Zicom Group Limited
ABN 62 009 816 871 • ASX Code : ZGL
A N N U A L R E P O R T 2 0 1 5
The Everest
Whatever you can do or dream you can,
Begin it.
Boldness has genius, power and magic in it.
- Johann Wolfgang von Goethe
(1749 - 1832)
For personal use only Growth Through
Innovations
Medtech Technology
Accelerator & Incubation
Surgical Robot For
Prostate Biopsy
Medtech Translation
& Prototyping
Liver Fibrosis Imaging/
Staging Technology
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Unique Drug
Development Technology
Turnkey Gas Processing
Plants
Electric Powered Deep Seas
Deck Machinery
P R O G R E S S I V E I N N O V A T I O N S
Proprietary Soil Foundation
Solutions
Flip Chip Thermal
Bonding Technology
Integrated Articulate Trailer
Mounted Concrete Mixers
High End Industrial
Automation
Contents
01 Chairman’s Message
02 Board of Directors
04 Company Secretaries
05 Corporate Chart
06 Key Management
07 Directors’ Report
24 Auditor’s Independence Declaration
25 Corporate Governance Statement
33 Consolidated Statement of Comprehensive Income
34 Consolidated Balance Sheet
35 Consolidated Statement of Changes in Equity
36 Consolidated Statement of Cash Flows
38 Notes to the Consolidated Financial Statements
99 Directors’ Declaration
100 Independent Auditor’s Report
102 Information on Shareholdings
Inside back cover
Inside back cover
Corporate Directory
Notice of Annual General Meeting
For personal use only
Chairman’s Message
Johann Wolfgang von Goethe …
(1749 - 1832)
“Whatever you can do or dream you can, Begin it.
Boldness has genius, power and magic in it”
GROWTH THROUGH INNOVATIONS
Dear Shareholders,
Global competition and economic uncertainties have made
growth more challenging than ever. Innovation has been the
key plank enabling successful global growth companies to
defy the laws of economic gravity.
INNOVATE TO GROW
To achieve long term sustainable growth, your Group
decided a few years back to embrace innovation in both
forms: progressive and disruptive innovations. Progressive
innovations strengthen the Group’s core capabilities
enabling its businesses to scale up the value chain and to
stay ahead of the curve. Disruptive technologies as those in
the medtech and semi-conductor related technologies that
we have invested in, possess the capability to disrupt the
existing market to create new market and value.
MANAGING RISKS OF INNOVATIONS
Innovations in whatever form necessitate gestation periods
and carry risks. As part of the Group’s prudential financial
policy such risks have been ring-fenced within the capability
of the Group’s internal resources without incurring external
borrowings.
The Group’s results in the last 2-3 years have invariably
reflected some of the gestation costs and risks undertaken.
Such costs, however, have not impaired the Group’s financial
position.
BENEFITS & POTENTIALS OF INNOVATIONS
Progressive innovations have enabled the Group’s businesses
to strengthen their capabilities and remain relevant and
competitive. These have come as increased costs. Your
Board is, however, confident that the Group’s strengthened
capabilities will deliver good returns in the future.
The Group’s technology investments are generally entering
into commercialisation stage. As they progress, gestation
costs will ebb and revenue is expected to be generated. At
the appropriate time, the Group will look for opportunities
to re-rate and unlock their value.
The on-going structural transition has evolved a culture
of innovation within the Group positioning it to remain
relevant in the highly competitive globalised economy.
APPRECIATION
Your Board is thankful to the Group’s management and
employees for their strong dedication and commitment to
support the Group’s structural transition and is confident
that such support will crystallise into promising rewards in
the near future.
I also wish to thank the Board for their boldness in supporting
the Group and contributing in this arduous journey. I thank
all our shareholders for their support. The Group’s direction
is in alignment with shareholders’ interest as it creates
opportunities to enhance their value going forward.
G L Sim
Chairman
1
ANNUAL REPORT 2015For personal use only Board of Directors
Executive Directors
GIOK LAK SIM, FCPA
Chairman and Group Managing Director,
Age 69
KOK HWEE SIM, BSc, MSc
Executive Director, Age 37
KOK YEW SIM, BSc
Executive Director, Age 35
Experience and Expertise
Experience and expertise
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, financial and
industrial management as well as
international trade.
Chairman of Grant Appeal Advisory
Panel, SPRING Singapore
Member of Growth Oriented Enterprise
Advisory Panel, SPRING Singapore
Member of Strategic Advisory Panel,
Diagnostic Development Hub at A*Star
Member of Incubation Advisory Board,
Singapore National Eye Centre
Singapore Ernst & Young Entrepreneur
of the Year (Industrial Products), 2008
Mr Kok Hwee Sim was appointed to
the Board 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.
On 1 January 2015, Mr Sim stepped
down as Managing Director of iPtec Pte
Ltd and was subsequently appointed as
the Managing Director of Biobot Surgical
Pte Ltd. He is also the Managing Director
of Zicom MedTacc Private Limited,
the medtech technology accelerator
investment company. Mr Sim graduated
with a Bachelor’s degree in Industrial
Engineering and Operations Research
from the University of Michigan with
Honours (Magna Cum Laude) and a
Master’s 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.
First appointed to the Board as Alternate
Director to Mr Kok Hwee Sim on 5 July
2010 and made an Executive Director
on 25 September 2014. Mr Sim is a
Director and Chief Executive Officer of
Sys-Mac Automation Engineering Pte
Ltd (Sys-Mac) and is responsible for
Sys-Mac’s growth strategies, overall
administration and management of
its business and operations. He has
assumed the role of Deputy Chairman
of iPtec Pte Ltd, the medtech translation
subsidiary, since 1 January 2015. Mr
Sim is also a Director of Zicom MedTacc
Private Limited, the medtech technology
accelerator investment company. He
will be instrumental in building the
Group’s capabilities to support medical
technologies. Mr Sim graduated with
a Bachelor’s 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
Other current directorships and former
directorships in last 3 years
Other current directorships and former
directorships in last 3 years
Board Member of SPRING Singapore
(appointed on 1 April 2014)
None
None
Special responsibilities
Special responsibilities
Special responsibilities
Member of Nomination and
Remuneration Committee
Executive Chairman of all subsidiaries
Chairman of Curiox Biosystems Pte Ltd
Chairman of HistoIndex Pte Ltd
Executive Director of Zicom Holdings
Private Limited and Director of its
subsidiaries
Director and Deputy CEO of Curiox
Biosystems Pte Ltd
Managing Director of Biobot Surgical
Pte Ltd
Managing Director of Zicom MedTacc
Private Limited
Director of HistoIndex Pte Ltd
Executive Director in Zicom Holdings
Private Limited
Director of Sys-Mac Automation
Engineering Pte Ltd and its subsidiaries
Director of Biobot Surgical Pte Ltd
Director of Zicom MedTacc Private Limited
Deputy Chairman of iPtec Pte Ltd
Director of Curiox Biosystems Pte Ltd
Relevant interests in shares and options
as at date of signing the Directors’ Report
Relevant interests in shares and options
as at date of signing the Directors’ Report
Relevant interests in shares and options as
at date of signing the Directors’ Report
81,794,110 ordinary shares
1,258,180 ordinary shares and 280,000
options
1,070,253 ordinary shares and 280,000
options
2
Zicom Group LimitedFor personal use only
Independent Directors
YIAN POH LIM, BSc, MSc
Independent Director, Age 69
FRANK LEONG YEE YEW,
MBA, FCA (ENGLAND &
WALES), FCA (SINGAPORE)
Independent Director, Age 72
IAN ROBERT MILLARD, FCA,
FAICD
Independent Director, Age 76
SHAW PAO SZE
Independent Director, Age 71
Experience and expertise
Experience and expertise
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 finance
industry. In 1993, he set
up Yian Poh Associates, a
financial consultancy and
investment firm. He has been
an Honorary Commercial
Advisor to The Administrative
Committee of Jiaxing
Economic Development Zone,
China since 2000. He is also
a member of the advisory
panel of the Singapore Food
Manufacturers’ Association.
Appointed to the Board
on 24 July 2006. Extensive
experience in auditing,
financial management
and corporate secretarial
work, having practised as
a partner in an audit firm
and worked as a company
secretary, finance manager
and financial controller
in a leading property
development company and
involved in acquisitions and
major developments.
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
firms in Queensland and
a Fellow of the Australian
Institute of Company
Directors.
Other current directorships
and former directorships in
last 3 years
Other current directorships
and former directorships in
last 3 years
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)
Independent Director of TTJ
Holdings Limited (appointed
11 January 2010)
None
Experience and expertise
Appointed to the Board on
19 February 2010. Mr Shaw
Pao Sze holds a Master
Foreign-Going Certificate
of Competency and has
extensive experiences in
maritime industry from
managing liner and ship
chartering services, 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)
Special responsibilities
Special responsibilities
Special responsibilities
Special responsibilities
Chairman of Nomination and
Remuneration Committee
Member of Audit Committee
Non-executive Director
of Zicom Holdings Private
Limited
Member of Nomination and
Remuneration Committee
Member of Audit Committee
Non-executive Director
of Zicom Holdings Private
Limited
Chairman of Audit
Committee
None
Relevant interests in shares
and options as at date of
signing the Directors’ Report
Relevant interests in shares
and options as at date of
signing the Directors’ Report
Relevant interests in shares
and options as at date of
signing the Directors’ Report
Relevant interests in shares
and options as at date of
signing the Directors’ Report
488,000 ordinary shares
624,364 ordinary shares
592,250 ordinary shares
30,000 options
3
ANNUAL REPORT 2015For personal use only
Company Secretaries
LIM BEE CHUN, JENNY, FCCA
Joint Company Secretary, Age 42
SURENDRA KUMAR, CPA
Joint Company Secretary, Age 55
Experience and expertise
Experience and expertise
Ms Jenny Lim has been the Group’s
Financial Controller since 2005. She is a
Fellow of the Association of Chartered
Certified Accountants from the United
Kingdom since 1998. Ms Lim has over 10
years of audit and tax experience in an
international public accounting firm prior
to joining the Group.
Mr Kumar is the Finance Manager of Cesco
Australia Limited and holds a Bachelor’s
degree in Commerce from Auckland
University and is a Certified 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
Other current directorships and former
directorships in last 3 years
None
None
Special responsibilities
Special responsibilities
Director of Zicom Private Limited
Director of Zicom MedTacc Private Limited
Joint Company Secretary of all subsidiaries
in Singapore except for MTA-Sysmac
Automation Pte Ltd
Joint Company Secretary of Curiox
Biosystems Pte Ltd
Director of Cesco Equipment Pty Ltd
Company Secretary of Cesco Australia
Limited and Cesco Equipment Pty Ltd
Relevant interests in shares and options as
at date of signing the Directors’ Report
Relevant interests in shares and options as
at date of signing the Directors’ Report
744,563 ordinary shares and 400,000
options
15,000 ordinary shares and 50,000 options
4
Zicom Group LimitedFor personal use only Corporate Chart
ZICOM GROUP LIMITED
ZICOM HOLDINGS
PRIVATE LIMITED
Singapore 100%
Investment Holding
HANGZHOU CESCO
MACHINERY CO LTD
China 100%
Concrete Mixers
CESCO AUSTRALIA LIMITED
Australia 100%
Concrete Mixers
ZICOM CESCO ENGINEERING
CO LTD
Thailand 100%
Concrete Mixers
ZICOM THAI HYDRAULICS
CO LTD
Thailand 100%
Hydraulics Systems
CESCO EQUIPMENT PTY LTD
Australia 100%
Engineered Products
ZICOM CESCO THAI CO LTD
Thailand 100%
Dormant
INVESTMENT HOLDING
COMPANY
CONSTRUCTION
EQUIPMENT
OFFSHORE MARINE,
OIL & GAS MACHINERY
PRECISION ENGINEERING &
TECHNOLOGIES
FOUNDATION ASSOCIATES
ENGINEERING PRIVATE LIMITED
Singapore 100%
Foundation Equipment
FA GEOTECH EQUIPMENT
SDN BHD
Malaysia 100%
Foundation Equipment
ZICOM PRIVATE LIMITED
Singapore 100%
Marine Deck Machinery
ZICOM EQUIPMENT
PRIVATE LIMITED
Singapore 100%
Oils & Gas Equipment
PT SYS-MAC INDONESIA
Indonesia 100%
Precision Engineering
SYS-MAC AUTOMATION
ENGINEERING PTE LTD
Singapore 100%
Precision Engineering & Automation
MTA-SYSMAC AUTOMATION
PTE LTD
Singapore 61%
Automation
ORION SYSTEMS INTEGRATION
PTE LTD
Singapore 84%
Semi-Conductor Equipment
SAEDGE VISION SOLUTIONS
PTE LTD
Singapore 95%
Optic & Vision System Engineering
BIOBOT SURGICAL PTE LTD
Singapore 95%
Medical Device
ZICOM MEDTACC PRIVATE LIMITED
Singapore 100%
Medical Technology Accelerator
Investment Holding
ASSOCIATED COMPANY
Curiox Biosystems Pte Ltd
IPTEC PTE LTD
Singapore 100%
Medical Technology Translation
Services
ASSOCIATED COMPANY
HistoIndex Pte Ltd
5
ANNUAL REPORT 2015For personal use only Key Management
Singapore
ZICOM PRIVATE LIMITED
JOINT MANAGING DIRECTORS
Juat Lim Sim
Hung Seah Tang
EXECUTIVE DIRECTORS
Kok Hwee Sim
Juat Khiang Sim
Hong Jun Zhang
Jenny Lim Bee Chun
ZICOM EQUIPMENT PRIVATE LIMITED
MANAGING DIRECTOR
Rashed Choudhury
FOUNDATION ASSOCIATES ENGINEERING PRIVATE LIMITED
MANAGING DIRECTOR
Jimmy Teoh Guan Hooi
DEPUTY MANAGING 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
BIOBOT SURGICAL PTE LTD
MANAGING DIRECTOR
Kok Hwee Sim
EXECUTIVE DIRECTOR
Kok Yew Sim
IPTEC PTE LTD
MANAGING DIRECTOR
Gary Lee Kim Hin
EXECUTIVE DIRECTORS
Kok Hwee Sim
Kok Yew Sim
ZICOM MEDTACC PRIVATE LIMITED
MANAGING DIRECTOR
Kok Hwee Sim
EXECUTIVE DIRECTOR
Kok Yew Sim
Malaysia
FA GEOTECH EQUIPMENT SDN BHD
MANAGING DIRECTOR
Peck Hua Ng
EXECUTIVE DIRECTOR
Teck Meng Liew
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
DEPUTY MANAGING DIRECTOR
Saowaluke Phongchok
ZICOM THAI HYDRAULICS CO LTD
MANAGING DIRECTOR
Sammy Ng Siong Teck
DEPUTY MANAGING DIRECTOR
Saowaluke Phongchok
Indonesia
PT SYS-MAC INDONESIA
MANAGING 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
Z i
c o m G r o u p L
i m i
t e d
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6
Zicom Group LimitedFor personal use only Directors’ Report 2015
Your directors present their report on Zicom Group Limited (the “Company”) and its subsidiaries (collectively, the
“Group” or “consolidated entity”) for the year ended 30 June 2015.
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. K Y Sim
Mr. Y P Lim
Mr. F Leong
Mr. I R Millard
Mr. S P Sze
(Chairman and Managing Director)
(Executive Director)
(Executive Director)
(Independent)
(Independent)
(Independent)
(Independent)
Details of Directors’ qualifications, experience, other current directorship and responsibilities are included in the
“Board of Directors” section within the annual report.
Principal Activities
The Group’s principal activities comprise the manufacturing of deck machinery, offshore structures, fluid metering
stations, gas processing plants, foundation equipment and concrete mixers, precision engineered machinery,
medtech translation services 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
Total Revenue
Net profits after tax (NPAT) attributable to equity holders of the Parent
Change
(%)
+ 11.6
- 40.2
Year ended
30 June 15
(S$ million)
Year ended
30 June 14
(S$ million)
127.12
2.44
113.95
4.08
The Group’s cash balances remain strong. As at 30 June 2015, the Group’s total cash and bank balances were
S$24.13m as compared with S$22.33m as at 30 June 2014.
Dividends
The Group has decided to pay a final dividend of 0.35 Australian cents per share (2014: 0.45 Australian cents) making
the full year dividends to 0.70 Australian cents per share (2014: 0.90 Australian cents). This final dividend will be 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 20 November 2015 and is payable on 4 December 2015.
7
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
Review of Operations
The Group’s consolidated revenue for the full year is S$127.12m as compared with S$113.95m in the previous year,
an increase of 11.6%. The Group’s full year net consolidated profits after tax attributable to members to 30 June
2015 are S$2.44m as compared with S$4.08m in the previous year, a decrease of 40.2%.
The net profit margin achieved for the full year is 2.0% as compared with 3.6% in the previous year, a drop of 1.6%.
Earnings per share dropped from Singapore 1.90 cents to 1.13 cents per share, a decrease of Singapore 0.77 cents.
Net tangible assets per share decreased slightly from Singapore 34.80 cents to 34.45 cents per share as a result of
translation loss arising from the depreciation in Australian dollar.
Return on equity, based on average of the opening and closing equity, for the year was 2.7% as compared to 4.6% in
2014.
The average rates for currency translation for transactions and cash flows are A$1 to S$1.0864 (2014: S$1.1521) for
the year ended 30 June 2015 and balances A$1 to S$1.0323 (2014: S$1.1739) as at 30 June 2015.
The results for the full year have been affected by cost overruns for the first time in projects undertaken involving
new processes by our precision engineering sector; dampened growth in the electronics sector, reduced margin
contributions by our construction equipment sector and timing delay in the recognition of oil and gas project
revenues.
The less than satisfactory results reflect an increased risk posture that the Group has taken in elevating its various
businesses up the value chain. The Group has established a strong engineering team imbued with various cross
disciplines and strong manufacturing capabilities. The Board believes that in order for the Group to achieve long
term sustainability in an age of dynamic changes globally, its businesses must scale up the value chain so as to
remain competitive and relevant. In doing so, the Group has, in recent years, forayed into medical technology and at
the same time assumed a higher risk exposure in its ongoing core businesses in participating in higher value projects
that come with higher rewards that are equally matched with higher risks.
The Group primarily positions the business for the long term benefit of its shareholders while it also hopes to meet
short term expectations. The Group adopts a calibrated approach and has always been measured and prudent in
its management of business risks. It ensures that all its investments in technologies that require some gestation
periods and projects with higher returns that inevitably come with increased risks are well covered by its internal
resources without being exposed to bank borrowings; hence its policy of holding strong cash balances with no bank
gearing.
In travelling this journey, the Group’s total capabilities continue to be enhanced and strengthened. The Group
therefore believes that the short-term setbacks suffered will strengthen the Group to climb up the value chain so as
to achieve higher and sustainable returns in the future.
Global economic uncertainties continue to reverberate, underscored by an imbalanced global economy that
is compounded by the Greek financial default that may well escalate in the Eurozone, the slowdown in the PRC’s
economy resulting in a recent Renminbi devaluation and rout in the share market, continuing deflation in Japan
and potential increase in interest rates. Although the Group’s businesses cannot escape from such global economic
impact, its focus therefore is to position and develop businesses and directions that can better withstand the impact
from such factors.
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Zicom Group LimitedFor personal use only Directors’ Report 2015
Strategic Repositioning
The Group continues to focus in restructuring its businesses in line with global dynamics. It is continuously
reviewing its entire business activities and may potentially regroup its activities to unlock values. As a strategy, the
Group continues to manage its businesses as a matter of course to maintain stability. The Group adopts no fixed
timing to unlock value. It will do so only when the timing is suitable so as to maximise value.
The setbacks in the precision engineering sector represent a component of the journey embarked upon by the Group.
The Group therefore remains committed to strengthen the business structure and organisation in this sector. The
precision engineering business is critical in our quest to expand our investments into technology companies as it is
the engineering and manufacturing support base for these investments. Our investment in technology is aimed to
create a new and broader revenue stream for this sector transforming it into one based on product sales, which are
recurrent, instead of project sales which are typically more cyclical.
Revenue by Business Segments
The following is an analysis of the segmental results:-
Revenue by Business Segments
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Technologies
Industrial & Mobile Hydraulics
Offshore Marine, Oil & Gas Machinery
Change
(%)
+ 7.03
- 3.04
+ 96.23
- 19.74
Year ended
30 June 15
(S$ million)
Year ended
30 June 14
(S$ million)
51.46
50.15
22.92
2.48
48.08
51.72
11.68
3.09
Demand for offshore marine, oil and gas machinery increased by 7.03% in the current year as compared with the
previous year.
The continuing softening of the oil price without any visible impetus to drive its recovery in the short term has
caused major oil and gas and service support companies to scale down their investments on equipment as well as
activities. This scenario is expected to pose considerable challenges in the oil and gas sector for the next financial
year.
Following the Group’s policy of scaling up its capability that may come with higher risk, the Group, has in the last
few years, successfully executed a few offshore projects involving deep seas operations and achieved good profits.
The experiences gained have enabled the Group to position itself as being able to supply a full complement of
equipment from shallow to deep seas operations. The success has won the loyalty from quality niche customers who
are continuing to invest in development, albeit on a reduced scale. The Group is hopeful of sustainable orders.
Our oil and gas sector is currently executing orders of 3 turnkey gas processing plants. The projects are being
executed as part of a consortium with a very established PRC state owned petroleum engineering institute. The
projects are on track so far and costs are under control. We are hopeful of a successful execution of these projects all
of which are expected to be completed within the coming financial year.
We are concurrently working on new projects and are hopeful of securing some of these in the near future.
As at the end of the financial year just ended, total confirmed orders in hand to be delivered in the financial year
2016 for this cluster were S$72.6m.
9
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
Construction Equipment
Revenue from sales and rental of construction equipment decreased by 3.04% in the current year as compared with
the previous year.
Demand for sales and rental of foundation equipment in Singapore and Malaysia remain healthy due to ongoing
construction activities in these markets. However, margins have decreased as there is a surplus of equipment
available in the market due to the slackened construction sector.
The weakening of the Australian dollar has dampened profit margin to some extent. Sales of concrete mixers in
Thailand have been steady and are expected to remain flat. Although government projects remain slow, demand
from the private sector, is however maintained. Demand for concrete mixers in Australia has increased and our
business in Australia is expected to improve.
As at the end of the financial year, total confirmed orders in hand to be delivered in the financial year 2016 for this
cluster were S$6.4m.
Precision Engineering & Technologies
Precision Engineering
The precision engineering sector experienced a significant increase in revenue of 96.23%. The sector secured
significant orders in automation projects from a consumer electronics customer that involved new processes. As
these projects involved new processes there is a development component in it which could benefit and enhance the
Group’s capability for future projects.
The new processes had required more engineering time and special materials not foreseen. As a result the increased
direct costs compounded by delays caused the Group to suffer significant cost overruns. This resulted in the projects
managing to achieve break-even only on its direct costs.
The major part of the revenue contribution in this sector is derived from our automation engineering and contract
manufacturing businesses as our new investments have only just started generating revenue and their contributions
are negligible.
Medtech Technology
The Group is focused to continue to grow its existing stable of medtech technology companies.
a)
Biobot Surgical Pte Ltd (Biobot)
Our digital robotic platform for transperineal prostate biopsy has been accepted by several internationally
renowned key opinion leaders and hospitals. We are well positioned to commercialise this technology.
Apart from our Centers of Excellence in hospitals in New York, Tubingen, Germany and Singapore, we have
recently set up our first Australian Center of Excellence with the Epworth Hospital at Richmond Victoria. The
Epworth group is the largest private cluster in Victoria. We planned to set up 3 to 5 more Centers of Excellence
before December in Australia, the UK and Italy.
We have begun sales in Germany and our commercialisation efforts are expected to gain traction, as our
Centers of Excellence are fully activated acting as our local champions and training centers.
10
Zicom Group LimitedFor personal use only Directors’ Report 2015
b)
Curiox Biosystems Pte Ltd (Curiox)
The Curiox’s DropArray technology which has proven to save the cost of development of drug assays by 60%
has been fully validated by the top 10 pharmaceutical companies.
However scalability of demand for our technology has proven more difficult with pharmaceutical companies.
The entire process of evaluation initiating from their research units which focus on high value assays with a
broad mix of protocols require a long gestation before our technology is adopted for high throughput usage
that generates volume.
With endorsement by the pharmaceutical companies we have redirected our immediate efforts to market our
technology to Contract Research Organisations (CRO). Although pricing to these CROs is lower, they consume
high volume of plates for their assays that involve lesser and standardised mix in protocols. Since then we
have successfully secured a 5 years’ contract from one of the top 5 global CROs in USA with the potential
of expanding into their international network. This success shows good promises for us to gain other CRO
accounts.
With the change in focus, we are confident that Curiox is likely to break-even within the next 6 months
and work towards profitability. We aim to re-engage with pharmaceutical companies to cater to their more
demanding and challenging higher value assays to achieve scalability in the value chain when these “low
hanging fruits” prove to be sustainable in generating revenue and a positive cash flow.
c)
HistoIndex Pte Ltd (HistoIndex)
During the year the Group co-invested in a tissue imaging company, HistoIndex Pte Ltd, together with SPRING
Singapore, a Singapore government agency under an Accelerator Funding Scheme for which the Group
has been awarded. HistoIndex has commenced commercialisation to the research sector and is currently
collaborating with various world renowned institutions in PRC, Singapore and USA focused on refining their
analytic algorithms for liver fibrosis for which numerous scientific papers have been published. The business
is potentially geared towards the creation and operation of a web-based pathology platform to assist
pathologists in refining and staging liver fibrosis and cancer. We aim to achieve initial applications in this
domain within the next 12 months.
Semi-Conductor Equipment Investment
a)
Orion Systems Integration Pte Ltd (Orion)
Orion’s fine pitch flip chip thermal bonder is used in downstream semi-conductor manufacturing. Due
to the dynamics of the industry, the chip industry has been undergoing very rapid changes with different
configurations by manufacturers to differentiate from each other causing varying demands on the
development of our machine to meet their needs during evaluation.
We have reached a stage where the various demands have been reduced to some common denominators
and we are in a position to offer a modular machine that can meet basic needs as well as to accommodate
customised needs of the key manufacturers.
We have during the last 6 months appointed an established distributor to handle our distribution for Asia
while our team focused on development and after sales service. We are hopeful to secure orders in the
coming financial year.
As at the end of the financial year, total confirmed orders in hand to be delivered in the financial year 2016 for this
cluster were S$6.3m.
11
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
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 significant.
Foreign Exchange Exposure
The Group generally prices its sales in foreign currencies on forward rates. During the full year, we hedged our rates
accordingly to ensure our margins were maintained. The net loss attributable to foreign exchange during the current
year is S$0.81m as compared with an exchange loss S$0.48m in the previous year.
Financial Position
The group’s financial position remains strong:-
Classification
Net Assets
Net Working Capital
Cash in Hand and at Bank
Gearing Ratios
Increase (+) / Decrease (-)
S$ million
As at 30 June 15
S$ million
As at 30 June 14
S$ million
- 0.02
+ 0.53
+ 1.80
89.44
45.62
24.13
89.46
45.09
22.33
The Group’s gearing ratio is 0% at the same ratio as for the year ended 30 June 2014 as cash and cash equivalents
exceeded interest-bearing liabilities. Gearing ratio has been arrived at by dividing our interest-bearing liabilities less
cash and cash equivalents over total capital.
Return Per Share
The Group’s earnings and net tangible assets per share are as follows:-
Classification
Earnings per share
Decrease
Singapore Cents
2015
Singapore Cents
2014
Singapore Cents
- 0.77
1.13
1.90
The weighted average shares used to compute basic earnings per share are 215,184,912 for this year and
214,881,267 shares for the previous year.
Classification
NTA per share
Decrease
Singapore Cents
As at 30 June 15
Singapore Cents
As at 30 June 14
Singapore Cents
- 0.35
34.45
34.80
NTA per share has dropped due to translation loss arising from the depreciation in Australian dollar.
Capital Expenditure
For the year ending 30 June 2016, the Group plans to invest up to S$1.0m in equipment.
12
Zicom Group LimitedFor personal use only Directors’ Report 2015
Confirmed Orders
We have a total of S$86.0m (30 June 2014: S$64.8m) outstanding confirmed orders in hand as on 30 June 2015. A
breakdown of these outstanding confirmed orders is as follows:-
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Technologies
Industrial & Mobile Hydraulics
Total
S$ m
72.6
6.4
6.4
0.6
86.0
Out of the above outstanding orders, S$85.9m are scheduled for delivery in the financial year 2016 and the balance
thereafter. Prospects for on-going orders continue to be strong.
Prospects
The global economic environment for the year just ended has continued to be one of uncertainty. Although
economic growth in the United States appears sustainable, other major economies notably PRC and Japan as well as
the Eurozone continue to splutter and showing signs of inertia. The situation will be compounded by the potential
winding down of the United States’ monetary quantitative easing. The prospects ahead will be challenging.
The Group’s resilience positions itself well to address such uncertainties and potential economic deceleration that
may arise if the adverse factors converge.
Order prospects for the Group continue to be strong. As such, the Group continues to be confident of a profitable
year in 2016.
Subsequent Events after the Balance Sheet Date
On 26 August 2015, the directors declared a final unfranked dividend of 0.35 Australian cents per share for the
financial year ended 30 June 2015 which has not been provided for in the financial statements of the current year.
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.
13
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
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:
Full meetings of directors
Audit
Nomination & Remuneration
Meetings of Committees
A
4
3
3
4
4
4
4
B
4
4
4
4
4
4
4
A
-
-
-
3
3
3
-
B
-
-
-
3
3
3
-
A
1
-
-
1
1
-
-
B
1
-
-
1
1
-
-
Giok Lak Sim
Kok Hwee Sim
Kok Yew Sim
Yian Poh Lim
Frank Leong Yee Yew
Ian R Millard
Shaw Pao Sze
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$8,190 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.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of its
terms of its audit engagement agreement against claims by third parties arising from the audit. No payment has
been made to indemnify Ernst & Young during or since the end of the financial year.
Retirement, election and continuation in office of directors
Messrs Kok Hwee Sim and Frank Leong retire by rotation and being eligible, offer themselves for re-election.
Directors’ relevant interests in Zicom Group Limited
In accordance with S300(11) of the Corporations Act 2001, except as disclosed below, 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 remuneration report as at 30 June 2015.
As at the date of this report, Mr G L Sim’s interests in the Company increased to 81,794,110 shares (30 June 2015:
80,758,915 shares).
14
Zicom Group LimitedFor personal use only Directors’ Report 2015
Remuneration report (Audited)
This remuneration report outlines the remuneration arrangements of 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 Parent. Details of the KMP are set out in the following tables:
(i)
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
(ii)
Senior Executives
(Chairman and Managing Director)
(Executive Director)
(Executive Director)
(Independent Director)
(Independent Director)
(Independent Director)
(Independent Director)
J L Sim
H S Tang
H J Zhang
J Khiang Sim
(Joint Managing Director of Zicom Private Limited)
(Joint Managing Director of Zicom Private Limited)
(Marketing Director of Zicom Private Limited) (considered as KMP effective 1 July 2014)
(Executive Director of Zicom Private Limited) (considered as KMP effective 1 July 2014)
There were no changes to KMP after the reporting date and before the date the financial report was
authorised for issue.
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.
15
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
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 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. No options were granted to non-executive directors
during the financial year and none are proposed for consideration at the 2015 Annual General Meeting.
The board recommends that total directors’ fees for non-executive directors for the financial year ending
30 June 2016 be fixed at a maximum sum of A$150,000 (S$153,000) at the same level as the previous year.
Executive directors and senior executives
All remuneration paid to executive directors and senior executives comprises of the following components:
l
l
l
l
Base pay and benefits;
Short term incentives;
Other remuneration such as superannuation,
Participation in the Zicom Employee Share and Option Plan.
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 and 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. The minimum profit threshold is the lower of S$500,000 or 15% of total
shareholder funds as at the reporting date.
16
Zicom Group LimitedFor personal use only Directors’ Report 2015
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 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, being the only
criterion for his entitlement. Mr Sim is entitled to convert part of his 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. For the financial year just ended, Mr Sim was not entitled to any bonus as
the minimum profit target was not achieved.
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 financial year just ended, Mr Sim was not paid any bonus by CAL as the profit target was
not achieved.
Senior Executives (directors of group companies)
Senior executives in key decision making are employed under rolling contracts. The company and these
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. Each year, each of the subsidiary
companies, allocates 10% of their pre-tax profits upon achieving agreed minimum profit targets, being the
only criterion for allocation of bonus to its eligible executives, as a “bonus pool”. The maximum entitlement
capped for eligible executives ranges from 2.5% to 5% of the pre-tax profits. Each year, the Nomination and
Remuneration Committee will decide the proportion payable to each of these eligible executives based on
the number of eligible executives entitled to the pool and any recommendation by management to reward
any outstanding senior executives who are otherwise not eligible contractually, to be specially rewarded.
The decisions made by the Committee are deemed to be 100% of their entitlement for the respective eligible
executive for the relevant financial year.
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. For the financial year just ended, none of the executives exercised the option to
convert part of their performance bonus into ZGL shares.
17
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
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.
Approved share options are first allocated to each group company based on its profit contribution to
the Group for the past 3 years adjusted by factors such as potential contribution to the Group and past
conversion rates. These options are then granted to employees based on individual performance and those
with potentials in that group company. This initiative strengthens the Group’s position to retain and attract
talent so as to expand and grow to improve the Group’s performance and enhance shareholders’ value.
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, or 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
vested 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.
Options are granted at no cost to employees. When exercised, each option is convertible into one ordinary
share which shall be credited as fully paid up and rank equally with all other fully paid ordinary shares.
During the current financial year, 2,150,000 share options (2014: nil) were granted. In the same period,
employees exercised options to acquire 555,000 (2014: 195,000) fully paid ordinary shares in Zicom Group
Limited at a weighted average exercise price of A$0.17 per share. 240,000 (2014: 275,000) share options
expired during the financial year.
As at the date of this report, there were 5,660,000 unissued ordinary shares under options (7,440,000 at the
reporting date).
Company Performance
The table below shows the performance of the Group for the past 5 financial years:
Earnings per share (Australian cents)
Dividend per share (Australian cents)
Closing share price (Australian cents)
Net tangible asset per share (Australian cents)
2015
1.04
0.70
20.50
33.37
2014
1.65
0.90
22.00
29.64
2013
2.56
1.00
23.00
29.96
2012
2.83
1.00
15.00
26.49
2011
5.15
1.00
50.00
24.73
18
Zicom Group LimitedFor personal use only Directors’ Report 2015
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(
Zicom Group LimitedFor personal use only
Directors’ Report 2015
Details of share options to key management personnel
Options granted to, vested, exercised or expired during the years 2015 and 2014 as well as their outstanding options
held as at year end are shown in the tables below.
30 June 2015
Balance at
1 July 2014 Granted
Options
exercised
Expired
Balance at
30 June 2015
Value of
options
granted
S$
Value of
options
expired Exercisable
Not
Exercisable
S$
–
280,000
280,000
–
–
–
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
–
–
–
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
–
–
–
30,000
–
–
–
–
–
–
–
280,000
280,000
280,000
280,000
1,710,000
200,000
200,000
200,000
200,000
800,000
(280,000)
–
–
–
(280,000)
200,000
–
480,000
–
480,000
–
–
480,000
– 2,230,000
4,528
4,528
4,528
4,528
18,112
–
–
280,000
–
280,000
–
–
280,000
– 1,430,000
200,000
200,000
200,000
200,000
800,000
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
J L Sim
H S Tang
H J Zhang*
J Khiang Sim*
*Considered as KMP effective 1 July 2014, accordingly, option holdings were not disclosed as at 30 June 2014.
30 June 2014
Balance at
1 July 2013 Granted
Options
exercised
Expired
Balance at
30 June 2014
Value of
options
granted
S$
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 L Sim
H S Tang
J K Sim
–
380,000
380,000
25,000
25,000
25,000
30,000
280,000
280,000
280,000
–
1,705,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(100,000)
(100,000)
(25,000)
(25,000)
(25,000)
–
–
280,000
280,000
–
–
–
30,000
–
–
–
–
280,000
280,000
280,000
–
(275,000) 1,430,000
–
–
–
–
–
–
–
–
–
–
–
–
Value of
options
expired Exercisable
Not
Exercisable
S$
–
4,633
4,633
1,144
1,144
1,144
–
–
240,000
240,000
–
–
–
30,000
–
40,000
40,000
–
–
–
–
–
–
–
–
240,000
240,000
240,000
–
12,698 1,230,000
40,000
40,000
40,000
–
200,000
The above options were granted under the Zicom Employee Share and Option Plan which was approved by
shareholders on 23 November 2006.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
21
ANNUAL REPORT 2015For personal use only Directors’ Report 2015
The terms and conditions of the options granted to key management personnel during the year are as follows:
Grant date
Fair value per option at grant date
Exercise price
First Exercise date
Last Exercise date
2015
1/11/2014
A$0.06
A$0.205
1/11/2016
31/10/2019
Shareholdings of key management personnel as at 30 June 2015 and 30 June 2014 are as follows:
30 June 2015
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
Executives
J L Sim
H S Tang
H J Zhang*
J Khiang Sim*
Balance as at
1 July 2014
Granted as
remuneration
Options
exercised
Net change
other
Balance as at
30 June 2015
77,474,368
1,258,180
1,070,253
488,000
524,364
592,250
–
6,407,767
2,470,699
795,939
1,789,525
92,871,345
419,317
–
–
–
–
–
–
–
–
–
–
419,317
–
–
–
–
–
–
–
280,000
–
–
–
280,000
2,865,230
–
–
–
100,000
–
–
–
–
–
–
2,965,230
80,758,915
1,258,180
1,070,253
488,000
624,364
592,250
–
6,687,767
2,470,699
795,939
1,789,525
96,535,892
*Considered as KMP effective 1 July 2014, accordingly, shareholdings were not disclosed as at 30 June 2014.
30 June 2014
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 L Sim
H S Tang
J K Sim
Balance as at
1 July 2013
Granted as
remuneration
Options
exercised
Net change
other
Balance as at
30 June 2014
77,474,368
1,258,180
1,070,253
488,000
524,364
592,250
–
50,000
6,407,767
2,470,699
20,091,937
110,427,818
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
77,474,368
1,258,180
1,070,253
488,000
524,364
592,250
–
50,000
6,407,767
2,470,699
20,091,937
110,427,818
There were no other transactions and balances with key management personnel and their related parties during the year.
22
Zicom Group LimitedFor personal use only Directors’ Report 2015
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.
Auditor’s 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.
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.
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.
GL Sim
Chairman/Managing Director
29 September 2015
A N N U A L
R E P O R T 2 0 1 5
23
For 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 2015, 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
29 September 2015
24
Zicom Group LimitedFor 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.
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
Role of Board and management
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 and strategic objectives. It monitors performance and achievement of
these 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, available resources, major
capital expenditure, capital raising, acquisition and divestment of Company’s assets;
maintains liaison with the Company’s auditor; and
reports to Shareholders.
Candidates for election or re-election as a Director
The Company is guided by the Board for the selection, nomination and appointment of Directors. As part of this
process the Board ascertain the qualifications and experience that a potential candidate possesses. Background
checks, as appropriate, are carried out before a person is appointed by the Board. In addition, the Board will continue
to provide Shareholders with all material information in its possession relevant to any decision to elect or re-elect a
Director by inclusion in the Notice of Meeting.
Written agreements with Directors
The Executive Chairman, Executive Directors and Senior Executives have letters of appointments or service contracts
describing their terms of office, duties, rights and responsibilities.
The other Directors 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.
Company Secretaries
The Joint Company Secretaries are directly accountable to the Board through the Chairman.
25
ANNUAL REPORT 2015For personal use only Corporate Governance Statement
Diversity Policy
The Company does not have a written diversity policy but 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, Burmese, New Zealanders,
Singaporeans and Thais. In addition, approximately 20% of the Company’s workforce is made up of female
employees.
Performance Review
The Chairman is responsible for evaluating the performance of its committees and individual Directors. The review
process is currently informal, generally done through a meeting with the Chairman of the Board. The performance
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.
The review process as disclosed above was undertaken in the current reporting period.
Principle 2: Structure the Board to Add Value
Composition of Board
The names of the Directors of the Company in office at the date of this annual report are set out in the Directors’
Report on page 7.
Details of the members of the Board, their experience, expertise, qualifications, term of office and independent
status are included in the “Board of Directors” section within the annual report.
The composition of the Board has been 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.
Nomination and Remuneration Committee
A combined Nomination and Remuneration Committee has been established comprising the following members:
l
l
l
Mr Y P Lim (Chairman)
Mr G L Sim
Mr Frank Leong
The Committee is responsible for the selection, nomination and appointment of Directors, monitoring the skills
and expertise of current Board members, consider succession planning issues, assessing the independence of Non-
Executive Directors and identifying the likely order of retirement by rotation of Non-Executive Directors. In addition
the committee formulates the remuneration policies for the Board Members and Managing Director of the Group.
Details on the number of meetings of the Nomination and Remuneration Committee held during the year and the
attendees at those meetings are set out in the Directors’ Report on page 14.
26
Zicom Group LimitedFor personal use only Corporate Governance Statement
Board Skills Matrix
The Board seeks to ensure as a minimum the Board’s skills matrix includes:
(a)
(b)
Each Director must be capable of making a valuable contribution to the effective operations of the
Company and Board deliberations and processes;
Directors must collectively have the necessary skills, knowledge and experience to understand the
risks of the Company and to ensure that the Company is managed in an appropriate way taking into
account these risks; and
(c)
All Directors must be able to read and understand fundamental financial statements.
The Board believes that it has adequate representation of the necessary skills and requirement noted above.
Independence
Majority of the Company’s Board of directors are 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;
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;
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;
and
has been a director of the entity for such a period that his or her independence may have been
compromised.
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 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.
27
ANNUAL REPORT 2015For personal use only Corporate Governance Statement
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 Executive Director and therefore is considered by the Board to be not independent.
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 Private Limited (“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 G L Sim is, and was not independent.
As such, the Chairperson and Managing Director positions are held by the same non-independent director. The Board
recognises the importance of having an independent chair, however, other selection criterion, in particular business
acumen and industry experience, are also fundamentally important. The Board has chosen a director who has
significant diversified and broad-based experience in the business who will lead the Company in the best interests of
the shareholders.
Length of Service
The term in office held by each Director in Office at the date of this report is as follows:
Executive
Mr G L Sim
Mr K H Sim
Mr K Y Sim
20 years
8 years
1 year
Independent
Mr Ian R Millard
Mr Y P Lim
Mr Frank Leong
Mr S P Sze
9 years
9 years
9 years
5 years
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.
Induction and Professional Development
The Company does not consider it necessary to have a formal program for inducting new Directors and professional
development for Directors. However, whenever appropriate, the Company provides opportunities to develop and
maintain their skills and knowledge to perform their roles as directors effectively.
28
Zicom Group LimitedFor personal use only Corporate Governance Statement
Principle 3: Act Ethically and Responsibly
Code of Conduct
The Board expects all Directors, officers, employees and consultants of the Company to observe high standards of
honesty, integrity, fairness and business ethics. 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.
Share Trading Policy
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:
l
l
l
l
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’s shares. The undertaking of any trading in shares must be notified to the Company
Secretary who makes disclosure to the ASX.
Principal 4: Safeguard Integrity in Corporate Reporting
Audit Committee
The Audit Committee comprises of only independent members:
l
l
l
Mr Ian Millard (Chairman)
Mr Frank Leong
Mr Y P Lim
29
ANNUAL REPORT 2015For personal use only Corporate Governance Statement
The Audit Committee operates in accordance with a charter. The main responsibilities of the Audit Committee are to:
l
l
l
l
l
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 Company’s internal control environment, including effectiveness and
efficiency of operations, reliability of financial reporting and compliance with applicable laws and
regulations.
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.
Report on matters relevant to the committee’s role and responsibilities.
Non-committee members, including members of management and the external auditor, may attend meetings of the
Committee by invitation of the Committee Chair.
The Committee has rights of access to management and auditors without management present and rights to seek
explanations and additional information from both management and auditors.
Details on the number of meetings of the Audit Committee held during the year and the attendees at those
meetings are set out in the Directors’ Report on page 14.
To ensure the integrity of the Company’s financial reports, the Managing Director and the Group Financial Controller
are required to provide written assurance to the Board that, in their opinion, the financial records of the Company
for the respective financial year have been properly maintained, the financial statements comply with appropriate
accounting standards and present a true and fair view of the financial position and performance of the entity.
The Company’s external auditors will be requested to attend the Company’s Annual General Meeting to answer any
questions from shareholders.
Principal 5: Make Timely and Balanced Disclosure
The Company is committed to complying with its disclosure obligations under the Corporations Act and the ASX
Listing Rules to keep the market reasonably informed of information which may have a material effect on the price
or value of the Company’s securities in a balanced and understandable way.
The Executive Chairman is responsible for monitoring information which could be price sensitive, liaising with the
Company Secretaries to make an initial assessment and forwarding to the Board for confirmation of disclosure of
such information. If not all Directors are immediately available, the Company Secretary is authorised to lodge such
information upon receiving the majority of Directors’ approval in order not to delay in giving this information to ASX.
30
Zicom Group LimitedFor personal use only Corporate Governance Statement
Principal 6: Respect the Rights of Shareholders
The Company aims to communicate all important information relating to the Company to its shareholders.
Additionally, the Company recognises potential investors and other interested stakeholders may wish to obtain
information about the Company from time to time.
To achieve this, the Company communicates information regularly to Shareholders and other stakeholders through
the following:
l
l
l
l
Annual General Meeting (“AGM”): the Company encourages full participation of shareholders at its
AGM and for those shareholders who are unable to attend in person, they are able to lodge proxies.
The external auditors will attend AGM and are available to answer any shareholder’s questions about
the conduct of the audit and the preparation and content of the auditor’s report.
Annual Report: the Company Annual Report will be available on its website and contains important
information about the Company’s activities and results for the previous financial year.
ASX Announcements: all ASX announcements, including annual and half year financial reports are
posted on the Company’s website as soon as they have been released by ASX.
Investor relations: the Company provides an online email inquiry service to assist shareholders with
any queries.
All shareholders are given the options to receive communications from, and send communications to, the share
registry electronically.
Principle 7: Recognise and Manage Risk
Given the size of the Company, the Board has not established a risk committee nor does it have an internal audit
function. Rather the Board is responsible for the Company’s risk management. The responsibility and control of risk
management rests with the senior management of the respective subsidiaries chaired by the Executive Chairman.
The Board is conscious of the need to continually maintain systems of risk management and controls 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, investment, 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.
The Company does not consider that it has any material exposure to economic, environmental and social
sustainability risks.
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 for the financial year just ended 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.
31
ANNUAL REPORT 2015For personal use only Corporate Governance Statement
The board acknowledges that such internal control assurance are not absolute and can only be provided on a
reasonable basis after having made due enquiries. This is due to factors such as the need for judgement and the
inherent limitations in internal controls and therefore is not and cannot be designed to detect all weaknesses in
control procedures.
Principle 8: Remunerate Fairly and Responsibly
As stated above, a combined Nomination and Remuneration Committee has been established by the board
comprising the Executive Chairman and two independent directors.
Details on the number of meetings of the Nomination and Remuneration Committee held during the year and the
attendees at those meetings are set out in the Directors’ Report on page 14.
Details of the remuneration for Directors and Key Management Personnel can be found in the Directors Report
within the Annual Report.
The Group Managing Director and Group Executive Directors 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. Transactions which limit the economic risk in
participating in unvested entitlement under equity-based remuneration schemes are not allowed.
32
Zicom Group LimitedFor personal use only Consolidated Statement of Comprehensive Income
For the year ended 30 June 2015
(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 benefit
Note
2015
S$’000
2014
S$’000
5
5
5
12
6
124,586
112,083
2,530
1,870
(67,660)
(33,110)
(5,762)
(2,919)
(15,678)
(497)
(316)
1,174
797
(58,895)
(29,102)
(5,211)
(2,578)
(13,166)
(378)
(739)
3,884
31
Profit for the year from continuing operations after taxation
1,971
3,915
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Share of other comprehensive income of associates
Foreign currency translation on consolidation
Effect of tax on other comprehensive income
Total comprehensive income
Profit/(loss) attributable to:
Equity holders of the Parent
Non-controlling interests
Profit for the year
Total comprehensive income/(loss) attributable to:
Equity holders of the Parent
Non-controlling interests
Total comprehensive income
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
(31)
(249)
–
(280)
–
(515)
–
(515)
1,691
3,400
2,437
(466)
4,081
(166)
1,971
3,915
2,157
(466)
3,566
(166)
1,691
3,400
7
7
1.13
1.13
1.90
1.89
33
ANNUAL REPORT 2015For personal use only Consolidated Balance Sheet
As at 30 June 2015
(In Singapore dollars)
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Convertible loan receivable from an associate
Investment in associates
Others
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Convertible loan receivable from an associate
Prepayments
Tax recoverable
TOTAL ASSETS
Current liabilities
Payables
Interest-bearing liabilities
Provisions
Provision for taxation
Unearned income
Unrealised loss on derivatives
NET CURRENT ASSETS
Non-current liabilities
Interest-bearing liabilities
Deferred tax liabilities
Provisions
TOTAL LIABILITIES
NET ASSETS
Equity attributable to equity holders of the Parent
Share capital
Reserves
Retained earnings
Non-controlling interests
TOTAL EQUITY
TOTAL EQUITY AND LIABILITIES
Note
2015
S$’000
2014
S$’000
28,669
15,197
3,213
–
5,015
1
52,095
24,134
26,411
29,416
459
430
86
80,936
30,784
14,792
2,418
459
1,804
1
50,258
22,328
27,758
38,601
460
626
–
89,773
133,031
140,031
23,697
9,915
1,454
252
–
–
35,318
30,701
12,105
966
336
400
173
44,681
45,618
45,092
5,549
2,371
358
8,278
2,758
2,745
390
5,893
43,596
50,574
89,435
89,457
37,862
(1,136)
52,211
88,937
498
37,593
(703)
51,703
88,593
864
89,435
89,457
133,031
140,031
9
10
6
12
12
20
13
14
12
16
17
18
17
6
18
19
34
Zicom Group LimitedFor personal use only Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
(In Singapore dollars)
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f
ANNUAL REPORT 2015For personal use only
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
(In Singapore dollars)
Cash flows from operating activities:
Operating profit before taxation
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Bad debts written off
Allowance for doubtful debts
Allowance for inventory obsolescence
Inventories written off
Finance costs
Interest income
Property, plant and equipment written off
Intangible assets written off
(Gain)/loss on disposal of property, plant and equipment, net
Gain on disposal of assets held for sale
Loss on subsidiary company struck off
Forfeiture of customer deposit
Trade and other payables written back
Provisions made, net
Cost of share-based payments
Share of results of associates
Unrealised loss on derivatives
Unrealised exchange difference
Operating profit before reinvestment in working capital
Decrease/(increase) in stocks and work-in-progress
Decrease in projects-in-progress
Decrease/(increase) in debtors
(Decrease)/increase in creditors
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Note
2015
S$’000
2014
S$’000
9
10
5
5
5
5
5
5
5
5
5
5
5
5
18
1,174
4,863
899
1
107
77
8
497
(243)
32
34
(53)
–
15
(639)
(8)
750
(29)
316
–
65
7,866
2,130
6,280
1,707
(11,044)
6,939
232
(489)
(517)
3,884
4,477
734
16
5
123
30
378
(179)
9
5
13
(260)
–
–
(50)
77
102
739
173
26
10,302
(4,998)
76
(1,287)
9,622
13,715
179
(374)
(418)
Net cash generated from operating activities
6,165
13,102
Cash flows from investing activities:
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of assets held for sales
Increase in computer software
Increase in development expenditure
Increase in patented technology
Investment in associates
Decrease/(increase) in amount due from associate
9(b)
9(c)
10
10
12(b)
(2,428)
125
–
(203)
(1,512)
(85)
(3,002)
1,306
(2,007)
14
784
(227)
(2,007)
(86)
–
(1,140)
Net cash used in investing activities
(5,799)
(4,669)
36
Zicom Group LimitedFor personal use only Consolidated Statement of Cash Flows
For the year ended 30 June 2015
(In Singapore dollars)
Cash flows from financing activities:
Proceeds from/(repayment of) bank borrowings
Dividends paid on ordinary shares
Proceeds from exercise of employee share options
Payment for minimum holding share buy-back
Repayment of hire purchase creditors
Net cash generated from/(used in) financing activities
Net increase in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
2015
S$’000
2014
S$’000
8
20
20
5,576
(1,892)
107
–
(1,920)
(2,956)
(2,489)
39
(90)
(2,250)
1,871
(7,746)
2,237
(169)
21,802
687
(87)
21,202
23,870
21,802
37
ANNUAL REPORT 2015For personal use only 1.
Corporate information
This financial report of Zicom Group Limited (the “Company” or “Parent Entity”) and its subsidiaries
(collectively, the “Group” or “consolidated entity”) for the year ended 30 June 2015 was authorised for issue in
accordance with a resolution of the directors on 29 September 2015.
Zicom Group Limited is a for profit company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange. The Company is also the ultimate parent.
The nature of the operations and principal activities of the Group are described in the Directors’ report.
2.
Summary of significant accounting policies
2.1
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board (“AASB”). The financial
report has also been prepared on a historical cost basis except for derivative financial instruments
which have been measured at their fair values.
The financial report is presented in Singapore dollars and all values are rounded to the nearest
thousand dollars (S$’000) unless otherwise stated.
2.2
Statement of compliance
The financial report also complies with 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 2014.
AASB 2012-3 Amendments to AASB 132 – Offsetting Financial Assets and Financial
Liabilities
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-
Financial Assets
AASB 2013-4 Amendments to AASB 139 – Novation of Derivatives and Continuation of
Hedge Accounting
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments
AASB 2014-1 Annual Improvements to AASBs 2010-2012 Cycle [AASB 2, AASB 3, AASB 8,
AASB 116, AASB 138, AASB 124]
AASB 2014-1 Annual Improvements to AASBs 2011-2013 Cycle [AASB 13, AASB 140]
AASB 2014-Part B Amendments to AASB 119 - Defined Benefit Plans: Employee
Contributions
The adoption of these standards and interpretations did not have any effect on the financial
performance or position of the Group.
38
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.2
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 2015. Except for the standards disclosed below which the directors have
yet to finalise their assessment of the impact, the directors expect the adoption of these new
and amended standards and interpretations will have no material impact on the financial
statements in the period of initial application.
AASB 9 Financial Instruments (Effective annual period on or after 1 July 2018)
AASB 15 Revenue from Contracts with Customers (Effective annual period on or after 1 July
2017, but the effective date may be deferred to 1 July 2018)
2.3
Principles of consolidation
The consolidated financial statements comprise the financial statements of the Group and its
subsidiaries as at 30 June 2015. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group controls an investee if and only if the Group
has:
l
l
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Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support
this presumption, and when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including:
l
l
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The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group losses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity
holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
39
ANNUAL REPORT 2015Notes 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)
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets
(including goodwill), liabilities, non-controlling interest and other components of equity while any
resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
In the Parent Entity’s separate financial statements, investments in subsidiaries are accounted for at
cost less impairment losses.
2.4
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred measured at acquisition date fair value
and the amount of any non-controlling interests in the acquiree. For each business combination, the
Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as
incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, any previously held equity interest is remeasured at
its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and any previously held interest,
over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it
has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment
still results in an excess of the fair value of the net assets acquired over the aggregate consideration
transferred, then the gain 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
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.
40
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.4
Business combinations and goodwill (cont’d)
Where goodwill has been allocated to a cash-generating unit and part of the operation within that
unit is disposed of, the goodwill associated with the disposed operation 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 disposed operation
and the portion of the cash-generating unit retained.
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.
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.
l
l
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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
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. Capital expenditure consists of additions of property, plant and
equipment and intangible assets.
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.
41
ANNUAL REPORT 2015Notes 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 (cont’d)
(b)
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective
functional currency spot rates ruling at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling at the reporting
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 is determined.
Differences arising on the settlement or translation of monetary items 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. These are recognised initially in other comprehensive
income and accumulated under foreign currency translation reserve in equity, until the net
investment is disposed of, at which time, the cumulative amount is reclassified from equity to
profit or loss.
(c)
Consolidated financial statements
On consolidation, the results and balance sheet of foreign operations are translated into
Singapore dollars using the following procedures:
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l
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and
Income and expenses are translated at average exchange rate for the year, which
approximates the exchange rates at the dates of the transactions.
The exchange differences arising on the translation are recognised in other comprehensive
income. On disposal of a foreign operation, the component of other comprehensive income
relating to that particular foreign operation is recognised in 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. Such cost includes the cost of replacing part of the property, plant and equipment
and borrowing costs for long-term construction projects if the recognition criteria are met. When
significant parts of property, plant and equipment are required to be replaced at intervals, the Group
depreciates them separately based on their specific useful lives. Likewise, when a major inspection is
performed, its costs is recognised in the carrying amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit
or loss as incurred.
42
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.7
Property, plant and equipment (cont’d)
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 buildings
Buildings
Machinery
Office furniture and equipment
Leasehold improvements
Motor vehicles
Computers
over remaining period of the lease expiring years 2036 to 2042
20 years
10 years
5 years
5 years
5 years
1 year
Machinery under installation are not depreciated as these assets are not yet available for use.
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. 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
Intangible assets acquired separately are measured on initial recognition 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. Internally generated intangibles, excluding capitalised
development and computer software costs, are not capitalised and the related expenditure is
recognised in profit or loss in the period in which such expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over their useful economic 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. Changes in expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis.
43
ANNUAL REPORT 2015Notes 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)
Intangible assets with indefinite useful lives or not yet available for use are not amortised, but 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. The assessment
of indefinite useful life is reviewed annually to determine whether it 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
Customer list
Developed technology
Development expenditure
Patented technology
Unpatented technology
Research and development costs
5 years
8 years
7 years
5 – 10 years
10 – 20 years
7 – 14 years
Research costs are expensed as incurred. Development expenditure on an individual project is
recognised as an intangible asset 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.
During the period of development, the asset is tested for impairment annually.
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 indication exists, or when annual impairment testing for an asset is required, the
Group estimates 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 companies 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 are recognised in profit or loss.
44
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.9
Impairment of non-financial assets (cont’d)
The Group bases its impairment calculation on detailed budgets and forecast calculations which are
prepared separately for each of the Group’s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally covering a period of five years. For
longer periods, a long-term growth rate is calculated and applied to project future cash flows after the
fifth year.
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses 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 assumptions 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 Associates
An associate is an entity over which the Group has power to participate in the financial and operating
policy decisions of the investee but does not have control or joint control over those policies.
The Group account for its investments in associates using the equity method from the date it becomes
an associate.
On acquisition of the investment, any excess of the cost of investment over the Group’s share of the
net fair value of the investee’s identifiable assets and liabilities is accounted for as goodwill and is
included in the carrying amount of the investment. Such goodwill is neither amortised nor tested for
impairment. Any excess of the Group’s share of the net fair value of the investee’s identifiable assets
and liabilities over the cost of investment is included as income in the determination of the entity’s
share of result of associate in the period in which the investment is acquired.
Under the equity method, investment in associate is carried in the balance sheet at cost plus post-
acquisition changes in the Group’s share of net assets of the associate. The profit or loss reflects the
Group’s share of the results of operations of the associate. Where there has been a change recognised
in other comprehensive income by the associate, the Group recognises its share of such changes in
other comprehensive income. Unrealised gains and losses resulting from transactions between the
Group and the associate are eliminated to the extent of the interest in the associate.
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.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on its 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 loss as “share of results of
associates” in profit or loss.
45
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.10 Associates (cont’d)
The financial statements of the associates are prepared for the same reporting period as the Group.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
Upon loss of significant influence over the associate, the Group measures and recognises any retained
investment at its fair value. Any difference between the aggregate of fair value of the retained interest
and proceeds from disposal and the carrying amount of the investment at the date the equity method
was discontinued is recognised in profit or loss.
2.11 Financial Instrument – Initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(i)
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit
or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or
as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial assets are recognised initially at fair value plus, in the case of financial assets
not subsequently measured at fair value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are recognised
on the trade date i.e., the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified in four categories:
l
l
l
l
Financial assets at fair value through profit or loss
Loan and receivables
Held-to-maturity investments
Available-for-sale financial assets
(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 or loss. Financial assets are classified as held for trading if they are acquired for
the purpose of selling or repurchasing in the near term. Derivatives, including separated
embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments as defined by AASB 139.
The Group has not designated any financial assets at fair value though profit or loss.
Financial assets at fair value through profit or loss are carried at fair value with net
changes in fair value presented as finance costs or interest income in profit or loss.
46
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.11 Financial Instrument – Initial recognition and subsequent measurement (cont’d)
(i)
Financial assets (cont’d)
Subsequent measurement (cont’d)
(b)
Loans and receivables
This category is the most relevant to the Group. Loan and receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active
market. After initial measurement, such financial assets are subsequently measured
at amortised cost using the effective interest rate method, less impairment. Gains and
losses are recognised in profit or loss when the loans and receivables are derecognised or
impaired, and through the amortisation process.
(c)
Held-to-maturity investment
Non-derivative financial assets with fixed or determinable payments and fixed maturities
are classified as held-to-maturity when the Group has the positive intention and ability
to hold them to maturity. After initial measurement, held-to-maturity investments are
measures at amortised cost using the effective interest rate method, less impairment.
The Group did not have any held-to-maturity investments during the years ended
30 June 2015 and 2014.
(d)
Available-for-sale (AFS) financial assets
AFS financial assets include equity investments and debt securities. Equity investments
classified as AFS are those that are neither classified as held for trading nor designated
at fair value through profit and loss. Debt securities in this category are those that are
intended to be held for an indefinite period of time and that may be sold in response to
needs for liquidity or changes in market conditions.
After initial measurement, AFS financial assets are subsequently measured at fair value
with unrealised gains or losses recognised as other comprehensive income and credited
in the AFS reserve until the investment is derecognised, at which time the cumulative
gain or loss is recognised in other operating income, or the investment is determined to
be impaired, when the cumulative loss is reclassified from the AFS reserve to profit or
loss. Interest earned while holding AFS financial assets is reported as interest income
using the effective interest rate method.
Investments in equity instruments whose fair value cannot be reliably measured are
measured at cost less impairment loss.
47
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.11 Financial Instrument – Initial recognition and subsequent measurement (cont’d)
(i)
Financial assets (cont’d)
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 recognised in profit or loss.
(ii)
Impairment of financial assets
The Group assesses, at each reporting date, whether there is objective evidence that a financial
asset or group of financial assets is impaired. An impairment exist if one or more events that
has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact
on the estimated future cash flows of the financial asset or the group of financial assets that
can be reliably estimated. Evidence of impairment may include indications that the debtor
or a group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and observable data indicating that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
For financial assets carried at amortised cost, the Group first assesses whether impairment
exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence
of impairment exists for an individually assessed financial asset, whether significant or not,
it includes the asset in a group of financial asset with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognised are not included in a
collective assessment of impairment.
The amount of any impairment loss identified 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 and
the loss is recognised in profit or loss. If, in a subsequent year, the amount of the estimated
impairment loss increases or decreases because of an event occurring after the impairment was
recognised, the previously recognised impairment loss is increased or reduced by adjusting the
allowance account. If a write-off is later recovered, the recovery is recognised in profit or loss.
48
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.11 Financial Instrument – Initial recognition and subsequent measurement (cont’d)
(iii)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially
at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings,
including bank overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative financial instruments
entered into by the Group that are not designated as hedging instruments in hedge
relationships as defined by AASB 139. Separated embedded derivatives are also classified as held
for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the criteria in AASB 139 are satisfied.
The Group has not designated any financial liability as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans
and borrowings 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 as
well as through the amortisation process.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or
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. The difference in the respective carrying amounts is
recognised in profit or loss.
49
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.11 Financial Instrument – Initial recognition and subsequent measurement (cont’d)
(iv)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported on the
balance sheet if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
2.12 Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts to hedge its foreign
currency risks. Such derivative financial instruments are initially recognised at fair value on the date on
which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives
are carried as financial assets when the fair value is positive and as financial liabilities when the fair
value is negative.
Any gains or losses arising from changes in fair value of derivatives are taken directly to 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. These also include bank overdrafts which forms an integral part
of the Group’s cash management. 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:
l
l
Raw materials and trading stocks: purchase costs on a first-in first-out basis; and
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.
50
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.15 Construction contracts
The Group principally operates fixed price 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 reporting date, when the outcome of a construction contract can be estimated
reliably.
The outcome of a construction contract can be estimated reliably when (i) total contract revenue can
be measured reliably; (ii) it is probable that the economic benefits associated with the contract will
flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured
reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured
reliably so that the actual costs incurred can be compared with prior estimates.
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 Fair value measurement
The Group measures financial instruments, such as forward currency options, at fair value at the
reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is
based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:
i)
ii)
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or liability is measured using the assumptions that the market participants
would use when pricing the asset or liability, assuming that the market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability
to generate economic benefits by using the asset in its highest and best use by selling it to another
market participant that would use the asset in its highest and best use.
51
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.16 Fair value measurement (cont’d)
The Group uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
l
l
l
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the
Group determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level of input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
2.17 Provisions
General
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 reporting 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, when 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.
Warranty provisions
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.
Wages and salaries, annual leave
Liabilities for wages and salaries, including annual leave expected to be settled within 12 months of
the reporting date are recognised in respect of employees’ services rendered up to the reporting date
and measured at the amounts expected to be paid when liabilities are settled.
52
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.17 Provisions (cont’d)
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 reporting 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 and corporate bond rates with terms to
maturity and currencies that match, as closely as possible, the estimated future cash outflows.
2.18 Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received
and all attaching conditions will be complied with. When the grant relates to an expense item, it
is recognised as income on a systematic basis over the period that the related costs, for which it is
intended to compensate, are expensed. Where the grant relates to an asset, it is deducted in arriving at
the carrying amount of the asset.
2.19 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised
as part of the cost of the asset. Capitalisation of borrowing costs commences when the activities to
prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs
are incurred. Borrowing costs are capitalised until the asset is substantially completed for its intended
use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
2.20
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if 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 or assets, even if that right is not explicitly specified in the arrangement.
Group as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers
substantially all the risks and rewards incidental to ownership to the Group is classified as a finance
lease. An operating lease is a lease other than a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date 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.
53
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.20
Leases (cont’d)
Group as a lessee (cont’d)
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.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over
the lease term.
Group as a lessor
Leases where the Group transfers substantially all the risks and rewards of ownership of the leased
asset is accounted for in accordance with the Group’s policy for sale of goods as set out in note 2.22.
Costs incurred in connection with negotiating and arranging the finance lease are 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 basis as rental
income. The accounting policy for rental income is set out in note 2.22.
2.21 Employee benefits
(a)
Defined contribution plans
The Group makes contributions to national pension schemes 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.
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 expense in the year
in which the related service is performed.
54
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)
(b)
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 when the grant is made using an appropriate valuation model.
This cost is recognised in profit or loss, with a corresponding increase in the share-based
payments reserve, over the period in which service conditions are fulfilled (“vesting period”).
The cumulative expense 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 share-based payments
reserve is transferred to retained earnings upon expiry or forfeiture of the share options after its
vesting date. When the options are exercised, the share-based payments reserve is transferred
to share capital as new shares are issued.
2.22 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when the payment is received. Revenue
is measured at the fair value of the consideration received or receivable, net of returns and allowances,
trade discounts and volume rebates, taking into account contractually defined terms of payment and
excluding taxes or duty. The Group has concluded that it is acting as a principal in all of its revenue
arrangements. The specific recognition criteria described below must also be met before revenue is
recognised.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership
of the goods have passed to the buyer, usually on delivery of the goods. Revenue is not recognised
to the extent where there are significant uncertainties regarding recovery of the consideration due,
associated costs or the possible return of goods.
Rendering of services
Revenue from services rendered are recognised upon performance of services and the delivery to
customers.
Revenue recognised on projects
Revenue on projects 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.
55
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.22 Revenue recognition (cont’d)
Interest income
Interest income is recognised using the effective interest rate.
Dividends
Dividend income is recognised when the Group’s right to receive payment is established, which is
generally when shareholders approve the dividends.
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 for services rendered is recognised on an accrual basis.
2.23 Taxation
(a)
Current income 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
reporting date, in the countries where the Group operates and generates taxable income.
Current income taxes are recognised in profit or loss except to the extent that the tax relates
to items recognised outside profit or loss, either in other comprehensive income or directly in
equity. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the end of the
reporting period 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
In respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint arrangements, when 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.
56
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.23 Taxation (cont’d)
(b)
Deferred tax (cont’d)
Deferred 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
In respect of deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint arrangements, 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 reporting 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 reporting 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 in
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 reporting 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:
-
-
When the goods and services tax incurred on a sale or purchase of assets or services is
not payable to or recoverable from the taxation authority, in which case the goods and
services tax is recognised as part of the revenue or the expense item or part of the cost of
acquisition of the asset, as applicable; and
When 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.
57
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.24 Share capital and share issuance expenses
Ordinary shares are classified as share capital in equity. Incremental costs directly attributable to the
issuance of new shares are deducted against share capital.
3.
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and
disclosures made. Uncertainty about these assumptions and estimates could result in outcomes that require
a material adjustment to the carrying amount of the asset or liability affected in future periods.
(a)
Judgements made in applying accounting policies
(i)
Determination of control over investees
As at 30 June 2015, the Group holds 68.55% (2014: 46.49%) equity interest in Curiox Biosystems
Pte Ltd (“Curiox”) and 459,326 convertible loan stocks which could potentially convert into a
further 1.76% interest in Curiox but currently not exercisable. Although the Group holds the
majority of voting rights in Curiox, it has been assessed that the Group does not have the
practical ability to direct the relevant activities of Curiox unilaterally but has significant
influence over its financial and operating policy decisions. Hence, the investment in Curiox is
treated as an associate as opposed to being a subsidiary company.
As at 30 June 2015, the Group holds 4.1% equity interest in HistoIndex Pte Ltd (“HistoIndex”).
The Group considers HistoIndex as an associate as the Group has the ability to exercise
significant influence through both its shareholdings and the Chairman’s active participation on
HistoIndex Board of Directors.
(b)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities in future periods, are described below.
(i)
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets
at each reporting 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. The key assumptions used to determine
the recoverable amount for the different cash generating units are disclosed in note 10 to the
financial statements.
58
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 3.
Significant accounting judgements, estimates and assumptions
(b)
Key sources of estimation uncertainty (cont’d)
(ii)
Impairment of loans and receivables
The Group assesses at the end of each reporting period 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 reporting date is
disclosed in note 21 to the financial statements.
(iii)
Construction contracts
The Group recognises contract revenue by reference to the stage of completion of the contract
activity at the reporting 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 to the estimated total contract costs. Significant
assumptions are required to estimate the total contract costs which will affect the stage
of completion. In making these estimates, management has relied on past experience and
knowledge of the project engineers. The carrying amounts of assets and liabilities arising
from construction contracts at the balance sheet date are disclosed in note 15 to the financial
statements.
(iv)
Development expenditure
The Group capitalises development expenditure in accordance with its accounting policy
as set out in note 2.8. Initial capitalisation of costs is based on management’s judgement
that technological and economic feasibility is confirmed. In determining the amount to be
capitalised, management makes assumptions regarding the expected future cash generation
of the project, discount rates to be applied and the expected period of benefits. As at 30 June
2015, the carrying amount of capitalised development expenditure was S$4,789,000 (2014:
S$3,754,000).
(v)
Taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement
is involved in determining the provision for income taxes. The Group recognises liabilities for
expected tax issues based on estimates of whether additional taxes will be due. The Group
recognises deferred tax assets for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilised. Significant judgement
is required to determine the amount of deferred tax assets that can be recognised, based on
likely timing and level of future taxable profits. Where the final tax outcome 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.
59
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 3.
Significant accounting judgements, estimates and assumptions
(b)
Key sources of estimation uncertainty (cont’d)
(v)
Taxes (cont’d)
The carrying amount of the Group’s current tax payables and deferred tax liabilities at 30 June
2015 was S$252,000 (2014: S$336,000) and S$2,371,000 (2014: S$2,745,000) respectively. The
Group also has deferred tax assets of S$3,213,000 (2014: S$2,418,000) as at 30 June 2015.
4.
Segment information
Business segments
Identification of reportable segments
The group has identified its operating segments based on internal reports that are reviewed and used by
the chief operating decision maker and the executive management team in assessing performance and in
determining the allocation of resources. The operating segments are identified based on products and
services as follows:
l
l
l
l
Offshore Marine, Oil & Gas Machinery – manufacture and supply of deck machinery, gas metering
stations, gas processing plants, offshore structures for underwater robots and related equipment, parts
and services.
Construction Equipment – manufacture and supply of concrete mixers and foundation equipment,
including equipment rental, parts and related services.
Precision Engineering & Technologies – manufacture of precision and automation equipment, medtech
equipment and products, medtech translation and engineering services.
Industrial & Mobile Hydraulics – supply of hydraulic drive systems, parts and services.
Inter-segment sales
Inter-segment sales are recognised based on internally set transfer price at arm’s length basis.
Unallocated revenue and expenses
Unallocated revenue comprises mainly non-segmental revenue. Unallocated expenses comprise mainly of
non-segmental expenses such as head office expenses.
60
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Business segments (cont’d)
The following tables present revenue and profit information regarding operating segments for the years
ended 30 June 2015 and 2014.
Offshore
marine, oil &
gas machinery
S$’000
Construction
equipment
S$’000
Precision
engineering &
technologies
S$’000
Industrial
& mobile
hydraulics
S$’000
Consolidated
S$’000
Year ended 30 June 2015
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
Operating profits
Finance costs
Interest income
Profit before taxation
Tax benefit
Net profit after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses
124,586
2,103
322
127,011
(322)
184
243
127,116
3,810
184
(2,250)
(316)
1,428
(497)
243
1,174
797
1,971
3,839
1,699
5,538
5,516
1,321
50,759
702
–
51,461
50,008
122
15
50,145
21,638
1,278
4
22,920
2,181
1
303
2,485
7,557
1,029
(5,366)
590
290
70
604
587
3,455
15
3,655
531
94
1,614
1,236
134
–
–
21
69
61
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Business segments (cont’d)
Year ended 30 June 2014
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
Operating profits
Finance costs
Interest income
Profit before taxation
Tax benefit
Net profit after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses
Offshore
marine, oil &
gas machinery
S$’000
Construction
equipment
S$’000
Precision
engineering &
technologies
S$’000
Industrial
& mobile
hydraulics
S$’000
Consolidated
S$’000
48,063
14
–
48,077
51,278
444
2
51,724
10,634
1,041
4
11,679
2,108
3
978
3,089
6,097
4,810
(4,761)
555
199
133
570
76
3,861
36
3,315
363
339
2,147
1,055
102
–
–
18
61
112,083
1,502
984
114,569
(984)
189
179
113,953
6,701
189
(2,068)
(739)
4,083
(378)
179
3,884
31
3,915
4,399
2,316
6,715
4,958
602
62
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Geographical segments
The Group’s geographical segments for revenue and non-current assets are determined based on location of
customers and assets respectively.
The following table presents revenue and certain assets information regarding geographical segments for the
years ended and as at 30 June 2015 and 2014.
30 June 2015
Australia Malaysia Singapore China
United
States
India
Bangladesh Thailand Others
Total
Revenue
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
20,923
7,517
52,655
26,010
8,231
–
1,435
2,433
5,382 124,586
Sales to external
customers
Other revenue
from external
customers
21
59
2,400
2
Other segment information
Segment non-
current assets
2,575
3,547
30,938
172
Investment in
associates
Unallocated
assets
Capital expenditure
- property,
plant and
equipment
- intangible
assets
73
–
57
3,730
–
1,769
12
–
3
–
–
–
–
–
–
–
–
45
–
2,530
127,116
–
6,201
433
43,866
5,015
3,214
52,095
–
–
73
3
6
–
3,951
1,772
5,723
63
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Geographical segments (cont’d)
30 June 2014
Australia Malaysia Singapore China
United
States
India
Bangladesh Thailand Others
Total
Revenue
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
16,438
12,908
30,022
17,297
9,532
10,513
5,191
6,273
3,909 112,083
Sales to external
customers
Other revenue
from external
customers
15
53
1,499
7
Other segment information
Segment non-
current assets
3,452
5,177
29,189
208
Investment in
associates
Unallocated
assets
Capital
expenditure
- property,
plant and
equipment
- intangible
assets
42
4
384
4,203
–
2,325
30
–
5.
Revenue, income and expenses
(i)
Revenue
Sale of goods
Rendering of services
Rental income
Revenue recognised on projects
–
–
–
–
–
–
–
–
–
295
1
1,870
113,953
–
6,433
1,117
45,576
1,804
2,878
50,258
–
–
12
–
8
–
4,679
2,329
7,008
Consolidated
2015
S$’000
75,049
5,255
3,807
40,475
124,586
2014
S$’000
63,923
6,614
5,927
35,619
112,083
64
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 5.
Revenue, income and expenses (cont’d)
(ii)
Other operating income
Interest income
Forfeiture of customer deposit
Gain on disposal of property, plant and equipment
Gain on disposal of assets held for sale
Service rendered
Government grants
Trade and other payables written back
Write back of excess provision for reinstatement costs
Other revenue
(iii) Other operating expenses
Included in other operating expenses are the following:
Allowance for inventory obsolescence
Allowance for doubtful debts
Bad debts written off
Foreign exchange loss
Provision for product warranties, net
Loss on disposal of property, plant and equipment, net
Property, plant and equipment written off
Warranty expense charged directly to profit or loss
Inventories written off
Intangible assets written off
Loss on subsidiary company struck off
Consolidated
2015
S$’000
2014
S$’000
243
639
53
–
152
1,351
8
25
59
2,530
179
–
–
260
261
1,078
50
–
42
1,870
Consolidated
2015
S$’000
2014
S$’000
77
107
1
807
713
–
32
4
8
34
15
123
5
16
482
22
13
9
8
30
5
–
65
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 6.
Taxation
Current income tax
- Current income tax charge
- Loss transferred under Group Relief Scheme
- Adjustments in respect of previous years
Deferred income tax
- Relating to the origination and reversal of temporary differences
- Adjustment in respect of previous years
Tax benefit
Consolidated
2015
S$’000
2014
S$’000
1,575
(1,478)
250
(1,331)
187
(797)
1,065
(736)
(6)
(496)
142
(31)
A reconciliation between the tax expense and the product of accounting profit of the Group multiplied by the
applicable tax rate for the year ended 30 June was as follows:
Profit before taxation
Tax expense:
Tax at the domestic rates applicable to profits in the countries where the
group operates
Release of deferred tax liability on intangible assets
Non-deductible expenses
Non-taxable income
Partial tax exemption
Deferred tax assets not recognised
Recognition of deferred tax assets not previously recognised
Utilisation of previously unrecognised tax losses
Adjustment in respect of previous years
Enhanced tax credits
Others
Tax benefit
Consolidated
2015
S$’000
2014
S$’000
1,174
3,884
349
(47)
183
(255)
(6)
483
(115)
(220)
437
(1,585)
(21)
(797)
992
(60)
520
(689)
(31)
404
(160)
–
136
(1,137)
(6)
(31)
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
66
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 6.
Taxation (cont’d)
Deferred taxation as at 30 June relates to the following:
Deferred tax liabilities
Differences in depreciation
Intangible assets
Accrual for unconsumed leave
Provisions
Unutilised capital allowances
Unutilised tax losses
Deferred tax assets
Unutilised tax losses
Unutilised capital allowances
Provisions
Accrual for unconsumed leave
Differences in depreciation
Intangible assets
Consolidated balance
sheet
2015
S$’000
2014
S$’000
Consolidated statement of
comprehensive income
2014
2015
S$’000
S$’000
(2,238)
(432)
–
–
299
–
(2,371)
3,459
550
448
–
(233)
(1,011)
3,213
(2,285)
(479)
–
–
–
19
(2,745)
2,870
411
297
–
(360)
(800)
2,418
(30)
(47)
–
–
(299)
19
(581)
(139)
(151)
–
(127)
211
(1,144)
(97)
(157)
58
147
7
169
(840)
(325)
(96)
11
332
437
(354)
Consolidated
2015
S$’000
2014
S$’000
The directors estimate that the potential future income tax benefit at
30 June in respect of revenue tax losses of certain subsidiaries not
brought to account is
4,384
4,375
The benefit will only be obtained if –
(a)
(b)
These subsidiaries derive future assessable income of a nature and of an amount sufficient to enable
the benefit to be realised;
These subsidiaries continue to be in the same trade and there is no substantial change in their
shareholdings; and
(c)
no changes in tax legislation that adversely affect these subsidiaries’ ability to realise the benefit.
Tax Consolidation Legislation
Zicom Group Limited and its wholly owned Australian subsidiaries have not elected to form a tax
consolidated group.
67
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 7.
Earnings per share
Earnings per share are calculated by dividing the Group’s net profit attributable to equity holders of the
Parent by the weighted average number of shares on issue during the year.
Diluted earnings per share are calculated by dividing the Group’s net profit attributable to equity holders of
the Parent by the adjusted weighted average number of ordinary shares which takes into account the effects
of all dilutive potential ordinary shares comprising of share options granted to employees.
(a)
Earnings used in calculating basic and diluted earnings per share
Net profit attributable to equity holders of the Parent
Consolidated
2015
S$’000
2014
S$’000
2,437
4,081
No. of shares (Thousands)
(b) Weighted average number of shares for basic earnings per share
215,185
214,881
Effect of dilution:
Share options
Adjusted weighted average number of shares
(c)
Earnings per share
Basic
Diluted
1,079
216,264
1,268
216,149
Singapore cents
1.13
1.13
1.90
1.89
There are 2,150,000 (2014: nil) share options excluded from the calculation of diluted earnings per share that
could potentially dilute basic earnings per share in the future because they are anti-dilutive for the current
period presented.
269,000 (2014: nil) shares were issued and allotted to employees under the Zicom Employee Share and
Option Plan on 26 August 2015.
There were no other transactions involving ordinary or potential ordinary shares which occurred between the
reporting date and the date of completion of these financial statements.
8.
Dividends
Declared and paid during the financial year:
- Final unfranked dividend for 2014: 0.45 Australian cents per share
- Interim unfranked dividend for 2015: 0.35 Australian cents per share
- Final unfranked dividend for 2013: 0.55 Australian cents per share
- Interim unfranked dividend for 2014: 0.45 Australian cents per share
Proposed but not recognised as a liability as at 30 June:
- Final unfranked dividend for 2015: 0.35 Australian cents per share
(2014: 0.45 Australian cents per share)
Consolidated
2015
S$’000
2014
S$’000
1,090
802
–
–
1,892
–
–
1,377
1,112
2,489
750
1,115
The final dividend for 2015 was approved by the board of directors after the reporting date.
68
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only l
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69
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only
9.
Property, plant and equipment (cont’d)
(a)
The net book value of property, plant and equipment held under hire purchase are as follows:
Motor vehicles
Plant and equipment
Consolidated
2015
S$’000
309
3,152
3,461
2014
S$’000
177
3,681
3,858
Leased assets are pledged as security for the related finance lease liabilities.
(b)
During the year, the Group acquired property, plant and equipment with an aggregate cost of
S$3,951,000 (2014: S$4,679,000) of which S$1,256,000 (2014: S$1,681,000) were acquired by means
of hire purchase financing. Cash payments of S$2,428,000 (2014: S$2,007,000) were made to purchase
property, plant and equipment. Included in additions is an amount of S$267,000 (2014: S$991,000)
which was previously included in stock but was converted and capitalised as fixed assets during the
current financial year.
(c)
During the financial year, the Group disposed of property, plant and equipment with an aggregate net
book value of S$72,000 (2014: S$27,000). Sales proceeds amounting to S$125,000 (2014: S$14,000)
were received in cash.
(d)
During the financial year, the Group wrote off property, plant and equipment with an aggregate net
book value of approximately S$32,000 (2014: S$9,000).
(e)
The net book value of property, plant and equipment pledged as security are as follows:
Mortgage of leasehold buildings
Mortgage of freehold land and buildings
Consolidated
2015
S$’000
2,874
4,946
7,820
2014
S$’000
2,999
5,000
7,999
70
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only d
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A
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only
10.
Intangible assets (cont’d)
Average remaining
amortisation period
(years) – 2015
Average remaining
amortisation period
(years) – 2014
Impairment tests for goodwill
Customer
list
Developed
technology
Development
expenditure
Computer
software
Unpatented
technology
Patented
technology
–
–
–
–
7.5
7.9
3
4
9.4
9
10.4
10
In accordance with AASB 3, the carrying value of the Group’s goodwill on acquisition as at 30 June 2015 was
assessed for impairment.
Group
Carrying value of capitalised goodwill
based on cash generating units
Sys-Mac Automation Engineering
Pte Ltd
Zicom Group Limited
Orion Systems Integration Pte Ltd
(“Orion”)
Biobot Surgical Pte Ltd (“BBS”)
MTA-Sysmac Automation Pte Ltd
Basis on
which
recoverable
values are
determined
Growth rate
per annum
2015
2014
Pre-tax
discount
rate per
annum
2015 2014
As at
30.6.2015
S$’000
As at
30.6.2014
S$’000
2,974
2,022
664
1,316
1
6,977
2,974
2,299
Value-in-use 15% - 25% 8% - 15% 20% 16%
Value-in-use 5% - 10% 5% - 10% 18% 18%
Value-in-use
Value-in-use
–
–
–
–
–
–
–
26% 17%
19% 19%
–
–
664
1,316
1
7,254
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 cash flow
projections based on financial budgets approved by management covering a one to five year period. Budgeted
revenue and gross margin in the financial budgets are based on past performance and its expectation of
market development. Terminal growth rate of 1% was used for the above cash generating units with the
exception of Orion for which 0% was used.
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’s assessment of the markets. These
are increased over the budget period for anticipated efficiency improvements.
Growth rates – These are used to extrapolate cash flow projections beyond the period covered by the most
recent budgets and 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. Most recent budgets for Orion and BBS covered a
period of 5 years, hence, no growth rate was used for extrapolation.
72
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 10.
Intangible assets (cont’d)
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 2015 and 2014 for goodwill as their
recoverable values were in excess of their carrying values.
11.
Investment in subsidiaries
Investment in controlled entities, at cost
Less: Impairment loss
Parent Entity
2015
S$’000
54,544
(4,660)
49,884
2014
S$’000
54,544
(5,334)
49,210
The consolidated financial statements include the financial statements of Zicom Group Limited and the
subsidiaries listed in the following table.
The interest in each controlled entity has been adjusted to assessed recoverable amounts on the basis of their
underlying assets.
Name of Company
Held by the Company:
Country of
incorporation/
formation
Carrying value of parent
entity investment
2014
2015
S$’000
S$’000
Equity interest
held by the Group
2014
2015
%
%
Cesco Australia Limited
Zicom Holdings Private Limited
Australia
Singapore
5,709
44,175
5,035
44,175
100
100
Controlled entities held through subsidiary
companies:
Cesco Equipment Pty Ltd
Zicom Private Limited
Zicom Equipment Private Limited
Foundation Associates Engineering
Private Limited
Sys-Mac Automation Engineering Pte Ltd
MTA-Sysmac Automation Pte Ltd
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
–
–
–
–
–
–
100
100
100
100
100
61
–
–
–
–
–
–
73
100
100
100
100
100
100
100
61
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
Name of Company
Country of
incorporation/
formation
Carrying value of parent
entity investment
2014
2015
S$’000
S$’000
Equity interest
held by the Group
2014
2015
%
%
Controlled entities held through subsidiary
companies: (cont’d)
SAEdge Vision Solutions Pte Ltd
Integrated Automation Systems Pte Ltd
iPtec Pte Ltd
Orion Systems Integration Pte Ltd
Biobot Surgical Pte Ltd (a)
Zicom MedTacc Private Limited
PT Sys-Mac Indonesia
Zicom Cesco Engineering Co. Ltd
Zicom Cesco Thai Co. Ltd
Zicom Thai Hydraulics Co. Ltd
FA Geotech Equipment Sdn Bhd
Cesco Kemajuan Sdn Bhd (b)
Hangzhou Cesco Machinery Co. Ltd
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Indonesia
Thailand
Thailand
Thailand
Malaysia
Malaysia
China
(a)
Biobot Surgical Pte Ltd (“BBS”)
–
–
–
–
–
–
–
–
–
–
–
–
–
49,884
–
–
–
–
–
–
–
–
–
–
–
–
–
49,210
95
100
100
84
95
100
100
100
100
100
100
–
100
95
100
100
84
92
–
100
100
100
100
100
100
100
On 30 December 2014, Zicom Holdings Private Limited (“ZHPL”) exercised 3,016,772 warrants to
subscribe for 3,016,772 ordinary shares in BBS for a total consideration of S$905,000 fully satisfied by
capitalising shareholder’s loan owing from BBS to ZHPL. This has resulted in an increase in the Group’s
interest in BBS from 91.80% to 93.42% and the favourable effect of the change of interest of S$35,000
has been recognised within equity.
On 26 June 2015, 5,105,600 ordinary shares were allotted to ZHPL pursuant to the non-renounceable
rights issue of BBS for a cash consideration of S$3,574,000. As a result of this allotment, the Group’s
interest in BBS increased to 95.06% and the unfavourable effect of the change of interest of S$135,000
was also recognised within equity.
(b)
Cesco Kemajuan Sdn Bhd, a dormant wholly-owned subsidiary, was struck off during the financial year.
Entity subject to class order relief
Pursuant to the Class Order 98/1418, relief has been granted to Cesco Australia Limited (“CAL”) and Cesco
Equipment Pty Ltd (“CEPL”) from the Corporations Act 2001 requirements for the preparation, audit and
lodgement of their financial reports.
As a condition for the Class Order, a deed of Cross Guarantee was executed between Zicom Group Limited
(“ZGL”) and CAL on 15 May 2008. The effect of the deed is that ZGL has guaranteed to pay any deficiency in
the event of winding up of CAL or if CAL does not meet its obligations under the terms of overdraft, loans,
leases or other liabilities subject to the guarantee.
CAL has also given a similar guarantee in the event that ZGL is wound up or if it does not meet its obligations
under the terms of overdraft, loans and leases or other liabilities subject to the guarantee.
74
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
Entity subject to class order relief (cont’d)
On 9 May 2013, CEPL executed a Deed of Assumption with ZGL so that CEPL is joined to the Deed of Cross
Guarantee and assumes liability under and be bound by the Deed of Cross Guarantee as if CEPL was a Group
Entity when the deed of Cross Guarantee was executed.
The consolidated Income Statement and Balance Sheet of the entities that are members of the Closed Group
are as follows:
Consolidated Income Statement
Closed Group
Profit from continuing activities before taxation
Income tax expense
Net profit for the year
Accumulated losses at the beginning
Expiry of employee share options
Dividends paid
Accumulated losses at the end
2015
S$’000
2,073
–
2,073
(24,589)
56
(1,892)
(24,352)
2014
S$’000
2,311
–
2,311
(24,436)
25
(2,489)
(24,589)
Consolidated Balance Sheet
Closed Group
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Prepayments
Current liabilities
Payables
Interest-bearing liabilities
Provisions
NET CURRENT ASSETS
2014
S$’000
1,164
519
44,175
45,858
1,620
3,979
5,962
20
11,581
7,766
1,084
347
9,197
2,384
2015
S$’000
586
386
44,175
45,147
1,790
3,082
4,691
18
9,581
5,886
313
339
6,538
3,043
75
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
Non-current liabilities
Provisions
NET ASSETS
Equity attributable to equity holders of the Parent
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
12.
Investment in associates
(a)
Investment details
Held through subsidiaries
Curiox Biosystems Pte Ltd
HistoIndex Pte Ltd
The principal place of business for both associates is in Singapore.
(b) Movements in carrying amount of the Group’s investment in associates
Curiox Biosystems Pte Ltd (“Curiox”)
Shareholdings held: 68.55% (2014: 46.49%)
At beginning of year
Additional investment
Share of losses after income tax
Share of other comprehensive income
Unrealised profits
At end of year
Closed Group
2015
S$’000
2014
S$’000
113
124
48,077
48,118
71,870
559
(24,352)
48,077
71,601
1,106
(24,589)
48,118
Consolidated
2015
S$’000
4,515
500
5,015
2014
S$’000
1,804
–
1,804
Consolidated
2015
S$’000
2014
S$’000
1,804
3,051
(316)
(31)
7
4,515
2,578
–
(739)
–
(35)
1,804
On 31 December 2014, 460,000 convertible loan stocks with cumulative interest at 5% per annum
amounting to S$549,000 were converted into 110,000 preference shares in Curiox, fully paid at S$5 per
share, resulting in an increase in the Group’s interest in Curiox to 49.28%. The remaining convertible
loan stocks amounting to S$459,000 due for conversion or repayment on 31 December 2015 has
accordingly been reclassified from non-current assets on the balance sheet to current assets.
76
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 12.
Investment in associates (cont’d)
(b) Movements in carrying amount of the Group’s investment in associates (cont’d)
Curiox Biosystems Pte Ltd (“Curiox”) (cont’d)
On 28 April 2015, 1,251,000 preference shares attached with 1 warrant for every 4 shares issued
were allotted to Zicom Holdings Private Limited (“ZHPL”) pursuant to the non-renounceable rights
issue of Curiox for a cash consideration of S$2,502,000. Each warrant entitles ZHPL to subscribe for 1
preference share in Curiox at S$2.00 by 31 December 2015. As a result of this allotment, the Group’s
interest in Curiox increased to 68.55%.
Although ZHPL holds the majority of voting rights in Curiox, it does not have the power and practical
ability to direct the relevant activities of Curiox unilaterally and hence, Curiox remains an associate of
the Group as at 30 June 2015.
HistoIndex Pte Ltd (“HistoIndex”)
On 8 June 2015, Zicom MedTacc Private Limited (“MedTacc”), a wholly-owned subsidiary of ZHPL and
an appointed Sector Specific Accelerator by Spring Singapore (“SPRING”), has acquired 4.1% equity
interest in HistoIndex Pte Ltd for a cash consideration of S$500,000. MedTacc is committed to inject
additional S$500,000 by 31 December 2015.
As part of the Accelerator Funding Scheme, SPRING co-invested with MedTacc on 1:1 basis and will
grant call options to MedTacc to acquire their investments at nominal annual compounding interest.
Although the Group holds less than 20% of equity interest in HistoIndex, the Group has the ability to
exercise significant influence through both its shareholdings and the Chairman’s active participation
on HistoIndex Board of Directors.
(c)
Summarised financial information
The following table illustrates summarised financial information relating to the Group’s investment in
Curiox:
Current assets
Non-current assets
Current liabilities
Net assets/(liabilities)
Add: Fair value adjustments arising from acquisition
Proportion of Group’s investment
Share of net assets/(liabilities)
Goodwill
Less: Unrealised profits
Less: Other equity transactions
Carrying amount of associate
2014
S$’000
1,141
559
1,700
(3,038)
(1,338)
264
(1,074)
46.49%
(499)
2,399
(81)
(15)
1,804
2015
S$’000
1,539
451
1,990
(826)
1,164
442
1,606
68.55%
1,101
3,502
(74)
(14)
4,515
77
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only
12.
Investment in associates (cont’d)
(c)
Summarised financial information (cont’d)
Results:
Revenue
Cost of goods sold
Other income
Operating expenses
Loss before tax
Income tax expense
Add: Fair value adjustments arising from acquisition
Net loss for the year
Other comprehensive income
Total comprehensive income
Group’s share of losses for the year
Group’s share of other comprehensive income
13.
Inventories
Raw materials/trading stocks (at cost or net realisable value)
Work-in-progress (at cost)
Finished goods (at cost)
Stocks-in-transit (at cost)
Total inventories at lower of cost and net realisable value
2015
S$’000
2014
S$’000
609
(51)
558
263
(1,442)
(621)
(1)
(622)
(60)
(682)
(57)
(739)
(316)
(31)
527
(92)
435
350
(2,313)
(1,528)
(1)
(1,529)
(60)
(1,589)
–
(1,589)
(739)
–
Consolidated
2015
S$’000
17,194
6,344
1,522
1,351
26,411
2014
S$’000
16,017
9,561
1,362
818
27,758
Inventories recognised as cost of sales for the year ended 30 June 2015 totalled S$80,662,000 (2014:
S$66,488,000) for the Group.
78
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 14.
Current assets - receivables
Trade receivables (a)
Allowance for impairment loss (b)
Advance payments to suppliers
Amount due from customers for contract work (note 15)
Deposits
Related party receivables (c):
- Associates
- trade
- non-trade
- loans
- Other related parties
- trade
- non-trade
Other receivables
Consolidated
2015
S$’000
23,063
(215)
22,848
836
3,769
96
698
29
–
43
1
1,096
29,416
2014
S$’000
24,316
(163)
24,153
1,817
10,075
155
622
282
500
45
–
952
38,601
(a)
Please refer to note 21(d) for the ageing analysis of trade receivables past due but not impaired.
(b)
Trade and other receivables are non-interest bearing and are generally due when invoiced or on 30 to
60 days’ term. An allowance for impairment loss is recognised when there is objective evidence that an
individual receivable is impaired.
The Group has trade and other receivables that are impaired at the balance sheet date and the
movements of the allowance accounts used to record the impairment are as follows:
Consolidated
Individually impaired
Trade receivables
2015
S$’000
2014
S$’000
Non-trade receivables
2015
2014
S$’000
S$’000
Nominal amounts
Less: allowance for impairment
Movements in allowance accounts:
As at 1 July
Charge for the year
Written off
Currency realignment
As at 30 June
215
(215)
–
163
107
(58)
3
215
163
(163)
–
317
5
(158)
(1)
163
26
(26)
–
26
–
–
–
26
26
(26)
–
26
–
–
–
26
(c)
For related party receivables, please refer to note 23 for terms and conditions.
79
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 15.
Gross amount due from/(to) customers for contract work
Contract costs incurred to date
Recognised profits to date
Progress billings and advances
Amount due (to)/from customers for contract work, net
Gross amount due from customers for contract work (note 14)
Gross amount due to customers for contract work (note 16)
Consolidated
2015
S$’000
5,208
1,905
7,113
(7,174)
(61)
3,769
(3,830)
(61)
2014
S$’000
17,790
6,993
24,783
(18,564)
6,219
10,075
(3,856)
6,219
Advances received included in gross amount due to customers
for contract work
–
5,470
Revenue recognised on projects is disclosed in note 5.
16.
Current liabilities - payables
Trade, other payables and accruals (a)
Amount due to customers for contract work (note 15)
Owing to related parties (b)
- trade
- non-trade
Consolidated
2015
S$’000
19,167
3,830
651
49
23,697
2014
S$’000
26,608
3,856
187
50
30,701
(a)
All amounts are non-interest bearing and are normally settled on 30 to 90 days’ terms.
(b)
For related parties’ payable, please refer to note 23 for terms and conditions.
80
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 17.
Interest-bearing liabilities
Current
Bank overdrafts (a)
Bills payable (b)
Factory loans (c)
Term loans (d)
Lease liabilities (note 25)
Non-Current
Factory loans (c)
Term loans (d)
Lease liabilities (note 25)
Consolidated
2015
S$’000
264
3,487
317
4,332
1,515
9,915
303
4,639
607
5,549
2014
S$’000
526
7,536
591
1,651
1,801
12,105
620
1,153
985
2,758
Details of the secured borrowings are as follows:
(a)
Bank overdraft amounting to S$248,000 (2014: S$462,000) which bears interest at 6.00% to 6.50%
(2014: 6.00% to 6.50%) per annum is secured by corporate guarantee from Zicom Holdings Private
Limited (“ZHPL”).
Bank overdraft of S$16,000 (2014: S$55,000) which bears interest at 7.80% (2014: 7.90%) per annum is
secured by a corporate guarantee from Zicom Cesco Engineering Co. Ltd.
The remaining bank overdraft amounting to S$9,000 which was outstanding as at 30 June 2014 bore
interest at 7.90% per annum and was secured by a 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.
(b)
Bills payable amounting to S$3,174,000 (2014: S$6,463,000) with an average maturity of 1 - 4 months
(2014: 3 - 4 months) bear fixed interest rates until expiry, ranging from 2.04% to 2.93% (2014: 1.58% to
2.50%) per annum, at which point interest rate resets and are secured by a corporate guarantee given
by ZHPL.
The remaining bills payable amounting to S$313,000 (2014: S$1,073,000) which bears floating interest
rate at 5.11% to 5.71% (2014: 5.62% to 5.86%) per annum is secured by a fixed and floating charge over
all the assets of Cesco Australia Limited.
(c)
Factory loan amounting to S$548,000 (2014: S$790,000) which is made up of current and long-term
portions of S$245,000 (2014: S$240,000) and S$303,000 (2014: S$550,000) respectively is repayable
over the remaining 26 monthly instalments at fixed interest rate of 2.75% (2014: 1.75%) per annum. It
is secured by a legal mortgage on ZHPL’s leasehold building at No. 9 Tuas Avenue 9 Singapore 639198
and a corporate guarantee from Zicom Group Limited.
The remaining factory loan due within the next 12 months amounting to S$72,000 (2014: S$421,000
made up of current portion: S$351,000; non-current portion: S$70,000) bears interest at floating
rate of 3.75% (2014: 3.90%) 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.
81
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 17.
Interest-bearing liabilities (cont’d)
(d)
Term loan amounting to S$2,833,000 (2014: S$892,000) comprising current and long-term portions
of S$1,000,000 (2014: S$892,000) and S$1,833,000 (2014: S$nil) respectively which bears interest at
floating rate of 2.70% (2014: 2.53%) per annum is payable over 3 years and is secured by a corporate
guarantee given by ZHPL.
Term loan amounting to S$3,185,000 (2014: S$nil) comprising current and long-term portions
of S$1,067,000 and $2,118,000 respectively bears interest at floating rate of 3.75% per annum and
is payable over 3 years. It 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 term loan amounting to S$1,153,000 (2014: S$1,612,000) comprising current and long-
term portions of S$465,000 (2014: S$459,000) and S$688,000 (2014: S$1,153,000) respectively which
bears interest at fixed rate of 2.75% (2014: 1.75%) per annum is payable over 5 years and is secured
by a legal mortgage on ZHPL’s leasehold building at No. 9 Tuas Avenue 9 Singapore 639198 and a
corporate guarantee from Zicom Group Limited.
Short term loans with tenures of 1 – 6 months (2014: 3 months) amounting to S$1,800,000 (2014:
S$300,000) bear interest at fixed rates ranging from 2.64% to 2.98% (2014: 2.35%) per annum and is
secured by a corporate guarantee given by ZHPL.
(e)
Financing facilities available
As at 30 June 2015, the Group had available S$141,000,000 (2014: S$117,000,000) of undrawn
committed borrowing facilities and all bank covenants were complied with.
18.
Provisions
Current
Product warranties
Employee benefits
Reinstatement costs
Non-Current
Employee benefits
Reinstatement costs
Consolidated
2015
S$’000
2014
S$’000
1,167
239
48
1,454
250
108
358
679
233
54
966
247
143
390
82
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 18.
Provisions (cont’d)
Movements in provision for warranties:
At beginning of year
Additional provision
Unused amounts reversed
Utilised
Currency realignment
At end of year
Warranty expense charged directly to profit or loss (note 5)
Movements in provision for employee benefits:
At beginning of year
Additional provision
Unused amounts reversed
Utilised
Currency realignment
At end of year
Movements in provision for reinstatement costs:
At beginning of year
Unused amounts reversed
Utilised
Currency realignment
At end of year
Consolidated
2015
S$’000
2014
S$’000
679
820
(107)
(222)
(3)
1,167
4
480
70
(8)
(11)
(42)
489
197
(25)
(10)
(6)
156
927
413
(391)
(270)
–
679
8
457
55
–
(29)
(3)
480
197
–
–
–
197
In accordance with the lease agreement, the Group must reinstate certain subsidiaries’ leased premises in
Singapore and Australia to its original condition at the end of the lease term.
Because of the long-term nature of liability, the greatest uncertainty in estimating the provision is the costs
that will ultimately be incurred.
83
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 19.
Share capital
(a)
Share capital
Parent Entity
Consolidated
2015
2014
No. of shares (Thousands)
2015
S$’000
2014
S$’000
Ordinary fully paid shares
215,522
214,547
37,862
37,593
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company.
All ordinary shares carry one vote per share without restriction.
(b) Movements in ordinary share capital
At 1 July 2013
Issue of shares under Zicom Employee Share and Option Plan (i)
Minimum holding share buy-back (ii)
At 30 June 2014
Issue of shares under Zicom Employee Share and Option Plan (i)
Issue of shares in lieu of cash performance bonus (iii)
At 30 June 2015
Company
Number of
ordinary shares
(Thousands)
214,752
195
(400)
214,547
555
420
215,522
Group
S$’000
37,623
60
(90)
37,593
167
102
37,862
(i)
Issue of shares under Zicom Employee Share and Option Plan (“ZESOP”)
On 1 October 2013, the Company issued and allotted 155,000 and 40,000 ordinary shares, fully paid
at A$0.17 and A$0.18 per share respectively, under the ZESOP. Such shares ranked pari passu with the
existing ordinary shares of the Company.
On 1 October 2014, 7 November 2014 and 17 March 2015, the Company issued and allotted a total of
250,000 and 305,000 ordinary shares fully paid at A$0.18 and A$0.17 per share respectively, under the
ZESOP. Such shares ranked pari passu with the existing ordinary shares of the Company.
(ii) Minimum holding share buy-back
ZGL completed a share buy-back exercise for holders of unmarketable parcels. A total of 399,367
ordinary shares were bought back by the Company at A$0.192 per share and cancelled.
(iii)
Issue of shares in lieu of cash performance bonus
Pursuant to the shareholders’ meeting held on 3 November 2014, 419,317 shares were allotted to Mr
Giok Lak Sim fully paid at A$0.22 per share as part payment of his performance bonus for the year
ended 30 June 2014. Such shares ranked pari passu with the existing ordinary shares of the Company.
84
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 20.
Cash and cash equivalents
Cash at bank and in hand
Short-term fixed deposits
Consolidated
2015
S$’000
23,108
1,026
24,134
2014
S$’000
18,895
3,433
22,328
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
24,134
(264)
23,870
22,328
(526)
21,802
Cash at bank balance amounting to S$2,580,000 as at 30 June 2015 (2014: S$2,660,000) earned interest at
floating rate based on daily bank deposit rates ranging of 0.10% to 3.51% (2014: 0.24% to 3.33 %) per annum.
The remaining cash at bank balances are non-interest bearing.
Short-term deposits are made for varying periods of one day to 3 months depending on the immediate cash
requirements of the Group and earn interests at the respective short-term rates.
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.
85
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(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 overdrafts
Bills payable
Factory loan
Term loans
Consolidated
2015
S$’000
2014
S$’000
2,580
2,660
264
313
72
6,018
6,667
526
1,073
421
892
2,912
Sensitivity analysis of interest rate risk
As at 30 June 2015, if interest rates had increased/decreased by 25 basis points with all other variables
held constant, post-tax profits for the consolidated entity for the financial year would be (S$10,000)/
S$10,000 (2014: (S$1,000)/S$1,000) lower/higher, as a result of the higher/lower interest rates.
Accordingly, the Group’s equity as at year-end will be (S$10,000)/S$10,000 (2014: (S$1,000)/S$1,000)
lower/higher.
(c)
Foreign currency risk
Foreign currency risk occurs as a result of the Group’s transactions that are not denominated in their
respective functional currencies. These transactions arise from the Group’s ordinary course of business.
The Group transacts business in various currencies and as a result, is largely exposed to movements in
exchange rates of United States dollar, Sterling pound, Euro and Australian dollar.
The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts
and payments in each individual currency. The Group also uses foreign currency forward contracts
and foreign currency options to hedge a portion of its future foreign exchange exposure purely as a
hedging tool and does not take positions in currencies with a view to make speculative gains from
currency movements.
86
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(c)
Foreign currency risk (cont’d)
The following sensitivity analysis is based on the foreign exchange risk exposure in existence at the
balance sheet date. As at 30 June, if exchange rates had moved, as illustrated in the table below, with
all other variables held constant, post-tax profit and equity would have been affected as follows:
Consolidated
USD
- strengthened 6% (2014: 3%)
- weakened 1% (2014: 3%)
EURO
- strengthened 8% (2014: 5%)
- weakened 1% (2014: 5%)
AUD
- strengthened 3% (2014: 3%)
- weakened 3% (2014: 3%)
GBP
- strengthened 5% (2014: 3%)
- weakened 5% (2014: 3%)
(d)
Credit risk
Post tax profit
Higher/(lower)
2015
S$’000
253
(42)
44
(5)
68
(68)
(2)
2
2014
S$’000
168
(168)
8
(8)
47
(47)
(5)
5
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other
receivables.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to
increased credit risk exposure. The Group trades only with recognised and creditworthy third parties.
Credit risk is monitored through careful selection of customers and their balances are monitored on an
ongoing basis with the result that the Group’s exposure of bad debts has not been significant.
87
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(d)
Credit risk (cont’d)
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the country profile of its trade
receivables on an on-going basis. The credit risk concentration profile of the Group’s trade receivables
at the balance sheet date is as follows:
Austria
Australia
Bangladesh
Germany
Hong Kong
Indonesia
Malaysia
New Zealand
People’s Republic of China
Singapore
Thailand
United States of America
Others
Consolidated
2015
2014
S$’000
% of total
S$’000
% of total
89
3,962
47
134
149
157
1,934
35
1,240
14,479
455
92
75
22,848
0.4
17.3
0.2
0.6
0.6
0.7
8.5
0.2
5.4
63.4
2.0
0.4
0.3
100
98
3,378
3,014
–
188
81
3,913
304
2,089
9,543
738
726
81
24,153
0.4
14.0
12.5
–
0.8
0.3
16.2
1.3
8.6
39.5
3.1
3.0
0.3
100
At the balance sheet date, approximately 63.2% (2014: 68.5%) of the Group’s trade receivables were
due from 7 (2014: 16) major customers.
Financial assets that are not impaired
Trade and other receivables that are not impaired are creditworthy debtors with good payment records.
Cash and short term deposits are placed with reputable banks.
As at 30 June, the ageing analysis of trade receivables that are past due but not impaired is as follows:
Less than 30 days
30 to 60 days
61 to 90 days
91 to 120 days
More than 120 days
Consolidated
2015
S$’000
2,569
3,485
613
537
1,964
9,168
2014
S$’000
4,612
1,712
1,322
164
2,833
10,643
As at 30 June 2014, trade receivables amounting to S$2,522,000 were arranged to be settled via letters
of credit issued by reputable banks in countries where the customers were based. There was no such
arrangement for trade receivables outstanding as at 30 June 2015.
88
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(d)
Credit risk (cont’d)
Financial assets that are impaired
Please refer to note 14 for details.
(e)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due
to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of stand-by credit facilities.
The following table summarises the maturity profile of the Group’s financial assets and liabilities at
the balance sheet date based on contractual undiscounted payments. The expected timing of actual
cash flows from these financial instruments may differ.
6 months
or less
S$’000
7 to 12
months
S$’000
After 1 year
but not more
than 5 years
S$’000
5 to
10 years
S$’000
Total
S$’000
23,310
1,028
1
471
24,134
48,944
6,378
6,817
15,976
29,171
19,773
–
–
–
–
–
–
–
–
–
–
–
Consolidated
2015
Financial assets:
Trade receivables
Other receivables
Investment securities
Loan receivable
Cash and bank balances
Total undiscounted financial
assets
Financial liabilities:
Trade payables
Other payables
Loans and borrowings
Total undiscounted financial
23,310
928
–
471
24,134
48,843
6,378
6,768
8,354
–
100
–
–
–
100
–
–
1
–
–
1
–
49
1,893
–
–
5,729
liabilities
21,500
1,942
5,729
Total net undiscounted financial
assets/(liabilities)
27,343
(1,842)
(5,728)
89
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(e)
Liquidity risk (cont’d)
Consolidated
2014
Financial assets:
Trade receivables
Other receivables
Investment securities
Loan receivable
Cash and bank balances
Total undiscounted financial
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
24,225
670
–
500
22,328
–
93
–
531
–
–
–
1
471
–
472
–
–
–
2,884
Total
S$’000
24,225
763
1
1,502
22,328
48,819
9,777
6,802
173
15,200
31,952
16,867
–
–
–
–
–
–
–
–
–
–
–
–
assets
47,723
624
Financial liabilities:
Trade payables
Other payables
Unrealised loss on derivatives
Loans and borrowings
Total undiscounted financial
9,777
6,217
173
10,963
–
585
–
1,353
liabilities
27,130
1,938
2,884
Total net undiscounted financial
assets/(liabilities)
20,593
(1,314)
(2,412)
(f)
Derivative financial instruments
(i)
Fair value of financial instruments that are carried at fair value
Quoted prices
in active
markets for
identical
instruments
(Level 1)
S$’000
Significant
other
observable
inputs
(Level 2)
S$’000
Significant
unobservable
inputs
(Level 3)
S$’000
Total
S$’000
1
1
–
–
–
–
1
1
Consolidated
2015
Financial assets:
Available-for-sale
At 30 June 2015
90
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(f)
Derivative financial instruments (cont’d)
(i)
Fair value of financial instruments that are carried at fair value (cont’d)
Quoted prices
in active
markets for
identical
instruments
(Level 1)
S$’000
Significant
other
observable
inputs
(Level 2)
S$’000
Significant
unobservable
inputs
(Level 3)
S$’000
Total
S$’000
1
1
–
–
–
–
173
173
–
–
–
–
1
1
173
173
Consolidated
2014
Financial assets:
Available-for-sale
At 30 June 2014
Financial liabilities:
Derivatives – foreign currency
options
At 30 June 2014
Fair value of available-for-sale financial assets is derived from quoted market prices in active
markets.
The Group enters into derivative financial instruments such as foreign currency options with
financial institutions to hedge its foreign currency risks. Such derivative financial instruments
are initially recognised at fair value on the date on which a derivative contract is entered into
and are subsequently remeasured at fair value. Any gains or losses arising from changes in fair
value of derivatives are taken directly to profit or loss.
The fair value of these foreign currency options are derived from the mark to market valuations
using the Monte Carlo valuation model which incorporates various inputs such as foreign
exchange spot and forward rates, volatility, tenure, time value and forward rates curves of the
underlying commodity. The Group’s own non-performance risk as at 30 June 2015 was assessed
to be insignificant.
Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
There were no transfers between level 1 and level 2 fair value measurements during the
financial years 2015 and 2014.
(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.
91
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(f)
Derivative financial instruments (cont’d)
(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 liabilities and bank loans bearing interest at fixed
rates, which are not carried at fair value on the balance sheet, is presented in the following
table. The fair value is estimated using discounted cash flow analysis using discount rate that
reflects the issuer’s borrowing rate at the end of the reporting period. The Group’s own non-
performance risk as at 30 June 2015 was assessed to be insignificant.
Carrying Amount
Fair Value
2015
S$’000
2014
S$’000
2015
S$’000
2014
S$’000
Financial liabilities:
Obligations under finance leases
Bank loans
607
991
985
1,703
591
907
955
1,536
22.
Capital management
The Group’s primary objective when managing capital structure is to maintain an efficient mix of debt
and equity in order to achieve a low cost of capital while taking into account the desirability of retaining
financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of
unforeseen events on cash flows.
The Group regularly reviews the company’s capital structure and make adjustments to reflect economic
conditions, business strategies and future commitments. The Group may adjust the dividend payments to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts. No changes were
made in the objectives, policies and processes during the years ended 30 June 2015 and 30 June 2014.
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 Parent and reserves. The Group’s policy is to keep its gearing ratio at less than 50%.
The gearing ratios as at 30 June 2015 and 30 June 2014 were 0% as cash and cash equivalents exceeded
interest-bearing liabilities.
92
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 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 & utilities income
- Secretarial fees
Other related parties
- Sales
Consolidated
2015
S$’000
2014
S$’000
396
721
939
119
111
24
31
167
312
464
84
134
24
268
(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.
Convertible loan stocks from Curiox Biosystems Pte Ltd (“Curiox”) amounting to S$459,000 (2014:
S$919,000) earns interest at 5% per annum. These will be either repaid or redeemed by Curiox on
31 December 2015. Zicom Holdings Private Limited holds the right to convert these into preference
shares in Curiox on the maturity date.
An amount of S$500,000 was extended to Curiox as an interest-bearing loan at 5% per annum as at
30 June 2014. This loan has been fully repaid during the current financial year.
Outstanding non-trade balances as at year-end with other related parties are unsecured, interest-free
and have no fixed terms of repayment. For information regarding outstanding balances on related
party receivables and payables at year-end, please refer to notes 14 and 16.
(c)
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
Consolidated
2015
S$
2,726,532
60,650
21,174
2,808,356
2014
S$
2,665,423
65,450
123,005
2,853,878
93
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 24.
Share-based payment plans
(a)
Recognised share-based payment expenses
During the current financial year, a credit amounting to S$30,000 was recognised in profit or loss
relating to equity-settled share-based payment transactions as it represents the movement in
cumulative expense in Singapore dollars recognised as at beginning and end of financial year.
The expense recognised for employee services received during the previous financial year for equity-
settled share-based payment transactions amounted to S$110,000.
There have been no cancellations or modifications to the plan during the years 2015 and 2014.
(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 vested options not exercised
prior to that date will be lost except for exceptional circumstances such as death or physical or mental
incapacity.
The contractual life of each option granted is 3-5 years. There are no cash-settlement alternatives.
(c)
Outstanding number of options granted under ZESOP
Outstanding at beginning of the year
Granted during the year
Forfeited during the year
Expired during the year
Exercised during the year
Outstanding at end of year
2015
(Thousands)
2014
(Thousands)
6,395
2,150
(310)
(240)
(555)
7,440
7,035
–
(170)
(275)
(195)
6,395
Exercisable at end of year
5,290
5,145
94
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 24.
Share-based payment plans (cont’d)
(c)
Outstanding number of options granted under ZESOP (cont’d)
The outstanding balance as at 30 June 2015 and 30 June 2014 is represented by:
No. of options (Thousands)
2014
135
135
1,650
1,675
215
215
1,040
1,170
80
80
–
6,395
2015
–
–
1,460
1,460
215
215
885
895
80
80
2,150
7,440
Exercise price
(Australian Cents)
28.0
28.0
18.0
18.0
18.0
18.0
17.0
17.0
17.0
17.0
20.5
Exercisable
on or after
1/5/2012
1/5/2013
1/10/2011
1/10/2012
15/11/2011
15/11/2012
1/9/2013
1/9/2014
15/11/2013
15/11/2014
1/11/2016
Expiry Date
30/4/2015
30/4/2015
30/9/2015
30/9/2015
14/11/2015
14/11/2015
31/8/2015
31/8/2015
14/11/2015
14/11/2015
31/10/2019
(d) Weighted average fair value
The weighted average fair value of options granted in the current financial year was A$0.06 (2014:
A$nil)
(e)
The weighted average share price during the period of exercise is A$0.21 (2014: A$0.22).
(f)
Option pricing model
The fair value of the equity-settled share options granted under the ZESOP is estimated as at the date
of grant using a Trinomial model taking into account the terms and conditions upon which the options
were granted. The following table lists the inputs to the model used for the share options granted in
the current financial year.
Inputs
Exercise price (A$):
Stock price at grant date (A$):
Maximum option life in years:
Volatility:
Risk free interest rate:
2015
0.205
0.205
5
35.66%
2.50%
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.
95
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 25.
Commitments
(a)
Commitments
As at year-end, the Group has the following commitments:
(i)
Issued letters of credit amounting to S$4,731,000 (2014: S$1,094,000).
(ii)
Issued letters of guarantee amounting to S$14,369,000 (2014: S$12,358,000).
(iii)
The Group entered into a foreign exchange buy contract amounting to S$109,000 (2014:
S$375,000) on 30 June 2015.
(b)
Operating lease commitments
The Group has entered into commercial leases for the use of leasehold properties and office equipment
as lessee. These leases have an average of 3 to 30 years. There are no restrictions placed upon the
Group by entering into these leases.
Future minimum lease payments for the leases are as follows:
Within 1 year
Within 2 - 5 years
More than 5 years
Consolidated
2015
S$’000
1,453
1,519
5,831
8,803
2014
S$’000
2,373
2,349
5,639
10,361
The amount of operating lease payments recognised as an expense in the year ended 30 June 2015 is
S$2,654,000 (2014: S$2,425,000).
(c)
Finance lease commitments
The Group has finance leases for certain items of plant and equipment and motor vehicles. Future
minimum lease payment under finance leases together with present value of the net minimum lease
payments are as follows:
Consolidated
Minimum
payments
2015
S$’000
Present value
of payments
2015
S$’000
Minimum
payments
2014
S$’000
Present value
of payments
2014
S$’000
Due within one year
After one year but not more than five years
Total minimum lease payments
Less: amounts representing finance charges
1,572
633
2,205
(83)
2,122
1,515
607
2,122
–
2,122
1,892
1,034
2,926
(140)
2,786
1,801
985
2,786
–
2,786
(d)
Capital commitments
As at 30 June 2015, the Group had capital commitment of S$500,000 (2014: S$nil) relating to the
additional capital injection into HistoIndex by 31 December 2015.
96
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 26.
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 and review of financial statements
Consolidated
2015
S$
2014
S$
133,627
138,255
Amounts received or due and receivable by Ernst & Young (Singapore)
- Audit and review of financial statements
230,000
217,000
Amounts received or due and receivable by other audit firms
- Audit and review of financial statements
- Taxation services
- Other non-audit services
23,358
7,766
2,211
396,962
24,886
9,259
–
389,400
27.
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
2015
S$’000
49,884
2,218
52,102
50
50
2014
S$’000
49,210
2,573
51,783
70
70
52,052
51,713
71,563
307
688
(406)
590
(20,690)
52,052
2,254
–
2,254
71,354
247
688
(200)
732
(21,108)
51,713
2,714
–
2,714
97
ANNUAL REPORT 2015Notes to the Consolidated Financial Statements (In Singapore dollars)For personal use only 27.
Parent entity disclosures (cont’d)
(b)
Guarantees
(i)
(ii)
The parent entity has issued letters of guarantee amounting to S$2,156,000 (2014:
S$3,637,000) to secure trade facilities and bank loans to controlled entities.
The parent entity has entered into a Deed of Cross Guarantee and the subsidiaries subject to
the deed is disclosed in note 11.
(c)
Contingent liabilities
The parent entity has no contingent liabilities as at 30 June 2015 and 30 June 2014.
28.
Subsequent events
On 26 August 2015, the directors declared a final unfranked dividend of 0.35 Australian cents per share for
the financial year ended 30 June 2015. This amount has not been recognised as a liability as at 30 June 2015
but will be accounted for in the next financial year.
98
Zicom Group LimitedNotes to the Consolidated Financial Statements (In Singapore dollars)For personal use only Directors’ Declaration
(In Singapore dollars)
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)
giving a true and fair view of the consolidated entity’s balance sheet as at 30 June 2015 and of its
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and Corporations Regulations 2001;
(b)
(c)
(d)
(e)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 2.2.
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 2015.
as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in Note 11 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
GL Sim
Chairman/Managing Director
29 September 2015
A N N U A L
R E P O R T 2 0 1 5
99
For 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 2015, 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
Australian 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.
100
Zicom Group LimitedFor 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 2015 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 2015.
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 Zicom Group Limited for the year ended 30 June 2015 complies with
section 300A of the Corporations Act 2001.
Ernst & Young
Ric Roach
Partner
Brisbane
29 September 2015
101
ANNUAL REPORT 2015For personal use only Information on Shareholdings
As at 29 September 2015
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
Ordinary Shares
Number of Holders
9,593
869,482
2,638,113
18,353,210
193,920,382
215,790,780
58
237
296
529
132
1,252
b)
There were 114 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:
Name
SNS HOLDINGS PTE LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JUAT KOON SIM
GIOK LAK SIM
VENTRADE (ASIA) PTE LTD
JUAT LIM SIM
BNP PARIBAS NOMS (NZ) LTD
CITICORP NOMINEES PTY LIMITED
EE GEK GOH
MR MAKRAM HANNA & MRS RITA HANNA
SIONG TECK NG
HUNG SEAH TANG
ALAN BLACKBURN & ASSOCIATES PTY LTD
FIRST CHARNOCK SUPERANNUATION PTY LTD
JUAT KHIANG SIM
DEBUSCEY PTY LTD
KOK HWEE SIM
KAILVA PTY LTD
MR CHUAN GAO
KOK YEW SIM
Substantial Shareholders
Number of Ordinary
Shares Held
Percentage of
Issued Shares
70,449,028
21,226,590
15,890,172
11,345,082
8,478,344
6,487,767
4,773,382
3,584,213
2,791,017
2,510,167
2,410,665
2,000,839
2,000,000
1,890,000
1,869,525
1,355,615
1,208,180
1,200,000
1,088,820
1,070,253
32.65%
9.84%
7.36%
5.25%
3.93%
3.01%
2.21%
1.66%
1.29%
1.16%
1.12%
0.93%
0.93%
0.88%
0.87%
0.63%
0.56%
0.56%
0.50%
0.50%
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
GIOK LAK SIM & HIS ASSOCIATES
JUAT KOON SIM & HIS ASSOCIATES
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Voting Rights
Number of Ordinary
Shares Held
Percentage of
Issued Shares
81,794,110
18,681,189
21,226,590
37.90%
8.65%
9.84%
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.
102
Zicom Group LimitedFor personal use only Corporate Directory
BOARD OF DIRECTORS
Giok Lak Sim
(Chairman and Managing Director)
Kok Hwee Sim
(Executive Director)
Kok Yew Sim
(Executive Director)
Yian Poh Lim
Frank Leong Yee Yew
Ian Robert Millard
Shaw Pao Sze
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
Thomson Geer
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 Limited
China Merchants Bank
Notice of Annual General Meeting
The Annual General Meeting of Zicom Group Limited will be held at the
The Colmslie Hotel
Corner of Wynnum and Junction Roads
Morningside, Queensland 4170
Australia
Time: 10.00am (Brisbane time)
Date: Tuesday, 17 November 2015
A formal Notice of Meeting is enclosed.
For personal use only
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Zicom Group Limited
38 Goodman Place, Murarrie QLD 4172 Australia
Telephone: +61 7 3908 6088
Facsimile: +61 7 3390 6898
www.zicomgroup.com
For personal use only