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LanTroVision (S) Ltd
(Co. Reg. No.: 199203374R)8 Ayer Rajah CrescentSingapore 139939Tel: 65 6778 1668Fax: 65 6778 1778
TacklingCHALLENGES
AheadANNUAL REPORT 2013
LAN
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) LTD
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DIRECTORY OF LANTROVISION NETWORK
SINGAPORELANTROVISION (S) LTD LANTRO (S) PTE LTD 8 Ayer Rajah Crescent,Singapore 139939Tel: (65) 6778 1668 Fax: (65) 6778 1778
VRNET (S) PTE LTD 8 Ayer Rajah Crescent,Singapore 139939Tel: (65) 6776 6618 Fax: (65) 6776 6638
INFILAN PTE LTD8 Ayer Rajah Crescent,Singapore 139939Tel: (65) 6777 1638 Fax: (65) 6773 1638
APPSILAN ASIA PTE LTD8 Ayer Rajah CrescentSingapore 139939Tel: (65) 6578 7101Fax: (65) 6773 1638
ALTRO SOLUTIONS PTE LTD7030, Northstar@AMK #07-08, Ang Mo Kio Ave 5 Singapore 569880Tel: (65) 6288 8310/8091Fax: (65) 6288 8300
MALAYSIALANTRO (MALAYSIA) SDN. BHD. 69, Jalan 3/23A Taman Danau Kota,Off Jalan Genting Kelang, 53300 Setapak, Kuala Lumpur, Malaysia Tel: (60-3) 4143 6177 Fax: (60-3) 4143 6443
LANTRO (MALAYSIA) SDN. BHD. Johor Bahru Branch OfficeNo. 42G, Jalan Bestari 8/5,Taman Nusa Bestari, 81300 Skudai, Johor Bahru, MalaysiaTel: (60-7) 511 3177 Fax: (60-7) 511 3816
LANTRO (PENANG) SDN. BHD. 11-A, Lorong Mayang Pasir 5, Taman Sri Tunas, Bayan Baru,11950 Penang, MalaysiaTel: (60-4) 643 5033 / 2033Fax: (60-4) 643 3033
THAILANDLANTRO (THAILAND) CO., LTD.1457 Soi Ladprao 94, Ladprao Road,Kwaeng Phlapphla, Khet Wangthonglang,Bangkok 10310, ThailandTel: (66-2) 934 6143 / 6144 / 6145Fax: (66-2) 934 5300
LANTRO (THAILAND) CO., LTD.Rayong Branch Office267/319 Muangmai Maptaphut,Sukhumvit Road,Tambol Mapthaphut,Amphoe Muang,Rayong 21150, ThailandTel: (66-38) 609 551Fax: (66-38) 609 552
LANTRO (THAILAND) CO., LTD.Phuket Branch Office9/5 Moo 8, Tumbol Pa-Klog,Ampur Talang,Phuket 83110, ThailandTel: (66-76) 379 861Fax: (66-76) 379 862
VIETNAMLANTRO (VIETNAM) CO., LTD.46 Phan Khiem Ich Street, Hung Gia 1 (R4),Tan Phong Ward, District 7, Ho Chi Minh City, VietnamTel: (84-8) 5410 3088 / 3089 / 3090Fax: (84-8) 5410 3087
LANTRO (VIETNAM) CO., LTD. Hanoi Rep. OfficeNo.6, 1G Block,Trung Yen Resident AreaTrung Kinh Str, Cau Giay Dist, Hanoi City, VietnamTel: (84-4) 3791 4889 / 4891 Fax: (84-4) 3791 4890
CAMBODIALANTRO CAMBODIA#258, St.448,Sangkat Phsar Deum Thkov,Khan Chamkamorn,Phnom Penh, CambodiaTel: (855) 2399 3471Fax: (855) 2399 3541
KOREALANTROVISION KOREA CO., LTD.Unit 503, Seokchon City Bldg,66-7 Bangyee-Dong,Songpa-Gu, Seoul, 138-050 KoreaTel: (82-2) 3431 8855 Fax: (82-2) 3431 8885
CHINALANTRO (SHANGHAI) CO. LTD.8F No. 58, Jiang Chang San Road,Industrial New Zone, ZhaBei District, Shanghai 200436, PRC588200436Tel: (86-21) 6142 1866Fax: (86-21) 6117 5220
LANTRO (SHANGHAI) CO. LTDBeijing Branch OfficeRoom 658, 6th Floor, JingXin Mansion, No.2, A, Dong San Huan Bei Road, ChaoYang District, Beijing, 100027, PRC26658 : 100027Tel: (86-10) 8449 3275 / 3276Fax: (86-10) 8449 3219
LANTRO CO. LTD (HANGZHOU)Rm. 519 Block #1 No. 23, HuangGushan Road,Xixi Software Zone, Hangzhou 310012, PRC231519310012Tel: (86-571) 5683 0535 / 0536 Fax: (86-571) 5683 0537
LANTRO (SHANGHAI) CO. LTDGuangzhou Branch OfficeRoom 1108, Middle Tower, Times Square,28 Tian He Bei Road, Guangzhou 510620, PRC281108510620Tel: (86-20) 3882 0658Fax: (86-20) 3891 0489
LANTRO (SHANGHAI) CO. LTD.Chengdu Branch Office Unit 1801, Sha He Tower 2, No.18 South of JingSha Rd, JinJiang District, Chengdu1821801,1802610000Tel: (86-28) 6501 3202Fax: (86-28) 6501 3203
HONG KONGLANTRO (HK) LIMITEDUnits 401-403,4/F, Shui Hing Centre 13 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong13401-403Tel: (852) 2789 3846Fax: (852) 2789 3847
PHILIPPINESLANTRO PHILS. INC.LANTROVISION INC. Unit A, 18th Floor, Belvedere Tower,San Miguel Ave, Ortigas Center,Pasig City, Philippines 1605Tel: (63-2) 638 3881 / 3882 Fax: (63-2) 638 3883
LANTRO PHILS. INC.Cebu BranchUnit 2-I Capitol Centrum Building,N. Escario St., Near Capitol,Cebu City, Philippines 6000Tel: (63-32) 238 2297Fax: (63-32) 238 2297
TAIWANLANTRO (TAIWAN) LTD3F, No 15, Lane 360 Neihu Road Section 1,Neihu, Taipei 114, Taiwan114, 360153Tel: (886-2) 2658 1047 Fax: (886-2) 2627 9582
INDIALANTRO TECHNOLOGIES INDIA PRIVATE LIMITED731, 7th Cross, III Block Koramangala,Behind BDA Complex,Bangalore 560034, IndiaTel: (91-80) 4126 4887
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITEDMumbai Branch OfficePremises No. 3, Ground Floor,Hindustan Kohinoor Premises Co-Op Society Ltd.Lalbahadur Shastri Marg., Vikroli (W)Mumbai 400083, India Tel: (91-22) 4215 4722
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITEDChennai Branch OfficeGround Floor, New No. 18 A, Old No. 08,Rajalakshmi Nagar, 2nd Main, VelacheryChennai 600042, IndiaTel: (91-44) 4202 7390
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITEDNew Delhi Branch OfficeFlat No 702, 7th Floor,Devika Towers, 6th Nehru Place,New Delhi 110019, IndiaTel: (91-11) 4063 4811 up to 18
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITEDHyderabad Branch Office1-8-450/1/A4, First floor,Indian Airlines Colony, BegumpetHyderabad 500033, IndiaTel: (91-40) 4221 6553
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CONTENTS
02 About Us
03 Chairmans Statement
05 Managing Directors Review
08 Board of Directors
10 Key Executives
11 Corporate Information
12 Group Structure
13 Corporate Governance Report
19 Directors Report
23 Statement by Directors
24 Independent Auditors Report
26 Balance Sheets
28 Consolidated Statement of Comprehensive Income
29 Consolidated Statement of Changes in Equity
30 Consolidated Statement of Cash Flows
32 Notes to the Financial Statements
85 Group Properties
86 Statistics of Shareholdings
88 Notice of Annual General Meeting
Proxy Form
TACKLING CHALLENGES AHEAD
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LANTROVISION ANNUAL REPORT 2013
02
CORPORATE INFORMATION
OUR MISSION
LANdmark provider of a Global Quality InfoComm Technology infrastructure
TRO satisfying beyond the needs and growth of our Stakeholders
VISION of pride in our work with continuous training, development and effective communication
OUR VISION
To be the leading global Structured Cabling System Integrator
LANTROVISION WAS ESTABLISHED BY OUR MANAGING DIRECTOR CHAN THYE YUAN AS A SOLE PROPRIETORSHIP IN 1990 TO SUPPLY AND INSTALL COMPUTER CABLING TO MEET CUSTOMERS INFORMATION AND TELECOMMUNICATION REQUIREMENTS. THE COMPANY WAS SUBSEQUENTLY INCORPORATED ON 27 JUNE 1992. ON 2 NOVEMBER 2001, THE COMPANY WAS LISTED ON THE OFFICIAL LIST OF SGX SESDAQ AND WAS SUBSEQUENTLY TRANSFERRED TO SGX MAINBOARD ON 15 JANUARY 2008.
ABOUT US
OUR CORPORATE CAPABILITY
Lantrovision (S) Ltd is the only Public Listed Company in Asia with dual BiCSi accreditation of Prestige Corporate Platinum Contractor and Prestige Corporate Platinum Consultant status
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TACKLING CHALLENGES AHEAD
03
CHAIRMANS STATEMENT
YEAR IN REVIEW FOR THE 12 MONTHS ENDED 30 JUNE 2013, THE GROUP HAS ACHIEVED A REVENUE OF
S$133.5 MILLION.
Amidst a year of volatility in the global economy
and challenges, we are pleased to report a
net profit attributable to equity holders of
S$9.1 million for the year ended 30 June 2013
(FY2013).
c) Partially offset with the increased staff costs of S$0.5 million and
foreign exchange loss of S$0.3 million.
The decrease in other comprehensive income by approximately
S$0.3 million is attributable mainly to currency translation
difference arising from a stronger Singapore dollar against the
regional currencies during the year. Deferred tax assets has
decreased primarily due to utilisation of tax credit to offset
against tax payable during the year. The increase in investment
in associates is due to new invesment in an associated company
in Singapore and partially offset with the share of losses
incurred by our associated companies. Inventories purchased
in preparation for the upcoming projects resulted in an increase
in Groups inventories. Net amount due from customers for
contract work-in-progress was lower due mainly to timing of
project completion. Trade receivables has decreased as a result
of lower turnover in the quarter ended 30 June 2013 as well
as greater effort made by management to improve its debt
collection. The increase in other receivables by approximately
S$0.6 million is mainly due to higher prepayments and interest
receivables as at year end. Non-controlling interest has increased
by approximately S$0.7 million due to higher share of profits
earned by subsidiaries. The reduction in trade payables of S$5.5
million is due to lower purchases in the last quarter in line with
slowing economy as well as timing of normal trade settlement.
OUR SATISFACTORY PERFORMANCE DEMONSTRATES THE STABILITY AND
RESILIENCE OF THE GROUP - A POSITION WE WILL ENDEAVOR TO STRIVE FOR IN MANY
MORE YEARS TO COME.
PROPOSED DIVIDEND
To reward our shareholders for the i r
continued support, the Board of Directors has
recommended for approval at the forthcoming
Annual General Meeting, a first and final
dividend of S$0.02 for each ordinary share held
as at a book closure date to be announced later.
YEAR IN REVIEW
For the 12 months ended 30 June 2013, the
Group has achieved a revenue of S$133.5
million. There is no significant change to the
group revenue for the two financial year ended
2013 and 2012. General and administrative
expenses has decreased by S$0.4 million
mainly as a result of higher legal fees as well
as allowance for impairment loss on non-trade
receivables made in the prior financial year.
The decrease in other operating expenses by
approximately S$0.7 million was mainly due to
the following factors:
a) Provision of bank balances of S$0.8 million
deposited in a Philippine bank that was placed
under sudden receivership in previous year;
b) Decrease in net provision for impairment
of work-in-progress of S$0.6 million in the
current year; and
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LANTROVISION ANNUAL REPORT 2013
04
CHAIRMANS STATEMENT
Higher accrued staff costs
in the current financial year
resulted in higher accruals and
other payables. Amount due
to a related party (non-trade)
relates to the dividends payable
to non-controlling interest. Net
cash generated from operating
activities have reduced by
S$8.3 million during the year
as a result of higher working
capital requirements.
OUTLOOK
T h e e c o n o m i c o u t l o o k
continues to be uncertain. With
a shrinking pool of the labour
workforce, the imposition of
minimum wages in certain
regions, coupled with volatile
raw material costs, the Group
is expected to face pressure on
its profit margins.
our profitability and add value
to our shareholders.
APPRECIATION
On behalf of the Board, I want
to express my sincere gratitude
to the management and staff,
whose hard work made it
possible for us to manage
the effects of the uncertain
global economy and achieve
profitability in FY2013. Lastly,
I want to thank our customers
and business partners as well
as our shareholders for your
continued support.
THE GROUP WILL CONTINUE TO MAINTAIN FINANCIAL PRUDENCE AND TO RAISE PRODUCTIVITY TO MANAGE THE OPERATING COSTS
OF THE GROUP.
By leveraging on our track records and regional
business infrastructure, continually improving
our products and services portfolio that
are complementary to our core IT cabling
infrastructure business, we strive to meet the
needs of our regional customers as well as to
expand our customer bases, so as to improve
LUM CHUE TATChairman
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TACKLING CHALLENGES AHEAD
05
MANAGING DIRECTORS REVIEW
GOING FORWARDWE WILL REMAIN MINDFUL OF THE CONSTANT NEED TO IMPROVE AND ADAPT TO THE CHANGING ECONOMIC ENVIRONMENT TO FULFILL OUR GOALS AND OBJECTIVES AND TO DEVELOP AND MOTIVATE OUR STAFF WITH A CLEAR FOCUS IN EXECUTING OUR STRATEGY TO IMPROVE OUR
TURNOVER AND MARGINS.
YEAR IN REVIEW
We entered FY 2013 on a positive note despite
global economic recovery remaining sluggish
over a combination of factors such as the
impending retraction of the US economy
stimulus program, uncertainty of the Euro-zone
economic recovery and the less than positive
economic data from China.
Despite operating in such challenging conditions
and pressures from ever increasing cost of
operation, we are proud to announce that our
team had done a great job to weather through
these challenges. Our strategy of diversifying
more into local Multi-National Corporations
and Government projects, the sectors which
we were not predominantly involved in, has
delivered positive results.
GIVEN THE GENERAL UNCERTAINTY IN THE GLOBAL ECONOMY, WE WILL CONTINUE WITH OUR STRATEGY
OF DIVERSIFYING OUR CLIENTS AND CUSTOMER BASE AND TO IMPROVE OUR TOP LINE BY OFFERING
MORE VALUE ADDED PRODUCTS AND SERVICES TO OUR EXISTING AND NEW CUSTOMERS, WHILE
CONSTANTLY BEING MINDFUL OF BALANCING OUR RESOURCES TO IMPROVE PRODUCTIVITY
THROUGHOUT THE ORGANIZATION.
Its also a year where labour crunch and rising
labor costs across the region posed a real
challenge to our business. Moving on, given
the strain on human resources, we will be more
selective with projects, and prioritise our service
delivery to achieve maximum values to both our
valued customers and our shareholders.
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LANTROVISION ANNUAL REPORT 2013
06
MANAGING DIRECTORS REVIEW
EXPANDING MARKET SEGMENT
The ever-changing dynamics of the present
economic environment had more than frequent
derailed our expectations and affected the way
business decisions were made. Customers
are more conservative with their business
expansion plans, leading to a reduction in
IT infrastructure projects, both in numbers
and sizes. As a result of such development,
in addition to the traditionally predominant
financial centres, the Group was able to use
its experience and redeploy resources to other
non-financial sectors, namely the manufacturing
sector, high end residential and commercial
developments, mega gaming and recreation
centers, etc.
Data Center Infrastructure Management (DCIM) is the key
trend. There are a multitude of new technologies products
and services currently available which can complement our
Structured Cabling business to meet the expectations and
provide solutions to the data centers owners and operators
in the areas of energy efficiency and savings over space cost.
AS AUTHORIZED PARTNERS, WE BELIEVE THAT OUR WELL ESTABLISHED REPUTATION AND
GEOGRAPHICAL PRESENCE WILL CREATE A WIN-WIN SITUATION FOR BOTH THE GROUP AND THE
VENDORS OF SUCH NEW TECHNOLOGIES.
EXPANDING PRODUCT AND SERVICES
We made substantial progress in strengthening
and expanding our product portfolio. We
experienced more than marginal success in
the sale of products and services that are
complementary to our IT cabling infrastructure
business, namely products and services on IT
infrastructure and power management; products
and software for data center and enterprise
communication rooms; security surveillance
products, active and passive datacenter
equipment and accessories as well as cabling
routing support system.
MANAGING COSTS
With inflationary pressures across the region, authorities
are encouraging industries and companies to improve the
minimum wages of lower income employees, which may pose
a challenge to our margin. This is further compounded with
pricing pressure from competition and clients expectation.
As such, it is more compelling now for us to accelerate our
productivity programs to remain competitive and relevant in the
industry. We will continue to educate and motivate our staff on
the relevance of productivity and operation cost management,
as well as to seek new ways to improve our processes in order
to optimise our resources, focusing on areas such as material
usage, savings and sourcing.
FOCUS AND IMPROVE OUR COMPARATIVE ADVANTAGE
I am also proud to mention that our Lantro Global Alliance
Partnerships with the members from United States of America,
Brazil, Europe, South Africa, Indonesia, Japan and Australia
have taken roots and have enabled us to establish a strong
global presence.
In the short to medium term, this Alliance continues to enhance
our marketing efforts in reaching out to potential clients through
presentations and joint events. One of the key initiative is to
develop processes and business portals to create a unique
proposition that best meet our existing and prospective
customers budgets and expectations.
In the long run, this Alliance will provide us with a competitive edge
over our competitors with access into different markets, and give
us greater opportunity and confidence to meet our global clients
transnational requirements. It is our intention to further enhance
our partnership through more synergistic engagement among the
Alliance members to create and seize new opportunities from our
common global clientele and new prospects.
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TACKLING CHALLENGES AHEAD
07
OUTLOOK
Given the continuing uncertainty in the global
economy, the Group is generally cautious about
the outlook of growth acceleration. Without any
clarity and stability in sight, the global business
environment remains challenging for us. We will
continue with our strategies of expanding and
diversifying our market segment, increase our
product and services portfolio by selling more to
our existing and new customers.
MANAGING DIRECTORS REVIEW
WE WILL LEVERAGE ON OUR GLOBAL PRESENCE TO INCREASE OUR BUSINESS OPPORTUNITIES TO MITIGATE ANY SHORTCOMINGS ARISING
FROM THE UNCERTAINTIES WE MAY FACE IN THE NEW FINANCIAL YEAR.
As the visibility of the economic environment
remains hazy, we are cautiously optimistic about
the market opportunities. We will adopt a prudent
approach in managing such challenges. Similar
to past experiences,we are confident that our
strategies, experience and the resilient nature of
our business will navigate us through the various
challenges we may encounter. We will remain
mindful of the constant need to improve and adapt
to the changing economic environment to fulfill our
goals and objectives and to develop and motivate
our staff with a clear focus in executing our strategy
to improve our turnover and margins.
In the last few years we have made concerted
effort to streamline our operations and
processes, focusing on manpower and resource
management, financial prudence and credit
management. We will continue to drive these
initiatives and enhance our productivity to
mitigate challenges from escalating costs and
falling prices. We will also focus on customer
profiling to identify value customers to maximise
the use of our resources and business returns.
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LANTROVISION ANNUAL REPORT 2013
08
BOARD OF DIRECTORS
LUM CHUE TATChairman
Lum Chue Tat, one of the Groups co-founders, was appointed to the Board in June 1992. Mr Lum is primarily responsible for the Groups overall business development. He holds a Diploma in Electronics and Communication from the Singapore Polytechnic and has over 20 years of experience in structured cabling design and marketing.
CHAN THYE YUAN RCDDManaging Director
Chan Thye Yuan, RCDD, one of the Groups co-founders, is the Managing Director of the Company and is responsible for the strategic initiatives as well as the Groups overall business development. He holds a Bachelor of Business in Business Administration and has been a Registered Communication Distribution Designer since 1999. Mr Chan has over 20 years of experience in structured cabling design and related telecommunications expertise.
ANG EE TIONG, KENNETH RCDDExecutive Director
Ang Ee Tiong, Kenneth, RCDD, an Executive Director of the Company, is responsible for operational and administrative matters as well as overseeing our overseas operations. He was appointed to the Board in November 2003. Mr Ang has been a Registered Communication Distribution Designer since 1999 and has more than 20 years of experience in structured cabling design and related design.
LIM WOON WAHNon-Executive Independent Director
Lim Woon Wah, a Non-Executive Independent Director, was appointed to the Board in December 2005. Ms Lim has extensive experience in the financial, compliance and special audit. She is the Chairman of the Audit and Nominating Committees as well as a member of the Remuneration Committee. Ms Lim is a Chartered Accountant with the New Zealand Institute of Chartered Accountants.
YEO JIEW YEWNon-Executive Director
Yeo Jiew Yew, a Non-Executive Director, was appointed to the Board in August 2008. Mr Yeo has more than 40 years of extensive experience in electrical installation industry. From 1983 to 2006, he was the Managing Director of Magnus Energy Group Ltd (Magnus) (fka. Strike Engineering Limited) and was responsible for the overall management of Magnus. He left Magnus in May 2006. Currently, Mr Yeo is the Managing Director of Victrad Enterprise (Pte) Ltd.
YEO KAN KIANG, ROYNon-Executive Independent Director
Yeo Kan Kiang, Roy, a Non-Executive Independent Director, was appointed to the Board in August 2005. He graduated with a Bachelor of Laws (Honours) degree from the University of Bristol, UK and has been in legal practice for more than 15 years. Mr Yeo is active in community service in Tanjong Pagar GRC and is presently the Chairman of the Henderson Community Club Management Committee. For his active involvement and participation in grassroots/community service in Singapore, Mr Yeo was awarded the Public Service Medal (PBM) by the President of the Republic of Singapore in 2011 National Day Awards.
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TACKLING CHALLENGES AHEAD
09
GLOBAL PRESENCE
With regional offices across
11 countries and25 cities,
we strive to fortify our service level capabilities, to capitalise on opportunities as well as to expand our footprint in the region that we are operating in, thereby strengthening our brand and improving our service standards to achieve higher growth.
together with our alliance partners in 7 countries,
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LANTROVISION ANNUAL REPORT 2013
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KEY EXECUTIVES
CHAN SOW HARAdministrative Manager
Chan Sow Har, our Administrative Manager, has been with the Group since 1992. Her main responsibilities are the management and supervision of administrative staff and she oversees the administrative functions of our Group such as payroll and personnel matters. She has a Certificate of Business Studies from the National Institute of Commerce in 1987.
LIM KHIA HUAT, VINCENTHead of International Group
Lim Khia Huat, Vincent, joined the Group as the Head of International Group in October 2003. He is responsible for overseeing regional strategic operations and developments. He obtained a Master of Business Administration (International Management) from the Royal Melbourne Institute of Technology in 1998.
LIM LEE CHOOGroup Financial Controller and Company Secretary
Lim Lee Choo, our Group Financial Controller, has been with the Group since 2001. She is responsible for our overall financial accounting and corporate finance matters. She obtained a Bachelor of Accountancy degree from Nanyang Technological University in 1993 and is a Chartered Accountant (Singapore) with the Institute of Singapore Chartered Accountants.
POH KHENG ANN RCDD Senior Business Development Manager
Poh Kheng Ann, RCDD, our Senior Business Development Manager, has been with the Group since 1995. Mr Poh, a Registered Communication Distribution Designer, is mainly responsible for identifying and developing strategic customers with long term potential. Mr Poh has extensive experience in the data and network communications industry. He obtained his Diploma from Singapore Polytechnic in 1979.
TAN CHIN LIM Senior Project Manager
Tan Chin Lim is our Senior Project Manager and has been with the Group since 1994. He is responsible for the local and regional installation projects. He is also responsible for project management and supervises a team of project engineers in system implementation. He obtained his GCE O levels in 1977.
TAN KIM HINSenior Project Manager
Tan Kim Hin is our Senior Project Manager and has been with the Group since 1992. He is responsible for site supervision and the deployment of manpower and technical resources such as testing equipment. He is also responsible for sales and project management, and has been involved in several significant projects for our Group. He completed his GCE O levels in 1979.
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BOARD OF DIRECTORSExecutive
Lum Chue Tat (Chairman)Chan Thye Yuan (Managing Director)Ang Ee Tiong, Kenneth
Non-Executive
Lim Woon Wah (Independent)Yeo Jiew Yew (Non-Independent)Yeo Kan Kiang, Roy (Independent)
AUDIT COMMITTEELim Woon Wah (Chairman)Yeo Kan Kiang, RoyYeo Jiew Yew
NOMINATING COMMITTEELim Woon Wah (Chairman)Yeo Kan Kiang, RoyYeo Jiew YewChan Thye Yuan
REMUNERATION COMMITTEEYeo Kan Kiang, Roy (Chairman)Lim Woon WahYeo Jiew YewAng Ee Tiong, Kenneth
COMPANY SECRETARYLim Lee Choo
REGISTERED OFFICE8 Ayer Rajah CrescentSingapore 139939Telephone: (65) 6778 1668Facsimile: (65) 6778 1778
CORPORATE INFORMATION
SHARE REGISTRARBoardroom Corporate & AdvisoryServices Pte. Ltd.50 Raffles Place#32 - 01 Singapore Land TowerSingapore 048623Telephone: (65) 6536 5355Facsimile: (65) 6536 1360
AUDITORSCrowe Horwath First Trust LLP8 Shenton Way#05 - 01 AXA TowerSingapore 068811
AUDIT PARTNER-IN-CHARGEAngeline Tan Lay Hong(Appointed since FY2012)
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LANTROVISION ANNUAL REPORT 2013
12
GROUP STRUCTURE
APPSILAN ASIA PTE LTD60%
MORE THAN 50% HOLDINGS
LESS THAN 50% HOLDINGS
LanTroVision (S) Ltd
LANTRO (PENANG) SDN BHD51%
LANTRO PHILS. INC.51% LANTROVISION INC.25%
LANTRO (MALAYSIA) SDN BHD100%
VRNET (S) PTE LTD100%
100%LANTRO (TAIWAN) SDN BHD100%
LANTROVISION KOREA CO. LTD85%
LANTRO (SHANGHAI) CO. LTD60%
LANTRO CO. LTD (HANGZHOU)70% 18%
LANTRO (HK) LIMITED100%
INFILAN PTE LTD60%
LANTRO (S) PTE LTD100% ALTRO SOLUTIONS PTE LTD50%
100% LANTRO (CAMBODIA) CO. LTD
LANTRO (THAILAND) CO. LTD
49%
LANTRO (VIETNAM) CO. LTD
100%
LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED60%
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Corporate GovernanCe report
Lantrovision (S) Ltd (the Company) is committed to achieving and maintaining high standards of corporate governance practices and processes in managing the business and affairs, so as to maintain performance and improve accountability and transparency of the Company.
BoarD MatterS
The Board of Directors (the Board) comprises three (3) Executive Directors, two (2) Independent Non-Executive Directors and one (1) Non-Executive Director. The Board is of the opinion that its current size is reasonably effective and efficient considering the nature and size of the Groups activities.
The Boards principal role is to protect and enhance long-term shareholders value. It sets the corporate strategies of the Group and determines the strategic goals and directions for the Management. It supervises the overall management of the business and affairs of the Group, and monitors performance of these goals to enhance shareholders value. The Board is responsible for the overall corporate governance of the Group.
Regular meetings are held to deliberate the strategic policies of the Company including significant acquisitions and disposals, review performance of the business and approve public release of periodic financial results.
The Board has formed Board Committees namely the Audit Committee, the Nominating Committee and the Remuneration Committee to assist in carrying out and discharging its duties and responsibilities efficiently and effectively.
Directors attendance at Board and Board Committee Meetings
Board audit Committee nominating Committee
remuneration Committee
no of Meetings no of Meetings no of Meetings no of MeetingsHeld attended Held attended Held attended Held attended
Lum Chue Tat 4 4 Chan Thye Yuan 4 4 1 1 Ang Ee Tiong, Kenneth 4 4 1 1Yeo Jiew Yew 4 3 4 3 1 1 1 1Lim Woon Wah 4 4 4 4 1 1 1 1Yeo Kan Kiang, Roy 4 4 4 4 1 1 1 1
The Companys Articles of Association (the Articles) allows Board meetings to be conducted by way of telephone. Where a decision has to be made before a Board meeting is convene, a Directors Resolution in writing is circulated in accordance with the Articles of the Company and the Directors are provided with all relevant information to allow them to make informed decisions.
With Mr Chan Thye Yuan assuming the designation of Managing Director and Mr Lum Chue Tat as the Chairman of the Board, the Board believes that this separation of roles is in line with the recommendation of the Code of Corporate Governance to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision- making.
The Chairman is responsible for, among others, exercising control over quality, quantity and timeliness of the flow of information between the Management of the Company and the Board, and assisting in ensuring compliance with the Companys guidelines on corporate governance.
In order to assist the Board in carrying out its responsibilities, training is provided when the need arises and any Board Member can seek independent professional advice, if necessary, at the Companys expense, with the Chairmans approval.
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audit Committee (aC)
The chairman of the AC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang,Roy and Non-Executive Director, Mr Yeo Jiew Yew.
The ACs key functions include, pursuant to its terms of reference, the review of (a) the effectiveness of the Companys material internal control (b) scope and results of the external audit and its cost effectiveness (c) independence and objectivity of the external auditors and (d) the provision of non-audit services. The AC has explicit authority to investigate any matters within its terms of reference and possess reasonable resources to discharge its functions properly. The external auditors have unrestricted access to the AC. The AC had undertaken a review of all non-audit services provided by the auditors and was of the opinion that the provision of such services would not affect the independence of the auditors. The AC has recommended the re-appointment of the external auditors at the forthcoming AGM.
The Company has in place a whistle-blowing policy and procedures, which provide employees with well-defined and accessible channels within the Group through which they may, in confidence, raise concerns about possible improprieties. Employees have ready access to the Chairman and members of the Audit Committee to raise improprieties in matters of financial reporting and other operational matters. The Audit Committee shall ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow-up actions.
Upon review by the AC on all interested parties transactions (IPT) during the financial year, the AC has noted all IPT were less than S$100,000 and is satisfied that these were carried out at arms length basis.
In accordance with the requirement of Rule 716 of the SGX-ST Listing Manual, the AC and the Board are satisfied that the appointment of different auditors for certain of its subsidiaries would not compromise the standard and effectiveness of the audit of the Group.
Control environment and internal audit process
The key features of the control environment include the terms of reference for the Boards sub-committees, a clear organisation structure and methods of assigning authority and responsibility, the managements internal control systems, and defined procedures for the approval of major transactions.
The Groups internal control process is anchored by the Groups corporate office which assists the Board to monitor its compliance with key internal controls procedures as well as the plan and performance of its subsidiaries and associated companies which is reported internally on a monthly basis. The Board shall consider expanding its internal audit resources as and when the need arises.
There is also regular communication between executive Directors and operational Management with presentation being made by the Management of each principal operation on a regular basis.
Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted.
nominating Committee (nC)
The chairman of the NC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang, Roy, Non-Executive Director, Mr Yeo Jiew Yew and Managing Director, Mr Chan Thye Yuan.
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Corporate GovernanCe report
The NC has adopted specific written terms of reference. Accordingly, the members of the NC are responsible for, among others, the review and recommendation of appointment and reappointment of Directors. In accordance with the Companys Article of Association, each Director is required to retire at least once every three years by rotation and all newly appointed Directors will have to retire at the Annual General Meeting (AGM) following their appointment. The retiring Directors are eligible to offer themselves for re-election. The NC has recommended the re-appointment of two Directors, namely Mr Yeo Jiew Yew and Mr Yeo Kan Kiang, Roy at the forthcoming AGM. The Board has accepted the NCs recommendation and these 2 Directors will be offering themselves for re-election.
Other duties of the NC include the determination of Directors independence, ability of Directors to handle multiple board representations and effectiveness of the Board including the board size and composition. The NC has deemed the current board size and composition to be appropriate after taking into consideration the nature and scope of the Groups operations.
The review parameters for evaluating each Director include (a) attendance at board committee meetings; (b) intensity of participation at meetings; (c) quality of involvement in Management; (d) special contribution; and (e) availability for consultation and advice, when required.
remuneration Committee (rC)
The Chairman of the RC is Mr Yeo Kan Kiang, Roy. The members are independent Non-Executive Director, Ms Lim Woon Wah, Non-Executive Director, Mr Yeo Jiew Yew and Executive Director, Mr Ang Ee Tiong, Kenneth.
The main functions and responsibilities as set out in its written code of reference include (a) the setting up and implementation of formal and transparent processes by which the remuneration packages of all the executive Directors (in the form of service agreement) and the top Management executives are formulated and approved, (b) the approval of the Directors remuneration and service agreements which will be reviewed every three years and (c) the administration of the Lantrovision Share Option Scheme and Lantrovision Performance Share Plan. The RC will also have access to expert advice in remuneration matters when the need arises.
A breakdown of the level and mix of remuneration paid to each Director in each remuneration bands are as follows:
remuneration band and name of Director
Salaries%
Bonus%
profit Sharing
%
Benefits & allowances
%Fees%
total%
Between S$500,000 and S$749,999Lum Chue Tat 48.50 15.94 30.32 5.24 100Chan Thye Yuan 49.37 15.36 29.22 6.05 100Ang Ee Tiong, Kenneth 48.03 16.09 30.60 5.28 100
Below S$250,000Yeo Jiew Yew 100 100Yeo Kan Kiang, Roy 100 100Lim Woon Wah 100 100
remuneration of top 5 key executives FY2013 FY2012Below $250,000 5 5
Although there are employees occupying managerial positions in the Group who are related to certain executive Directors of the Company, none of their remunerations exceeds S$150,000 for FY2013.
The RC and the Board are of the opinion that the remuneration of the Directors are adequate but not excessive in order to attract, retain and motivate them to run the Company successfully.
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the Lantrovision Share option Scheme
1. The Lantrovision Share Option Scheme (the Scheme) approved by the then shareholders of the Company on 31 August 2001, is administered by the RC.
2. Under the Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the share at the time of the grant of the option. The RC, may at its discretion, fix that subscription price at a discount of up to 20% off market price. The consideration for the grant of an option is S$1.00. Options granted with the subscription at the market price shall only be exercised after first anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of the grant of that option. Options granted with the subscription price set at a discount to the market price shall only be exercisable after the second anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Option will lapse when the option holder ceased to be a full-time employee of the Company or any Company within the Group, subject to certain exceptions at the discretion of the Company.
3. Details of the number of shares under option to subscribe for ordinary shares of the Company are as follows:
Grant DateBalance as at
01.07.12 adjustment*expired during
the yearBalance as at
30.06.13
adjustedexercise
priceexpiryDate
10 Jan 2003 7,015,000 (6,325,000) 690,000 $0.5346 9 Jan 201319 Jan 2004 4,751,000 (4,261,000) 490,000 490,000 $0.5196 18 Jan 2014
* Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year.
4. Details of the options to subscribe for ordinary shares of the Company granted to Directors of the Company under the Scheme are as follows:
name of participants
aggregate options granted since
commencement of scheme to end of
financial year under review (adjusted for any rights and those lapsed during the financial year)
aggregate options exercised since
commencement of scheme to end of
financial year under review
aggregate options outstanding as at end of financial year under
reviewLum Chue Tat 110,000 Nil 110,000Chan Thye Yuan 110,000 Nil 110,000Ang Ee Tiong, Kenneth 110,000 Nil 110,000Yeo Jiew Yew NA Yeo Kan Kiang, Roy NA Lim Woon Wah NA
5. No options were granted to any controlling shareholders and their associates since the commencement of the Scheme.
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Corporate GovernanCe report
6. No participant other than the Executive Directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total options available under the Scheme.
7. Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee falls, which is financial year 2003. Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not.
the Lantrovision performance Share plan
1. The Lantrovision Performance Share Plan was approved by then shareholders of the Company at an Extraordinary General Meeting held on 31 October 2007. The Performance Share Plan is also administered by the RC.
2. The purpose of adopting the Performance Share Plan (the Plan) in addition to the existing Lantrovision Share Option Scheme is to serve as a motivational tool to recruit, attract and retain Employees and Directors, motivate them to perform and contribute to the Group, instil loyalty and a stronger identification by them with the long-term prosperity of the Group and foster an ownership culture within the Group by aligning their interest with that of the Shareholders.
Since the commencement of the Plan, no awards have been granted.
Some information on the Plan:-
1. Awards over the Companys ordinary shares may be granted to all executive Directors, non-executive Directors and executives of the Group, except those who are controlling shareholders, as may be determined by the RC from time to time.
2. Under the Plan, awards represent the right of a participant to receive fully paid ordinary shares in the Company free of charge upon the participant achieving prescribed performance targets.
The selection of a participant and the number of shares which are the subject of each award to be granted to a participant in accordance to the Plan shall be determined at the absolute discretion of the RC, which shall take into consideration criteria such as his rank, job performance and potential for future development, his contribution to the success and development of the Group and the extent of effort and resourcefulness required to achieve the performance target(s) within the performance period.
3. The total number of new shares of the Company which may be issued pursuant to awards under the Plan, when added to the total number of new shares issued and issuable in respect of all awards granted under the Plan, and all options granted under the Lantrovision Share Option Scheme, shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company on the day preceding the relevant date of Award.
4. Subject to prevailing legislation and SGX-ST guidelines, the Company will have the flexibility to deliver ordinary shares of the Company to participants under the Plan upon vesting of their awards by way of an issue of new ordinary shares; and/or deliver existing shares, whether acquired pursuant to a share purchase mandate or held as treasury shares; and/or pay the equivalent cash value, in lieu of the issue or delivery of all or some of the shares.
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Corporate GovernanCe report
Communication with Shareholders
The Board is mindful of its obligation to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the SGX-ST.
Results and other material information are released via SGXNET on a timely basis for dissemination to shareholders and the public. All shareholders will receive a copy of the annual report and the notice of AGM (the AGM Notice). The AGM Notice is also advertised in the newspapers and released via SGXNET.
The Board welcomes the view of the shareholders on matters affecting the Company at shareholders meetings. At AGMs, shareholders are given the opportunity to air their view and to ask the Directors and Management questions regarding the Group.
Material Contracts
There were no material contracts entered into by the Company and its subsidiaries involving the interest of the Directors that subsisted at the end of the financial year or have been entered into since the end of the previous financial year.
Use of proceeds arising from rights Issue
On 16 October 2012, the Company completed a renounceable and non-underwritten rights Issue of 248,992,464 new ordinary shares in the issued share capital of the Company (the Rights Shares) at an issue price of S$0.09 for each Rights Share.
The gross proceeds from the Rights Issue were S$22,409,322 were utiised by the Group as follows:
Utilisation of rights Issue proceeds S$000General working capital (Payment to trade vendors for trade supplies and services) 22,137 Payment for expenses incurred in connection with the Rights Issue 272 Rights Issue proceeds fully utilised 22,409
Dealings in Companys securities
The Company has adopted the SGX-ST Best Practice Guide to provide guidance to its Directors and officers on their dealings in its securities.
Directors and officers are prohibited from dealing in the Companys securities two weeks before the announcement of the Company quarters results, and one month before the announcement of the Companys full year results. Directors and officers are also not allowed to deal in the Companys securities on short-term considerations.
risk Management policies and processes
The management of all forms of business risk continues to be an important part of ensuring that the Group creates and protects values for its shareholders. The main risk faced by the Group is credit risk which is primarily attributable to its trade receivables. Accordingly, stringent credit control policies and processes have been set up and closely monitored to ensure adequate prevention, early detection and resolution of potential bad debts.
For further details on the risks faced by the Group, please refer to page 75 of the Annual Report.
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DIreCtorS reportFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
The directors are pleased to present their report to the members together with the audited financial statements of Lantrovision (S) Ltd (the Company) and subsidiaries (collectively, the Group) for the financial year ended 30 June 2013 and the balance sheet of the Company as at 30 June 2013.
Directors
The directors of the Company in office at the date of this report are as follows:
Lum Chue TatChan Thye YuanAng Ee Tiong, KennethLim Woon WahYeo Kan Kiang, RoyYeo Jiew Yew
arrangements to enable directors to acquire benefits by means of the acquisition of shares and debentures
Except for the Lantrovision Share Option Scheme as described in the Share options section, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
Directors interests in shares or debentures
According to the register of directors shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the Act), none of the directors of the Company holding office at the end of the financial year had any interests in the shares, share options, warrants or debentures of the Company or its related corporations except as follows:
Direct Interests Deemed Interests
name of Directorsat 1 July
2012at 30 June
2013at 21 July
2013at 1 July
2012at 30 June
2013at 21 July
2013
Ordinary shares in the Company
Chan Thye Yuan 176,703,750 22,971,481 27,651,481 Ang Ee Tiong, Kenneth 239,793,750 31,173,181 31,173,181 Lum Chue Tat 192,453,750 25,018,981 25,018,981 Yeo Jiew Yew 103,897,000 15,987,000 15,987,000
Options to subscribe for ordinary shares in the Company
Chan Thye Yuan 2,666,000 110,000 110,000 865,000 40,000 40,000Ang Ee Tiong, Kenneth 1,841,000 110,000 110,000 Lum Chue Tat 2,666,000 110,000 110,000
Directors contractual benefits
Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors of those related corporations.
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DIreCtorS reportFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
Share options
The Lantrovision Share Option Scheme (the Scheme) approved by shareholders on 31 August 2001 is administered by the Remuneration Committee comprising the following members:
Yeo Kan Kiang, Roy, ChairmanLim Woon WahYeo Jiew YewAng Ee Tiong, Kenneth
All options issued under the Scheme to eligible employees, including executive directors, have a term no longer than 10 years and options issued to non-executive directors have a term no longer than 5 years. The exercise period of the options commences on the first anniversary of the date of the grant.
Details of the options to subscribe for ordinary shares of the Company granted to eligible employees, including directors of the Group pursuant to the Scheme are as follows:
Number of shares under optionDate ofGrant
Exercise period
Balance at 1 July 2012 Adjustment*
Expired during the year
Balance at 30 June 2013
AdjustedExercise price
10 January 200310 January 2004 to
9 January 2013 7,015,000 (6,325,000) 690,000 $0.5346
19 January 200419 January 2005 to
18 January 2014 4,751,000 (4,261,000) 490,000 490,000 $0.519611,766,000 (10,586,000) 490,000 490,000
* Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year.
Number of shares under option
Aggregate options granted during financial
year ended30 June 2013
Aggregate options
granted since commencement of the Scheme to
30 June 2013
Aggregate options
exercised since commencement of the Scheme to
30 June 2013
Aggregate options
cancelled due to adjustment/ expired since
commencement of the Scheme to
30 June 2013
Aggregate options
outstanding as at 30 June 2013
Directors of the CompanyChan Thye Yuan 2,666,000 (2,556,000) 110,000Ang Ee Tiong, Kenneth 1,841,000 (1,731,000) 110,000Lum Chue Tat 2,666,000 (2,556,000) 110,000
The aggregate number of options granted to directors and employees since the commencement of the Scheme is 42,072,000 (before adjustment of the Share Consolidation and Rights Issue).
Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee fall s, which is financial year 2003. Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not.
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DIreCtorS reportFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
Since the commencement of scheme to the end of the financial year,
(a) No options have been granted to controlling shareholders of the Company or their associates (as defined in the Listing Manual of Singapore Exchange Securities Trading Limited); and
(b) No participant other than executive directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total number of shares under options available under the Scheme.
Except as disclosed above, there were:
- no options granted by the Company or subsidiaries to any person to take up unissued shares in the Company or subsidiaries;
- no shares issued by virtue of any exercise of option to take up unissued shares of the Company or subsidiaries; and- no unissued shares of the Company or subsidiaries under option.
audit committee
The members of the Audit Committee at the end of the financial year are as follows:
Lim Woon Wah (Chairman)Yeo Kan Kiang, RoyYeo Jiew Yew
The Audit Committee (AC) carried out its functions in accordance with section 201B(5) of the Act, the Listing Manual of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance. In performing those functions, the Audit Committee reviewed:
- the audit plan of the Companys independent auditors and any recommendations on internal accounting controls arising from the statutory audit;
- the assistance given by the Companys management to the independent auditors;- the periodic results announcements prior to their submission to the Board for approval;- the balance sheet of the Company and the consolidated financial statements of the Group for the financial year
ended 30 June 2013 prior to their submission to the Board of Directors, as well as the independent auditors report on the balance sheet of the Company and the consolidated financial statements of the Group; and
- interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited).
The Audit Committee has recommended to the Board of Directors that the independent auditors, Crowe Horwath First Trust LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. The Audit Committee has conducted an annual review of non-audit services provided by the independent auditors to satisfy itself that the nature and extent of such services will not affect the independence and objectivity of the external auditors before confirming their re-nomination.
In appointing the external auditors for the Company, subsidiaries and significant associated companies, we have complied with Rules 712, 715 and 716 of the Listing Manual of the Singapore Exchange Securities Trading Limited.
Further details regarding the AC are disclosed in the Report on Corporate Governance set out in the Annual Report of the Company.
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DIreCtorS report
Internal control
Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted.
Independent auditors
The independent auditors, Crowe Horwath First Trust LLP, have expressed their willingness to accept re-appointment as auditors of the Company.
on behalf of the Board of Directors
CHan tHYe YUan LUM CHUe tatDirector Director
25 September 2013
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
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StateMent BY DIreCtorS
In the opinion of the directors,
(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 26 to 84 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2013 and of the results, changes in equity and cash flows of the Group for the financial year then ended; and
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
on behalf of the Board of Directors
CHan tHYe YUan LUM CHUe tatDirector Director
25 September 2013
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InDepenDent aUDItorS report TO THE MEMBERS OF LANTROVISION (S) LTD
Crowe Horwath First Trust LLPChartered Accountants of SingaporeMember Crowe Horwath International
8 Shenton Way#05-01 AXA TowerSingapore 068811+65 6221 0338+65 6221 1080 Faxwww.crowehorwath.com.sg
report on the Financial Statements
We have audited the accompanying financial statements of Lantrovision (S) Ltd (the Company) and subsidiaries (the Group) set out on pages 26 to 84, which comprise the consolidated balance sheet and the balance sheet of the Company as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entitys preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Crowe Horwath First Trust LLP (UEN: T08LL1312H) is an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A).
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InDepenDent aUDItorS report TO THE MEMBERS OF LANTROVISION (S) LTD
Opinion
In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2013, and the results, changes in equity and cash flows of the Group for the financial year ended on that date.
report on other Legal and regulatory requirements
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Crowe Horwath First trust LLpPublic Accountants andChartered AccountantsSingapore
25 September 2013
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BaLanCe SHeetSAS AT 30 JUNE 2013(Amounts in thousands of Singapore dollar)
note Group Company2013 2012 2013 2012$000 $000 $000 $000
aSSetSnon-current assetsProperty, plant and equipment 3 6,052 6,495 3,832 4,391Subsidiaries 4 3,877 3,677Associates 5 643 577 784 784Available for sale financial assets 6 90 90 1 1Other receivables 7 Deferred tax assets 8 127 249
Current assetsInventories 9 7,025 6,493 Amount due from customers for contract
work-in-progress 10 12,939 14,041 141Trade receivables 11 26,894 29,524 191 1,540Other receivables, deposits and prepayments 7 2,252 1,623 340 164Due from subsidiaries (non-trade) 12 13,465 12,868Due from associates (non-trade) 12 228 121 4 1Fixed deposits 13 55,498 31,264 40,000 17,042Cash and bank balances 13 20,611 35,590 7,475 23,397
125,447 118,656 61,475 55,153
totaL aSSetS 132,359 126,067 69,969 64,006
eQUItYCapital and reserves attributable to equity holders
of the CompanyShare capital 14 59,307 37,170 59,307 37,170Translation deficit (2,494) (2,404) Statutory reserves 15 747 648 Fair value reserve 16 (3) (3) (3) (3)Retained earnings 17 45,397 57,142 7,738 23,955
102,954 92,553 67,042 61,122non-controlling interests 5,170 4,475
totaL eQUItY 108,124 97,028 67,042 61,122
The accompanying notes are an integral part of the financial statements.
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BaLanCe SHeetSAS AT 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
note Group Company2013 2012 2013 2012$000 $000 $000 $000
LIaBILItIeSnon-current liabilitiesOther payables and accruals 18 219 199 Finance lease liabilities 19 154 226 61 80Deferred tax liabilities 8 181 150 42 42
Current liabilitiesAmount due to customers for contract
work-in-progress 10 1,022 1,040 36 Trade payables 20 13,556 19,024 892 941Other payables and accruals 18 7,061 6,685 1,847 1,765Due to a related party (non-trade) 21 286 Due to directors (non-trade) 22 31 31 31 31Finance lease liabilities 19 100 114 18 25Income tax payable 1,625 1,570
23,681 28,464 2,824 2,762
totaL LIaBILItIeS 24,235 29,039 2,927 2,884
totaL eQUItY anD LIaBILItIeS 132,359 126,067 69,969 64,006
The accompanying notes are an integral part of the financial statements.
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ConSoLIDateD StateMent oF CoMpreHenSIve InCoMeFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013(Amounts in thousands of Singapore dollar)
note 2013 2012$000 $000
revenue 23 133,542 132,351Cost of sales (93,275) (91,835)
Gross profit 40,267 40,516
Other income 24 10 63Distribution and selling expenses (2,961) (2,991)General and administrative expenses (3,618) (3,986)Other operating expenses, net 25 (21,568) (22,251)
Profit from operations 26 12,130 11,351
Finance income 28 361 365Finance expense 29 (84) (68)Share of losses of associates (76) (48)
profit before income tax 12,331 11,600
Income tax expense 30 (2,107) (2,137)
profit for the year 10,224 9,463
other comprehensive (loss) / incomeItem that may be reclassified subsequently to profit or loss:Currency translation difference arising from consolidation (116) 161
total comprehensive income for the year 10,108 9,624
profit attributable to:Equity holders of the Company 9,103 8,643Non-controlling interests 1,121 820
10,224 9,463
total comprehensive income attributable to:Equity holders of the Company 9,013 8,779Non-controlling interests 1,095 845
10,108 9,624
earnings per share (in cents)Basic and diluted 31 3.72 4.65
The accompanying notes are an integral part of the financial statements.
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ConSoLIDateD StateMent oF CHanGeS In eQUItY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
attributable to equity holders of the Company
Sharecapital
translation deficit
Statutoryreserves
Fair value reserve
retained earnings total
non -controlling interests
totalequity
$000 $000 $000 $000 $000 $000 $000 $000
Balance at 1.7.2012 37,170 (2,404) 648 (3) 57,142 92,553 4,475 97,028
Profit for the year 9,103 9,103 1,121 10,224other comprehensive
income, net of taxCurrency translation
differences arising from consolidation (90) (90) (26) (116)
total comprehensive income for the year (90) 9,103 9,013 1,095 10,108
Contributions by and distributions to owners
Issuance of shares (Note 14) 22,137 22,137 22,137
Dividends paid (Note 32) (20,749) (20,749) (460) (21,209)
Transfer to statutory reserves 99 (99)
total contributions by and distributions to owners 22,137 99 (20,848) 1,388 (460) 928
Changes in ownership interests in subsidiaries
Cash contributed by non-controlling interest for investment in a subsidiary 60 60
Balance at 30.6.2013 59,307 (2,494) 747 (3) 45,397 102,954 5,170 108,124
Balance at 1.7.2011 37,170 (2,540) 609 (3) 48,538 83,774 3,673 87,447
Profit for the year 8,643 8,643 820 9,463other comprehensive
income, net of taxCurrency translation
differences arising from consolidation 136 136 25 161
total comprehensive income for the year 136 8,643 8,779 845 9,624
Contributions by and distributions to owners
Dividends paid (43) (43)Transfer to statutory reserves 39 (39)
total contributions by and distributions to owners 39 (39) (43) (43)
Balance at 30.6.2012 37,170 (2,404) 648 (3) 57,142 92,553 4,475 97,028
The accompanying notes are an integral part of the financial statements.
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ConSoLIDateD StateMent oF CaSH FLoWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013(Amounts in thousands of Singapore dollar)
note 2013 2012$000 $000
Cash flows from operating activitiesProfit before income tax 12,331 11,600Adjustments for:
Allowance for impairment loss on trade receivables 907 1,222Allowance for impairment loss on trade receivables written back (304) (794)Allowance for impairment loss on non-trade receivables 93 300Bad trade debts written off 109 20Bad non-trade debts (written back) / written off (1) 34Depreciation of property, plant and equipment 1,207 1,240Exchange differences (69) 23Gain on disposal of property, plant and equipment (1) (19)Gain on disposal of an associate (34)Interest expense 30 18Interest income (361) (365)Inventories written off 77 Loss on liquidation of a subsidiary 156Provision for inventories obsolescence 450 152
(Write back) / Provision for foreseeable losses in contract work-in-progress (402) 230Share of losses of associates 76 48
Operating profit before working capital changes 14,142 13,831Inventories (1,060) 194Amount due from customers for contract work-in-progress, net 1,486 9,274Trade receivables 1,919 (1,686)Other receivables, deposits and prepayments (609) (175)Trade payables (5,468) (1,969)Other payables and accruals 404 (336)
Cash generated from operations 10,814 19,133Interest paid (30) (18)Income tax paid (1,915) (1,914)
Net cash generated from operating activities 8,869 17,201
The accompanying notes are an integral part of the financial statements.
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ConSoLIDateD StateMent oF CaSH FLoWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
note 2013 2012$000 $000
Cash flows from investing activitiesPurchase of property, plant and equipment A (746) (661)Proceeds from disposal of property, plant and equipment 6 35Net cash inflow on disposal of an associate 20Net cash outflow on liquidation of a subsidiary (156)Interest received 361 365Investment in associates (130)
Net cash used in investing activities (509) (397)
Cash flows from financing activitiesCash contributed by non-controlling interests for investment in a subsidiary 60 Proceeds from Rights Issue 22,137 Repayment of finance lease liabilities (117) (100)Dividends paid (20,749) Dividend paid to non-controlling interests (165) (357)Pledge of fixed deposits (49) (157)Related parties non-trade balances, net (202) 7
Net cash generated from / (used in) financing activities 915 (607)
net increase in cash and cash equivalents 9,275 16,197
Cash and cash equivalents at beginning of financial year 66,694 50,329Effects of exchange rate changes in cash and cash equivalents (69) 168
Cash and cash equivalents at end of financial year 13 75,900 66,694
notes to Consolidated Statement of Cash Flows
A. During the year, the Group made the following cash payments to purchase property, plant and equipment:
2013 2012$000 $000
Purchase of property, plant and equipment 778 827Financed by lease arrangements (32) (166)
Cash payments on purchase of property, plant and equipment 746 661
The accompanying notes are an integral part of the financial statements.
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LANTROVISION ANNUAL REPORT 2013
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013(Amounts in thousands of Singapore dollar)
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. GeneraL InForMatIon
Lantrovision (S) Ltd (the Company) is a limited liability company domiciled and incorporated in Singapore and listed on the Singapore Exchange Securities Trading Limited (SGX-ST).
The registered office and principal place of business of the Company is 8 Ayer Rajah Crescent, Singapore 139939.
The principal activities of the Company are those of investment holding and supplying, designing, installation and provision of consultancy services on network integration and structure cabling and those of electrical contractors and suppliers of electrical hardware and fittings. The principal activities of its subsidiaries are disclosed in Note 4 to the financial statements.
The financial statements for the financial year ended 30 June 2013 were authorised for issue in accordance with a resolution of the Board of Directors on 25 September 2013.
2. SIGnIFICant aCCoUntInG poLICIeS
Basis of preparation
The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below and are drawn up in accordance with the Singapore Financial Reporting Standards (FRS). The financial statements are presented in Singapore dollar ($) and all values are rounded to the nearest thousand ($000) as indicated.
The preparation of financial statements in conformity with FRS requires management to exercise its judgment in the process of applying the Groups accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on managements best knowledge of current events and actions, actual results may ultimately differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements and areas involving a higher degree of judgement or complexity are disclosed in this Note.
adoption of new and revised standards
On 1 July 2012, the Group adopted the new or amended FRS and Interpretations of FRS (INT FRS) that are mandatory for application from that date. Changes to the Groups accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Groups accounting policies and had no material effect on the amounts reported for the current or prior financial years.
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
2. SIGnIFICant aCCoUntInG poLICIeS (Continued)
Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
DescriptionEffective for annual periods
beginning on or after
Revised FRS 19 Employee Benefits 1 January 2013FRS 113 Fair Value Measurement 1 January 2013Amendments to FRS 107 Disclosures Offsetting Financial Assets and
Financial Liabilities 1 January 2013Improvements to FRSs 2012- Amendment to FRS 1 Presentation of Financial Statements 1 January 2013- Amendment to FRS 16 Property, Plant and Equipment 1 January 2013- Amendment to FRS 32 Financial Instruments: Presentation 1 January 2013Revised FRS 27 Separate Financial Statements 1 January 2014Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014FRS 110 Consolidated Financial Statements 1 January 2014FRS 111 Joint Arrangements 1 January 2014FRS 112 Disclosure of Interests in Other Entities 1 January 2014Amendments to FRS 110, 111 and 112: Transition Guidance 1 January 2014Amendments to FRS 110, 112 and FRS 27: Investment Entities 1 January 2014Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014Amendments to FRS 36 Recoverable Amount Disclosures for
Non-Financial Assets 1 January 2014
Except for Improvements to FRSs 2012 Amendment to FRS 1 and FRS 16, FRS 110, FRS 112 and Amendments to FRS 110, 111 and 112 and FRS 27, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of Improvements to FRSs 2012 Amendment to FRS 1 and FRS 16, FRS 110, FRS 112 and Amendments to FRS 110, 111, 112 and FRS 27 are described below.
Improvements to FRSs 2012 - Amendment to FRS 1 - Presentation of Financial Statements
The Amendment clarifies that an entity must include comparative in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. However, unlike the voluntary comparative information, the related notes are not required to accompany the third balance sheet.
Improvements to FRSs 2012 - Amendment to FRS 16 - Property, Plant and Equipment
The Amendment provides clarification that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory.
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013(Amounts in thousands of Singapore dollar)
2. SIGnIFICant aCCoUntInG poLICIeS (Continued)
FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate Financial Statements
FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated with the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
The Group is currently determining the impact of the changes to the control.
FRS 112 Disclosure of Interests in Other Entities
FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. The Group is currently determining the impact of the disclosure requirements including the related amendments (see below). As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014/ financial year 2015.
Amendments to FRS 110, 111 and 112: Transition Guidance
The Amendments provides clarification of retrospective applications and provides additional transition relief for initial application of FRS 110, 111 and 112.
Amendments to FRS 110, 112 and FRS 27: Investment Entities
The Amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. It also introduces new disclosure requirements for investment entities in FRS 112 and FRS 27. The Group is currently determining the impact of the Amendments and expects that it is likely that there are subsidiaries to be classified as Investment entities and be exempted from consolidation upon adoption of the Amendments in 2014 / financial year 2015.
Group accounting
(i) Subsidiaries
(a) Basis of consolidation
From 1 July 2010
Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
2. SIGnIFICant aCCoUntInG poLICIeS (Continued)
Group accounting (Continued)
(i) Subsidiaries (Continued)
(a) Basis of consolidation (Continued)
In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance.
Prior to 1 July 2010
Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:
- Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 July 2010 were not reallocated between non-controlling interest and the equity holders of the Company.
(b) Acquisition of businesses
From 1 July 2010
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement. Acquisition-related costs, other than those associated with the issue of debt or equity securities, are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured until it is finally settled within equity.
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013(Amounts in thousands of Singapore dollar)
2. SIGnIFICant aCCoUntInG poLICIeS (Continued)
Group accounting (Continued)
(i) Subsidiaries (Continued)
(b) Acquisition of businesses (Continued)
In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquirees net assets in the event of liquidation, the Group elects on an acquisition-by-acquisition basis whether to recognise them either at fair value or at the non-controlling interests proportionate share of the acquirees net identifiable assets, at the date of acquisition.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Prior to 1 July 2010
In comparison to the above-mentioned requirements, the following differences applied:
- Transactions costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interests were measured at the proportionate share of the acquirees identifiable net assets.
- Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.
- Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.
(c) Disposals of subsidiaries or businesses
From 1 July 2010
The assets and liabilities of the subsidiary, including any goodwill, are derecognised when a change in the Companys ownership interest in a subsidiary results in a loss of control over the subsidiary. Amounts recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard.
Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained investment at the date when control is lost and its fair value is recognised in profit or loss. Subsequently, the retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
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noteS to tHe FInanCIaL StateMentSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013
(Amounts in thousands of Singapore dollar)
2. SIGnIFICant aCCoUntInG poLICIeS (Continued)
Group accounting (Continued)
(ii) transactions with non-controlling interests
Changes in the Companys ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Group. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised in a separate reserve within equity attributable to the equity holders of the Company.
(iii) associates
Associates are entities over which the Group exercises significant influence, but not control, over the financial and operating policy decision, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any.
Investments in associates are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associates represents the excess of the cost of acquisition of the associate over the Groups share of the fair value of the identifiable net assets of the associate and is included in the carrying amount of the investments.
In applying the equity method of accounting, the Groups share of its associates post-acquisition profits or losses are recognised in profit or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions received from the associates are adjusted against the carrying amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associates, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associates.
Unrealised gains on transactions between the Group and its associates are el