Mahatma Gandhi
“In the midst of darkness, light persists.”
Annual Report 2021
For personal use only
Contents
01
03
05
06
07
23
24
33
34
35
36
38
108
109
116
IBC
IBC
Chairman’s Message
Board of Directors
Company Secretary
Corporate Chart
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
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
For personal use only
Mahatma Gandhi 1869 -1948
“In the midst of darkness,
light persists.”
Chairman’s Message
Dear Shareholders,
Mahatma Gandhi’s famous speech in 1931 cannot be
more appropriate to describe the dark periods in
the last 18 months. Indeed, in the midst of darkness,
humanity has focused on the light. It has embraced
all necessary health control measures and expedited
the discovery of vaccines to control the pandemic so
normalcy can be restored to our lives. However, the
Delta Variant and the Mu Variant, two of the most
virulent mutations of the Covid-19 virus which are
more infectious and transmissible, continue to keep
the pandemic at its height. It is assuming an endemic
characteristic like the common flu. The virus has
somewhat evolved to control our destiny. Economic
growth is subject to it being under control.
Severe Impact
The impact inflicted on our businesses in 2020 right
up to the end of the financial year just ended has been
the most severe in the Company’s history. Orders for
our products and services virtually ceased for almost
the better part of the year, caused by lockdowns,
global downturns compounded by trade war and
geopolitical conflicts between USA and China,
reduced travels and people movement. We had to
rely on past orders secured in 2019 pre-pandemic,
for revenue and cash flow.
Outcome In Adversity
In the midst of these adversities, we devised and
innovated new ways of working together to execute
our projects remotely. We reinforced communications
and understanding among the teams and invested
in new tools to facilitate these, ramped up tight
healthcare control measures across the businesses
and enhanced safety measures for all employees with
emphasis on those at project sites. These additional
costs were incurred necessarily. The payback came in
the form of successful completion of projects, without
penalties and runaway costs. Customers’ trust and
confidence has been bolstered positioning ourselves
strongly for new projects ahead.
Unrelenting Efforts Paying Off
At the same time, our push into Green Energy projects
had been unrelenting in expediting technology
developments and engagement with customers. Most
of these efforts had to be carried out remotely. The
hard work and tenacity in the midst of very tough
challenges finally paid off with us securing a total
of S$60m of LNG propulsion systems. These were
secured from one of the world’s biggest oil tanker
owners. The tankers are chartered to a top European
oil company which strongly champions green energy
and sustainability. This strong recognition is now
propelling us to foray into different medium of
carbon-free gas propulsion systems to meet industry
demand, such as methanol and ammonia.
Green Shoots
In the last 6 months, general enquiries covering all
sectors of our businesses have increased. We believe
the Group has turned the corner and should see better
days ahead. The resilience, fortitude and dedication
of the Group’s management and workforce reinforce
the Group’s ability to capture growing opportunities
as the global economy is resetting. The pandemic
is expected to ease with increased vaccinations.
Humanity and businesses are adapting to live with
this potential endemic as a new normal to restore
economic growth.
Annual Report 2021
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Chairman’s Message
G L Sim
Executive Chairman
Share Buy-back
Our ability to deliver projects successfully in the
pandemic enabled the Group to pay off all project
loans taken in time, and to achieve a strong positive
cash flow. This has reduced the Group’s gearing
ratio positioning the board to review its capital
management policy. As the board is of the opinion
that the Group’s quoted share price does not reflect
its intrinsic value, it has decided on a share buy-back
from September 2021.
The Teams’ Fortitude
During the year the management and all employees,
in particular the site project teams displayed great
valour, strong dedication and commitment in the face
of adversity in executing projects. We owe them great
gratitude for their efforts without which, the projects
would not have been successfully completed in time.
A group of senior managers volunteered suspension
of their pay between 20-30%. I took a 50% suspension
of my pay. This was to strengthen cash liquidity. On 30
June 2021, their salaries were restored as we emerged
with a stronger cash position. I did not restore my pay
suspension but instead decided to reduce my monthly
pay permanently by two-thirds as a solidarity with
the employees’ strong dedication and commitment
during a crisis.
Appreciation
Our board members gave valuable guidance and
exercised patience and support during the year,
for which I am grateful. I would like to take this
opportunity to express my appreciation to our
shareholders for their forbearance and continuing
support. We look forward to deliver better returns
and to enhance their share value in the near future.
ZICOM GROUP LIMITED
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Experience and expertise
Appointed to the Board on 5 April 1995. Chairman
and Managing Director of Zicom Group Limited till
31 December 2018. From 1 January 2019, stepped
down as Managing Director and remains as
Executive Chairman of Zicom Group Limited and all
its subsidiaries. Experienced in public accounting,
corporate development, strategic management as
well as international trade.
Member of Incubation Advisory Board, Singapore
National Eye Centre
Member of Board of Governors, UOB-SMU Asian
Enterprise Institute
Singapore Ernst & Young Entrepreneur of the Year
(Industrial Products), 2008
Experience and expertise
Made an Executive Director on 25 September 2014
and promoted to Group Chief Executive Officer on 1
January 2019. For many years as the Chief Executive
Officer of Sys-Mac Automation Engineering Pte. Ltd.
(Sys-Mac), Mr Kok Yew Sim has been instrumental in
Sys-Mac Group’s growth journey, focusing on providing
customised automation solutions, building capabilities
and market penetration. As he gradually transits
into his new role as the Group CEO, he will focus on
strengthening and transforming the Group’s existing
core businesses to align with the technological age so
as to enhance shareholders value. His first task was
to spearhead the Group’s foray into LNG propulsion
systems and is now leading the team to execute the
maiden project in transforming the offshore marine
sector. He is leading the team to advance development
into carbon-free gas propulsion systems in addition to
LNG to meet evolving mandates of the International
Maritime Organisation.
Mr Sim graduated with a Bachelor’s degree in
Electrical and Electronics Engineering from the
University of Michigan, Ann Arbor, USA (Summa
Cum Laude). He is the second son of the Executive
Chairman, Mr G L Sim and Director of substantial
shareholder, SNS Holdings Pte. Ltd.
Executive Directors
Experience and expertise
Appointed to the Board on 13 November 2019, Ms
Jenny Lim has been the Group’s Financial Controller
since 2005. She is responsible for accounting,
financial, tax and corporate secretarial matters of
the Group. Ms Lim also assumed the role of Joint
Company Secretary since 6 June 2008. Before
joining the Group, Ms Lim was with an international
public accounting firm for more than 10 years
specialising in audit and tax. She is a Fellow of the
Association of Chartered Certified Accountants.
GIOK LAK SIM, FCPA
Executive Chairman, Age 75
LIM BEE CHUN, JENNY, FCCA
Group Financial Controller and
Joint Company Secretary, Age 48
KOK YEW SIM, BSc
Group Chief Executive Officer,
Age 41
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
CEO of Sys-Mac Automation
Engineering Pte. Ltd. and its
subsidiaries
Deputy Chairman of iPtec Pte. Ltd.
Director of Emage Vision Pte. Ltd.
Relevant interests in shares and
options as at date of signing the
Directors’ Report
1,350,253 ordinary shares and
400,000 options
Other current directorships and
former directorships in last 3 years
Board Member of SPRING Singapore
(1 April 2014 to 31 March 2018)
Special responsibilities
Member of Nomination and
Remuneration Committee
Executive Chairman of all
subsidiaries
Relevant interests in shares and
options as at date of signing the
Directors’ Report
107,781,137 ordinary shares
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
Joint Company Secretary
Director of Zicom Private Limited
Director and Company Secretary of
Zicom Holdings Private Limited
Relevant interests in shares and
options as at date of signing the
Directors’ Report
944,563 ordinary shares and
250,000 options
Board of Directors
Annual Report 2021
3
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Non-Executive Directors
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 and is currently
the managing director of Yian Poh Associates, a
financial consultancy and investment firm. Since
2000, Mr Lim has been an Honorary Commercial
Advisor to The Administrative Committee of Jiaxing
Economic Development Zone, China. He is also an
Expert Consultant to Suzhou Vocational University,
China. Mr Lim holds a Bachelor of Science degree
from Nanyang University, Singapore and a Master of
Science degree from the University of Hull, England.
YIAN POH LIM, BSc, MSc
Non-Executive and
Independent Director, Age 75
Other current directorships and
former directorships in last 3 years
Independent Director of Casa
Holdings Limited (appointed 4
November 2008)
Lead Independent Director of TTJ
Holdings Limited (appointed on 5
July 1996)
Independent Director of ECON
Healthcare (Asia) Limited
(appointed on 22 March 2021)
Special responsibilities
Chairman of Nomination and
Remuneration Committee
Member of Audit Committee
Non-Executive Director of Zicom
Holdings Private Limited
Relevant interests in shares and
options as at date of signing the
Directors’ Report
1,038,000 ordinary shares and
250,000 options
Experience and expertise
Appointed to the Board on 13 November 2019, Mr Yeo
has a distinguished career. He brings with him more
than 40 years of working experience in the field of
shipbuilding/repair, electrical engineering and cable
industries. He sits on board of several companies,
government boards and committees. Mr Yeo holds
a Higher National Diploma (HND) in Electrical and
Electronic Engineering from Southampton College
of Technology, UK and a Master in Management
(MBA) with High Distinction from the Asia Institute
of Management, Philippines. Mr Yeo was conferred
the Public Service Star (BBM) in 2018 and the Public
Service Medal (PBM) in 2000 by the President of
the Republic of Singapore.
SPRING Singapore Distinguished Partner Award, 2011
SISIR Standards Council Distinguished Award, 1994
RENNY YEO AH KIANG,
PBM, BBM
Non-Executive and
Independent Director, Age 71
Other current directorships and
former directorships in last 3 years
Non-Executive and Independent
Director of Tai Sin Electric Limited
(appointed on 1 July 2018)
Independent Chairman of Sin Heng
Heavy Machinery Limited
(21 December 2009 to 26 June 2020)
Lead Independent Director of OEL
(Holdings) Limited (12 August
2005 to 27 February 2020)
Board Member of Enterprise Singapore
(1 April 2018 to 31 March 2020)
Board Member of SPRING Singapore
(1 April 2013 to 31 March 2018)
Special responsibilities
Member of Nomination and
Remuneration Committee
Member of Audit Committee
Non-Executive Director of Zicom
Holdings Private Limited
Relevant interests in shares and
options as at date of signing the
Directors’ Report
NIL
Experience and expertise
Appointed to the Board on 13 November 2019, Mr
Douglas is an Audit Partner/Director at Bentleys
Queensland, an Australian national firm of public
accountants. He has over 20 years of audit and
professional experience in London, Singapore and
Brisbane. Mr Douglas possesses expert technical
knowledge across all facets of audit and assurance
and across a broad range of sectors. He also brings
along extensive internal audit experience and has
been responsible for a large number of internal
audits including internal control reviews, payroll
reviews and governance reviews. Mr Douglas holds
a Bachelor of Business degree from Queensland
University of Technology and is a member of
the Chartered Accountants Australia and New
Zealand and a Graduate of the Australian Institute
of Company Directors. He also chairs the Board of
Bentley Australia.
STEWART JAMES DOUGLAS,
BBus, CA ANZ, GAICD
Non-Executive and
Independent Director, Age 50
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
Chairman of Audit Committee
Relevant interests in shares and
options as at date of signing the
Directors’ Report
NIL
Board of Directors
ZICOM GROUP LIMITED
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Experience and expertise
Mr Marvin Blok joined the Group on 24 August
2021 as the Finance Manager of Cesco Australia
Limited and appointed Joint Company Secretary
on 29 September 2021. He has more than 15 years
of financial and commercial experience across
many industries including manufacturing, banking
& insurances, transport, education and consultancy.
Mr Blok has held diverse positions such as financial
controller, finance manager, commercial manager,
project controller and improvement manager in both
domestic and international enterprises. Mr Blok
graduated with a Bachelor of Commerce from the
University of Nijmegen, the Netherlands and Master
of Science in Management and Financial Controlling
from the Open University of the Netherlands. He is
a Fellow of CPA Australia.
Non-Executive Directors
MARVIN BLOK
BA, MSc, FCPA
Joint Company Secretary, Age 47
Experience and expertise
Mr Kok Hwee Sim was appointed to the Board on
21 November 2007. Pursuant to the demerger of
the medical technology businesses from the Group,
he stepped down as an executive director and
remained on the Board as a Non-Executive Director
for 2 years before stepping down to focus on the
medical technology businesses. On 30 November
2020, he was appointed as Alternate Director to Mr
G L Sim.
Mr Kok Hwee Sim is an experienced chief executive
officer, skilled in operations management, corporate
finance, engineering, business development and
international business. Mr Sim graduated with a
Bachelor of Science Degree in Industrial Engineering
and Operations Research from the University of
Michigan, Ann Arbor, USA (Magna Cum Laude) and
Master of Science Degree in Financial Engineering
from Columbia University, New York, USA. He is
the eldest son of the Executive Chairman, Mr G L
Sim and Director of substantial shareholder, SNS
Holdings Pte. Ltd.
KOK HWEE SIM, BSc, MSc
Alternate Director
to Mr Giok Lak Sim, Age 43
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
Non-Executive Director of Zicom
Holdings Private Limited
Relevant interests in shares and
options as at date of signing the
Directors’ Report
1,538,180 ordinary shares and
250,000 options
Experience and expertise
Appointed to the Board on 30 November 2020,
Dr Dean Tai is a founder, Chief Scientific Officer
and Director of HistoIndex Pte Ltd (“HistoIndex”).
HistoIndex is a medical technology company
providing optical medical imaging systems and
services to aid pathologists in diagnostics, clinical
trials and research studies for the assessment
and staging of liver diseases. Dr Dean Tai brings
with him many years of board experiences, global
marketing exposure and collaborations in addition
to his strong attributes in innovation, research and
development. Dr Dean Tai earned both his Bachelor
of Technology (with First Class Honours) and PhD
in Biomedical Engineering from the University of
Auckland, New Zealand.
DEAN TAI CHI-SHANG, PhD
Non-Executive and
Non-Independent Director, Age 43
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
None
Relevant interests in shares and
options as at date of signing the
Directors’ Report
NIL
Other current directorships and
former directorships in last 3 years
None
Special responsibilities
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
Nil
Company Secretary
Board of Directors
Annual Report 2021
5
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Corporate Chart
Investment Holding Company
Construction Equipment
Green Energy, Gas & Marine Equipment
Precision Engineering & technologies
ZICOM ENERGY SOLUTIONS
PRIVATE LIMITED
Singapore
Alternative Fuel
Solutions Integrator
FAE THAI
COMPANY LIMITED
Thailand
Foundation Equipment
LINK VUE SYSTEMS PTE. LTD.
Singapore
Industrial Automation
ORION SYSTEMS
INTEGRATION PTE. LTD.
Singapore
Semiconductor Equipment
IPTEC PTE. LTD.
Singapore
Medical Devices
Contract Manufacturing
MTA-SYSMAC
AUTOMATION PTE. LTD.
Singapore
Automation
PT. SYS-MAC INDONESIA
Indonesia
Precision Engineering
ASSOCIATED COMPANY
Emage Vision Pte. Ltd.
ZICOM GROUP LIMITED
CESCO AUSTRALIA LIMITED
Australia
Concrete Mixers
CESCO EQUIPMENT PTY LTD
Australia
Engineered Products
FOUNDATION ASSOCIATES
ENGINEERING PRIVATE LIMITED
Singapore
Foundation Equipment
ZICOM PRIVATE LIMITED
Singapore
Green Energy &
Marine Equipment
DEQING CESCO
MACHINERY CO., LTD.
China
Concrete Mixers
ZICOM EQUIPMENT
PRIVATE LIMITED
Singapore
Oil & Gas Equipment
SYS-MAC AUTOMATION
ENGINEERING PTE. LTD.
Singapore
Precision Engineering & Automation
ZICOM CESCO ENGINEERING
COMPANY LIMITED
Thailand
Concrete Mixers
ZICOM THAI HYDRAULICS
COMPANY LIMITED
Thailand
Hydraulics Systems
FAEQUIP CORPORATION
Philippines
Foundation Equipment
FAE CONSTRUCTION PTE. LTD.
Singapore
Foundation Works &
Marine Construction
FA GEOTECH EQUIPMENT
SDN. BHD.
Malaysia
Foundation Equipment
ZICOM HOLDINGS
PRIVATE LIMITED
Singapore
Investment Holding
ZICOM CESCO THAI
COMPANY LIMITED
Thailand
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
61%
100%
59%
100%
72%
100%
98%
100%
100%
ZICOM GROUP LIMITED
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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 2021.
Directors
The following persons were directors of Zicom Group Limited during the financial year and up to the date of this report.
Unless otherwise stated, the directors were in office for entire period.
Mr. G L Sim
(Executive Chairman)
Mr. K Y Sim
(Executive Director, Group CEO)
Ms. Jenny Lim
(Executive Director)
Mr. Y P Lim
(Non-Executive and Independent Director)
Mr. S J Douglas
(Non-Executive and Independent Director)
Mr. Renny Yeo
(Non-Executive and Independent Director)
Dr. Dean Tai
(Non-Executive and Non-Independent Director, Appointed 30 November 2020)
Mr. K H Sim
(Non-Executive and Non-Independent Director, Retired on 30 November 2020,
Appointed as Alternate Director to Mr. Giok Lak Sim on 30 November 2020)
Mr. S P Sze
(Non-Executive and Independent Director, Retired on 30 November 2020)
Mr. I R Millard
(Alternate Director to Mr. Giok Lak Sim, Retired on 30 November 2020)
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 design and supply of LNG propulsion systems, deck machinery, gas metering
stations, gas processing plants and compressor stations, manufacturing of foundation equipment, concrete mixers, rental
of foundation equipment, supply of precision and automation equipment and services, computer chip packaging machines
and surgical masks.
Consolidated Results
The Group recorded the following consolidated results during the year as compared with those of previous year:
Key Financials
Change
%
Year ended
30 June 21
S$ million
Year ended
30 June 20
S$ million
Total consolidated revenue
- 9.6
93.39
103.28
Net loss after tax attributable to equity holders of the Parent
+ 6.3
(1.13)
(1.20)
The Group’s cash and bank balances comprising cash and cash equivalents and fixed deposits as at 30 June 2021
strengthened to S$20.33m (30 June 2020: S$11.51m). The Group’s gearing ratio which has been arrived at by dividing
interest-bearing liabilities less cash and cash equivalents over capital has strengthened during the year to 15.80% from
49.10% at the end of 30 June 2020.
The audited gearing ratio of 15.80% represents an improvement over the gearing ratio of 16.08% disclosed in our
unaudited Appendix 4E. Additional revaluation surplus relating to the Thailand land and buildings of S$1.15m has been
recorded in the audited accounts as the valuation report was only made available after the release of Appendix 4E due to
the lockdown in Thailand. For the same reasons, audited net tangible assets per share has also recorded an improvement
to what was disclosed in the unaudited Appendix 4E.
Directors’ Report 2021
Annual Report 2021
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Dividends & Share Buy-Back
Although the Group has shown a strong positive operating cash flow, the results for the year just ended do not justify any
payment of dividends. Given the prospects ahead, we are hopeful of profits in the near term that could justify us paying
dividends to shareholders.
While the Group is in a strong positive cash flow position, its share price does not reflect its intrinsic value. The Board
has therefore decided to carry out a share buy-back exercise from September 2021 as part of the Group’s capital
management exercise.
Review of Operations
The Group’s consolidated revenue for the full year was S$93.39m as compared with S$103.28m in the previous year,
a decrease of 9.6%. The Group’s full year net consolidated loss after tax attributable to members to 30 June 2021 is
S$1.13m as compared with net consolidated loss of S$1.20m in the previous year, an improvement of 6.3%.
Loss per share for the year was Singapore 0.52 cents compared to Singapore 0.55 cents in the previous year, an
improvement of Singapore 0.03 cents per share. Net tangible assets per share increased from Singapore 23.11 cents to
Singapore 23.94 cents. Return on equity, based on average of the opening and closing equity, for the year was -1.7% as
compared to -1.8% in the preceding year.
The audited net tangible assets per share of Singapore 23.94 cents represents an improvement over 23.41 Singapore
cents disclosed in our unaudited Appendix 4E. Similar to the improvement seen in audited gearing ratio, the improvement
in net tangible assets per share was due to additional revaluation surplus relating to the Thailand land and buildings of
S$1.15m recorded in the audited accounts after the release of Appendix 4E.
The Covid-19 pandemic had remained unabated, continuing to cast a pall globally throughout the financial year just
ended. Customers slowed down in new orders. The global supply chain and movement of people were affected, resulting
in shortage of labour and materials. Lockdowns had caused port congestion and shipping delays. All these factors had
affected our business performance. These have raised business costs and financing charges, reducing margins.
Notwithstanding these challenges, we managed to successfully complete our projects without penalties, given force
majeure reliefs being granted by customers, and at the same time successfully transforming our marine sector to evolve
into a green energy player.
There is light in darkness. After 18 months labouring under the pandemic that first broke out in December 2019,
governments have accepted that the pandemic has evolved into an endemic as the new normal. Measures are introduced
to reactivate the economy minimising lockdowns, riding on aggressive ramping up in vaccinations. Business enquiries and
project tenders have increased. General economic recovery is evident.
Capital Management
Notwithstanding the results, the Group achieved strong positive cash flows during the year just ended. This positions it to
capitalise on growth opportunities as the pandemic abates. Going forward the Group is confident of strong prospects. The
Board is of the opinion that the Group’s current share price does not reflect its intrinsic value. It has therefore decided to
carry out a share buy-back exercise from September 2021.
Directors’ Report 2021
ZICOM GROUP LIMITED
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Evolving Green Energy Directions
The Group’s efforts in transforming the Offshore Marine, Oil and Gas sector in embarking on Green Energy LNG propulsion
systems for ocean-going vessels to meet pollution standards mandated by the International Maritime Organisation
(IMO) is proving successful. Our gas processing plant business has achieved new milestones holding strong promises
for scalability. The revenue generated by these activities will potentially replace revenue lost in marine deck machinery
whose demand continues to be weak and uncertain. To expand our market footprint, in addition to LNG, we have
begun to foray into developing propulsion systems for methanol and ammonia, as demand for carbon-free systems is
fast gaining traction. China is leading in shipbuilding in the world and most of the vessels ordered from their shipyards
adopt green energy propulsion or dual-fuel systems. Green energy being a relatively nascent technology, comes with
great opportunities to innovate, value-add and accelerate growth. Demand for these is mandated by international maritime
regulations.
To more correctly reflect the business direction that is evolving, this cluster has been renamed as Green Energy, Gas and
Marine Equipment. For the year just ended, as a cluster, it has been profitable notwithstanding the challenging environment
under which the businesses were carried out.
Segmental Revenue
The following is an analysis of the segmental revenue:-
Segmental Revenue
Change
%
Year ended
30 June 21
S$ million
Year ended
30 June 20
S$ million
Green Energy, Gas & Marine Equipment
- 27.77
38.24
52.94
Construction Equipment
+ 13.28
30.29
26.74
Precision Engineering & Technologies
+ 4.67
22.88
21.86
Industrial & Mobile Hydraulics
+ 9.09
1.92
1.76
Green Energy, Gas & Marine Equipment
There was a drop in revenue during the financial year just ended. This was due to timing of revenue recognition.
Notwithstanding the drop in revenue, this segment has been profitable for 2 consecutive years. We expect to maintain
its performance in the years to come. Demand for our products and services in this cluster is increasing as reflected in
the confirmed orders in hand. This segment potentially forms the bulk of our revenue and its growth is expected to be
sustainable.
We have renamed this sector as Green Energy, Gas & Marine Equipment to reflect its evolving direction.
Green energy technology is nascent. There are abundant growth opportunities for innovations and to value-add as well as
evolution in new applications. As evident with the majority of new ships being built globally, carbon-free propulsion systems
are installed as ship owners are increasingly embracing Environmental Sustainability Governance as part of their ESG
responsibility while complying with mandated global maritime regulations.
Directors’ Report 2021
Annual Report 2021
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Construction Equipment
Demand for construction equipment in Australia, Singapore, Malaysia, the Philippines and Thailand picked up towards
the last quarter of calendar year 2020. The momentum carried through towards the end of the financial year just ended
as pandemic restrictions eased with the availability of vaccines. The pandemic is expected to evolve into an endemic as
with the common flu. Governments and businesses are adjusting to this new normal in reactivating the global economy.
Construction activities in 2020 have, in the main, been held back in most infected countries that included all the countries
in which the Group operated. Pent-up construction activities coupled with the easing of pandemic, a result of higher
vaccination coverage, is expected to drive demand for our equipment.
Precision Engineering & Technologies
Revenue from precision engineering and technologies segment increased by 4.67% in the full year as compared with the
previous year. The increase reflects gradual resurgence in demand for automation and manufacturing services in line with
economic recovery.
The growth in this segment will gain increasing impetus as more people are vaccinated and the global supply chains
recover driving growth. While the impasse in the USA-China political relationship is expected to continue for a while,
tension has been considerably lessened with a new President in the USA. Global trade is expected to recover as success
in controlling the pandemic gains pace.
The emergence of the Covid-19 Variant, the Delta, which is more transmissible and infectious has called for use of quality
masks that meet surgical standards such as Type IIR. Our surgical masks are manufactured to the highest standards
meeting EU and FDA specifications. Demand for our masks has increased. We have recovered our capital investment. The
mask project was primarily premised as an CSR project to help society meet the shortage of masks at the height of the
pandemic in mid-2020. Profits from this activity are expected to remain marginal pursuant to our CSR objective.
Industrial & Mobile Hydraulics
This sector, as with most businesses, was impacted by the Covid-19 lockdowns. As the main part of this business
includes supply of hydraulic systems to the concrete mixer manufacturing, we have decided to consolidate and include
this division into the Construction Equipment segment with effect from 1 July 2021.
Financial Position
The Group’s financial position remains satisfactory:-
Classification
Increase
S$ million
As at 30 June 21
S$ million
As at 30 June 20
S$ million
Net assets
0.51
65.79
65.28
Net working capital
1.70
23.87
22.17
Cash in hand and at bank
8.82
20.33
11.51
Directors’ Report 2021
ZICOM GROUP LIMITED
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Return per Share
The Group’s earnings and net tangible assets per share are as follows:-
Decrease
Singapore Cents
Year ended
30 June 2021
Singapore Cents
Year ended
30 June 2020
Singapore Cents
Loss per share
0.03
(0.52)
(0.55)
The weighted average number of shares used to compute basic earnings per share are 217,140,780 for this year and the
previous year.
Increase
Singapore Cents
As at 30 June 21
Singapore Cents
As at 30 June 20
Singapore Cents
Net tangible assets per share
0.83
23.94
23.11
The calculation of net tangible assets per share includes contract assets and lease liabilities but excludes right-of-use
intangible assets.
The audited net tangible assets per share of Singapore 23.94 cents represents an improvement over 23.41 Singapore
cents disclosed in our unaudited Appendix 4E. The improvement in net tangible assets per share was due to additional
revaluation surplus relating to the Thailand land and buildings of S$1.15m recorded in the audited accounts after the
release of Appendix 4E.
Capital Expenditure
For the year ending 30 June 2022, the Group does not plan to invest in any major capital equipment.
Confirmed Orders
We have a total of S$82.9m (30 June 2020: S$53.6m) outstanding confirmed orders in hand as at 30 June 2021. A
breakdown of these outstanding confirmed orders are as follows:-
S$ m
Green Energy, Gas & Marine Equipment
62.1
Construction Equipment
9.3
Precision Engineering & Technologies
11.5
Total
82.9
Of the above, S$64.2m are scheduled for delivery in the financial year 2022 and S$18.7m are scheduled to be delivered in
the financial year 2023.
Directors’ Report 2021
Annual Report 2021
11
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Prospects
Your board is confident that the Group is turning the corner. Prospects ahead are strong.
The successful milestones achieved by our transformation into green energy and gas processing plants will place us in a
position to recover revenue lost in marine equipment. Potentials for growth surpassing past level in this sector are strong.
With potential recovery in deck machinery in time to come and increase in value-added activity in this sector, we are hopeful
of an expanded revenue base capable of vertical and horizontal growth in the years ahead, barring no worsening of the
pandemic or the global trade war.
Overall, Group’s growth prospects are strong, it being further supported by the construction sector being expected to
resurge strongly post-pandemic and global manufacturing activities recovering in line with the easing of the pandemic
propelling increase in demand in precision engineering and automation activities.
Subsequent Events after the Balance Sheet Date
Subsequent to the financial year-end, the board of directors resolved to carry out an on-market share buy-back within the
10/12 limit provided for under Section 257A of the Corporations Act 2001 to enhance shareholders value as part of capital
management. The share buy-back exercise has commenced in September 2021 after the release of the full year results
and requisite notifications had been given to the regulatory authorities.
Except for the above, no matter or circumstances has occurred subsequent to the year-end that has significantly affected,
or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group
subsequent to 30 June 2021.
Environmental Regulations
The Group is subject to environmental regulations under State and Federal legislations. The Group holds environmental
licences for its manufacturing site in Brisbane. No significant material environmental incidents occurred during the year.
Meetings of directors
The number of meetings of the Company’s board of directors and of each board committee held since the last Annual
General Meeting, and the number of meetings attended by each director were:
Meetings of Committees
Full meetings of directors
Audit
Nomination &
Remuneration
A
B
A
B
A
B
Mr. G L Sim
5
5
-
-
2
2
Mr. K Y Sim
5
5
-
-
-
-
Ms. Jenny Lim
5
5
-
-
-
-
Mr. Y P Lim
5
5
3
3
2
2
Mr. Renny Yeo
4
5
2
3
1
2
Mr. S J Douglas
5
5
3
3
-
-
Dr. Dean Tai
5
5
-
-
-
-
Mr. K H Sim
5
5
-
-
-
-
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
Directors’ Report 2021
ZICOM GROUP LIMITED
12
For personal use only
Insurance or indemnification of officers
During the financial year, Zicom Group Limited paid a premium of A$31,185 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 Australia, 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
In accordance with ASX Listing Rule 14.4 and the Company’s Constitution, Messrs G L Sim and Y P 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 2021.
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 table:
(i)
Directors
Mr. G L Sim
(Executive Chairman)
Mr. K Y Sim
(Executive Director, Group CEO)
Ms. Jenny Lim
(Executive Director)
Mr. Y P Lim
(Non-Executive and Independent Director)
Mr. S J Douglas
(Non-Executive and Independent Director)
Mr. Renny Yeo
(Non-Executive and Independent Director)
Dr. Dean Tai
(Non-Executive and Non-Independent Director, Appointed 30 November 2020)
Mr. K H Sim
(Non-Executive and Non-Independent Director, Retired on 30 November 2020,
Appointed as Alternate Director to Mr. Giok Lak Sim on 30 November 2020)
Mr. S P Sze
(Non-Executive and Independent Director, Retired on 30 November 2020)
Mr. I R Millard
(Alternate Director to Mr. Giok Lak Sim, Retired on 30 November 2020)
Directors’ Report 2021
Annual Report 2021
13
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Remuneration report (Audited)
(ii)
Senior Executives
J L Sim
(Managing Director of Zicom Private Limited)
H S Tang
(Chief Technical Officer of Zicom Private Limited)
In view of the evolving green energy direction of the Group as a result of our business transformation, with effect from
1 July 2021, Mr J L Sim will focus on his expertise on deck machinery and Mr H S Tang, who is 72, will focus on
engineering mentorship. Both will cease to be KMP from that date as they are not expected to be instrumental in the
future strategic directions of the Group’s activities and hence will not directly or indirectly control the major activities of the
Group.
There were no other 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
Principles used to determine the nature and amount of remuneration
B
Service Agreements
C
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 G L Sim and Mr Renny Yeo as members.
The Nomination and Remuneration Committee had approved the Service Agreements of the Executive Chairman,
Mr G L Sim and the Group CEO, Mr Kok Yew Sim.
The key principle of Zicom Group Limited’s remuneration policy is to ensure remuneration is set at levels that will
attract, motivate, reward and retain personnel to improve business results, having regard to the Company’s financial
performance and financial position.
Non-Executive Directors
Remuneration of Non-Executive Directors is determined by the directors within the maximum amount approved by
shareholders. Each Non-Executive Director receives a base fee of A$30,000 for being a director of the Company.
An additional fee of A$5,000 is paid for each Board Committee of which a Non-Executive Director sits and
A$10,000 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.
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 2021 Annual General Meeting.
The Board recommends that total directors’ fees for Non-Executive Directors for the financial year ending 30 June
2022 be fixed at a maximum sum of A$200,000 (S$202,080), the same level as the previous year.
Directors’ Report 2021
ZICOM GROUP LIMITED
14
For personal use only
Remuneration report (Audited)
Executive Directors and Senior Executives
All remuneration paid to Executive Directors and senior executives comprises the following components:
l
Base pay and benefits;
l
Short term incentives;
l
Other remuneration such as superannuation; and
l
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. Car allowance which
is given to defray cost of commuting has been suspended since the lockdown first started in April 2020 until further
review.
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 shareholders’
funds outstanding at the end of the previous financial year.
B
Service Agreements
Executive Chairman and Group Chief Executive Officer
The Executive Chairman, 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 2021. ZHPL 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 Executive Chairman of Zicom Group Limited
and all its subsidiaries.
Mr Sim is entitled to an annual review of his monthly salary if the consolidated profits before tax of the Group
exceed 15% return on shareholders’ funds as at the end of that financial year. Mr Sim has frozen his monthly salary
since 2007. From 1 January 2019, he reduced his monthly salary by 30% and from 1 January 2020, by another
10%. He has decided to further reduce his monthly salary by another two-thirds from 1 July 2021 which translates
to less than one-third of the monthly salary he used to draw in 2007. Apart from this, all other benefits, terms and
conditions in his service agreement remain unchanged.
Group Chief Executive Officer, Mr K Y Sim, is directly employed by ZHPL and has entered into a 5-year service
agreement with ZHPL with effect from 1 January 2019. ZHPL and Mr K Y 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 is also appointed as the Group CEO of ZGL.
Directors’ Report 2021
Annual Report 2021
15
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Remuneration report (Audited)
Both Mr G L Sim and Mr K Y Sim are paid a monthly salary and a car allowance. Car allowance which is given to
defray cost of commuting has been suspended since the lockdown first started in April 2020 until further review.
Both of them are entitled to a minimum performance bonus of 5% but their total not exceeding 10% of the pre-
tax consolidated profits of ZHPL upon achieving agreed minimum profit targets, being the only criterion for their
entitlement. Both are entitled to convert part of their performance bonus up to 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 G L Sim was not entitled to any bonus as the minimum profit target was not
achieved. Mr K Y Sim, the Group CEO, continues as CEO of Sys-Mac Automation Engineering Pte. Ltd. (“Sys-Mac”)
while transiting into his Group’s role pending a successor for Sys-Mac, is entitled to a bonus under his contract at the
higher of his entitlement based on the profits of Sys-Mac or consolidated profits of ZHPL. For the financial year just
ended, Mr K Y Sim was not entitled to a bonus as both ZHPL and Sys-mac did not achieve the minimum profit target.
Pursuant to their service agreements with ZHPL, both are 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, both
Mr G L Sim and Mr K Y Sim will be paid a total bonus not exceeding 5% of CAL’s profits. During the financial
year just ended, both were 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. Similarly, car allowance which is given to defray
cost of commuting has been suspended since the lockdown first started in April 2020 until further review.
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 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.
Directors’ Report 2021
ZICOM GROUP LIMITED
16
For personal use only
Remuneration report (Audited)
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 for future contributions 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, no share option was granted or exercised whilst 600,000 share options had
expired.
There were 6,000,000 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:
2021
2020
2019
2018
2017
Earnings per share (Australian cents)
(0.52)
(0.59)
0.22
(4.83)
(2.03)
Dividends per share (Australian cents)
–
–
–
–
0.15
Closing share price (Australian cents)
6.30
5.00
11.00
9.60
12.00
Net tangible assets per share (Australian cents)
23.69
24.13
28.36
25.12
28.65
Exchange rates used for currency translation
Average rate for EPS
1.0058
0.9288
0.9749
1.0375
1.0498
Closing rate for NTA per share
1.0104
0.9576
0.9488
1.0076
1.0570
Directors’ Report 2021
Annual Report 2021
17
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Remuneration report (Audited)
C
Details of remuneration
Details of the remuneration to the directors and the key management personnel of Zicom Group Limited for the years ended 30 June 2021 and 2020 are set out in
the following tables. All performance related bonus and share-based payments listed in the table were 100% vested for both financial years.
2021
Short Term Employee Benefits
Post-Employment
Benefit
Share-Based Payments
Name
Cash
Salary and
Fees
Bonus
Non-
Monetary
Benefits
Other
Short-Term
Employee
Benefits
Superannuation
Performance
Bonus Paid in
Shares
Share
options
Total
Performance
Related
Consisting
Of Share
Options
S$
S$
S$
S$
S$
S$
S$
S$
%
%
Non-Executive Directors
K H Sim (1)
14,668
–
–
–
–
–
–
14,668
–
–
Y P Lim
45,261
–
–
–
–
–
–
45,261
–
–
Renny Yeo
40,232
–
–
–
–
–
–
40,232
–
–
S J Douglas
40,232
–
–
–
–
–
–
40,232
–
–
Dean Tai
17,602
–
–
–
–
–
–
17,602
–
–
S P Sze (1)
12,573
–
–
–
–
–
–
12,573
–
–
I R Millard (1)
–
–
–
–
–
–
–
–
–
–
Sub-total Non-Executive Directors
170,568
–
–
–
–
–
–
170,568
Executive Directors
G L Sim – Executive Chairman
51,840
–
–
–
3,888
–
–
55,728
–
–
K Y Sim
240,000
–
–
–
12,240
–
2,661
254,901
–
1
Jenny Lim
183,115
–
–
1,020
12,240
–
1,663
198,038
–
1
Sub-total Executive Directors
474,955
–
–
1,020
28,368
–
4,324
508,667
Other Key Management Personnel
J L Sim (2)
151,200
–
–
–
5,400
–
1,314
157,914
–
1
H S Tang (3)
126,840
–
–
–
5,400
–
1,314
133,554
–
1
Sub-total Other Key Management Personnel
278,040
–
–
–
10,800
–
2,628
291,468
Grand total
923,563
–
–
1,020
39,168
–
6,952
970,703
(1)
Messrs K H Sim, S P Sze and I R Millard retired on 30 November 2020.
(2)
J L Sim is the managing director of Zicom Private Limited.
(3)
H S Tang is the chief technical officer of Zicom Private Limited.
Directors’ Report 2021
ZICOM GROUP LIMITED
18
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Remuneration report (Audited)
C
Details of remuneration (Cont’d)
2020
Short Term Employee Benefits
Post-Employment
Benefit
Share-Based Payments
Name
Cash Salary
and Fees
Bonus
Non-
Monetary
Benefits
Other
Short-Term
Employee
Benefits
Superannuation
Performance
Bonus Paid in
Shares
Share
options
Total
Performance
Related
Consisting
Of Share
Options
S$
S$
S$
S$
S$
S$
S$
S$
%
%
Non-Executive Directors
K H Sim
30,643
–
–
–
–
–
3,817
34,460
–
11
Y P Lim
38,424
–
–
–
–
–
3,817
42,241
–
9
Renny Yeo
20,948
–
–
–
–
–
–
20,948
–
–
S J Douglas
23,940
–
–
–
–
–
–
23,940
–
–
S P Sze
26,933
–
–
–
–
–
1,527
28,460
–
5
I R Millard
11,491
–
–
–
–
–
1,527
13,018
–
12
Sub-total Non-Executive Directors
152,379
–
–
–
–
–
10,688
163,067
Executive Directors
G L Sim – Executive Chairman
280,800
–
–
18,000
5,400
–
–
304,200
–
–
K Y Sim
246,831
–
–
18,000
12,240
–
2,437
279,508
–
1
Jenny Lim
117,014
–
–
5,138
7,650
–
1,523
131,325
–
1
Sub-total Executive Directors
644,645
–
–
41,138
25,290
–
3,960
715,033
Other Key Management Personnel
J L Sim (1)
151,200
–
–
16,200
5,400
–
1,437
174,237
–
1
H S Tang (2)
126,840
–
–
28,800
5,400
–
1,437
162,477
–
1
Sub-total Other Key Management Personnel
278,040
–
–
45,000
10,800
–
2,874
336,714
Grand total
1,075,064
–
–
86,138
36,090
–
17,522
1,214,814
(1)
J L Sim is the managing director of Zicom Private Limited.
(2)
H S Tang is the chief technical officer of Zicom Private Limited.
Directors’ Report 2021
Annual Report 2021
19
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Remuneration report (Audited)
Details of share options to key management personnel
Options granted to, vested, exercised or expired during the years 2021 and 2020 as well as their outstanding options held
as at year-end are shown in the tables below.
30 June 2021
Balance at
1 July 2020
Balance at
30 June 2021 Exercisable
Not
Exercisable
Expiry date
Options
Granted
exercised
Expired
Directors
K Y Sim
700,000
–
–
(300,000)
400,000
136,000
264,000
12/11/2024
Jenny Lim
250,000
–
–
–
250,000
85,000
165,000
12/11/2024
K H Sim
550,000
–
–
(300,000)
250,000
250,000
–
12/11/2024
Y P Lim
250,000
–
–
–
250,000
250,000
–
12/11/2024
Executives
J L Sim
200,000
–
–
–
200,000
68,000
132,000
15/10/2024
H S Tang
200,000
–
–
–
200,000
68,000
132,000
15/10/2024
2,150,000
–
–
(600,000)
1,550,000
857,000
693,000
Messrs S P Sze and I R Millard held 100,000 share options each at the date of their retirement.
30 June 2020
Balance at
1 July 2019
or date of
appointment,
if later
Balance at
30 June 2020 Exercisable
Not
Exercisable
Expiry date
Options
Granted
exercised
Expired
Directors
K Y Sim
300,000
400,000
–
–
700,000
300,000
400,000
(1)
Jenny Lim
–
250,000
–
–
250,000
–
250,000
12/11/2024
K H Sim
300,000
250,000
–
–
550,000
550,000
–
(1)
Y P Lim
–
250,000
–
–
250,000
250,000
–
12/11/2024
S P Sze
–
100,000
–
–
100,000
100,000
–
12/11/2024
I R Millard
–
100,000
–
–
100,000
100,000
–
12/11/2024
Executives
J L Sim
200,000
200,000
–
(200,000)
200,000
–
200,000
15/10/2024
H S Tang
200,000
200,000
–
(200,000)
200,000
–
200,000
15/10/2024
1,000,000
1,750,000
–
(400,000)
2,350,000
1,300,000
1,050,000
(1)
300,000 options expire on 30/11/2020 and remaining options expire on 12/11/2024.
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. Please refer to note 27 for more details.
No other key management personnel were granted, exercised or had options which expired during the years 2021 and
2020 or had outstanding options as at 30 June 2021 and 30 June 2020.
Directors’ Report 2021
ZICOM GROUP LIMITED
20
For personal use only
Remuneration report (Audited)
Shareholdings of key management personnel as at 30 June 2021 and 30 June 2020 are as follows:
30 June 2021
Balance at
1 July 2020
or date of
appointment,
if later
Sold
Options
exercised
Bought
Balance as at
30 June 2021
Directors
G L Sim
107,781,137
–
–
–
107,781,137
K Y Sim
1,350,253
–
–
–
1,350,253
Jenny Lim
944,563
–
–
–
944,563
K H Sim
1,538,180
–
–
–
1,538,180
Y P Lim
1,038,000
–
–
–
1,038,000
Renny Yeo
–
–
–
–
–
S J Douglas
–
–
–
–
–
Dean Tai
–
–
–
–
–
Executives
J L Sim
6,687,767
–
–
–
6,687,767
H S Tang
2,111,339
(354,682)
–
–
1,756,657
121,451,239
(354,682)
–
–
121,096,557
Messrs I R Millard and S P Sze held 592,250 and NIL ordinary shares respectively at the date of their retirement.
30 June 2020
Balance at
1 July 2019
or date of
appointment,
if later
Sold
Options
exercised
Bought
Balance as at
30 June 2020
Directors
G L Sim
107,781,137
–
–
–
107,781,137
K Y Sim
1,350,253
–
–
–
1,350,253
Jenny Lim
944,563
–
–
–
944,563
K H Sim
1,538,180
–
–
–
1,538,180
Y P Lim
1,038,000
–
–
–
1,038,000
Renny Yeo
–
–
–
–
–
S J Douglas
–
–
–
–
–
I R Millard
592,250
–
–
–
592,250
S P Sze
–
–
–
–
–
Executives
J L Sim
6,687,767
–
–
–
6,687,767
H S Tang
2,111,339
–
–
–
2,111,339
122,043,489
–
–
–
122,043,489
There were no other transactions and balances with key management personnel and their related parties during the years
2021 and 2020.
Directors’ Report 2021
Annual Report 2021
21
For personal use only
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
set out immediately after this report.
Non-Audit Services
In August 2020, EY Corporate Services Limited in Thailand was engaged to conduct a fact-finding investigation with
regards to alleged cash fraud discovered in Thailand subsidiary companies. The directors are satisfied that the provision of
non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001. The nature and scope of non-audit services provided did not compromise auditor’s independence.
Ernst & Young Australia only received or due to receive fees for assurance-related services.
Rounding of Amounts
The Company is an entity to which ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
applies and accordingly, the amounts contained 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
Executive Chairman
30 September 2021
Directors’ Report 2021
ZICOM GROUP LIMITED
22
For personal use only
Auditor’s Independence Declaration
to the Directors of Zicom Group Limited
As lead auditor for the audit of the financial report of Zicom Group Limited for the financial year ended 30 June 2021,
I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b.
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.
Annual Report 2021
23
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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” or “ZGL”). 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: Lay Solid Foundations for Management and Oversight
Role of Board and management
The Board is responsible for the governance of ZGL. The role of the Board is to review and approves ZGL’s strategic
direction and provide oversight of management.
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 ascertains 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, responsibilities, rights and remuneration entitlement. These contracts set out the
circumstances in which the employment of the Executives may be terminated by either ZGL or the Executives including
details of notice periods.
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.
Corporate Governance Statement
ZICOM GROUP LIMITED
24
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Company Secretaries
The Joint Company Secretaries attend all meetings of the Board and Board Committees and is responsible for the day-to-
day corporate secretarial function and are directly accountable to the Board through the Chairman.
Diversity Policy
The Company’s workforce is relatively small and as such, the Board does not see the relevance of having a written
diversity policy or establishing measurable objectives for achieving gender diversity. However, the Company recognises
the importance of benefitting from all available talent regardless of gender, age, ethnicity and cultural background. The
Company promotes an environment conducive to the appointment of well qualified employees, senior management and
board candidates so that there is appropriate diversity to maximise the achievement of corporate goals.
The Company has employees including executives from diversified cultural background and nationalities such as
Australians, Bangladeshis, Chinese, Indians, Indonesians, Filipinos, Malaysians, Burmese, New Zealanders, Singaporeans
and Thais.
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 measurable 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 be Effective and 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 an appropriate balance of skills,
industry knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities
effectively and to represent Shareholders.
Nomination and Remuneration Committee
A combined Nomination and Remuneration Committee has been established comprising the following members:
l
Mr Y P Lim (Chairman)
l
Mr G L Sim
l
Mr Renny Yeo
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, Executive Chairman and Group CEO.
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 12 of the Directors’ Report.
Corporate Governance Statement
Annual Report 2021
25
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Board Skills Matrix
The Board seeks to ensure that it has an appropriate mix of diversity, skills, industry experience and expertise to enable it
to discharge its responsibilities effectively. As a minimum, the Board’s skills matrix includes:
(a)
Each Director must be capable of making a valuable contribution to the effective operations of the Company and
Board’s deliberations and processes;
(b)
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 requirements noted above.
Independence
At the date of this annual report, the Board is made up of 3 executive directors, 2 non-executive and non-independent
and 3 independent directors. Hence, majority of board members are non-executive.
An independent director is one who:
-
is not and has not within the last three years been employed in an executive capacity by the Company or other
group member;
-
does not receive performance-based remuneration;
-
is not or has not been within the last three years in a material business relationship (eg. supplier, professional
adviser, consultant or customer) with the Company or other group member or is not an officer of or associated with
someone with such a relationship;
-
is not and does not represent a substantial shareholder of the Company or has not within the last three years been
an officer or employee of, or professional adviser to, a substantial shareholder;
-
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.
Mr Renny Yeo has no relationships or interests that would affect his role as an independent director.
Mr Stewart Douglas 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.
Corporate Governance Statement
ZICOM GROUP LIMITED
26
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Dr Dean Tai being an executive director and chief scientific officer of HistoIndex Pte Ltd (“HI”), an investee company of ZIG
Ventures Limited (“ZIGV”), reports to Mr G L Sim as chairman of HI. The Board has therefore considered Dr Dean Tai to be
not independent.
Mr S P Sze has no relationships or interests that would affect his independence and hence was an independent director
until his retirement on 30 November 2020.
Mr Ian R Millard has no relationships or interests that would affect his independence and hence was an independent
director until his retirement on 30 November 2020.
Ms Jenny Lim is the Group Financial Controller since 2005 and is therefore considered by the Board to be not
independent.
Mr K H Sim had, within the last three years, been an executive director and being the eldest son of Mr G L Sim, he is
therefore considered by the Board to be not independent.
Mr K Y Sim is the Group Chief Executive Officer, he is therefore considered by the Board to be not independent.
Mr G L Sim was appointed the Group 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. On 1 January 2019, Mr G L Sim stepped down as the Group Managing Director and remains as
Executive Chairman of Zicom Group. The Board has determined that Mr G L Sim is, and was not independent.
As such, the position of the Chairperson is held by a 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 to 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:
Non-independent
Independent
Mr G L Sim
26 years
Mr Y P Lim
15 years
Mr K Y Sim
7 years
Mr Renny Yeo
2 years
Ms Jenny Lim
2 years
Mr Stewart Douglas
2 years
Dr Dean Tai
1 year
Mr K H Sim
- As director
- As alternate director
13 years
1 year
The Company’s Constitution specifies that at each annual general meeting, 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.
The Board recognises that it is desirable for the majority of the Board to be independent directors. However, given the size
of the current operations and financial resources of the Company, the current Board composition reflects an appropriate
balance of skills, expertise and experience to discharge its obligations effectively and act in the best interest of the
Company and all stakeholders.
Corporate Governance Statement
Annual Report 2021
27
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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, all new directors are invited to meet key executives and attend site visits of key
operations to gain an understanding of the Company’s structure, business operations, history and key risks. Whenever
appropriate, the Company provides opportunities to develop and maintain their skills and knowledge to perform their roles
as Directors effectively.
Principle 3: Act Lawfully, Ethically and Responsibly
Code of Conduct
The Company has a Code of Conduct that applies to ZGL and its Directors, officers, employees and consultants and sets
out the standards of responsibility and ethical conduct required of our people. A summary of this Code is as follow:
l
Act honestly and with high standards of personal integrity
l
Act ethically and responsibly
l
Protect Company’s non-public information such as business plans, product formulas, marketing strategies, pricing,
proposals, potential mergers and acquisitions
l
Safeguard Company’s assets which include physical, electronic and intellectual properties
l
Comply with all laws and regulations that apply to the Company and its operations
l
Treat fellow colleagues with respect and do not engage in bullying, harassment or discrimination
l
Deal with customers and suppliers fairly and ethically
l
Respect government authorities and regulatory bodies
l
Do not allow our personal interests to influence our decisions made on behalf of Company
l
Do not take advantage of the Company’s property or information or its customer for personal gain or to cause
detriment to the Company or customer
l
Do not take advantage of our position or the opportunities arising therefrom for personal gains
l
Report breaches of the Code
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 2001 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.
Any material breaches of the Code of Conduct are reported to the Board and monitored until the relevant breach is
considered closed.
Corporate Governance Statement
ZICOM GROUP LIMITED
28
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Share Trading Policy
Directors are required to make disclosure of any share trading. The key principles of the Share Trading Policy are that
Directors and officers are prohibited to trade while in possession of unpublished price sensitive information and during the
following closed periods:
l
The period between 1 January and the release of the Company’s Half Year results to the Stock Exchange
l
The period between 1 July and the release of the Company’s Full Year results to the Stock Exchange
l
The twenty-four hours following an announcement of price sensitive information on the Stock Exchange
l
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 the Integrity of Corporate Reports
Audit Committee
The Audit Committee comprises of 3 members, all of whom are independent:
l
Mr S J Douglas (Chairman)
l
Mr Y P Lim
l
Mr Renny Yeo (appointed on 30 November 2020)
The Audit Committee operates in accordance with a charter. The main responsibilities of the Audit Committee are to:
l
Review, assess and approve the annual report, the half year financial report and all other financial information
published by the Company or released to the market.
l
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.
l
Recommend the appointment or removal of the external auditor and the rotation of the audit engagement partner.
l
Recommend the remuneration of the external auditor, and review the terms of their engagement, the scope and
quality of their audit and assess their performance.
l
Consider the independence and competence of the external auditor on an ongoing basis.
l
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 12 of the Directors’ Report.
Corporate Governance Statement
Annual Report 2021
29
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To ensure the integrity of the Company’s financial reports, the Executive Chairman 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 2001, 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 annual and half-yearly financial reports are reviewed by the Audit Committee and the external auditors,
including the disclosures made in those reports. Where there are other periodic reports to be released to the market, it will
be reviewed by the relevant board committee and the Board.
Principal 5: Make Timely and Balanced Disclosure
The Board recognises that the Company as a publicly listed entity has an obligation to make timely and balanced
disclosure in accordance with the requirements of the Australian Securities Exchange (“ASX”) Listing Rules and the
Corporations Act 2001. The Board is committed 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.
As soon as the confirmation of release is received from ASX, the Company Secretaries forward it to the Board immediately
for their information. The Company also circulates all price sensitive announcements to the Board ahead of release being
made.
The Company will ensure that all substantive presentations are released to the market to enable all shareholders the
opportunity to access the materials included in the presentation.
Principal 6: Respect the Rights of Shareholders
The Company aims to communicate all important information relating to the Company to its shareholders. Additionally,
the Company recognises potential investors and other interested stakeholders may wish to obtain information about the
Company from time to time.
To achieve this, the Company communicates information regularly to shareholders and other stakeholders through the
following:
l
Annual General Meeting (“AGM”): the Company encourages full participation of shareholders at the AGM and for
those shareholders who are unable to attend in person, they are able to lodge proxies. The external auditor will
attend the AGM and is available to answer any questions from shareholders about the conduct of the audit and the
preparation and content of the auditor’s report.
l
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. Shareholders may elect to receive annual
reports electronically. Hard copy annual reports are provided to shareholders who have not elected to receive these
electronically.
l
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.
l
Investor relations: the Company provides an online email inquiry service to assist shareholders with any queries.
Corporate Governance Statement
ZICOM GROUP LIMITED
30
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The Chairman encourages shareholders to ask questions and make comments about the Company’s operations at the
AGMs. The Chair may respond directly to questions or, at his discretion, may refer a question to another Director, the
Group CEO or a senior executive. As far as practicable, all substantive resolutions at the shareholders’ meetings are
decided by a poll rather than a show of hands.
All shareholders are encouraged to take advantage of the benefit of electronic communications by electing to receive
communication 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, cyber-security,
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 Executive Chairman (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 control which implements the policies adopted by the Board; and
-
The Company’s risk management and internal control system is operating efficiently and effectively in all material
respects to manage the Company’s key business risks.
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, the use of testing on a
sample basis, the inherent limitations in internal controls and because much of the evidence available is persuasive rather
than conclusive 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, chaired by an independent director.
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 12 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.
Corporate Governance Statement
Annual Report 2021
31
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The Executive Directors receive performance-based remuneration. Both the Executive Chairman and the Group CEO have
service agreements with the Group for a term of 5 years. The Non-Executive Directors do not receive any performance-
based remuneration and do not have contracts with the Company that give them any form of specific tenure. One-third of
the Directors except the Group CEO 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 into 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. The first grant of options 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 sensible and balanced which
aligns the interests of shareholders and all Directors.
The grant of options to Non-Executive Directors are not conditional upon the achievement of any performance condition
so as not to compromise on their objectivity.
Transactions which limit the economic risk of participating in unvested elements under equity-based remuneration
schemes are not allowed.
Corporate Governance Statement
ZICOM GROUP LIMITED
32
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Note
2021
S$’000
2020
S$’000
Revenue from contracts with customers
5
89,462
99,076
Rental income
1,521
1,870
Revenue
90,983
100,946
Other revenue
6
2,410
2,329
Total consolidated revenue
93,393
103,275
Cost of materials
(48,458)
(60,948)
Employee, contract labour and related costs
(24,684)
(24,659)
Depreciation and amortisation
(6,436)
(6,561)
Property related expenses
(167)
(165)
Other operating expenses
6
(13,078)
(9,978)
Finance costs
(1,131)
(1,533)
Share of results of associate
13
(146)
(394)
Loss before taxation
(707)
(963)
Tax expense
7
(465)
(359)
Loss for the year
(1,172)
(1,322)
Other comprehensive income
Items that will not be reclassified to profit or loss (net of tax):
Revaluation of land and buildings
2,041
–
Items that may be subsequently reclassified to profit and loss
(net of tax):
Foreign currency translation on consolidation
(398)
504
Other comprehensive income for the year, net of tax
1,643
504
Total comprehensive income/(loss) for the year
471
(818)
Loss attributable to:
Equity holders of the Parent
(1,125)
(1,200)
Non-controlling interests
(47)
(122)
Loss for the year
(1,172)
(1,322)
Total comprehensive income/(loss) attributable to:
Equity holders of the Parent
518
(696)
Non-controlling interests
(47)
(122)
Total comprehensive income/(loss) for the year
471
(818)
Earnings per share (cents)
Basic loss per share
8
(0.52)
(0.55)
Diluted loss per share
8
(0.52)
(0.55)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2021
(In Singapore dollars)
Annual Report 2021
33
For personal use only
Note
2021
S$’000
2020
S$’000
ASSETS
Non-current assets
Property, plant and equipment
9
34,896
34,320
Right-of-use assets
10
8,507
8,740
Intangible assets
11
6,906
7,116
Deferred tax assets
7
1,921
2,459
Investment in associate
13
3,191
3,337
55,421
55,972
Current assets
Cash and cash equivalents
22
17,246
11,508
Fixed deposits
23
3,080
–
Inventories
14
24,082
27,868
Trade and other receivables
15
19,692
9,600
Contract assets
5
1,630
38,237
Contract costs
16
4,161
1,286
Prepayments
319
356
Tax recoverable
137
195
70,347
89,050
TOTAL ASSETS
125,768
145,022
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
17
17,652
28,667
Contract liabilities
5
8,346
2,093
Lease liabilities
10
2,336
1,936
Other interest-bearing liabilities
18
15,683
32,544
Provisions
19
2,160
1,068
Unearned income
20
231
252
Provision for taxation
73
319
46,481
66,879
NET CURRENT ASSETS
23,866
22,171
Non-current liabilities
Lease liabilities
10
5,744
6,848
Other interest-bearing liabilities
18
3,850
2,133
Deferred tax liabilities
7
3,565
3,310
Provisions
19
336
569
13,495
12,860
TOTAL LIABILITIES
59,976
79,739
NET ASSETS
65,792
65,283
Equity attributable to equity holders of the Parent
Share capital
21
21,100
21,100
Reserves
12,333
11,260
Retained earnings
32,201
32,718
65,634
65,078
Non-controlling interests
158
205
TOTAL EQUITY
65,792
65,283
TOTAL LIABILITIES AND EQUITY
125,768
145,022
Consolidated Balance Sheet
as at 30 June 2021
(In Singapore dollars)
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
ZICOM GROUP LIMITED
34
For personal use only
Attributable to equity holders of the Parent
Note
Share
capital
Share capital
– exercise
of share
options
(a)
Asset
revaluation
surplus
Foreign
currency
translation
reserve
(b)
Share-
based
payment
reserve
(c)
Retained
earnings
Total
Non-
controlling
interests
Total equity
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Balance at 1.7.2019
20,628
472
13,055
(1,789)
141
33,270
65,777
276
66,053
Loss for the year
–
–
–
–
–
(1,200)
(1,200)
(122)
(1,322)
Other comprehensive income
Foreign currency translation
–
–
–
504
–
–
504
–
504
Total comprehensive income for the year
–
–
–
504
–
(1,200)
(696)
(122)
(818)
Share-based payments
27
–
–
–
–
48
–
48
–
48
Expired employee share options
–
–
–
–
(116)
116
–
–
–
Transfer of depreciation for buildings
–
–
(583)
–
–
583
–
–
–
Acquisition of non-controlling interests
12
–
–
–
–
–
(51)
(51)
51
–
Balance at 30.6.2020
20,628
472
12,472
(1,285)
73
32,718
65,078
205
65,283
Loss for the year
–
–
–
–
–
(1,125)
(1,125)
(47)
(1,172)
Other comprehensive income
Revaluation of land and buildings
–
–
2,041
–
–
–
2,041
–
2,041
Foreign currency translation
–
–
–
(398)
–
–
(398)
–
(398)
Total comprehensive income for the year
–
–
2,041
(398)
–
(1,125)
518
(47)
471
Share-based payments
27
–
–
–
–
38
–
38
–
38
Expired employee share options
–
–
–
–
(26)
26
–
–
–
Transfer of depreciation for buildings
–
–
(582)
–
–
582
–
–
–
Balance at 30.6.2021
20,628
472
13,931
(1,683)
85
32,201
65,634
158
65,792
(a)
Share capital – exercise of share options is used to record the transfer from share-based payment reserve upon the exercise of the share options.
(b)
Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations
whose functional currencies are different from that of the Group’s presentation currency.
(c)
The share-based payment reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing
from the grant date of equity-settled share options and is reduced by the expiry or exercise of the share options.
Consolidated Statement of Changes in Equity
for the financial year ended 30 June 2021
(In Singapore dollars)
Annual Report 2021
35
For personal use only
Note
2021
S$’000
2020
S$’000
Cash flows from operating activities:
Operating loss before taxation
(707)
(963)
Adjustments for:
Depreciation of property, plant and equipment
9
3,622
3,766
Depreciation of right-of-use assets
10
2,471
2,301
Amortisation of intangible assets
11
343
494
Bad debts written off
6
–
1
Write-back of impairment and expected credit losses, net of provision
6
(85)
(78)
Allowance for inventory obsolescence, net of reversal
6
209
742
Inventories written off
6
294
47
Finance costs
1,131
1,533
Interest income
6
(9)
(38)
Property, plant and equipment written off
6
1
–
Intangible assets written off
6
34
–
Gain on disposal of property, plant and equipment
6
(11)
(24)
Gain on derecognition of right-of-use assets
6
(1)
–
Trade and other payables written back
6
(1)
(3)
Rental waiver
6
(67)
–
Provisions made, net of write-back
19
1,125
246
Share-based payments
38
48
Share of results of associate
13
146
394
Unrealised exchange differences
(320)
331
Operating profit before reinvestment in working capital
8,213
8,797
Decrease in stocks and work-in-progress
1,910
3,974
Decrease/(increase) in trade receivables, contract assets and prepayments
23,769
(26,108)
(Decrease)/increase in trade and other payables, contract liabilities
(4,554)
3,028
Cash generated from/(used in) operations
29,338
(10,309)
Interest received
9
38
Interest paid
(1,649)
(1,006)
Income taxes paid
(270)
(229)
Net cash generated from/(used in) operating activities
27,428
(11,506)
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the financial year ended 30 June 2021
(In Singapore dollars)
ZICOM GROUP LIMITED
36
For personal use only
Note
2021
S$’000
2020
S$’000
Cash flows from investing activities:
Purchase of property, plant and equipment
9(a)
(1,445)
(1,133)
Proceeds from disposal of property, plant and equipment
9(b)
12
31
Purchase of computer software
11
(53)
(57)
Increase in development expenditure
11
–
(181)
Increase in patented technology
11
(11)
–
Net cash used in investing activities
(1,497)
(1,340)
Cash flows from financing activities:
(Decrease)/increase in bills payable
(16,088)
10,679
Proceeds from bank borrowings
3,000
2,000
Repayments of bank borrowings
(1,396)
(1,260)
Loans from a related party
–
1,035
Repayment of loans to a related party
(607)
(1,070)
Proceeds from asset financing
1,021
462
Repayment of principal portion of lease liabilities
10(b)
(3,031)
(2,503)
Increase in fixed deposits pledged
23
(3,080)
–
Net cash (used in)/generated from financing activities
(20,181)
9,343
Net increase/(decrease) in cash and cash equivalents
5,750
(3,503)
Net foreign exchange differences
41
(4)
Cash and cash equivalents at beginning of year
22
10,234
13,741
Cash and cash equivalents at end of year
22
16,025
10,234
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the financial year ended 30 June 2021
(In Singapore dollars)
Annual Report 2021
37
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
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 2021 was authorised for issue on 30 September 2021
in accordance with a resolution of the Directors.
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 statements have
been prepared on a going concern basis and items are measured on a historical cost basis except for land
and buildings and 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.
Compliance with International Financial Reporting Standards (IFRS)
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
2.2
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
as at 30 June 2021. The financial statements of the subsidiaries used in the preparation of the consolidated
financial statements are prepared for the same reporting date as the Parent. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. Specifically, the Group controls an investee if and
only if the Group has:
l
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities
of the investee);
l
Exposure, or rights, to variable returns from its involvement with the investee; and
l
The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
l
The contractual arrangement(s) with the other vote holders of the investee;
l
Rights arising from other contractual arrangements; and
l
The Group’s voting rights and potential voting rights.
ZICOM GROUP LIMITED
38
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.2
Basis of consolidation (cont’d)
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.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including
goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised at fair value.
In the Parent Entity’s separate financial statements, investments in subsidiaries are accounted for at cost less
impairment losses.
2.3
Changes in accounting policies
The Group has applied the following standards and amendments for the first time for annual period
beginning on or after 1 July 2020.
l
Amendments to Reference to Conceptual Framework in IFRS Standards
l
Definition of a Business (Amendments to IFRS 3)
l
Definition of Material (Amendments to IAS 1 and IAS 8)
l
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
l
COVID-19-Related Rent Concessions (Amendment to IFRS 16)
The adoption of these amendments to standards and interpretations did not have any material effect on the
financial performance or position of the Group.
IFRIC agenda decision – Configuration or Customisation Costs in a Cloud Computing Arrangement
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and
customisation costs incurred related to implementing Software as a Service (SaaS) arrangements.
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s
application software over the contract period. A right to receive future access to the supplier’s software
does not, at the contract commencement date, give the customer the power to obtain the future economic
benefits flowing from the software itself and to restrict others’ access to those benefits. As such, the Group
does not receive a software intangible asset at the contract commencement date. As at the reporting date,
we have incurred S$60,000 for such arrangements and have been recognised as operating expense over
the term of the service contract.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but
is not yet effective.
Annual Report 2021
39
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.4
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.
2.5
Significant accounting policies
a)
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. Identifiable assets acquired
and liabilities assumed in a business combination are measured initially at fair values at the date of
acquisition. 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.
The Group determines if it has acquired a business when the acquired set of activities and assets
meets the definition of a business and control is transferred to the Group. In determining whether a
particular set of activities and assets is a business, the Group assesses whether the set of assets
and activities acquired includes, at a minimum, an input and substantive process and whether the
acquired set has the ability to produce outputs.
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.
Any excess of the sum of the fair value of the consideration transferred in the business combination,
the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s
previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s
identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds
the former, 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 the amount recognised at acquisition date 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 is 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.
ZICOM GROUP LIMITED
40
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
a)
Business combinations and goodwill (cont’d)
Where goodwill has been allocated to a cash-generating unit and part of the operation within that
unit is disposed of, the goodwill associated with the disposed operation is included in the carrying
amount of the operation when determining the gain or loss on disposal. 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.
b)
Operating segments
An operating segment is a component of an entity that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions with
other components of the same entity), whose operating results are regularly reviewed by the entity’s
chief operating decision makers to make decisions about resources to be allocated to the segment
and assess its performance and for which discrete financial information is available.
Operating segments have been identified based on the information provided to the chief operating
decision makers – being the executive management team.
The Group aggregates two or more operating segments when they have similar economic
characteristics and the segments are similar in each of the following respects:
l
Nature of the products and services
l
Type or class of customer for the products and services
l
Methods used to distribute the products or provide the services, and
l
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, right-of-use assets and intangible assets.
c)
Foreign currency
(i)
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.
Annual Report 2021
41
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
c)
Foreign currency (cont’d)
(ii)
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 was determined.
Differences arising on the settlement or translation of monetary items are recognised in profit or
loss.
(iii)
Consolidated financial statements
On consolidation, the results and balance sheet of foreign operations are translated into
Singapore dollars using the following procedures:
l
Assets and liabilities are translated at the closing rate prevailing at the reporting date;
and
l
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 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.
d)
Revenue from contracts with customers
Revenue from contracts with customers is recognised when the Group satisfies a performance
obligation (“PO”) by transferring control of the promised goods and services to the customer. The
amount of revenue recognised is the amount of the transaction price allocated to the satisfied PO.
The transaction price is the amount of consideration to which the Group expects to be entitled in
exchange for those goods and services. The Group has generally concluded that it is the principal in
its revenue arrangements.
Sale of goods
Revenue from sale of goods is recognised at a point in time when control of the asset is transferred to
the customer, generally on delivery of the goods at an amount that reflects the consideration to which
the Group expects to be entitled.
ZICOM GROUP LIMITED
42
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
d)
Revenue from contracts with customers (cont’d)
Rendering of services
Services are sold separately. Customer receives and consumes the benefits as the entity performs
the services and generally has an enforceable right to payment for performance completed to date.
The Group therefore recognises revenue from services over time, using an input method based on
materials consumed and the actual time spent in the supply of services to measure progress towards
complete satisfaction of the service.
Revenue recognised on projects
The Group builds specialised assets for customers through fixed price contracts. Revenue is
recognised when the control over the specialised asset has been transferred to the customer and
performance obligations are fulfilled. At contract inception, the Group assesses whether the Group
transfers control of the asset over time or at a point in time by determining if its performance creates
an asset with an alternative use to the Group and the Group has an enforceable right to payment
for performance completed to date. If the specialised asset has no alternative use to the Group and
the Group has an enforceable right to payment arising from contractual terms, for these contracts,
revenue is recognised over time using the input method, based on costs incurred, as a measure of
Group’s progress towards completing the construction of the specialised asset.
For contracts where the Group does not have enforceable right to payment, revenue is recognised
only when the completed specialised asset is delivered to the customer and the customer has
accepted it in accordance with the contract.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange of goods or services transferred to the
customer. If the Group performs by transferring goods or services to a customer before the
customer pays consideration or before payment is due, a contract asset is recognised for the earned
consideration that is conditional.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e only
the passage of time is required before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group
has received consideration (or an amount of consideration is due) from the customer. If a customer
pays consideration before the Group transfers goods or services to the customer, a contract liability is
recognised when the payment is made or when it is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Group performs under the contract.
Annual Report 2021
43
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
d)
Revenue from contracts with customers (cont’d)
Contract costs
Incremental costs of obtaining a contract are capitalised as acquisition costs if these costs are
recoverable. Costs incurred to fulfil a contract are capitalised only if the costs relate directly to the
contract or an anticipated contract which the Group can specifically identify, generate or enhance
resources of the Group that will be used in satisfying future performance obligations and are expected
to be recovered. Otherwise such costs are recognised as an expense immediately.
Capitalised contract costs are subsequently amortised on a systematic basis as the Group recognises
the related revenue over time. An impairment loss is recognised in the profit or loss to the extent that
the carrying amount of the capitalised contract cost exceeds the expected remaining consideration
less any directly related costs not yet recognised as expenses.
Significant financing component
Generally, the Group receives short-term advances from its customers which is presented as contract
liability. As the period between the transfer of the promised goods and payment by customer is one
year or less, the Group elects the practical expedient in AASB 15 not to adjust for significant financing
component.
Warranty obligations
Certain contracts include standard warranty terms to give assurance that the Group’s products
conform with specifications. Warranties are not given in excess of what is typically available and
customers do not have an option to purchase a warranty separately. These assurance-type warranties
are accounted for under AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
e)
Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of 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 recognises
such parts as individual assets and 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
property, 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 other than land and buildings are measured
at cost less accumulated depreciation and accumulated impairment losses.
Land and buildings are measured at fair value less accumulated depreciation and impairment losses
recognised after the date of revaluation. Valuations are performed with sufficient frequency to ensure
that the carrying amount does not differ materially from the fair value of land and buildings at the
reporting date.
ZICOM GROUP LIMITED
44
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
e)
Property, plant and equipment (cont’d)
A revaluation surplus is recorded in other comprehensive income and credited to asset revaluation
surplus in equity. However, to the extent that it reverses a revaluation deficit of the same asset
previously recognised in profit or loss, the increase is recognised in profit or loss. A revaluation deficit
is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same
asset recognised in the asset revaluation surplus.
An annual transfer from the asset revaluation surplus to retained earnings is made for the difference
between depreciation based on revalued carrying amount of the asset and depreciation based on the
asset’s original cost. Additionally, accumulated depreciation as at the revaluation date is adjusted to
equal the difference between the gross carrying amount and the carrying amount of the asset after
taking into account accumulated impairment losses. Upon disposal, any revaluation surplus relating to
the particular asset being sold is transferred to retained earnings.
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:
Singapore buildings
15 - 21 years
Thailand buildings
20 years
Machinery
5 - 10 years
Office furniture and equipment
3 - 5 years
Leasehold improvements
5 years or lease term, if shorter
Motor vehicles
5 years
Computers
1 year
Machinery under installation or construction are not depreciated as these assets are not yet available
for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal (i.e at the date the recipient
obtains control) or when no future economic benefits are expected from its use. Any gain or loss on
derecognition of the asset calculated as the difference between the net disposal proceeds and the
carrying amount of the asset is included in profit or loss in the year the asset is derecognised.
f)
Intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of an intangible
asset acquired in a business combination is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses. Internally generated intangible assets with the exception
of development expenditure 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.
Annual Report 2021
45
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
f)
Intangible assets (cont’d)
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
5 years
Customer list
8 years
Developed technology
7 years
Development expenditure
5 years
Patented technology
10 – 20 years
Unpatented technology
10 – 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.
Club membership
Club membership was acquired separately and is not amortised as it has an indefinite life.
An intangible asset is derecognised upon disposal (i.e at the date the recipient obtains control) or
when no future economic benefits are expected from its use or disposal. Any gains or loss arising
from derecognition is measured as the difference between the net disposal proceeds and the carrying
amount of the asset and is recognised in profit or loss.
ZICOM GROUP LIMITED
46
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
g)
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 costs 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.
The Group bases its impairment calculation on detailed budgets which are prepared separately for
each of the Group’s cash-generating units to which the individual assets are allocated. These budgets
generally cover a period of five years. For longer periods, a long-term growth rate is calculated and
applied to project future cash flows after the period covered by the budgets.
Impairment losses are recognised in profit or loss, except for assets that are previously revalued
where the revaluation was taken to other comprehensive income. In this case, impairment loss is
recognised in other comprehensive income up to the amount of any previous revaluation surplus.
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 unless the asset is measured at revalued
amount, in which case, the reversal is treated as a revaluation increase. Impairment losses relating to
goodwill cannot be reversed in future periods.
h)
Associates
An associate is an entity over which the Group has significant influence through its 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’s investments in associates are accounted for using the equity method from the date it
becomes an associate.
On acquisition of the investment, any excess of the cost of investment over the Group’s share of
the net fair value of the investee’s identifiable assets and liabilities is accounted 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.
Annual Report 2021
47
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
h)
Associates (cont’d)
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. Distributions received from associate
reduces the carrying amount of the investment. 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 its 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 associate. The Group determines at each reporting
date whether there is any objective evidence that the investment in the associate is impaired. If there
is such evidence, 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 within the
Group’s share of results of associate 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.
i)
Financial Instrument
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
At initial recognition, the Group measures financial assets at fair value plus, in the case of
financial assets not at fair value through profit or loss, transaction costs that are attributable to
the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Trade receivables are measured at the amount of consideration to which the Group expects to
be entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties.
ZICOM GROUP LIMITED
48
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
i)
Financial Instrument (cont’d)
(i)
Financial assets (cont’d)
Subsequent measurement
Investments in debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the contractual cash flow characteristics of the asset. The category
most relevant to the Group is debt instruments measured at amortised cost.
Financial assets that are held for the collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at amortised cost.
Financial assets are measured at amortised cost using the effective interest method,
less impairment. Gains and losses are recognised in profit or loss when the assets are
derecognised or impaired, and through the amortisation process.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered
into and are subsequently remeasured to their fair value at the end of each reporting period.
Changes in fair value of derivatives are recognised in profit or 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 had been recognised in other comprehensive income is recognised in profit or loss.
(ii)
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments
not held at fair value through profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that the
Group expects to receive, discounted at an approximation of the original effective interest rate.
The expected cash flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
For trade receivables and contract assets, the Group applies a simplified approach in calculating
ECLs by recognising a loss allowance based on lifetime ECLs at the reporting date. The Group
has established a provision matrix that is based on its historical credit loss experience, adjusted
for forward-looking factors specific to the debtors and economic environment.
The Group considers a financial asset in default when contractual payments are significantly
delayed from historical payment patterns or when there is internal or external information
indicating that the Group is unlikely to receive the outstanding contractual amounts in full.
A financial asset is written off when there is no reasonable expectation of recovering the
contractual cash flows.
Annual Report 2021
49
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
i)
Financial Instrument (cont’d)
(iii)
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value plus, in the case of financial liabilities
not at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
After initial recognition, financial liabilities that are not carried at fair value through profit or
loss are subsequently measured at amortised cost using effective interest method. Gain and
losses are recognised in profit or loss when the liabilities are derecognised, and through the
amortisation process.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged,
cancelled or expires. On derecognition, the difference between the carrying amount and the
consideration paid 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.
j)
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.
k)
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the
inventories to their present location and condition are accounted for as follows:
l
Raw materials and trading stocks: purchase costs on a first-in, first-out basis; and
l
Finished goods and work-in-progress: costs of direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity. These costs are assigned on a
first-in, first-out basis.
When necessary, allowance is provided for damaged, obsolete and slow-moving items to adjust the
carrying value of inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less estimated
costs of completion and the estimated costs necessary to make the sale.
ZICOM GROUP LIMITED
50
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
l)
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.
m)
Fair value measurement
The Group measures some financial instruments such as derivatives and non-financial assets such as
land and buildings at fair value at each 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)
In the principal market for the asset or liability or
ii)
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 a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that the market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or 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:
l
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
l
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
l
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
Annual Report 2021
51
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
m)
Fair value measurement (cont’d)
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.
n)
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 a reliable estimate can be made of the amount of the obligation.
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 assurance-type 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.
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 government or corporate bond rates with terms to maturity and
currencies that match, as closely as possible, the estimated future cash outflows.
o)
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 periods 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.
ZICOM GROUP LIMITED
52
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
p)
Leases
The Group assess at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Group as lessee
The Group applies a single recognition and measurement approach for all leases, except for short-
term leases and leases of low-value assets. The Group recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
(i)
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e
the date the underlying asset is available for use). Right-of-use assets are measured at
cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of a right-of-use asset includes the amount of lease
liabilities recognised, initial direct costs incurred and lease payments made at or before the
commencement date less any lease incentives received. The cost of the right-of-use asset
also includes an estimate of costs to be incurred by lessee in dismantling and removing the
underlying asset, restoring the site to its original condition.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets. If ownership of the leased asset transfers to the
Group at the end of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are
subject to impairment.
(ii)
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include
fixed payments less any lease incentives receivable, variable lease payment that depend on
an index or rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by the Group and payments of penalties for terminating the lease, if the lease term
reflects the Group exercising the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing
rate at the lease commencement date if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if there is a modification, a change in lease
term, a change in the lease payments or a change in the assessment of an option to purchase
the underlying asset.
Annual Report 2021
53
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
p)
Leases (cont’d)
(iii)
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e
those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value assets recognition
exemption to leases of equipment that are considered to be low value. Lease payments on
short-term leases and leases of low-value assets are recognised as expense on a straight-line
basis over the lease term.
Group as lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance
lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers
substantially all the risks and rewards incidental to ownership of the underlying asset. If this
is the case, then the lease is a finance lease. If otherwise, it is an operating lease. As part of this
assessment, the Group considers certain indicators such as whether the lease is for the major part of
the economic life of the asset.
The Group recognises lease payments received under operating leases in profit or loss on a straight-
line basis over the lease term. Amounts due from lessees under the finance leases are recorded
as receivables at the amount of the Group’s net investment in the leases. Finance lease income is
allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net
investment outstanding in respect of the leases.
q)
Other income recognition
Interest income
Interest income is recognised on an accrual basis using the effective interest method.
Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
ZICOM GROUP LIMITED
54
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
r)
Employee benefits
(i)
Defined contribution plans
The Group makes contributions to national pension schemes as defined by the laws of the
countries in which it has operations.
For its Australian subsidiaries, contributions are made to employee accumulation
superannuation funds. For the Group’s companies in Singapore, contributions are made 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.
(ii)
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 payment reserve,
over the period in which service conditions are fulfilled (“vesting period”).
The cumulative expense recognised at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the Group’s best estimate of the number
of options that will ultimately vest. The charge or credit to profit or loss for a period represents
the movement in cumulative expense recognised as at beginning and end of that period and is
recognised in employee costs.
No expense is recognised for options that do not ultimately vest. The share-based payment
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 payment reserve is transferred
to share capital as new shares are issued.
Where the terms of an equity-settled transaction award are modified, the minimum expense
recognised is the expense as if the terms had not been modified, if the original terms of
the award are met. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Annual Report 2021
55
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
r)
Employee benefits (cont’d)
(ii)
Employee share option plan (cont’d)
Where the employee share option plan is cancelled, it is treated as if it vested on the date
of cancellation, and any expense that otherwise would have been recognised for services
received over the remaining vesting period is recognised immediately. However, if a new award
is substituted for the cancelled award, and designated as a replacement award on the date it
was granted, the cancelled and new awards are treated as if there was a modification of the
original award, as described in the previous paragraph.
(iii)
Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they are accrued to
the employees. The undiscounted liability for leave expected to be settled within 12 months
from the reporting date is recognised for services rendered by the employees up to the end of
the reporting period.
s)
Taxation
(i)
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.
(ii)
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
-
When the deferred tax liability arises from the initial recognition of goodwill or 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.
ZICOM GROUP LIMITED
56
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
s)
Taxation (cont’d)
(ii)
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 relating to items recognised outside profit or loss is recognised outside profit or
loss. Deferred tax items are recognised in correlation to the underlying transaction either in
other comprehensive income or directly in equity and deferred tax arising from a business
combination is adjusted against goodwill on acquisition.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for
separate recognition at that date, would be recognised subsequently if new information about
facts and circumstances changed. The adjustment would either be treated as a reduction of
goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period
or in the profit or loss.
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.
Annual Report 2021
57
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
2.
Summary of significant accounting policies (cont’d)
2.5
Significant accounting policies (cont’d)
s)
Taxation (cont’d)
(iii)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
except:
-
where the goods and services tax incurred on a purchase of assets or services is not
recoverable from the taxation authority, in which case the goods and services tax is
recognised as part of the cost of acquisition of the asset or as part of the expense item,
as applicable; and
-
receivables and payables 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.
t)
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
disclosure of contingent liabilities at the end of the reporting period. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities
affected in future periods.
(a)
Judgements made in applying accounting policies
(i)
Determination of control and significant influence over investee
As at 30 June 2021, the Group holds 16.29% (2019: 16.29%) equity interest in Emage Vision
Pte. Ltd. (“EV”). The Group considers EV as an associate as the Group has the ability to exercise
significant influence through both its shareholdings and active participation on the Board of Directors.
(ii)
Lease term
Judgement is required when assessing the term of the lease and whether to include optional
extension and termination periods. Optional periods are included in the lease term if the Group is
reasonably certain whether or not to exercise the option to renew or terminate the lease depending
on management’s analysis of all relevant facts and circumstances including the leased asset’s nature
and purpose, the economic and practical potential for replacing the asset and any plans the Group
has in place for the future use of the asset.
ZICOM GROUP LIMITED
58
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
3.
Significant accounting judgements, estimates and assumptions (cont’d)
(b)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The Group based its assumptions and
estimates on parameters available when the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes
or circumstances arising that are beyond the control of the Group. Such changes are reflected in the
assumptions when they occur.
(i)
Revaluation of land and buildings
The Group carries its land and buildings at fair value. Changes in fair values of land and buildings are
accounted for as set out in our accounting policy note 2.5(e). The fair value of land and buildings are
determined by accredited external valuers using recognised valuation techniques. These techniques
comprise market comparison approach, replacement cost approach and income approach.
The determination of the fair value of the land and buildings requires the use of estimates such as:
-
sales of similar properties that have been transacted in the open market with adjustments
made for differences in factors that affect value;
-
an estimate of the current market value of the land plus the current gross replacement of
improvements, less allowances for physical deterioration, obsolescence and optimisation; and
-
capitalisation of net rental income taking into consideration factors such as vacancy rates and
rental growth rates.
(ii)
Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix by age bracket to calculate ECLs for trade receivables and
contract assets. The provision rates are based on number of days past due for groupings of various
customer segments that have similar credit risk characteristics.
The provision matrix is initially based on the Group’s historical observed default rates and
subsequently calibrated to adjust historical credit loss experience with forward-looking information. At
each reporting date, historical default rates are updated and changes in the forward-looking estimates
are analysed.
The Group also assesses at the end of each reporting period whether there is any objective evidence
that the receivables and contract balances is credit-impaired based on factors such as insolvency,
financial difficulties or significant delay in repayments.
The assessment of the correlation between historical observed default rates, forecast economic
conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group’s historical credit loss experience and
forecast of economic conditions may not be representative of customer’s actual default in the future.
The information on ECLs on the Group’s trade receivables is disclosed in note 15 to the financial
statements.
Annual Report 2021
59
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
3.
Significant accounting judgements, estimates and assumptions (cont’d)
(b)
Key sources of estimation uncertainty (cont’d)
(iii)
Revenue recognised on projects
For contracts where the Group has an enforceable right to payment, revenue is recognised over time
using the input method, based on the proportion of costs incurred to date bear to estimated total
contract costs, as a measure of entity’s performance in transferring control of goods and services.
Significant judgement is used to estimate the total contract costs which will determine the amount
of revenue recognised on projects. In making these estimates, management has relied on past
experience and knowledge of the project engineers. The carrying amounts of contract assets and
liabilities at the balance sheet date are disclosed in note 5 to the financial statements.
(iv)
Impairment of non-financial assets and investment in associate
The Group assesses whether there are any indicators of impairment for all non-financial assets and
investment in associate at each reporting date. Impairment exists when the carrying value of an asset
or cash-generating unit (CGU) exceeds its recoverable amount which is the higher of its fair value less
costs of disposal and its value in use.
Goodwill and other intangibles with indefinite lives are tested for impairment annually and at other
times when such indicators exist. Other non-financial assets and investment in associate are tested
for impairment when there are indicators that the carrying amounts may not be recoverable.
The fair value less costs of disposal calculation is based on available data from binding sales
transactions conducted at arm’s length for similar assets or observable market prices less incremental
costs of disposing the assets (where applicable). The value in use calculations are based on a
discounted cash flow (DCF) model. The cash flows are derived from budgets for the next five years
and do not include restructuring activities that the Group is not yet committed to or significant future
investments that will enhance the performance of the assets of the CGU being tested.
When value in use calculations are undertaken to determine the recoverable amount, 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 recoverable
amounts are sensitive to the discount rates used in the DCF model, future cash inflows including
the timing of such cash inflows and the growth rates used for both the initial five-year cash flow
period and long-term growth rates. Management also considers the stage of development and/
or commercialisation of certain CGU’s product and services. Whilst these decisions are based on
information available to date, it also involves a significant level of judgement. These estimates are
most relevant to goodwill and other intangible assets recognised by the Group.
The key assumptions used to determine the recoverable amounts for the different cash-generating
units are disclosed in note 11 to the financial statements.
ZICOM GROUP LIMITED
60
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
3.
Significant accounting judgements, estimates and assumptions (cont’d)
(b)
Key sources of estimation uncertainty (cont’d)
(v)
Taxes
The Group has exposure to income taxes in several 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 the likely timing and level of future taxable
profits. Where the final tax outcome of these matters is different from the amounts that were initially
recognised, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
The carrying amounts of the Group’s current tax payables and deferred tax liabilities at 30 June 2021
were S$73,000 (2020: S$319,000) and S$3,565,000 (2020: S$3,310,000) respectively. The Group
also had deferred tax assets of S$1,921,000 (2020: S$2,459,000) as at 30 June 2021.
(vi)
Estimating the incremental borrowing rate
Where the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental
borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would
have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR
therefore reflects what the Group “would have to pay” which requires estimation when no observable
rates are available. The Group estimates the IBR using observable inputs (such as market interest
rates) when available and is required to make certain region and entity-specific estimates (such as
subsidiary’s standalone credit rating).
Annual Report 2021
61
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
4.
Segment information
Business segments
Identification of reportable segments
The Group has identified its operating segments based on internal reports that are reviewed and used by the chief
operating decision maker and the executive management team in assessing performance and in determining the
allocation of resources. The operating segments are identified based on products and services as follows:
l
Green Energy, Gas & Marine Equipment (formerly known as Offshore Marine, Oil & Gas Machinery)
– design and supply of LNG propulsion systems, deck machinery, gas metering stations, compressor
stations, gas processing plants and related equipment, parts and services.
l
Construction Equipment
– manufacture and supply of concrete mixers and foundation equipment, including equipment rental, parts
and related services.
l
Precision Engineering & Technologies
– manufacture and supply of precision and automation equipment including flip chip bonders, supply of
medtech equipment, medical consumables and engineering services.
l
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.
ZICOM GROUP LIMITED
62
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
4.
Segment information (cont’d)
Business segments (cont’d)
The following tables present information regarding operating segments for continuing operations for the years
ended 30 June 2021 and 2020.
Green
Energy, Gas
& Marine
Equipment
Construction
Equipment
Precision
Engineering &
Technologies
Industrial
& Mobile
Hydraulics
Consolidated
S$’000
S$’000
S$’000
S$’000
S$’000
Year ended 30 June 2021
Revenue
Revenue from contracts with
customers
37,868
27,937
21,825
1,832
89,462
Rental income
–
1,521
–
–
1,521
Other revenue
374
828
1,007
8
2,217
Intersegment sales
–
3
51
75
129
Total segment revenue
38,242
30,289
22,883
1,915
93,329
Intersegment elimination
(129)
Unallocated revenue
184
Interest income
9
Total consolidated revenue
93,393
Results
Segment results
3,264
(653)
(1,045)
990
2,556
Unallocated revenue
184
Unallocated expenses
(2,179)
Share of results of associate
(146)
(146)
Profit before tax and finance costs
415
Finance costs
(1,131)
Interest income
9
Loss before taxation
(707)
Tax expense
(465)
Loss after taxation
(1,172)
Other segment information
Capital expenditure
- property, plant and equipment
1,261
2,158
171
–
3,590
- right-of-use assets
–
405
914
–
1,319
- intangible assets
23
12
8
–
43
4,952
Depreciation and amortisation
677
3,504
1,737
–
5,918
Other non-cash expenses
1,084
634
(7)
(100)
1,611
In the current financial year, revenue from a single (2020:1) customer of Green Energy, Gas & Marine Equipment
represents approximately 38% (2020: 47%) of the Group’s revenue from contracts with external customers.
Annual Report 2021
63
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
4.
Segment information (cont’d)
Business segments (cont’d)
Green
Energy, Gas
& Marine
Equipment
Construction
Equipment
Precision
Engineering &
Technologies
Industrial
& Mobile
Hydraulics
Consolidated
S$’000
S$’000
S$’000
S$’000
S$’000
Year ended 30 June 2020
Revenue
Revenue from contracts with
customers
52,623
24,187
20,682
1,584
99,076
Rental income
–
1,870
–
–
1,870
Other revenue
314
679
1,119
8
2,120
Intersegment sales
–
–
60
164
224
Total segment revenue
52,937
26,736
21,861
1,756
103,290
Intersegment elimination
(224)
Unallocated revenue
171
Interest income
38
Total consolidated revenue
103,275
Results
Segment results
6,290
(2,331)
(639)
(406)
2,914
Unallocated revenue
171
Unallocated expenses
(2,159)
Share of results of associate
(394)
(394)
Profit before tax and finance costs
532
Finance costs
(1,533)
Interest income
38
Loss before taxation
(963)
Tax expense
(359)
Loss after taxation
(1,322)
Other segment information
Capital expenditure
- property, plant and equipment
17
1,942
290
–
2,249
- right-of-use assets
(2)
799
407
–
1,204
- intangible assets
–
1
237
–
238
3,691
Depreciation and amortisation
623
3,683
1,716
–
6,022
Other non-cash expenses
(177)
637
46
562
1,068
ZICOM GROUP LIMITED
64
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
4.
Segment information (cont’d)
Geographical segments
The Group’s geographical segments for revenue and non-current assets are determined based on location of customers and assets respectively.
The following table presents revenue and certain assets information regarding geographical segments for the years ended and as at 30 June 2021 and
2020.
30 June 2021
Australia Malaysia
Singapore
China
United
States
Bangladesh Thailand Indonesia Philippines
Taiwan
Others
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Revenue
Revenue from contracts with
customers
16,322
1,113
23,597
987
1,254
36,613
875
390
3,971
1,352
2,988
89,462
Rental income
113
309
885
–
–
–
207
–
7
–
–
1,521
Other revenue from external
customers
586
3
1,741
4
–
–
59
2
15
–
–
2,410
93,393
Other segment information
Segment non-current assets
4,400
245
35,390
583
–
–
9,380
82
229
–
–
50,309
Investment in associate
–
–
3,191
–
–
–
–
–
–
–
–
3,191
Unallocated assets
1,921
55,421
Capital expenditure
- property, plant and equipment
59
85
3,187
–
–
–
199
4
85
–
–
3,619
- right-of-use assets
–
–
1,294
–
–
–
7
–
18
–
–
1,319
- intangible assets
–
–
64
–
–
–
–
–
–
–
–
64
5,002
Annual Report 2021
65
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
4.
Segment information (cont’d)
Geographical segments (cont’d)
30 June 2020
Australia Malaysia
Singapore
China
United
States
Bangladesh Thailand Indonesia Philippines
Taiwan
Others
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Revenue
Revenue from contracts with
customers
14,472
1,143
16,907
4,967
1,654
48,055
1,725
1,491
3,910
2,660
2,092
99,076
Rental income
170
183
831
–
–
–
665
–
21
–
–
1,870
Other revenue from external
customers
482
2
1,776
28
–
–
4
28
–
–
9
2,329
103,275
Other segment information
Segment non-current assets
4,887
490
34,795
935
–
–
8,683
225
161
–
–
50,176
Investment in associate
–
–
3,337
–
–
–
–
–
–
–
–
3,337
Unallocated assets
2,459
55,972
Capital expenditure
- property, plant and equipment
53
1
1,787
–
–
–
420
5
1
–
–
2,267
- right-of-use assets
733
–
471
–
–
–
–
–
–
–
–
1,204
- intangible assets
–
–
238
–
–
–
–
–
–
–
–
238
3,709
ZICOM GROUP LIMITED
66
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
5.
Revenue from contracts with customers
(a)
Disaggregation of revenue from contracts with customers
2021
Green Energy,
Gas & Marine
Equipment
Construction
Equipment
Precision
Engineering &
Technologies
Industrial
& Mobile
Hydraulics
Total
S$’000
S$’000
S$’000
S$’000
S$’000
Primary geographical markets
Australia
–
15,753
353
216
16,322
Singapore
372
6,829
15,717
679
23,597
Taiwan
–
–
1,352
–
1,352
Bangladesh
36,613
–
–
–
36,613
Others
883
5,355
4,403
937
11,578
Total
37,868
27,937
21,825
1,832
89,462
Main revenue streams
Sales of goods
66
25,272
14,567
1,346
41,251
Rendering of services
265
2,665
753
486
4,169
Revenue recognised on projects
37,537
–
6,505
–
44,042
Total
37,868
27,937
21,825
1,832
89,462
Timing of transfer of goods
and services
At a point in time
168
25,272
15,438
1,346
42,224
Over time
37,700
2,665
6,387
486
47,238
Total
37,868
27,937
21,825
1,832
89,462
2020
Green Energy,
Gas & Marine
Equipment
Construction
Equipment
Precision
Engineering &
Technologies
Industrial
& Mobile
Hydraulics
Total
S$’000
S$’000
S$’000
S$’000
S$’000
Primary geographical markets
Australia
–
14,269
12
191
14,472
Singapore
582
4,071
11,942
312
16,907
Taiwan
–
–
2,660
–
2,660
Bangladesh
48,028
26
1
–
48,055
Others
4,013
5,821
6,067
1,081
16,982
Total
52,623
24,187
20,682
1,584
99,076
Main revenue streams
Sales of goods
728
21,777
14,759
1,486
38,750
Rendering of services
265
2,410
476
98
3,249
Revenue recognised on projects
51,630
–
5,447
–
57,077
Total
52,623
24,187
20,682
1,584
99,076
Timing of transfer of goods
and services
At a point in time
3,807
21,777
14,847
1,486
41,917
Over time
48,816
2,410
5,835
98
57,159
Total
52,623
24,187
20,682
1,584
99,076
Annual Report 2021
67
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
5.
Revenue from contracts with customers (cont’d)
(b)
Contract balances
Consolidated
2021
S$’000
2020
S$’000
Trade receivables
17,396
7,058
Contract assets
1,630
38,237
Contract liabilities
(8,346)
(2,093)
Trade receivables are non-interest bearing and are generally due when invoiced or on 30 to 60 days’ term.
Contract assets mainly relate to the Group’s rights to consideration for work completed on oil and gas and
automation projects but not billed at reporting date. The contract assets are transferred to trade receivables when
the rights become unconditional. There was no impairment loss incurred on contract assets during the year.
The significant decrease in contract asset is mainly due to the transfer of S$37,608,000 to trade receivables
relating to large order for a gas processing plant and such amount transferred has been received from the
customer during the financial year. This large order which was completed on 30 June 2021 also contributed
to the significant increase in trade receivables as at year-end. S$8,993,000 relating to the last milestone
payment has been recorded as unbilled receivable as at the reporting date.
Contract liabilities are primarily advance consideration received from customers amounting to S$7,025,000
(2020: S$458,000) for which revenue is recognised over time and S$1,321,000 (2020: S$1,635,000) for
which revenue is recognised at a point in time.
The significant increase in contract liabilities is due to advance consideration received for the supply of LNG
propulsion systems.
Significant changes in the contract assets and the contract liabilities balances during the year are as follows:
Contract assets
Contract liabilities
2021
S$’000
2020
S$’000
2021
S$’000
2020
S$’000
Revenue recognised that was included in the
contract liability balance at the beginning of
the year
–
–
1,779
9,208
Increase due to cash received, excluding
amounts recognised as revenue during the
year
–
–
(8,032)
(1,793)
Contract asset reclassified to trade receivables
(37,948)
(1,092)
–
–
Recognition of revenue, net of trade receivables
recognised
1,341
37,977
–
–
(c)
Transaction price allocated to remaining performance obligations
The Group applies the practical expedient in paragraph 121 of AASB 15 and does not disclose information
about remaining performance obligations if the performance obligation is part of a contract that has an
original expected duration of one year or less.
As at 30 June 2021, revenue expected to be recognised in the future, related to performance obligations
that are unsatisfied at the reporting date, for the supply of LNG propulsion systems amounts to
S$60,953,000 (2020: nil) for the financial periods 2022 to 2023.
ZICOM GROUP LIMITED
68
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
6.
Other income and expenses
(i)
Other income
Consolidated
2021
2020
$’000
$’000
Interest income
9
38
Gain on disposal of property, plant and equipment
11
24
Gain on derecognition of right-of-use assets
1
–
Trade and other payables written back
1
3
Forfeiture of customer deposit
–
26
Services rendered
216
343
Sales of scrap
92
14
Government grants
1,996
1,871
Rental waiver
67
–
Other revenue
17
10
2,410
2,329
Included in government grants were S$1,948,000 (2020: S$1,739,000) relating to Covid-19 business
support measures introduced by the Singapore and Australian governments.
(ii)
Other operating expenses
Included in other operating expenses are the following:
Consolidated
2021
2020
$’000
$’000
Allowance for inventory obsolescence, net of reversal
209
742
Write-back of impairment and expected credit losses, net of provision
(85)
(78)
Bank charges
1,304
784
Bad debts written off
–
1
Foreign exchange (gain)/loss
(303)
27
Provision for product warranties, net of reversal
1,034
125
Property, plant and equipment written off
1
–
Warranty expense charged directly to profit or loss
–
3
Inventories written off
294
47
Intangible assets written off
34
–
Sales commission
787
1,589
Sea freight
4,435
551
Travelling expenses
98
494
Utility charges
695
685
Annual Report 2021
69
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
7.
Taxation
Consolidated
2021
S$’000
2020
S$’000
Current income tax
- Current income tax charge
(922)
(1,065)
- Loss transferred under Group Relief Scheme
880
872
- Adjustments in respect of previous years
(40)
(39)
Deferred income tax
- Relating to the origination and reversal of temporary differences
(607)
(194)
- Adjustments in respect of previous years
224
67
Tax expense in profit & loss
(465)
(359)
Net surplus on revaluation of buildings
(470)
–
Deferred tax charged to other comprehensive income
(470)
–
A reconciliation between the tax expense and the product of accounting loss of the Group multiplied by the
applicable tax rate for the year ended 30 June is as follows:
Consolidated
2021
S$’000
2020
S$’000
Loss before taxation
(707)
(963)
Tax credit at the domestic rates in the countries where the Group operates
197
115
Release of deferred tax liability on intangible assets
43
42
Release of deferred tax liability on revalued properties
120
121
Non-deductible expenses
(234)
(453)
Non-taxable income
317
241
Partial tax exemption
23
22
Deferred tax assets not recognised
(648)
(516)
Deferred tax asset written off
(600)
–
Utilisation of previously unrecognised tax losses
134
32
Adjustments in respect of previous years
184
28
Enhanced tax credits
5
4
Others
(6)
5
Tax expense
(465)
(359)
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
ZICOM GROUP LIMITED
70
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
7.
Taxation (cont’d)
Deferred taxation as at 30 June relates to the following:
At 30 June
2019
Recognised in
profit or loss
(charge)/credit
Translation/
adjustments
At 30 June
2020
Recognised in
profit or loss
(charge)/credit
Recognised
in other
comprehensive
income
Translation/
adjustments
At 30 June
2021
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Deferred tax assets
Property, plant and equipment
19
(55)
–
(36)
(89)
–
–
(125)
Intangible assets
(66)
34
–
(32)
(20)
–
–
(52)
Leases
–
29
–
29
(8)
–
–
21
Provisions
461
(67)
–
394
166
–
–
560
Unutilised tax losses
2,109
(236)
11
1,884
(600)
–
30
1,314
Unutilised capital allowances
296
(76)
–
220
(17)
–
–
203
2,819
(371)
2,459
(568)
–
1,921
Deferred tax liabilities
Property, plant and equipment
– at cost
(962)
84
–
(878)
25
–
(3)
(856)
– at revaluation
(2,774)
121
(12)
(2,665)
120
(470)
33
(2,982)
Intangible assets
(245)
42
–
(203)
43
–
–
(160)
Leases
–
10
–
10
10
–
–
20
Provisions
44
(16)
–
28
10
–
–
38
Unutilised capital allowances
375
–
–
375
–
–
–
375
Unutilised tax losses
–
16
–
16
(16)
–
–
–
Unutilised donations
20
(13)
–
7
(7)
–
–
–
(3,542)
244
(3,310)
185
(470)
(3,565)
Tax expense
(127)
(383)
The Group has tax losses and capital allowances of S$28,980,000 (2020: S$24,583,000) and S$884,000 (2020: S$951,000) respectively that are available
for offset against future taxable profits of the companies in which these arose. Whilst unabsorbed losses can be carried forward indefinitely, unabsorbed
capital allowance must be used to offset income from the same business source. These deferred tax assets have not been recognised as they have arisen
in subsidiaries that have been loss-making for some time and there is no evidence of recoverability in the near future. If the Group were able to recognise all
unrecognised deferred tax assets, profit would increase by S$5,925,000 (2020: S$5,200,000).
Annual Report 2021
71
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
8.
Earnings per share
Basic earnings per share is calculated by dividing the Group’s profit or loss attributable to equity holders of the
Parent by the weighted average number of ordinary shares outstanding during the year.
For purposes of calculating diluted earnings per share, profit/(loss) attributable to equity holders of the Parent and
the weighted average number of ordinary shares outstanding are adjusted for effects of all dilutive potential shares.
Consolidated
2021
2020
S$’000
S$’000
Net loss attributable to equity holders of the Parent
(1,125)
(1,200)
Parent Entity
Weighted average number of ordinary shares outstanding for basic and diluted
earnings per share (’000)
217,141
217,141
Singapore cents
Basic and diluted loss per share
(0.52)
(0.55)
There were 6,000,000 (2020: 6,600,000) share options excluded from the calculation of diluted earnings per share
that could potentially dilute basic earnings per share in the future because they are antidilutive for the current period
presented.
There have been no transactions involving ordinary or potential ordinary shares which occurred between the
reporting date and the date of completion of these financial statements.
ZICOM GROUP LIMITED
72
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
9.
Property, plant and equipment
Consolidated
Freehold
land
Singapore
buildings
Thailand
buildings
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Cost/Valuation
At 1.7.2020
4,104
37,412
5,686
37,848
3,188
1,675
89,913
Currency realignment
(291)
–
(409)
(13)
12
4
(697)
Additions
–
–
–
3,607
12
–
3,619
Revaluation surplus
1,082
2,174
866
–
–
–
4,122
Transfer from right-of-use assets (Note 10)
–
–
–
670
–
94
764
Transfer to right-of-use assets (Note 10)
–
–
–
(1,389)
–
–
(1,389)
Disposals
–
–
–
(27)
–
(11)
(38)
Reclassification
–
(86)
86
–
–
–
–
Reclassification to inventories
–
–
–
(2,211)
–
–
(2,211)
Write off
–
–
–
(152)
–
–
(152)
At 30.6.2021
4,895
39,500
6,229
38,333
3,212
1,762
93,931
Accumulated depreciation
At 1.7.2020
–
19,344
3,073
28,836
2,963
1,377
55,593
Currency realignment
–
–
(233)
(36)
15
–
(254)
Charge for 2021
–
940
273
2,221
83
105
3,622
Revaluation adjustment
–
1,101
510
–
–
–
1,611
Transfer from right-of-use assets (Note 10)
–
–
–
–
–
90
90
Transfer to right-of-use assets (Note 10)
–
–
–
–
–
–
–
Disposals
–
–
–
(26)
–
(11)
(37)
Reclassification
–
(86)
86
–
–
–
–
Reclassification to inventories
–
–
–
(1,439)
–
–
(1,439)
Write off
–
–
–
(151)
–
–
(151)
At 30.6.2021
–
21,299
3,709
29,405
3,061
1,561
59,035
Net carrying value
At 30.6.2021
4,895
18,201
2,520
8,928
151
201
34,896
Annual Report 2021
73
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
9.
Property, plant and equipment (cont’d)
Consolidated
Freehold
land
Singapore
buildings
Thailand
buildings
Plant and
equipment
Leasehold
improvements
Motor
vehicles
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Cost/Valuation
At 1.7.2019 – as previously reported
4,004
37,410
5,548
37,886
3,158
1,988
89,994
Effect of adopting AASB 16 (Note 10)
–
–
–
(1,592)
–
(500)
(2,092)
At 1.7.2019 – as restated
4,004
37,410
5,548
36,294
3,158
1,488
87,902
Currency realignment
100
2
138
133
4
13
390
Additions
–
–
–
2,205
26
36
2,267
Adjustment
–
–
–
–
–
25
25
Transfer from right-of-use assets (Note 10)
–
–
–
1,385
–
130
1,515
Transfer to right-of-use assets (Note 10)
–
–
–
(335)
–
–
(335)
Disposals
–
–
–
(27)
–
(17)
(44)
Reclassification to inventories
–
–
–
(1,766)
–
–
(1,766)
Write off
–
–
–
(41)
–
–
(41)
At 30.6.2020
4,104
37,412
5,686
37,848
3,188
1,675
89,913
Accumulated depreciation
At 1.7.2019 – as previously reported
–
18,402
2,720
27,818
2,778
1,402
53,120
Effect of adopting AASB 16 (Note 10)
–
–
–
(466)
–
(219)
(685)
At 1.7.2019 – as restated
–
18,402
2,720
27,352
2,778
1,183
52,435
Currency realignment
–
2
72
116
2
11
203
Charge for 2020
–
940
281
2,244
183
118
3,766
Adjustment
–
–
–
–
–
23
23
Transfer from right-of-use assets (Note 10)
–
–
–
457
–
59
516
Transfer to right-of-use assets (Note 10)
–
–
–
(28)
–
–
(28)
Disposals
–
–
–
(20)
–
(17)
(37)
Reclassification to inventories
–
–
–
(1,247)
–
–
(1,247)
Write off
–
–
–
(38)
–
–
(38)
At 30.6.2020
–
19,344
3,073
28,836
2,963
1,377
55,593
Net carrying value
At 30.6.2020
4,104
18,068
2,613
9,012
225
298
34,320
ZICOM GROUP LIMITED
74
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
9.
Property, plant and equipment (cont’d)
(a)
During the year, the Group acquired property, plant and equipment with an aggregate cost of S$3,619,000
(2020: S$2,267,000) of which $1,445,000 (2020: S$1,133,000) was settled in cash, S$nil (2020:
$1,134,000) was acquired through invoice financing and the remaining balance of $2,174,000 (2020: S$nil)
which was previously included in the stock but converted and capitalised as fixed asset during the current
financial year.
(b)
During the financial year, the Group disposed of property, plant and equipment with an aggregate net book
value of S$1,000 (2020: S$7,000). Sales proceeds amounting to S$12,000 (2020: S$31,000) were received
in cash.
(c)
The net book value of property, plant and equipment pledged as security are as follows:
Consolidated
2021
2020
S$’000
S$’000
Singapore buildings
18,201
18,068
Freehold land and buildings in Thailand
7,415
6,717
Plant and equipment
157
201
Motor vehicles
13
44
25,786
25,030
Please refer to note 18 for details.
(d)
Revaluation of land and buildings
i)
The fair values of land and buildings are determined by accredited external valuers using a
combination of recognised valuation techniques. All land and buildings were revalued as at 30 June
2021.
In arriving at the fair values, valuers have relied on proprietary databases of active market prices of
transactions for properties of similar nature, location and condition.
Considering the nature and complexity of the significant inputs, the Group has classified the fair value
of the Group’s land and buildings within Level 3 of the fair value hierarchy. There were no transfers
between the different levels during the year.
Annual Report 2021
75
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
9.
Property, plant and equipment (cont’d)
(d)
Revaluation of land and buildings (cont’d)
The following table shows the information about fair value measurements using significant
unobservable inputs:
Description
Valuation
techniques
Key unobservable
inputs
Interrelationship between
unobservable inputs and fair
value measurement
Buildings, Singapore Market Comparison
Approach (1)
Comparable prices:
S$733 to S$1,527
(2020: S$797 to
S$1,661) per square
meter
The estimated fair value
increases with higher
comparable price
Land and buildings,
Thailand
Market Comparison
Approach and
Replacement Cost
Approach (2)
Comparable prices:
21,250-25,000 (2020:
21,250-30,000) Baht
per Sq. wah
The estimated fair value
increases with higher
comparable price
(1)
Market comparison approach considers the sales of similar properties that have been
transacted in the open market with adjustment made for differences in factors that affect value.
(2)
Replacement cost approach is based on an estimate of the current market value of land, plus
the current gross replacement of improvements, less allowance for physical deterioration,
obsolescence and optimisation.
ii)
The carrying amounts of land and buildings if measured using the cost model, would be as follows:
Consolidated
2021
2020
S$’000
S$’000
Freehold land
1,860
2,002
Singapore buildings
4,916
5,182
Thailand buildings
1,940
2,342
8,716
9,526
ZICOM GROUP LIMITED
76
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
10.
Right-of-use assets and leases
a.
Right-of-use assets
Consolidated
Land and
buildings
Plant and
equipment
Motor
vehicles
Total
S$’000
S$’000
S$’000
S$’000
At 1.7.2019 (As previously stated)
–
–
–
–
Effect of adopting AASB 16
9,015
1,219
281
10,515
At 1.7.2019 (As restated)
9,015
1,219
281
10,515
Currency realignment
14
–
–
14
Additions
797
407
–
1,204
Transfer from property, plant and equipment
–
307
–
307
Transfer to property, plant and equipment
–
(928)
(71)
(999)
Depreciation charge for the year
(2,123)
(104)
(74)
(2,301)
At 30.6.2020
7,703
901
136
8,740
Currency realignment
147
2
–
149
Additions
1,002
317
–
1,319
Transfer from property, plant and equipment
–
1,389
–
1,389
Transfer to property, plant and equipment
–
(670)
(4)
(674)
Depreciation charge for the year
(2,206)
(210)
(55)
(2,471)
Other movements
55
–
–
55
At 30.6.2021
6,701
1,729
77
8,507
Included in other movements is the under-recognition of prior year’s lease amounting to S$67,000 (2020:
$nil) adjusted in the current year offset by the derecognition of a right-of-use asset amounting to $12,000
(2020: $nil).
Annual Report 2021
77
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
10.
Right-of-use assets and leases (cont’d)
b.
Lease liabilities
Consolidated
2021
2020
S$’000
S$’000
As at 1 July
8,784
9,621
Additions
2,340
1,666
Derecognition of lease
(13)
–
Finance costs
377
364
Payments
(3,562)
(2,884)
Currency realignment
154
17
As at 30 June
8,080
8,784
Current
2,336
1,936
Non-current
5,744
6,848
8,080
8,784
c.
Amounts recognised in profit or loss
Included in property related expenses in the profit or loss for the financial year ended 30 June 2021,
expenses relating to short-term leases was $59,000 (2020: $78,000) and expenses relating to the leases of
low-value assets, excluding short-term leases of low-value assets, was $3,000 (2020: $3,000).
d.
Group as a lessor
Rental income recognised by the Group during the year is $1,521,000 (2020: $1,870,000). As at 30 June
2021, trade receivables amounting to S$699,000 (2020: S$745,000) are related to rental. The Group’s lease
arrangements as lessor are generally short-term.
ZICOM GROUP LIMITED
78
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
11.
Intangible assets
Consolidated
Customer
list
Developed
technology
Goodwill
Development
expenditure
Club
membership
Computer
software
Unpatented
technology
Patented
technology
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Cost
At 1.7.2019
918
1,141
5,497
2,015
11
2,283
3,366
161
15,392
Currency realignment
–
–
17
–
–
12
–
–
29
Additions
–
–
–
181
–
57
–
–
238
Write off
–
–
–
–
–
(30)
–
–
(30)
At 30.6.2020
918
1,141
5,514
2,196
11
2,322
3,366
161
15,629
Currency realignment
–
–
103
–
–
(1)
–
–
102
Additions
–
–
–
–
–
53
–
11
64
Reclassification
–
–
–
(166)
–
166
–
–
–
Write off
–
–
–
(15)
(11)
(5)
–
(8)
(39)
At 30.6.2021
918
1,141
5,617
2,015
–
2,535
3,366
164
15,756
Accumulated amortisation
At 1.7.2019
918
1,141
–
1,819
–
2,211
1,924
24
8,037
Currency realignment
–
–
–
–
–
12
–
–
12
Amortisation
–
–
–
196
–
43
248
7
494
Write off
–
–
–
–
–
(30)
–
–
(30)
At 30.6.2020
918
1,141
–
2,015
–
2,236
2,172
31
8,513
Currency realignment
–
–
–
–
–
(1)
–
–
(1)
Amortisation
–
–
–
–
–
86
250
7
343
Write off
–
–
–
–
–
(5)
–
–
(5)
At 30.6.2021
918
1,141
–
2,015
–
2,316
2,422
38
8,850
Net carrying value
At 30 June 2021
–
–
5,617
–
–
219
944
126
6,906
At 30 June 2020
–
–
5,514
181
11
86
1,194
130
7,116
Annual Report 2021
79
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
11.
Intangible assets (cont’d)
Development
expenditure
Unpatented
technology
Average remaining amortisation period (years) – 2021
NA
4.0
Average remaining amortisation period (years) – 2020
5.0
5.0
Assets by business segment:
Assets and investments in associates by business segment are summarised as follows:
Green
Energy, Gas
& Marine
Equipment
Construction
Equipment
Precision
Engineering &
Technologies
Industrial
& Mobile
Hydraulics
Unallocated
Total
S$’000
S$’000
S$’000
S$’000
S$’000
S$’000
Property plant and
equipment
8,526
18,706
376
–
7,288
34,896
Right-of-use assets
1,020
4,830
1,274
–
1,383
8,507
Intangible assets other
than goodwill
225
18
1,037
–
9
1,289
Goodwill
–
1,978
3,639
–
–
5,617
Investment in associate
–
–
3,191
–
–
3,191
9,771
25,532
9,517
–
8,680
53,500
Green Energy, Gas & Marine Equipment
The assets in this segment relate predominantly to Zicom Private Limited and Zicom Equipment Private Limited. The
most significant asset in this segment relates to a building at 9 Tuas Avenue 9, Singapore amounting to S$7.0m
carried at fair value supported by external valuation performed as at 30 June 2021. The other most significant
asset is the right-of-use asset relating to a 30-year lease for the land which the building at 9 Tuas Avenue 9 sits on
amounting to S$1.0m. The gas segment continues to generate positive cash flows with a pipeline of contracts. The
green energy segment clinched its first order amounting to S$60m further supporting no impairment trigger.
Construction Equipment
The assets in this segment relate predominantly to Foundation Associates Engineering Private Limited, Cesco
Australia Limited and Zicom Cesco Engineering Co., Ltd. This segment manufactures and supply concrete mixers
and foundation equipment including equipment rental continues to generate positive cash flows. Due to the
goodwill that arose from the acquisition of Cesco Australia Limited, an impairment analysis is performed annually
(refer below for discussion on Zicom Group Limited).
ZICOM GROUP LIMITED
80
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
11.
Intangible assets (cont’d)
Precision Engineering & Technologies
Companies included in this segment are Sys-Mac Automation Engineering Pte. Ltd. and Orion Systems Integration
Pte. Ltd. Due to the goodwill that arose from acquisition of these entities, an annual impairment assessment is
performed.
Industrial and Mobile Hydraulics
As noted above, there are no material assets in this segment.
Unallocated
The most significant asset in this segment represents a building at 29 Tuas Avenue 3, Singapore and its right-of-use
asset arising from 30+30 year lease for the land that the building at 29 Tuas Avenue 3 sits on amounting to S$7.2m
and S$1.3m respectively. The building is carried at fair value supported by valuation report from accredited external
valuer as at 30 June 2021.
Impairment tests for goodwill and associates
Goodwill acquired through business combinations are allocated to the individual entity which is also the cash-
generating unit (CGU). These entities fall within the Precision Engineering & Technologies and Construction
Equipment segments of the Group as outlined above.
Consolidated
As at
30.6.2021
As at
30.6.2020
Basis on
which
recoverable
values are
determined
Pre-tax discount
rate per annum
S$’000
S$’000
2021
2020
Carrying value of capitalised goodwill based on
cash-generating units
Sys-Mac Automation Engineering Pte. Ltd.
2,975
2,975
Value in use
15%
15%
Zicom Group Limited
1,978
1,875
Value in use
18%
18%
Orion Systems Integration Pte. Ltd. (“Orion”)
664
664
Value in use
18%
18%
5,617
5,514
In accordance with AASB 136, the carrying value of the Group’s goodwill on acquisition as at 30 June 2021 was
assessed for impairment.
The recoverable amount of each CGU is determined based on value in use calculations using cash flow projections
from financial budgets approved by management covering a 5-year period. Budgeted revenue and gross margin in
the financial budgets are based on past performance and its expectation of market development. Long term growth
rate of 1% (2020: 1%) was used for the above cash-generating units with the exception of Orion for which 20%
(2020: 20%) declining growth rate was used.
Annual Report 2021
81
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
11.
Intangible assets (cont’d)
Zicom Group Limited
Goodwill in this CGU relates mainly to Cesco Australia Limited that operates in the construction industry in the
manufacturing of cement mixers. The recoverable amount of the CGU has been determined based on value in use
calculation using cash flow projections from financial budgets that was approved by management covering a 5-year
period. The cash flows beyond 5 years were extrapolated using a long-term growth rate of 1% (2020: 1%) based
on market information consistent for the industry it operates in. The cash flows for the first 5 years included growth
of between 0% and 9% (2020: 0% and 12%).
Sys-Mac Automation Engineering Pte. Ltd. (“Sys-Mac”)
Sys-Mac is involved in contract manufacturing and system integration which includes machining works, design and
build of customised automation solutions and systems. The recoverable amount of the CGU has been determined
based on value in use calculation using cash flow projections from financial budgets that was approved by
management covering a 5-year period. The cash flows beyond 5 years were extrapolated using a long-term growth
rate of 1% (2020: 1%) based on market information consistent for the industry it operates in. The cash flows for the
first 5 years included growth of between 0% and 60% (2020: 0% and 60%). Based on the value in use calculation,
there is a headroom of S$2.8m and management concludes that there is no impairment in this CGU.
Orion Systems Integration Pte. Ltd. (“Orion”)
Orion provides equipment with high performance flip chip applications to companies involved in back-end
semiconductor production. Its signature product is Phoenix Quadpro, a high speed, fine pitch flip chip bonder. The
cash flows beyond 5 years were extrapolated using a declining growth rate of 20% (2020: 20%) considering Orion’s
reliance on a single product. The recoverable amount of the CGU has been determined based on value in use
calculation using cash flow projections from financial budgets that was approved by management covering a 5-year
period. The cash flows for the first 5 years included growth of between 0% and 100% (2020: 0% and 100%).
Impairment tests for goodwill
Key assumptions used in value in use calculations and sensitivity to changes in assumptions:
The calculations of value in use (VIU) for the CGUs are most sensitive to the following assumptions:
-
Gross margins
-
Pre-tax discount rates
-
Market share assumptions
-
Growth rate estimates
-
Timing of cash flows
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. Decreased demand can lead to a decline
in gross margin. For Sys-Mac, a decrease in gross margin of more than 5% (2020: 5%) may result in impairment
adjustment.
ZICOM GROUP LIMITED
82
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
11.
Intangible assets (cont’d)
Impairment tests for goodwill (cont’d)
Pre-tax discount rates – Discount rate reflect the current market assessment of the risk specific to the CGUs,
taking into consideration the time value of money and individual risks of the underlying assets that have not been
incorporated in the cash flow estimates. 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. CGU’s specific risk is incorporated in the discount rate by applying
individual beta factors. The beta factors are evaluated annually based on publicly available market data. A rise in
the pre-tax discount rate by 3 percentage points (2020: 5 percentage points) or above may result in impairment
adjustment for Sys-Mac CGU.
Market share assumptions – These assumptions are important because management assesses how the CGU’s
position relative to its competitors may change over the forecast period.
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. Management acknowledges that the speed of technological
change and the possibility of new entrants can have a significant impact on growth rates. Growth rates can also
impact on the margins achieved by the CGUs as discussed above. Should the long-term growth rate be reduced
by 1% (2020: 1%), there is still no impairment required for Sys-Mac CGU.
Summary of sensitivity to changes in assumptions
Considering that the calculated value in use for both Orion and Zicom Group Limited CGUs equal to their carrying
values, any unfavourable change in any of the above key assumptions may result in impairment adjustments.
For the Sys-Mac CGU, management believe that no reasonably possible change in any of the above key
assumptions would cause its carrying value to materially exceed its recoverable amount.
12.
Investments in subsidiaries
Parent Entity
2021
2020
S$’000
S$’000
Investments in controlled entities, at cost
54,544
54,544
Less: Impairment loss
(1,421)
(1,461)
53,123
53,083
Annual Report 2021
83
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
12.
Investments in subsidiaries (cont’d)
The consolidated financial statements include the financial statements of Zicom Group Limited and the subsidiaries
listed in the following table.
The carrying amount in each controlled entity has been adjusted to assess recoverable amounts on the basis of
their underlying assets.
Name of Company
Country of
incorporation/
formation
Carrying value of
Parent Entity
investment
Percentage of
equity held by the
Group
2021
2020
2021
2020
S$’000
S$’000
%
%
Held by the Company:
Cesco Australia Limited
Australia
8,948
8,908
100
100
Zicom Holdings Private Limited
Singapore
44,175
44,175
100
100
Controlled entities held through subsidiary
companies:
Cesco Equipment Pty Ltd
Australia
–
–
100
100
Zicom Private Limited
Singapore
–
–
100
100
Zicom Energy Solutions Private Limited
Singapore
–
–
59
59
Zicom Equipment Private Limited
Singapore
–
–
100
100
Link Vue Systems Pte. Ltd.
Singapore
–
–
72
72
Foundation Associates Engineering Private
Limited
Singapore
–
–
100
100
FAE Construction Pte. Ltd.
Singapore
–
–
100
100
FAEQUIP Corporation
Philippines
–
–
100
100
FAE Thai Co., Ltd.
Thailand
–
–
100
100
Sys-Mac Automation Engineering Pte. Ltd.
Singapore
–
–
100
100
MTA-Sysmac Automation Pte. Ltd.
Singapore
–
–
61
61
iPtec Pte. Ltd.
Singapore
–
–
100
100
Orion Systems Integration Pte. Ltd.
Singapore
–
–
98
98
PT. Sys-Mac Indonesia
Indonesia
–
–
100
100
Zicom Cesco Engineering Co., Ltd.
Thailand
–
–
100
100
Zicom Cesco Thai Co., Ltd.
Thailand
–
–
100
100
Zicom Thai Hydraulics Co., Ltd.
Thailand
–
–
100
100
FA Geotech Equipment Sdn. Bhd.
Malaysia
–
–
100
100
Deqing Cesco Machinery Co., Ltd.
China
–
–
100
100
53,123
53,083
ZICOM GROUP LIMITED
84
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
12.
Investments in subsidiaries (cont’d)
Investment in Zicom Energy Solutions Private Limited (“ZES”)
In the previous financial year, on 30 November 2019, Zicom Private Limited (“ZPL”), a wholly-owned subsidiary,
increased its investment in ZES by way of capitalisation of an amount of S$137,000 owed by ZES to ZPL,
increasing the Group’s interest in ZES from 51% to 59%. The effect on the change in interest in ZES amounted to
S$51,000 has been recognised within equity.
Entity subject to class order relief
Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, relief has been granted
to Cesco Australia Limited (“CAL”) and Cesco Equipment Pty Ltd (“CEPL”) from the Corporations Act 2001
requirements for the preparation, audit and lodgement of their financial reports.
As a condition for the relief, a Deed of Cross Guarantee was executed between Zicom Group Limited (“ZGL”)
and CAL on 15 May 2008. The effect of the Deed is that ZGL has guaranteed to pay any deficiency in the event
of winding up of CAL or if CAL does not meet its obligations under the terms of overdraft, loans, leases or other
liabilities subject to the guarantee.
CAL has also given a similar guarantee in the event that ZGL is wound up or if it does not meet its obligations
under the terms of overdraft, loans and leases or other liabilities subject to the guarantee.
On 9 May 2013, CEPL executed a Deed of Assumption with ZGL so that CEPL is joined to the Deed of Cross
Guarantee and assumes liability under and be bound by the Deed of Cross Guarantee as if CEPL was a Group
Entity when the Deed of Cross Guarantee was executed.
The consolidated Income Statement and Balance Sheet of the entities that are members of the Closed Group are
as follows:
Consolidated Income Statement
Closed Group
2021
2020
S$’000
S$’000
Loss from continuing activities before taxation
(89)
(581)
Income tax
–
–
Net loss for the year
(89)
(581)
Accumulated losses at the beginning of year
(21,684)
(21,219)
Expired employee share options
26
116
Accumulated losses at the end of year
(21,747)
(21,684)
Annual Report 2021
85
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
12.
Investments in subsidiaries (cont’d)
Consolidated Balance Sheet
Closed Group
2021
2020
S$’000
S$’000
Non-current assets
Property, plant and equipment
615
756
Right-of-use assets
1,878
2,365
Intangible assets
358
340
Deferred tax assets
303
287
Investments in subsidiaries
44,175
44,175
47,329
47,923
Current assets
Cash and cash equivalents
1,364
2,503
Inventories
4,580
3,951
Trade and other receivables
3,843
2,097
Prepayments
30
22
9,817
8,573
Current liabilities
Payables
3,716
2,420
Contract liabilities
87
207
Lease liabilities
654
517
Other interest-bearing liabilities
123
405
Provisions
616
583
5,196
4,132
Net Current Assets
4,621
4,441
Non-current liabilities
Lease liabilities
1,286
1,903
Other interest-bearing liabilities
18
133
Provisions
144
154
1,448
2,190
NET ASSETS
50,502
50,174
Equity attributable to equity holders of the Parent
Share capital
72,322
72,322
Reserves
(73)
(464)
Accumulated losses
(21,747)
(21,684)
TOTAL EQUITY
50,502
50,174
ZICOM GROUP LIMITED
86
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
13.
Investment in associate
Movement in the carrying amount of the Group’s investment in associate:
Consolidated
Emage Vision Pte. Ltd. (“EV”)
2021
2020
Shareholdings held: 16.29% (30 Jun 20: 16.29%)
S$’000
S$’000
Principal place of business: Singapore
At beginning of year
3,337
3,731
Share of results after income tax
(146)
(394)
At end of year
3,191
3,337
Although the Group holds less than 20% of equity interest in EV, the Group has the ability to exercise significant
influence through its shareholdings and participation on EV Board of Directors.
14.
Inventories
Consolidated
2021
S$’000
2020
S$’000
Raw materials/trading stocks (at cost or net realisable value)
14,929
17,424
Work-in-progress (at cost)
6,400
6,928
Finished goods (at cost)
2,154
2,383
Stocks-in-transit (at cost)
599
1,133
Total inventories at lower of cost and net realisable value
24,082
27,868
Inventories recognised as cost of sales for the year ended 30 June 2021 totalled S$56,088,000 (2020:
S$67,554,000) for the Group.
Annual Report 2021
87
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
15.
Current assets - receivables
Consolidated
2021
S$’000
2020
S$’000
Trade receivables
20,029
9,913
Allowance for impairment and expected credit losses
(1,934)
(2,110)
18,095
7,803
Advance payments to suppliers
889
775
Deposits
217
94
Related party receivables:
- Associate
- trade
7
42
- non-trade
–
26
- Other related parties
- trade
150
328
- non-trade
26
37
Grant receivables
256
388
Unrealised gain on derivative
–
51
Other receivables
52
56
Total financial assets at amortised cost
19,692
9,600
Trade and other receivables are non-interest bearing and are generally due when invoiced or on 30 to 60 days’
terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
As at 30 June 2021, trade receivables amounting to S$7,713,000 (2020: S$1,966,000) were arranged to be settled
via letters of credit issued by reputable banks in countries where the customers were based.
Receivables that are past due but not impaired
Trade and other receivables that are past due but not individually impaired are with creditworthy debtors with good
payment records. Cash and short-term deposits are placed with reputable banks.
As at 30 June 2021, the ageing analysis of trade receivables is as follows:
Consolidated
2021
S$’000
2020
S$’000
Less than 30 days
1,912
3,162
30 to 60 days
314
252
61 to 90 days
538
182
91 to 120 days
109
106
More than 120 days
837
808
3,710
4,510
ZICOM GROUP LIMITED
88
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
15.
Current assets – receivables (cont’d)
Receivables that are impaired
The Group’s trade receivables that are credit-impaired at the end of the reporting period and the movement of the
allowance accounts used to record the impairment are as follows:
Consolidated
2021
S$’000
2020
S$’000
Trade receivables - nominal amounts
1,882
1,960
Less: allowance for impairment
(1,882)
(1,960)
–
–
Movement in allowance accounts:
As at 1 July
1,960
2,146
Charge for the year
76
282
Written off
(71)
(312)
Unused amounts reversed
(62)
(171)
Currency realignment
(21)
15
As at 30 June
1,882
1,960
Trade receivables are individually determined to be impaired at the end of the reporting period based on the
management’s historical experience in the collection of debts from customers. Significant financial difficulties of the
debtor and default or delinquency in payments are considered indicators that the trade debtor is credit impaired.
These receivables are not secured by any collateral or credit enhancements.
Expected credit losses
Expected credit losses are made for trade receivables which are not credit-impaired. The movement in allowance
for expected credit losses of trade receivables computed based on lifetime ECL are as follows:
Consolidated
2021
S$’000
2020
S$’000
As at 1 July
150
339
Charge for the year
15
139
Unused amounts reversed
(114)
(328)
Currency realignment
1
–
As at 30 June
52
150
For receivables from related parties, please refer to note 26 for terms and conditions.
Annual Report 2021
89
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
16.
Contract costs
Consolidated
2021
S$’000
2020
S$’000
Acquisition costs
3,929
434
Fulfilment costs
232
852
4,161
1,286
Incremental costs of obtaining a contract are capitalised as acquisition costs if these costs are recoverable.
Costs incurred to fulfil a contract are capitalised only if the costs relate directly to the contract, generate or enhance
resources used in satisfying future performance obligations, and are expected to be recovered.
Capitalised contract costs are amortised on a systematic basis that is consistent with the entity’s transfer of the
related goods and services to the customers.
For the financial year ended 30 June 2021, S$1,621,000 (2020: S$1,275,000) was amortised and no impairment
loss had been recognised.
17.
Current liabilities - payables
Consolidated
2021
S$’000
2020
S$’000
Trade payables and accruals (a)
16,180
28,254
Related party payables (b)
- trade
1
–
- non-trade
444
170
Other payables
1,027
243
17,652
28,667
(a)
All amounts are non-interest bearing and are normally settled on 30 to 90 days’ terms.
(b)
For payables to related parties, please refer to note 26 for terms and conditions.
ZICOM GROUP LIMITED
90
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
18.
Other interest-bearing liabilities
Consolidated
2021
S$’000
2020
S$’000
Current
Bank overdrafts (a)
1,221
1,274
Bills payable (b)
–
16,088
Revolving term loans (c)
11,350
12,600
Term loans (d)
1,290
153
Loans from a related party (e)
1,822
2,429
15,683
32,544
Non-current
Term loans (d)
3,850
2,133
Details of the secured borrowings are as follows:
(a)
Bank overdraft amounting to S$583,000 (2020: S$591,000) which bears interest at floating rate ranging from
6.00% to 6.8% (2020: 6.00% to 7.70%) per annum is secured by corporate guarantee from Zicom Holdings
Private Limited (“ZHPL”).
Bank overdraft of S$638,000 (2020: S$683,000) which bears interest at floating rate at 6.80% (2020:
ranging from 6.80% - 7.70%) per annum is secured by a legal mortgage on the subsidiary company’s
freehold land and buildings at 700/895 Moo 2, Amata Nakorn Industrial Estate, Chonburi, Thailand and a
corporate guarantee from ZHPL.
(b)
Bills payable outstanding as at 30 June 2020 amounting to S$16,088,000 had been fully settled during the
financial year and there are no outstanding bills payable as at 30 June 2021. Below sets out the terms of
bills payable outstanding as at 30 June 2020.
Tenure
Interest at fixed rate
during tenure
(per annum)
Corporate Guarantor
Amount (S$)
Up to 185 or 390 days
3.97% to 5.90%
ZHPL
12,253,000
1 – 4 months
1.85% to 3.51%
ZHPL
3,583,000
120 days
3.52%
the Company
252,000
16,088,000
(c)
A revolving credit line of S$5,000,000 (2020: S$5,000,000) for a term of 10 years was offered to ZHPL
where drawdown can be made in tranches for a tenure of 1, 2 or 3 months and thereafter, rollover as
required. This facility which is secured by a first legal mortgage on ZHPL’s building at No. 9 Tuas Avenue 9
Singapore 639198 and corporate guarantees from the Company and Zicom Private Limited shall be reduced
by an annual reduction of S$500,000 commencing on 28 August 2018. As at 30 June 2021, S$3,500,000
(2020: S$4,000,000) is outstanding with tenure of 1 month (2020: 1-2 months) bearing interest at fixed rates
until expiry, ranging from 1.75% to 2.70% (2020: 2.00% to 3.35%) per annum, at which point, interest rate
resets.
Annual Report 2021
91
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
18.
Interest-bearing liabilities (cont’d)
(c)
Short term loan of S$3,000,000 (2020: S$3,000,000) with a term of 5 years was granted to Zicom Private
Limited where drawdown can be made in tranches for a tenure of 1, 3 or 6 months and thereafter, rollover
as required. This facility which is subject to a monthly reduction of S$50,000 commencing on 16 June 2018
is secured by a first legal mortgage on ZHPL’s building at No. 5 Tuas Avenue 1 Singapore 639490 and a
corporate guarantee from ZHPL. As at 30 June 2021, S$1,150,000 (2020: S$1,750,000) is outstanding
with tenure of 1 month (2020: 1 month) bearing interest at fixed rate at 1.53% (2020: 1.51% to 3.22%) per
annum, at which point, interest rate resets.
Short term loans with a tenure of 3 - 6 months (2020: 3 - 6 months) amounting to S$1,700,000 (2020:
S$1,850,000) bear interest at fixed rates until expiry ranging from 2.20% to 2.28% (2020: 2.77% to 3.99%)
per annum at which time interest rate resets and is secured by a corporate guarantee given by ZHPL.
The remaining short-term loans with tenure of 1 month (2020: 1 month) amounting to S$5,000,000 (2020:
$5,000,000) which is secured by a first legal mortgage on ZHPL’s building at No. 29 Tuas Avenue 3
Singapore 639420 bears interest at fixed rates until expiry, ranging from 1.51% to 1.60% (2020: 1.50% to
3.26%) per annum at which point interest rate resets.
(d)
Term loans amounting to S$37,000 (2020: S$63,000) comprising of current and long-term portions of
S$20,000 (2020: S$27,000) and S$17,000 (2020: S$36,000) respectively which are secured by a fixed
charge over the purchased motor vehicles and equipment are payable over the remaining 1 to 2 years
(2020: 1 – 3 years) and bear interest at fixed rates of 5.05% to 5.40% (2020: 5.05% to 5.40%) per annum.
Term loans amounting to S$103,000 (2020: S$223,000) comprising of current and long-term portions of
S$103,000 (2020: S$126,000) and S$nil (2020: S$97,000) respectively is repayable within 1 year (2020: 1
- 2 years) and bear interest at fixed rates of 5.51% (2020: 5.11% and 5.51%) per annum. It is secured by a
fixed charge over the purchased equipment and a corporate guarantee from Cesco Australia Limited.
Temporary bridging loans with a tenor of 5 years totalled S$5,000,000 were offered to Zicom Private Limited,
Zicom Equipment Private Limited and Sys-Mac Automation Engineering Pte. Ltd. in the previous financial
year. Introduced by the Singapore government to help businesses cope during the pandemic, interest is
charged at a fixed rate of 2.25% per annum and repayment of loan only commences after 12 months after
drawdown. As at 30 June 2021, S$5,000,000 (2020: S$2,000,000) comprising of current and long-term
portions of S$1,167,000 (2020: S$nil) and S$3,833,000 (2020: 2,000,000) respectively is outstanding and
secured by a corporate guarantee by ZHPL.
(e)
Loans from a related party amounting to S$1,822,000 (2020: S$2,429,000) which bear interest at fixed
rate of 3.5% (2020: 5%) per annum have a maturity of 3 months which may be extended if required at the
discretion of borrowers.
(f)
Financing facilities available
As at 30 June 2021, the Group had available S$73,421,000 (2020: S$100,961,000) of undrawn committed
borrowing facilities and all significant bank covenants were complied with.
ZICOM GROUP LIMITED
92
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
19.
Provisions
Consolidated
2021
S$’000
2020
S$’000
Current
Assurance-type warranties
1,400
611
Employee benefits
487
457
Reinstatement costs
200
–
Onerous contracts
73
–
2,160
1,068
Non-current
Employee benefits
219
417
Reinstatement costs
117
152
336
569
Movement in provision for assurance-type warranties:
At beginning of year
611
747
Additional provision
1,304
426
Unused amounts reversed
(270)
(301)
Utilised
(247)
(264)
Currency realignment
2
3
At end of year
1,400
611
Warranty expense charged directly to profit or loss (note 6)
–
3
Movement in provision for employee benefits:
At beginning of year
874
747
Additional provision
55
121
Unused amounts reversed
(192)
–
Utilised
(46)
(6)
Currency realignment
15
12
At end of year
706
874
Movement in provision for reinstatement costs:
At beginning of year
152
151
Additional provision
- charge for the year
- borne by subtenant
152
10
–
–
Currency realignment
3
1
At end of year
317
152
Movement in provision for onerous contracts:
At beginning of year
–
–
Additional provision
76
–
Utilised
(3)
–
At end of year
73
–
Annual Report 2021
93
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
19.
Provisions (cont’d)
Provision for assurance-type warranty claims is made for deck machineries, compressor stations, gas processing
plants and flip chip bonders supplied. Assumptions used to calculate these provisions were based on a certain
percentage of sale value and past experience of the level of repairs and returns based on the two-year warranty
period.
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 for reinstatement is the costs that will ultimately be
incurred.
As soon as a contract is assessed to be onerous, a provision for onerous contracts is recorded for the loss it
expects to make on the contract.
20.
Unearned income
Consolidated
2021
S$’000
2020
S$’000
Unearned income
231
252
Included in unearned income as at 30 June 2021 was an amount of S$196,000 (2020: nil) relating to an Enterprise
Development Grant awarded to Zicom Private Limited, a wholly-owned subsidiary, to support the building of
LNG engineering capability and development of a high pressure LNG fuel gas supply system for large vessels.
Cash advancement was disbursed upon the acceptance of the offer and shall be recognised in profit or loss on
a systematic basic over the periods in which the related costs for which the grant is intended to compensate are
recognised as expenses.
The remaining unearned income of $35,000 as at 30 June 2021 (2020: S$252,000) relates to the Job Support
Scheme (“JSS”) introduced by the Singapore government (“JSS”) to offset local employees’ wages and help protect
their jobs. The cumulative grant received as at the reporting date that was intended to defray the Group’s payroll
costs in future periods is recorded as “unearned income”. Such unearned income shall be released to future
period’s profit or loss on a systematic basis over the remaining relevant periods.
21.
Share capital
Parent Entity
Consolidated
2021
2020
2021
2020
No. of shares (Thousands)
S$’000
S$’000
Ordinary fully paid shares
217,141
217,141
21,100
21,100
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares carry one vote per share without restriction.
There were no movements in share capital for both financial years.
ZICOM GROUP LIMITED
94
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
22.
Cash and cash equivalents
Consolidated
2021
2020
S$’000
S$’000
Cash at bank and in hand
17,230
11,493
Demand deposits
16
15
17,246
11,508
For the purpose of statement of the consolidated cash flows, cash and cash equivalents comprise the following as
at 30 June:
Cash and demand deposits
17,246
11,508
Bank overdrafts
(1,221)
(1,274)
16,025
10,234
Cash at bank balances amounting to S$7,542,000 as at 30 June 2021 (2020: S$4,110,000) earned interest at
floating rate based on daily bank deposit rates ranging from 0.01% to 2.30% (2020: 0.01% to 2.30%) per annum.
23.
Fixed deposits
These are fixed deposits placed with the bank to secure banking facilities. Fixed deposit amounting to S$3,053,000
(2020: nil) earned interest at floating rate at 0.1% (2020: nil) per annum, the remaining fixed deposit do not earn
interest.
24.
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.
Annual Report 2021
95
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
24.
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 material 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:
Consolidated
2021
2020
S$’000
S$’000
Financial assets
Cash and cash equivalents
7,542
4,110
Fixed deposits
3,053
–
10,595
4,110
Financial liabilities
Bank overdrafts
1,221
1,274
Sensitivity analysis of interest rate risk
As at 30 June 2021, if interest rates had increased/decreased by 25 basis point with all other variables held
constant, post-tax losses for the consolidated entity for the current financial year would be S$19,000 (2020:
S$5,000) lower/higher as a result of the higher/lower interest rates. Accordingly, the Group’s equity as at
year-end will be S$19,000 (2020: S$5,000) higher/lower.
(c)
Foreign currency risk
Foreign currency risk occurs as a result of the Group’s transactions that are not denominated in their
respective functional currencies. These transactions arise from the Group’s ordinary course of business.
The Group transacts business in various currencies and as a result, is largely exposed to movements in
exchange rates of United States dollar, Euro, Bangladeshi Taka and Australian dollar.
The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts and
payments in each individual currency. The Group also uses foreign currency forward contracts to hedge
a portion of its future foreign exchange exposure purely as a hedging tool and does not take positions in
currencies with a view to make speculative gains from currency movements.
ZICOM GROUP LIMITED
96
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
24.
Financial instruments (cont’d)
(c)
Foreign currency risk (cont’d)
The following sensitivity analysis is based on the foreign exchange risk exposure in existence at the balance
sheet date. As at 30 June, if exchange rates had moved, as illustrated in the table below, with all other
variables held constant, post-tax results and equity would have been affected as follows:
2021
2020
Consolidated
S$’000
S$’000
USD
- strengthened 1% (2020: 1%)
100
24
- weakened 2% (2020: 2%)
(200)
(47)
EURO
- strengthened 2% (2020: 5%)
(2)
(13)
- weakened 3% (2020: 1%)
3
3
AUD
- strengthened 4% (2020: 4%)
4
-
- weakened 1% (2020: 1%)
(1)
-
BDT
- strengthened 1% (2020: 2%)
34
(8)
- weakened 1% (2020: 2%)
(34)
8
(d)
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased
credit risk exposure. The Group trades only with recognised and creditworthy third parties. Credit risk is
monitored through careful selection of customers and their balances are monitored on an ongoing basis with
the result that the Group’s exposure to bad debts has not been significant.
The Group determines that its financial assets are credit impaired when contractual payments are
significantly delayed from historical payment patterns or when there is information indicating that the debtor
is in severe financial difficulty and there is no realistic prospect of recovery.
The Group provides for expected credit losses for all trade receivables using a provision matrix based on
the Group’s historical credit loss experience adjusted for factors that are specific to the debtors and general
economic conditions at the reporting date.
Annual Report 2021
97
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
24.
Financial instruments (cont’d)
(d)
Credit risk (cont’d)
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the country profile of its trade receivables
and contract assets on an ongoing basis. The credit risk concentration profile of the Group’s trade
receivables and contract assets at the balance sheet date is as follows:
Consolidated
2021
2020
S$’000
% of total
S$’000
% of total
Australia
2,508
13.9
1,226
15.7
Bangladesh
9,445
52.2
2,046
26.2
Indonesia
17
0.1
114
1.5
Malaysia
465
2.6
324
4.2
People’s Republic of China
119
0.7
171
2.2
Myanmar
5
–
34
0.4
New Zealand
354
2.0
–
–
Singapore
4,293
23.7
2,570
32.9
Switzerland
99
0.5
37
0.5
Taiwan
127
0.7
101
1.3
Thailand
473
2.6
673
8.6
United States of America
45
0.2
420
5.4
Others
145
0.8
87
1.1
18,095
100
7,803
100
At the balance sheet date, approximately 61.9% (2020: 35.9%) of the Group’s trade receivables were due
from 3 (2020: 3) major customers.
Contract assets
Consolidated
2021
2020
S$’000
% of total
S$’000
% of total
Bangladesh
–
–
36,712
96.0
Malaysia
462
28.3
–
–
People’s Republic of China
–
–
77
0.2
Singapore
1,168
71.7
1,308
3.4
United States of America
–
–
140
0.4
1,630
100
38,237
100
ZICOM GROUP LIMITED
98
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
24.
Financial instruments (cont’d)
(e)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage
of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial
assets and liabilities.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
standby credit facilities.
The following table summarises the maturity profile of the Group’s financial assets and liabilities at the
balance sheet date based on contractual undiscounted payments. The expected timing of actual cash flows
from these financial instruments may differ.
1 year or less
After 1 year
but not more
than 5 years
More than
5 years
Total
Consolidated
S$’000
S$’000
S$’000
S$’000
2021
Financial assets:
Trade receivables
17,923
–
–
17,923
Other receivables
549
–
–
549
Cash and cash equivalents
17,246
–
–
17,246
Fixed deposits
3,080
–
–
3,080
Total undiscounted financial assets
38,798
–
–
38,798
Financial liabilities:
Trade payables
5,424
–
–
5,424
Other payables
10,834
–
–
10,834
Lease liabilities
2,611
3,444
3,707
9,762
Other interest-bearing liabilities
16,122
3,987
–
20,109
Total undiscounted financial liabilities
34,991
7,431
3,707
46,129
Total net undiscounted financial liabilities
3,807
(7,431)
(3,707)
(7,331)
2020
Financial assets:
Trade receivables
7,686
–
–
7,686
Other receivables
204
–
–
204
Cash and cash equivalents
11,508
–
–
11,508
Total undiscounted financial assets
19,398
–
–
19,398
Financial liabilities:
Trade payables
5,861
–
–
5,861
Other payables
20,988
–
–
20,988
Lease liabilities
2,243
4,397
4,088
10,728
Other interest-bearing liabilities
33,714
2,229
–
35,943
Total undiscounted financial liabilities
62,806
6,626
4,088
73,520
Total net undiscounted financial liabilities
(43,408)
(6,626)
(4,088)
(54,122)
Annual Report 2021
99
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
24.
Financial instruments (cont’d)
(f)
Fair values
(i)
Fair value of financial instruments that are carried at fair value
As at 30 June 2021, the Group had no financial instruments measured at fair value.
As at 30 June 2020, the Group had the following financial liabilities measured at fair value.
Quoted prices
in active
markets for
identical
instruments
Significant
other
observable
inputs
Significant
unobservable
inputs
Total
(Level 1)
(Level 2)
(Level 3)
S$’000
S$’000
S$’000
S$’000
Consolidated
Financial assets:
Derivative – foreign currency
forward contract
–
51
–
51
(ii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value
Management has determined that the carrying amounts of cash and cash equivalent, fixed deposits,
current trade and other receivables, current trade and other payables, current interest-bearing
liabilities reasonably approximate their fair values because they are mostly short-term in nature and
repriced frequently.
(iii)
Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value
The fair values of non-current bank loans bearing interest at fixed rates, which are not carried at fair
value in the balance sheet, are presented in the following table. The fair value is estimated using
discounted cash flow analysis using discount rate that reflects the issuer’s borrowing rate at the end
of the reporting period. Considering the unobservable inputs, the Group has classified the fair value
within Level 3 of the fair value hierarchy. The Group’s own non-performance risk as at 30 June 2021
was assessed to be insignificant.
Consolidated
Carrying Amount
Fair Value
2021
2020
2021
2020
S$’000
S$’000
S$’000
S$’000
Financial liabilities:
Term loans
3,850
2,133
3,599
1,969
ZICOM GROUP LIMITED
100
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
25.
Capital Management
The Group’s primary objective when managing capital structure is to maintain an efficient mix of debt and equity
in order to achieve a low cost of capital while taking into account the desirability of retaining financial flexibility to
pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events including
the impact of COVID-19 pandemic on cash flows.
The Directors regularly reviews the Company’s capital structure and make adjustments to reflect economic
conditions, business strategies and future commitments. The Company may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets or increase borrowings. No changes
were made in the objectives, policies and processes during the years ended 30 June 2021 and 30 June 2020.
Management monitors capital through the gearing ratio (net debt / total capital). The Group defines net debt as
interest-bearing liabilities less cash and cash equivalents. Capital includes equity attributable to the equity holders of
the Parent and reserves. The Group’s policy is to keep its gearing ratio at less than 50%.
The gearing ratios as at 30 June 2021 and 30 June 2020 were as follows:
Consolidated
2021
S$’000
2020
S$’000
Lease liabilities (note 10)
8,080
8,784
Other interest-bearing liabilities (note 18)
19,533
34,677
27,613
43,461
Less: cash and cash equivalents
(17,246)
(11,508)
Net debt
10,367
31,953
Equity attributable to holders of the Parent
65,634
65,078
Gearing ratio
15.80%
49.10%
Annual Report 2021
101
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
26.
Related party disclosures
In addition to the related party information disclosed elsewhere in the financial statements, the following table
provides the total amount of transactions that have been entered with related parties at mutually agreed terms for
the relevant financial year.
(a)
Sale and purchase of goods and services
Consolidated
2021
S$’000
2020
S$’000
Minority shareholder of a subsidiary company
- Sales
253
337
Associates
- Sales
6
9
- Purchases
115
773
- Rental & utilities income
19
68
- Services rendered
50
64
Other related parties
- Sale of goods and services
1,367
1,254
- Sale of fixed assets
8
–
- Interest income
–
3
- Rental & utilities income
121
198
- Services rendered
26
36
- Interest expense
50
95
- Services received
–
63
(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.
All non-trade amounts due from/(to) related parties as at 30 June 2021 are unsecured, interest-free and have
no fixed terms of repayment.
As at 30 June 2020, except for non-trade balances due from related parties amounting S$51,000 which
were on 30 to 60 days terms, the remaining non-trade balances were unsecured, interest-free and have no
fixed terms of repayment.
For information regarding outstanding balances on related party receivables and payables at year-end,
please refer to notes 15 and 17.
ZICOM GROUP LIMITED
102
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
26.
Related party disclosures (cont’d)
(c)
Compensation of key management personnel
Consolidated
2021
S$
2020
S$
Short-term employee benefits
924,583
1,161,202
Post-employment benefits
39,168
36,090
Share-based payments
6,952
17,522
Total compensation
970,703
1,214,814
27.
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$38,000 (2020: S$48,000).
There have been no cancellations or modifications to the plan during the years 2021 and 2020.
(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)
Movement during the year
2021
2020
No. of options (Thousands)
Outstanding at beginning of year
6,600
2,550
Granted during the year
–
6,000
Expired during the year
(600)
(1,950)
Outstanding at end of year
6,000
6,600
Exercisable at end of year
2,502
1,300
Annual Report 2021
103
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
27.
Share-based payment plans (cont’d)
(c)
Movement during the year (cont’d)
The outstanding balance of share options as at 30 June 2021 and 30 June 2020 are represented by:
No. of options (Thousands)
Exercise price
Exercisable
Expiry Date
2021
2020
(Australian Cents)
on or after
–
600
18.0
1/12/2016
30/11/2020
700
700
8.1
13/11/2019
12/11/2024
221
221
8.1
13/11/2020
12/11/2024
215
215
8.1
13/11/2021
12/11/2024
214
214
8.1
13/11/2022
12/11/2024
1,581
1,581
8.1
16/10/2020
15/10/2024
1,535
1,535
8.1
16/10/2021
15/10/2024
1,534
1,534
8.1
16/10/2022
15/10/2024
6,000
6,600
(d)
Weighted average fair value
The weighted average fair value of options granted in the previous financial year was A$0.02.
(e)
No share option was granted or exercised during the year.
(f)
Option pricing model
The fair value of the equity-settled share options granted during the previous financial year under the ZESOP
was estimated as at the date of grant using a Trinomial model taking into account the terms and conditions
upon which the options were granted. The following table lists the inputs to the model used:
Inputs
Grant date
16/10/2019
13/11/2019
Exercise price (A$):
0.081
0.081
Stock price at grant date (A$):
0.081
0.080
Maximum option life in years:
5
5
Volatility:
23.79%
23.20%
Risk free interest rate:
1.00%
1.00%
The effects of early exercise had 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.
The expected volatility reflects the assumption that historical volatility over a period similar to the life of the
options is indicative of future trends, which may not necessarily be the actual outcome.
ZICOM GROUP LIMITED
104
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
28.
Commitments
(a)
Commitments
As at year-end, the Group has issued letters of guarantee amounting to S$23,235,000 (2020:
S$20,555,000).
(b)
Capital commitment
The Group has no capital commitment as at 30 June 2021 and 30 June 2020.
29.
Auditors’ remuneration
During the year, the following fees were paid/payable for services provided by auditors:
Consolidated
2021
S$
2020
S$
Amounts received or due and receivable by Ernst & Young (Australia) for:
- Audit and review of financial statements
153,690
139,320
Amounts received or due and receivable by Ernst & Young (Thailand) for:
- Fact-finding investigation
47,469
–
Amounts received or due and receivable by Ernst & Young (Singapore) for:
- Audit and review of financial statements
248,170
235,000
Amounts received or due and receivable by other audit firms for:
- Audit and review of financial statements
28,789
27,464
- Taxation services
23,721
50,805
501,839
452,589
Annual Report 2021
105
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
30.
Parent Entity disclosures
(a)
The individual financial statements of the Parent Entity shows the following aggregate amounts:
2021
2020
S$’000
S$’000
Balance sheet
Non-current assets
53,123
53,083
Current assets
1,214
1,319
Total assets
54,337
54,402
Current liabilities
165
104
Net assets
54,172
54,298
Equity
Share capital (i)
71,850
71,850
Share capital - exercise of share options
472
472
Capital reserve
688
688
Foreign currency translation reserve
(452)
(515)
Share-based payments reserve
85
73
Accumulated losses
(18,471)
(18,270)
54,172
54,298
Results
Loss for the year
(227)
(272)
Other comprehensive income
–
–
Total comprehensive loss
(227)
(272)
(i)
The share capital of the Parent Entity differs from that of the consolidated entity due to the reverse
takeover which took place in 2006. Accordingly, the Parent Entity which is the legal parent is
accounted for as the acquiree for accounting purposes.
(b)
Guarantees
(i)
The Parent Entity has issued letters of guarantee amounting to S$3,500,000 (2020: S$4,252,000) to
secure trade facilities and bank loans for controlled entities.
(ii)
The Parent Entity has entered into a Deed of Cross Guarantee and the subsidiaries subject to the
deed is disclosed in note 12.
(c)
Contingent liabilities
The Parent Entity has no contingent liabilities as at 30 June 2021 and 30 June 2020.
ZICOM GROUP LIMITED
106
For personal use only
Notes to the Consolidated Financial Statements
(In Singapore dollars)
31.
Subsequent events
Subsequent to the financial year-end, the board of directors resolved to carry out an on-market share buy-back
within the 10/12 limit provided for under Section 257A of the Corporations Act 2001 to enhance shareholders value
as part of capital management. The share buy-back exercise has commenced in September 2021 after the release
of full year results and requisite notifications had been given to the regulatory authorities.
Except for the above, no matter or circumstances has occurred subsequent to the year-end that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of
affairs of the Group subsequent to 30 June 2021.
Annual Report 2021
107
For personal use only
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 2021 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 2021 and of its
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and Corporations Regulations 2001.
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note
2.1.
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
(d)
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 2021.
(e)
as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group
identified in note 12 will be able to meet any obligations or liabilities to which they are or may become subject, by
virtue of the Deed of Cross Guarantee.
On behalf of the Board
G L Sim
Executive Chairman
30 September 2021
Directors’ Declaration
ZICOM GROUP LIMITED
108
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Zicom Group Limited (the Company) and its subsidiaries (collectively the Group),
which comprises the consolidated balance sheet as at 30 June 2021, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its
consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial report of the current year. These matters were addressed in the context of our audit of the financial report as a
whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed
to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on
the accompanying financial report.
Annual Report 2021
109
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Assessment of the carrying value of the intangible assets and non-current assets
Why significant
How our audit addressed the key audit matter
In accordance with the requirements of Australian
Accounting Standards and as described in note
11 of the financial report, the Group performed an
annual impairment assessment of the carrying value
of the non-current assets and the cash generating
units (CGUs) to which they relate to determine
whether their recoverable amount is below the
carrying amount as at balance date. The Group’s
assessment in the current year resulted in the
recording of no impairment charges.
Management’s assessment of the recoverability of
the Group’s non-current assets involves significant
judgments and assumptions about the progress
and future results of the CGUs of the Group.
Due to the significant carrying amount of the
non-current assets, the range of judgments and
assumptions used in the impairment models such
as cash flow forecasts, growth rates, discount rates,
timing of cash flows, market share assumptions and
margins, as well as the sensitivity of the calculations
to changes in the key assumptions, this was
considered a Key Audit Matter.
Our audit procedures included the following:
• We assessed the Group’s determination of CGUs based
on our understanding of the nature of the Group and their
operations and assessed whether this was consistent with
the internal reporting of the business.
• We evaluated the Group’s assessment of indicators of
impairment. In doing so, we considered the business
performance of the CGUs and associated results for the
year, market conditions and expected future results.
• Where indicators of impairment were identified or the CGU
included goodwill, we assessed the Group’s value-in-use
models used to determine the recoverable amount of the
CGU.
• We also assessed the fair values of land and buildings
assets within Property, Plant and Equipment that are
carried at fair value.
• We assessed the cash flow forecasts approved by the
Board and used in the impairment models taking into
account our knowledge of the business and relevant
external information.
• In conjunction with our valuation specialists, we assessed
the discount rate applied to the cash flows of each CGU
to assess whether the rate reflects the risks associated
with the respective cash flow forecasts and were
comparable with externally available industry, economic
and financial data.
• We considered the sensitivity of the Group’s estimated
value-in-use for its CGUs to changes in significant
assumptions including discount rates, terminal growth
rates, and revenue growth assumptions.
• We assessed the adequacy of the related disclosures in
note 11 of the financial report.
ZICOM GROUP LIMITED
110
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Revenue recognition
Why significant
How our audit addressed the key audit matter
The Group’s business involves entering into contractual
relationships with customers to provide a range of goods
and services. A significant portion of the Group’s revenue
is derived from long-term contracts.
Revenue recognition from long term contracts involves
a significant degree of judgement, with estimates being
made to:
• Determine the transaction price under customer
contracts;
• Assess the total contract costs;
• Determine the appropriate measurement method
(input or output); and
• Measure the Group’s progress towards the
satisfaction of the performance obligations under the
customer contract.
On this basis we consider revenue recognition to be a
Key Audit Matter.
The Group’s accounting policies and disclosures
for revenue are detailed in Key Judgements note 3,
accounting policy and note 5 Revenue and Contract
assets.
We examined a sample of key contracts and enquired
with the Group for each of these contracts to understand
the specific terms and risks, which in turn allowed us to
assess the recognition of revenue.
We assessed the operating effectiveness of internal
controls over recording of revenue recognised in financial
report.
The audit procedures we performed on a sample of
contracts also included the following:
• Understood the status of the contracts through
enquiries with the key executives.
• Assessed the contract status through the
examination of external evidence, such as approved
variations and customer correspondence.
• Analysed the Group’s estimates for total contract
costs and forecast costs to complete, including
historical estimation accuracy.
• Re-performed the percentage of completion
attributed to the specific contract after assessing the
underlying inputs to the calculation.
• Assessed the Group’s accounting policies and
adequacy of related disclosures in the financial report.
Annual Report 2021
111
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Singapore and related parties operations – reliance on the work of EY component teams
Why significant
How our audit addressed the key audit matter
As detailed in note 4 Geographical segments, the
Group’s operating activities take place in numerous
countries. These decentralised operations consolidate
with a parent company in Singapore where our
component team performs audit procedures.
In our role as group auditor, we obtain sufficient
appropriate audit evidence regarding the financial
information of the entities or business activities
(“components”) within the Group to express an opinion
on the financial report. We are responsible for the
direction, supervision, and performance of the Group
audit.
Given the financial significance of components to the
Group result, our direction and supervision of our
component audit team in Singapore was considered a
Key Audit Matter.
In fulfilling our responsibilities as group auditor:
• We performed risk assessment and component
scoping at a consolidated Group level and, based
on this scoping, identified the components to be
audited by Ernst & Young Singapore (“EY component
auditor”).
• We sent instructions to the EY component auditor
detailing significant audit areas to be covered,
including the relevant risks and the information to be
reported to the Group audit team. The Group audit
team approved the component materiality, having
regard to the size and risk profile of the component
relative to the Group.
• The EY component team provided written
confirmation to the Group audit team confirming
the work performed and the results of that work as
well as key documents supporting independence,
significant findings and observations.
• We, as the Group audit team, held meetings with the
EY component teams to discuss the outcome and
extent of their procedures.
• We reviewed underlying working papers and
documentation of the EY component auditor for
selected areas of audit focus.
• We ensured the trial balance and related supporting
schedules audited by the EY component team
agreed to the Group consolidation schedule and
where relevant financial statement notes.
• We assessed the accounting policies of the
components for consistency with the Group’s
accounting policies and tested the Group’s
accounting for intercompany transactions.
ZICOM GROUP LIMITED
112
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information included in the
Company’s 2021 annual report other than the financial report and our auditor’s report thereon. We obtained the directors’
report that is to be included in the annual report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the annual report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the directors 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 control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Annual Report 2021
113
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Independent Auditor’s Report
to the members of Zicom Group Limited
Auditor’s responsibilities for the audit of the financial report (cont’d)
•
Obtain an understanding of internal control relevant to the audit 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
Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the
audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
ZICOM GROUP LIMITED
114
For personal use only
Independent Auditor’s Report
to the members of Zicom Group Limited
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 21 of the directors’ report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of Zicom Group Limited for the year ended 30 June 2021, complies with section
300A of the Corporations Act 2001.
Responsibilities
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.
Annual Report 2021
115
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Distribution of Equity Securities
a)
Analysis of numbers of equity security holders by size of holding:
Number of Holders
Number of Ordinary
Shares Held
Percentage of
Shares Held
1
–
1,000
67
9,197
–
1,001
–
5,000
190
705,656
0.33%
5,001
–
10,000
229
2,057,501
0.95%
10,001
–
100,000
364
12,970,278
5.97%
100,001
and over
110
201,398,148
92.75%
960
217,140,780
100.00%
b)
There were 194 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
Number of
Ordinary Shares Held
Percentage of
Issued Shares
SNS HOLDINGS PTE LTD
94,028,360
43.30%
GIOK LAK SIM
13,752,777
6.34%
JUAT KOON SIM
11,812,172
5.44%
BNP PARIBAS NOMS PTY LTD
11,776,528
5.42%
MR MAKRAM HANNA & MRS RITA HANNA
8,824,350
4.06%
JUAT LIM SIM
6,487,767
2.99%
CITICORP NOMINEES PTY LIMITED
4,459,760
2.05%
EE GEK GOH
2,791,017
1.29%
FIRST CHARNOCK SUPERANNUATION PTY LTD
2,691,316
1.24%
SIONG TECK NG
2,423,165
1.12%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2,083,589
0.96%
JUAT KHIANG SIM
2,069,525
0.95%
KAILVA PTY LTD
1,800,000
0.83%
HUNG SEAH TANG
1,621,157
0.75%
ZHANG HONG JUN
1,625,939
0.75%
MR AIDAN HANNA
1,563,000
0.72%
KOK HWEE SIM
1,488,180
0.69%
G M ELASTOMERICS PTY LTD
1,426,073
0.66%
KOK YEW SIM
1,350,253
0.62%
MISS SARAH HANNA
1,129,452
0.52%
Substantial Shareholders
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
Number of Ordinary
Shares Held
Percentage of
Issued Shares
GIOK LAK SIM & HIS ASSOCIATES
107,781,137
49.64%
JUAT KOON SIM & HIS ASSOCIATES
14,603,189
6.73%
Voting Rights
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.
Information on Shareholdings
As at 28 September 2021
ZICOM GROUP LIMITED
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The Annual General Meeting of Zicom Group Limited will be held at 11:30am (Brisbane time) on Tuesday,
30 November 2021.
The meeting will be held virtually and can be accessed at https://meetings.linkgroup.com/ZGL21.
Notice of Annual General Meeting
BOARD OF DIRECTORS
Giok Lak Sim (Executive Chairman)
Kok Yew Sim (Group Chief Executive Officer)
Jenny Lim Bee Chun
Yian Poh Lim
Renny Yeo Ah Kiang
Stewart James Douglas
Dean Tai Chi-Shang
Kok Hwee Sim (Alternate Director to G L Sim)
JOINT COMPANY SECRETARIES
Jenny Lim Bee Chun
Marvin Blok
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 21
10 Eagle Street
Brisbane, QLD 4000
Australia
Facsimile
:
+61 2 9287 0303
AUDITORS
Ernst & Young
111 Eagle Street
Brisbane, QLD 4000
Australia
SOLICITORS
Thomson Geer
Level 28, Waterfront Place
1 Eagle Street
Brisbane, QLD 4000
Australia
BANKERS
Australia
Westpac Banking Corporation
Singapore
United Overseas Bank Limited
Maybank Singapore Limited
Oversea-Chinese Banking Corporation Limited
DBS Bank Ltd
Thailand
United Overseas Bank (Thai) Public Company Limited
The Siam Commercial Bank Public Company Limited
China
Industrial and Commercial Bank of China Limited
China Construction Bank Corporation
Bangladesh
Dhaka Bank Limited
Philippines
BDO Unibank, Inc.
Corporate Directory
For personal use only
38 Goodman Place, Murarrie QLD 4172 Australia
Telephone: +61 7 3908 6088 | Facsimile: +61 7 3390 6898
www.zicomgroup.com
For personal use only