2012: $3,000) was pledged to a bank in order to obtain a bank guarantee for VAT registration and fixed deposits of $207,000 (2012: $157,000) was pledged in connection with a performance bond of the same amount issued in favour of a customer of a subsidiary. Fixed deposits earn interest at between 0.58% to 7.50% (2012: 0.35% to 7.50%) per annum and have tenure of approximately 30 days to 5 years (2012: 30 days to 5 years). During the current financial year, the Group has written back an allowance of $14,000 for a insurance claimed received in relation to a bank balance deposited in an overseas bank which went into sudden receivership in prior financial year.
14. SHARE CAPITAL Group and Company 2013 Number of ordinary shares At beginning of the year Less: Share consolidation (i) Issue of new shares from Rights Issue (ii) Share issuance expense At end of the year
$’000
2012 Number of ordinary shares
$’000
2,074,939,000 (2,054,189,628) 248,992,464 –
37,170 – 22,409 (272)
2,074,939,000 – – –
37,170 – – –
269,741,836
59,307
2,074,939,000
37,170
The holders of the ordinary shares are entitled to receive dividend as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value. (i)
62
On 3 September 2012, the shareholders approved during the Extraordinary General Meeting held, the proposed share consolidation of every 100 ordinary shares in the capital of the Company into one (1) consolidated ordinary share in the capital of the Company, fractional entitlements to be disregarded (the “Share Consolidation”). Pursuant to the completion of the Share consolidation exercise on 10 September 2012, the number of issued and paid up ordinary shares is revised to 20,749,372 ordinary shares.
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
14. SHARE CAPITAL (Continued) (ii) The shareholders also approved the proposed renounceable non-underwritten rights issue of twelve (12) rights shares for one (1) consolidated share in the capital of the Company after the completion of the share consolidation (the “Rights Issue”) at an issue price of S$0.09 for each rights share. The Company completed the Rights Issue on 16 October 2012. Share options The Company has a share option scheme (“Lantrovision Share Option Scheme”) for the granting of nontransferable options to confirm full-time employees as well as the directors of the Company who are noncontrolling shareholders and their associates. Options granted to employees, including executive directors, have a term no longer than 10 years and options granted to non-executive directors have a term no longer than 5 years. The exercise period of the options commences on the first anniversary of the date of the grant. The vesting of the granted options is conditional on the employees remain in employment after the first anniversary of the date of grant. The Company has no legal or constructive obligation to repurchase or settle the options in cash. No share option reserve is recognised as the options were granted after 22 November 2002 and had vested at the effective date of FRS 102 Share Based Payment, on 1 January 2006. Movement in the number of ordinary shares outstanding under the options at the end of the financial year and the exercise prices are as follows: Group and Company
Outstanding and exercisable at beginning of year Adjustment due to Share Consolidation and Rights Issue. Expired during the year
2013 Weighted average No. of exercise Shares price ‘000 $
2012 Weighted average No. of exercise Shares price ‘000 $
11,766
0.05
11,766
0.05
(10,586) (690)
– 0.5346
– –
– 0.05
490
0.5196
11,766
0.05
Outstanding and Exercisable at year end
Pursuant to the completion of Share Consolidation and implementation of the Rights Issue, the number of outstanding share options and the corresponding exercise price are adjusted in 2013 as follows: Terms of the share options outstanding as at end of year: Expiry date 9 January 2013 18 January 2014
Exercise 2013 $0.5346 $0.5196
price 2012 $0.0534 $0.0519
Number of options 2013 2012 ‘000 ‘000 – 490
7,015 4,751
490
11,766 63
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
15. STATUTORY RESERVES Group
People’s Republic of China reserve South Korea reserve Taiwan reserve
(a)
(a) (b) (c)
2013 $’000
2012 $’000
409 127 211
398 127 123
747
648
People’s Republic of China reserve In accordance with the Foreign Enterprise Law of the People’s Republic of China (“PRC”), the PRC subsidiaries are required to make contributions to a statutory reserve fund. At least 10% of the statutory after-tax profits as determined in accordance with the applicable PRC accounting standards and regulations is required to be allocated to the reserve fund. If the cumulative total of the statutory reserve fund reaches 50% of the subsidiary’s registered capital, any further appropriation is optional. The reserve fund may be used to offset accumulated losses or increase the registered capital of the respective company, subject to approval from the relevant PRC authorities and is not available for dividend distribution to the shareholders. The PRC subsidiaries are prohibited from distributing dividends unless the losses (if any) of previous years have been made up. However, except for offsetting prior years’ losses, such statutory reserves must be maintained at a minimum of 25% of share capital after such usage.
(b)
South Korea reserve In accordance with the Korea Commercial Code in South Korea, an amount equal to at least 10% of cash dividend paid must be appropriated to a legal reserve from retained earnings until such reserve amounts to 50% of the respective company’s paid-up capital. Such reserve is not available for cash dividend. However, it may be used to reduce a deficit or may be capitalised by a resolution of the respective company’s shareholders.
(c)
Taiwan reserve In accordance with R.O.C. law, an appropriation for legal reserve amounting to 10% of the Taiwan subsidiary’s net profit is required until the reserve equals the aggregate par value of such Taiwan company’s issued capital stock. The reserve can only be used to offset a deficit or be distributed as a dividend of up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate paid-in capital of the Taiwan subsidiary.
16. FAIR VALUE RESERVE Fair value reserve records the cumulative fair value changes of available for sale financial assets until they are derecognised or impaired.
64
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
17. RETAINED EARNINGS Group 2013 $’000
2012 $’000
Company 2013 2012 $’000 $’000
At the beginning of the year Profit for the year attributable to equity holders of the Company Dividends paid (Note 32) Transfer to statutory reserves
57,142
48,538
23,955
22,031
9,103 (20,749) (99)
8,643 – (39)
4,532 (20,749) –
1,924 – –
At the end of the year
45,397
57,142
7,738
23,955
2013 $’000
2012 $’000
Company 2013 2012 $’000 $’000
Non-current Accrued operating expenses
219
199
–
–
Current Other payables Accrued operating expenses Deferred revenue
452 6,545 64
593 5,858 234
52 1,795 –
99 1,666 –
7,061
6,685
1,847
1,765
18. OTHER PAYABLES AND ACCRUALS Group
Accrued operating expenses (non-current portion) relates to the provision of long service payments and pension liability expected to be made to Lantro (HK) Limited’s employees under the Hong Kong Employment Ordinance and Lantro Phils. Inc.’s employees under the Philippines Retirement Pay Law, respectively. This amount is not expected to be paid out in the next 12 months.
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
19. FINANCE LEASE LIABILITIES
Group
Minimum lease payments $’000
Interest $’000
Present value of payments $’000
2013 Non-current portion: - Later than 1 year and not later than 5 years
172
(18)
154
Current portion: - Not later than 1 year
113
(13)
100
285
(31)
254
246 18 264
(35) (3) (38)
211 15 226
133
(19)
114
397
(57)
340
2012 Non-current portion: - Later than 1 year and not later than 5 years - Later than 5 years Current portion: - Not later than 1 year
Company
Minimum lease payments $’000
Interest $’000
Present value of payments $’000
2013 Non-current portion: - Later than 1 year and not later than 5 years
74
(13)
61
Current portion: - Not later than 1 year
22
(4)
18
96
(17)
79
79 18
(14) (3)
65 15
97
(17)
80
31
(6)
25
128
(23)
105
2012 Non-current portion: - Later than 1 year and not later than 5 years - Later than 5 years
Current portion: - Not later than 1 year
Lease terms range from 3 to 7 years. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. The finance lease liabilities are secured on certain property, plant and equipment of the Group and of the Company acquired under the finance lease as disclosed in Note 3. The effective interest rates of these leases ranging from 2.99% to 7.40% (2012: 2.99% to 7.40%) per annum. 66
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
20. TRADE PAYABLES Group
Non-related parties Subsidiaries Associates
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
13,556 – –
19,001 – 23
50 842 –
51 890 –
13,556
19,024
892
941
21. DUE TO A RELATED PARTY (NON-TRADE) These non-trade balances are unsecured, interest-free and repayable on demand. Amount due to a related party arose from the dividends paid to non-controlling interests which includes a director of a subsidiary.
22. DUE TO DIRECTORS (NON-TRADE) These non-trade balances are unsecured, interest-free and repayable on demand.
23. REVENUE Group
Installations works Maintenance services Sale of products
2013 $’000
2012 $’000
100,021 22,199 11,322
96,958 21,970 13,423
133,542
132,351
24. OTHER INCOME Group
Gain on disposal of property, plant and equipment Gain on disposal of an associate Income from rental of machineries / equipment from associates
2013 $’000
2012 $’000
1 – 9
19 34 10
10
63
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
25. OTHER OPERATING EXPENSES, NET Other operating expenses Depreciation of property, plant and equipment (Note 3) Personnel expenses (Note 27) Foreign exchange loss / (gain) Inventories written off Maintenance fees Others Other operating income (Write back) / Provision for foreseeable losses in contract work-in-progress (Write back) / Allowance for impairment loss on bank balance Other operating expenses, net
Group 2013 $’000 1,207 18,507 182 77 789 1,222 21,984 (402) (14) (416) 21,568
2012 $’000 1,240 18,007 (128) – 873 1,268 21,260 230 761 991 22,251
26. PROFIT FROM OPERATIONS This is determined after charging / (crediting) the following:Group
Bad trade debts written off Bad non-trade debts (written back) / written off Allowance for impairment loss of trade receivables Allowance for impairment loss of trade receivables written back Allowance for impairment loss of non-trade receivables Audit fees: - auditors of the Company - other auditors - non audit fees paid to other auditors Operating lease expenses Directors’ remuneration: - directors of the Company - directors of subsidiaries Directors’ fees Depreciation of property, plant and equipment (Note 3) Personnel expenses (Note 27) * Foreign exchange loss / (gain) Inventories written off Allowance for impairment loss on bank balance (written back) / made (Write back) / Provision for foreseeable losses in contract work-in-progress * 68
2013 $’000
2012 $’000
109 (1) 907 (304) 93
20 34 1,222 (794) 300
80 67 30 1,333
74 71 43 1,201
1,989 519 120 1,207 29,931 182 77 (14) (402)
1,711 467 120 1,240 28,671 (128) – 761 230
Includes directors’ fees and remuneration as disclosed in Note 33 and in this Note.
TACKLING CHALLENGES AHEAD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
27. PERSONNEL EXPENSES Group
Salaries and bonuses * Contributions to defined contribution plans Other personnel expenses
*
2013 $’000
2012 $’000
28,217 1,513 201
27,109 1,421 141
29,931
28,671
Includes directors’ fees and remuneration as disclosed in Note 26 and 33.
Personnel expenses are recognised in the following line items in the consolidated statement of comprehensive income: Group
Cost of sales Other operating expenses (Note 25)
2013 $’000
2012 $’000
11,424 18,507
10,664 18,007
29,931
28,671
28. FINANCE INCOME Group
Interest income:- bank balances - fixed deposits - others
2013 $’000
2012 $’000
102 252 7
78 283 4
361
365
29. FINANCE EXPENSE Group
Interest on finance leases Others
2013 $’000
2012 $’000
30 54
18 50
84
68
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
30. INCOME TAX EXPENSE Group 2013 $’000
2012 $’000
Current tax - current year - (over) / under provision in prior years
2,052 (93)
2,013 108
Deferred tax - current year - (over) / under provision in prior years
152 (4)
5 11
2,107
2,137
The reconciliation of the tax expense and the product of accounting profit multiplied by the applicable rate is as follows:Group 2013 $’000
2012 $’000
12,331
11,600
Tax at the applicable tax rate of 17% (2012: 17%) Expenses not deductible for tax purpose Tax effect of different tax rate in other countries Tax incentives Utilisation of deferred tax assets not recognised in prior year Income not subject to tax Withholding tax expenses on dividend (Over) / under provision of tax expense in respect of prior year
2,096 347 365 (103) (230) (348) 73 (93)
1,972 380 373 (4) (425) (566) 299 108
Income tax expense
2,107
2,137
Profit before income tax
The Group has unutilised tax losses of approximately $1,064,000 (2012: $2,124,000) available for set-off against future taxable profits with no expiry date, subject to compliance with the relevant provisions of the Income Tax Act and agreement with the tax authorities of the countries in which the entities operate. In addition, the Group has unrecognised deductible temporary differences of approximately $461,000 (2012: $575,000). Deferred tax assets are not recognised due to uncertainty of its recoverability. The aggregate amount of temporary differences associated with undistributed earnings of all its subsidiaries for which deferred tax liabilities have not been recognised is approximately $37,659,000 (2012: $33,187,000). No liability has been recognised in respect of these temporary differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.
70
TACKLING CHALLENGES AHEAD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
31. EARNINGS PER SHARE (CENTS) The calculations of earnings per share are based on the profits and numbers of shares shown below. Basic and Diluted 2013 2012 $’000 $’000 Profit attributable to equity holders of the Company
9,103
8,643
Weighted average number of shares Number of shares (‘000) 2013 2012 For basic and dilutive earnings per share
244,901
185,788
Share options have not been included in the calculation of diluted earnings per share because they are antidilutive for current and previous financial years. There is no dilutive effect arising from share options as the exercise prices of the share options was higher than the Company’s average share price during the financial years ended 30 June 2013 and 30 June 2012.
32. DIVIDENDS Group and Company 2013 2012 $’000 $’000 Special dividend
20,749
–
On 3 September 2012, the Company held an Extraordinary General Meeting during which the shareholders approved the proposed special dividend of one (1.0) Singapore cent for each ordinary share in the capital of the Company (the “Special dividend”). At the forthcoming Annual General Meeting, a first and final dividend of $0.02 per ordinary share (one-tier, tax exempt) will be recommended. These financial statements do not reflect this proposed dividend as this will be accounted for in shareholders’ equity as an appropriation in retained earnings in the financial year ending 30 June 2014.
33. SIGNIFICANT RELATED PARTY TRANSACTIONS Some of the arrangements with related parties (as defined in the Note 2 above) and the effects of these bases determined between the parties are reflected elsewhere in this report. The balances due from related parties are unsecured, interest-free and repayable on demand except as disclosed otherwise. Transactions between the Company and subsidiaries, which are related companies of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related companies are disclosed below.
71
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
33. SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued) Group
Income Sales to associates Income from rental of machineries / equipment from associates Expenses Purchases from associates Purchases from a company controlled by a director of a subsidiary Rental expenses paid to a director of the Company Rental expenses paid to a director of a subsidiary Key management personnel compensation Directors of the Company - Salary and related cost - Contribution to defined contribution plans - Directors’ fees Directors of subsidiaries - Salary and related cost - Contribution to defined contribution plans Executive Officers’ remuneration - Salary and related cost - Contribution to defined contribution plans
2013 $’000
2012 $’000
1,003 9
432 10
84 118 24 10
24 162 24 10
2,025 73 120
1,638 73 120
472 47
424 43
2,878 143
2,414 139
34. NON-CANCELLABLE OPERATING LEASE COMMITMENTS The Group has various operating lease agreements for equipment, offices and other facilities. Most leases contain renewable options. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing. Group Company 2013 2012 2013 2012 $’000 $’000 $’000 $’000 Future minimum lease payments - within 1 year 736 862 160 165 - within 2 to 5 years 963 1,249 644 618 403 534 403 534 - more than 5 years 2,102
2,645
1,207
1,317
35. SEGMENT INFORMATION Business segments Operating segments are identified on the basis of internal reports about operating divisions of the Group that are regularly reviewed by the Board of Directors for the purpose of resource allocation and performance assessment. The Group is organised on a worldwide basis into three main operating divisions, namely: - Sale of product: Sale of cabling products and their components - Installation works: Provision of installation services for structured cabling systems - Maintenance services: Provision of maintenance and support services for structured cabling systems 72
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
35. SEGMENT INFORMATION (Continued) Business segments (Continued) (i) Operating segments Inter-segment pricing is on arm’s length basis. Unallocated costs represent corporate expenses. Segments assets consist primarily of property, plant and equipment, inventories and receivables. Segments liabilities comprise trade and other payables and provisions. Sale of products $’000
Installation works $’000
Revenue Inter-segment revenue
15,737 (4,415)
101,938 (1,917)
22,906 (707)
140,581 (7,039)
External revenue
11,322
100,021
22,199
133,542
921
8,710
2,499
12,130 361 (84) (76)
30 June 2013
Segment results Finance income Finance expenses Share of losses of associates
Maintenance services $’000
12,331
Profit before income tax Segment assets Investments in associates Unallocated corporate assets - fixed deposits - cash and bank balances - others
2,558
38,893
6,438
132,359 1,683
10,322
1,921
13,926 3,339 5,472 1,498
Total liabilities Other segment information: Capital expenditure Depreciation of property, plant and equipment Provision for inventories obsolescence Provision for foreseeable loss on contract work-in-progress written back Bad trade debts written off Allowance for impairment loss on non-trade receivables Allowance for impairment loss on trade receivables:- allowance made - written back
47,889 643 55,498 20,611 7,718
Total assets Segment liabilities Unallocated liabilities - trade payables - other payables and accruals - others
Group $’000
24,235 43 67 26
613 948 424
122 192 –
778 1,207 450
– 3
(402) 104
– 2
(402) 109
–
93
–
93
694 (19)
145 (283)
68 (2)
907 (304) 73
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
35. SEGMENT INFORMATION (Continued) Business segments (Continued) (i) Operating segments (Continued) Sale of products $’000
Installation works $’000
Revenue Inter-segment revenue
18,224 (4,801)
99,340 (2,382)
22,749 (779)
140,313 (7,962)
External revenue
13,423
96,958
21,970
132,351
1,879
7,439
2,033
11,351 365 (68) (48)
30 June 2012
Segment results Finance income Finance expenses Share of losses of associates
Maintenance services $’000
11,600
Profit before income tax Segment assets Investments in associates Unallocated corporate assets - fixed deposits - cash and bank balances - others
4,228
40,028
7,166
126,067
2,892
16,532
3,001
74
22,425 4,846 1,768
Total liabilities Other segment information : Capital expenditure Depreciation of property, plant and equipment Provision for inventories obsolescence Provision for foreseeable loss on contract work-in-progress Bad trade debts written off Allowance for impairment loss on non-trade receivables Allowance for impairment loss on trade receivables:- allowance made - written back
51,422 577 31,264 35,590 7,214
Total assets
Segment liabilities Unallocated liabilities - other payables - others
Group $’000
29,039
115
433
279
827
73 5
805 116
362 31
1,240 152
8 17
172 2
50 1
230 20
2
158
140
300
40 (18)
746 (641)
436 (135)
1,222 (794)
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
35. SEGMENT INFORMATION (Continued) Business segments (Continued) (ii)
Geographical information Revenue is based on the location of customers regardless of where the goods are produced and service is rendered. Assets and additions to property, plant and equipment are based on the location of those assets. Revenue 2013 2012 $’000 $’000 Singapore Malaysia Hong Kong China Philippines India Taiwan Korea United States of America Australia Others *
*
Non-current assets 2013 2012 $’000 $’000
63,464 16,941 15,885 13,077 8,406 4,159 5,224 2,329 1,923 902 1,232
55,461 16,068 14,991 16,428 7,544 7,101 5,610 5,014 1,328 1,042 1,764
4,969 839 167 315 91 169 118 27 – – –
5,506 932 30 270 53 211 48 22 – – –
133,542
132,351
6,695
7,072
Mainly from Indonesia, Vietnam, Thailand and Japan.
36. FINANCIAL INSTRUMENTS Financial risk management objectives and policies The main risks arising from the Group’s financial instruments are market risk (including foreign exchange risk and interest rate risk), liquidity risk and credit risk. The Group does not have a formal risk management policies and guidelines. However, the Board of Directors reviews and agrees policies for managing each of these risks and they are summarised below. It is the Group’s policy not to trade in derivative contracts. (i)
Market Risk (a)
Foreign exchange risk The Group operates mainly in eleven countries and, as a result, is exposed to foreign exchange risks arising from various currency exposures. In addition to transactional exposures, the Group is also exposed to foreign exchange movements on its net investment in the foreign subsidiaries. It is not the Group’s policy to enter into derivative forward foreign exchange contracts for hedging and speculative purposes. The Group’s foreign exchange exposures are primarily from United States dollar (“USD”), Malaysia ringgit (“Ringgit”), Hong Kong dollar (“HKD”) and China Renminbi (“RMB”). The Group does not consider foreign exchange risk arising from other currencies to be significant. 75
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) (i)
Market Risk (Continued) (a)
Foreign exchange risk (Continued)
Group 2013
SGD $’000
USD $’000
Ringgit $’000
HKD $’000
RMB $’000
Others* $’000
6,427 12,196
488 1,632
1,216 4,449
3,273 3,513
521 1,791
1,014 3,313
12,939 26,894
402
–
222
112
218
503
1,457
318 54,526
– –
– 431
– 206
– –
– 335
318 55,498
12,358
991
2,318
2,043
1,822
1,079
20,611
86,227
3,111
8,636
9,147
4,352
6,244
117,717
(5,298)
(1,730)
(1,721)
(2,829)
(455)
(1,523)
(13,556)
(5,500)
–
(417)
(562)
(306)
(431)
(7,216)
(111)
–
(140)
–
(12)
(308)
(571)
(10,909)
(1,730)
(2,278)
(3,391)
(773)
(2,262)
(21,343)
Net financial assets
75,318
1,381
6,358
5,756
3,579
3,982
96,374
Less: Net financial assets denominated in the respective entities’ functional currencies
(75,318)
–
(6,358)
(5,666)
(3,579)
(3,886)
(94,807)
Foreign currency exposure
–
1,381
–
90
–
96
1,567
Financial assets Amount due from customers for contract work-in-progress Trade receivables Other receivables and deposits Other financial assets Fixed deposits Cash and bank balances
Financial liabilities Trade payables Other payables and accruals Other financial liabilities
*
76
Total $’000
Others comprise of Korean Won, Indian Rupee, New Taiwan dollar, Japanese Yen, Philippine Peso, Euro dollar and Australian dollar.
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) (i)
Market Risk (Continued) (a)
Foreign exchange risk (Continued)
Group 2012
SGD $’000
USD $’000
Ringgit $’000
HKD $’000
RMB $’000
Others* $’000
Total $’000
5,338 11,113
96 3,396
1,212 4,319
3,250 1,944
2,036 2,809
2,109 5,943
14,041 29,524
246
–
349
111
134
366
1,206
102 30,451
– –
– 432
– 157
– –
109 224
211 31,264
26,542
1,134
1,856
4,123
785
1,150
35,590
73,792
4,626
8,168
9,585
5,764
9,901
111,836
(4,573)
(4,062)
(1,585)
(3,785)
(1,809)
(3,210)
(19,024)
(4,956)
–
(442)
(511)
(272)
(469)
(6,650)
(136)
–
(182)
–
(15)
(38)
(371)
(9,665)
(4,062)
(2,209)
(4,296)
(2,096)
(3,717)
(26,045)
Net financial assets
64,127
564
5,959
5,289
3,668
6,184
85,791
Less: Net financial assets denominated in the respective entities’ functional currencies
(64,127)
–
(5,959)
(5,205)
(3,668)
(6,155)
(85,114)
–
564
–
84
–
29
677
Financial assets Amount due from customers for contract work-in-progress Trade receivables Other receivables and deposits Other financial assets Fixed deposits Cash and bank balances
Trade payables Other payables and accruals Other financial liabilities
Foreign currency exposure
*
Others comprise of Korean Won, Indian Rupee, New Taiwan dollar, Japanese Yen, Philippine Peso and Thai Baht.
77
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) (i)
Market Risk (Continued) (a)
Foreign exchange risk (Continued) Company 2013 Financial assets Trade receivables Other receivables and deposits Other financial assets Fixed deposits Cash and bank balances
Financial liabilities Trade payables Other payables and accruals Other financial liabilities
Net financial assets Less: Net financial assets denominated in the respective entities’ functional currencies Foreign currency exposure
*
78
SGD $’000
USD $’000
RMB $’000
Others* $’000
Total $’000
217 271 8,418 40,000 7,274
(26) – 3,950 – 36
– – 260 – –
– – 842 – 165
191 271 13,470 40,000 7,475
56,180
3,960
260
1,007
61,407
(868) (1,847) (110)
(24) – –
– – –
– – –
(892) (1,847) (110)
(2,825)
(24)
–
–
(2,849)
53,355
3,936
260
1,007
58,558
(53,355)
–
–
–
(53,355)
–
3,936
260
1,007
5,203
Others comprise of Korean Won, Hong Kong dollar, Japanese Yen, New Taiwan dollar and Philippine Peso.
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) (i)
Market Risk (Continued) (a)
Foreign exchange risk (Continued) Company 2012
SGD $’000
USD $’000
RMB $’000
141 1,298 90 4,077 17,042 23,011
– 242 – 7,593 – 208
– – – 739 – –
– – – 461 – 178
141 1,540 90 12,870 17,042 23,397
45,659
8,043
739
639
55,080
(672) (1,765) (136)
(269) – –
– – –
– – –
(941) (1,765) (136)
(2,573)
(269)
–
–
(2,842)
Net financial assets
43,086
7,774
739
639
52,238
Less: Net financial assets denominated in the respective entities’ functional currencies
(43,086)
–
–
–
(43,086)
–
7,774
739
639
9,152
Financial assets Amount due from customers for contract work-in-progress Trade receivables Other receivables and deposits Other financial assets Fixed deposits Cash and bank balances
Financial liabilities Trade payables Other payables and accruals Other financial liabilities
Foreign currency exposure
*
Others* $’000
Total $’000
Others comprise of Korean Won, Hong Kong dollar, Japanese Yen, New Taiwan dollar and Philippine Peso.
79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
36. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) (i)
Market Risk (Continued) (a)
Foreign exchange risk (Continued) Sensitivity analysis for foreign currency risk Foreign exchange risk sensitivity The following table details the sensitivity to a 5% increase and decrease in the Singapore dollar against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. If the Singapore dollar strengthens by 5% (2012: 5%) against the relevant foreign currency, with all other variables held constant, profit for the year will increase (decrease) by: Group 2013 Profit for the year 2012 Profit for the year Company 2013 Profit for the year 2012 Profit for the year
USD $’000
HKD $’000
(57)
(4)
(23)
(3)
USD $’000
RMB $’000
(163)
(11)
(323)
(31)
A weakening of the Singapore dollar against the above currencies at 30 June would have had the equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant. (ii)
Interest rate risk The Group’s exposure to interest rate risk is not significant and relates primarily to the interest-bearing fixed deposits and interest on finance leases.
(iii)
Liquidity risk In the management of liquidity risk, the Group monitors and maintains a level of cash and bank balances deemed sufficient to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.
80
TACKLING CHALLENGES AHEAD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) (iii)
Liquidity risk (Continued) The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The table below analyses the maturity profile of the Group’s and Company’s financial liabilities based on contractual undiscounted cash flows.
Group As at 30 June 2013 Trade payables Other payables and accruals Other financial liabilities
As at 30 June 2012 Trade payables Other payables and accruals Other financial liabilities
Company As at 30 June 2013 Trade payables Other payables and accruals Other financial liabilities
As at 30 June 2012 Trade payables Other payables and accruals Other financial liabilities
(iv)
On demand or within 1 Within year 2 to 5 years $’000 $’000
After 5 years $’000
13,556 6,997 430
– – 172
– 219 –
20,983
172
219
19,024 6,451 164
– – 246
– 199 18
25,639
246
217
On demand or within 1 Within year 2 to 5 years $’000 $’000
After 5 years $’000
892 1,847 53
– – 74
– – –
2,792
74
–
941 1,765 62
– – 79
– – 18
2,768
79
18
Credit risk Financial instruments which potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents and trade and other receivables. The cash and cash equivalents are placed with various reputable financial institutions. The Group’s major customers’ base consists primarily of major financial institutions and multi-national corporations in Singapore, Malaysia and Hong Kong. The Group performs ongoing credit evaluations of its customers and generally does not require collateral on trade receivables.
81
NOTES TO THE FINANCIAL STATEMENTS
LANTROVISION ANNUAL REPORT 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) (iv)
Credit risk (Continued) The average credit period on sale of products, installation works and maintenance service is 30 days (2011: 30 days). No interest is charged on the trade receivables. The age analysis of trade receivables is as follows: Group
Not past due and not impaired Past due but not impaired - Past due 0 to 3 months - Past due 3 to 6 months - Past due over 6 months
Past due and impaired trade receivables Less: allowance for impairment loss
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
17,389
15,500
30
717
6,185 1,485 1,835
9,983 775 3,266
143 2 16
160 7 656
9,505
14,024
161
823
2,925 (2,925)
12,160 (12,160)
1,154 (1,154)
1,263 (1,263)
26,894
29,524
191
1,540
The Group has provided allowance for impairment loss based on estimated irrecoverable amounts from the sale of products, installation works and maintenance, determined by reference to past default experience. Included in the Group’s and Company’s trade receivables balance are debtors with total carrying amount of approximately $9,505,000 and $161,000 respectively (2012: $14,024,000 and $823,000 respectively) which are past due but not impaired as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group and Company does not hold any collateral over these balances. The amount that are neither past due nor impaired represents balances owing from and these amounts are deemed fully recoverable. Movement in allowance for impairment during the year are as follows: Group
At beginning of the year Allowance made for the year / (written back) Written off against allowance Currency translation difference At end of the year 82
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
12,160 603 (9,859) 21
12,515 428 (623) (160)
1,263 (109) – –
2,910 (649) (998) –
2,925
12,160
1,154
1,263
NOTES TO THE FINANCIAL STATEMENTS
TACKLING CHALLENGES AHEAD
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
36. FINANCIAL INSTRUMENTS (Continued) (iv)
Credit risk (Continued) The credit risk for trade receivables based on the information provided to key management is as follows: Group
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
11,479 4,449 3,624 1,791 1,130 1,177 1,106 931 268 939
11,730 4,326 2,383 2,809 1,480 849 1,701 2,049 740 1,457
178 – – – – – – 13 – –
1,376 1 – – 3 – – – – 160
26,894
29,524
191
1,540
By geographical areas - Singapore - Malaysia - Hong Kong - People’s Republic of China - Taiwan - United States of America - Philippines - India - Korea - Others
(v)
Financial instruments by category The carrying amount of the different categories of financial instruments is as follows: Group
Available for sale financial assets Loans and receivables (including cash and cash equivalents)
Financial liabilities at amortised cost
Company 2013 2012 $’000 $’000
2013 $’000
2012 $’000
90
90
1
1
117,627
111,746
61,406
55,079
117,717
111,836
61,407
55,080
21,343
26,045
2,849
2,842
Fair values of financial assets and financial liabilities The carrying amounts of cash and cash equivalent, trade and other receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments carried at amortised cost using the effective interest method. The fair values of other classes of financial assets and liabilities are as disclosed in the respective notes to financial statements. The fair value of finance lease liabilities is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date of which the carrying value approximates to the fair value. 83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (Amounts in thousands of Singapore dollar)
LANTROVISION ANNUAL REPORT 2013
36. FINANCIAL INSTRUMENTS (Continued) (v)
Financial instruments by category (Continued) Capital risk management policies and objectives The Group manages its capital to ensure that entity within the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the lease obligations, cash and bank balances and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents. Total capital is calculated as equity plus net debt. The Company’s management reviews the capital structure on an annual basis. As part of this review, management considers the cost of capital and the risks associated with each class of capital. Upon review, the Company will balance its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt, if necessary. The Company’s overall strategy remains unchanged from 2012.
84
GROUP PROPERTIES
TACKLING CHALLENGES AHEAD
Tenure
Gross Area (sq m)
102F Pasir Panjang Road, Disaster Recovery #03-03 Citilink Warehouse Centre Complex Singapore 118530
Freehold
175
S$671,836.00
S$723,412.48
102F Pasir Panjang Road, Warehouse unit #03-09 Citilink Warehouse within a Warehouse Complex Singapore 118530 Complex for warehouse purposes
Freehold
131
S$568,130.78
S$608,339.90
Leasehold (12 years and 4 months from August 2008)
3,666
S$1,477,444.20 S$1,674,438.60
Location
Description and existing use
Net book value 2013 2012
Held by the Company
8 Ayer Rajah Crescent LanTroVision Building Singapore 139939
Office building for office and warehouse purposes
Held by Subsidiary No. 69 Jalan 3/23A Taman Danau Kota, Off Jalan Genting Kelang 53300 Setapak Kuala Lumpur, Malaysia
A 3 storey terrace shop for office and warehouse purposes
Leasehold (99 years from 2 November 1990)
164
RM344,390.21 RM368,045.81
No. 71 Jalan 3/23A Taman Danau Kota, Off Jalan Genting Kelang 53300 Setapak Kuala Lumpur, Malaysia
A 3 storey terrace shop for office and warehouse purposes
Leasehold (99 years from 2 November 1990)
164
RM382,096.17 RM403,636.00
85
STATISTICS OF SHAREHOLDINGS
LANTROVISION ANNUAL REPORT 2013
AS AT 18 SEPTEMBER 2013
CLASS OF EQUITY SECURITIES ORDINARY
NO. OF EQUITY SECURITIES
VOTING RIGHTS
269,741,836
ONE VOTE PER SHARE
There are no treasury shares held in the issued share capital of the Company. SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders) DIRECT INTEREST NO. OF SHARES ANG EE TIONG, KENNETH CHAN THYE YUAN LUM CHUE TAT YEO JIEW YEW CHAN BEE FONG
86
31,173,181 27,651,481 25,018,981 16,902,000 16,503,000
%
11.56 10.25 9.28 6.27 6.12
STATISTICS OF SHAREHOLDINGS
TACKLING CHALLENGES AHEAD
AS AT 18 SEPTEMBER 2013
Distribution of Shareholdings No. of Size of Shareholdings
Shareholders
%
No. of Shares
%
1
- 999
681
28.29
231,771
0.09
1,000
- 10,000
830
34.48
3,445,479
1.28
10,001
- 1,000,000
867
36.02
55,657,901
20.63
29
1.21
210,406,685
78.00
2,407
100.00
269,741,836
100.00
No. of Shares
%
1,000,001 and above Total
Twenty Largest Shareholders No.
Name
1.
ANG EE TIONG KENNETH
31,173,181
11.56
2.
CHAN THYE YUAN
27,651,481
10.25
3.
LUM CHUE TAT
25,018,981
9.28
4.
YEO JIEW YEW
16,902,000
6.27
5.
CHAN BEE FONG
16,503,000
6.12
6.
HSBC (SINGAPORE) NOMS PTE LTD
14,208,344
5.27
7.
NG TIOW SWEE @ NG TIOW KEE
13,484,000
5.00
8.
PHILLIP SECURITIES PTE LTD
11,582,395
4.29
9.
UNITED OVERSEAS BANK NOMINEES (PTE) LTD
6,736,416
2.50
10.
BANK OF EAST ASIA NOMINEES PTE LTD
5,690,000
2.11
11.
HONG LEONG FINANCE NOMINEES PTE LTD
4,918,310
1.82
12.
OCBC SECURITIES PRIVATE LTD
3,908,459
1.45
13.
MAYBANK KIM ENG SECURITIES PTE LTD
3,767,000
1.40
14.
HO SWEE SENG
3,423,955
1.27
15.
OH MOI HONG
2,806,000
1.04
16.
SUWONDO WIJONO
2,730,000
1.01
17.
DBS NOMINEES PTE LTD
2,403,177
0.89
18.
HARTONO SUTANTO
2,340,000
0.87
19.
CIMB SECURITIES (SINGAPORE) PTE LTD
1,893,486
0.70
20.
UOB KAY HIAN PTE LTD
1,692,500
0.63
198,832,685
73.73
Total
PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HAND Approximately 61% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule723 of the Listing Manual of SGX-ST.
87
NOTICE OF ANNUAL GENERAL MEETING
LANTROVISION ANNUAL REPORT 2013
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Lantrovision (S) Ltd (“the Company”) will be held at Tanglin 1 & 2 Room, Level 1, RELC International Hotel, 30 Orange Grove Road, Singapore 258352, on Wednesday, 23 October 2013, at 9.30 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 2013 together with the Auditors’ Report thereon. (Resolution 1)
2.
To declare a first and final tax-exempt (one-tier) dividend of S$0.02 per ordinary share for the financial year ended 30 June 2013 (2012: a special dividend of S$0.01 per ordinary share). (Resolution 2)
3.
To re-elect the following Directors of the Company retiring pursuant to Articles 104 of the Articles of Association of the Company: Mr Yeo Jiew Yew (Resolution 3) Mr Yeo Kan Kiang, Roy (Resolution 4) Mr Yeo Jiew Yew will, upon re-election as a Director of the Company, remain as a member of the Audit, Nominating and Remuneration Committees of the Company, and will be considered non-independent. Mr Yeo Kan Kiang, Roy will, upon re-election as a Director of the Company, remain as the Chairman of the Remuneration Committee and a member of the Audit and Nominating Committees of the Company, and will be considered independent. 4.
To approve the payment of Directors’ fees of S$120,000 for the financial year ending 30 June 2014 to be paid quarterly in arrears (2013: S$120,000). (Resolution 5)
5.
To re-appoint Messrs Crowe Horwath First Trust LLP as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 6) 6. To transact any other ordinary business which may properly be transacted at an 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: 7. Authority to 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, the Directors of the Company be authorised and empowered to: (a)
88
(i)
issue shares in 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 (as well as adjustments to) options, 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 of the Company may in their absolute discretion deem fit; and
TACKLING CHALLENGES AHEAD
(b)
NOTICE OF ANNUAL GENERAL MEETING
(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 of the Company while this Resolution was in force,
provided that: (1)
the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);
(2)
(subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) 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) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a)
new shares arising from the conversion or exercise of any convertible securities;
(b)
new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution; and
(c)
any subsequent bonus issue, consolidation or subdivision of shares;
(3)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and
(4)
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. [See Explanatory Note (i)] (Resolution 7)
8.
Authority to issue shares under the Lantrovision Performance Share Plan That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to: (a)
grant awards in accordance with the provisions of the Lantrovision Performance Share Plan (the “Share Plan�); and
(b)
issue from time to time such number of shares in the capital of the Company as may be required to be
89
NOTICE OF ANNUAL GENERAL MEETING
LANTROVISION ANNUAL REPORT 2013
issued pursuant to the vesting of awards under the Share Plan, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Share Plan shall not exceed fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, 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. [See Explanatory Note (ii)] (Resolution 8)
By Order of the Board
Lim Lee Choo Company Secretary Singapore, 7 October 2013
Explanatory Notes: (i)
The Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company, effective 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 or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, 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, of which up to 20% may be issued other than on a pro-rata basis to shareholders. For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.
(ii)
The Ordinary Resolution 8 in item 8 above, if passed, will empower the Directors of the Company, effective 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 or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to grant awards and issue shares in the capital of the Company pursuant to the Share Plan, up to a number not exceeding in total fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.
Notes: 1.
A Member entitled to attend and vote at the Annual General Meeting (the “Meeting�) is entitled to appoint not more than 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 8 Ayer Rajah Crescent, Singapore 139939 not less than forty-eight (48) hours before the time appointed for holding the Meeting. 90
LANTROVISION (S) LTD
IMPORTANT:
(Company Registration No.: 199203374R) (Incorporated In The Republic of Singapore)
PROXY FORM
(Please see notes overleaf before completing this Form)
1.
For investors who have used their CPF monies to buy Lantrovision (S) Ltd’s shares, this Report is forwarded to them at the request of the 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.
3.
CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting 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 Lantrovision (S) Ltd (the “Company”), hereby appoint: Name
NRIC/Passport No.
Proportion of Shareholdings No. of Shares
%
Address and/or (delete as appropriate) Name
NRIC/Passport No.
Proportion of Shareholdings 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 Annual General Meeting (the “Meeting”) of the Company to be held on Wednesday, 23 October 2013 at 9.30 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. 1 2 3 4 5 6 7 8
Resolutions relating to:
For
Against
Directors’ Report and Audited Accounts for the financial year ended 30 June 2013 Payment of proposed first and final tax-exempt (one-tier) dividend Re-election of Mr Yeo Jiew Yew as a Director Re-election of Mr Yeo Kan Kiang, Roy as a Director Approval of Directors’ fees amounting to S$120,000 Re-appointment of Messrs Crowe Horwath First Trust LLP as Auditors Authority to issue shares Authority to issue shares under the Lantrovision Performance Share Plan
Dated this
day of
2013 Total number of Shares in: (a) CDP Register (b) Register of Members
Signature of Shareholder(s) or, Common Seal of Corporate Shareholder
No. of Shares
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 a 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 member shall specify the proportion of his/her shareholdings (expressed as percentage of the whole) to be represented by each proxy. If no such proportion or number is specified, the first named proxy shall be treated as representing 100% of his/her shareholding and any second named proxy as an alternate to the first named.
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 8 Ayer Rajah Crescent, Singapore 139939 not less than 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 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
DIRECTORY OF LANTROVISION NETWORK
SINGAPORE
VIETNAM
HONG KONG
LANTROVISION (S) LTD LANTRO (S) PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6778 1668 Fax: (65) 6778 1778
LANTRO (VIETNAM) CO., LTD. 46 Phan Khiem Ich Street, Hung Gia 1 (R4), Tan Phong Ward, District 7, Ho Chi Minh City,Vietnam Tel: (84-8) 5410 3088 / 3089 / 3090 Fax: (84-8) 5410 3087
LANTRO (HK) LIMITED Units 401-403,4/F, Shui Hing Centre 13 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong 香港九龍灣常悅道13號瑞興中心401-403室 Tel: (852) 2789 3846 Fax: (852) 2789 3847
VRNET (S) PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6776 6618 Fax: (65) 6776 6638
LANTRO (VIETNAM) CO., LTD. Hanoi Rep. Office No.6, 1G Block, Trung Yen Resident Area Trung Kinh Str, Cau Giay Dist, Hanoi City,Vietnam Tel: (84-4) 3791 4889 / 4891 Fax: (84-4) 3791 4890
INFILAN PTE LTD 8 Ayer Rajah Crescent, Singapore 139939 Tel: (65) 6777 1638 Fax: (65) 6773 1638 APPSILAN ASIA PTE LTD 8 Ayer Rajah Crescent Singapore 139939 Tel: (65) 6578 7101 Fax: (65) 6773 1638 ALTRO SOLUTIONS PTE LTD 7030, Northstar@AMK #07-08, Ang Mo Kio Ave 5 Singapore 569880 Tel: (65) 6288 8310/8091 Fax: (65) 6288 8300
MALAYSIA LANTRO (MALAYSIA) SDN. BHD. 69, Jalan 3/23A Taman Danau Kota, Off Jalan Genting Kelang, 53300 Setapak, Kuala Lumpur, Malaysia Tel: (60-3) 4143 6177 Fax: (60-3) 4143 6443 LANTRO (MALAYSIA) SDN. BHD. Johor Bahru Branch Office No. 42G, Jalan Bestari 8/5, Taman Nusa Bestari, 81300 Skudai, Johor Bahru, Malaysia Tel: (60-7) 511 3177 Fax: (60-7) 511 3816 LANTRO (PENANG) SDN. BHD. 11-A, Lorong Mayang Pasir 5, Taman Sri Tunas, Bayan Baru, 11950 Penang, Malaysia Tel: (60-4) 643 5033 / 2033 Fax: (60-4) 643 3033
THAILAND LANTRO (THAILAND) CO., LTD. 1457 Soi Ladprao 94, Ladprao Road, Kwaeng Phlapphla, Khet Wangthonglang, Bangkok 10310, Thailand Tel: (66-2) 934 6143 / 6144 / 6145 Fax: (66-2) 934 5300 LANTRO (THAILAND) CO., LTD. Rayong Branch Office 267/319 Muangmai Maptaphut, Sukhumvit Road, Tambol Mapthaphut, Amphoe Muang, Rayong 21150, Thailand Tel: (66-38) 609 551 Fax: (66-38) 609 552 LANTRO (THAILAND) CO., LTD. Phuket Branch Office 9/5 Moo 8, Tumbol Pa-Klog, Ampur Talang, Phuket 83110, Thailand Tel: (66-76) 379 861 Fax: (66-76) 379 862
CAMBODIA
PHILIPPINES LANTRO PHILS. INC. LANTROVISION INC. Unit A, 18th Floor, Belvedere Tower, San Miguel Ave, Ortigas Center, Pasig City, Philippines 1605 Tel: (63-2) 638 3881 / 3882 Fax: (63-2) 638 3883
LANTRO CAMBODIA #258, St.448, Sangkat Phsar Deum Thkov, Khan Chamkamorn, Phnom Penh, Cambodia Tel: (855) 2399 3471 Fax: (855) 2399 3541
LANTRO PHILS. INC. Cebu Branch Unit 2-I Capitol Centrum Building, N. Escario St., Near Capitol, Cebu City, Philippines 6000 Tel: (63-32) 238 2297 Fax: (63-32) 238 2297
KOREA
TAIWAN
LANTROVISION KOREA CO., LTD. Unit 503, Seokchon City Bldg, 66-7 Bangyee-Dong, Songpa-Gu, Seoul, 138-050 Korea Tel: (82-2) 3431 8855 Fax: (82-2) 3431 8885
LANTRO (TAIWAN) LTD 3F, No 15, Lane 360 Neihu Road Section 1, Neihu, Taipei 114, Taiwan 114, 台北市內湖區內湖路一段360巷15號3樓 Tel: (886-2) 2658 1047 Fax: (886-2) 2627 9582
CHINA
INDIA
LANTRO (SHANGHAI) CO. LTD. 8F No. 58, Jiang Chang San Road, Industrial New Zone, ZhaBei District, Shanghai 200436, PRC 上海市闸北区市北工业园区江场三路58号8层 邮编：200436 Tel: (86-21) 6142 1866 Fax: (86-21) 6117 5220
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED 731, 7th Cross, III Block Koramangala, Behind BDA Complex, Bangalore 560034, India Tel: (91-80) 4126 4887
LANTRO (SHANGHAI) CO. LTD Beijing Branch Office Room 658, 6th Floor, JingXin Mansion, No.2, A, Dong San Huan Bei Road, ChaoYang District, Beijing, 100027, PRC 北京市朝阳区东三环北路甲2号京信大厦6层658室 邮编: 100027 Tel: (86-10) 8449 3275 / 3276 Fax: (86-10) 8449 3219 LANTRO CO. LTD (HANGZHOU) Rm. 519 Block #1 No. 23, HuangGushan Road, Xixi Software Zone, Hangzhou 310012, PRC 浙江省杭州市黄姑山路23号西溪软件园1号楼 519室 邮编：310012 Tel: (86-571) 5683 0535 / 0536 Fax: (86-571) 5683 0537 LANTRO (SHANGHAI) CO. LTD Guangzhou Branch Office Room 1108, Middle Tower, Times Square, 28 Tian He Bei Road, Guangzhou 510620, PRC 广州天河北路28号时代广场中座1108室 邮编：510620 Tel: (86-20) 3882 0658 Fax: (86-20) 3891 0489 LANTRO (SHANGHAI) CO. LTD. Chengdu Branch Office Unit 1801, Sha He Tower 2, No.18 South of JingSha Rd, JinJiang District, Chengdu 成都市锦江区静沙南路18号沙河壹号2幢 1801,1802室 邮编：610000 Tel: (86-28) 6501 3202 Fax: (86-28) 6501 3203
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Mumbai Branch Office Premises No. 3, Ground Floor, Hindustan Kohinoor Premises Co-Op Society Ltd. Lalbahadur Shastri Marg.,Vikroli (W) Mumbai 400083, India Tel: (91-22) 4215 4722 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Chennai Branch Office Ground Floor, New No. 18 A, Old No. 08, Rajalakshmi Nagar, 2nd Main,Velachery Chennai 600042, India Tel: (91-44) 4202 7390 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED New Delhi Branch Office Flat No 702, 7th Floor, Devika Towers, 6th Nehru Place, New Delhi 110019, India Tel: (91-11) 4063 4811 up to 18 LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED Hyderabad Branch Office 1-8-450/1/A4, First floor, Indian Airlines Colony, Begumpet Hyderabad 500033, India Tel: (91-40) 4221 6553
LANTROVISION (S) LTD ANNUAL REPORT 2013
LanTroVision (S) Ltd (Co. Reg. No.: 199203374R) 8 Ayer Rajah Crescent Singapore 139939 Tel: 65 6778 1668 Fax: 65 6778 1778
Tackling
CHALLENGES Ahead
ANNUAL REPORT 2013