Zicom Group Limited
ABN 62 009 816 871 • ASX Code : ZGL
ANNUAL REPORT 2012
RIDING THE WAVES......Of Change
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Zicom Group Limited
www.zicomgroup.com
38 Goodman Place, Murarrie QLD 4172 Australia • Telephone: +61 7 3908 6088 • Facsimile: +61 7 3390 6898
The winds and the waves are always on
the side of the ablest navigators.
~ Edward Gibbon ~ English Historian (1737-1794)
For personal use only
Highlights
SEGMENTAL REvENUE (S$’million)
146.4
134.2
129.0
125.5
107.7
44.0
77.7
65.8
12.7
3.0
46.1
7.7
2.7
46.8
42.5
14.7
3.7
58.3
34.3
54.7
30.5
2.9
57.2
34.7
2.8
FY08
FY09
FY10
FY11
FY12
Offshore Marine, Oil and Gas Machinery
Construction Equipment
Precision Engineering and Automation
Industrial and Mobile Hydraulics
SEGMENTAL RESULTS (S$’million)
21.2
20.4
16.1
14.7
11.7
12.0
6.6
0.9
0.9
15.5
0.2
0.9
(0.5)
FY08
12.0
1.9
6.8
6.4
1.7
0.7
2.7
0.7
9.6
3.5
0.6
1.0
FY09
FY10
FY11
FY12
Offshore Marine, Oil and Gas Machinery
Construction Equipment
Precision Engineering and Automation
Industrial and Mobile Hydraulics
Contents
01 Chairman’s Message
02 Directors and Company Secretaries
05 Corporate Chart
06 Key Management
07 Directors’ Report
19 Auditor’s Independence Declaration
20 Corporate Governance Statement
26 Consolidated Statement of Comprehensive Income
27 Consolidated Balance Sheet
Riding
the Waves
......Of Change
Managing
Competencies
In A Turbulent World
Staying at the
Leading Edge of
Change
Engaging Technologies
Of The New Age
Corporate Directory
BOARD OF DIRECTORS
Giok Lak Sim
(Chairman and Managing Director)
Kok Hwee Sim
(Executive Director)
Yian Poh Lim
Frank Leong Yee Yew
Ian Robert Millard
Shaw Pao Sze
Kok Yew Sim
(Alternate Director to Kok Hwee Sim)
JOINT COMPANY SECRETARIES
Jenny Lim Bee Chun
Surendra Kumar
REGISTERED OFFICE
38 Goodman Place
Murarrie QLD 4172
Australia
Telephone : +61 7 3908 6088
Facsimile
: +61 7 3390 6898
Website
: www.zicomgroup.com
SHARE REGISTRY
Link Market Services Limited
Level 15
324 Queen Street
Brisbane, QLD 4000
Australia
Facsimile
: +61 2 9287 0309
AUDITORS
Ernst & Young
111 Eagle Street
Brisbane QLD 4000
Australia
SOLICITORS
ThomsonsLawyers
Level 16, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Australia
BANKERS
Australia
Westpac Banking Corporation
Singapore
United Overseas Bank Limited
Malayan Banking Berhad
Oversea-Chinese Banking Corporation Limited
DBS Bank Limited
Westpac Banking Corporation
Australia & New Zealand Banking Group Limited
Thailand
United Overseas Bank (Thai) Public Company Limited
Siam Commercial Bank
China
Industrial and Commercial Bank of China
China Merchants Bank
Notice of General Meeting
The General Meeting of Zicom Group Limited will be held at the
28 Consolidated Statement of Changes in Equity
29 Consolidated Statement of Cash Flows
31 Notes to the Consolidated Financial Statements
88 Directors’ Declaration
89
91
Independent Auditor’s Report
Information on Shareholdings
Inside back cover
Inside back cover
Corporate Directory
Notice of General Meeting
Colmslie Hotel
Corner of Wynnum and Junction Roads
Morningside 4170
Brisbane, Queensland, Australia
Time: 10.00am (Brisbane time)
Date: Tuesday, 13 November 2012
A formal Notice of Meeting is enclosed.
For personal use only
Chairman’s message
Riding the Waves......Of Change
I am pleased to report that notwithstanding the global economic uncertainties in
the past year, the Group has achieved a consolidated profi t after tax of S$7.84m,
representing a return on equity of 9.7%. This is a 44% drop from the previous
year. Consolidated revenue is S$130.65m, a drop of 11% from S$147.19m in
the previous year. The Group’s fi nancial position remains strong.
The Group has been consistently profi table every year since 2006 after acquiring
the Asian businesses. Your directors are confi dent that notwithstanding the
continuous challenges ahead, the coming year is expected to be signifi cantly
better.
The last 5 years have witnessed a seamless chain of unprecedented economic
challenges from the Global Financial Crisis (“GFC”) in 2007-2008 to the current
Eurozone fi nancial crisis. The Eurozone crisis represents the collateral damage
from the GFC whose impact continues to simmer forcing the US to execute
further quantitative easing (QE3) recently.
15.58
net tangiBle aSSetS peR SHaRe
Australian Cents
30.00
26.49
23.53
24.73
20.84
20.00
10.00
-
30.00
25.00
20.00
15.00
Edward Gibbon (1737-1794), an English Historian once said “The winds and the
waves are always on the side of the ablest navigators”.
The unprecedented changes in the last 5 years represent a new paradigm
wave. The Group has positioned itself to ride the waves. In the midst of the
frenzied global economy immediately preceding the GFC in 2006, your Board
adopted a prudent fi nancial policy of low gearing. This has enabled us to focus
on developing and strengthening our core business capabilities in the midst of
the GFC. In Singapore we invested in new factories and machinery for deck
machinery manufacturing and precision engineering and created new capability
in oil and gas project engineering. In Thailand we invested in a concrete mixer
manufacturing hub that consolidates all concrete mixer manufacturing from
Australia and South East Asia to achieve economy of scale and minimise idle
overheads. In the last 24 months in the face of continuing economic challenges
exacerbated by the Euro crisis, the Group invested in disruptive technologies
to propel our development into technologies of the new age. These investments
have been internally funded without borrowings.
The Group has acquired strong attributes of the ablest navigators and is
confi dent of navigating through the challenges ahead and take advantage of
opportunities that may arise. Business prospects remain robust.
FY08
FY09
FY10
FY11
FY12
pRice cHaRt
www.netquote.com.au
Australian Cents
2011
2012
share price
RetuRn on eQuitY
eaRningS peR SHaRe
25%
20%
21.5%
15%
10%
5%
0%
19.3%
19.5%
16.4%
9.7%
FY08
FY09
FY10
FY11
FY12
appreciation
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
Singapore Cents
6.62
4.60
4.86
4.82
3.69
FY08
FY09
FY10
FY11
FY12
My fellow directors have been a source of support and strength for which I am thankful. The good results of all these years are due to the
strong commitment and diligence of our management and the employees; for these I am extremely grateful. The Group will continue to work
hard and smart to maintain and enhance shareholders’ value to reward our shareholders for their forbearance and support.
g l Sim
Chairman
2012 ANNUAL REPORT
1
For personal use only directors and Company secretaries
Executive Directors
Alternate Director
gioK laK Sim, FCPA
Chairman and Group Managing Director,
Age 66
KoK HWee Sim, BSc, MSc
Executive Director, Age 34
KoK YeW Sim, BSc
Alternate Director to Mr Kok Hwee Sim,
Age 32
Experience and Expertise
Appointed to the Board on 5 April 1995.
Chairman and Managing Director of Zicom
Group Limited and Executive Chairman of
all its subsidiaries. Experienced in public
accounting, corporate development,
fi nancial and industrial management as well
as international trade.
Singapore Ernst & Young Entrepreneur of
the Year (Industrial Products), 2008.
Member of the Management Policy
Advisory Committee of SPRING,
Singapore.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Member of Nomination and Remuneration
Committee
Executive Chairman of all subsidiaries
Chairman of Curiox Biosystems Pte Ltd
Relevant interests in shares and options as
at date of signing the Directors’ Report
76,085,212 ordinary shares
Experience and expertise
First appointed to the Board as an
Alternate Director on 24 July 2006 and
made a full director on 21 November
2007. As Executive Director of the
Group, his responsibilities include
human resource development, business
process improvements, restructuring and
acquisitions and treasury management.
He graduated with a Bachelors degree
in Industrial Engineering and Operations
Research from the University of Michigan
with Honours (Magna Cum Laude) and a
Masters degree in Financial Engineering
from Columbia University, New York. Mr
Kok Hwee Sim is the eldest son of the
Chairman and Managing Director, Mr G L
Sim and director of substantial shareholder,
SNS Holdings Pte Ltd.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Executive Director of Zicom Holdings Pte
Ltd and Director of its subsidiaries
Director of Curiox Biosystems Pte Ltd
Experience and expertise
Appointed as Alternate Director to Mr
Kok Hwee Sim on 5 July 2010. Mr Sim
is the Chief Executive Offi cer of Sys-
Mac Automation Engineering Pte Ltd
(SMAE) and is responsible for SMAE’s
growth strategies, overall administration
and management of its business and
operations. Mr Sim graduated with
a Bachelors degree in Electrical and
Electronics Engineering from the University
of Michigan with Honours (Summa Cum
Laude). He is the second son of the
Chairman and Managing Director, Mr G L
Sim and director of substantial shareholder,
SNS Holdings Pte Ltd.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Alternate Director to Mr Kok Hwee Sim in
Zicom Holdings Pte Ltd
Director of Sys-Mac Automation
Engineering Pte Ltd and its subsidiaries
Director of Biobot Surgical Pte Ltd
Relevant interests in shares and options as
at date of signing the Directors’ Report
1,062,846 ordinary shares and 300,000
options
Relevant interests in shares and options as
at date of signing the Directors’ Report
800,717 ordinary shares and 300,000
options
2
ZICOM GROUP LIMITED
For personal use only directors and Company secretaries
Independent Directors
Yian poH lim, BSc, MSc
Independent Director, Age 66
Experience and expertise
Appointed to the Board on 24 July 2006.
Yian Poh Lim has more than 20 years of
extensive experience in the banking and
fi nance industry. In 1993, he set up Yian
Poh Associates, a fi nancial consultancy and
investment fi rm. He has been an Honorary
Commercial Advisor to The Administrative
Committee of Jiaxing Economic
Development Zone, China since 2000.
Other current directorships and former
directorships in last 3 years
Independent Director of Casa Holdings
Limited (appointed 4 November 2008)
Independent Director of TTJ Holdings
Limited (appointed 5 July 1996)
Special responsibilities
Chairman of Nomination and
Remuneration Committee
Member of Audit Committee
Independent Director of Zicom Holdings
Pte Ltd
Relevant interests in shares and options
as at date of signing the Directors’ Report
438,000 ordinary shares and 75,000
options
FRanK leong Yee YeW,
MBA, ACA, FCPA
Independent Director, Age 69
Experience and expertise
Appointed to the Board on 24 July
2006. Extensive experience in auditing,
fi nancial management and corporate
secretarial work, having practised as a
partner in an audit fi rm and worked as a
company secretary, fi nance manager and
fi nancial controller in a leading property
development company and involved in
acquisitions and major developments.
Other current directorships and former
directorships in last 3 years
Independent Director of TTJ Holdings
Limited (appointed 11 January 2010)
Special responsibilities
Member of Nomination and Remuneration
Committee
Member of Audit Committee
Independent Director of Zicom Holdings
Pte Ltd
Relevant interests in shares and options as
at date of signing the Directors’ Report
426,344 ordinary shares and 75,000
options
ian RoBeRt millaRd, FCA, FAICD
Independent Director, Age 73
Experience and expertise
Appointed to the Board on 23 November
2006. Extensive experience in public
accounting and corporate secretarial
work. Fellow of the Institute of Chartered
Accountants with 30 years as a partner
in major accounting fi rms in Queensland
and a Fellow of the Australian Institute of
Company Directors.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Chairman of Audit Committee
Relevant interests in shares and options as
at date of signing the Directors’ Report
542,250 ordinary shares and 75,000
options
2012 ANNUAL REPORT
3
For personal use only directors and Company secretaries
Independent Directors
Company Secretaries
SHaW pao SZe
Independent Director, Age 68
lim Bee cHun, JennY, FCCA
Joint Company Secretary, Age 39
SuRendRa KumaR, CPA
Joint Company Secretary, Age 52
Experience and expertise
Appointed to the Board on 19 February
2010. Mr Shaw Pao Sze holds a Master
Foreign-Going Certifi cate of Competency
and has extensive experiences in maritime
industry from managing liner and ship
chartering services, and corporate planning
in one of the world’s largest shipping lines
and consultancy services for transport
engineering, maritime and logistics
planning for infrastructure projects.
Other current directorships and former
directorships in last 3 years
Synergy Metals Ltd (Australia) (appointed
15 October 2010)
Freight Links Express Holdings (Australia)
Ltd (appointed on 6 December 1996,
resigned on 16 December 2009)
Special responsibilities
None
Relevant interests in shares and options as
at date of signing the Directors’ Report
30,000 options
Experience and expertise
Ms Jenny Lim has been the Group’s
Financial Controller since 2005. She is
a qualifi ed accountant and a Fellow of
the Association of Chartered Certifi ed
Accountants from the United Kingdom
since 1998. Ms Lim has over 10 years of
audit and tax experience in an international
public accounting fi rm prior to joining the
Group.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Director of Zicom Pte Ltd
Joint Company Secretary of all subsidiaries
in Singapore except for MTA-Sysmac
Automation Pte Ltd
Joint Company Secretary of Curiox
Biosystems Pte Ltd
Relevant interests in shares and options as
at date of signing the Directors’ Report
513,623 ordinary shares and 250,000
options
Experience and expertise
Mr Kumar is the Finance Manager of
Cesco Australia Limited and holds a
Bachelors degree in Commerce from
Auckland University and is a Certifi ed
Practicing Accountant. He has had 30
years of experiences in auditing, industrial
and management accounting prior to
joining the Group in 2008.
Other current directorships and former
directorships in last 3 years
None
Special responsibilities
Director of Cesco Equipment Pty Limited
Company Secretary of Cesco Australia
Limited and Cesco Equipment Pty Limited
Relevant interests in shares and options as
at date of signing the Directors’ Report
15,000 ordinary shares and 100,000
options
4
ZICOM GROUP LIMITED
For personal use only Corporate Chart
Zicom gRoup limited
ZiCom Holdings Pte ltd
Singapore 100%
Investment Holding
CesCo AustrAliA ltd
Australia 100%
Concrete Mixers
HAngZHou CesCo mACHinery
Co ltd
China 100%
Concrete Mixers
ZiCom CesCo engineering
Co ltd
Thailand 100%
Concrete Mixers
CesCo equiPment Pty ltd
Australia 100%
Engineered Products
ZiCom CesCo tHAi Co ltd
Thailand 100%
Dormant
FoundAtion AssoCiAtes
engineering Pte ltd
Singapore 100%
Foundation Equipment
ZiCom Pte ltd
Singapore 100%
Marine Deck Machinery
ZiCom equiPment Pte ltd
Singapore 100%
Oils & Gas Equipment
sys-mAC AutomAtion
engineering Pte ltd
Singapore 100%
Precision Engineering & Automation
investment Holding
ComPAny
ConstruCtion equiPment
oFFsHore mArine,
oil & gAs mACHinery
PreCision engineering &
AutomAtion
ZiCom tHAi HydrAuliCs
Co ltd
Thailand 100%
Hydraulics Systems
FA geoteCH equiPment
sdn BHd
Malaysia 100%
Foundation Equipment
Pt sys-mAC indonesiA
Indonesia 100%
Precision Engineering
orion systems integrAtion
Pte ltd
Singapore 84%
Semi-Conductor Equipment
mtA-sysmAC AutomAtion
Pte ltd
Singapore 61%
Automation
BioBot surgiCAl Pte ltd
Singapore 80%
Medical Device
AssoCiAted ComPAny
Curiox Biosystems Pte Ltd
integrAted AutomAtion
systems Pte ltd
Singapore 100%
Automation
sAedge vision solutions
Pte ltd
Singapore 100%
Optic & Vision System Engineering
5
2012 ANNUAL REPORTFor personal use only Australia
ceSco auStRalia limited
managing diRectoR
Gary Webster
ceSco eQuipment ptY ltd
managing diRectoR
Gary Webster
executive diRectoRS
Surendra Kumar
Rick Pearce
Kenny Teh
Thailand
Zicom ceSco engineeRing co ltd
managing diRectoR
Sammy Ng Siong Teck
executive diRectoR
Saowaluke Phongchok
Zicom tHai HYdRaulicS co ltd
managing diRectoR
Sammy Ng Siong Teck
executive diRectoR
Saowaluke Phongchok
Indonesia
pt SYS-mac indoneSia
pReSident diRectoR
Juat Koon Sim
executive diRectoRS
Kok Yew Sim
David Loh Chin Woon
Boon Chye Seah
China
HangZHou ceSco macHineRY co ltd
managing diRectoR
Chin Ming Tan
Key management
Singapore
Zicom pRivate limited
Joint managing diRectoRS
Juat Lim Sim
Hung Seah Tang
executive diRectoRS
Kok Hwee Sim
Jenny Lim Bee Chun
Hong Jun Zhang
Juat Khiang Sim
Zicom eQuipment pte ltd
managing diRectoR
Rashed Choudhury
executive diRectoRS
Kim Chee Chia
Khwaza Md Rezwanul
Foundation aSSociateS engineeRing pte ltd
managing diRectoR
Jimmy Teoh Guan Hooi
executive diRectoR
Peck Hua Ng
SYS-mac automation engineeRing pte ltd
managing diRectoR
Juat Koon Sim
executive diRectoRS
Kok Yew Sim - CEO
David Loh Chin Woon
Tony Low Boon Koon
mta-SYSmac automation pte ltd
managing diRectoR
Juat Koon Sim
executive diRectoRS
Kok Yew Sim - CEO
Tony Low Boon Koon
Bobby Owen Archer
Bryan Raymond Root
Saedge viSion SolutionS pte ltd
executive diRectoRS
Kok Yew Sim - CEO
Bing Chiang Wong
oRion SYStemS integRation pte ltd
executive diRectoRS
Amlan Sen
Chin Guan Khaw
Siew Sarn Lau
Malaysia
Fa geotecH eQuipment Sdn BHd
managing diRectoR
Peck Hua Ng
executive diRectoR
Teck Meng Liew
6
Zicom Group LimitedFor personal use only directors’ report 2012
Your directors present their report on the consolidated accounts of Zicom Group Limited for the year ended 30 June 2012.
Directors
The following persons were directors of Zicom Group Limited during the financial year and up to the date of this report. Directors
were in office for this entire period.
Mr. G L Sim
Mr. K H Sim
Mr. Y P Lim
Mr. F Leong
Mr. I R Millard
Mr. S P Sze
Mr. K Y Sim
(Chairman and Managing Director)
(Executive Director)
(Independent)
(Independent)
(Independent)
(Independent)
(Alternate Director to K H Sim)
Principal Activities
The Group’s principal activities comprise the manufacturing of deck machinery, offshore structures, fluid metering stations, process
plants, foundation equipment and concrete mixers, precision engineered machinery and services to the offshore marine, oil and gas,
construction, electronics, biomedical and agriculture industries.
Consolidated Results
The Group recorded the following consolidated results during the year as compared with those of previous year:-
Key Financials
Revenue
Earnings before interest, tax, depreciation, & amortisation (EBITDA)
Net profits after tax (NPAT)
change
(%)
- 11.2
- 39.6
- 44.4
Year ended
30 June 12
(S$ million)
Year ended
30 June 11
(S$ million)
130.65
13.59
7.84
147.19
22.49
14.09
Dividends
The Group has decided to pay a final dividend of Australian cents 0.55 per share (2011: Australian cents 0.55) making the full year
dividends to 1 Australian cent per share. The final dividend will be fully paid out of Conduit Foreign Income under the provisions of
the Australian Income Tax Act. Accordingly, withholding tax will not apply to non Australian residents.
The record date for the final dividend will be 16 November 2012 and the payment date is 30 November 2012.
Review of Operations
The Group’s consolidated revenue for the full year is S$130.65m as compared with S$147.19m in the previous year, a decrease of
11%. The Group’s full year net consolidated profits after tax attributable to members to 30 June 2012 are S$7.84m as compared
with S$14.09m in the previous year, a decrease of 44%.
The net profit margin achieved for the full year is 6.1% as compared with 9.6% in the previous year. The 3.5% decrease is mainly
attributable to the slowdown in the offshore marine, oil and gas segment.
Earnings per share dropped from Singapore 6.62 cents to 3.69 cents per share, a decrease of 2.93 cents.
Net tangible assets per share increased from Singapore 32.76 cents to 34.22 cents per share.
Return on equity, based on average of the opening and closing equity, for the year was 9.7% as compared to 19.5% in 2011 and
16.4% in 2010.
7
2012 ANNUAL REPORTFor personal use only
directors’ report 2012
The average rates for currency translation for revenue and expenses are A$1 to S$1.3031 (2011: S$1.2865) and for balance sheet
items A$1 to S$1.2917 (2011: S$1.3245).
The results for the full year have been impacted by the decrease in revenue from the offshore marine segment, losses arising out of
initial problems encountered in integrating various skills in the oil and gas segment and pre-commercialisation gestation costs on
start-up companies that we invested in 2010.
The sharp spike in oil prices from below US$50 a barrel in 2004 to a record high of US$147 in mid-2008 gave rise to unbridled
exuberance and speculation in the marine offshore sector prior to the Global Financial Crisis (“GFC”), resulting in excess capacities.
Post GFC, the global financial industry also deleveraged. The combined effect of these factors subsequently impacted against
demand for marine equipment which was strongly felt by us in the year just ended, notwithstanding that during the year there has
been a strong resurgence in oil rig orders globally. Oil rig orders now parallel the previous peak. Gratuitously, demand for oil as
evidenced by its less volatile price range post GFC has appeared to be more stabilized. We believe that the present orders for new
offshore vessels giving rise to demand for our deck machinery reflect realistic demand.
The Group’s businesses are focused on the Asia Pacific region from Australia to China. The Asia Pacific economies, although
decelerating, have proved to be extremely resilient and will continue to grow.
The Group’s business is pegged to long term sustainability and prudent financial management. This policy enables the Group
to continue to deliver profits for shareholders before and after the GFC and to maintain a strong financial position. The Group’s
prudence in financial management has withstood the stress of uncertain times. The Group has fully funded its investments on start-
up companies possessing disruptive technologies and high growth potentials from available internal resources.
To accelerate commercialisation of the various start-ups, we have committed further investments of up to S$3m into these
companies from our internal resources.
The Group is confident of a strong recovery in the marine offshore, oil and gas sector. The Group’s other revenue sectors likewise are
expected to continue to grow in the financial year 2013. Gestation costs in start-ups taper off as their commercialisation efforts take
off. Your directors believe that the global economy remains challenging and may slow down further. Although we cannot escape
completely unscathed, the Group’s businesses remain robust. We are therefore hopeful to achieve significant growth in profits in the
coming year barring no unforeseen deterioration in the world’s economic order.
The Group’s cash balances remain strong. As at 30 June 2012, the group’s total cash and bank balances were S$24.45m as
compared with S$23.67m as at 30 June 2011.
Revenue by Business Segments
The following is an analysis of the segmental revenue :-
Revenue by Business Segments
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Automation
Industrial & Mobile Hydraulics
change
(%)
- 41.1
+ 3.9
+ 13.9
- 0.6
Year ended
30 June 12
(S$ million)
Year ended
30 June 11
(S$ million)
34.35
57.39
34.90
3.19
58.33
55.23
30.65
3.21
8
Zicom Group LimitedFor personal use only Offshore Marine, Oil & Gas Machinery
Rationalisation of the excess capacities in offshore vessels post GFC had slowed demand for deck machinery. Orders for offshore
vessels have begun to recover following huge oil rig orders being placed globally, as deep sea oil and gas exploration and production
activities have increased in the past 18 months. The demand for our deck machinery usually lags behind the demand for offshore oil
rigs by about 2 to 3 years. The Group has developed its capability to supply to offshore vessels for deep seas operations exceeding
500m depth and has recently secured its first order for such deck machinery. At present the bulk of offshore vessels operate below
500m depth and these form the major part of demand for deck machinery. The Group’s capability now enables it to align itself
with, and to meet the demand of, the oil industry in their foray into deeper sea operations. We remain confident that demand in the
offshore marine sector continues to be robust.
Demand for offshore structures for operations of remote operated vehicles in sub-seas operations is expected to likewise strengthen
in parallel with the demand for deck machinery for offshore operations.
2 x 3500kw Multipurpose Offshore Vessel
Zicom Supplied Anchor Handling Towing Winch
30MMSFD TEG Gas Dehydration Plant
Our foray into the engineering, procurement and construction (EPC) of oil and gas projects has been relatively recent. Our first 2 EPC
projects that involved engineering personnel over 3 countries in Indonesia, Singapore and Bangladesh encountered initial problems
in integration of work culture and engineering disciplines. As a result we suffered losses in execution of these projects. We have
addressed these problems and are confident that going forward such losses are not likely to recur. Prospects for this sector are
strong and we are hopeful of increased orders and to be profitable.
As at the end of the financial year just ended, we have secured confirmed orders of S$23.7m in the marine offshore and oil and gas
segment to be delivered in the financial year 2013.
9
2012 ANNUAL REPORTFor personal use only directors’ report 2012
Construction Equipment
Demand for construction equipment increased by 3.9% in the current year
as compared with the previous year. Concrete mixer demand in Thailand has
been strong following swift government’s re-construction efforts to rebuild
the flood-devastated parts of Thailand including Bangkok. This demand will
continue into the next financial year as more rebuilding efforts continue. Our
Thailand factory with its fully equipped capacity is well positioned to take
on such demand in addition to continue to meet demand for Australia and
surrounding region. The consolidation of volume has brought on economy of
scales and minimised idle overheads enabling the concrete mixer segment as
a whole to be profitable during the year.
Mixers for Thailand Biggest Concrete Company
Foundation equipment demand
in
South East Asia continues to be strong following continuous growth in construction and
infrastructure investments in the region. This region has a combined population of more
than 600 million people. Sound banking structure and prudent financial policies has been
established in the region after the last Asian Financial Crisis. The emerging economies that
make up this region combine and complement well with China and India to form a broad
based growth basin that has escaped relatively unscathed from the GFC and hopefully
would be impacted minimally by the Eurozone crisis. Such resilience in the region is
foreseen to continue to under-score the sustainability of demand for foundation equipment
in the medium future.
Our Australian business has successfully expanded its product offerings to include the
supply of piling and boring equipment for foundation works to complement its core business
in concrete mixers. We intend to expand our fleet of piling and boring equipment over the
next 12 months for both sales and rental to generate recurrent revenue and cash flow. In
addition to this, the Group aims to explore opportunities in the oil and gas sector. We aim
to diversify our Australian revenue base supported by the Group’s internal capabilities so
as to take advantage of our established reputation and capacity in Australia as well as to
strengthen the viability of the Group’s Australian subsidiary.
Precision Engineering & Automation
The precision engineering sector has shown a 13.9% increase in revenue over the previous
year. This increase in revenue has been on the back of strong organic growth in both
automation and precision engineering driven by demand in the biomedical and consumer
electronics customers. The growth in the precision engineering sector has been sustainable.
Offshore Vibratory Piling
Onshore Vibratory Piling
Sustainability in the growth of our precision engineering business is strongly supported by the Group’s commitment in strengthening
its engineering excellence in this area and its continuing investments in facilities and high end machinery notwithstanding uncertainties
in the global economy. We have recently developed an Innovation Development Center focused on supporting our various start-ups
that require precision engineering and manufacturing services and to cross-support each other to strengthen innovation efforts to
stay ahead of competition.
Industrial & Mobile Hydraulics
This sector is made up of supply of hydraulic system drives
and hydraulic services in support of our general core business
activities in hydraulic engineering. Variation in this sector is not
expected to be significant to the Group.
Foreign Exchange Exposure
The Group generally prices its sales in foreign currencies based
on forward rates. During the full year, we hedged our foreign
rates accordingly to ensure our margins were maintained. The
net gain attributable to foreign exchange during the current
year is S$161,000 as compared with an exchange loss of
S$130,000 in the previous year.
Pre-shipment Inspection of Liquid Dispensing Modules
10
Zicom Group LimitedFor personal use only
Accounting Standards AASB 139 obliges us to fair value our outstanding foreign currency derivatives at the rates ruling on 30 June
2012. The net gain of S$161,000 included the imputed unrealised gain/loss in the valuation of these derivatives as at 30 June 2012.
Financial Position
The group’s financial position has generally improved :-
classification
increase (+) / decrease (-)
S$ million
as at 30 Jun 12
S$ million
as at 30 Jun 11
S$ million
Net Assets
Net Working Capital
Cash in Hand and at Bank
+ 4.35
+ 0.46
+ 0.78
84.62
42.42
24.45
80.27
41.96
23.67
Gearing Ratios
The Group gearing ratio is 0% at the same ratio for the year ended 30 June 2011. Gearing ratio has been arrived at by dividing our
net interest bearing debts over total capital.
Return Per Share
The Group’s earnings and net tangible assets per share are as follows: -
classification
increase (+)/ decrease (-)
Singapore cents
2012
Singapore cents
Earnings per share
- 2.93
3.69
2011
Singapore cents
6.62
The weighted average shares used to compute basic earnings per share are 212,376,000 for this year and 212,925,000 shares for
the previous year.
classification
increase (+)/ decrease (-)
Singapore cents
as at 30 June 12
Singapore cents
NTA per share
+ 1.46
34.22
as at 30 June 11
Singapore cents
32.76
Capital Expenditure
The Group is not likely to incur any significant capital expenditure for FY2013.
Confirmed Orders
We have a total of S$51.5m (30 Jun 2011: S$63.2m) outstanding confirmed orders in hand as at 30 June 2012. A breakdown of
these outstanding confirmed orders is as follows :-
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Automation
Industrial & Mobile Hydraulics
total
S$ m
23.7
5.4
22.2
0.2
S$51.5
These outstanding orders are scheduled for delivery in the financial year 2013. Our outstanding confirmed orders as at 31 December
2011 were S$41.6m. The higher outstanding orders reflect acceleration in customers’ orders in the last 6 months. Prospects for
on-going orders continue to be robust. We remain optimistic.
Investments in Start-Ups
The Group has invested a combined S$10.5m into the 3 start-ups from internal cash resources without external borrowings. All
these start-ups have achieved various milestones and gained customer acceptance in trials carried out. Our technologies have been
proven to be disruptive. Current efforts are focused to accelerate their commercialisation which requires the completion of industrial
design engineering, manufacturing processes, marketing development and setting up of distribution network. The Group has
therefore committed to increase its investments of up to S$3m in these start-ups to support such efforts. Once commercialisation
gains traction, it will be expected to be accompanied with exponential growth.
11
2012 ANNUAL REPORTFor personal use only directors’ report 2012
Biobot Surgical pte ltd (Biobot) has undergone a complete restructuring
resulting in the departure of the founder-CEO and the sale of his entire shareholdings
to the Group at a nominal price arrived in a legally mandated mediation between the
parties. The Group now owns 80% of Biobot. Since the founder-CEO’s departure,
clinical trials with our long standing clinical partners, the Singapore General
Hospital who is also our licensor, have accelerated as working relationships have
improved and strengthened. The close cooperation has brought about results that
have strengthened Biobot’s confidence to launch a sustainable commercialisation
of its product and technology in the second quarter of 2013, as compared with
the faltering and unsustainable efforts of the previous management. All the funds
injected previously were burnt off in half the time for which they had been intended
for. Biobot’s product has been approved by FDA (USA), CE Mark (EU), TGA
(Australia) and DOH (Taiwan). It has now applied for approval from the recently
set up Health Science Authority in Singapore. Biobot’s on-going development is
fully supported in engineering and manufacturing by our wholly owned precision
engineering subsidiary, Sys-Mac Automation Engineering Pte Ltd. The Group has
committed to increase its investment by S$1m in Biobot and may further augment
its working capital as its commercialisation takes off.
Curiox LT DropArray Machine
iSROBOT Mona Lisa Surgical Robot
curiox Biosystems pte ltd (curiox)’s DropArray technology has gained
approval by world leading Genentech Inc in USA, considered the founder of the
biotechnology industry, and various leading drug research institutes and leading
universities in USA, Singapore, the UK and Japan. The DropArray technology has
proven to enable drug discovery processes to save more than 50% in disease
markers, reagents and man-hours. Being a new technology, the challenges faced
by Curiox in a highly conservative industry include lifting customers’ psychological
barrier to try new technology and processes. Consolidation in the pharmaceutical
industries arising from the impending expiry of many drug patents in the near
future has affected spending. Curiox’s technology that aims to expedite drug
discovery has become a timely proposition for the industry. We have expanded
our base for customers to pre-trial before buying our product and technology.
Such initial efforts are paying off. These efforts coupled with impending scientific
publications of positive findings on our technology by leading drug companies
and researchers are expected to act as an impetus to our marketing drive. We
expect our commercialisation of the DropArray technology to gain traction in next
6-12 months. To accelerate commercialisation efforts, the Group has committed
to invest a further S$1-1.5m into Curiox out of our internal resources. The Group
currently holds 44.06% in Curiox and would expect this to increase over the next
12 months.
Curiox HT DropArray Machine
orion Systems integration pte ltd (orion)’s first commercial Thermal
Bonder for fine pitch flip chips has been subjected to lengthy trial tests
on bonding various customers’ fine pitch flip chip samples. Validation
reports have been positive. Following customers’ feedback the first unit
has been upgraded and is ready for sale. It is hopeful to secure its first
order within the next 3 months. Further orders are expected to follow
closely as the leading edge features of our machine become wider
market knowledge. The Group has increased its investments in Orion
after buying out other minority shareholders. The remaining minority
interest in Orion is owned by the key executive founder-directors who
continue to manage the business. The Group is expected to inject
further funds into Orion to augment its working capital in its drive to
increase sales.
12
Orion Phonenix 5000 Thermal Bonder
Zicom Group LimitedFor personal use only Directors’ Report 2012
Prospects
The full year’s results reflected the impact of the uncertain global conditions. We remain steadfast and committed to growing our
organisation organically, integrating the high growth start-ups into our group, and looking out for synergistic acquisitions. The
capabilities that we have built continue to strengthen securing for us a strong and competitive platform for sustainable growth.
We are therefore confident that the financial year 2013 is expected to experience a significant increase in profit growth barring no
unforeseen deterioration of existing world economic order.
Share Buy-Back Scheme
The existing Share Buy-Back Scheme expires on 31 August 2012. The board has decided not to renew the scheme so as to
maintain share liquidity.
Environmental Regulations
The group is subject to environmental regulations under State and Federal legislations. The group holds environmental licences for
its manufacturing site in Brisbane. No significant material environmental incidents occurred during the year.
Meetings of directors
The number of meetings of the company’s board of directors and of each board committee held since the last Annual General
Meeting, and the numbers of meetings attended by each director were:
Giok Lak Sim
Kok Hwee Sim
Yian Poh Lim
Frank Leong Yee Yew
Ian R Millard
Shaw Pao Sze
Kok Yew Sim
Meetings of Committees
Full meetings
of directors
Audit
A
5
5
5
5
5
5
3
B
5
5
5
5
5
5
5
A
–
–
2
2
2
–
–
B
–
–
2
2
2
–
–
Nomination &
Remuneration
B
A
1
1
–
–
1
1
1
1
–
–
–
–
–
–
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
Insurance or indemnification of officers
During the financial year, Zicom Group Limited paid a premium of A$10,793 to insure against liabilities of the directors and officers
of the reporting entity.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against
directors or officers in their capacities as officers of the reporting entity.
The policy also provides for certain statutory fines incurred by the reporting entity or officers, and protection for claims made
alleging a breach of professional duty arising out of an act, error or omission of the officers of the reporting entity.
13
2012 ANNUAL REPORTFor personal use only
Directors’ Report 2012
Retirement, election and continuation in office of directors
Mr Ian R Millard retires by rotation and being eligible, offers himself for re-election.
Directors’ relevant interests in Zicom Group Limited
In accordance with S300(11) of the Corporations Act 2001, the relevant interests of the Directors in the shares and options of
Zicom Group Limited as at the date of this report are unchanged to those disclosed within the financial statements as at 30 June
2012.
Remuneration report (Audited)
This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in
accordance with the requirements of the Corporations Act 2001 and its Regulations. This information has been audited as required
by section 308(3C) of the Act.
Key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or
otherwise) of the Group.
The remuneration report is set out under the following main headings:
A
B
C
Principles used to determine the nature and amount of remuneration
Service Agreements
Details of remuneration
A
Principles used to determine the nature and amount of remuneration
A combined Nomination and Remuneration Committee has been formed. The members of the Nomination and
Remuneration Committee comprise of Mr Y P Lim as Chairman with Mr Frank Leong and Mr G L Sim as members. The
Nomination and Remuneration Committee had approved the Service Agreement of the group managing director, Mr G L
Sim and this was subsequently ratified by the full board.
The key principle of Zicom Group Limited’s remuneration policy is to ensure remuneration is set at levels that will attract,
motivate, reward and retain personnel to improve business results, having regard to the company’s financial performance
and financial position.
Non-executive directors
Remuneration of non-executive directors is determined by the directors within the maximum amount approved by the
shareholders. Each non-executive director receives a base fee of A$25,000 for being a director of the Group. An additional
fee of A$2,000 is also paid for each Board Committee of which a non-executive director sits and A$5,000 if the director
is a Chair of a Board Committee. The payment of additional fees for serving on committees recognises the additional time
commitment, and responsibilities of the non-executive directors who serve on one or more sub committees. There is also
an attendance fee of A$1,000 for each meeting attended by the non-executive director.
Non-executive directors are eligible to participate in the Zicom Employee Share and Option Plan (“ZESOP”). The Board
considers that there should be an appropriate mix of remuneration comprising cash and securities for all Directors to link
the remuneration of the Directors to the financial performance of the Company and to align the interests of shareholders
and all Directors.
The board recommends that total directors’ fees for non-executive directors for the financial year ending 30 June 2013 be
fixed at a maximum sum of A$150,000 (S$195,000) at the same level as the previous year.
14
Zicom Group LimitedFor personal use only
Directors’ Report 2012
Key management personnel – executive directors and senior executives
All remuneration paid to executive directors and senior executives comprises of the following components:
•
•
•
•
Base pay and benefits;
Short term incentives;
Other remuneration such as superannuation; and
Participation in the Zicom Employee Share and Option Plan.
The company’s policy does not allow transactions which limit the economic risk in participating in unvested entitlements
under equity-based remuneration schemes.
Base pay
The level of base pay is set so as to provide a level of remuneration which is appropriate to the position and is competitive
in the market. The remuneration of the executive directors is reviewed annually by the board and the remuneration of senior
executives is reviewed annually or on promotion by the managing director(s).
Benefits
Senior executives receive benefits including health insurance, disability insurance and car allowances.
Short term incentives
The objective of short term incentives is to reward the senior executives of the group with performance bonus tied to a
minimum profit threshold of the group companies. Such bonuses are paid within 90 days after the year end and completion
of audit.
B
Service Agreements
Group Managing Director
The Group Managing Director, Mr G L Sim is directly employed by Zicom Holdings Private Limited (“ZHPL”) and has
renewed his service agreement with ZHPL for another 5 years with effect from 1 July 2011. The Group and Mr Sim are
required to give each other at least 6 months notice in the termination of the service agreement. Under the terms of his new
service agreement, Mr Sim continues to be appointed as the Zicom Group Limited (“ZGL”) Group Managing Director and
Chairman as well as the Executive Chairman of all the operating subsidiaries.
Mr Sim is entitled to an annual review of his monthly salary if the company’s results exceed 15% return on shareholders’
funds. Mr Sim has frozen his monthly salary since 2007. Mr Sim will continue to draw the monthly salary at the 2007
level for the next 5 years from 1 July 2011 and waive all salary increments. Apart from this, all other benefits, terms and
conditions in his service agreement remain unchanged.
Mr Sim is paid a monthly salary and a car allowance. Mr Sim is entitled to a performance bonus not exceeding 5% of the
pre-tax consolidated profits of ZHPL upon achieving agreed minimum profit targets. He is entitled to convert part of this
performance bonus up to no more than 50% of the amount payable, into shares of ZGL at the average of the closing prices
of the last 5 trading days before the end of the relevant financial year. However, such entitlement must be exercised within
7 working days after the financial year end. ZHPL’s profits exceeded the target for the financial year just ended and Mr Sim
will be paid a bonus accordingly. Mr Sim has elected to convert 50% of his performance bonus amounting to S$175,000
(2011: S$nil) into ZGL shares, fully paid at A$0.155 per share. This is subject to shareholders’ approval.
Mr Sim is not paid any salary or fees by ZGL, Cesco Australia Limited (“CAL”) or any other group companies. In the event
CAL achieves the minimum pre-tax profits, Mr Sim will be paid a bonus not exceeding 5% of CAL’s profits. During the year
just ended, Mr Sim was not paid any bonus by CAL as the profit target was not achieved.
15
2012 ANNUAL REPORTFor personal use only
Directors’ Report 2012
Other Senior Executives
All senior executives have rolling contracts. The company and the senior executives are required to give each other 6
months’ notice to terminate the service contracts. The senior executives are entitled to a monthly salary and a car
allowance. The senior executives are paid a performance bonus on their respective companies achieving agreed minimum
profit targets. These senior executives are also entitled to convert part of their performance bonus, up to no more than 50%
of the amount payable, into shares in ZGL at the average of the closing prices of the last 5 trading days before the end of
the relevant financial year. However, such entitlement must be exercised within 7 working days after the financial year end.
During the year, some executives have elected to convert part of their performance bonus into ZGL shares amounting to
S$84,750 (2011: S$nil), fully paid at A$0.155 per share.
During the year, Messrs K H Sim and K Y Sim have also elected to convert part of their performance bonus into shares in
ZGL amounting to S$38,500 (2011: S$nil) and S$53,125 (2011: S$nil) respectively, fully paid at A$0.155 per share. These
are subject to shareholders’ approval.
Zicom Employee Share and Option Plan
Options are granted under the Zicom Employee Share and Option Plan (“ZESOP”) which was approved by shareholders on
23 November 2006.
A person is eligible to participate in ZESOP if he or she is a director or an employee of a group company. The board may
at any time make invitations to eligible employees to participate in the ZESOP. The invitation will specify the total number of
options each eligible employee may acquire, the exercise price, period and exercise conditions. All options shall lapse upon
the expiry of the exercise period as determined by the board or 10 years after grant of the option whichever is earlier.
If an eligible participant ceases to be employed by any member of the group his or her options shall lapse. In the event
an eligible participant, who, by reason of death, physical or mental incapacity or such other reasons as the Board may
approve, ceases to be an eligible participant before the participant has exercised all options under ZESOP, then those
options shall continue to be capable of being exercised in accordance with the rules.
Options granted under ZESOP carry no voting rights or entitlement to dividends.
At the date of this report, there were 8,985,000 unissued ordinary shares under options (6,375,000 at the reporting date).
Options are granted at no cost to employees. When exercised, each option is convertible into one ordinary share, pursuant
to a resolution passed at a meeting of the Board, which shall be credited as fully paid up and rank equally with all other fully
paid ordinary share capital.
During the financial year, employees have exercised options to acquire 292,500 fully paid ordinary shares in Zicom Group
Limited at a weighted average exercise price of A$0.18 per share.
Company Performance
The table below shows the performance of the Group for the past 5 financial years:
Earnings per share (Australian cents)
Dividend per share (Australian cents)
Closing share price (Australian cents)
Net tangible assets per share (Australian cents)
2012
2.83
1.00
15.0
26.49
2011
5.15
1.00
50.0
24.73
2010
4.02
0.85
12.5
23.53
2009
4.47
0.60
10.0
20.84
2008
3.53
0.80
20.0
15.58
C
Details of remuneration (audited)
Details of the remuneration to the directors and the key management personnel of Zicom Group Limited for the years
ended 30 June 2012 and 30 June 2011 are set out in the following tables. All performance related bonus and share-based
payment listed in the table were 100% vested for both financial years.
16
Zicom Group LimitedFor personal use only
Directors’ Report 2012
2012
Name
Short Term Employee Benefits
Cash
Salary and
Fees
S$
Short
Term
Cash
S$
Non-
Monetary
Benefits
S$
Other
Short-Term
Employee
Benefits
S$
Post
Employment
Benefit
Share-
Based
Payment
Superannuation
S$
Equity-
Based
S$
Total
S$
Performance
Related
%
Non-executive Directors
Y P Lim
F Leong
I R Millard
S P Sze
Sub-total non-executive
directors
48,215
44,305
45,609
39,093
177,222
–
–
–
–
–
Executive Directors
G L Sim - Chairman
K H Sim
K Y Sim (alternate to K H Sim)
Sub-total executive directors
432,000
120,186
165,172
717,358
175,000
71,500
159,375
405,875
Other key management personnel
G H Teoh(1)
J Koon Sim(2)
J L Sim(3)
H S Tang(4)
Sub-total other key
management personnel
Grand total
2011
216,000
157,614
216,907
180,187
286,303
200,351
80,000
60,000
770,708
626,654
1,665,288 1,032,529
Non-executive Directors
Y P Lim
F Leong
I R Millard
S P Sze
Sub-total non-executive
directors
Executive Directors
G L Sim - Chairman
K H Sim
K Y Sim (alternate to K H Sim,
appointed 5 Jul 2010)
Sub-total executive directors
Other key management
personnel
J L Sim(3)
G H Teoh(1)
H S Tang(4)
J Koon Sim(2)
Sub-total other key
47,601
43,741
45,028
38,595
174,965
–
–
–
–
–
432,000
119,058
710,000
165,000
144,640
159,500
695,698 1,034,500
202,495
200,700
184,073
202,370
500,000
295,250
300,000
201,500
management personnel
Grand total
789,638 1,296,750
1,660,301 2,331,250
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,857
3,857
3,857
–
–
–
–
–
24,000
12,000
44,362
80,362
60,000
18,000
21,600
20,400
120,000
200,362
–
–
–
–
–
24,000
12,000
12,000
48,000
21,600
39,000
20,400
18,000
99,000
147,000
(1) G H Teoh is the managing director of Foundation Associates Engineering Pte Ltd
(2) J Koon Sim is the president of Sys-Mac Automation Engineering Pte Ltd
(3) J L Sim is the joint managing director of Zicom Pte Ltd
(4) H S Tang is the joint managing director of Zicom Pte Ltd
–
–
–
–
–
5,307
13,130
9,522
27,959
6,331
7,162
7,367
5,310
26,170
54,129
–
–
–
–
–
4,262
11,523
14,318
30,103
5,973
8,213
4,062
14,538
32,786
62,889
3,218
3,218
3,218
1,908
51,433
47,523
48,827
41,001
11,562
188,784
175,000
51,233
65,858
292,091
811,307
268,049
444,289
1,523,645
9,868
–
9,342
9,605
578,502
383,127
335,216
275,502
28,815
332,468
1,572,347
3,284,776
3,969
3,969
3,969
2,070
51,570
47,710
48,997
40,665
13,977
188,942
–
14,895
1,170,262
322,476
14,895
29,790
345,353
1,838,091
20,115
17,256
17,449
–
750,183
560,419
525,984
440,265
54,820
98,587
2,276,851
4,303,884
–
–
–
–
–
43.1
41.0
47.8
49.5
52.3
23.9
21.8
–
–
–
–
–
60.7
51.2
46.2
66.7
52.7
57.0
45.8
17
2012 ANNUAL REPORTFor personal use only
Directors’ Report 2012
Share options granted to key management personnel
There were no share options awarded, exercised or lapsed during the year ended 30 June 2012.
For details on the valuation of options, including models and assumption used, please refer to note 25.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
Legal Proceedings
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity or to intervene in any
proceedings to which the consolidated entity is a party for the purpose of taking responsibility on behalf of the consolidated entity
for all or any part of those proceedings.
Non-Audit Services
There were no non-audit services provided by the entity’s auditor and related practices of the entity auditor, Ernst & Young, during
the year.
Auditors’ Independence Declaration
A copy of the auditor’s signed independence declaration as required under Section 307C of the Corporations Act 2001 is attached
to this report.
Rounding of Amounts
The company is an entity to which the Class Order 98/100 applies and accordingly, amounts in the financial statements and
directors’ report have been rounded to the nearest S$1,000 unless otherwise stated.
This report was made in accordance with a resolution of the board of directors.
G L Sim
Chairman/Managing Director
Brisbane
28 September 2012
18
Zicom Group LimitedFor personal use only
Auditor’s Independence Declaration
to the Directors of Zicom Group Limited
In relation to our audit of the financial report of Zicom Group Limited for the financial year ended 30 June 2012, to the best of my
knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001
or any applicable code of professional conduct.
Ernst & Young
Ric Roach
Partner
28 September 2012
19
2012 ANNUAL REPORTFor personal use only
Corporate Governance Statement
Introduction
The Board of Directors is responsible for the Corporate Governance of Zicom Group Limited and its controlled entities (referred to
in this document as “the Company”). The Directors are focused on fulfilling their responsibilities individually and as a Board to all
of the Company’s stakeholders. This involves recognition of and a need to adopt principles of good corporate governance having
regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance principles and
recommendations.
The Company has reviewed its Corporate Governance procedures over the past year to ensure compliance with the principles of
good corporate governance.
At the end of this Corporate Governance Statement there is a table detailing the recommendations with which the Company does
not strictly comply.
A description of the Company’s practices in complying with the principles is set out below.
Principle 1: Laying Solid Foundations for Management and Oversight
The role of the Board is to lead and oversee the management and direction of the Company and its controlled entities.
After appropriate consultation with executive management the Board:
-
-
-
-
-
defines and sets the business objectives. It subsequently monitors performance and achievement of the Company’s
objectives;
oversees the reporting on matters of compliance with corporate policies and laws, takes responsibility for risk management
processes and reviews executive management of the Company;
monitors and approves business plans, financial performance and budgets, and available resources and major capital
expenditure initiatives of the Company;
maintains liaison with the Company’s auditor; and
reports to Shareholders.
Senior Executives and Executive Directors have letters of appointments or service contracts describing their terms of office, duties,
rights and responsibilities.
The performance of the board and key executives is reviewed regularly against both measureable and qualitative indicators. The
performance criteria against which directors and executives are assessed are aligned with the financial and non-financial objectives
of Zicom Group Limited. Directors whose performance is consistently unsatisfactory may be asked to retire.
Principle 2: Structure the Board to Add Value
The recommendations of the Corporate Governance Council are that the composition of the Board be determined so as to provide
the Company with a broad base of industry, business, technical, administrative and corporate skill and experience considered
necessary to represent Shareholders and fulfil the business objectives of the Company.
The recommendations of best practice are that the majority of the directors and in particular the chairperson should be
independent. An independent director is one who:
does not hold an executive position;
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial
shareholder of the Company;
-
-
20
Zicom Group LimitedFor personal use only
Corporate Governance Statement
-
-
-
-
-
has not within the last three years been employed in an executive capacity by the Company or other group member, or
been a director after ceasing to hold any such employment;
is not a principal of a significant professional adviser or a significant consultant of the Company or other group member, or
an employee materially associated with the service provided;
is not a significant supplier or customer of the Company or other group member, or an officer of, or otherwise associated
directly or indirectly with a significant supplier or customer;
has no significant contractual relationship with the Company or other group member other than as a Director of the
Company; and
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interests of the Company.
Individual board members do not fulfil all of these criteria but the overall profile of the Board is considered the most appropriate for
the activities of the Company.
Details of the members of the Board, their experience, expertise, qualifications, term of office and independent status are included
in the “Directors” section within the annual report.
Materiality thresholds in determining the independence of non-executive directors are:
-
-
A relationship that accounts for more than 10% of the Director’s gross income (other than director’s fees paid by the
company).
Where the relationship is with a firm, company or entity, in respect of which the Director (or any associate) has more than a
20% shareholding if a private company or 2% if a listed company.
Mr G L Sim was appointed Managing Director of Zicom Group Limited commencing 1 July 2006, and Chairman of Zicom Group
Limited with effect from 23 November 2006. He is a major shareholder in Zicom Group Limited through his interest in his family
company, SNS Holdings Pte Ltd. Previously Mr Sim had been the major shareholder (through SNS Holdings Pte Ltd) of Zicom
Holdings Pte Ltd (“ZHPL”). Mr Sim has been the Managing Director of ZHPL since founding the company and was appointed the
Chairman of ZHPL on 17 August 2007, in line with his position as the Group chairman. The Board has determined that Mr Sim is,
and was not independent.
Mr Frank Leong has no relationships or interests that would affect his role as an independent director.
Mr Y P Lim has no relationships or interests that would affect his role as an independent director.
Mr Ian R Millard has no relationships or interests that would affect his role as an independent director.
Mr S P Sze has no relationships or interests that would affect his role as an independent director.
Mr K H Sim is an Executive Director and therefore is considered by the Board to be not independent.
Mr K Y Sim is an alternate director of Mr K H Sim and therefore is considered by the Board to be not independent.
Term of Office
The Company’s Constitution specifies that at the annual general meeting in every year, one third of the Directors for the time being
but not exceeding one-third (with the exception of the Managing Director) must retire from office by rotation.
Independent Professional Advice
Directors and Board Committees have the right, in connection with their duties and responsibilities as Directors, to seek
independent professional advice at the Company’s expense. Prior written approval of the Chairman is required, and this will not be
unreasonably withheld.
21
2012 ANNUAL REPORTFor personal use only
Corporate Governance Statement
Board Committees
The Company has a Nomination and Remuneration Committee and an Audit Committee, the details of which are set out below:
Nomination and Remuneration Committee
The Nomination and Remuneration Committee is a combined committee, comprising of the following members:
•
•
•
Mr Y P Lim (Chairman)
Mr G L Sim
Mr Frank Leong
The Committee has the responsibility for recruitment and evaluation of Board Members. In addition the committee formulates the
remuneration policies for the Board Members and Managing Director of the Group.
Audit Committee
The Audit Committee comprises of the following members:
•
•
•
Mr Ian R Millard (Chairman)
Mr Frank Leong
Mr Y P Lim
The Audit Committee operates in accordance with a charter. The main responsibilities of the Audit Committee are to:
•
•
•
•
•
•
•
Review, assess and approve the annual report, the half year financial report and all other financial information published by
the Company or released to the market.
Review the effectiveness of the Group’s internal control environment, including effectiveness and efficiency of operations,
reliability of financial reporting and compliance with applicable laws and regulations.
Oversee the effective operation of the risk management framework.
Recommend the appointment, removal and remuneration of the external Auditor, and review the terms of their engagement,
the scope and quality of their audit and assess their performance.
Consider the independence and competence of the external Auditor on an ongoing basis.
Review and monitor related party transactions and assess their propriety.
Report on matters relevant to the committee’s role and responsibilities.
The Board and the Company Secretaries
The Company Secretaries are accountable to the Board and the appointment or removal of the Company Secretary is a matter of
the Board as a whole.
Each Director is entitled to access the advice and services of the Company Secretary.
22
Zicom Group LimitedFor personal use only
Corporate Governance Statement
Principle 3: Promote Ethical and Responsible Decision-Making
Code of Conduct
Directors, officers, employees and consultants to the Company are required to observe high standards of behaviour and business
ethics on behalf of the Company and they are required to maintain a reputation of integrity on the part of both the Company and
themselves. The Company does not contract with or otherwise engage any person or party where it considers integrity may be
compromised.
Directors are required to disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to
exist between the interests of the director or the interests of any other party in so far as it affects the activities of the Company.
When applicable, directors are to act in accordance with the Corporations Act if a conflict cannot be removed or it persists.
Directors would be restricted from taking part in the decision making process or discussions where that conflict does arise.
Directors are required to make disclosure of any share trading. The key principles of the Share Trading Policy are that Directors and
officers are prohibited to trade while in possession of unpublished price sensitive information and during the following closed periods:
•
•
•
•
The period between 1 January and the release of the Company’s Half Year results to the Stock Exchange
The period between 1 July and the release of the Company’s Full Year results to the Stock Exchange
The twenty-four hours following an announcement of price sensitive information on the Stock Exchange
Other periods as may be imposed by the Company when price sensitive, non-public information may exist in relation to a
matter
Price sensitive information is information that a reasonable person would expect to have a material effect on the price or value of
the company shares. The undertaking of any trading in shares must be notified to the Company Secretary who makes disclosure
to the ASX.
Diversity Policy
The Company does not have a written diversity policy, however, the Company recognises the importance of benefitting from all
available talent regardless of gender, age, ethnicity and cultural background. The Company promotes an environment conducive
to the appointment of well qualified employees, senior management and board candidates so that there is appropriate diversity to
maximise the achievement of corporate goals.
The Company has employees including executives from diversified cultural background and nationalities such as Australians,
Bangladeshis, Chinese, Indians, Indonesians, Filipinos, Malaysians, New Zealanders, Singaporeans and Thais. In addition,
approximately 18% of the Company’s workforce is made up of female employees.
Principal 4: Safeguard Integrity in Financial Reporting
As stated above the Company’s Audit Committee is made up of independent directors.
To ensure the integrity of the Company’s financial reports, the managing director and the Group Financial Controller are required
to declare annually, in writing to the board, that the financial records of the Company for the respective financial year have been
properly maintained, the Company’s financial reports comply with accounting standards and present a true and fair view of the
Company’s financial condition and operational results.
Each member of the Board has access to the external Auditor and the Auditor has access to each Board member.
Principal 5: Make Timely and Balanced Disclosure
The Joint Company Secretaries are persons responsible for overseeing and co-ordinating disclosure of information to the ASX as
well as communication with the ASX. This involves compliance with the continuous disclosure requirements of the Listing Rules.
23
2012 ANNUAL REPORTFor personal use only
Corporate Governance Statement
Principal 6: Respect the Rights of Shareholders
Pursuant to Principle 6, the Board’s objective is to promote effective communication with its shareholders at all times.
Zicom Group Limited is committed to:
-
-
-
Ensuring that shareholders and financial markets are provided with full and timely information about the Company’s
activities in a balanced and understandable way
Complying with continuous disclosure obligations contained in the ASX listing rules and the Corporations Act in Australia
Communicate effectively with its shareholders and making it easier for shareholders to communicate with the Company
To promote effective communication with shareholders and encourage effective participation at general meetings, information is
communicated to shareholders:
-
-
-
-
-
Through the release of information to the market via the ASX
Through the distribution of annual report and Notice of Annual General Meeting
Through shareholder meetings and investor relations presentations
Through letters and other forms of communications directly with shareholders when deemed necessary
Hosting all of the above on the Company website at www.zicomgroup.com
The external auditors are required to attend the Annual General Meeting and are available to answer any shareholder questions
about the conduct of the audit preparation of the audit report.
Principle 7: Recognise and Manage Risk
The Board is conscious of the need to continually maintain systems of risk management and controls in order to create long-term
shareholders value. In recognition of this, the board determines the Company’s risk profile and is responsible for overseeing and
approving risk management strategy and policies and internal controls. The Company has in place policies and procedures for
risk management which cover areas including workplace health and safety, control of key resources, manufacturing, financial and
other critical business processes. The operational risks are managed by senior management level and escalated to the board for
direction where the issue is exceptional, non-recurring or may have a material financial or operational impact on the Company.
In accordance with Section 295A of the Corporations Act, the Group Managing Director (Chief Executive Officer equivalent) and the
Group Financial Controller (Chief Financial Officer equivalent) have provided a written statement to the board that:
-
-
The view provided on the Company’s financial report is founded on a sound system of risk management and internal
compliance and control which implements the Board’s policies; and
The Company’s risk management and internal compliance and control system is operating efficiently and effectively in all
material respects.
The board notes that due to its nature, such internal control assurance can only be reasonable rather than absolute as the inherent
limitations in internal controls cannot be designed to detect all weaknesses in control procedures.
Principle 8: Remunerate Fairly and Responsibly
As stated above, a Nomination and Remuneration Committee has been established by the board.
Details of the remuneration for Directors and Key Management Personnel can be found in the Directors Report within the Annual Report.
24
Zicom Group LimitedFor personal use only
Corporate Governance Statement
The Group Managing Director and Group Executive Director receive performance based remuneration. In addition, the Group
Managing Director has renewed his service agreement with the Group for a term of another 5 years from 1 July 2011. The other
Directors do not receive any performance based remuneration and do not have contracts with the Company that give them any
form of certain tenure. One third of the Directors retire annually and are free to seek re-election by Shareholders.
Each member of the Board has committed to spending sufficient time to enable them to carry out their duties as a Director of the
Company.
A maximum amount of remuneration for non-executive Directors is fixed by Shareholders in general meeting and can be varied in
the same manner. In determining the allocation (if any) the Board must take account of the time demands on the Directors together
with such factors as fees paid to other corporate directors and to the responsibilities undertaken by them.
The Directors with the exception of Mr G L Sim were granted options after it was approved by the shareholders in an Extraordinary
General Meeting on 28 August 2008. The Board considers that there should be an appropriate mix of remuneration comprising
cash and securities for all Directors to link the remuneration of the Directors to the financial performance of the Company. The
Directors consider this remuneration policy to be a sensible and balanced policy which aligns the interests of shareholders and all
Directors. The hedging policy regarding unvested options is detailed within the Directors’ Report.
Departures from the Recommendations of the ASX Corporate Governance Council
Recommendation
Number
1.1
1.2 and 2.5
2.2
2.3
3.3
5.1
6.1
7.1 and 7.2
Departure from Recommendation Explanation for Departure
There is no formalisation of the
separation of functions between the
Board and Management.
Throughout the reporting period the Board consisted of a majority
of non-executive Directors. Practices followed are consistent with
the Principle.
There is no written process for
performance evaluation of the Board,
committees, individual Directors and
key executives.
The Chair is not an independent
director.
The Chair and Managing Director
positions are held by the same non-
independent director.
There is no written Diversity Policy
and there are no established
measureable objectives for achieving
gender diversity.
There are no written policies and
procedures designed to ensure
compliance with ASX Listing Rule
disclosure requirements.
The Nomination and Remuneration Committee monitors, reviews
and discusses the performance of the Board and key executives
and implements changes where necessary.
The Chairperson and Managing Director positions are held by the
same non-independent director. The Board has chosen a director
who has significant experience in the business who will lead the
Company in the best interests of the shareholders.
The Board has agreed on the responsibilities and division between
Chairman and Managing Director.
Although there are no written policies and measureable objectives
in place, practices followed are consistent with the Principle.
Although there are no written policies in place, the responsibility for
compliance with the ASX Listing Rules is handled by the Board, in
conjunction with the Company Secretaries.
The Company has no formally
designed or disclosed
communication strategy with
Shareholders.
The Board is conscious of the need to keep Shareholders and
markets advised. The procedures adopted within the Company,
although not written, are weighted towards informing Shareholders
and markets.
There has been no written
implementation of policy on risk
oversight and management or
for senior management to make
statements to the Board concerning
those matters.
Given the nature and size of the Company, its business interests
and the involvement of all Directors, all of whom have business
management skills, it was not considered necessary to establish
a written policy. The Company adheres to the Recommendations
under this Principle for statements by senior management to the
Board.
25
2012 ANNUAL REPORTFor personal use only
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2012 (In Singapore dollars)
Revenue from continuing operations
Other operating income
Cost of materials
Employee, contract labour and related costs
Depreciation and amortisation
Property related expenses
Other operating expenses
Finance costs
Share of results of associates
Profit before taxation
Tax expense
Note
2012
S$’000
2011
S$’000
4
4
4
5
128,959
146,444
1,689
750
(73,776)
(27,318)
(4,931)
(2,528)
(12,081)
(878)
(1,357)
7,779
(553)
(81,536)
(26,585)
(4,600)
(2,133)
(13,561)
(1,079)
(892)
16,808
(2,684)
Profit for the year from continuing operations after taxation
7,226
14,124
(135)
–
(135)
(22)
–
(22)
7,091
14,102
7,836
(610)
7,226
7,701
(610)
7,091
14,087
37
14,124
14,065
37
14,102
6
6
3.69
3.67
6.62
6.60
Other comprehensive income:
Foreign currency translation on consolidation
Effect of tax on other comprehensive income
Total comprehensive income
Profit attributable to:
Owners of parent
Non-controlling interest
Profit for the year
Total comprehensive income attributable to:
Owners of parent
Non-controlling interest
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
26
Zicom Group LimitedFor personal use only Consolidated Balance Sheet
as at 30 June 2012 (In Singapore dollars)
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Finance lease receivable
Investment in associates
Others
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Prepayments
Tax recoverable
Financial asset recorded at fair value through profit or loss
TOTAL ASSETS
Current liabilities
Payables
Interest-bearing liabilities
Provisions
Provision for taxation
Unearned income
Unrealised loss on derivatives
NET CURRENT ASSETS
Non-current liabilities
Interest-bearing liabilities
Deferred tax liabilities
Provisions
Unearned income
TOTAL LIABILITIES
NET ASSETS
Equity attributable to equity holders of the Company
Contributed equity
Reserves
Retained earnings
Non-controlling interest
TOTAL EQUITY
TOTAL EQUITY AND LIABILITIES
Note
2012
S$’000
2011
S$’000
8
9
5
13
11
20
12
13
15
16
17
18
17
5
18
19
35,833
11,918
754
–
2,768
1
51,274
24,446
28,255
33,169
908
205
300
87,283
35,343
10,757
840
26
4,845
1
51,812
23,675
30,306
34,012
690
142
–
88,825
138,557
140,637
31,547
10,425
1,315
1,015
64
497
44,863
31,611
11,211
1,401
2,406
125
110
46,864
42,420
41,961
6,535
2,161
317
63
9,076
10,638
2,459
283
127
13,507
53,939
60,371
84,618
80,266
37,083
110
45,955
83,148
1,470
36,983
41
41,340
78,364
1,902
84,618
80,266
138,557
140,637
27
2012 ANNUAL REPORTFor personal use only Consolidated Statement of Changes in Equity
for the year ended 30 June 2012 (In Singapore dollars)
Attributable to equity holders of the Company
Note
Share
capital
Share
capital –
exercise
of share
options
(a)
Foreign
currency
translation
reserve
(b)
Share
based
payments
reserve
(c)
Retained
earnings
Total
Non-
controlling
interest
Total
equity
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Balance at 1.7.2010
36,987
Other comprehensive income
Profit for the year
Total comprehensive income for
the year
Shares issued, net of expense
Share buy-back
Exercise of employee share
options
19
19
19
Cost of share-based payments
25(a)
Acquisition of subsidiary
companies
Dividends on ordinary shares
7
Dividends to non-controlling
shareholders
4
–
–
–
–
–
–
–
–
561
(1,107)
422
116
–
–
–
–
–
–
–
–
(474)
207
29,746
66,470
292
66,762
(22)
–
(22)
–
–
–
–
–
–
–
–
–
–
–
–
(116)
446
–
–
–
–
(22)
14,087
14,087
–
37
(22)
14,124
14,087
14,065
37
14,102
–
–
–
–
–
561
(1,107)
422
446
–
–
–
–
–
1,720
(2,493)
(2,493)
–
561
(1,107)
422
446
1,720
(2,493)
–
–
(147)
(147)
Balance at 30.06.2011
36,863
120
(496)
537
41,340
78,364
1,902
80,266
Other comprehensive income
Profit for the year
Total comprehensive income for
the year
Exercise of employee share
options
Cost of share-based payments
Acquisition of subsidiary
Acquisition of non-controlling
interests
Disposal of subsidiary
19
25(a)
26(a)
26(b)
Dividends on ordinary shares
7
Dividends to non-controlling
shareholders
–
–
–
–
–
–
66
34
–
–
–
–
–
–
–
–
–
–
–
–
(135)
–
(135)
–
–
–
–
–
–
–
–
–
–
(34)
238
–
–
–
–
–
–
7,836
(135)
7,836
–
(610)
(135)
7,226
7,836
7,701
(610)
7,091
–
–
–
(515)
–
66
238
–
(515)
–
(2,706)
(2,706)
–
–
578
(370)
68
–
66
238
578
(885)
68
(2,706)
–
–
(98)
(98)
Balance at 30.06.2012
36,929
154
(631)
741
45,955
83,148
1,470
84,618
Share capital – exercise of share options is used to record the transfer from share-based payment reserve upon the
exercise of the share options.
Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.
The share-based payments reserve is made up of the cumulative value of services received from employees recorded over
the vesting period commencing from the grant date of equity-settled share options and is reduced by the expiry or exercise
of the share options.
(a)
(b)
(c)
28
Zicom Group LimitedFor personal use only Consolidated Statement of Cash Flows
for the year ended 30 June 2012 (In Singapore dollars)
Cash flows from operating activities:
Operating profit before taxation
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Bad debts written off
Allowance for doubtful debts, net
Allowance for inventory obsolescence, net
Inventories written off
Interest expenses
Interest income
Property, plant and equipment written off
Gain on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss / (gain) on disposal of equity interest in subsidiary
Loss on remeasurement of investment in an associate to fair value
Goodwill written off
Provisions made, net
Cost of share-based payments
Development expenditure written off
Investment in joint venture written off
Share of results of associates
Gain on financial asset recorded at fair value through profit or loss
Unrealised loss on derivatives
Unrealised exchange (gain) / loss
Operating profit before reinvestment in working capital
Decrease / (increase) in stocks and work-in-progress
Decrease / (increase) in projects-in-progress
(Increase) / decrease in debtors
(Decrease) / increase in creditors
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Note
2012
S$’000
2011
S$’000
7,779
16,808
8
9
4
4
4
4
4
4
4
4
4
4
4
25(a)
4
4
4
4,225
706
2
297
45
3
878
(220)
4
(100)
13
87
874
–
214
238
–
–
1,357
(800)
497
(75)
16,024
4,727
2,421
(778)
(1,284)
21,110
220
(885)
(2,274)
3,964
636
13
5
42
2
1,079
(207)
51
(20)
2
(33)
–
5
403
446
325
80
892
–
110
231
24,834
(10,255)
(5,269)
542
2,030
11,882
207
(1,072)
(1,836)
Net cash provided by operating activities
18,171
9,181
29
2012 ANNUAL REPORTFor personal use only Consolidated Statement of Cash Flows
for the year ended 30 June 2012 (In Singapore dollars)
Cash flows from investing activities:
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of computer software
Increase in development expenditure
Increase in patented technology
Decrease in amount due from joint venture
Investment in associates
Increase in amount due from associates
Acquisition of subsidiaries
Disposal of subsidiary
Acquisition of non-controlling interests
Note
8(b)
8(c)
9
9
9
11(b)
26(a)
26(c)
26(b)
2012
S$’000
2011
S$’000
(5,740)
131
(83)
(37)
(31)
–
(1,451)
(924)
157
(77)
(385)
(5,417)
21
(454)
–
–
320
(5,238)
(33)
(1,311)
(12)
–
Net cash used in investing activities
(8,440)
(12,124)
Cash flows from financing activities:
Net increase / (decrease) in amount due to directors
(Repayments of) / proceeds from bank borrowings
Dividends paid on ordinary shares by the Company
Dividends paid to non-controlling shareholders
Share buy back
Proceeds from issue of shares
Proceeds from exercise of employee share options
(Repayment of) / proceeds from hire purchase creditors
Net cash (used in) /provided by financing activities
Net increase / (decrease) in cash and cash equivalents
Exchange rate effects
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
30
(3,289)
(2,706)
(98)
–
–
66
(2,684)
(24)
2,951
(2,493)
(147)
(1,107)
561
422
1,342
(8,681)
1,505
1,050
11
23,180
(1,438)
80
24,538
24,241
23,180
7
19
19
20
20
30
Zicom Group LimitedFor personal use only 1.
Corporate information
This financial report of Zicom Group Limited (the “Company” or “Parent Entity”) and its subsidiaries for the year ended
30 June 2012 was authorised for issue in accordance with a resolution of the directors on 28 September 2012.
Zicom Group Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ report.
2.
Summary of significant accounting policies
2.1
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a
historical cost basis except for derivative financial instruments which have been measured at their fair values.
2.2
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board.
(i)
Changes in accounting policies and disclosures
The Group has adopted the following new and amended Australian Accounting Standards and AASB
Interpretations as of 1 July 2011.
AASB 124 (Revised) Related Party Disclosures effective 1 January 2011
AASB 2009–12 Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119,
133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] effective 1 January 2011
AASB 2010–4 Amendments to Australian Accounting Standards arising from the Annual
Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13] effective
1 January 2011
AASB 2010–5 Amendments to Australian Accounting Standards [AASBs 1, 3, 4, 5, 101, 107, 112,
118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132,
& 1042] effective 1 January 2011
AASB 1054 Australian Additional Disclosures effective 1 July 2011
AASB 2010–6 Amendments to Australian Accounting Standards – Disclosures on Transfers of
Financial Assets [AASB 1 & AASB7] effective 1 July 2011
AASB 1048 Interpretation of Standards effective 1 July 2011
The adoption of these standards and interpretations did not have any effect on the financial performance or
position of the Group.
31
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.2
Statement of compliance (cont’d)
(ii)
Accounting Standards and Interpretations issued but not effective
Certain Australian Accounting Standards and Interpretations have been recently issued or amended but are
not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2012.
The directors expect the adoption of these new and amended standards and interpretations below will have
no material impact on the financial statements in the period of initial application.
AASB 2010–8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of
Underlying Assets [AASB 112]
AASB 2011–9 Amendments to Australian Accounting Standards – Presentation of Other
Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]
AASB 10 Consolidated Financial Statements
AASB 11 Joint Arrangements
AASB 12 Disclosure of Interests in Other Entities
AASB 13 Fair Value Measurement
AASB 119 Employee Benefits
AASB 2011–4 Amendments to Australian Accounting Standards to Remove Individual Key
Management Personnel Disclosure Requirements [AASB 124]
AASB 2012–2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial
Assets and Financial Liabilities
AASB 2012–5 Amendments to Australian Accounting Standards arising from Annual Improvements
2009 – 2011 Cycle
AASB 2012–3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities
AASB 9 Financial Instruments
Annual Improvements to IFRSs 2009 – 2011 Cycle [IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34]
2.3
Principles of consolidation
Basis of consolidation from 1 July 2009
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at
the balance sheet date.
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies
so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
The financial statements of the subsidiaries used in the preparation of the consolidated financial statements
are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like
transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised
gain and losses resulting from intra-group transactions are eliminated in full.
32
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.3
Principles of consolidation (cont’d)
Basis of consolidation from 1 July 2009 (cont’d)
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control ceases.
Investments in subsidiaries held by Zicom Group Limited are accounted for at cost in the separate financial
statements of the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as
a component of other revenues in the separate statement of comprehensive income of the parent entity, and do
not impact the recorded cost of investment. Upon receipt of dividend payments from subsidiaries, the parent will
assess whether any indicators of impairment of the carrying value of the investment in the subsidiary exist. Where
such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an
impairment loss is recognised.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method
of accounting involves recognising at the acquisition date, separately from goodwill, the identifiable assets required,
the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the
liabilities assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of consideration (including the fair value of any pre-
existing investment in the acquiree) is goodwill or discount on acquisition.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income
and are presented within equity in the consolidated balance sheet, separately from the equity of the owners of the
parent.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an
equity transaction.
If the group loses control over a subsidiary, it
•
•
•
•
•
•
•
Derecognises the assets (including goodwill) and liabilities of the subsidiary;
Derecognises the carrying amount of any non-controlling interest;
Derecognises the cumulative translation differences, recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss;
Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit
or loss.
33
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.3 Principles of consolidation (cont’d)
Basis of consolidation prior to 1 July 2009
Certain of the above mentioned requirements were applied on a prospective basis. The following differences,
however, are carried forward in certain instances from the previous basis of consolidation:
Acquisitions of non-controlling interest, prior to 1 July 2009, were accounted for using the parent entity
extension method, whereby, the difference between the consolidation and the book value of the share of the
net assets acquired was recognised in goodwill.
Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to
nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding
obligation to cover these. Losses prior to 1 July 2009 were not reallocated between NCI and the parent
shareholders.
Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset
value at the date control was lost. The carrying value of such investments at 1 July 2009 have not been
restated.
2.4
Business combinations
Subsequent to 1 July 2009
Business combinations are accounted for using the acquisition method. The consideration transferred in a business
combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values
of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquire
and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each
business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred, and
included in operating expenses.
When the Group acquires a business, it assess the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions and other pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the
acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will
be recognised in accordance with AASB 139 either in profit or lost or as a change to other comprehensive income.
If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within
equity.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in acquiree (if any)
is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the
acquiree’s identifiable net assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of
non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the
acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The
accounting policy for goodwill is set out in Note 2.8 (a). In instances where the latter amount exceeds the former, the
excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.
34
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.4
Business combinations (cont’d)
Prior to 1 July 2009
In comparison to the above-mentioned requirements, the following differences applied:
Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the
acquisition formed part of the acquisition cost. The non-controlling interest (formerly known as minority interest) was
measured at the proportionate share of the acquiree’s identifiable net assets.
Business combinations achieved in stages were accounted for in separate steps. Any additional acquired share of
interest did not affect previously recognised goodwill. The goodwill amounts calculated at each step acquisition were
accumulated.
When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were
not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that
significantly modified the cash flows that otherwise would have been required under the contract.
Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow
was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent
consideration were adjusted against goodwill.
2.5 Operating segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components of
the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision makers to
make decisions about resources to be allocated to the segment and assess its performance and for which discrete
financial information is available. This includes start up operations which are yet to earn revenues.
Operating segments have been identified based on the information provided to the chief operating decision makers
– being the executive management team.
The group aggregates two or more operating segments when they have similar economic characteristics, and the
segments are similar in each of the following respects.
Nature of the products and services
Type or class of customer for the products and services
Methods used to distribute the products or provide the services, and if applicable
Nature of the regulatory environment
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
Segment results include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items mainly comprise corporate assets, head office expenses and income tax assets
and liabilities. Segment capital expenditure is the total costs incurred during the year to acquire segment assets by
geographical area that are expected to be used for more than one year.
35
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.6
Foreign currency translation
(a)
Functional and presentation currency
The presentation currency of Zicom Group Limited is Singapore dollars (S$). Each subsidiary in the Group
determines its own functional currency and items included in the financial statements of each subsidiary
company are measured using that functional currency.
(b)
Foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currencies of the Company and its
subsidiaries at exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated
in foreign currencies are retranslated at the rate of exchange ruling at the 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 transaction. 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.
(c)
Foreign currency translation
The results and balance sheet of foreign operations are translated into Singapore dollars using the following
procedures:
•
•
Assets and liabilities are translated at the closing rate prevailing at reporting date; and
Income and expenses are translated at average exchange rates for the year, which approximates the
exchange rates at the dates of the transactions.
The exchange differences arising on the translation are taken directly to a separate component of other
comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other
comprehensive income relating to that particular foreign operation is recognised in profit or loss.
2.7 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 is recognised as an asset if, and only if, it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses.
Freehold land has an unlimited useful life and is therefore not depreciated. Depreciation of an asset begins when it is
available for use and is computed on the straight-line basis over the estimated useful lives of the assets as follows:
Leasehold properties
Machinery
Office furniture and equipment
Leasehold improvements
Motor vehicles
Computers
–
–
–
–
–
–
over remaining period of the lease expiring years 2039 to 2043
10 years
5 years
5 years
5 years
1 year
36
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.7 Property, plant and equipment (cont’d)
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year end and adjusted
prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the
year the asset is derecognised.
2.8
Intangible assets
(a)
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the
consideration transferred over the fair value of the Group’s net identifiable assets acquired and liabilities
assumed. If this consideration transferred is lower than the fair value of the net identifiable assets of the
subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies
of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and
whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying
amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the
cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying
amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not
reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and an operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance
is measured based on the relative fair values of the operations disposed of and the portion of the cash-
generating unit retained.
(b) Other intangible assets
Intangible assets acquired separately or in a business combination are measured initially at cost. The cost
of an intangible asset acquired in a business combination is its fair value as at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite useful lives are amortised over their estimated useful lives and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method are reviewed at least at each financial year end.
37
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.8
Intangible assets (cont’d)
(b) Other intangible assets (cont’d)
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually
or more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life
of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life
assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a
prospective basis.
Amortisation is calculated on a straight-line basis over the estimated useful lives of intangible assets as
follows:-
Computer software costs
Patent costs
Customer list
Developed/ Unpatented technology
5 years
10 years
8 years
7 – 14 years
Research and development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an
individual project is recognised only when the Group can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or sale, its intention to complete and its ability to
use or sell the asset, how the asset will generate future economic benefits, the availability of resources to
complete and the ability to measure reliably the expenditure during the development. Amortisation begins
when the development is complete and the asset is available for use or sale. Any expenditure so capitalised
is amortised over the period of expected benefit from the related project.
Club membership
Club membership was acquired separately and is not amortised as it has an indefinite life.
Gains or losses from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in profit or loss.
2.9
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 annual impairment testing for an asset (i.e. goodwill acquired in a business
combination) is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. In assessing value in use, the estimated
future cash flows 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 cost to
sell, recent market transactions are taken into account, if available. If no such transaction can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share
prices for publicly traded subsidiaries or other available fair value indicators. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses of continuing operations are recognised in profit or loss as ‘impairment losses’.
38
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.9
Impairment of non-financial assets (cont’d)
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses recognised for an asset other than goodwill may no longer exist or may have decreased. If
such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment loss is
recognised in profit or loss.
2.10
Investment in associates
The Group’s investment in its associates is accounted for using the equity method of accounting in the consolidated
financial statements and at cost in the parent entity. The associates are entities over which the Group has significant
influence and that are neither subsidiaries nor joint ventures.
The Group generally deems they have significant influence if they have over 20% of the voting rights.
Under the equity method, investments in associates are carried in the balance sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the associates. Goodwill relating to an associate is included in
the carrying amount of the investment and is not amortised. After application of the equity method, the Group
determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in
associates. Goodwill included in the carrying amount of the investment in associate is not tested separately, rather
the entire carrying amount of the investment is tested for impairment as a single asset. If impairment is recognised,
the amount is not allocated to the goodwill of the associate.
The Group’s share of an associate’s profits or losses after tax is recognised in profit or loss and its share of
movements in reserves is recognised in reserves. The cumulative movements are adjusted against the carrying
amount of the investment. Unrealised gains and losses resulting from the transactions between the Group and the
associates are eliminated to the extent of the interest in the associates.
After application of the equity method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group’s investment in its associate. The Group determines at each reporting date whether
there is any objective evidence that the investment in the associate is impaired. If this is the case the Group
calculates the amount of impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount in the “share of results of associates” in the profit or loss.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does
not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
The reporting dates of the associates and the Group are identical and the associates’ accounting policies conform
to those used by the Group for like transactions and events in similar circumstances.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at
its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the
fair value of the aggregate of the retained investment and proceeds from disposal is recognised in the profit or loss.
39
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.11 Financial assets
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. The Group determines the classification of its financial assets at
initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not
at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:-
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition at fair value through profit and loss. Derivatives are also classified as held
for trading unless they are designated as effective hedging instruments.
The Group has not designated any financial assets upon initial recognition at fair value through profit or loss.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value.
Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss
and the related assets are classified as current assets in the balance sheet.
(b)
Loans and receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. Subsequent to initial recognition, such assets are carried at amortised
cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or
loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
These are included in current assets, except for those with maturities greater than 12 months after the
balance sheet date, which are classified as non-current.
(c)
Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are not classified in any of the other categories.
After initial recognition, available-for-sale financial assets are measured at fair value with gains or losses
from changes in fair value recognised in other comprehensive income, except for 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 measured at cost less
impairment loss.
Derecognition
A financial asset is derecognised where the contractual right to receive cash flows from the asset has
expired. 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 has been recognised in other
comprehensive income is now recognised in profit or loss.
40
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.12
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.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred,
the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is
recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if
an amount was charged to the allowance account, the amounts charged to the allowance account are written off
against the carrying value of the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has incurred, the Group
considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or
significant delay in payments.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed
to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The
amount of reversal is recognised in profit or loss.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing liabilities
under current liabilities on the balance sheet.
2.14
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their
present location and condition are accounted for as follows:
-
-
Raw material: purchase costs on a first-in first-out basis.
Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. These costs are assigned on a first-in first-out basis.
When necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of
inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of
completion and the estimated costs necessary to make the sale.
41
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.15 Construction contracts
Contract revenue and contract costs are recognised as revenue and expenses, respectively, by reference to the
stage of completion of the contract activity at the balance sheet date, when the outcome of a construction contract
can be estimated reliably. Where the contract outcome cannot be measured reliably (principally during the early
stages of a contract), both contract revenue and expenses are not recognised until the contract outcome can be
estimated reliably.
The stage of completion is measured by the proportion that contract costs incurred to date bear to the estimated
total contract cost. Only costs that reflect services performed are included in the estimated total costs of the
contract.
An expected loss on the construction contract is recognised as an expense immediately when it is probable that
total contract costs will exceed total contract revenue.
2.16 Provisions
Provisions are 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 the amount of the obligation can be estimated reliably.
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. If the effect of the time value of money is material, provisions are discounted using a current pre- tax rate
that reflects, where appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition
is based on historical experience. The initial estimate of warranty-related costs is reviewed annually and revised, if
necessary.
2.17 Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is
recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful
life of the relevant asset by equal annual instalments.
2.18 Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of
the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through
profit or loss, directly attributable transaction costs.
42
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.18 Financial liabilities (cont’d)
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:-
(a)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial
liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified
as held for trading if they are acquired for the purpose of selling in the near term. This category includes
derivative financial instruments entered into by the Group that are not designated as hedging instruments in
hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair
value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit
or loss.
The Group has not designated any financial liabilities upon initial recognition at fair value through profit or
loss.
(b)
Other financial liabilities
After initial recognition, other financial liabilities are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
2.19 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs
are incurred.
Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other
borrowing costs are expensed in the period they occur.
43
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.20 Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement
at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset, even if that right is not explicitly specified in the arrangement.
Group as a lessee
Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned between the finance charges
and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged to profit or loss. Capitalised leased 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 benefits of ownership of the leased item
are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a
straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and
subsequently reduced by allocating lease payments between rental expense and reduction of the liability.
Group as a lessor
Leases where the Group transfers substantially all the risks and benefits of ownership of the leased item is
accounted for in accordance with the Group’s policy for sales of goods. Cost incurred in connection with negotiating
and arranging the finance lease is recognised as an expense when the selling profit is recognised.
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 Note 2.23.
2.21 Employee benefits
(a) Wages and salaries, annual leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave expected to be settled within
12 months of the balance sheet date are recognised in respect of employees’ services up to the reporting
date and measured at the amounts expected to be paid when liabilities are settled.
(b)
Long service leave / retirement benefits
The liabilities for long service leave and retirement benefits, applicable to Australian and Thailand subsidiaries
respectively, are recognised in the provision for employee benefits and measured at the present value of
expected future payments to be made in respect of services provided by employees up to the balance sheet
date. Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date
on national government bonds with terms to maturity and currencies that match, as closely as possible, the
estimated future cash outflows.
(c)
Superannuation
The Group participates in the national pension scheme as defined by the laws of the countries in which it has
operations.
Contributions are made by the Group, for its Australian subsidiaries, to employee accumulation
superannuation funds.
44
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.21 Employee benefits (cont’d)
(c)
Superannuation (cont’d)
The Group’s companies in Singapore make contributions to the Central Provident Fund scheme, a defined
contribution pension scheme.
The subsidiary company incorporated and operating in the People’s Republic of China (“PRC”) is required to
provide certain staff pension benefits to its employees under existing PRC regulations. Pension contributions
are provided at rates stipulated by PRC regulators and are contributed to a pension fund managed by
government agencies, which are responsible for administering these amounts for the subsidiary’s employees.
Contributions to defined contribution pension schemes are recognised as an expenses in the period in which
the related services is performed.
(d)
Employee share option plan
Employees (including key management personnel) of the Group receive remuneration in the form of share
options as consideration for service rendered. The cost of these equity-settled share based payment
transactions with employees is measured by reference to the fair value of the options at the date on
which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in
the employee share option reserve, over the vesting period. The cumulative expenses are recognised at
each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Group’s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss
for a period represents the movement in cumulative expense recognised as at beginning and end of that
period and is recognised in employee costs.
No expense is recognised for options that do not ultimately vest. The employee share option reserve is
transferred to retained earnings upon expiry or forfeiture of the vested share options. When the options are
exercised, the employee share option reserve is transferred to share capital as new shares are issued.
2.22 Derivative financial instruments
The Group uses derivative financial instruments to hedge its risks associated with foreign currency. Such derivative
financial instruments are classified as financial assets or liabilities at fair value through profit or loss and are initially
recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured
at fair value at each balance sheet date.
Any gains or losses arising from changes in fair value on derivative financial instruments are taken to profit or loss.
2.23 Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is
probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised:-
Sale of goods
Revenue on sale of goods is recognised when the significant risks and rewards of ownership of the goods have
been passed to the buyer, which generally coincides with delivery and acceptance of the goods sold.
Services rendered
Revenue from services rendered are recognised upon performance of services and the delivery to customers.
45
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.23 Revenue recognition (cont’d)
Revenue recognised on projects
Revenue on contract jobs are recognised using the percentage of completion method. The stage of completion is
measured using the proportion of costs incurred to the estimated total costs to complete the project. Losses, if any,
are immediately recognised when their existence is foreseen.
Interest income
Interest income is recognised using the effective interest method.
Dividends
Dividend income is recognised when the Group’s right to receive payment is established.
Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate cost of incentives
provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.
Commission income
Commission income is recognised on an accrual basis.
2.24 Taxation
(a)
Current tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at 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 or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where appropriate.
(b)
Deferred tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-
-
When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
When the taxable temporary difference is associated with investments in subsidiaries, associates
and interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
46
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.24 Taxation (cont’d)
(b)
Deferred tax (cont’d)
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised except:
-
-
When the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and
When the deductible temporary difference is associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.
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 profit will be available to allow all or part of the
deferred tax 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 the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.
(c)
Goods and service tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax except:
-
Where the goods and services tax incurred on a purchase of assets or services is not recoverable
from the taxation authority, in which case the goods and services tax is recognised as part of the cost
of acquisition of the asset or as part of the expense item as applicable; and
-
Receivables and payables that are stated with the amount of goods and services tax included.
The net amount of goods and services tax recoverable from, or payable to, the taxation authority is included
as part of receivables or payables on the balance sheet.
2.25 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
47
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.26 Earnings per share
(a)
Basic earnings per share
Basic earnings per share is determined by dividing net profit attributable to members of the Company by the
weighted average number of ordinary shares outstanding during the year.
(b)
Diluted earnings per share
Diluted earnings per share is determined by dividing the net profit attributable to members of the Company
by the adjusted weighted average number of ordinary shares which takes into account the effects of all
dilutive potential ordinary shares comprising of share options granted to employees.
2.27 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 Company if that person:
(i)
Has control or joint control over the Company;
(ii)
Has significant influence over the Company; or
(iii)
Is a member of the key management personnel of the Group or Company or of a parent of the
Company.
(b)
An entity is related to the Group and the Company if any of the following conditions applies:
(i)
(ii)
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).
(iii)
Both entities are joint ventures of the same third party.
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Company or
entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also
related to the Company.
(vi)
The entity is controlled or jointly controlled by a person identified in (a).
(vii)
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).
2.28 Critical accounting estimates and judgments
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the balance sheet date. However, uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in
the future periods.
48
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.28 Critical accounting estimates and judgments (cont’d)
(a)
Key sources of estimation uncertainty
Management has identified the following critical accounting policies for which significant judgements,
estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the balance sheet reported in future
periods.
(i)
Useful lives of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight-line basis over the property,
plant and equipment’s estimated economic useful lives. Management estimates the useful lives of
these property, plant and equipment to be within 1 to 31 years. Changes in the expected level of
usage and technological developments could impact the economic useful lives and the residual
values of these assets, therefore, future depreciation charges could be revised. The carrying amount
of the Group’s property, plant and equipment at the balance sheet date is disclosed in Note 8 to the
financial statements.
(ii)
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets at
each balance sheet date. Goodwill and other intangibles with indefinite lives are tested for impairment
annually and at other times when such indicators exist. Other non-financial assets are tested for
impairment when there are indicators that the carrying amounts may not be recoverable.
When value in use calculations are undertaken, management must estimate the expected future
cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to
calculate the present value of those cash flows. Further details of the key assumptions applied in the
impairment assessment of goodwill are given in Note 9 to the financial statements.
(iii)
Impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a
financial asset is impaired. To determine whether there is objective evidence of impairment, the Group
considers factors such as the probability of insolvency or significant financial difficulties of the debtor
and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics. The
carrying amount of the Group’s loans and receivable at the balance sheet date is disclosed in note 21
to the financial statements.
(iv)
Construction contracts
The Group recognises contract revenue by reference to the stage of completion of the contract
activity at the balance sheet date, when the outcome of a construction contract can be estimated
reliably. The stage of completion is measured by reference to the proportion that contract costs
incurred for work performed to date bear to the estimated total contract costs. Significant
assumptions are required to estimate the total contract costs that will affect the stage of completion.
The estimates are made based on past experience and knowledge of the project engineers. The
carrying amounts of assets and liabilities arising from construction contracts at the balance sheet date
are disclosed in Note 14 to the financial statements.
49
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.28 Critical accounting estimates and judgments (cont’d)
(b)
Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following
judgements, apart from those involving estimations, which has the most significant effect on the amounts
recognised in the financial statements:
Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in
determining the group-wide provision for income taxes. There are certain transactions and computations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recognised,
such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made. The carrying amount of the Group’s tax payables and deferred tax liabilities at
30 June 2012 was S$1,015,000 (2011: S$2,406,000) and S$2,161,000 (2011: S$2,459,000) respectively.
The Group also has deferred tax assets of S$754,000 (2011: S$840,000) as at 30 June 2012.
3.
Segment information
Business segments
Identification of reportable segments
The group has identified its operating segments based on internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance and in determining the allocation of
resources. The operating segments identified are as follows:
•
•
•
•
Offshore Marine, Oil and Gas Machinery – manufacture and supply of deck machinery, gas metering stations,
offshore structures for underwater robots and related equipment, parts and services.
Construction Equipment – manufacture and supply of concrete mixers and foundation equipment, including
equipment rental, parts and related services.
Precision Engineering and Automation – manufacture of precision and automation equipment, including equipment
related parts and engineering services.
Industrial and Mobile Hydraulics – supply of hydraulic drive systems, parts and services.
Inter-segment sales
Inter-segment sales are recognised based on internally set transfer price at arm’s length basis.
Corporate charges
Unallocated revenue comprises mainly non-segmental revenue including fair value gain on derivative asset. Unallocated
expenses comprise mainly of non-segmental expenses such as head office expenses and loss on remeasurement.
50
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 3.
Segment information (cont’d)
Business segments (cont’d)
The following tables present revenue and profit information regarding operating segments for the years ended 30 June
2012 and 2011.
Offshore
marine, oil
and gas
machinery
S$’000
Precision
engineering
and
automation
S$’000
Construction
equipment
S$’000
Industrial
and mobile
hydraulics Consolidated
S$’000
S$’000
Year ended 30 June 2012
Revenue
Sales to external customers
Other revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue
Interest income
Total consolidated revenue
Results
Segment results
Unallocated revenue
Unallocated expenses
Share of results of associates
Profit before tax and finance cost
Finance costs
Interest income
Profit before taxation
Income tax expense
Net profit after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses
34,302
52
–
34,354
57,167
207
15
57,389
34,721
171
4
34,896
2,769
5
414
3,188
1,916
6,394
2,722
668
328
4
552
541
7,016
–
3,122
663
1,317
99
931
172
–
–
15
139
128,959
435
433
129,827
(433)
1,034
220
130,648
11,700
1,034
(2,940)
(1,357)
8,437
(878)
220
7,779
(553)
7,226
8,661
103
8,764
4,620
1,515
51
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 3.
Segment information (cont’d)
Business segments (cont’d)
Year ended 30 June 2011
Revenue
Sales to external customers
Other revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue
Interest income
Total consolidated revenue
Results
Segment results
Unallocated revenue
Unallocated expenses
Share of results of associates
Profit before tax and finance cost
Finance costs
Interest income
Profit before taxation
Income tax expense
Net profit after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses / (revenue)
Offshore
marine, oil
and gas
machinery
S$’000
Precision
engineering
and
automation
S$’000
Construction
equipment
S$’000
Industrial
and mobile
hydraulics Consolidated
S$’000
S$’000
58,334
–
–
58,334
54,732
352
144
55,228
30,482
114
54
30,650
2,896
–
312
3,208
12,023
6,839
1,721
636
299
190
505
669
7,215
322
2,686
812
649
3,839
1,059
181
1
–
18
(23)
146,444
466
510
147,420
(510)
77
207
147,194
21,219
77
(2,724)
(892)
17,680
(1,079)
207
16,808
(2,684)
14,124
8,164
4,351
12,515
4,268
1,639
52
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 3.
Segment information (cont’d)
Geographical segments
The Group’s geographical segments are determined based on location of Group’s assets.
The following table presents revenue and certain assets information regarding geographical segments for the years ended
30 June 2012 and 2011.
Year ended 30 June 2012
Australia Malaysia Singapore
China
United
States
Bangladesh Thailand
Others
Total
Revenue
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Sales to external
customers
Other revenue from
23,281
12,721
35,938
6,947
29,099
8,067
6,833
6,073
128,959
external customers
41
32
1,390
41
Other segment
information
Segment non-current
assets
4,997
1,269
32,547
284
Investment in associates
Unallocated assets
Capital expenditure
- property, plant and
equipment
- intangible assets
Year ended 30 June 2011
772
–
1,121
–
6,481
2,110
37
–
2
–
–
–
21
16
146
1,689
130,648
–
7,954
701
47,752
2,768
754
51,274
8,752
2,139
10,891
–
–
134
–
207
29
Sales to external
customers
Other revenue from
22,569
16,216
52,430
21,409
14,660
8,336
3,050
7,774
146,444
external customers
21
6
517
137
Other segment
information
Segment non-current
assets
4,616
303
31,839
279
Investment in associates
Unallocated assets
Capital expenditure
- property, plant and
equipment
- intangible assets
310
322
105
–
7,517
3,846
89
–
–
–
–
–
–
–
–
–
7
62
750
147,194
8,335
755
46,127
4,845
840
51,812
8,197
4,357
12,554
106
–
70
189
53
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 4.
Revenue, income and expenses
(i)
Revenue
Sales of goods
Rendering of services
Rental revenue
Revenue recognised on projects
(ii)
Other operating income
Interest income
Commission income
Gain on disposal of property, plant and equipment
Service rendered
Bad debts recovered
Government grants
Gain on disposal of equity interest in subsidiary
Gain on financial asset recorded at fair value through profit or loss
Other revenue
(iii)
Other operating expenses
Included in other operating expenses are the following:
Allowance for inventory obsolescence, net
Allowance for doubtful debts, net
Bad debts written off
Foreign exchange (gain)/loss
Provision for product warranties, net
Loss on disposal of property, plant and equipment
Property, plant and equipment written off
Investment in joint venture written off
Development expenditure written off
Warranty expense charged directly to profit or loss
Goodwill written off
Inventories written off
Loss on remeasurement of investment in an associate to fair value
Loss on disposal of equity interest in subsidiary
Consolidated
2012
S$’000
93,764
7,684
6,326
21,185
128,959
220
66
100
193
2
140
–
800
168
1,689
45
297
2
(161)
109
13
4
–
–
–
–
3
874
87
2011
S$’000
88,111
7,020
4,749
46,564
146,444
207
195
20
102
–
112
33
–
81
750
42
5
13
130
403
2
51
80
325
5
5
2
–
–
54
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 5.
Tax expense
Current income tax
- Current income tax charge
- Adjustments in respect of previous years
Deferred income tax
- Relating to the origination and reversal of temporary differences
- Adjustment in respect of previous years
Consolidated
2012
S$’000
2011
S$’000
1,073
(30)
(186)
(304)
553
2,417
77
115
75
2,684
A reconciliation between the tax expense and the product of accounting profit of the Group multiplied by the applicable tax
rate for the year ended 30 June was as follows:
Profit before taxation
7,779
16,808
Tax expense:
Tax at the domestic rates applicable to profits in the countries where the group operates
Release of deferred tax liability on intangible assets
Non-deductible expenses
Non-taxable income
Partial tax exemption
Deferred tax asset not recognised
Recognition of deferred tax assets not previously recognised
Utilisation of deferred tax asset previously not recognised
(Over)/ under provision in prior years
Enhanced tax allowance
Others
Tax expense
2,352
(106)
248
(992)
(155)
73
–
(62)
(334)
(417)
(54)
553
3,308
(92)
228
(406)
(110)
44
(30)
(150)
152
(254)
(6)
2,684
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
55
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 5.
Tax expense (cont’d)
Deferred taxation as at 30 June relates to the following:
Deferred tax liabilities
Differences in depreciation
Intangible assets
Acquisition of subsidiary
Accrual for unconsumed leave
Unutilised capital allowances
Unutilised tax losses
Others
Deferred tax assets
Unutilised tax losses
Unutilised capital allowances
Provisions
Accrual for unconsumed leave
Differences in depreciation
Intangible assets
Others
Consolidated balance
sheet
Consolidated statement of
comprehensive income
2012
S$’000
2011
S$’000
2012
S$’000
2011
S$’000
(1,510)
(573)
(114)
36
–
–
–
(2,161)
533
8
405
40
(197)
(35)
–
754
(1,852)
(170)
(517)
39
31
10
–
(2,459)
563
5
526
35
(241)
(48)
–
840
(502)
(111)
–
3
31
10
–
20
(3)
124
(5)
(44)
(13)
–
(490)
251
(107)
–
(8)
469
(11)
19
(139)
(6)
(526)
(17)
243
15
7
190
Consolidated
2012
S$’000
2011
S$’000
The directors estimate that the potential future income tax benefit at 30 June in respect of
revenue tax losses not brought to account is
3,663
3,750
The benefit will only be obtained if –
(a)
the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the
benefit to be realised;
(b)
the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and
(c)
no changes in tax legislation adversely affect the consolidated entity’s ability to realise the benefit.
Tax Consolidation Legislation
Zicom Group Limited and its wholly owned Australian subsidiaries have not elected to form a tax consolidated group.
56
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 6.
Earnings per share
Earnings per share is calculated by dividing the Group’s profit attributable to members of the Company by the weighted
average number of shares in issue during the year.
(a)
Earnings used in calculating basic and diluted earnings per share
Net profit attributable to equity holders of the Parent
7,836
14,087
Consolidated
2012
S$’000
2011
S$’000
(b)
Weighted average number of shares for basic earnings per share
Effect of dilution:
Share options (d)
Adjusted weighted average number of shares
(c)
Earnings per share
Basic
Diluted
(d)
Options
No. of shares (Thousands)
212,376
212,925
1,406
213,782
461
213,386
Singapore cents
3.69
3.67
6.62
6.60
Options granted to employees (including KMP) as described in note 25 are considered to be potential ordinary
shares and have been included in the determination of diluted earnings per share to the extent they are dilutive.
These options have not been included in the determination of basic earnings per share.
2,610,000 (2011: nil) employee share options were granted to eligible employees and directors on 1 September
2012. Potential ordinary shares would have increased by 995,000 to 2,401,000 had this transaction occurred before
the end of the reporting period. There were no other transactions involving ordinary or potential ordinary shares
which occurred between the reporting date and the date of completion of these financial statements.
7.
Dividends
Declared and paid during the financial year:
- Final unfranked dividend for 2010: 0.50 Australian cents per share
- Interim unfranked dividend for 2011: 0.45 Australian cents per share
- Final unfranked dividend for 2011: 0.55 Australian cents per share
- Interim unfranked dividend for 2012: 0.45 Australian cents per share
Proposed but not recognised as a liability as at 30 June:
- Final unfranked dividend for 2012: 0.55 Australian cents per share
(2011: 0.55 Australian cents)
Consolidated
2012
S$’000
2011
S$’000
–
–
1,471
1,235
2,706
1,309
1,184
–
–
2,493
1,519
1,488
After the reporting date, the final dividend for 2012 was approved by the board of directors. These amounts have not been
recognised as a liability as at 30 June 2012 but will be brought to account during next financial year.
57
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only
Freehold
land
Leasehold
properties
Buildings
Machinery
under
installation
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
8.
Property, plant and equipment
Consolidated
Cost
At 1.7.2010
Currency realignment
Additions
Disposals
Reclassification
Reclassification to inventory
Write off
Acquisition of subsidiaries
Disposal of subsidiary
At 30.6.2011
Currency realignment
Additions
Disposals
Reclassification to inventory
Write off
Acquisition of subsidiary
Disposal of subsidiary
At 30.6.2012
2,382
(173)
–
–
–
–
–
–
–
10,441
(6)
–
–
–
–
–
–
–
5,155
(374)
3
–
–
–
–
–
–
2,209
10,435
4,784
1
–
–
–
–
–
–
–
–
–
–
–
–
–
3
3
–
–
–
–
–
–
–
28
–
(8)
–
–
–
–
20
–
78
–
–
–
–
–
2,210
10,435
4,790
98
34,375
2,070
26,265
45
7,512
(13)
8
(2,240)
(370)
96
(11)
1,332
1,669
47,244
15
468
–
–
–
(75)
–
–
18
186
(52)
–
–
(3)
14
–
(475)
8,197
(65)
–
(2,240)
(448)
110
(11)
31,292
1,740
1,832
52,312
(101)
8,243
(82)
(4,860)
(17)
19
(119)
(5)
335
–
–
–
–
–
8,702
163
2,937
(10)
(569)
(357)
77
(4)
10,939
(86)
3,381
(54)
(895)
(13)
15
(107)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
777
7
364
–
–
(37)
–
–
(3)
218
–
–
–
–
–
(5)
93
(183)
–
–
–
(352)
1,385
(107)
8,752
(265)
(4,860)
(17)
19
(471)
55,363
1,374
13,816
20
141
(52)
–
(3)
–
–
144
3,964
(62)
(569)
(397)
77
(4)
(7)
111
(167)
–
–
–
(342)
1,075
(101)
4,225
(221)
(895)
(13)
15
(449)
19,530
1,111
1,480
16,969
13,180
1,326
98
20
21,195
20,353
744
629
310
35,833
352
35,343
Accumulated depreciation and impairment
At 1.7.2010
Currency realignment
Charge for 2011
Disposals
Reclassification to inventory
Write off
Acquisition of subsidiaries
Disposal of subsidiary
At 30.6.2011
Currency realignment
Charge for 2012
Disposals
Reclassification to inventory
Write off
Acquisition of subsidiary
Disposal of subsidiary
At 30.6.2012
Net carrying value
At 30.6.2012
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,580
(5)
270
–
–
–
–
–
2,845
–
270
–
–
–
–
–
383
(41)
252
–
–
–
–
–
594
(5)
245
–
–
–
–
–
3,115
834
2,210
7,320
3,956
At 30.6.2011
2,209
7,590
4,190
58
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 8.
Property, plant and equipment (cont’d)
(a)
The net book value of property, plant and equipment held under hire purchase are as follows:-
Motor vehicles
Plant and equipment
Consolidated
2012
S$’000
32
4,315
4,347
2011
S$’000
50
4,790
4,840
(b)
(c)
(d)
During the year, the Group acquired property, plant and equipment with an aggregate cost of S$8,752,000 (2011:
S$8,197,000) of which S$1,711,000 (2011: S$1,265,000) were acquired by means of hire purchase financing.
Cash payments of S$5,740,000 (2011: S$5,417,000) were made to purchase property, plant and equipment.
Additions also included an amount of S$1,266,000 (2011: S$1,410,000) which was previously included in stock
but was converted and capitalised as fixed assets during the current financial year. The balance of S$35,000 (2011:
S$105,000) relates to provision for reinstatement made in the current financial year.
During the financial year, the Group disposed of property, plant and equipment with an aggregate net book value of
S$44,000 (2011: S$3,000). Sales proceeds amounting to S$131,000 (2011: S$21,000) were received in cash.
During the financial year, the Group wrote off property, plant and equipment with an aggregate net book value of
approximately S$4,000 (2011: S$51,000).
(e)
The net book value of property, plant and equipment pledged as security are as follows:
Mortgage of leasehold properties
Mortgage of freehold land and buildings
3,250
6,166
9,416
3,375
6,399
9,774
59
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only Customer
Developed
Development
Club
Computer
Unpatented
Patented
list
technology Goodwill
expenditure
membership
software
technology
technology
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
9.
Intangible assets
Consolidated
Cost
At 1.7.2010
Additions
Acquisition of subsidiary
Write off
Currency realignment
At 30.6.2011
Currency realignment
Additions
Acquisition of subsidiary
Disposal of subsidiary
910
1,108
5,323
316
–
–
–
17
–
–
–
44
–
854
–
246
927
1,152
6,423
(3)
–
–
–
(7)
–
–
–
(64)
–
1,316
(190)
At 30.6.2012
924
1,145
7,485
Accumulated amortisation:
At 1.7.2010
Currency realignment
Amortisation
At 30.6.2011
Currency realignment
Amortisation
638
–
139
777
–
49
635
–
169
804
–
171
At 30.6.2012
826
975
–
–
–
–
–
–
–
Net carrying value:
At 30 June 2012
98
170
7,485
At 30 June 2011
150
348
6,423
–
–
(316)
–
–
–
37
–
–
37
–
–
–
–
–
–
–
37
–
11
–
–
–
(1)
10
–
–
–
–
731
454
–
–
12
–
–
3,049
–
–
1,197
3,049
(11)
83
–
–
–
–
672
–
–
–
–
–
–
–
–
31
–
–
8,399
454
3,903
(316)
318
12,758
(85)
151
1,988
(190)
10
1,269
3,721
31
14,622
–
–
–
–
–
–
–
10
10
90
2
201
293
(3)
254
–
–
127
127
–
232
544
359
–
–
–
–
–
–
–
1,363
2
636
2,001
(3)
706
2,704
725
3,362
31
11,918
904
2,922
–
10,757
Customer
list
Developed
technology
Computer
software
Unpatented
technology
Patented
technology
Average remaining amortisation period
(years) – 2012
Average remaining amortisation period
(years) - 2011
2
3
1
2
2
3
12.4
13.4
10
–
60
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 9.
Intangible assets (cont’d)
Impairment tests for goodwill
In accordance with AASB 3, the carrying value of the Group’s goodwill on acquisition as at 30 June 2012 was assessed for
impairment.
Group
Carrying value of capitalised goodwill
based on cash generating units
Sys-Mac Automation Engineering Pte Ltd
Zicom Group Limited
Orion Systems Integration Pte Ltd
Biobot Surgical Pte Ltd
PT. Putra Dharma Harmoteknik
As at
30.6.2012
As at
30.6.2011
S$’000
S$’000
2,974
2,530
664
1,316
–
7,484
2,974
2,594
664
–
190
6,422
Basis on
which
recoverable
values are
determined
Growth rate
per annum
Discount
rate per
annum
2012
%
2011
%
2012
%
2011
%
Value-in-use
Value-in-use 5% - 10%
Value-in-use 10% - 30%
Value-in-use
Value-in-use
12%
5% - 8% 5% - 15% 13%
17%
17%
14% 15.3%
–
17%
17%
–
5%
2%
–
5%
–
–
Goodwill is allocated for impairment testing purposes to the individual entity which is also the cash generating unit (“CGU”).
The recoverable amount of each CGU is determined based on value-in-use calculations using cashflow projections based
on financial budgets approved by management covering a one or five year period. Management determined budgeted
gross margin in the financial budgets based on past performance and its expectation of market development. Cash flows
beyond the one or five year period are extrapolated using the growth rates stated above.
The calculations of value in use for the CGUs are most sensitive to the following assumptions:-
Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the start
of the budget period or if unavailable, based on management assessment of the markets. These are increased over the
budget period for anticipated efficiency improvements.
Growth rates – The forecasted growth rates are based on management’s assessment of the markets and do not exceed
the long-term average growth rate for the industries relevant to the CGUs.
Pre-tax discount rates – Discount rate reflect the current market assessment of the risk specific to the CGUs. In
determining appropriate discount rates for each unit, regard has been given to the weighted average cost of capital of the
entity as a whole and the yield on a 15 year government bond at the beginning of the budgeted year.
Sensitivity to changes in assumption
Management believe that no reasonably possible change in any of the above key assumptions would cause the carrying
values of these CGUs to materially exceed their recoverable amounts.
No impairment loss was required for the financial years ended 30 June 2012 and 30 June 2011 for goodwill as their
recoverable values were in excess of their carrying values.
61
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 10.
Investment in subsidiaries
Investment in controlled entities, at cost
Less: Impairment loss
Parent Entity
2012
S$’000
54,544
(5,263)
49,281
2011
S$’000
54,544
(5,251)
49,293
The consolidated financial statements include the financial statements of Zicom Group Limited and the subsidiaries listed in
the following table.
The interest in each controlled entity has been adjusted to assessed recoverable amounts on the basis of their underlying
assets.
The details of controlled entities are as follows:
Name of Company
Held by the Company:
Cesco Australia Limited
Zicom Holdings Pte Ltd
Controlled entities held by subsidiary companies:
Country of
incorporation
Carrying value
of Parent Entity
Investment
2012
S$’000
2011
S$’000
Percentage of equity
held by the Group
2011
2012
%
%
Australia
Singapore
5,106
44,175
5,118
44,175
100
100
100
100
Cesco Equipment Pty Ltd
Zicom Pte Ltd
Zicom Equipment Pte Ltd
Foundation Associates Engineering Pte Ltd
Foundation & Associate Pte Ltd
Sys-Mac Automation Engineering Pte Ltd
MTA-Sysmac Automation Pte Ltd
SAEdge Vision Solutions Pte Ltd
Integrated Automation Systems Pte Ltd
Orion Systems Integration Pte Ltd
Biobot Surgical Pte Ltd
PT. Sys-Mac Indonesia
PT. Putra Dharma Harmoteknik
Zicom Cesco Engineering Co. Ltd
Zicom Cesco Thai Co. Ltd
Zicom Thai Hydraulics Co. Ltd
FA Geotech Equipment Sdn Bhd
Cesco Kemajuan Sdn Bhd
Cesco Systems & Engineering Sdn Bhd
Hangzhou Cesco Machinery Co. Ltd
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Indonesia
Indonesia
Thailand
Thailand
Thailand
Malaysia
Malaysia
Malaysia
China
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49,281
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49,293
100
100
100
100
100
100
61
100
100
54
80
100
–
100
100
100
100
100
–
100
100
100
100
100
100
100
51
–
100
54
47
100
60
100
100
100
100
100
88
100
62
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 10.
Investment in subsidiaries (cont’d)
Entity subject to class order relief
Pursuant to the Class Order 98/1418, relief has been granted to Cesco Australia Limited from the Corporations Act 2001
requirements for preparation, audit and lodgement of their financial reports.
As a condition for the Class Order, Cesco Australia Limited entered into a Deed of Cross Guarantee on 15 May 2008. The
effect of the deed is that Zicom Group Limited has guaranteed to pay any deficiency in the event of winding up of Cesco
Australia Limited or if Cesco Australia Limited does not meet its obligations under the terms of overdraft, loans, leases or
other liabilities subject to the guarantee.
Cesco Australia Limited has also given a similar guarantee in the event that Zicom Group Limited is wound up or if it does
not meet its obligations under the terms of overdraft, loans and leases or other liabilities subject to the guarantee.
The consolidated Income Statement and Balance Sheet of the entities that are members of the Closed Group are as
follows:
Consolidated Income Statement
Profit from continuing activities before taxation
Income tax expense
Net profit for the year
Accumulated losses at the beginning
Dividends paid
Accumulated losses at the end
Closed Group
2012
S$’000
3,250
–
3,250
(25,081)
(2,706)
(24,537)
2011
S$’000
2,818
–
2,818
(25,406)
(2,493)
(25,081)
63
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only Closed Group
2012
S$’000
2,251
742
44,175
47,168
1,605
3,692
7,717
13,014
8,977
2,812
229
–
12,018
2011
S$’000
1,415
850
44,175
46,440
1,365
4,627
7,656
13,648
9,330
2,891
200
61
12,482
996
1,166
91
194
285
242
195
437
47,879
47,169
71,091
1,325
(24,537)
70,991
1,259
(25,081)
47,879
47,169
10.
Investment in subsidiaries (cont’d)
Consolidated Balance Sheet
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Current liabilities
Payables
Interest-bearing liabilities
Provisions
Unearned income
NET CURRENT ASSETS
Non-current liabilities
Interest-bearing liabilities
Provisions
NET ASSETS
Equity attributable to equity holders of the Company
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
64
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 11.
Investment in associates
(a)
Investment details
Biobot Surgical Pte Ltd
Curiox Biosystems Pte Ltd
Consolidated
2012
S$’000
–
2,768
2,768
2011
S$’000
2,838
2,007
4,845
(b)
Movements in the carrying amount of the Group’s investment in associates
Biobot Surgical Pte Ltd (“BBS”)
On 2 April 2012, Zicom Holdings Pte Ltd (“ZHPL”), the wholly owned subsidiary of the Company, acquired control in
its 46.67% owned associate. Consequently, Biobot Surgical Pte Ltd became a subsidiary of the Group. Please refer
to note 26 for more details.
Curiox Biosystems Pte Ltd (“Curiox”)
At beginning of year or date of acquisition, if later
Additional investment
Share of losses after income tax
At end of year
2012
S$’000
2,007
1,451
(690)
2,768
2011
S$’000
1,706
532
(231)
2,007
During the year, ZHPL has injected S$998,000 via the exercise of the symmetrical cross call and put options
on Curiox. ZHPL has also been allocated 171,586 Rights Shares pursuant to the renounceable Rights Issue of
Curiox, at an issue price of S$5.28 per Right Share payable in 2 equal tranches. Consideration for the first tranche
amounting to S$453,000 has been paid in April 2012 whilst the remaining tranche will be due in September 2012.
With the additional investment, ZHPL’s equity interest in Curiox increased to 44.06% as at 30 June 2012 (2011:
32.78%).
(c)
Summarised financial information
The following table illustrates summarised financial information relating to the Group’s associates:
Extract from the associates’ balance sheet:
Current assets
Non-current assets
Current liabilities
Net assets
2012
S$’000
2011
S$’000
1,137
560
1,697
(772)
925
2,032
6,348
8,380
(593)
7,787
65
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only
11.
Investment in associates (cont’d)
(c)
Summarised financial information (cont’d)
Extract from the associates’ statement of comprehensive income:
Results:
Revenue
Net losses
12.
Inventories
Raw materials, at net realisable value
Raw materials, at cost
Work-in-progress, at cost
Trading stocks, at cost
Trading stocks, at net realisable value
Stocks-in-transit, at cost
Total inventories at lower of cost and net realisable value
Consolidated
2012
S$’000
2011
S$’000
133
164
(1,600)
(2,479)
Consolidated
2012
S$’000
2,844
2,020
9,925
12,735
296
435
28,255
2011
S$’000
3,109
1,921
11,936
11,873
298
1,169
30,306
Inventories recognised as cost of sales for the year ended 30 June 2012 totalled S$99,144,000 (2011: S$101,639,000) for
the Group.
13. Current assets - receivables
Trade receivables (a)
Allowance for impairment loss (b)
Lease receivable (c)
Advance payments to suppliers
Amount due from customers for contract work (note 14)
Deposits
Related party receivables (d):
- Associates (non-trade)
- Other related parties (trade)
Other receivables
Consolidated
2012
S$’000
26,150
(374)
25,776
–
677
4,554
207
457
13
1,485
33,169
2011
S$’000
24,943
(141)
24,802
316
1,066
5,961
205
33
–
1,629
34,012
(a)
Please refer to note 21 for the ageing analysis of trade receivables past due but not impaired.
66
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 13. Current assets – receivables (cont’d)
(b)
Allowance for impairment loss
Trade and other receivables are non-interest bearing and are generally due when invoiced or on 30 days term.
An allowance for impairment loss is recognised when there is objective evidence that an individual receivable is
impaired.
The group has trade and other receivables that are impaired at the balance sheet date and the movements of the
allowance accounts used to record the impairment are as follows:
Consolidated
individually impaired
Trade receivables
Non-trade receivables
2012
S$’000
2011
S$’000
2012
S$’000
2011
S$’000
374
(374)
–
141
281
(40)
(10)
2
374
141
(141)
–
197
49
(64)
(44)
3
141
26
(26)
–
–
26
–
–
–
26
–
–
–
–
–
–
–
–
–
Nominal amounts
Less: allowance for impairment
Movements in allowance accounts:
As at 1 July
Charge for the year
Written off
Write back
Currency realignment
As at 30 June
(c)
As one of the subsidiary companies leases equipment to third parties under finance lease, future minimum lease
payments receivable together with the present value of the net minimum lease payments receivable are as follows:
Consolidated
Due within 1 year
After 1 year but not more than 5 years
Total minimum lease payments
Less: Amount representing finance charges
Minimum
lease
payments
receivable
2012
S$’000
Present
value of
receivable
2012
S$’000
Minimum
lease
payments
receivable
2011
S$’000
Present
value of
receivable
2011
S$’000
–
–
–
–
–
–
–
–
–
–
330
27
357
(15)
342
316
26
342
–
342
(d)
For related party receivables, please refer to note 23 for terms and conditions.
(e)
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
67
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 14. Gross amount due from/(to) customers for contract work
Contract costs incurred to date
Recognised profits to date
Progress billings and advances
Amount due from customers for contract work, net
Gross amount due from customers for contract work (note 13)
Gross amount due to customers for contract work (note 16)
Consolidated
2012
S$’000
17,889
2,198
20,087
(18,815)
1,272
4,554
(3,282)
1,272
2011
S$’000
14,090
5,549
19,639
(15,945)
3,694
5,961
(2,267)
3,694
Advances received included in gross amount due to customers for contract work
1,330
1,279
Revenue recognised on projects is disclosed in note 4.
15.
Financial assets recorded at fair value through profit or loss
Derivative relates to a contractual right held by Zicom Holdings Pte Ltd (“ZHPL”) to receive Profit Guarantee Shares from
the non-controlling shareholders of Biobot Surgical Pte Ltd (“BBS”) if BBS do not achieve the minimum agreed profits by
30 June 2013.
The fair value of these Profit Guarantee Shares recognised in profit or loss during the current financial year was a gain of
S$800,000 (2011: S$nil).
16. Current liabilities - payables
Trade, other payables and accruals (a)
Amount due to customers for contract work (note 14)
Owing to related parties (b)
- Associate (non-trade)
- Other related parties (trade)
- Other related parties (non-trade)
Consolidated
2012
S$’000
28,209
3,282
–
25
31
31,547
2011
S$’000
28,843
2,267
500
–
1
31,611
(a)
All amounts are non-interest bearing and are normally settled on 30 to 90-day terms.
(b)
Related parties
For related parties’ payable, please refer to note 23 for terms and conditions.
(c)
Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.
68
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 17.
Interest-bearing liabilities
Current
Bank overdraft (a)
Bills payable (b)
Factory loan (c)
Machinery loan (d)
Invoice finance facility (e)
Term loan (f)
Lease liabilities (note 27)
Non-Current
Factory loan (c)
Machinery loan (d)
Term loan (f)
Lease liabilities (note 27)
Consolidated
2012
S$’000
205
2,342
585
366
3,217
2,332
1,378
10,425
1,847
244
2,784
1,660
6,535
2011
S$’000
495
3,142
575
357
2,754
2,412
1,476
11,211
2,431
616
5,056
2,535
10,638
Details of the secured borrowings are as follows:
(a)
Overdraft of S$205,000 (2011: S$181,000) which bears interest at 7.50% (2011: 9.00%) per annum is secured by a
mortgage of the subsidiary company’s freehold land and buildings at Chonburi, Thailand.
(b)
(c)
The remaining overdraft of S$314,000 outstanding as at 30 June 2011 which bore interest at 6.00% per annum was
secured by a corporate guarantee given by Zicom Holdings Pte Ltd (“ZHPL”).
Bills payable amounting to S$2,342,000 (2011: S$3,142,000) with an average maturity of 3 – 4 months (2011: 2 -
4 months) bears interest at 2.15% to 7.50% (2011: 2.10% to 6.00%) per annum. As at 30 June 2012, S$39,000
(2011: S$265,000) of these bills payables were secured by a mortgage of the subsidiary company’s freehold land
and buildings at Chonburi, Thailand. All bills payable were secured by a corporate guarantee given by ZHPL.
Factory loans amounting to S$1,266,000 (2011: S$1,476,000) which is made up of current and long-term
portions of S$220,000 (2011: S$211,000) and S$1,046,000 (2011: S$1,265,000) respectively is repayable over
the remaining 62 monthly instalments at fixed interest rate of 1.45% per annum. It is secured by a legal mortgage
on ZHPL’s leasehold property at No. 9 Tuas Avenue 9 Singapore 639198 and a corporate guarantee from the
Company. This factory loan was refinanced after the balance sheet date on substantially same terms except for the
reduction in interest rate. This factory loan bore interest at a floating rate of 4.875% per annum as at 30 June 2011.
The remaining factory loan amounting to S$1,166,000 (2011: S$1,530,000) which is made up of current and non-
current portions of S$365,000 (2011: S$364,000) and S$801,000 (2011: S$1,166,000) respectively is repayable
over the remaining 38 monthly instalments at an interest rate of 5.25% (2011: 5.00%) per annum. It is secured by a
legal mortgage of the subsidiary company’s freehold land and buildings at 700/895 Moo 2, Amata Nakorn Industrial
Estate, Chonburi, Thailand and a corporate guarantee from ZHPL.
(d)
Machinery loan amounting to S$374,000 (2011: S$595,000) which is made up of current and non-current portions
of S$221,000 (2011: S$221,000) and S$153,000 (2011: S$374,000) respectively is repayable over the remaining 20
monthly instalments. This machinery loan which bears interest at 5.25% (2011: 5.00%) per annum is secured by a
legal mortgage on the subsidiary company’s freehold land and buildings at 700/895 Moo 2, Amata Nakorn Industrial
Estate, Chonburi, Thailand and a corporate guarantee from ZHPL.
The remaining machinery loan amounting to S$236,000 (2011: S$378,000) which consists of current and long-term
portions of S$145,000 (2011: S$136,000) and S$91,000 (2011: S$242,000) respectively bears interest at a fixed
rate of 8.62% (2011: 8.62%) per annum. This facility is secured by a fixed and floating charge over all the assets of
Cesco Australia Limited (“CAL”).
69
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 17.
Interest-Bearing Liabilities (cont’d)
(e)
Invoice finance facility amounting to S$550,000 (2011: S$nil) which bears interest at 2.46% per annum is secured
by a corporate guarantee given by ZHPL.
The remaining invoice finance facility amounting to S$2,667,000 (2011: S$ 2,754,000) which bears floating interest
rate at 6.80% to 7.90% (2011: 6.90% to 9.20%) per annum is secured by a fixed and floating charge over all the
assets of CAL.
(f)
Term loans amounting to S$5,056,000 (2011: S$7,328,000) comprising current and long-term portions of
S$2,272,000 (2011: S$2,272,000) and S$2,784,000 (2011: S$5,056,000) respectively bears floating interest at
2.45% to 2.70% (2011: 2.60% to 2.71%) per annum is repayable over 36 or 48 monthly instalments and secured by
a corporate guarantee given by ZHPL.
The remaining term loan payable within 12 months amounting to S$60,000 (2011: S$140,000) bears interest at 4.25%
(2011: 5.00%) per annum and is secured by a legal mortgage on the subsidiary company’s freehold land and buildings
at 700/895 Moo 2, Amata Nakorn Industrial Estate, Chonburi, Thailand and a corporate guarantee from ZHPL.
(g)
Financing facilities available
As at 30 June 2012, the Group had available S$108,785,000 (2011: S$82,965,000) of undrawn committed
borrowing facilities and all bank covenants were complied with.
18.
Provisions
Current
Product warranties
Employee benefits
Non-Current
Employee benefits
Reinstatement costs
Movements in provision for warranties:
At beginning of year
Allowance for the year
Write back of allowance
Utilisation
Acquisition of subsidiary
Currency realignment
At end of year
Consolidated
2012
S$’000
2011
S$’000
1,061
254
1,315
134
183
317
1,243
418
(309)
(314)
23
–
1,061
1,243
158
1,401
135
148
283
1,029
567
(164)
(194)
–
5
1,243
Warranty expense written-off directly to profit or loss (note 4)
–
5
Movements in provision for employee benefits:
At beginning of year
Allowance for the year
Currency realignment
At end of year
293
105
(10)
388
265
–
28
293
70
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 18.
Provisions (cont’d)
Movements in provision for reinstatement costs:
At beginning of year
Allowance for the year
At end of year
Consolidated
2012
S$’000
2011
S$’000
148
35
183
43
105
148
In accordance with the lease agreement, the Group must reinstate certain subsidiaries’ leased premises in Singapore and
Australia to its original condition at the end of the lease term in 2014 and 2015 respectively.
An additional provision of S$35,000 (2011: S$105,000) was raised during the year ended 30 June 2012 in respect of the
Group’s obligation to remove leasehold improvements from the leased premises in Singapore and is included in the carrying
amount of leasehold improvements.
Because of the long-term nature of liability, the greatest uncertainty in estimating the provision is the costs that will
ultimately be incurred. The provision has been calculated using a pre-tax discount rate of 6%.
19. Contributed equity
(a)
Share Capital
Parent entity
Consolidated
2012
2011
No. of shares (Thousands)
2012
S$’000
2011
S$’000
Ordinary fully paid shares
212,452
212,159
37,083
36,983
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares carry one vote per share without restriction.
(b) Movements in ordinary share capital
At 1 July 2010
Issue of shares in lieu of cash performance bonus (i)
Share buy-back (ii)
Issue of shares under Zicom Employee Share and Option Plan (iii)
At 30 June 2011
Issue of shares under Zicom Employee Share and Option Plan (iv)
At 30 June 2012
Company
Number of
ordinary
shares
(Thousands)
211,698
3,358
(4,059)
1,162
212,159
293
212,452
Group
S$’000
36,991
561
(1,107)
538
36,983
100
37,083
71
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 19. Contributed equity (cont’d)
(b) Movements in ordinary share capital (cont’d)
(i)
Issue of shares in lieu of cash performance bonus
On 6 October 2010, the board approved the issue and allotment of a total 1,454,000 shares to Messrs
Juat Lim Sim, Hung Seah Tang and Hong Jun Zhang fully paid at A$0.13 per share as part payment of
their performance bonus for the year ended 30 June 2010. Such shares ranked pari passu with the existing
ordinary shares of the Company.
Pursuant to the shareholders’ meeting on 12 November 2010, 1,574,000 and 330,000 shares were allotted
to Mr Giok Lak Sim and Mr Kok Hwee Sim respectively, fully paid at A$0.13 per share as part payment of
their performance bonus for the year ended 30 June 2010. Such shares ranked pari passu with the existing
ordinary shares of the Company.
(ii)
Share buy-back
On 30 May 2010, the board approved an on-market share buy-back within the 10/12 limit as part of the
Group’s capital management program. The share buy-back scheme which commenced on 1 September
2010 bought back 4,059,000 shares up to 30 June 2011.
(iii)
Issue of shares under Zicom Employee Share and Option Plan (“ZESOP”)
From February 2011 to June 2011, the Company issued and allotted 1,162,000 ordinary shares, fully paid at
A$0.28 per share, under the ZESOP. Such shares ranked pari passu with the existing ordinary shares of the
Company.
(iv)
Issue of shares under ZESOP
On 4 October 2011, the Company issued and allotted 293,000 ordinary shares, fully paid at A$0.18 per
share, under the ZESOP. Such shares ranked pari passu with the existing ordinary shares of the Company.
20. Cash and cash equivalents
Cash at bank and in hand
Short-term fixed deposits
For the purpose of cash flow statements, cash and cash equivalents comprise the following
as at 30 June:
Cash and short-term deposits
Bank overdrafts
Consolidated
2012
S$’000
21,455
2,991
24,446
2011
S$’000
19,871
3,804
23,675
24,446
(205)
24,241
23,675
(495)
23,180
Cash at bank balance amounting to S$3,123,000 (2011: S$193,000) as at 30 June 2012 earned interest at floating rate
based on daily bank deposit rates ranging of 1.0% to 3.8% (2011: 1.0% to 7.1%) per annum. The remaining cash at bank
balances are non-interest bearing.
Short-term deposits are made for varying periods of one day to one month depending on the immediate cash requirements
of the Group and earn interests at the respective short-term rates.
72
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments
(a)
Financial risk management objectives and policies
The Group and the Company is exposed to financial risks arising from its operations and the use of financial
instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The
Board of Directors reviews and agrees policies and procedures for the management of these risks. The Group
enters into derivative transactions, principally foreign currency forward contracts and foreign currency options,
purpose is to manage currency risk arising from the Group’s operations and sources of finance. The Group does not
apply hedge accounting for such derivatives.
The following sections provide details regarding the Group’s exposure to the above-mentioned financial risks and the
objectives, policies and processes for the management of these risks.
(b)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate
because of changes in market interest rates.
The Group’s exposure to interest rate risk arises primarily from loans and borrowings which have floating interest
rates. The Group’s policy with respect to controlling this risk is linked to a regular review of the total debt position
and assessment of the impact of adverse changes in interest rates applicable to new and existing debt facilities.
Consideration is given to potential renewal of existing positions, alternative financing, alternative hedging positions
and mix of fixed and variable interest rates.
At the balance sheet date, the Group had the following mix of financial assets and liabilities exposed to variable
interest rate risk:
Financial assets
Cash and bank balances
Financial liabilities
Bank overdraft
Invoice finance facility
Factory loans
Machinery loans
Term loan
Consolidated
2012
S$’000
2011
S$’000
3,123
193
205
2,667
1,166
374
5,056
9,468
495
2,754
3,006
595
7,328
14,178
Sensitivity analysis of interest rate risk
As at 30 June 2012, if interest rates had increased/decreased by 25 basis point with all other variables held
constant, post-tax profits for the consolidated entity for the financial year would be (S$12,000)/S$12,000 (2011:
(S$43,000)/S$43,000) lower/higher, as a result of the higher/lower interest rates. Accordingly, the Group’s equity
as at year-end will be (S$12,000)/S$12,000 (2011: (S$43,000)/S$43,000) lower/higher. Term loans amounting to
S$60,000 (2011: S$140,000) have fixed interest rates until expiry, at which point interest rates resets.
73
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(c)
Foreign currency risk
Foreign currency risk occurs as a result of the Group’s transactions that are not denominated in their respective
functional currencies. These transactions arise from the Group’s ordinary course of business. The Group transacts
business in various currencies and as a result, is largely exposed to movements in exchange rates of United States
dollars, Norwegian Kroner, Euros and Australian dollars.
The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts and
payments in each individual currency. The Group also uses foreign currency forward contracts and foreign currency
options to hedge a portion of its future foreign exchange exposure. The Group uses these currency contracts purely
as a hedging tool and does not take positions in currencies with a view to make speculative gains from currency
movements.
The following sensitivity analysis is based on the foreign exchange risk exposure in existence at the balance sheet
date. As at 30 June, if exchange rates had moved, as illustrated in the table below, with all other variables held
constant, post tax profit and equity would have been affected as follows:
Consolidated
USD
- strengthened 3% (2011: 6%)
- weakened 3% (2011: 6%)
NOK
- strengthened 2% (2011: 4%)
- weakened 2% (2011: 4%)
EUROS
- strengthened 3% (2011:4%)
- weakened 3% (2011:4%)
AUD
- strengthened 1% (2011: 3%)
- weakened 1% (2011: 3%)
GBP
- strengthened 3% (2011: 2%)
- weakened 3% (2011: 2%)
(d)
Credit risk
Post tax profit
Higher/(lower)
2012
S$’000
2011
S$’000
255
(255)
559
(559)
–
–
(1)
1
34
(34)
(11)
11
5
(5)
6
(6)
19
(19)
(2)
2
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its
obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit
risk exposure. The Group trades only with recognised and creditworthy third parties. Credit risk is monitored through
careful selection of customers and their balances are monitored on an ongoing basis with the result that the Group’s
exposure of bad debts has not been significant.
74
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(d)
Credit risk (cont’d)
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the country profile of its trade receivables on an
on-going basis. The credit risk concentration profile of the Group’s trade receivables at the balance sheet date is as
follows:
Australia
Bangladesh
Hong Kong
India
Indonesia
Malaysia
People’s Republic of China
Singapore
Thailand
United States of America
Vietnam
Others
Consolidated
2012
2011
S$’000
% of total
S$’000
% of total
5,288
3,459
279
3
61
2,301
494
8,910
1,519
3,363
–
99
25,776
20.5%
13.4%
1.1%
–
0.2%
8.9%
1.9%
34.6%
5.9%
13.1%
–
0.4%
100%
4,863
3,465
134
201
335
2,270
445
9,058
874
2,663
255
239
24,802
19.6%
14.0%
0.5%
0.8%
1.3%
9.2%
1.8%
36.5%
3.5%
10.7%
1.1%
1.0%
100%
At the balance sheet date, approximately 59.8% (2011: 61.8%) of the Group’s trade receivables were due from 15
(2011: 18) major customers.
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment
record with the Group. Cash and short term deposits are placed with reputable banks.
Included in trade receivables as at 30 June 2012, S$2,506,000 (2011: S$1,869,000) are arranged to be settled via
letters of credit issued by reputable banks in countries where the customers are based.
Financial assets that are past due but not impaired
As at 30 June 2012, the ageing analysis of trade receivables is as follows:
Less than 30 days
30 to 60 days
61 to 90 days
91 to 120 days
More than 120 days
Financial assets that are impaired
Please refer to note 13 for details.
Consolidated
2012
S$’000
4,192
1,752
1,326
1,162
3,756
12,188
2011
S$’000
6,010
2,108
504
1,191
3,313
13,126
75
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(e)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of
funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets
and liabilities.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-
by credit facilities.
The following table summarises the maturity profile of the Group’s financial assets and liabilities at the balance sheet
date based on contractual undiscounted payments. The expected timing of actual cash flows from these financial
instruments may differ.
6 months
or less
S$’000
7 to 12
months
S$’000
After 1 year
but not more
than 5 years
S$’000
5 to 10
years
S$’000
25,776
545
–
24,446
50,767
12,409
7,589
8,373
28,371
–
139
–
–
139
–
986
2,397
3,383
–
–
1
–
1
–
134
6,754
6,888
–
–
–
–
–
–
183
29
212
Total
S$’000
25,776
684
1
24,446
50,907
12,409
8,892
17,553
38,854
Consolidated
2012
Financial assets:
Trade receivables
Other receivables
Investment securities
Cash and bank balances
Total undiscounted financial assets
Financial liabilities:
Trade payables
Other payables
Loans and borrowings
Total undiscounted financial liabilities
Total net undiscounted financial
assets/(liabilities)
22,396
(3,244)
(6,887)
(212)
12,053
Consolidated
2011
Financial assets:
Trade receivables
Other receivables
Investment securities
Cash and bank balances
Total undiscounted financial assets
Financial liabilities:
Trade payables
Other payables
Loans and borrowings
Total undiscounted financial liabilities
Total net undiscounted financial
24,967
194
–
23,675
48,836
10,287
9,382
9,177
28,846
165
110
–
–
275
–
1,008
2,560
3,568
27
7
1
–
35
–
175
10,975
11,150
–
–
–
–
–
–
148
324
472
25,159
311
1
23,675
49,146
10,287
10,713
23,036
44,036
assets/(liabilities)
19,990
(3,293)
(11,115)
(472)
5,110
76
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(f)
Derivative financial instruments
(i)
Fair value of financial instruments that are carried at fair value
Quoted prices
in active
markets for
identical
instruments
(Level 1)
S$’000
Significant
other
observable
inputs
(Level 2)
S$’000
Significant
unobservable
inputs
(Level 3)
S$’000
Total
S$’000
1
–
1
–
–
1
1
–
–
–
–
–
497
497
–
–
110
110
–
300
300
–
–
–
–
–
–
1
300
301
497
497
1
1
110
110
Consolidated
2012
Financial assets:
Available-for-sale
Derivatives (unquoted)
At 30 June 2012
Financial liabilities:
Derivatives – foreign currency options
At 30 June 2012
2011
Financial assets:
Available-for-sale
At 30 June 2011
Financial liabilities:
Derivatives – foreign currency options
At 30 June 2011
Fair value hierarchy
The Group classify fair value measurement using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy have the following levels:
•
•
•
Level 1– Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
Quoted market price represents the fair value determined based on quoted prices on active markets as at
the reporting date without any deduction for transaction costs. The fair value of the listed equity investments
are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as
present value techniques, comparison to similar instruments for which market observable prices exist and
other relevant models used by market participants. These valuation techniques use both observable and
unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that
are not significant to the overall valuation include foreign exchange contracts not on a recognised exchange.
There were no transfers between level 1 and level 2 during the financial years 2012 and 2011.
77
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(f)
Derivative financial instruments (cont’d)
(i)
Fair value of financial instruments that are carried at fair value (cont’d)
Reconciliation of Level 3 fair value movements
Opening balance
Total gains or losses
in other comprehensive income
in profit or loss
Transfer from other categories
Ending balance
Consolidated
2012
S$’000
2011
S$’000
–
–
300
–
300
–
–
–
–
–
The Group uses the discounted cashflow method in determining the fair value of unquoted derivative.
(ii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts
are reasonable approximation of fair value
Management has determined that the carrying amounts of cash and short-term deposits, current trade and
other receivables, current trade and other payables, current interest-bearing liabilities reasonably approximate
their fair values because they are mostly short-term in nature and repriced frequently.
(iii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts
are not reasonable approximation of fair value
The fair values of non-current finance lease liability and bank loans, which are not carried at fair value in the
balance sheet, is presented in the following table. The fair value is estimated using discounted cash flow
analysis, based on current incremental lending rates for similar types of lending and borrowing arrangements.
Carrying amount
2011
2012
S$’000
S$’000
Fair value
2012
S$’000
2011
S$’000
Financial liabilities:
Obligations under finance leases
Bank loans (non-current)
1,660
4,875
2,535
8,103
1,581
4,456
2,343
7,278
22. Capital Management
The Group’s primary objective when managing capital is to ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholders’ value. Management also aims to maintain a capital
structure that ensures the lowest cost of capital available to the entity.
Management is constantly adjusting the capital structure to take advantage of favourable costs of capital or higher returns
on assets. As the market is constantly changing and after taking into account the Group’s expansion requirements,
management may adjust the dividend payments to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debts.
78
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 22.
Capital Management (cont’d)
Management monitors capital through the gearing ratio (net debt / total capital). The Group defines net debts as interest-
bearing liabilities less cash and cash equivalents. Capital includes equity attributable to the equity holders of the Company
and reserves. The Group’s policy is to keep its gearing ratio at less than 50%.
The gearing ratios as at 30 June 2012 and 30 June 2011 were 0% as cash and cash equivalents exceeded interest-
bearing liabilities.
23.
Related party disclosures
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence
over the other party in making financial and operating decisions.
In addition to the related party information disclosed elsewhere in the financial statements, the following are transactions
with related parties at mutually agreed terms and amounts:
(a)
Sale and purchase of goods and services
Minority shareholder of a subsidiary company
- Sales
- Purchases
Associates
- Sales
- Interest income
- Rental income
- Service rendered
Other related parties
- Sales
- Purchases
- Commission paid
Consolidated
2012
S$’000
284
46
137
32
33
18
12
22
28
2011
S$’000
324
1,740
82
34
–
–
–
–
–
(b)
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made at arm’s length basis at normal market prices and on normal
commercial terms.
As at 30 June 2012, advances amounting to S$453,000 (2011: S$nil) given to Curiox Biosystems Pte Ltd bears
interest at 5.0% per annum. This advance will be applied against payment for the Right Shares due in September
2012.
As at 30 June 2011, advances amounting to S$1,500,000 were given to Biobot Surgical Pte Ltd at an interest
rate of 5% per annum. These loans which were given in advance against investment tranche dates have been fully
capitalised in the current financial year.
Outstanding balances as at year-end with other related parties are unsecured, interest-free and have no fixed terms
of repayment. For information regarding outstanding balance on related party receivables and payables at year-end,
please refer to notes 13 and 16.
(c)
Directors and key management personnel
Disclosures are set out in note 24.
79
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 24.
Key management personnel
(a)
Details of key management personnel
(i)
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
(ii)
Executives
(Chairman and Managing Director)
(Executive Director)
(Alternate Director to K H Sim)
(Independent)
(Independent)
(Independent)
(Independent)
G H Teoh
J Koon Sim
J L Sim
H S Tang
(Managing Director of Foundation Associates Engineering Pte Ltd)
(President of Sys-Mac Automation Engineering Pte Ltd)
(Joint Managing Director of Zicom Pte Ltd)
(Joint Managing Director of Zicom Pte Ltd)
(b)
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payment
Total compensation
(c)
Shareholdings of key management personnel
30 June 2012
Consolidated
2012
S$
2011
S$
2,898,179
54,129
332,468
3,284,776
4,142,408
62,889
98,587
4,303,884
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
G H Teoh
J Koon Sim
J L Sim
H S Tang
Balance as at
1 July 2011
Granted as
remuneration
Options
exercised
Net change
other
Balance as at
30 June 2012
73,785,212
1,062,846
800,717
438,000
258,750
542,250
–
50,000
20,091,937
6,407,767
2,636,464
106,073,943
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,300,000
–
–
–
167,594
–
–
76,085,212
1,062,846
800,717
438,000
426,344
542,250
–
–
–
–
(165,765)
2,301,829
50,000
20,091,937
6,407,767
2,470,699
108,375,772
80
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 24.
Key management personnel (cont’d)
(c)
Shareholdings of key management personnel (cont’d)
30 June 2011
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
G H Teoh
J Koon Sim
J L Sim
H S Tang
Balance as at
1 July 2010
Granted as
remuneration
Options
exercised
Net change
other
Balance as at
30 June 2011
72,210,947
733,000
800,717
413,000
233,750
517,250
–
5,578,469
22,031,771
5,691,149
2,575,772
110,785,825
1,574,265
329,846
–
–
–
–
–
–
–
716,618
449,927
3,070,656
–
–
–
25,000
25,000
25,000
–
–
–
–
–
–
–
–
73,785,212
1,062,846
800,717
438,000
258,750
542,250
–
100,000
–
–
–
175,000
(5,628,469)
(1,939,834)
–
(389,235)
(7,957,538)
50,000
20,091,937
6,407,767
2,636,464
106,073,943
(d)
Option holdings of key management personnel
30 June 2012
Balance at
1 July 2011 Granted
Options
exercised Forfeited
Balance at
30 June 2012
Value of
options
granted Exercisable
Not
Exercisable
Directors
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
G H Teoh
J Koon Sim
J L Sim
H S Tang
300,000
300,000
75,000
75,000
75,000
30,000
200,000
–
400,000
300,000
1,755,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300,000
300,000
75,000
75,000
75,000
30,000
200,000
–
400,000
300,000
1,755,000
–
–
–
–
–
–
–
–
–
–
–
200,000
200,000
50,000
50,000
50,000
15,000
100,000
–
300,000
200,000
1,165,000
100,000
100,000
25,000
25,000
25,000
15,000
100,000
–
100,000
100,000
590,000
81
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 24.
Key management personnel (cont’d)
(d)
Option holdings of key management personnel (cont’d)
30 June 2011
Balance at
1 July 2010 Granted
Options
exercised Forfeited
Balance at
30 June 2011
Value of
options
granted Exercisable
Not
Exercisable
Directors
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
G H Teoh
J Koon Sim
J L Sim
H S Tang
100,000
100,000
50,000
50,000
50,000
–
200,000
200,000
50,000
50,000
50,000
30,000
–
–
(25,000)
(25,000)
(25,000)
–
200,000 (100,000)
100,000
–
–
–
–
200,000
200,000
100,000
–
200,000
750,000 1,180,000 (175,000)
–
–
–
–
–
–
–
–
–
–
–
300,000
300,000
75,000
75,000
75,000
30,000
29,394
29,394
7,349
7,349
7,349
4,409
50,000
50,000
–
–
–
–
250,000
250,000
75,000
75,000
75,000
30,000
200,000
–
400,000
300,000
1,755,000
26,123
–
26,123
26,123
163,613
–
–
200,000
100,000
400,000
200,000
–
200,000
200,000
1,355,000
The above options were granted under the Zicom Employee Share and Option Plan which was approved by
shareholders on 23 November 2006. Please refer to note 25 for more information.
(e)
There were no loans made to key management personnel by the Group during the year.
25.
Share-based payment plans
(a)
Recognised share-based payment expenses
The expense recognised for employee services received during the year for equity-settled share-based payment
transactions amounted to S$238,000 (2011: S$446,000). There have been no cancellations or modifications to the
plan during the years 2012 and 2011.
(b)
Description of the share-based payment plan.
Zicom Employee Share and Option Plan (“ZESOP”)
Share options are granted to employees as an incentive to retain experience and attract talent. Under the ZESOP,
the exercise price of the options approximates the market price of the shares on the grant dates. Employees must
remain in service for a period of 1 to 3 years.
Should an employee leave the company or resign from his office, any options not exercised prior to that date will be
lost except for exceptional circumstances such as death, physical or mental incapacity.
The contractual life of each option granted is 5 years. There are no cash-settlement alternatives.
82
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 25.
Share-based payment plans (cont’d)
(c)
Outstanding number of options granted under ZESOP
Outstanding at beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at end of year
2012
(Thousands)
2011
(Thousands)
No. of options
6,888
–
(220)
(293)
6,375
3,265
5,000
(215)
(1,162)
6,888
The outstanding balance as at 30 June 2012 is represented by:
No. of options (Thousands)
2012
2011
Exercise price
(Australian Cents)
Exercisable on or after
Expiry Date
495
828
100
175
163
162
1,790
2,082
290
290
6,375
515
848
100
175
188
187
2,148
2,147
290
290
6,888
28
28
28
28
28
28
18
18
18
18
(d) Weighted average fair value
1/6/2010
1/6/2011
28/8/2010
28/8/2011
1/5/2012
1/5/2013
1/10/2011
1/10/2012
15/11/2011
15/11/2012
31/5/2013
31/5/2013
27/8/2013
27/8/2013
30/4/2015
30/4/2015
30/9/2015
30/9/2015
14/11/2015
14/11/2015
No share options were granted during the year. The weighted average fair value of options granted in financial year
2011 was A$0.10.
(e)
The weighted average share price during the period of exercise is A$0.26 (2011: A$0.49).
(f)
Option pricing model
The fair value of the equity-settled share options granted under the ZESOP is estimated as at the date of grant using
a Trinomial model taking into account the terms and conditions upon which the options were granted. The following
table lists the inputs to the model used for the last financial year. No share options were granted in the current
financial year:
Inputs
Exercise price (A$):
Stock price at grant date (A$):
Maximum option life in years:
Volatility:
Risk free interest rate
2011
0.18
0.21
5
78.18%
4.63%
The effects of early exercise have been incorporated into the calculations by defining the conditions under which
employees are expected to exercise their options after vesting in terms of the stock price reaching a specified
multiple of the exercise price, which is not necessary indicative of exercise patterns that may occur in the future.
83
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 26.
Business combinations
(a)
Acquisition of Biobot Surgical Pte Ltd
On 2 April 2012, the Group’s wholly-owned subsidiary, Zicom Holdings Pte Ltd (“ZHPL”) acquired control in its
46.67% owned associate, Biobot Surgical Pte Ltd (“BBS”). This acquisition was not material to the Zicom Group
Limited’s results or Balance Sheet as at 30 June 2012.
The fair values of the identifiable assets and liabilities of BBS as at the acquisition date were:
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Purchase consideration
Purchase consideration transferred:
Cash paid for subscription of redeemable loan stocks attached with warrants
Fair value of equity interest in BBS held by the Group immediately before acquisition
Purchase consideration
Effect of the acquisition on cash flows
Total cash consideration for equity interest acquired
Less: cash and cash equivalents of subsidiary acquired
Net cash inflow on acquisition
S$’000
991
(578)
1,316
1,729
447
1,282
1,729
447
(604)
157
Loss on remeasuring previously held interest in BBS to fair value at acquisition date
The Group recognised a loss of S$874,000 as a result of remeasuring at fair value its 46.67% equity interest held in
BBS before 2 April 2012. The loss is included in other operating expenses in the Group’s profit or loss for the year
ended 30 June 2012.
(b)
Acquisition of non-controlling interests in subsidiaries
(i)
Biobot Surgical Pte Ltd (“BBS”)
On 26 June 2012, as part of a legal settlement, ZHPL acquired an additional of 33.33% equity interest
in BBS from its non-controlling interest satisfied by a cash consideration of S$338,000 and a transfer of
2,000,000 Profit Guarantee Shares from the founder-shareholder to ZHPL at a value of S$500,000. As a
result of this acquisition, BBS became a 80% owned subsidiary of ZHPL. The carrying value of the additional
interest acquired was S$284,000. The difference between the cost of acquisition and the carrying value of
additional interest acquired amounting to S$554,000 has been recognised as premium paid on acquisition of
non-controlling interest within equity.
(ii)
MTA-Sysmac Automation Pte Ltd
On 13 January 2012, our precision engineering subsidiary, Sys-Mac Automation Engineering Pte Ltd
acquired an additional 10% equity interest in MTA-Sysmac Automation Pte Ltd (“MTA-Sysmac”) for a cash
consideration of S$47,000. As a result of this acquisition, MTA-Sysmac became a 61% owned subsidiary of
the Group. The carrying value of the additional interest acquired was S$86,000. The discount of S$39,000
between the carrying value of additional interest acquired and the consideration paid has been recognised
within equity.
84
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 26.
Business combinations (cont’d)
(c)
Disposal of PT. Putra Dharma Harmoteknik (“PDH”)
On 31 March 2012, the Group disposed its entire 60% interest in PDH to its original owner who owns the remaining
40% for a nominal amount of S$1 as efforts to integrate engineering resources in Indonesia with those in Singapore
proved futile. The value of assets and liabilities at the date of disposal and cash flow effect of the disposal were:
Carrying value of the net assets disposed
Loss on disposal of equity interest
Cash consideration
Cash and cash equivalent disposed
Net outflow on disposal of subsidiary
27. Commitments
(a)
Commitments
S$’000
87
87
–
77
(77)
As at year-end, the Group has the following commitments:
(i)
(ii)
Issued letters of credit amounting to S$196,000 (2011: S$3,196,000).
Issued letters of guarantee amounting to S$7,133,000 (2011: S$5,479,000).
(iii)
The Group has entered into foreign exchange derivatives amounting to S$24,967,000 (2011: S$5,531,000).
(iv)
(v)
The Group has subscribed for 2,707,397 redeemable loan stocks attached with warrants in Biobot Surgical
Pte Ltd. Consideration for the remaining tranche amounting to S$365,000 is due in September 2012.
The Group has subscribed for 171,586 Rights Shares in Curiox Biosystems Pte Ltd, consideration for the
second tranche amounting to S$453,000 will be due in September 2012.
(b)
Operating lease commitments
The Group has entered into commercial leases for the use of leasehold properties and office equipment as lessee.
These leases have an average of 3 to 30 years with a further option for certain leasehold properties to extend for a
further 15 years. There are no restrictions placed upon the Group by entering into these leases.
Future minimum lease payments for the leases are as follows:
Within 1 year
Within 2 - 5 years
More than 5 years
Consolidated
2012
S$’000
2,406
5,064
5,212
12,682
2011
S$’000
1,981
5,626
1,423
9,030
85
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 27. Commitments (cont’d)
(b)
Operating lease commitments (cont’d)
The amount of operating lease payments recognised as an expense in the year ended 30 June 2012 is
S$2,448,000 (2011: S$1,811,000).
(c)
Finance lease commitments
The Group conducts a portion of its business using leased assets. The average discount rate implicit in the leases is
2.9% (2011: 3.4%) per annum.
Future minimum lease payment under finance leases together with present value of the net minimum lease
payments are as follows:
Consolidated
Minimum
payments
2012
S$’000
Present
value of
payments
2012
S$’000
Minimum
payments
2011
S$’000
Present
value of
payments
2011
S$’000
Due within one year
After one year but not more than five years
Total minimum lease payments
Less: amounts representing finance charges
1,460
1,762
3,222
(184)
3,038
1,378
1,660
3,038
–
3,038
1,585
2,732
4,317
(306)
4,011
1,476
2,535
4,011
–
4,011
(d)
Capital commitments
The Group has no capital commitment as at 30 June 2012 and 30 June 2011.
28.
Auditors’ remuneration
During the year, the following fees were paid/ payable for services provided by auditors:
Amounts received or due and receivable by Ernst & Young (Australia)
- Audit or review of financial statements
Amounts received or due and receivable by Ernst & Young (Singapore)
- Audit or review of financial statements
- Taxation services
Amounts received or due and receivable by other audit firms
- Audit or review of financial statements
- Taxation services
Consolidated
2012
S$
2011
S$
155,720
181,397
198,938
–
250,000
24,500
26,157
12,746
393,561
26,351
11,579
493,827
86
Zicom Group LimitedNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only 29.
Parent entity disclosures
(a)
The individual financial statements of the parent entity shows the following aggregate amounts:
Balance sheet of the parent entity at year end
Non-current assets
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Total equity of the parent entity comprising of:
Share capital
Share capital-exercise of share options
Capital reserve
Foreign currency translation reserve
Share based payments reserve
Accumulated losses
Results of parent entity
Profit for the year
Other comprehensive income
Total comprehensive income
(b)
Guarantees
2012
S$’000
49,281
1,841
51,122
118
118
2011
S$’000
49,293
1,963
51,256
589
589
51,004
50,667
70,937
153
689
(89)
736
(21,422)
51,004
2,834
–
2,834
70,872
119
689
–
537
(21,550)
50,667
2,513
–
2,513
(i)
(ii)
The parent entity has issued letters of guarantee amounting to S$9,152,000 (2011: S$9,321,000) to secure
trade facilities and factory loans to controlled entities.
The parent entity has entered into a Deed of Cross Guarantee and the subsidiary subject to the deed is
disclosed in note 10.
(c)
Contingent liabilities
The parent entity has no contingent liabilities and commitments as at 30 June 2012 and 30 June 2011.
30.
Subsequent events
Increased investment in Orion Systems Integration Pte Ltd (“Orion”)
On 3 July 2012, Zicom Holdings Pte Ltd acquired an additional 29.74% equity interest in Orion from its non-controlling
interest for a cash consideration of S$595,000 thereby increasing the Group’s interest in Orion to 84%.
87
2012 ANNUAL REPORTNotes to the Consolidated Financial Statements(In Singapore dollars)For personal use only Directors’ Declaration
In accordance with a resolution of the directors of Zicom Group Limited, I state that:
In the opinion of the directors:
(a)
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s balance sheet as at 30 June 2012 and of its performance for
the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2.2.
(c)
(d)
(e)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
this declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.
as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified
in Note 10 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed
of Cross Guarantee.
On behalf of the Board
G L Sim
Chairman/Managing Director
Brisbane
28 September 2012
88
Zicom Group LimitedFor personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Report on the financial report
We have audited the accompanying financial report of Zicom Group Limited, which comprises the consolidated balance sheet
as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company
and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are
necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In
Note 2.2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s
preparation and fair presentation of the financial report 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 controls. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the
directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.
89
2012 ANNUAL REPORTFor personal use only Independent Auditor’s Report
to the members of Zicom Group Limited
Opinion
In our opinion:
a.
the financial report of Zicom Group Limited is in accordance with the Corporations Act 2001, including:
i
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for
the year ended on that date; and
ii
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.2.
Report on the remuneration report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2012. The directors of the
company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Company for the year ended 30 June 2012, complies with section 300A of the
Corporations Act 2001.
Ernst & Young
Ric Roach
Partner
Brisbane
28 September 2012
90
Zicom Group LimitedFor personal use only
Information on Shareholdings
As at 28 September 2012
Distribution of Equity Securities
a)
Analysis of numbers of equity security holders by size of holding:-
1
1,001
5,001
10,001
100,001
–
–
–
–
1,000
5,000
10,000
100,000
and over
b)
There were 488 holders of less than a marketable parcel of ordinary shares.
Twenty Largest Equity Security Holders
The names of the twenty largest equity security holders are listed below:
Ordinary Shares
Number of Holders
103,137
1,659,709
4,106,713
32,508,469
174,073,559
212,451,587
255
567
470
930
171
2,393
Name
SNS HOLDINGS PTE LTD
SIM JUAT KOON
GIOK LAK SIM
VENTRADE (ASIA) PTE LTD
SIM JUAT LIM
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
GOH EE GEK
TANG HUNG SEAH
NG SIONG TECK
MANDEL PTY LTD
FIRST CHARNOCK SUPERANNUATION PTY LTD
SIM JUAT KHIANG
DEBUSCEY PTY LTD
CLAPSY PTY LTD
ANTHONY SARACENI & CARMEL SARACENI
KOK HWEE SIM
CONRAN JAMES SMITH
ALAN BLACKBURN & ASSOCIATES PTY LTD
JOHN BOON HENG CHEAK
Substantial Shareholders
Number of
Ordinary Shares Held
Percentage of
Issued Shares
66,047,330
17,300,920
10,037,882
8,478,344
6,207,767
4,106,998
3,647,049
2,791,017
2,460,199
2,410,665
2,200,000
1,890,000
1,650,000
1,280,615
1,139,770
1,015,000
1,012,846
900,636
871,384
870,000
31.09%
8.14%
4.72%
3.99%
2.92%
1.93%
1.72%
1.31%
1.16%
1.13%
1.04%
0.89%
0.78%
0.60%
0.54%
0.48%
0.48%
0.42%
0.41%
0.41%
Substantial shareholders in the company (holding not less than 5% of the issued capital), as disclosed in substantial shareholder
notices given to the company, are set out below:
Name
Mr G L Sim & his associates
Sim Juat Koon & his associates
Voting Rights
Number of
Ordinary Shares Held
Percentage of
Issued Shares
76,085,212
20,091,937
35.81%
9.45%
On a show of hands, every member present in person or by proxy shall have one vote and, upon a poll, each share shall have one vote.
91
2012 ANNUAL REPORTFor personal use only
Highlights
SEGMENTAL REvENUE (S$’million)
146.4
134.2
129.0
125.5
107.7
44.0
77.7
65.8
12.7
3.0
46.1
7.7
2.7
46.8
42.5
14.7
3.7
58.3
34.3
54.7
30.5
2.9
57.2
34.7
2.8
FY08
FY09
FY10
FY11
FY12
Offshore Marine, Oil and Gas Machinery
Construction Equipment
Precision Engineering and Automation
Industrial and Mobile Hydraulics
SEGMENTAL RESULTS (S$’million)
21.2
20.4
16.1
14.7
11.7
12.0
6.6
0.9
0.9
15.5
0.2
0.9
(0.5)
FY08
12.0
1.9
6.8
6.4
1.7
0.7
2.7
0.7
9.6
3.5
0.6
1.0
FY09
FY10
FY11
FY12
Offshore Marine, Oil and Gas Machinery
Construction Equipment
Precision Engineering and Automation
Industrial and Mobile Hydraulics
Contents
01 Chairman’s Message
02 Directors and Company Secretaries
05 Corporate Chart
06 Key Management
07 Directors’ Report
19 Auditor’s Independence Declaration
20 Corporate Governance Statement
26 Consolidated Statement of Comprehensive Income
27 Consolidated Balance Sheet
Riding
the Waves
......Of Change
Managing
Competencies
In A Turbulent World
Staying at the
Leading Edge of
Change
Engaging Technologies
Of The New Age
Corporate Directory
BOARD OF DIRECTORS
Giok Lak Sim
(Chairman and Managing Director)
Kok Hwee Sim
(Executive Director)
Yian Poh Lim
Frank Leong Yee Yew
Ian Robert Millard
Shaw Pao Sze
Kok Yew Sim
(Alternate Director to Kok Hwee Sim)
JOINT COMPANY SECRETARIES
Jenny Lim Bee Chun
Surendra Kumar
REGISTERED OFFICE
38 Goodman Place
Murarrie QLD 4172
Australia
Telephone : +61 7 3908 6088
Facsimile
: +61 7 3390 6898
Website
: www.zicomgroup.com
SHARE REGISTRY
Link Market Services Limited
Level 15
324 Queen Street
Brisbane, QLD 4000
Australia
Facsimile
: +61 2 9287 0309
AUDITORS
Ernst & Young
111 Eagle Street
Brisbane QLD 4000
Australia
SOLICITORS
ThomsonsLawyers
Level 16, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Australia
BANKERS
Australia
Westpac Banking Corporation
Singapore
United Overseas Bank Limited
Malayan Banking Berhad
Oversea-Chinese Banking Corporation Limited
DBS Bank Limited
Westpac Banking Corporation
Australia & New Zealand Banking Group Limited
Thailand
United Overseas Bank (Thai) Public Company Limited
Siam Commercial Bank
China
Industrial and Commercial Bank of China
China Merchants Bank
Notice of General Meeting
The General Meeting of Zicom Group Limited will be held at the
28 Consolidated Statement of Changes in Equity
29 Consolidated Statement of Cash Flows
31 Notes to the Consolidated Financial Statements
88 Directors’ Declaration
89
91
Independent Auditor’s Report
Information on Shareholdings
Inside back cover
Inside back cover
Corporate Directory
Notice of General Meeting
Colmslie Hotel
Corner of Wynnum and Junction Roads
Morningside 4170
Brisbane, Queensland, Australia
Time: 10.00am (Brisbane time)
Date: Tuesday, 13 November 2012
A formal Notice of Meeting is enclosed.
For personal use only
Zicom Group Limited
ABN 62 009 816 871 • ASX Code : ZGL
ANNUAL REPORT 2012
RIDING THE WAVES......Of Change
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Zicom Group Limited
www.zicomgroup.com
38 Goodman Place, Murarrie QLD 4172 Australia • Telephone: +61 7 3908 6088 • Facsimile: +61 7 3390 6898
The winds and the waves are always on
the side of the ablest navigators.
~ Edward Gibbon ~ English Historian (1737-1794)
For personal use only