Embracing
Revolution 4.0
Annual Report 2016
Life is like riding a bicycle.
To keep your balance, you must keep moving.
- Albert Einstein (1879-1955)
For personal use only GROWTH THROUGH INNOVATIONS
Medtech
Technology
Accelerator &
Incubation
Turnkey Gas
Processing
Plants
Flip Chip
Thermal Bonding
Technology
Medtech
Translation &
Prototyping
High End
Industrial
Automation
Surgical Robot
For Prostate
Biopsy
Liver Fibrosis
Imaging / Staging
Technology
Unique Drug
Development
Technology
Integrated
Articulate Trailer
Mounted Concrete
Mixers
Electric Powered
Deep Seas Deck
Machinery
Proprietary
Soil Foundation
Solutions
CONTENTS
Chairman’s Message
Board of Directors
Company Secretaries
Corporate Chart
Key Management
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
01
02
04
05
06
07
23
24
32
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Information on Shareholdings
Corporate Directory
Notice of Annual General Meeting
33
34
35
37
97
98
100
Inside back cover
Inside back cover
For personal use only CHAIRMAN’S MESSAGE
EMBRACING REVOLUTION 4.0
“Life is like riding a bicycle. To keep your balance, you must keep moving.”
- Albert Einstein (1879-1955)
We are in an age of technological revolution – the 4th Industrial
Revolution or in Germany, “Industrie 4.0”. The global economic
and social structures are being transformed by disruptive
innovations.
The transformation of the world economy poses unprecedented
challenges to businesses and governments. To align with this
new paradigm the Board decided and invested in disruptive
technologies 6 years ago, while continuing to innovate on its
core businesses to stay relevant. As Einstein said it, to keep
our balance we must keep moving. This includes going into
uncharted territories at some short term costs.
CORE BUSINESSES
Our core businesses continue to maintain their market share.
Margins, however, have eroded due to increased competition
from shrinking demand. Growth impetus for the old economy
is not readily evident. We foresee that the world economy will
continue in the current state for the next 24 months.
TECHNOLOGY INVESTMENTS GAINING TRACTION
Our investments in technologies have largely come off their
gestation stage and are gaining traction in commercialisation. On
the semiconductor sector, our fine pitch flip chip bonder which
is in the forefront of the technology, has successfully achieved a
major breakthrough. In recent months we have secured our first
order of more than 10 machines from one of the world’s leading
chip assemblers against established competitors. Shipment
will be completed by October 2016. This positions us to scale
commercialisation of the product. We are close to installing
20 units of our surgical robots worldwide covering Australia,
Japan, USA, UK, Germany, Italy, apart from Singapore, by the
first quarter of 2017. With the various centers of excellence
established as key reference sites, distributors have taken interest
and this will enable us to launch full scale commercialisation in
the respective countries. Our drug development instrumentation
is achieving break-even. Scalable growth is fast gaining traction
and momentum. All other recent technology investments are on
track to achieve their milestones.
UNLOCKING VALUES
The Group is therefore now able to position itself to unlock
values in its technology investments. It has commenced towards
clustering these investments for an IPO. The unlocking of these
investments will strengthen the Group’s financial position and at
the same time enable it to re-define its directions and objectives.
STAYING RELEVANT
The Group suffered setbacks in the preceding few years partly
due to the global slowdown and partly to gestation costs of the
technology investments. Your board is confident that the Group
will emerge into a stronger state in the coming years fully relevant
in the age of technological revolution.
APPRECIATION
I am grateful to the board members, the management and
all employees for their support in embracing the current
technological revolution. We are confident of a new and broader
horizon in the offing. I thank all the shareholders for their patience
and support.
G L Sim
Chairman
ZICOM GROUP LIMITED | Annual Report 2016
1
For personal use only BOARD OF DIRECTORS
Executive Directors
GIOK LAK SIM, FCPA
Chairman and Group Managing Director,
Age 70
KOK HWEE SIM, BSc, MSc
Executive Director, Age 38
KOK YEW SIM, BSc
Executive Director, Age 36
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
Member, Board of Governors, UOB-SMU
Asian Enterprise Institute
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, he
focuses on developing capabilities and
infrastructure to support the expansion
of the Group’s investments in the
technology cluster. Mr Sim is also the Chief
Executive Officer of Biobot Surgical Pte
Ltd and 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. He 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 Kok Yew 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 is also the Deputy
Chairman of iPtec Pte Ltd, the medtech
translation subsidiary, and 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
CEO of Biobot Surgical Pte Ltd
CEO 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
89,345,442 ordinary shares
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
1,538,180 ordinary shares and 300,000
options
1,350,253 ordinary shares and 300,000
options
2
ZICOM GROUP LIMITED | Annual Report 2016
For personal use only Independent Directors
BOARD OF DIRECTORS
YIAN POH LIM, BSc, MSc
Independent Director, Age 70
FRANK LEONG YEE YEW,
MBA, FCA (ENGLAND &
WALES), FCA (SINGAPORE)
Independent Director, Age 73
IAN ROBERT MILLARD,
FCA, FAICD
Independent Director, Age 77
Experience and expertise
Experience and expertise
Experience and expertise
Appointed to the Board on 24
July 2006. Mr 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. Mr Lim 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. Mr Leong
is also the Honorary Treasurer
of The Children’s Charities
Association of Singapore.
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.
SHAW PAO SZE
Independent Director, Age 72
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
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
Independent Director of TTJ
None
Holdings Limited (appointed
4 November 2008)
Holdings Limited (appointed
11 January 2010)
Synergy Metals Ltd (Australia)
(appointed 15 October 2010)
Lead Independent Director
of TTJ Holdings Limited
(appointed 5 July 1996)
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
Non-Executive Director of
Cesco Australia Limited
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
NIL
ZICOM GROUP LIMITED | Annual Report 2016
3
For personal use only COMPANY SECRETARIES
LIM BEE CHUN, JENNY, FCCA
Joint Company Secretary, Age 43
SURENDRA KUMAR, CPA
Joint Company Secretary, Age 56
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 Limited
Company Secretary of Cesco Australia
Limited and Cesco Equipment Pty
Limited
Relevant interests in shares and
options as at date of signing the
Directors’ Report
944,563 ordinary shares and 200,000
options
Relevant interests in shares and
options as at date of signing the
Directors’ Report
15,000 ordinary shares
4
ZICOM GROUP LIMITED | Annual Report 2016
For personal use only CORPORATE CHART
ZICOM GROUP LIMITED
ZICOM HOLDINGS
PRIVATE LIMITED
Singapore 100%
Investment Holding
CESCO AUSTRALIA LIMITED
Australia 100%
Concrete Mixers
DEQING CESCO
MACHINERY CO LTD
China 100%
Concrete Mixers
ZICOM CESCO
ENGINEERING CO LTD
Thailand 100%
Concrete Mixers
CESCO EQUIPMENT PTY LTD
Australia 100%
Engineered Products
ZICOM CESCO THAI CO LTD
Thailand 100%
Dormant
ZICOM THAI HYDRAULICS
CO LTD
Thailand 100%
Hydraulics Systems
FA GEOTECH EQUIPMENT
SDN BHD
Malaysia 100%
Foundation Equipment
INVESTMENT HOLDING
COMPANY
CONSTRUCTION
EQUIPMENT
OFFSHORE MARINE,
OIL & GAS MACHINERY
PRECISION ENGINEERING &
TECHNOLOGIES
FOUNDATION ASSOCIATES
ENGINEERING PRIVATE LIMITED
Singapore 100%
Foundation Equipment
FAE CONSTRUCTION PTE LTD
Singapore 100%
Foundation Works &
Marine Construction
ZICOM PRIVATE LIMITED
Singapore 100%
Marine Deck Machinery
FAEQUIP CORPORATION
Philippines 100%
Foundation Equipment
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%
Semiconductor Equipment
SAEDGE VISION SOLUTIONS
PTE LTD
Singapore 96%
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
ZICOM GROUP LIMITED | Annual Report 2016
5
For 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
Peck Hua Ng
EXECUTIVE DIRECTOR
Teck Meng Liew
FAE CONSTRUCTION PTE LTD
EXECUTIVE DIRECTORS
Peck Hua Ng
Teck Meng Liew
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
EXECUTIVE DIRECTORS
Kok Hwee Sim - CEO
Kok Yew Sim
IPTEC PTE LTD
MANAGING DIRECTOR
Gary Lee Kim Hin
EXECUTIVE DIRECTORS
Kok Hwee Sim
Kok Yew Sim
6
ZICOM MEDTACC PRIVATE LIMITED
EXECUTIVE DIRECTORS
Kok Hwee Sim - CEO
Kok Yew Sim
Peter Cheng Tim Kum
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
Tony Low Boon Koon
CHINA
DEQING CESCO MACHINERY CO LTD
MANAGING DIRECTOR
Chin Ming Tan
ZICOM GROUP LIMITED | Annual Report 2016For personal use only 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 2016.
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, gas metering stations,
gas processing plants, foundation equipment, concrete mixers and precision engineered machinery, rental of foundation
equipment, supply of medtech equipment and products, 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 (loss)/profit after tax attributable to equity holders of the Parent
Change
%
- 9.0
- 185.7
Year ended
30 June 16
S$ million
Year ended
30 June 15
S$ million
115.66
(2.09)
127.12
2.44
The Group’s cash balances remain healthy. As at 30 June 2016, the Group’s total cash and bank balances were
S$20.56m as compared with S$24.13m as at 30 June 2015.
Dividends
The Group has decided to pay a final dividend of 0.20 Australian cents per share (2015: 0.35 Australian cents) making the
full year dividends to 0.45 Australian cents per share (2015: 0.70 Australian cents). This final dividend will be paid out of
Conduit Foreign Income under the provision 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 30 November 2016 and is payable on 15 December 2016.
ZICOM GROUP LIMITED | Annual Report 2016
7
DIRECTORS’ REPORT 2016For personal use only Review of Operations
The Group’s consolidated revenue for the full year is S$115.66m as compared with S$127.12m in the previous year, a
decrease of 9.0%. The Group’s full year net consolidated loss after tax attributable to members to 30 June 2016 are
S$2.09m as compared with the net consolidated profit of S$2.44m in the previous year, a decrease of 185.7%.
The net profit margin achieved for the full year is -1.8% as compared with 2.0% in the previous year, a drop of 3.8%.
Losses per share for the year is Singapore 0.96 cents compared to earnings per share of Singapore 1.13 cents in the
previous year, a decrease of Singapore 2.09 cents.
Net tangible assets per share decreased from Singapore 34.45 cents to 32.45 cents per share.
Return on equity, based on average of the opening and closing equity, for the year was -2.4% as compared to 2.7% in 2015.
The average rates for currency translation for transactions and cash flows are A$1 to S$1.0106 (2015: S$1.0864) for the
year ended 30 June 2016 and balances A$1 to S$1.0026 (2015: S$1.0323) as at 30 June 2016, reflecting a weakened A$.
The results for the full year have been adversely affected generally by a global economy that deteriorated more rapidly
than foreseen. Lower margin had been caused by price pressures, notwithstanding during the year general overheads had
been reduced by S$8.5m.
The main segments that were severely affected were the offshore marine sector, the construction sector as well as the
precision engineering sector. However, the oil and gas sector had performed better than expected and is expected
to remain resilient as stronger and better project management controls are in place and strengthened. Low oil prices
are expected to stay. Consolidation in the construction sector is expected to continue. Governments continue to
maintain regulatory measures to control industry-related growing debts amidst an atmosphere of low interest regime
that has become common stimulus measures to support demand in sagging economies. The precision engineering
and technologies sector is expected to improve as the semiconductor industry has, in recent months, shown marked
improvements and gestation costs of our medical technology investments are trending lower, as their products and
services enter into commercialisation.
The precision engineering and technologies segment is due for restructuring. Our investments in this segment have
matured into a growth stage. Marketing development costs are expected to increase in scaling up growth. In addition,
continuous investments in new technologies will be required to develop and strengthen this segment into an integrated
business. The Group aims to develop this business into an integrated ecosystem for investment, development,
manufacturing and marketing of medical technologies, products and services for the global market. The Group owns
several disruptive technologies with strong capacity for exponential growth. The Board has considered that these
investments are due to unlock their values. A potential spin-off in the form of a public listing in which new funds will be
raised to accelerate growth in this sector is under planning and consideration.
The global economies, and in particular the Asian regional economies, are expected to encounter continuous headwinds
for some time to come. No definitive sign of the next growth catalyst has so far emerged. The Group’s decision to invest
in technologies has been a recognition that emerging trends of such a state had become apparent in the last decade,
as emerging technologies had been proven to be disrupting the world economic order. Technology driven companies
have outgrown businesses which had taken generations to build in a relatively short period of 2 decades. Some of these
companies have even upstaged many of these businesses to become top ranking leaders in value. The 4th industrial
revolution has begun.
The Group’s existing established businesses are leaders in the respective segments. We are confident to maintain our
position in these mature market segments. Growth, however, is expected to be somewhat restrained. Innovations in these
segments are critical to augment and to ride the next wave.
8
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only Segmental Revenue
The following is an analysis of the segmental revenue:-
Revenue by Business Segments
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Technologies
Industrial & Mobile Hydraulics
Offshore Marine, Oil & Gas Machinery
Change
%
+ 15.16
- 17.71
- 43.24
- 6.45
Year ended
30 June 16
S$ million
Year ended
30 June 15
S$ million
59.26
41.27
13.01
2.32
51.46
50.15
22.92
2.48
Demand for offshore marine, oil and gas machinery increased by 15.16% in the current year as compared with the
previous year. However low oil prices are expected to continue as, in the midst of reduced demand, incumbent suppliers
no longer act in concert to control production, each maintaining its production levels to keep its market share. The
strategy to keep shale oil production off the market as well as to leverage against oil producing countries emerging from
political isolation from taking market share, further compounds the situation.
An expected prolonged low oil prices has caused the industry to greatly curtail their capital expenditure. This has greatly
reduced demand for services and sales of equipment. Several offshore marine service companies have in recent months
faced insolvency problems.
The Group’s customers are diverse ranging from those servicing the offshore marine sector, rescue and salvage operations
as well as port operations. Due to our established reputation, we are hopeful of continuous demand in certain niche areas,
although overall demand is expected to remain subdued.
The Group has strengthened its oil and gas engineering and project management teams. This has enabled us to secure
significant turn-key contracts during the year that are progressing well. These projects contribute positively to ameliorate
the setbacks in offshore marine sector. We are confident of securing more of such projects.
As at the end of the financial year just ended, total confirmed orders in hand to be delivered in the financial year 2017 for
this segment were S$25.6m.
Construction Equipment
Revenue from sales and rental of construction equipment decreased by 17.71% in the current year as compared with the
previous year.
Demand for sales and rental of foundation equipment in Singapore and Malaysia are expected to be challenging in the
next financial year. Although governments continue to fund infrastructure projects, residential construction has slumped
due to oversupply and governments’ control measures. Demand for equipment has dropped. This is not expected to
improve in the next 2 years.
The demand for concrete mixers in Australia and Thailand remain strong but margins may be affected by currency
fluctuations. We are confident that this sector is expected to be profitable in the next 2 years. Notwithstanding subdued
demand in construction equipment generally, cyclical demand for infrastructure works in these two countries is expected
to continue to generate demand for concrete mixers.
As at the end of the financial year, total confirmed orders in hand to be delivered in the financial year 2017 for this segment
were S$5.2m.
ZICOM GROUP LIMITED | Annual Report 2016
9
DIRECTORS’ REPORT 2016For personal use only Precision Engineering & Technologies
Precision Engineering
The precision engineering sector suffered a significant drop in revenue of 43.24%. This sector suffered from a prolonged
slack in the semiconductor industry and protracted gestation in our technology investments. The Group’s direction in
investing in disruptive technologies with precision engineering as the core pillar of this cluster in the last few years further
impacted against this sector.
The Group is pleased that each of these investments has entered into commercialisation and gestation costs are trending
down. Coupled with the improving semiconductor industry, we are confident that our precision engineering sector will
experience positive growth and results in the coming years.
Semiconductor Technology
We are pleased that after a few years of gestation, our fine pitch flip chip bonding machine has achieved a significant
breakthrough in the semiconductor industry. Our latest machine design has been evaluated and been proven by world
leading chip packaging companies to have met the advance requirements for bonding and packaging of the latest
high capacity chips for smart hand-held devices. As a result, we have recently secured our first order of more than 10
machines. These machines will be delivered in the first quarter of the financial year 2017. This breakthrough proves that
our technology has stayed ahead of the curve of industry’s needs and is now able to meet their requirements.
We are confident of securing more orders. This sector is expected to contribute to Group’s profits in the next financial year.
Medtech Technology
The Group’s medtech investments have generally entered into commercialisation. Each of these investments aims to
achieve break-even within the next 12-18 months and position themselves for growth. Gestation costs are trending down.
However marketing costs are expected to increase to scale growth globally.
These investments are due to unlock their values and the Board is considering to cluster these together with our
precision engineering and manufacturing sector to seek an IPO to raise further funds to scale growth globally. Further
announcements on these efforts will be made to the ASX at the appropriate time.
As at the end of the financial year, total confirmed orders in hand to be delivered in the financial year 2017 for this cluster
were S$17.4m.
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$0.36m as compared to S$0.81m in the previous year.
10
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only Financial Position
The group’s financial position remains strong:-
Classification
Net assets
Net working capital
Cash in hand and at bank
Gearing Ratio
Decrease
S$ million
As at 30 June 16
S$ million
As at 30 June 15
S$ million
4.35
4.28
3.57
85.09
41.34
20.56
89.44
45.62
24.13
The Group’s gearing ratio is 0% at the same ratio as for the year ended 30 June 2015 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
2016
Singapore Cents
2015
Singapore Cents
2.09
(0.96)
1.13
The weighted average shares used to compute basic earnings per share are 216,702,764 for this year and 215,184,912
for the previous year.
Classification
Decrease
Singapore Cents
As at 30 June 16
Singapore Cents
As at 30 June 15
Singapore Cents
Net tangible assets per share
2.00
32.45
34.45
Net tangible assets per share has decreased due to the Group’s operational loss for the year and translation loss arising
from the depreciation of functional currencies of foreign operations.
Capital Expenditure
For the year ending 30 June 2017, the Group does not plan to invest in any capital equipment.
ZICOM GROUP LIMITED | Annual Report 2016
11
DIRECTORS’ REPORT 2016For personal use only Confirmed Orders
We have a total of S$48.4m (30 June 2015: S$86.0m) outstanding confirmed orders in hand as on 30 June 2016. A
breakdown of these outstanding confirmed orders is as follows:-
Offshore Marine, Oil & Gas Machinery
Construction Equipment
Precision Engineering & Technologies
Industrial & Mobile Hydraulics
Total
S$ m
25.6
5.2
17.4
0.2
48.4
These outstanding orders are scheduled for delivery in the financial year 2017. Prospects for ongoing orders continue to
be promising.
Prospects
The global economic environment has been challenging for the year just ended and is expected to continue for the next
2 years. No growth impetus is apparent. Uncertainties surrounding the impending United States presidential election,
the recent Brexit scenario coupled with the continuing uncertainty in Asia’s biggest economies, China and Japan, cast
a darker and longer shadow over global growth than in previous years. Governments appear to have exhausted most
measures, focusing on tweaking interest rates, even to negative level, to stimulate domestic demand. This may create a
vicious circle that leads to more future volatility and uncertainties.
The Group believes that it should not be distracted by the above factors that are generally politically driven and are
beyond its control. It therefore focuses to ensure that its business strategy and direction for the future align with economic
fundamentals arising from the disruption by the 4th industrial revolution that has gathered dynamic traction.
The Board is confident that given the directions adopted by the Group, we are well positioned for sustainable growth for
the medium to long term. Short term setbacks, which have always been funded by internal resources without borrowings,
are to be considered as part of the costs of the Group’s restructuring efforts.
Order prospects for the Group continue to be strong. As such, the Group is confident of a profitable year in 2017.
Subsequent Events after the Balance Sheet Date
On 31 August 2016, the directors declared a final unfranked dividend of 0.20 Australian cents per share for the financial
year ended 30 June 2016 which has not been provided for in the financial statements of the current year.
On 21 September 2016, FAEQUIP Corporation was incorporated in the Philippines by Foundation Associates Engineering
Private Limited, a wholly-owned subsidiary of Zicom Holdings Private Limited, with a paid up capital of PHP9,500,000.
FAEQUIP Corporation, a wholly-owned subsidiary, is principally engaged in trading and rental of foundation equipment and
the provision of construction services.
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.
12
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only 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 number of meetings attended by each director were:
Full meetings of directors
Audit
Nomination &
Remuneration
Meetings of Committees
A
5
4
5
5
4
5
5
B
5
5
5
5
5
5
5
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 Ian R Millard and Yian Poh Lim 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, 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 2016.
ZICOM GROUP LIMITED | Annual Report 2016
13
DIRECTORS’ REPORT 2016For personal use only 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
(Chairman and Managing Director)
(Executive Director)
(Executive Director)
(Independent Director)
(Independent Director)
(Independent Director)
(Independent Director)
(ii)
Senior Executives
J L Sim
H S Tang
(Joint Managing Director of Zicom Private Limited and Director of Zicom Holdings Private Limited)
(Joint Managing Director of Zicom Private Limited and Director of Zicom Holdings Private Limited)
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.
14
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only 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 2016 Annual General Meeting.
The Board recommends that total directors’ fees for Non-Executive Directors for the financial year ending 30 June
2017 be fixed at a maximum sum of A$150,000 (S$154,000) at the same level as the previous year.
Executive directors and senior executives
All remuneration paid to executive directors and senior executives comprises the following components:
•
•
•
•
Base pay and benefits;
Short term incentives;
Other remuneration such as superannuation; and
Participation in the Zicom Employee Share and Option Plan.
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.
ZICOM GROUP LIMITED | Annual Report 2016
15
DIRECTORS’ REPORT 2016For personal use only 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 2016. 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 2016 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 minimum performance bonus of 5%
but not exceeding 10% 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.
16
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only 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, 600,000 share options (2015: 2,150,000) were granted. In the same period,
employees exercised options to acquire 1,619,000 (2015: 555,000) fully paid ordinary shares in Zicom Group
Limited at a weighted average exercise price of A$0.18 (2015: A$0.17) per share. 3,651,000 (2015: 240,000) share
options expired during the financial year.
There were 2,750,000 unissued ordinary shares under options at the reporting date and the date of this report.
Company Performance
The table below shows the performance of the Group for the past 5 financial years:
Earnings per share (Australian cents)
Dividends per share (Australian cents)
Closing share price (Australian cents)
Net tangible assets per share (Australian cents)
2016
(0.95)
0.45
17.00
32.37
2015
1.04
0.70
20.50
33.37
2014
1.65
0.90
22.00
29.64
2013
2.56
1.00
23.00
29.96
2012
2.83
1.00
15.00
26.49
ZICOM GROUP LIMITED | Annual Report 2016
17
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ZICOM GROUP LIMITED | Annual Report 2016
19
DIRECTORS’ REPORT 2016For personal use only
Details of share options to key management personnel
Options granted to, vested, exercised or expired during the years 2016 and 2015 as well as their outstanding options held
as at year end are shown in the tables below.
30 June 2016
Value of
options
expired Exercisable
Not
Exercisable
Balance at
1 July 2015 Granted
Options
exercised Expired
Balance at
30 June
2016
Value of
options
granted
S$
–
280,000
280,000
–
–
–
30,000
–
300,000
300,000
–
–
–
–
–
–
–
(280,000)
–
(280,000)
–
–
–
–
–
–
– (30,000)
–
300,000
300,000
–
–
–
–
–
7,650
7,650
–
–
–
–
S$
–
–
–
–
–
–
3,538
200,000
480,000
1,270,000
–
–
600,000
–
200,000
–
(100,000) (180,000)
200,000
(660,000) (210,000) 1,000,000
–
–
15,300
–
19,108
22,646
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
–
–
–
–
–
–
–
–
–
–
–
300,000
300,000
–
–
–
–
200,000
200,000
1,000,000
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$
Directors
G L Sim
K H Sim
K Y Sim
Y P Lim
F Leong
I R Millard
S P Sze
–
280,000
280,000
–
–
–
30,000
Executives
280,000
J L Sim
280,000
H S Tang
H J Zhang
280,000
J Khiang Sim 280,000
1,710,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
–
–
–
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
–
–
–
30,000
–
–
–
–
–
–
–
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
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.
20
ZICOM GROUP LIMITED | Annual Report 2016
DIRECTORS’ REPORT 2016For personal use only The terms and conditions of the options granted to key management personnel during the financial years ended 30 June
2016 and 30 June 2015 are as follows:
Grant date
Fair value per option at grant date
Exercise price
First Exercise date
Last Exercise date
2016
1/12/2015
A$0.04
A$0.18
1/12/2016
30/11/2020
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 2016 and 30 June 2015 are as follows:
30 June 2016
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
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 2015
Granted as
remuneration
Options
exercised
Net change
other
Balance as at
30 June 2016
80,758,915
1,258,180
1,070,253
488,000
624,364
592,250
–
6,687,767
2,470,699
93,950,428
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
–
–
–
–
8,586,527
–
–
–
–
–
–
89,345,442
1,538,180
1,350,253
488,000
624,364
592,250
–
–
100,000
660,000
–
(459,360)
8,127,167
6,687,767
2,111,339
102,737,595
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
–
–
–
–
–
–
–
2,865,230
–
–
–
100,000
–
–
80,758,915
1,258,180
1,070,253
488,000
624,364
592,250
–
280,000
–
–
–
280,000
–
–
–
–
2,965,230
6,687,767
2,470,699
795,939
1,789,525
96,535,892
There were no other transactions and balances with key management personnel and their related parties during the year.
ZICOM GROUP LIMITED | Annual Report 2016
21
DIRECTORS’ REPORT 2016For personal use only DIRECTORS’ REPORT 2016
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 ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
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
30 September 2016
22
ZICOM GROUP LIMITED | Annual Report 2016
For personal use only As lead auditor for the audit of Zicom Group Limited for the financial year ended 30 June 2016, I declare to the best of my
knowledge and belief, there have been:
a)
b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Zicom Group Limited and the entities it controlled during the financial year.
Ernst & Young
Tom du Preez
Partner
30 September 2016
ZICOM GROUP LIMITED | Annual Report 2016
23
to the Directors of Zicom Group LimitedAUDITOR’S INDEPENDENCE DECLARATIONFor personal use only 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.
24
ZICOM GROUP LIMITED | Annual Report 2016
CORPORATE GOVERNANCE STATEMENTFor personal use only 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 senior executives, 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:
•
•
•
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 Directors. In addition the committee formulates the
remuneration policies for the Board Members and Managing Director of the Group.
For details on the number of meetings of the Nomination and Remuneration Committee held during the year and the
attendees at those meetings, please refer to page 13 of the Directors’ Report.
ZICOM GROUP LIMITED | Annual Report 2016
25
CORPORATE GOVERNANCE STATEMENTFor personal use only 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 not 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 20% shareholding if a private company or 2% if a listed company.
26
ZICOM GROUP LIMITED | Annual Report 2016
CORPORATE GOVERNANCE STATEMENTFor personal use only Mr Frank Leong has no relationships or interests that would affect his role as an independent director.
Mr Y P Lim has no relationships or interests that would affect his role as an independent director.
Mr Ian R Millard has no relationships or interests that would affect his role as an independent director.
Mr S P Sze has no relationships or interests that would affect his role as an independent director.
Mr K H Sim is an Executive Director and therefore is considered by the Board to be not independent.
Mr K Y Sim is an 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
21 years
9 years
2 years
Independent
Mr Ian R Millard
10 years
Mr Y P Lim
10 years
Mr Frank Leong
10 years
Mr S P Sze
6 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.
ZICOM GROUP LIMITED | Annual Report 2016
27
CORPORATE GOVERNANCE STATEMENTFor personal use only Principle 3: Act Ethically and Responsibly
Code of Conduct
The Board expects all Directors, officers, employees and consultants to 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 and 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:
•
•
•
•
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:
•
•
•
Mr Ian R Millard (Chairman)
Mr Frank Leong
Mr Y P Lim
The Audit Committee operates in accordance with a charter. The main responsibilities of the Audit Committee are to:
•
•
Review, assess and approve the annual report, the half year financial report and all other financial information
published by the Company or released to the market.
Review the effectiveness of the Group’s internal control environment, including effectiveness and efficiency of
operations, reliability of financial reporting and compliance with applicable laws and regulations.
28
ZICOM GROUP LIMITED | Annual Report 2016
CORPORATE GOVERNANCE STATEMENTFor personal use only •
•
•
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 the management team 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 external Auditor without management present and rights to seek
explanations and additional information from both management and auditor.
For details on the number of meetings of the Audit Committee held during the year and the attendees at those meetings,
please refer to page 13 of the Directors’ Report.
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
relevant financial year have been properly maintained in accordance with the Corporations Act, the financial statements
and the notes for the financial year comply with accounting standards and present a true and fair view of the financial
position and performance of the entity.
The Company’s external Auditor is 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.
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:
•
•
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
Auditor will attend AGM and is available to answer any shareholder 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.
ZICOM GROUP LIMITED | Annual Report 2016
29
CORPORATE GOVERNANCE STATEMENTFor personal use only •
•
ASX Announcements: all ASX announcements, including annual and half year financial reports are posted on
the Company’s website as soon as these 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 2001, 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.
The board acknowledges that such internal control assurance is 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.
For details on the number of meetings of the Nomination and Remuneration Committee held during the year and the
attendees at those meetings, please refer to page 13 of the Directors’ Report.
Details of the remuneration for Directors and Key Management Personnel can be found in the Directors’ Report within the
Annual Report.
30
ZICOM GROUP LIMITED | Annual Report 2016
CORPORATE GOVERNANCE STATEMENTFor personal use only The Managing Director and Executive Directors receive performance based remuneration. In addition, the Managing
Director has renewed his service agreement with the Group for a term of another 5 years from 1 July 2016. 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, the Board must take account of the time demands on the
Directors together with 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
elements under equity-based remuneration schemes are not allowed.
ZICOM GROUP LIMITED | Annual Report 2016
31
CORPORATE GOVERNANCE STATEMENTFor personal use only 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
(Loss)/profit before taxation
Tax (expense)/benefit
Note
2016
S$’000
2015
S$’000
5
5
5
12
6
113,897
124,586
1,761
2,530
(67,941)
(28,564)
(5,604)
(2,398)
(11,999)
(467)
(382)
(1,697)
(878)
(67,660)
(33,110)
(5,762)
(2,919)
(15,678)
(497)
(316)
1,174
797
(Loss)/profit for the year from continuing operations after taxation
(2,575)
1,971
Other comprehensive income:
Items that may be subsequently reclassified to profit and loss
Share of other comprehensive income of associates
Foreign currency translation on consolidation
Effect of tax on other comprehensive income
Other comprehensive loss for the period, net of tax
10
(855)
–
(845)
(31)
(249)
–
(280)
Total comprehensive (loss)/income
(3,420)
1,691
(Loss)/profit attributable to:
Equity holders of the Parent
Non-controlling interests
(Loss)/profit for the year
Total comprehensive (loss)/income attributable to:
Equity holders of the Parent
Non-controlling interests
Total comprehensive (loss)/income
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
32
ZICOM GROUP LIMITED | Annual Report 2016
(2,086)
(489)
2,437
(466)
(2,575)
1,971
(2,931)
(489)
2,157
(466)
(3,420)
1,691
7
7
(0.96)
(0.96)
1.13
1.13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 30 June 2016(In Singapore dollars)For personal use only ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Investment in associates
Others
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Gross amount due from customers for contract work
Convertible loan receivable from an associate
Prepayments
Tax recoverable
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities
Payables
Gross amount due to customers for contract work
Interest-bearing liabilities
Provisions
Provision for taxation
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 LIABILITIES AND EQUITY
Note
2016
S$’000
2015
S$’000
9
10
6
12
20
13
14
15
12
16
15
17
18
17
6
18
19
24,728
14,632
2,378
6,886
1
48,625
20,557
22,427
15,512
11,735
–
786
17
71,034
28,669
15,197
3,213
5,015
1
52,095
24,134
26,411
25,647
3,769
459
430
86
80,936
119,659
133,031
18,176
2,580
7,352
1,069
513
29,690
19,867
3,830
9,915
1,454
252
35,318
41,344
45,618
2,584
1,954
339
4,877
5,549
2,371
358
8,278
34,567
43,596
85,092
89,435
38,314
(2,437)
49,146
85,023
69
37,862
(1,136)
52,211
88,937
498
85,092
89,435
119,659
133,031
ZICOM GROUP LIMITED | Annual Report 2016
33
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34
ZICOM GROUP LIMITED | Annual Report 2016
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 2016(In Singapore dollars)For personal use only
Cash flows from operating activities:
Operating (loss)/profit before taxation
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Bad debts written off
Allowance for doubtful debts, net
Allowance for inventory obsolescence, net
Inventories written off
Finance costs
Interest income
Property, plant and equipment written off
Intangible assets written off
Gain on disposal of property, plant and equipment, net
Loss on subsidiary company struck off
Forfeiture of customer deposit
Trade and other payables written back
Provisions (written back)/made, net
Share-based payments
Share of results of associates
Unrealised exchange difference
Operating profit before reinvestment in working capital
Decrease in stocks and work-in-progress
(Increase)/decrease in projects-in-progress
Decrease in debtors
Decrease in creditors
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Note
2016
S$’000
2015
S$’000
(1,697)
1,174
9
10
5
5
5
5
5
5
5
5
5
5
5
18
4,536
1,068
130
160
224
7
467
(81)
36
22
(46)
–
(45)
(6)
(177)
83
382
(422)
4,641
4,397
(9,216)
9,468
(3,360)
5,930
81
(480)
(102)
4,863
899
1
107
77
8
497
(243)
32
34
(53)
15
(639)
(8)
750
(29)
316
65
7,866
2,130
6,280
1,707
(11,044)
6,939
232
(489)
(517)
Net cash generated from operating activities
5,429
6,165
Cash flows from investing activities:
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of computer software
Increase in development expenditure
Increase in patented technology
Investment in associates
Decrease in amounts due from associate
9(b)
9(c)
10
10
12(b)
(794)
115
(39)
(506)
(41)
(1,765)
–
(2,428)
125
(203)
(1,512)
(85)
(3,002)
1,306
Net cash used in investing activities
(3,030)
(5,799)
ZICOM GROUP LIMITED | Annual Report 2016
35
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 30 June 2016(In Singapore dollars)For personal use only Cash flows from financing activities:
(Repayment of)/proceeds from bank borrowings
Dividends paid on ordinary shares
Proceeds from issue of shares by subsidiary company to non-controlling
interests
Proceeds from exercise of employee share options
Repayment of hire purchase creditors
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
2016
S$’000
2015
S$’000
8
20
20
(3,434)
(1,336)
43
287
(1,693)
5,576
(1,892)
–
107
(1,920)
(6,133)
1,871
(3,734)
(155)
23,870
2,237
(169)
21,802
19,981
23,870
36
ZICOM GROUP LIMITED | Annual Report 2016
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 30 June 2016(In Singapore dollars)For personal use only 1.
Corporate information
This financial report of Zicom Group Limited (the “Company” or “Parent Entity”) and its subsidiaries (collectively, the
“Group” or “consolidated entity”) for the year ended 30 June 2016 was authorised for issue in accordance with a
resolution of the directors on 30 September 2016.
Zicom Group Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange. The Company is also the ultimate parent.
The nature of the operations and principal activities of the Group are described in the Directors’ report.
2.
Summary of significant accounting policies
2.1 Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board (“AASB”). The financial report has also been
prepared on a historical cost basis except for derivative financial instruments which have been measured at
their fair values.
The financial report is presented in Singapore dollars and all values are rounded to the nearest thousand
dollars (S$’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 applied for the first time certain standards and amendments, which are effective for annual
periods beginning on or after 1 July 2015. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
The adoption of these standards and interpretations did not have any effect on the financial
performance or position of the Group.
(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. 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 except for the standards disclosed below for which the directors have yet to finalise their
assessment of the impact.
•
•
AASB 9 Financial Instruments (Effective for annual periods on or after 1 July 2018)
AASB 15 Revenue from Contracts with Customers (Effective for annual periods on or after
1 July 2018)
•
AASB 16 Leases (Effective for annual periods on or after 1 July 2019)
ZICOM GROUP LIMITED | Annual Report 2016
37
NOTES 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
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
as at 30 June 2016. 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. Specially, the Group controls an investee if and only if the Group has:
•
•
•
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:
•
•
•
The contractual arrangement(s) 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 loses 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.
In the Parent Entity’s separate financial statements, investments in subsidiaries are accounted for at cost less
impairment losses.
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
recognise in profit or loss. Any investment retained is recognised at fair value.
38
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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
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, the previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date 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,
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.
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. 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.
ZICOM GROUP LIMITED | Annual Report 2016
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.5 Operating segments (cont’d)
Operating segments have been identified based on the information provided to the chief operating decision
makers – being the executive management team.
The group aggregates two or more operating segments when they have similar economic characteristics and
the segments are similar in each of the following respects:
•
•
•
•
Nature of the products and services
Type or class of customer for the products and services
Methods used to distribute the products or provide the services, and
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
(a)
Functional and presentation currency
The presentation currency of Zicom Group Limited is Singapore dollars (S$). Each subsidiary in the
Group determines its own functional currency and items included in the financial statements of each
subsidiary company are measured using that functional currency.
(b)
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 retranslated 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 at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value 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.
40
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.6
Foreign currency (cont’d)
(c)
Consolidated financial statements
On consolidation, the results and balance sheet of foreign operations are translated into Singapore
dollars using the following procedures:
•
•
Assets and liabilities are translated at the closing rate prevailing at the reporting date; 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.
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.
ZICOM GROUP LIMITED | Annual Report 2016
41
NOTES 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)
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
amortisation method are reviewed at least at each financial year-end. Changes in the 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.
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
5 years
8 years
7 years
5 – 10 years
10 – 20 years
12 – 14 years
Research and development costs
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 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.
42
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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)
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.
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 generally cover a period of one to 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.
ZICOM GROUP LIMITED | Annual Report 2016
43
NOTES 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)
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 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 Group’s share of results 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 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 amount in profit or loss.
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 the retained interest at 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 recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.
44
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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)
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:
•
•
•
•
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.
(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 investments
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 measured 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 2016 and 2015.
ZICOM GROUP LIMITED | Annual Report 2016
45
NOTES 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)
(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 or 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 in 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 when the investment is determined to be impaired,
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.
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 other 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 exists 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 assets with similar credit risk characteristics and collectively assesses them for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is, or continues
to be, recognised are not included in a collective assessment of impairment.
46
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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)
(ii)
Impairment of financial assets (cont’d)
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. When the asset becomes uncollectable, the carrying amount of the
impaired financial asset is reduced directly or if the amount was previously charged to the allowance
account, the amounts charged to the allowance account are written off against the carrying value of
the financial asset.
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.
(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:
(a)
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.
ZICOM GROUP LIMITED | Annual Report 2016
47
NOTES 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 (cont’d)
(b)
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.
(iv)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in 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 in the
balance sheet.
2.14
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories
to their present location and condition are accounted for as follows:
•
•
Raw 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.
48
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 2.
Summary of significant accounting policies (cont’d)
2.14
Inventories (cont’d)
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.
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 contracts, 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.
ZICOM GROUP LIMITED | Annual Report 2016
49
NOTES 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)
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.
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:
•
•
•
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 at fair value on a recurring basis,
the Group determines whether transfers have occurred between levels in the hierarchy by reassessing
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, 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.
50
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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)
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.
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.
ZICOM GROUP LIMITED | Annual Report 2016
51
NOTES 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)
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.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and 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.
52
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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 of grant 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 expense 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.
Interest income
Interest income is recognised using the effective interest rate.
ZICOM GROUP LIMITED | Annual Report 2016
53
NOTES 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)
Dividends
Dividend income is recognised when the Group’s right to receive payment is established.
Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate cost of
incentives provided to lessees is recognised as a reduction of rental income over the lease term on a
straight-line basis.
Commission income
Commission 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.
54
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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 services 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 in the balance sheet.
ZICOM GROUP LIMITED | Annual Report 2016
55
NOTES 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
the accompanying disclosures. 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 and significant influence over investees
As at 30 June 2016, the Group holds 72.62% (2015: 68.55%) equity interest in Curiox Biosystems
Pte Ltd (“Curiox”). 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 2016, the Group holds 10.88% (2015: 4.13%) 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 are described below. The Group based its assumptions and estimates on parameters available when
the financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
(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.
56
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 3.
Significant accounting judgements, estimates and assumptions (cont’d)
(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. The Group also takes into account if there have
been significant changes in the technological, market, economic or legal environment in which the
debtor operates in.
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 receivables 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 bear 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 2016, the carrying amount of capitalised
development expenditure was S$4,754,000 (2015: S$4,789,000).
(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.
ZICOM GROUP LIMITED | Annual Report 2016
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 3.
Significant accounting judgements, estimates and assumptions (cont’d)
(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 2016
was S$513,000 (2015: S$252,000) and S$1,954,000 (2015: S$2,371,000) respectively. The Group
also has deferred tax assets of S$2,378,000 (2015: S$3,213,000) as at 30 June 2016.
4.
Segment information
Business segments
Identification of reportable segments
The Group has identified its operating segments based on internal reports that are reviewed and used by the chief
operating decision maker and the executive management team in assessing performance and in determining the
allocation of resources. The operating segments are identified based on products and services as follows:
•
•
•
Offshore Marine, Oil & Gas Machinery – manufacture and supply of deck machinery, gas metering stations,
gas processing plants, offshore structures for underwater robots and related equipment, parts and services.
Construction Equipment – manufacture and supply of concrete mixers and foundation equipment, including
equipment rental, parts and related services.
Precision Engineering & Technologies – manufacture of precision and automation equipment, medtech
equipment and products, medtech translation and engineering services.
•
Industrial & Mobile Hydraulics – supply of hydraulic drive systems, parts and services.
Intersegment sales
Intersegment sales are recognised based on internally set transfer price at arm’s length basis.
Unallocated revenue and expenses
Unallocated revenue comprises mainly non-segmental revenue. Unallocated expenses comprise mainly non-
segmental expenses such as head office expenses.
58
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Business segments (cont’d)
The following tables present information regarding operating segments for the years ended 30 June 2016 and
2015.
Offshore
marine, oil &
gas machinery
S$’000
Construction
equipment
S$’000
Precision
engineering &
technologies
S$’000
Industrial
& mobile
hydraulics Consolidated
S$’000
S$’000
59,210
48
–
59,258
41,202
66
3
41,271
11,623
1,387
–
13,010
1,862
1
452
2,315
7,450
494
(7,723)
420
Year ended 30 June 2016
Revenue
Sales to external customers
Other revenue
Intersegment sales
Total segment revenue
Intersegment elimination
Unallocated revenue
Interest income
Total consolidated revenue
Results
Segment results
Unallocated revenue
Unallocated expenses
Share of results of associates
Loss before tax and finance costs
Finance costs
Interest income
Loss before taxation
Tax expense
Net loss after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses/(income)
442
(100)
23
33
1,168
2
3,496
528
491
548
1,408
151
–
–
17
48
113,897
1,502
455
115,854
(455)
178
81
115,658
641
178
(1,748)
(382)
(1,311)
(467)
81
(1,697)
(878)
(2,575)
1,682
583
2,265
5,363
627
ZICOM GROUP LIMITED | Annual Report 2016
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only Offshore
marine, oil &
gas machinery
S$’000
Construction
equipment
S$’000
Precision
engineering &
technologies
S$’000
Industrial
& mobile
hydraulics Consolidated
S$’000
S$’000
50,759
702
–
51,461
50,008
122
15
50,145
21,638
1,278
4
22,920
2,181
1
303
2,485
7,557
1,029
(5,366)
590
290
70
604
587
3,455
15
3,655
531
94
1,614
1,236
134
–
–
21
69
124,586
2,103
322
127,011
(322)
184
243
127,116
3,810
184
(2,250)
(316)
1,428
(497)
243
1,174
797
1,971
3,839
1,699
5,538
5,516
1,321
4.
Segment information (cont’d)
Business segments (cont’d)
Year ended 30 June 2015
Revenue
Sales to external customers
Other revenue
Intersegment sales
Total segment revenue
Intersegment elimination
Unallocated revenue
Interest income
Total consolidated revenue
Results
Segment results
Unallocated revenue
Unallocated expenses
Share of results of associates
Profit before tax and finance costs
Finance costs
Interest income
Profit before taxation
Tax benefit
Net profit after taxation
Other segment information
Capital expenditure
- property, plant and equipment
- intangible assets
Depreciation and amortisation
Other non-cash expenses
60
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 4.
Segment information (cont’d)
Geographical segments
The Group’s geographical segments for revenue and non-current assets are determined based on location of
customers and assets respectively.
The following table presents revenue and certain assets information regarding geographical segments for the years
ended and as at 30 June 2016 and 2015.
Australia Malaysia Singapore China
United
States Bangladesh Thailand Indonesia Others
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
21,281
2,909
23,420
10,856
1,248
42,542
4,358
1,730
5,553
113,897
30 June 2016
Revenue
Sales to external
customers
Other revenue
from external
customers
7
9
1,677
3
Other segment information
Segment non-current
assets
Investment in
associates
Unallocated assets
Capital expenditure
- property, plant and
equipment
- intangible assets
2,182
2,107
28,954
121
100
–
–
–
1,561
586
14
–
–
–
–
–
–
–
–
–
18
47
–
1,761
115,658
5,490
507
–
39,361
6,886
2,378
48,625
16
–
140
–
–
–
1,831
586
2,417
ZICOM GROUP LIMITED | Annual Report 2016
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only Australia Malaysia Singapore China
United
States Bangladesh Thailand Indonesia Others
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
20,923
7,517
52,655
26,010
8,231
1,435
2,433
1,466
3,916
124,586
3
–
–
–
–
–
–
–
45
–
–
2,530
127,116
6,201
433
–
43,866
5,015
3,214
52,095
73
3
6
–
–
–
3,951
1,772
5,723
Consolidated
2016
S$’000
50,200
4,275
2,921
56,501
113,897
2015
S$’000
75,049
5,255
3,807
40,475
124,586
4.
Segment information (cont’d)
Geographical segments (cont’d)
30 June 2015
Revenue
Sales to external
customers
Other revenue
from external
customers
21
59
2,400
2
Other segment information
Segment non-current
assets
Investment in
associates
Unallocated assets
Capital expenditure
- property, plant and
equipment
- intangible assets
2,575
3,547
30,938
172
73
–
57
–
3,730
1,769
12
–
5.
Revenue, income and expenses
(i)
Revenue
Sale of goods
Rendering of services
Rental income
Revenue recognised on projects
62
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 5.
Revenue, income and expenses (cont’d)
(ii)
Other operating income
Interest income
Forfeiture of customer deposit
Gain on disposal of property, plant and equipment
Service rendered
Government grants
Trade and other payables written back
Write back of excess provision for reinstatement costs
Other revenue
(iii)
Other operating expenses
Included in other operating expenses are the following:
Allowance for inventory obsolescence, net
Allowance for doubtful debts, net
Bad debts written off
Foreign exchange loss
Provision for product warranties, net
Property, plant and equipment written off
Warranty expense charged directly to profit or loss
Inventories written off
Intangible assets written off
Loss on subsidiary company struck off
Loss on disposal of property, plant and equipment
Consolidated
2016
S$’000
2015
S$’000
81
45
56
118
1,433
6
–
22
1,761
243
639
53
152
1,351
8
25
59
2,530
Consolidated
2016
S$’000
2015
S$’000
224
160
130
359
(240)
36
–
7
22
–
10
77
107
1
807
713
32
4
8
34
15
–
ZICOM GROUP LIMITED | Annual Report 2016
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 6.
Taxation
Current income tax
- Current income tax charge
- Loss transferred under Group Relief Scheme
- Adjustments in respect of previous years
Deferred income tax
- Relating to the origination and reversal of temporary differences
- Adjustments in respect of previous years
Tax expense/(benefit)
Consolidated
2016
S$’000
2015
S$’000
268
(207)
371
475
(29)
878
1,575
(1,478)
250
(1,331)
187
(797)
A reconciliation between the tax expense and the product of accounting (loss)/profit of the Group multiplied by the
applicable tax rate for the year ended 30 June was as follows:
(Loss)/profit before taxation
Tax at the domestic rates applicable to profits in the countries where the
Group operates
Release of deferred tax liability on intangible assets
Non-deductible expenses
Non-taxable income
Partial tax exemption
Deferred tax assets not recognised
Recognition of deferred tax assets not previously recognised
Utilisation of previously unrecognised tax losses
Adjustment in respect of previous years
Enhanced tax credits
Others
Tax expense/(benefit)
Consolidated
2016
S$’000
2015
S$’000
(1,697)
1,174
(118)
(47)
206
(363)
(46)
1,807
–
(285)
342
(630)
12
878
349
(47)
183
(255)
(6)
483
(115)
(220)
437
(1,585)
(21)
(797)
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
64
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 6.
Taxation (cont’d)
Deferred taxation as at 30 June relates to the following:
Deferred tax liabilities
Differences in depreciation
Intangible assets
Unutilised capital allowances
Unutilised tax losses
Deferred tax assets
Unutilised tax losses
Unutilised capital allowances
Provisions
Differences in depreciation
Intangible assets
Consolidated
balance sheet
2016
S$’000
2015
S$’000
Consolidated statement of
comprehensive income
2015
S$’000
2016
S$’000
(1,876)
(385)
247
60
(1,954)
2,688
467
340
(129)
(988)
2,378
(2,238)
(432)
299
–
(2,371)
3,459
550
448
(233)
(1,011)
3,213
(353)
(47)
52
(60)
790
83
108
(104)
(23)
446
(30)
(47)
(299)
19
(581)
(139)
(151)
(127)
211
(1,144)
Consolidated
2016
S$’000
2015
S$’000
The directors estimate that the potential future income tax benefit at 30 June in
respect of revenue tax losses of certain subsidiaries not brought to account is
5,639
4,384
The benefit will only be obtained if –
(a)
(b)
These subsidiaries derive future assessable income of a nature and of an amount sufficient to enable the
benefit to be realised;
These subsidiaries continue to be in the same trade and there is no substantial change in their
shareholdings; and
(c)
no changes in tax legislation that adversely affect these subsidiaries’ ability to realise the benefit.
Tax Consolidation Legislation
Zicom Group Limited and its wholly-owned Australian subsidiaries have not elected to form a tax consolidated
group.
ZICOM GROUP LIMITED | Annual Report 2016
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 7.
Earnings per share
Basic earnings per share is calculated by dividing the Group’s net profit or loss attributable to equity holders of the
Parent by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated by dividing the Group’s net profit or loss attributable to equity holders of
the Parent by the adjusted weighted average number of ordinary shares which takes into account the effects of all
dilutive potential ordinary shares comprising of share options granted to employees.
(a)
Earnings used in calculating basic and diluted earnings per share
Net (loss)/profit attributable to equity holders of the Parent
Consolidated
2016
S$’000
2015
S$’000
(2,086)
2,437
No. of shares (Thousands)
(b) Weighted average number of ordinary shares for basic earnings per share
216,703
215,185
Effect of dilution:
Share options
Adjusted weighted average number of ordinary shares
(c)
Earnings per share
Basic
Diluted
–
216,703
1,079
216,264
Singapore cents
(0.96)
(0.96)
1.13
1.13
There were 2,750,000 (2015: 2,150,000) share options excluded from the calculation of diluted earnings per share
that could potentially dilute basic earnings per share in the future because they are anti-dilutive for the current
period presented.
There have been no transactions involving ordinary or potential ordinary shares which occurred between the
reporting date and the date of completion of these financial statements.
8.
Dividends
Declared and paid during the financial year:
- Final unfranked dividend for 2015: 0.35 Australian cents per share
- Interim unfranked dividend for 2016: 0.25 Australian cents per share
- Final unfranked dividend for 2014: 0.45 Australian cents per share
- Interim unfranked dividend for 2015: 0.35 Australian cents per share
Proposed but not recognised as a liability as at 30 June:
- Final unfranked dividend for 2016: 0.20 Australian cents per share
(2015: 0.35 Australian cents per share)
Consolidated
2016
S$’000
2015
S$’000
774
562
–
–
1,336
–
–
1,090
802
1,892
442
750
The final dividend for 2016 was approved by the board of directors after the reporting date.
66
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only l
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i
ZICOM GROUP LIMITED | Annual Report 2016
67
3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only
9.
Property, plant and equipment (cont’d)
(a)
The net book value of property, plant and equipment held under hire purchase are as follows:
Motor vehicles
Plant and equipment
Consolidated
2016
S$’000
282
2,145
2,427
2015
S$’000
309
3,152
3,461
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$1,831,000
(2015: S$3,951,000) of which S$766,000 (2015: S$1,256,000) were acquired by means of hire purchase
financing and S$78,000 (2015: S$nil) was acquired by means of loan financing. Cash payments of
S$794,000 (2015: S$2,428,000) were made to purchase property, plant and equipment. Included in
additions is an amount of S$193,000 (2015: S$267,000) 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$69,000 (2015: S$72,000). Sales proceeds amounting to S$115,000 (2015: S$125,000) 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$36,000 (2015: S$32,000).
(e)
The net book value of property, plant and equipment pledged as security are as follows:
Leasehold buildings
Freehold land and buildings
Motor vehicle
Consolidated
2016
S$’000
2015
S$’000
2,748
4,555
75
7,378
2,874
4,946
–
7,820
68
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only l
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ZICOM GROUP LIMITED | Annual Report 2016
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only
10.
Intangible assets (cont’d)
Customer
list
Developed
technology
Development
expenditure
Computer
software
Unpatented
technology
Patented
technology
Average remaining
amortisation period
(years) – 2016
Average remaining
amortisation period
(years) – 2015
Impairment tests for goodwill
–
–
–
–
6.2
7.5
2
3
8.4
9.4
8
9
In accordance with AASB 136, the carrying value of the Group’s goodwill on acquisition as at 30 June 2016 was
assessed for impairment.
Consolidated
Carrying value of capitalised
goodwill based on
cash-generating units
Sys-Mac Automation Engineering
Pte Ltd
Zicom Group Limited
Orion Systems Integration Pte Ltd
(“Orion”)
Biobot Surgical Pte Ltd (“BBS”)
MTA-Sysmac Automation Pte Ltd
Basis on
which
recoverable
values are
determined
Growth rate
per annum
Pre-tax
discount
rate per
annum
2016
2015
2016
2015
As at
30.6.2016
S$’000
As at
30.6.2015
S$’000
2,974
1,964
664
1,316
1
6,919
2,974
2,022
Value in use
15% - 25% 22% 20%
Value in use 5% - 10% 5% - 10% 12% 18%
8%
Value in use
Value in use
-
-
-
-
-
-
-
28% 26%
16% 19%
-
-
664
1,316
1
6,977
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.
70
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 10.
Intangible assets (cont’d)
Impairment tests for goodwill (cont’d)
The calculations of value in use for the CGUs are most sensitive to the following assumptions:
Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the
start of the budget period or if unavailable, based on management assessment of the markets. These are increased
over the budget period for anticipated efficiency improvements.
Growth rates – 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.
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 10-15 year government bond at the beginning of the budgeted year.
Sensitivity to changes in assumptions
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 2016 and 2015 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
2016
S$’000
54,544
(3,947)
50,597
2015
S$’000
54,544
(4,660)
49,884
The consolidated financial statements include the financial statements of Zicom Group Limited and the subsidiaries
listed in the following table.
The interest in each controlled entity has been adjusted to assessed recoverable amounts on the basis of their
underlying assets.
ZICOM GROUP LIMITED | Annual Report 2016
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
Name of Company
Country of
incorporation/
formation
Carrying value
of Parent Entity
investment
2016
S$’000
2015
S$’000
Percentage of equity
held by the Group
2015
2016
%
%
Held by the Company:
Cesco Australia Limited
Zicom Holdings Private Limited
Controlled entities held through
subsidiary companies:
Cesco Equipment Pty Ltd
Zicom Private Limited
Zicom Equipment Private Limited
Foundation Associates Engineering Private
Limited
FAE Construction Pte Ltd (a)
Sys-Mac Automation Engineering Pte Ltd
MTA-Sysmac Automation Pte Ltd
SAEdge Vision Solutions Pte Ltd
Integrated Automation Systems Pte Ltd (b)
iPtec Pte Ltd
Orion Systems Integration Pte Ltd
Biobot Surgical Pte Ltd (c)
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
Deqing Cesco Machinery Co. Ltd
(Previously known as Hangzhou Cesco
Machinery Co. Ltd)
(a)
FAE Construction Pte Ltd
Australia
Singapore
6,422
44,175
5,709
44,175
100
100
Australia
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Indonesia
Thailand
Thailand
Thailand
Malaysia
China
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
61
96
–
100
84
95
100
100
100
100
100
100
100
50,597
49,884
100
100
100
100
100
100
–
100
61
95
100
100
84
95
100
100
100
100
100
100
100
On 30 October 2015, Foundation Associates Engineering Private Limited, a wholly-owned subsidiary of
Zicom Holdings Private Limited (“ZHPL”), incorporated a wholly-owned subsidiary, FAE Construction Pte Ltd,
which is principally engaged in foundation works and marine construction, with an initial paid up capital of
S$200,000.
(b)
Integrated Automation Systems Pte Ltd, a dormant wholly-owned subsidiary, was struck off during the
financial year.
72
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
(c)
Biobot Surgical Pte Ltd (“BBS”)
Pursuant to the subscription of non-renounceable rights issue of BBS, a total of 1,640,000 shares
were allotted to ZHPL equally on 26 February 2016 and 22 June 2016 for a total cash consideration of
S$1,148,000, thereby increasing the Group’s interest in BBS from 95.06% to 95.12% and 95.17%
respectively. The unfavourable effect of the changes in interest in BBS amounting to S$11,000 has been
recognised directly in equity.
Entity subject to class order relief
Pursuant to the Class Order 98/1418, relief has been granted to Cesco Australia Limited (“CAL”) and Cesco
Equipment Pty Ltd (“CEPL”) from the Corporations Act 2001 requirements for the preparation, audit and lodgement
of their financial reports.
As a condition for the Class Order, a deed of Cross Guarantee was executed between Zicom Group Limited (“ZGL”)
and CAL on 15 May 2008. The effect of the deed is that ZGL has guaranteed to pay any deficiency in the event
of winding up of CAL or if CAL does not meet its obligations under the terms of overdraft, loans, leases or other
liabilities subject to the guarantee.
CAL has also given a similar guarantee in the event that ZGL is wound up or if it does not meet its obligations
under the terms of overdraft, loans and leases or other liabilities subject to the guarantee.
On 9 May 2013, CEPL executed a Deed of Assumption with ZGL so that CEPL is joined to the Deed of Cross
Guarantee and assumes liability under and be bound by the Deed of Cross Guarantee as if CEPL was a Group
Entity when the deed of Cross Guarantee was executed.
The consolidated Income Statement and Balance Sheet of the entities that are members of the Closed Group are
as follows:
Consolidated Income Statement
Profit from continuing activities before taxation
Income tax expense
Net profit for the year
Accumulated losses at the beginning of year
Expiry of employee share options
Dividends paid
Accumulated losses at the end of year
Closed Group
2016
S$’000
1,663
–
1,663
(24,352)
374
(1,336)
(23,651)
2015
S$’000
2,073
–
2,073
(24,589)
56
(1,892)
(24,352)
ZICOM GROUP LIMITED | Annual Report 2016
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 11.
Investment in subsidiaries (cont’d)
Consolidated Balance Sheet
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Current assets
Cash and bank balances
Inventories
Trade and other receivables
Prepayments
Current liabilities
Payables
Interest-bearing liabilities
Provisions
NET CURRENT ASSETS
Non-current liabilities
Interest-bearing liabilities
Provisions
Closed Group
2016
S$’000
2015
S$’000
243
357
44,175
44,775
1,538
3,153
3,314
11
8,016
3,503
21
440
3,964
4,052
60
86
146
586
386
44,175
45,147
1,790
3,082
4,691
18
9,581
5,886
313
339
6,538
3,043
–
113
113
NET ASSETS
48,681
48,077
Equity attributable to equity holders of the Parent
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
72,322
10
(23,651)
71,870
559
(24,352)
48,681
48,077
74
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 12.
Investment in associates
(a)
Investment details
Held through subsidiaries
Curiox Biosystems Pte Ltd
HistoIndex Pte Ltd
At end of year
The principal place of business for both associates is in Singapore.
(b) Movements in carrying amount of the Group’s investment in associates
Curiox Biosystems Pte Ltd (“Curiox”)
Shareholdings held: 72.62% (2015: 68.55%)
At beginning of year
Additional investment
Share of loss after income tax
Share of other comprehensive income
Unrealised profits
At end of year
Consolidated
2016
S$’000
5,295
1,591
6,886
2015
S$’000
4,515
500
5,015
Consolidated
2016
S$’000
2015
S$’000
4,515
1,108
(339)
8
3
5,295
1,804
3,051
(316)
(31)
7
4,515
On 30 December 2015, Zicom Holdings Private Limited (“ZHPL”) exercised 313,000 warrants to subscribe
for 313,000 preference shares in Curiox for a total cash consideration of S$626,000. This has resulted in an
increase in the Group’s interest in Curiox from 68.55% to 71.19%.
On 31 December 2015, 459,000 convertible loan stocks subscribed in 2013 with cumulative interest at 5%
per annum amounting to S$482,000 have been fully converted into 241,000 preference shares, fully paid at
S$2 per share. This has resulted in an increase in the Group’s interest in Curiox from 71.19% to 72.62%.
Although ZHPL holds the majority of voting rights in Curiox, it does not have the power and practical ability
to direct the relevant activities of Curiox unilaterally and hence, Curiox remains an associate of the Group as
at 30 June 2016.
ZICOM GROUP LIMITED | Annual Report 2016
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 12.
Investment in associates (cont’d)
(b) Movements in carrying amount of the Group’s investment in associates (cont’d)
HistoIndex Pte Ltd (“HistoIndex”)
Shareholdings held: 10.88% (2015: 4.13%)
At beginning of year
Additional investment
Share of loss after income tax
Share of other comprehensive income
Unrealised profits
At end of year
Consolidated
2016
S$’000
2015
S$’000
500
1,139
(43)
2
(7)
1,591
–
500
–
–
–
500
On 23 October 2015, Zicom MedTacc Private Limited (“ZMT”), a wholly-owned subsidiary of ZHPL and an
appointed Sector Specific Accelerator by Spring Singapore, injected an additional S$500,000 in HistoIndex,
increasing the Group’s interest in HistoIndex from 4.13% to 7.94%.
On 11 March 2016, 726,000 ordinary shares were allotted to ZMT pursuant to the subscription of
renounceable rights issue of HistoIndex for a cash consideration of S$639,000. As a result of this allotment,
the Group’s interest in HistoIndex increased to 10.88%.
Although the Group holds less than 20% of equity interest in HistoIndex, the Group has the ability to exercise
significant influence through both its shareholdings and the Chairman’s active participation on HistoIndex
Board of Directors.
(c)
Summarised financial information
The following table illustrates summarised financial information relating to the Group’s material investment in
associate:
Current assets
Non-current assets
Current liabilities
Net assets
Add: Fair value adjustments arising from acquisition
Proportion of Group’s investment
Share of net assets
Goodwill
Less: Unrealised profits
Less: Other equity transactions
Group’s carrying amount of investment in associate
76
ZICOM GROUP LIMITED | Annual Report 2016
Curiox
2016
S$’000
2,012
423
2,435
(393)
2,042
385
2,427
72.62%
1,762
3,676
(71)
(72)
5,295
2015
S$’000
1,539
451
1,990
(826)
1,164
442
1,606
68.55%
1,101
3,502
(74)
(14)
4,515
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only
12.
Investment in associates (cont’d)
(c)
Summarised financial information (cont’d)
Results:
Revenue
Cost of goods sold
Other income
Operating expenses
Loss before tax
Income tax expense
Add: Fair value adjustments arising from acquisition
Net loss for the year
Other comprehensive income
Total comprehensive income
Group’s share of loss for the year
Group’s share of other comprehensive income
13.
Inventories
Raw materials/trading stocks (at cost or net realisable value)
Work-in-progress (at cost)
Finished goods (at cost or net realisable value)
Stocks-in-transit (at cost)
Total inventories at lower of cost and net realisable value
Curiox
2016
S$’000
2015
S$’000
1,852
(246)
1,606
280
(2,296)
(410)
(2)
(412)
(30)
(442)
9
(433)
(339)
8
609
(51)
558
263
(1,442)
(621)
(1)
(622)
(60)
(682)
(57)
(739)
(316)
(31)
Consolidated
2016
S$’000
15,504
4,371
1,762
790
22,427
2015
S$’000
17,194
6,344
1,522
1,351
26,411
Inventories recognised as cost of sales for the year ended 30 June 2016 totalled S$75,886,000 (2015:
S$80,662,000) for the Group.
ZICOM GROUP LIMITED | Annual Report 2016
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only
14. Current assets - receivables
Trade receivables (a)
Allowance for impairment loss (b)
Advance payments to suppliers
Deposits
Related party receivables (c):
- Associates
- trade
- non-trade
- Other related parties
- trade
- non-trade
Other receivables
Consolidated
2016
S$’000
12,824
(309)
12,515
1,360
90
74
32
4
–
1,437
15,512
2015
S$’000
23,063
(215)
22,848
836
96
698
29
43
1
1,096
25,647
(a)
Please refer to note 21(d) for the ageing analysis of trade receivables past due but not impaired.
(b)
Trade and other receivables are non-interest bearing and are generally due when invoiced or on 30 to
60 days’ terms. An allowance for impairment loss is recognised when there is objective evidence that an
individual receivable is impaired.
The Group has trade and other receivables that are impaired at the balance sheet date and the movements
of the allowance accounts used to record the impairment are as follows:
Consolidated
Individually impaired
Trade receivables
2016
S$’000
2015
S$’000
Non-trade receivables
2015
2016
S$’000
S$’000
Nominal amounts
Less: allowance for impairment
Movements in allowance accounts:
As at 1 July
Charge for the year
Written off
Unused amounts reversed
Currency realignment
As at 30 June
309
(309)
–
215
200
(66)
(40)
–
309
215
(215)
–
163
107
(58)
–
3
215
–
–
–
26
–
(26)
–
–
–
26
(26)
–
26
–
–
–
–
26
(c)
For related party receivables, please refer to note 23 for terms and conditions.
78
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 15. Gross amount due from/(to) customers for contract work
Contract costs incurred to date
Recognised profits to date
Progress billings
Amount due from/(to) customers for contract work, net
Gross amount due from customers for contract work
Gross amount due to customers for contract work
Revenue recognised on projects is disclosed in note 5.
16. Current liabilities - payables
Trade, other payables and accruals (a)
Owing to related parties (b)
- trade
- non-trade
Consolidated
2016
S$’000
42,451
12,976
55,427
(46,272)
9,155
11,735
(2,580)
9,155
2015
S$’000
5,208
1,905
7,113
(7,174)
(61)
3,769
(3,830)
(61)
Consolidated
2016
S$’000
2015
S$’000
18,123
19,167
1
52
18,176
651
49
19,867
(a)
All amounts are non-interest bearing and are normally settled on 30 to 90 days’ terms.
(b)
For related parties’ payables, please refer to note 23 for terms and conditions.
17.
Interest-bearing liabilities
Current
Bank overdrafts (a)
Bills payable (b)
Factory loans (c)
Term loans (d)
Lease liabilities (note 25)
Non-current
Factory loans (c)
Term loans (d)
Lease liabilities (note 25)
Consolidated
2016
S$’000
2015
S$’000
576
1,930
255
3,830
761
7,352
42
2,108
434
2,584
264
3,487
317
4,332
1,515
9,915
303
4,639
607
5,549
ZICOM GROUP LIMITED | Annual Report 2016
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 17.
Interest-bearing liabilities (cont’d)
Details of the secured borrowings are as follows:
(a)
Bank overdraft amounting to S$221,000 (2015: S$248,000) which bears interest at floating rates ranging
from 6.00% to 6.50% (2015: 6.00% to 6.50%) per annum is secured by corporate guarantee from Zicom
Holdings Private Limited (“ZHPL”).
Bank overdraft of S$217,000 (2015: S$16,000) which bears interest at floating rate of approximately 7.80%
(2015: 7.80%) per annum is secured by a corporate guarantee from Zicom Cesco Engineering Co. Ltd.
Bank overdraft of S$138,000 (2015: S$nil) which bears interest at floating rate of approximately 7.80% per
annum is secured by a 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.
(b)
Bills payable amounting to S$1,930,000 (2015: S$3,174,000) with an average maturity of 1 - 5 months (2015:
1 - 4 months) bear fixed interest rates until expiry, ranging from 2.04% to 3.80% (2015: 2.04% to 2.93%) 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 which was outstanding as at 30 June 2015 bore
interest at floating rates of 5.11% to 5.71% per annum was secured by a fixed and floating charge over all
the assets of Cesco Australia Limited.
(c)
Factory loan amounting to S$297,000 (2015: S$548,000) which is made up of current and long-term
portions of S$255,000 (2015: S$245,000) and S$42,000 (2015: S$303,000) respectively is repayable over
the remaining 14 monthly instalments at floating interest rate of approximately 2.95% (2015: 2.75%) 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. This factory loan was converted during the
current financial year from a fixed rate loan to a variable rate loan to take advantage of lower interest rates.
Other terms and conditions including the tenure remain unchanged.
The remaining factory loan outstanding as at 30 June 2015 amounting to S$72,000 which bore interest at
floating rate of 3.75% per annum was fully repaid during the year.
(d)
Term loan amounting to S$1,833,000 (2015: S$2,833,000) comprising current and long-term portions of
S$1,000,000 (2015: S$1,000,000) and S$833,000 (2015: S$1,833,000) respectively which bears interest at
floating rates ranging from 2.70% to 3.20% (2015: 2.70% to 2.86%) per annum is payable over 3 years and
is secured by a corporate guarantee given by ZHPL.
Term loan amounting to S$2,043,000 (2015: S$3,185,000) comprising current and long-term portions of
S$1,029,000 (2015: S$1,067,000) and S$1,014,000 (2015: S$2,118,000) respectively bears interest at
floating rate of approximately 3.75% (2015: 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.
Term loan amounting to S$680,000 (2015: S$1,153,000) comprising current and long-term portions
of S$480,000 (2015: S$465,000) and S$200,000 (2015: S$688,000) respectively which bears interest at
floating rate of approximately 2.95% (2015: 2.75%) 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. This term loan was also converted during the current financial year
from a fixed rate loan to a variable rate loan to take advantage of lower interest rates. Other terms and
conditions including the tenure remain unchanged.
80
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 17.
Interest-bearing liabilities (cont’d)
(d)
The remaining term loan amounting to S$82,000 (2015: S$nil) comprising of current and long-term portions
of S$21,000 and S$61,000 respectively was taken up during the financial year to purchase a motor vehicle.
This loan which is secured by the asset purchased is payable over 4 years and bears interest at fixed rate of
4.12% per annum.
Short term loans with tenures of 3 – 6 months (2015: 1 – 6 months) amounting to S$1,300,000 (2015:
S$1,800,000) bear interest at fixed rates ranging from 2.80% to 2.99% (2015: 2.64% to 2.98%) per annum
and is secured by a corporate guarantee given by ZHPL.
(e)
Financing facilities available
As at 30 June 2016, the Group had available S$116,000,000 (2015: S$141,000,000) of undrawn committed
borrowing facilities and all bank covenants were complied with.
18. Provisions
Current
Product warranties
Employee benefits
Reinstatement costs
Non-current
Employee benefits
Reinstatement costs
Movements in provision for warranties:
At beginning of year
Additional provision
Unused amounts reversed
Utilised
Currency realignment
At end of year
Consolidated
2016
S$’000
2015
S$’000
720
303
46
1,069
231
108
339
1,167
291
(531)
(210)
3
720
1,167
239
48
1,454
250
108
358
679
820
(107)
(222)
(3)
1,167
Warranty expense charged directly to profit or loss (note 5)
–
4
ZICOM GROUP LIMITED | Annual Report 2016
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 18. Provisions (cont’d)
Movements in provision for employee benefits:
At beginning of year
Additional provision
Unused amounts reversed
Utilised
Currency realignment
At end of year
Movements in provision for reinstatement costs:
At beginning of year
Unused amounts reversed
Utilised
Currency realignment
At end of year
Consolidated
2016
S$’000
2015
S$’000
489
64
(1)
(2)
(16)
534
156
–
–
(2)
154
480
70
(8)
(11)
(42)
489
197
(25)
(10)
(6)
156
In accordance with the lease agreements, the Group must reinstate certain subsidiaries’ leased premises in
Singapore and Australia to its original condition at the end of the lease term.
Because of the long-term nature of liability, the greatest uncertainty in estimating the provision is the costs that will
ultimately be incurred.
19.
Share capital
(a)
Share Capital
Parent Entity
Consolidated
2016
2015
No. of shares (Thousands)
2016
S$’000
2015
S$’000
Ordinary fully paid shares
217,141
215,522
38,314
37,862
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All
ordinary shares carry one vote per share without restriction.
82
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 19.
Share capital (cont’d)
(b) Movements in ordinary share capital
At 1 July 2014
Issue of shares under Zicom Employee Share and Option Plan (i)
Issue of shares in lieu of cash performance bonus (ii)
At 30 June 2015
Issue of shares under Zicom Employee Share and Option Plan (i)
At 30 June 2016
Company
Number of
ordinary shares
(Thousands)
214,547
555
420
215,522
1,619
217,141
Group
S$’000
37,593
167
102
37,862
452
38,314
(i)
Issue of shares under Zicom Employee Share and Option Plan (“ZESOP”)
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.
On 26 August 2015, 30 September 2015 and 9 November 2015, the Company issued and allotted
a total of 1,190,000 and 429,000 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)
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$0.22 per share as part payment of his performance bonus for the
year ended 30 June 2014. Such shares ranked pari passu with the existing ordinary shares of the
Company.
ZICOM GROUP LIMITED | Annual Report 2016
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 20. Cash and cash equivalents
Cash at bank and in hand
Short-term fixed deposits
Consolidated
2016
S$’000
20,438
119
20,557
2015
S$’000
23,108
1,026
24,134
For the purpose of statement of cash flows, cash and cash equivalents comprise the following as at 30 June:
Cash and short-term deposits
Bank overdrafts
20,557
(576)
19,981
24,134
(264)
23,870
Cash at bank balance amounting to S$336,000 as at 30 June 2016 (2015: S$2,580,000) earned interest at floating
rate based on daily bank deposit rates ranging from 0.38% to 2.17% (2015: 0.10% to 3.51%) per annum. The
remaining cash at bank balances are non-interest bearing.
Short-term deposits are made for varying periods of 1 day to 3 months depending on the immediate cash
requirements of the Group and earn interest at the respective short-term rates.
21.
Financial instruments
(a)
Financial risk management objectives and policies
The Group and the Company are 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,
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.
84
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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
2016
S$’000
2015
S$’000
336
2,580
576
–
297
4,556
5,429
264
313
72
6,018
6,667
Sensitivity analysis of interest rate risk
As at 30 June 2016, if interest rates had increased/decreased by 25 basis point with all other variables held
constant, post-tax loss for the consolidated entity for the financial year would be S$11,000 higher/lower, as
a result of the higher/lower interest rates. For the previous year ended 30 June 2015, post-tax profit was
S$10,000 lower/higher as result of the higher/lower interest rates. Accordingly, the Group’s equity as at year-
end will be (S$11,000)/S$11,000 (2015: (S$10,000)/S$10,000) lower/higher.
(c)
Foreign currency risk
Foreign currency risk occurs as a result of the Group’s transactions that are not denominated in their
respective functional currencies. These transactions arise from the Group’s ordinary course of business.
The Group transacts business in various currencies and as a result, is largely exposed to movements in
exchange rates of United States dollar, Sterling pound, Euro, Bangladeshi Taka and Australian dollar.
The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts and
payments in each individual currency. The Group also uses foreign currency forward contracts to hedge
a portion of its future foreign exchange exposure purely as a hedging tool and does not take positions in
currencies with a view to make speculative gains from currency movements.
ZICOM GROUP LIMITED | Annual Report 2016
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(c)
Foreign currency risk (cont’d)
The following sensitivity analysis is based on the foreign exchange risk exposure in existence at the balance
sheet date. As at 30 June, if exchange rates had moved, as illustrated in the table below, with all other
variables held constant, post-tax results and equity would have been affected as follows:
Consolidated
USD
- strengthened 5% (2015: 6%)
- weakened 2% (2015: 1%)
EURO
- strengthened 3% (2015: 8%)
- weakened 3% (2015: 1%)
AUD
- strengthened 3% (2015: 3%)
- weakened 3% (2015: 3%)
GBP
- strengthened 5% (2015: 5%)
- weakened 5% (2015: 5%)
BDT
- strengthened 2% (2015: 2%)
- weakened 2% (2015: 2%)
(d)
Credit risk
Post-tax (loss)/profit
2015
2016
S$’000
S$’000
–
–
(12)
12
14
(14)
(8)
8
10
(10)
253
(42)
44
(5)
68
(68)
(2)
2
3
(3)
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased
credit risk exposure. The Group trades only with recognised and creditworthy third parties. Credit risk is
monitored through careful selection of customers and their balances are monitored on an ongoing basis with
the result that the Group’s exposure to bad debts has not been significant.
86
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(d)
Credit risk (cont’d)
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the country profile of its trade receivables
on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the balance
sheet date is as follows:
Austria
Australia
Bangladesh
Germany
Hong Kong
Indonesia
Malaysia
New Zealand
People’s Republic of China
Singapore
Thailand
United States of America
Others
Consolidated
2016
2015
S$’000
% of total
S$’000
% of total
169
2,774
959
–
157
38
1,580
11
65
5,922
680
127
33
12,515
1.3
22.2
7.7
–
1.3
0.3
12.6
0.1
0.5
47.3
5.4
1.0
0.3
100
89
3,962
47
134
149
157
1,934
35
1,240
14,479
455
92
75
22,848
0.4
17.3
0.2
0.6
0.6
0.7
8.5
0.2
5.4
63.4
2.0
0.4
0.3
100
At the balance sheet date, approximately 39.9% (2015: 63.2%) of the Group’s trade receivables were due
from 5 (2015: 7) major customers.
Financial assets that are not impaired
Trade and other receivables that are not impaired are with creditworthy debtors with good payment records.
Cash and short term deposits are placed with reputable banks.
As at 30 June 2016, the ageing analysis of trade receivables that are past due but not impaired is as follows:
Less than 30 days
30 to 60 days
61 to 90 days
91 to 120 days
More than 120 days
Consolidated
2016
S$’000
2015
S$’000
1,894
955
228
145
3,445
6,667
2,569
3,485
613
537
1,964
9,168
As at 30 June 2016, trade receivables amounting to S$758,000 (2015: S$nil) were arranged to be settled via
letters of credit issued by reputable banks in countries where the customers were based.
ZICOM GROUP LIMITED | Annual Report 2016
87
NOTES 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$’000
12,109
1,421
1
20,557
34,088
9,299
6,083
10,181
25,563
8,525
–
–
–
–
–
–
–
–
–
–
Consolidated
2016
Financial assets:
Trade receivables
Other receivables
Investment securities
Cash and bank balances
Total undiscounted financial assets
Financial liabilities:
Trade payables
Other payables
Loans and borrowings
Total undiscounted financial liabilities
Total net undiscounted financial
12,109
1,278
–
20,557
33,944
9,299
6,040
5,746
21,085
–
143
–
–
143
–
43
1,796
1,839
–
–
1
–
1
–
–
2,639
2,639
assets/(liabilities)
12,859
(1,696)
(2,638)
88
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(e)
Liquidity risk (cont’d)
Consolidated
2015
Financial assets:
Trade receivables
Other receivables
Investment securities
Loan receivable
Cash and bank balances
Total undiscounted financial assets
Financial liabilities:
Trade payables
Other payables
Loans and borrowings
Total undiscounted financial liabilities
Total net undiscounted financial
6 months
or less
S$’000
7 to 12
months
S$’000
After 1 year
but not more
than 5 years
S$’000
5 to
10 years
S$’000
23,310
928
–
471
24,134
48,843
6,378
6,768
8,354
21,500
–
100
–
–
–
100
–
49
1,893
1,942
–
–
1
–
–
1
–
–
5,729
5,729
Total
S$’000
23,310
1,028
1
471
24,134
48,944
6,378
6,817
15,976
29,171
19,773
–
–
–
–
–
–
–
–
–
–
–
assets/(liabilities)
27,343
(1,842)
(5,728)
(f)
Fair values
(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
–
–
–
–
–
–
–
–
1
1
1
1
Consolidated
2016
Financial assets:
Available-for-sale
At 30 June 2016
2015
Financial assets:
Available-for-sale
At 30 June 2015
Fair value of available-for-sale financial assets is derived from quoted market prices in active markets.
There were no transfers between level 1 and level 2 fair value measurements during the financial years
2016 and 2015.
ZICOM GROUP LIMITED | Annual Report 2016
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 21.
Financial instruments (cont’d)
(f)
Fair values (cont’d)
(ii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value
Management has determined that the carrying amounts of cash and short-term deposits, current
trade and other receivables, current trade and other payables, current interest-bearing liabilities
reasonably approximate their fair values because they are mostly short-term in nature and repriced
frequently.
(iii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value
The fair values of non-current finance lease liability and bank loans bearing interest at fixed rates,
which are not carried at fair value in the balance sheet, are 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 2016 was assessed to be insignificant.
Financial liabilities:
Obligations under finance leases
Bank loans
Consolidated
Carrying Amount
Fair Value
2016
S$’000
2015
S$’000
2016
S$’000
2015
S$’000
434
61
607
991
419
54
591
907
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 2016 and 30 June 2015.
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 2016 and 30 June 2015 were 0% as cash and cash equivalents exceeded
interest-bearing liabilities.
90
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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
- Services rendered
Other related parties
- Sales
- Interest income
Consolidated
2016
S$’000
2015
S$’000
222
32
509
31
78
32
–
1
396
721
939
119
111
24
31
–
(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.
Outstanding non-trade balances as at year-end with 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
2016
S$
2015
S$
1,455,999
46,909
27,590
1,530,498
2,726,532
60,650
21,174
2,808,356
ZICOM GROUP LIMITED | Annual Report 2016
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In Singapore dollars)For personal use only 24.
Share-based payment plans
(a)
Recognised share-based payment expenses
The expense recognised for employee services received during the year for equity-settled share-based
payment transactions amounted to S$83,000.
A credit amounting to S$30,000 was recognised during the previous financial year as it represented the
movement in cumulative expense for equity-settled share-based payment transactions in SGD recognised as
at beginning and end of financial year.
There have been no cancellations or modifications to the plan during the years 2016 and 2015.
(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, physical or mental incapacity.
The contractual life of each option granted is 3 to 5 years. There are no cash-settlement alternatives.
(c)
Movements during the year
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Expired during the year
Exercised during the year
Outstanding at end of year
2016
2015
No. of options (Thousands)
7,440
600
(20)
(3,651)
(1,619)
2,750
6,395
2,150
(310)
(240)
(555)
7,440
Exercisable at end of year
–
5,290
92
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 24.
Share-based payment plans (cont’d)
(c)
Movements during the year (cont’d)
The outstanding balance of share options as at 30 June 2016 and 30 June 2015 is represented by:
No. of options (Thousands)
2016
–
–
–
–
–
–
–
–
2,150
600
2,750
2015
1,460
1,460
215
215
885
895
80
80
2,150
–
7,440
Exercise price
(Australian Cents)
18.0
18.0
18.0
18.0
17.0
17.0
17.0
17.0
20.5
18.0
Exercisable
on or after
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
1/12/2016
Expiry Date
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
30/11/2020
(d) Weighted average fair value
The weighted average fair value of options granted in the current financial year was A$0.04 (2015: A$0.06).
(e)
The weighted average share price during the period of exercise was A$0.18 (2015: A$0.21).
(f)
Option pricing model
The fair value of the equity-settled share options granted under the ZESOP is estimated as at the date of
grant using a Trinomial model taking into account the terms and conditions upon which the options were
granted. The following table lists the inputs to the model used:
Inputs
Exercise price (A$):
Stock price at grant date (A$):
Maximum option life in years:
Volatility:
Risk free interest rate:
2016
0.180
0.170
5
34.94%
2.00%
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 necessarily indicative of exercise patterns that may
occur in the future.
ZICOM GROUP LIMITED | Annual Report 2016
93
NOTES 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)
(ii)
Issued letters of guarantee amounting to S$13,990,000 (2015: S$14,369,000).
Entered into a foreign exchange sell contract amounting to S$120,000 (2015: S$109,000).
(b)
Operating lease commitments
The Group has entered into commercial leases for the use of leasehold properties and office equipment as
lessee. These leases have an average of 3 to 30 years. There are no restrictions placed upon the Group by
entering into these leases.
Future minimum lease payments for the leases are as follows:
Within 1 year
Within 2 - 5 years
More than 5 years
Consolidated
2016
S$’000
2,148
4,203
5,575
11,926
2015
S$’000
1,453
1,519
5,831
8,803
The amount of operating lease payments recognised as an expense in the year ended 30 June 2016 is
S$2,297,000 (2015: S$2,654,000).
(c)
Finance lease commitments
The Group has finance leases for certain items of plant and equipment and motor vehicles. Future minimum
lease payment under finance leases together with present value of the net minimum lease payments are as
follows:
Consolidated
Due within one year
After one year but not more than five years
Total minimum lease payments
Less: amounts representing finance charges
Minimum
payments
2016
S$’000
Present
value of
payments
2016
S$’000
Minimum
payments
2015
S$’000
Present
value of
payments
2015
S$’000
792
455
1,247
(52)
1,195
761
434
1,195
–
1,195
1,572
633
2,205
(83)
2,122
1,515
607
2,122
–
2,122
(d)
Capital commitments
The Group had no capital commitment as at 30 June 2016.
As at 30 June 2015, the Group had committed to invest an additional S$500,000 in HistoIndex by
31 December 2015.
94
ZICOM GROUP LIMITED | Annual Report 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In Singapore dollars)For personal use only 26. Auditors’ remuneration
During the year, the following fees were paid/payable for services provided by auditors:
Amounts received or due and receivable by Ernst & Young (Australia)
- Audit and review of financial statements
Consolidated
2016
S$
2015
S$
127,336
133,627
Amounts received or due and receivable by Ernst & Young (Singapore)
- Audit and review of financial statements
230,000
230,000
Amounts received or due and receivable by other audit firms
- Audit and review of financial statements
- Taxation services
- Other non-audit services
23,502
7,552
2,229
390,619
23,358
7,766
2,211
396,962
27. Parent Entity disclosures
(a)
The individual financial statements of the Parent Entity shows the following aggregate amounts:
Balance Sheet
Non-current assets
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity
Share capital
Share capital - exercise of share options
Capital reserve
Foreign currency translation reserve
Share-based payments reserve
Accumulated losses
Results
Profit for the year
Other comprehensive income
Total comprehensive income
2016
S$’000
50,597
2,024
52,621
49
49
2015
S$’000
49,884
2,218
52,102
50
50
52,572
52,052
71,850
472
688
(437)
129
(20,130)
52,572
1,522
–
1,522
71,563
307
688
(406)
590
(20,690)
52,052
2,254
–
2,254
ZICOM GROUP LIMITED | Annual Report 2016
95
NOTES 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$1,115,000 (2015: S$2,156,000) to
secure trade facilities and bank loans for 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 2016 and 30 June 2015.
28.
Subsequent events
(a)
Declaration of final dividend
On 31 August 2016, the directors declared a final unfranked dividend of 0.20 Australian cents per share for
the financial year ended 30 June 2016. This amount has not been recognised as a liability as at 30 June
2016 but will be accounted for in the next financial year.
(b)
Incorporation of FAEQUIP Corporation
On 21 September 2016, FAEQUIP Corporation was incorporated in the Philippines by Foundation
Associates Engineering Private Limited, a wholly-owned subsidiary of Zicom Holdings Private Limited, with a
paid up capital of PHP9,500,000. FAEQUIP Corporation, a wholly-owned subsidiary, is principally engaged in
trading and rental of foundation equipment and the provision of construction services.
96
ZICOM GROUP LIMITED | Annual Report 2016
NOTES 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 for the financial year ended 30 June 2016 are 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 2016 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 2016.
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
30 September 2016
ZICOM GROUP LIMITED | Annual Report 2016
97
For personal use only 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 2016, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising
the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the
directors determine are necessary to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 2.2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial
report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have
given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the
directors’ report.
98
ZICOM GROUP LIMITED | Annual Report 2016
INDEPENDENT AUDITOR’S REPORTto the members of Zicom Group LimitedFor personal use only Opinion
In our opinion:
a.
the financial report of Zicom Group Limited is in accordance with the Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
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 2016. 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 2016, complies with section
300A of the Corporations Act 2001.
Ernst & Young
Tom du Preez
Partner
Brisbane
30 September 2016
ZICOM GROUP LIMITED | Annual Report 2016
99
INDEPENDENT AUDITOR’S REPORTto the members of Zicom Group LimitedFor personal use only
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
8,496
784,706
2,385,273
15,748,043
198,214,262
217,140,780
58
214
267
456
122
1,117
b)
There were 154 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
MR MAKRAM HANNA & MRS RITA HANNA
EE GEK GOH
JP MORGAN NOMINEES AUSTRLIA LIMITED
SIONG TECK NG
HUNG SEAH TANG
JUAT KHIANG SIM
FIRST CHARNOCK SUPERANNUATION PTY LTD
KOK HWEE SIM
DEBUSCEY PTY LTD
KOK YEW SIM
ALAN BLACKBURN & ASSOCIATES PTY LTD
KAILVA PTY LTD
Substantial Shareholders
Number of
Ordinary Shares
Held
Percentage of
Issued Shares
78,000,360
17,889,919
14,778,172
11,345,082
8,478,344
6,487,767
5,021,650
3,332,175
2,968,358
2,791,017
2,415,087
2,410,665
2,100,839
2,069,525
1,890,000
1,488,180
1,355,615
1,350,253
1,207,630
1,200,000
35.92%
8.24%
6.80%
5.23%
3.90%
2.99%
2.31%
1.53%
1.37%
1.29%
1.11%
1.11%
0.97%
0.95%
0.87%
0.69%
0.62%
0.62%
0.56%
0.55%
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
89,345,442
17,569,189
17,889,919
41.15%
8.09%
8.24%
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.
100
ZICOM GROUP LIMITED | Annual Report 2016
INFORMATION ON SHAREHOLDINGS As at 29 September 2016For personal use only This page has been intentionally left blank.
For personal use only This page has been intentionally left blank.
For 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 Ltd
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, 15 November 2016
A formal Notice of Meeting is enclosed.
For personal use only
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38 Goodman Place, Murarrie QLD 4172 Australia
Telephone: +61 7 3908 6088
Facsimile: +61 7 3390 6898
www.zicomgroup.com
For personal use only