Fischer Tech 2012

ANNUAL REPORT 2013
F RMULA
CONTENTS
01 02 04 06 08 10 12 14 16
Corporate Profile Our Expertise Letter to Shareholders Corporate Information Review of Operations Financial Highlights Board of Directors Key Management Corporate Structure
17 18 28 33 34 35 36 37 38
Financial Contents Corporate Governance Report Directors Report Statement by Directors Independent Auditors Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Balance Sheets Statements of Changes in Equity
41 42
Consolidated Cash Flow Statement Notes to the Financial Statements
102 Statistics of Shareholdings 103 Substantial Shareholders 104 Notice of Annual General Meeting and Notice of Books of Closure Date Proxy Form
CORPORATE PROFILE
FISCHER TECH LTD IS A SPECIALIST MANUFACTURER OF HIGH VOLUME PRECISION ENGINEERING PLASTIC COMPONENTS FOR NEW ELECTRONIC PRODUCT INNOVATIONS. IN ADDITION, FISCHER TECH IS ALSO INVOLVED IN THE DESIGN AND MANUFACTURE OF PLASTIC INJECTION MOULDS AND SUBASSEMBLY OF PLASTIC COMPONENTS.
The Companys forte is in 2-shot injection moulding, thin-wall injection moulding, Nd-YAG (Neo dynium-yitrium aluminium garnet) laser marking and decorative finishing technologies. In particular, it has added in-mould labelling (IML) and cosmetic moulding to its range of finishing technologies. These processes allow Fischer Tech to manufacture engineering plastic components of precise dimensions that are used in the production of high-end electronic products such as automobiles, computer peripherals, consumer electronics as well as healthcare products. Among the Companys diverse range of customers are TRW, BHTC and Panasonic in the automotive industry, Canon, Hewlett Packard and Fujitsu in the computer peripherals industry, Grundfos and Sony in the consumer electronics industry and Baxter and Morita in the healthcare industry. A progressive company, Fischer Tech is always on the look out for new product markets, geographical areas and strategic partners. With R & D divisions in Singapore and China, manufacturing facilities in Singapore, China, Malaysia, Thailand and sales offices in the USA, Japan and Taiwan, it actively searches for avenues to expand its presence. Fischer Tech is listed on the Main Board of the Singapore Exchange since July 2001.
FISCHER TECH LTD ANNUAL REPORT 2013
OUR EXPERTISE
2-shot injection moulding

This process enables the combination of two different plastic materials or two different coloured plastics into one composite component through a single manufacturing process. It also allows for a soft plastic layer to be moulded over a tougher plastic to produce soft tactile effects for products such as handheld scanners and other appliances. With dedicated 2-shot injection moulding machines, Fischer Tech is a major producer of 2-colour and 2-material plastic components in Asia.
Thin-wall injection moulding

This injection moulding process is used to manufacture plastic components with sections which can be as thin as 0.2 mm in thickness. It enables the production of light yet durable components for use in compact devices.
Laser Marking
The Nd-YAG laser marking process adopts the use of lasers to inscribe high definition alphanumeric characters or symbols onto components such as back-lit buttons and display panels.
Decorative Finishing
A secondary process or combination of processes utilising automated spray painting technology, ultra-violet (UV) coating, IML technology and cosmetic moulding technology. Spray painting on plastic components allows the adding of a decorative effect or high-wear resistance UV coating on the surface of plastic components such as handheld devices and automotive components. IML is a process utilising second surface printing on foil, forming and trimming technology and injection moulding, in which the printed foil is moulded onto the plastic component to add a scratchproof glossy surface with choice of graphics and designs. The main advantages of IML part are its durability, environmentalfriendliness and unique design features. Cosmetic moulding technology uses elevated mould temperatures during the polymer injection cycle followed by rapid cooling. This process results in super high gloss, moulded products without weld lines and without visible flow lines. This high gloss surfaces are obtained even with glass fibre and mineral-filled polymers. The ability to produce a very high gloss surface allows this technology to reduce total system costs by eliminating painting or substituting for other more expensive decorative processes.
quality reliability consistency = fischer-tech

Over the years, our aspiration has always been to build a name that customers can easily equate to their ideal solutions provider.
LETTER TO SHAREHOLDERS
Dear Shareholders On behalf of the Board of Directors, we are pleased to present an excellent set of results by Fischer Tech Group for the financial year ended 31 March 2013 (FY2013). Financial Performance Turnaround The Group achieved a remarkable turnaround in profitability in FY2013, registering net profit attributable to owners of the Company of S$10.3 million compared to a loss of S$4.2 million in the previous financial year. Likewise, gross profit increased by 84.6 per cent to S$26.6 million from S$14.4 million in FY2012. The rigorous rebound in our profitability was underpinned by, among other factors, robust sales revenue growth. For the year under review, the Group recorded total revenue amounting to S$132.5 million, an increase of S$8.8 million (7.2%) from S$123.7 million in FY2012. The higher revenue was attributed to higher sales volume in the automotive and computer peripherals industries. Benefiting From Right-Sizing In last years annual report, we said that Fischer Tech was not spared the adverse impact of the earthquake and tsunami in Japan and the extensive floods in Thailand that wreaked devastation to our factory in Rojana Industrial Park in Ayutthaya which was subsequently shut down. We also reported that notwithstanding the setbacks, we did not shy away from investing in production facilities which would yield long-term growth. So we expanded automotive production capacity in China and Thailand even as we disposed of other assets that were not revenue accretive. In other words, we were right-sizing our portfolio of manufacturing facilities. During the financial year under review, the Group increased automotive production capacity and enhanced capability in China and Thailand. The significant increase in sales (21.7%) in the automotive industry has borne out the validity of our decision. When our customers awarded us bigger orders for production of automotive components, we had the capacity to ramp up production very quickly and seamlessly to meet tight delivery deadlines without comprising quality. Building Strong Fundamentals The Groups excellent performance in FY2013 was not just due to any particular measure or strategy that we implemented in the last one to two years, but was the result of our decisive and consistent efforts to build sound business fundamentals since the global financial crisis in 2008. At that time, however, we resisted the temptation to take short-term measures like indiscriminate retrenchments
Foo Meng Tong Tan Choon King
and disposal of production resources in order to cut costs that might result in the lost of our talents and inhouse capabilities. Instead, we focused on improving and strengthening our manufacturing and precision engineering capabilities that could make our business viable and sustainable in the long term. As an engineering company, the key to our survival and competitiveness is our leadership in cutting-edge technology and manufacturing processes. Thus, we invested in facilities and training to enhance our R & D capability so as to develop innovative solutions in engineering plastics, mould design and fabrication and surface finishing. As a result of focusing on fundamentals, Fischer Tech has a fundamentally sound business model which can weather the vagaries of the operating environment, increase market share and deliver consistently good value to shareholders. Corporate Governance In May 2012, the Monetary Authority of Singapore approved most of the recommendations submitted by the Corporate Governance Council for the revision of the Code of Corporate Governance (the Code). The final Revised Code has included amendments relating to director independence, board composition, directors training, multiple directorships, alternate directors, remuneration practices and disclosures, risk management and shareholders rights and roles. The revised Code will take effect in respect of Annual Reports relating to financial years commencing from 1 November 2012. The Directors were kept abreast of the changes to the Code. The Board will conduct an in-depth study of the revisions and also review our current corporate governance practices to ascertain if any changes need to be made in our Board composition and practices to ensure that we are in compliance with the new stipulations.
LETTER TO SHAREHOLDERS
Prudence and Risk Management The Groups strong performance during the year further strengthened our balance sheet. During the year, the Group generated net operating cash flows amounting to S$16.5 million compared to S$11.9 million in the previous year, an increase of 38.3 per cent. As at 31 March 2013, the Groups cash and cash equivalents increased by S$4.9 million (21.1%) to S$28.1 million against S$23.2 million in FY2012. While investing in projects, facilities and equipment is an integral part of our growth strategy, we are nevertheless prudent in evaluating the risk of any investment opportunity and guided by our established principle of long-term value creation and sustainability. While risks cannot be eliminated in a rapidly changing and uncertain operating environment, we have in place an effective risk management process that reduces our vulnerabilities and exposure to unexpected changes in the macro economy, natural disasters and breach of internal financial, operational and compliance controls. Looking Forward In the coming year, the global economy is expected to improve, albeit with uneven growth reflecting divergence in different countries and regions. Against the backdrop of a positive macro-economic outlook and barring any unforeseen circumstances that may upset the positive scenario, we are cautiously confident about the Groups growth prospects in FY2014. Given our sound business fundamentals, we expect our automotive business to continue to be the main growth driver for the Group. We anticipate that this industry which accounted for about 70.1 per cent of the Groups revenue in FY2013, and with an excellent track record, will be able to continue to expand and increase market share in China as well as in other regions. We have and will continue to improve operational excellence with more innovations in product design and manufacturing processes. Last year, we rolled out automation programmes to automate various processes in our factories in Suzhou, China. These programmes have enhanced our operational capability, enabling us to win the confidence of several major automotive manufacturers who are working with us on global supply programmes. Under these programmes we have been selected to supply parts and components to their manufacturing plants around the world. Recognition and Accolades During the year, our efforts to improve our operational capability through innovations and automation had been recognised by our customers and partners. Baxter, one of our major customers in the healthcare industry awarded
Fischer Tech the Gold Award for being the Best Supplier of the Year. The Groups plant at Suzhou Industrial Park received certificates of recognition from the Jiangsu Province Department of Science and Technology for automation projects implemented for three processes: Fully automated laser engraving of automobile control panel Fully automated lined-up of automobile keys Automation of precision plastic injection molding During the year, we also received an award by Alpine, one of our customers in China, for significant progress in quality improvement. Dividend We are grateful for the patience and support of our shareholders in the past year, as we implemented measures to overcome the crisis brought about by the natural disasters in Japan and Thailand and bring the Group back to profitability. We are focused on creating value to ensure that the business is sustainable in the long term and shareholders can enjoy maximum returns. The Board has proposed a final tax-exempt cash dividend of 0.6 Singapore cent per ordinary share and a special taxexempt cash dividend of 0.3 Singapore cent per ordinary share, subject to shareholders approval at the next Annual General Meeting to be held on 30 July 2013. This will bring total dividend for FY2013 to 0.9 Singapore cent per ordinary share, totalling about $2.5 million. Appreciation We would like to thank the Board of Directors for their expert guidance and support during the year. We also thank our customers, partners, business associates and shareholders for their support and trust in us. Last but not least, we would like to express our appreciation to the management and staff for their loyalty, hard work and sacrifice without which, the Group would not have been able to achieve the remarkable turnaround during the year.
Foo Meng Tong Chairman Tan Choon King President and Chief Executive Officer 21 June 2013
CORPORATE INFORMATION
BOARD OF DIRECTORS: Foo Meng Tong (Non-Executive and Independent Chairman) Tan Choon King (President and Chief Executive Officer) Tay Kok Leong (Executive Director) Ng Boon Yew (Independent Director) Moy Kok Leng, James (Independent Director) Leong Hong Kiat, Amos (Non-Executive Director) Daisuke Ono (Non-Executive Director) AUDIT COMMITTEE: Ng Boon Yew (Chairman) Foo Meng Tong Moy Kok Leng, James COMPENSATION COMMITTEE: Moy Kok Leng, James (Chairman) Ng Boon Yew Foo Meng Tong NOMINATING COMMITTEE: Foo Meng Tong (Chairman) Ng Boon Yew Tan Choon King
COMPANY SECRETARY: Chuang Sheue Ling (CPA) Tan Ching Chek (LL. B. Hons, ACIS) SHARE REGISTRAR AND SHARE TRANSFER OFFICE: Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 AUDITORS Ernst & Young LLP Public Accountants and Certified Public Accountants One Raffles Quay North Tower, Level 18 Singapore 048583 Partner in charge (since financial year 2011): Tan Swee Ho REGISTERED OFFICE 12 Loyang Way 4 Loyang Industrial Estate Singapore 507602 Company Registration Number: 199404532R
customers = lasting partnership

Strong collaboration with customers entails not just understanding but also addressing their needs.
REVIEW OF OPERATIONS
How we fared
OUR REVENUE BY INDUSTRY
S$93.0M
Automotive
S$21.1M
Computer Peripherals
S$7.8M
Healthcare
S$10.6M
Consumer Electronics and Others
(21.7%)
(16.8%)
(-31.3%)
(-40.6%)
During the year, our operations recovered strongly from the adversities in the last two years caused by the Japanese earthquake and tsunami and the severe flood in Thailand. The supply chains for electronics and automotive industries disrupted by the Japanese earthquake had fully recovered and many companies were operating at prequake level capacity. Our plant at Pathumthani, north of Bangkok, had been running at high capacity during the year which in a way compensated for the closure of our old plant in Ayutthaya due to damage caused by the flood. In addition to the improved conditions in the operating environment, our operations were also able to reap the benefits of higher productivity and efficiency arising from our continuous efforts in automation and process improvement. As a result, our operations, particularly in the key automotive industry, achieved higher output, more efficient cost management and better margins. Gross profit for the financial year under review increased to S$26.6 million, up 84.6 per cent compared to S$14.4 million in the previous year. Gross profit margin also improved to 20.1 per cent from 11.7 per cent in FY2012. In the same vein, net profit from continuing operations recovered from a loss of S$3.9 million in FY2012 to S$10.4 million for the year. INDUSTRY PERFORMANCE Automotive The automotive industry was once again the star performer and main contributor to the Groups revenue and profits. In fact, this industrys share of total revenue increased in FY2013 to 70.1 per cent from 61.8 per cent in the year before. Revenue from our automotive business reached S$93.0 million in the same period, up 21.7 per cent (S$16.6 million) from S$76.4 million in the previous year. The better performance could be attributed to higher sales volume from existing customers who had acquired confidence in our competence and quality through our ability to deliver high quality products and services over the years.
In particular, our advanced manufacturing processes in our plants in Suzhou, China were awarded certificates of recognition for our industrial automation technology by the Jiangsu Province Department of Science and Technology. China remained the biggest market for our automotive plastic components, accounting for 56.5 percent of our revenue in this industry. Computer Peripherals During the year, with the recovery of the electronics supply chain in the aftermath of the Japanese earthquake and tsunami, our customers had increased production of computer printers resulting in our Group receiving bigger orders for plastic components for printer parts. Revenue for computer peripherals industry during the year increased 16.8 per cent year-on-year (S$3.0 million) to S$21.1 million from S$18.1 million in FY2012. Healthcare Our emerging healthcare business, which began in 2010, saw a dip in revenue during the year, declining 31.3 per cent to S$7.8 million compared to S$11.4 million in FY2012. The decrease was due to lower demand for plastic components by a major customer in the medical product industry. Notwithstanding, our healthcare business received the Gold Award from Baxter for being the Best Supplier of the Year. Consumer Electronics and Others Revenue from consumer electronics industry for the year decreased to S$10.6 million, down 40.6 per cent yearon-year. The decline was attributed to lower demand for plastic components for telecommunications devices and smart phones. The deluge of smart phones with touchscreen keypads replacing the traditional pushbutton keyboards in older phone models had adversely affected the demand for plastic buttons for keypads which had been the mainstay of our business in this industry.
REVIEW OF OPERATIONS
Geographic Segments During the financial year under review, revenue from our operations in North Asia, primarily China, amounting to S$70.0 million, had, for the first time, exceeded revenue from South East Asia which came in at S$62.5 million. This could be attributed to strong growth in our automotive business in China and decline of consumer electronics and healthcare businesses in South East Asia. North Asias share of the Groups total revenue increased from 39.7 per cent in FY2012 to 52.8 per cent in the year under review on the back of 42.6 per cent (S$20.9 million) surge in revenue to S$70.0 million compared to S$49.1 million in the previous year. In contrast, revenue from South East Asia saw a drop of 16.2 per cent (S$12.1 million) from S$74.6 million to S$62.5 million. As a result, this region accounted for a lower 47.2 per cent of the Groups revenue as compared to approximately 60.3 per cent in FY2012. The Year in Review The financial year ended 31 March 2013 had been a rewarding year for the Fischer Tech Group. Our operations had recovered from the disruptions caused by natural disasters in the previous year and capacity utilisation in all our plants had increased. Over the last few years, our efforts in focusing on strengthening our business fundamentals including improving the productivity of our manufacturing operations through industrial automation and innovative processes, rationalisation of our production facilities in the region, developing cutting-edge injection moulding technologies and more effective cost management had enabled the Group to stay the course towards long-term business sustainability. The success of our efforts was reflected in our strong financial performance as well as in the recognition of our quality and competence by our customers, especially in the automotive industry, who entrusted the Group with bigger and more complex projects. Although the Chinese automotive market grew at a slower rate in 2012, the Groups revenue in China, primarily driven by our automotive business, grew at a faster rate of 42.6 per cent in the same period, indicating that we were gaining market share in the Chinese market. During the year, in addition to securing more orders from our customers, we were also successful in securing global supply projects with some multi-national automotive customers. Under the global supply programmes, we would be supplying automotive components to their plants around the world. When these programmes are fully implemented, our leadership position in the automotive industry in Asia and around the world would be further s tre ng the ne d a nd reve nue f rom this indu s tr y would be enhanced.
Challenges Notwithstanding our excellent performance in FY2013, we will not be complacent but will remain vigilant because the global business environment is expected to remain volatile and challenging. We expect our operations in almost every geographic region to face increasing cost pressures, especially labour costs. Wages will continue to rise as workers in countries ranging from Singapore to Malaysia, Thailand and China are demanding higher wages. We would be mindful to manage these costs appropriately so as to avoid having our competitiveness eroded. We will focus on striving for operational excellence and increasing productivity through innovation and automation to mitigate the ef fects of rising costs. Our healthcare business which had been growing steadily since 2010, slowed down in FY2013 with a 31.3 per cent decline in revenue year-on-year due to a fall in demand by a major customer. In the coming year, we will strive to expand and diversify our customer base so as to avoid the risk of being overly dependent on a few major customers. We will also work with our customers to develop and widen our engineering capability so that we could manufacture a wider range of products in the medical device industry. Our Focus in 2014 In the coming year, we will continue to implement industrial automation programmes in all our manufacturing facilities in the region, especially for our automotive business. We will also continue to focus on our fundamentals, improve productivity and efficiency in our processes, as well as increase excellence in product quality and customer satisfaction to achieve long-term sustainability.
FINANCIAL HIGHLIGHTS
Performance at a Glance Financial Year Ended 31 March
REVENUE (S$000)
EBITDA (S$000)
PROFIT/(LOSS) FOR THE YEAR (S$000)
09
129,580
10
121,161
11
137,039
12
123,676
13
132,523
09
5,325
10
11,838
11
11,517
12
4,829
13
20,536
09
(4,087)
10
1,109
11
1,140
12
(4,339)
13
10,293
S$000 Income Statement Revenue Gross profit EBITDA(1) Profit/(Loss) before taxation from continuing operations Income tax expense Profit/(Loss) for the year
(1)
2009 129,580 7,976 5,325 (3,881) (206) (4,087)
2010 121,161 12,053 11,838 2,846 (1,737) 1,109
2011 137,039 19,005 11,517 2,911 (1,063) 1,140
2012 123,676 14,438 4,829 (3,472) (393) (4,339)
2013 132,523 26,649 20,536 12,188 (1,836) 10,293
Earnings before interest, taxation, depreciation and amortisation
S$000 Balance Sheets Non-Current Assets Current Assets Total Assets Current Liabilities Non-Current Liabilities Total Equity
2009 57,461 54,832 112,293 41,866 1,871 68,556 2009 #
2010 52,859 59,460 112,319 41,457 3,010 67,852 2010 # 29.25 0.50
2011 47,492 72,797 120,289 43,275 1,601 75,413 2011@ 27.46 0.45
2012 40,386 79,268 119,654 46,565 799 72,290 2012@ 26.46 (1.54)
2013 44,184 82,129 126,313 43,994 1,229 81,090 2013@ 29.68 3.77
Per Share Data (in cents) Net Assets Earning/(Loss) After Tax
# @
29.55 (1.59)
Computed based on share capital of 230,311,771 shares Computed based on share capital of 273,204,948 shares
10
innovation = possibilities
Continuous innovation is key to moving with the times and staying ahead. It also open doors to boundless opportunities.
BOARD OF DIRECTORS
FOO MENG TONG 1 Mr Foo Meng Tong (appointed 1st March 1998, last re-appointed 30th July 2012) is a non-executive and independent director of the Company. He is Chairman of the Board of Directors from 1st August 2000. He is also Chairman of the Nominating Committee and a member of the Audit and Compensation Committees. Mr Foo is a director of public-listed company, DMX Technologies Group Ltd. Mr Foo worked for the Economic Development Board for a total of 26 years until April 1993. His last position there was Director, Industry Development and concurrently General Manager of EDB Investments Pte Ltd. During 1994 to 1997, Mr Foo served as Singapores Ambassador to France with concurrent accreditations to Spain, Portugal, Switzerland (1994 to 1996) and Israel (1996 to 1997). TAN CHOON KING 2 Mr Tan Choon King (appointed 18th July 1994) is the founder, President and Chief Executive Officer of the Company. He is also a member of the Nominating Committee. Mr Tan has over 30 years of experience in the plastic injection moulding industry. He began his career at Asian Machine Pte Ltd in 1977 as a technician and progressed to the position of Engineering Manager when he left in 1987. He subsequently joined Tong Aik Plastic Factory Pte Ltd (Tong Aik) in 1987. He was promoted to General Manager in 1990 and became a member of its Board of Directors in 1992. Mr Tan obtained his Craftsmanship Certification (Tool and Die Making) from the Rollei Government Training Centre (RGTC). He also holds a National Trade Certificate (Tool and Die Making) from the Institute of Technical Centre and was awarded a scholarship to Japan sponsored by Asia Machine Pte Ltd under the auspices of the Association of Technical Scholarship. During his stint in Japan, he was attached to Hitachi Works Ltd where he received training in plastics mould design and fabrication as well as plastics processing and secondary processes. He also received a Full Technology Certification in Mechanical Engineering
from the City and Guilds of London Institute in 1983 and holds a Certificate in Industrial Management (UK) from the Management Development Institute of Singapore (MDIS), which he received in 1985. TAY KOK LEONG 3 Mr Tay Kok Leong (appointed 1st June 2001, last re-elected 30th July 2012) is the Executive Director and Vice President, Engineering of the Company. His responsibility is to oversee the operations of the Group in areas such as production, quality assurance and testing and maintenance. Mr Tay joined our Company in 1994 as the Factory Manager and was promoted to Senior Operations Manager in October 2000, to oversee the entire manufacturing operations of the Company. Mr Tay has over 29 years of experience in the plastic injection moulding industry. Prior to joining our Company in July 1994, Mr Tay was the Factory Manager of Tong Aik from 1983 to 1994. During his stint at Tong Aik, he was overall in charge of its production department and liaised with Tong Aiks customers to ensure that their production schedules were met. Mr Tay received industrial training at the Industrial Training Institute. NG BOON YEW 4 Mr Ng Boon Yew (appointed 18th June 2001, last re-elected 30th July 2012) is a non-executive and independent director of the Company. He is Chairman of the Audit Committee and a member of the Compensation and Nominating Committees. Mr Ng is the Chairman and Chief Executive Officer of Raffles Campus Pte Ltd. He is also a director of Datapulse Technology Limited, Gems TV Holdings Limited and The National Kidney Foundation. Mr Ng has more than 25 years of accounting and auditing experience in both the private and public sectors. He was a partner with an international accounting firm where he was involved in the audit of companies in various industries and the provision of corporate finance services in the area of valuation, mergers and acquisitions and corporate and business restructuring. He is a member of the Securities Industry
12
BOARD OF DIRECTORS
Council. He served as Chairman of the Disclosure and Accounting Standards Committee and a member of the Council on Corporate Disclosure and Governance. Mr Ng is a member of the Institute of Certified Public Accountants of Singapore and a fellow member of the Association of Chartered Certified Accountants. He is also an associate member of the Institute of Chartered Accountants in England and Wales, Institute of Chartered Secretaries and Administrators and Chartered Institute of Taxation. MOY KOK LENG, JAMES 5 Mr Moy Kok Leng, James (appointed 2nd January 2003, last re-elected 29th July 2011) is a non-executive and independent director of the Company. He is also Chairman of the Compensation Committee and a member of the Audit Committee. Mr Moy is a Certified Management Consultant and a Corporate Trainer. He runs his own successful, 31 year-old consultancy practice serving many clients. His consultancy specialises in the areas of strategic change and organisational renewal, leadership development, sales and marketing and customer relationship, as well as in executive coaching and in personal development. He holds qualifications in management consultancy, business administration, personnel management and banking. He is also a Fellow Member of the Institute of Management Consultants (Singapore). Mr Moy has previously worked in senior management positions in several large and smaller organisations. LEONG HONG KIAT, AMOS
6
strategy and direction of Venture Corporations business in strategic components, and their related material and process technologies. In addition, Mr Leong has considerable expertise in the electronics manufacturing industry. His career began in 1987 as a supply-chain engineer in the manufacturing operations of HewlettPackard Singapore and since then, he has held numerous managerial positions in the Asia-Pacific field operations and product divisions in the US. After Agilent Technologies was separated from Hewlett-Packard, he was appointed as Vice President and General Manager of Global Sales, Marketing & Support for the Electronics Manufacturing and Semiconductor Test businesses for Agilent. In 2004, he was appointed by Venture Corporation to assume his current leadership role for the Univac Group. Mr Leong received an honors degree in electrical and electronics engineering from the National University of Singapore. DAISUKE ONO 7 Mr Daisuke Ono (appointed 1st August 2012) is a nonexecutive director of the Company. He is currently the Chairman and CEO of Ono Sangyo Co.,Ltd (OSK), a deemed substantial shareholder of the Company. Mr Ono was appointed President of OSK at the age of 30. Under his strong leadership, OSK was listed in JASDAQ (Japan Association of Securities Dealers Automated Association) four years later in 1999. Mr Ono studied business at Keio University in Japan and the University of Pennsylvania. Prior to his engagement with OSK, he worked for a Japanese general trading and investment conglomerate, Mitsui & Co Ltd.
Mr Leong Hong Kiat, Amos (appointed 1st April 2005, last re-elected 29th July 2011) is a non-executive director of the Company. He is currently the President and CEO of the Univac Group, which provides the highest quality design, development and global manufacturing solutions for medical devices and FMCG, precision tooling and injection molding, and turnkey supply-chain services. He is also Group General Manager of Venture Corporations Component Technology Business that drives the overall
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KEY MANAGEMENT
TAN CHEE BUN, GORDON Mr Tan Chee Bun, Gordon is the Chief Financial Officer of the Fischer Tech Group. He joined the Company in August 2000 as the Financial Controller and is overall in charge of the financial, accounting, human resource and administrative matters of the Company. In January 2004, he was promoted to the position of Chief Financial Officer. Mr Tan began his career at Ernst & Young, an international accounting firm where he undertook the audit of various companies. Between 1993 and 1994, Mr Tan worked in Wepco Ltd as Group Accountant where he assisted in overseeing its finance department and the computerisation of its new accounting system. Subsequently, he was promoted to the position of Finance Manager of both Tong Aik Plastic Factory Pte Ltd and Ray Tech Industry Pte Ltd (both of which are subsidiaries of Wepco Ltd). In 1996, Mr Tan became the Financial Controller of Omni Mold Ltd where he was responsible for the financial, taxation and management accounting functions of the Omni Mold Group. Mr Tan holds a Bachelor of Accountancy Degree from the National University of Singapore and is a Fellow of the Institute of Certified Public Accountants of Singapore. CHAN KOK WAI, PETER Mr Chan Kok Wai, Peter is the Group General Manager of Fischer Tech Ltd. Mr Chan is also concurrently the Managing Director of Fischer Tech (Suzhou) Co., Ltd and Fischer Solution (Suzhou) Co., Ltd. He has 18 years of working experience in Suzhou, from pioneering of factories to managing the operations. Tapping from his background as far back from 1975, he started learning mould making with the EDB program and was selected for further training in Japan. After one year of training in Japan, he
was attached to Asian Machine, which was subsequently acquired by Hymold, for 22 years. He started as a tool maker for 8 years, worked in the secondary process department for 8 years and was Production Manager for another 6 years. In 1994, he was appointed to set up Hymold in Suzhou and later joined Pacific Plastic in 1997 as Assistant General Manager. He holds a Craftsman Certificate in Mold & Die, Diploma in Production Management & a Diploma in Business Management. TAY NGEE JOO Mr Tay Ngee Joo is the General Manager of Fischer Tech Ltd. He is also concurrently the General Manager of Fischer Medtech Pte Ltd, Fischer Technology Pte Ltd and M-Fischer Tech Sdn Bhd. Mr Tay joined Fischer Tech in May 2000 as an Operations Manager responsible for overseeing the laser marking and decorative finishing departments. Subsequently, he was promoted to the position of Business Development Director and then to the current position. From 1983 to 1996, Mr Tay worked as a Quality Assurance Manager in JVC where he was responsible for budgeting, policy and objective planning as well as promoting JVCs products to its suppliers. Subsequently, Mr Tay spent two years from 1996 to 1998 in Preshion Engineering Plastec Pte Ltd, where he was in charge of new model development, product quality and planning of production schedules. From 1998 to 2000, he was a director of Preshion Engineering Plastec, Indonesia (PEPI), where he was responsible for business development and managing the plastic injection moulding and secondary processes of the PEPI plant. Mr Tay holds a National Trade Certificate in Machining from Jurong Vocational Institute.
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KEY MANAGEMENT
SIM KIAN FUA Mr Sim Kian Fua is the Engineering Development Director of Fischer Tech Ltd. Mr Sim joined Fischer Tech as an Assistant Moulding Engineer in June 1994 and was promoted to Moulding Manager in January 1998 and subsequently Engineering Development Manager in October 2000. Mr Sim has over 20 years of experience in the plastic injection moulding industry during which he was involved in various aspects of the mould fabrication process as tool room specialist, moulding engineer, machine designer and project engineer. Some of the responsibilities he has assumed throughout his career include providing technical support for tooling design, establishing moulding standards and being responsible for moulding operations. Mr Sim holds a Diploma in Mechanical Engineering from the Singapore Polytechnic. CHUA CHIAN WEE Mr. Chua Chian Wee is currently the General Manager of Fischer Tech (Thailand) Co., Ltd. Mr. Chua Chian Wee joined Fischer Tech in June 2011. He was previously the Managing Director of SEB Corporation Pte Ltd (SEB) from 1986 to 2008. With the sale of SEB to Jurong Technology, he took up the position of General Manager looking after the companys factories in Brazil and China (both Suzhou and Tianjin) from 2008 to 2010. Mr. Chua Chian Wee holds an A Level certificate and a national trade certificate.
ANG YANN SIANG Mr Ang Yann Siang is the General Manager of Fischer Tech (Suzhou) Co., Ltd. He is also concurrently the General Manager of Fischer Solution (Suzhou) Co., Ltd. Mr Ang joined Fischer Tech in June 2006 as a Plant Manager and was responsible for overseeing the operations department before assuming his current position. Mr Ang spent 6 years from 2000 to 2006 in Omni Plastic (Suzhou) Co., Ltd, where he was in charge of the operations of its Suzhou factory. He holds a National Trade Certificate in Mechatronics. LEONG CHEE SENG Mr Leong Chee Seng is the Research and Development Director of the Company. Prior to joining Fischer Tech, Mr Leong had a distinguished career spanning more than 30 years working with major electronics MNCs including Philips, Motorola and GM (now Delphi Electronics). He was a member of the pioneer team who set up the Design Center in GM Singapore (now Delphi Electronics) and was responsible for the Mechanical, CAD/CAE and documentation system of the company to develop various automotive electronics products. He also worked as the Program Manager to manage the global design team (comprised of various functions such as mechanical, electrical, systems, software, manufacturing, sales, purchasing, quality, service, etc and located in various countries) and worked closely with all regional sales managers of the company to develop new customers and business. Mr Leong holds a Degree in Mechanical Engineering (1976) from The University of Singapore (now known as National University of Singapore).
15
CORPORATE STRUCTURE
Fischer Tech International Pte Ltd 100%
FISCHER TECH LTD
Fischer Technology Pte Ltd 100%
Fischer Tech (Suzhou) Co., Ltd 100%
Fischer Solution (Suzhou) Co., Ltd 100%
Zeito International Pte Ltd 38%
Fischer Medtech Pte Ltd 100%
DongGuan Hyform Electronic Co., Ltd 100%
CPP-Fischer Pte Ltd 100% Fon-Fischer Pte Ltd (In Voluntary Liquidation) 100%
AP-Fischer Pte Ltd (In Voluntary Liquidation) 100% M-Fischer Tech Sdn Bhd 100%
Fischer Tech (Thailand) Co., Ltd 100%
16
FINANCIAL CONTENTS
18 28 33 34 35 36 37 38 41 42
Corporate Governance Report Directors Report Statement by Directors Independent Auditors Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Balance Sheets Statements of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements
102 Statistics of Shareholdings 103 Substantial Shareholders 104 Notice of Annual General Meeting Proxy Form
CORPORATE GOVERNANCE
The Board of Directors (the Board) and management of Fischer Tech Ltd (the Company) are committed to maintaining a high standard of corporate governance within the Company and its subsidiaries (the Group). Good corporate governance establishes and maintains a legal and ethical environment in the Group, which strives to enhance and safeguard the interests of all shareholders. This report describes the Companys corporate governance practices with specific reference to the Code of Corporate Governance 2005 (the Code). In the following sections covering each of the principles, we have outlined our policies and practices and where appropriate, we have provided explanation for any deviation from the Code. On 2 May 2012, the revised Code of Corporate Governance 2012 (the Code 2012) was issued and took effect for financial year commencing on or after 1 November 2012. The Company is in the midst of putting the processes in place to comply with the requirements of the Code 2012. (A) BOARD MATTERS PRINCIPLE 1: BOARDS CONDUCT OF ITS AFFAIRS The Board oversees the business affairs of the Group, approves the financial objectives and strategies; monitors standards of performance; and issues policies. The Board delegates the day-to-day operations of the Group to the management while reserving certain key matters for its approval. The Board is accountable to the shareholders while the management is accountable to the Board. The Board has seven members comprising two executive directors, two non-executive director and three independent directors. The Boards principal functions include the following: (1) Supervising the overall management of the business and affairs of the Group and approving the Groups corporate and strategic policies and direction; Formulating and approving financial objectives of the Group and monitoring its performances such as reviewing and approving of results announcements and approving of annual financial statements; Overseeing the processes for evaluating the adequacy of internal controls and risk management including the review and approval of interested person transactions; Assuming responsibility for corporate governance and compliances with the Companies Act and the rules and regulations of the relevant regulatory bodies; and Evaluating performance of and approving the nomination to the Board.
(2)
(3)
(4)
(5)
Matters that are specifically reserved for the approval of the Board include material acquisitions and disposals of assets or businesses, corporate or financial restructuring, share issuance and formulation of dividend policy. The Board has adopted a set of internal guidelines on the matters requiring Board approval. Certain functions have been delegated to various Board committees, namely, the Audit Committee, the Compensation Committee and the Nominating Committee. Each of the committees has its own terms of reference setting out the scope of its duties and responsibilities and rules and procedures governing the manner in which each is to operate.
18
The Board conducts at least two meetings a year. Additional meetings are convened when deemed necessary by the Board. In financial year 2013, the directors conducted 2 Board meetings, 4 Audit Committee meetings, 2 Compensation Committee meetings and 1 Nominating Committee meeting. The directors attendances at these meetings were as follows: NAME OF DIRECTORS BOARD No of Meetings attended 1 2 3 4 5 6 7 8 Foo Meng Tong (1) Tan Choon King (2) Tay Kok Leong Ng Boon Yew
(3)
AUDIT COMMITTEE No of Meetings attended 4 4 4 4 4 -
COMPENSATION COMMITTEE No of Meetings attended 2 2 2 2 -
NOMINATING COMMITTEE No of Meetings attended 1 1 1 -
2 2 2 2 2
(5)
Moy Kok Leng, James (4) Leong Hong Kiat, Amos Daisuke Ono (6) Hiroaki Miyauchi (7)
2 1 1
Note: (1) Mr Foo Meng Tong is the Chairman of the Nominating Committee and a member of the Audit and Compensation Committees. (2) Mr Tan Choon King is a member of the Nominating Committee. He attended the Audit Committee and Compensation Committee meetings by invitation. (3) Mr Ng Boon Yew is the Chairman of the Audit Committee and a member of the Compensation and Nominating Committees. (4) Mr Moy Kok Leng, James is the Chairman of the Compensation Committee and a member of the Audit Committee. (5) Mr Leong Hong Kiat, Amos attended the Audit Committee meetings by invitation. (6) Mr Daisuke Ono was appointed a director of the Company on 1 August 2012. (7) Mr Hiroaki Miyauchi resigned from the Board on 31 May 2012. For expediency, Board papers supplement Board meetings and Board members are free to seek further clarification and explanation from management on the Board papers circulated. All directors have unrestricted access to the Companys records and information and the independent directors have access to all levels of senior executives and are free to speak to other employees to seek further information. To facilitate the convening of ad-hoc Board meetings as and when the need arises, the Companys Articles of Association allow Board meetings to be conducted by way of tele-conferencing or video-conferencing. Management monitors changes to regulations and Financial Reporting Standards closely. To keep pace with regulatory changes, where these changes have an important bearing on the Companys or directors disclosure obligations, directors are briefed either during Board meetings or at specially convened sessions conducted by professionals. Newly appointed directors, if any, will be given orientation by way of briefings by the management on the business activities of the Group and its strategic directions as well as their duties and responsibilities as directors. The directors are also briefed by the management on the business activities of the Group and they also conduct routine inspections at the manufacturing facilities to enhance their understanding of the Groups business and operations. PRINCIPLE 2: BOARD COMPOSITION AND GUIDANCE The majority of directors are non-executive and independent of management. The Board comprises seven members of whom two are executive directors, two are non-executive directors and three are independent directors. At least one third of the Board comprises independent directors.
19
There is strong and independent element on the Board. The Board is able to exercise objective judgment independently from Management and no individual or small group of individuals dominate the decisions of the Board. The independent directors are Mr Foo Meng Tong, Mr Ng Boon Yew, and Mr Moy Kok Leng James. The independence of each director is assessed by the Nominating Committee annually. Each independent director is required to declare his independence in writing in accordance to the guidelines set out in the Code. The Nominating Committee is of the view that the current Directors have an appropriate mix of core competencies and a broad range of industry knowledge and the business experience to govern and contribute to the effectiveness and success of the Group. The Nominating Committee reviews the size of the Board from time to time. The Board has no dissenting view on the Chairmans and Chief Executive Officers letter to shareholders for the year in review. PRINCIPLE 3: CHAIRMAN AND CHIEF EXECUTIVE OFFICER The Company has a separate Chairman and Chief Executive Officer who are not related. There is a clear segregation of the roles and responsibilities between the Chairman and the Chief Executive Officer. The Chairman is Mr Foo Meng Tong, an independent director who bears responsibility for the workings of the Board. As the Chairman, he is responsible for, among others, the following : (1) (2) lead the Board to ensure its effectiveness on all aspects of its role; schedule meetings with the Board and preparing meeting agenda with the assistance of the Company Secretary and in consultation with the Chief Executive Officer prior to the meeting. In addition, he also ensure adequate time is available for discussion on all agenda items, in particular strategic issues; promote a culture of openness and debate at the Board; exercise control over quality, quantity and timeliness of the flow of information between the management and the Board; ensure effective communication with shareholders; encourage constructive relations within the Board and between the Board and Management; facilitate effective contribution of non-executive directors; and promote high standard of corporate governance.
(3) (4)
(5) (6) (7) (8)
The Chief Executive Officer is Mr Tan Choon King, the most senior executive in the Company who bears executive responsibility for the management of the Company and the Group. He is also the Managing Director and is responsible for the running of the Groups business and has the full executive responsibilities over the business directions and operational decisions of the Group. The Managing Director need not retire by rotation as provided by the Articles of Association of the Company. PRINCIPLE 4: BOARD MEMBERSHIP PRINCIPLE 5: BOARD PERFORMANCE The Nominating Committee (NC) comprises two independent directors and an executive director. Mr Foo Meng Tong, who is an independent director, chairs the NC. The other members of the NC are Mr Ng Boon Yew (independent director) and Mr Tan Choon King (executive director).
20
The NC has adopted a set of Terms of Reference that include the following functions: (1) (2) The appointment or re-appointment of members of the Board and of the various Board Committees; Evaluating and assessing the effectiveness of the Board as a whole, and the contribution made by each individual director to the effectiveness of the Board. The NC has considered a number of factors, including those set out in the Code, for the purpose of such evaluation and assessment; and Determining the independence of directors.
(3)
New directors, where appropriate and necessary, are appointed by way of a board resolution, after the NC has approved their nomination. Such new directors submit themselves for re-election at the next Annual General Meeting (AGM). The Companys Articles of Association requires one-third of the Board to retire by rotation at every AGM. The NC has recommended that Mr Moy Kok Leng James who is retiring by rotation pursuant to Article 91 and Mr Daisuke Ono who is retiring pursuant to Article 97 of the Companys Articles of Association, at the forthcoming AGM, be re-elected. The NC has also recommended the re-appointment of Mr Foo Meng Tong who is retiring under Section 153(6) of the Companies Act, Chapter 50 at the forthcoming AGM. The retiring directors have offered themselves for re-election/re-appointment. The Board has accepted the recommendations of the NC. The dates of initial appointment and last re-election of each director are set out below: NAME OF DIRECTORS APPOINTMENT DATE OF INITIAL APPOINTMENT 1 March 1998 18 July 1994 1 June 2001 18 June 2001 2 January 2003 1 April 2005 1 August 2012 1 April 2010 DATE OF LAST RE-ELECTION/ RE-APPOINTMENT 30 July 2012 N.A. 30 July 2012 30 July 2012 29 July 2011 29 July 2011 N.A. Resigned on 31 May 2012
1 2 3 4 5 6 7 8
Foo Meng Tong Tan Choon King Tay Kok Leong Ng Boon Yew Moy Kok Leng, James Leong Hong Kiat, Amos Daisuke Ono
(2) (1)
Independent Chairman Chief Executive Officer Vice President, Engineering Independent Director Independent Director Non-Executive Director Non-Executive Director Non-Executive Director
Hiroaki Miyauchi (3)
Note: Mr Tan Choon King is also the Managing Director and need not retire by rotation as provided by the Articles of Association. (2) Mr Daisuke Ono was appointed a director of the Company on 1 August 2012. (3) Mr Hiroaki Miyauchi resigned from the Board on 31 May 2012.
(1)
The profiles of all directors are set out on pages 12 to 13 of the Annual Report. The Nominating Committee formally evaluates and assesses the effectiveness of the Board and each director annually, taking into consideration appropriate performance criteria. The findings of such evaluations were analysed and discussed with a view to identifying areas for improvement and implementing certain recommendations to further enhance the effectiveness of the Board.
21
The NC in its evaluation has reviewed and considered aspects such as the directors integrity, impartiality, attendance, communication, participation and assessed the contributions of these directors to the Groups businesses and operations. The NC is also of the view that whilst it is important for directors to devote sufficient time and attention to the affairs of the Group, the issue relating to multiple board representations should be left to the judgment and discretion of each director. The NC believes that contributions from each director can be reflected in other ways other than the reporting of attendances of each director at Board and Committee Meetings as well as the frequency of such Meetings. A director would have been appointed on the strength of his experience and stature, and his potential to contribute to the proper guidance of the Group and its business. To focus on a directors attendance at formal Meetings alone may lead to a narrow view of a directors contribution. It may also not do justice to his contributions, which can be in many forms, including managements access to him for guidance or exchange of views outside the formal environment of the Board. The Board, through the delegation of its authority to the NC, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Groups business and that each director, through his unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. The NC, in considering the nominating of any director for re-election/re-appointment, will evaluate the performance of the Director involved. The search and nomination process for new directors, if any, will be through search companies, contacts and recommendations that go through the normal selection process, to cast its net as wide as possible for the right candidates. The NC is of the view that the current size of the Board is adequate for the purposes of the Group. PRINCIPLE 6: ACCESS TO INFORMATION The management has provided the members of the Board with management accounts on a monthly basis, as well as relevant background information and documents relating to items of business to be discussed at a Board meeting before the scheduled meeting. The directors are kept informed by the Chief Executive Officer on the status of on-going activities between meetings. Where a decision has to be made other than in a Board meeting, a circulating directors resolution is done in accordance with the Articles of Association of the Company and the directors are provided with all necessary information to enable them to make informed decisions. The Board has separate and independent access to the Company Secretary at all times and the Company Secretary attends all Board and Committee meetings and is responsible for ensuring that Board procedures are followed. The appointment and removal of the Company Secretary should be a matter for the Board as a whole. The Board also has access to independent professional advice where necessary, at the Companys expense. (B) REMUNERATION MATTERS PRINCIPLE 7: PROCEDURES FOR DEVELOPING REMUNERATION POLICIES PRINCIPLE 8: LEVEL AND MIX OF REMUNERATION The Compensation Committee (CC) comprises three independent directors. Mr Moy Kok Leng, James, chairs the CC. The other members of the CC are Mr Ng Boon Yew and Mr Foo Meng Tong. The CC has adopted a set of Terms of Reference that include the following functions: (1) Review and recommend appropriate remuneration policy and package (in all its forms, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits-in-kind) and associated matters of the executive and non-executive directors of the Board and key senior management executives of the Company;
22
(2)
Review and approve the Companys remuneration policies, structures and service contracts as proposed by the Companys Chief Executive Officer, for any relatives of a director and/or a substantial shareholder who are employed in managerial positions by the Company, or any of its subsidiaries; and Oversee the administration of the Share Option Scheme.
(3)
No director or member of the CC shall be involved in deciding his own remuneration, except for providing information and documents specifically requested by the CC to assist it in its deliberations. The executive directors have service contracts. The non-executive directors do not have any service agreements with the Company and have remuneration packages consisting of a directors fee. The CC may obtain professional advice on remuneration matters, if required. PRINCIPLE 9: DISCLOSURE ON REMUNERATION A breakdown of the level and mix of remuneration paid to directors and top five key management executives in remuneration bands of $250,000 for financial year ended 31 March 2013 are as follows:Remuneration Bands and Names of Directors Between $1,500,000 to $1,750,000 Tan Choon King Between $500,000 to $750,000 Tay Kok Leong Below $250,000 Foo Meng Tong Ng Boon Yew Moy Kok Leng, James Leong Hong Kiat, Amos Daisuke Ono
(5) (4)
Salary
Bonus/ Profit Sharing (1) % 67 54
Benefits-inkind (2) % 4 7
Fees (3)
Total
% 29 39
% 100 100 100 100 100 100
% 100 100 100 100 100 100 100 100
Hiroaki Miyauchi (6)
Note: (1) This relates to the Bonus and Profit Sharing Schemes which Mr Tan Choon King and Mr Tay Kok Leong are entitled to under their respective service agreements with the Company. (2) This relates to benefits such as car, club membership, etc made available to directors as appropriate. (3) Subject to approval as a lump sum at the Annual General Meeting (AGM) for financial year ended 31 March 2013. (4) Mr Leong Hong Kiat, Amos is the representative of Univac Precision Engineering Pte Ltd and his fees will be paid to Univac Precision Engineering once the fees are approved at the AGM. (5) Mr Daisuke Ono was appointed a director of the Company on 1 August 2012. He is the representative of Ono Sangyo Co Ltd and his fees will be paid to Ono Sangyo Co Ltd. The fees, if approved at the AGM, will be for his service from 1 August 2012 to 31 March 2013. (6) Mr Hiroaki Miyauchi resigned from the Board on 31 May 2012. He is the representative of Ono Sangyo Co Ltd and his fees will be paid to Ono Sangyo Co Ltd. The fees, if approved at the AGM, will be for his service from 1 April 2012 to 31 May 2012
23
Remuneration Bands of top 5 key executives who are not Directors or CEO Between $750,000 to $1,000,000 Chan Kok Wai, Peter Between $250,000 to $500,000 Tan Chee Bun Gordon Tay Ngee Joo Ang Yann Siang Chua Chian Wee
Salary % 28 53 55 37 50
Bonus/ Profit Sharing % 68 38 32 59 20
Benefits-inkind % 4 9 13 4 30
Total % 100 100 100 100 100
In the interest of maintaining good morale and a strong spirit of teamwork within the Group, the Board is of the opinion that it is in the best interest of the Group not to disclose the exact salary of the CEO, executive director and the key management executives. There are no employees of the Group who are immediate family members of a director or of the CEO and whose remuneration exceeds $50,000 for the financial year. (C) ACCOUNTABILITY AND AUDIT PRINCIPLE 10: ACCOUNTABILITY The shareholders are provided with detailed analysis, explanation and assessment of the Groups financial position and prospects in the Companys annual and half-yearly results announcements and the Annual Report. On a monthly basis, Board members are provided with managements accounts detailing up-to-date financial reports and other information on the Groups performance. The management also provides the Audit Committee and the Board with detailed management accounts of the Groups performance and position on a quarterly and half-yearly basis, respectively. PRINCIPLE 11: AUDIT COMMITTEE The Audit Committee (AC) comprises three members, all of whom are independent directors : Ng Boon Yew (Chairman, independent director) Foo Meng Tong (Independent director) Moy Kok Leng, James (Independent director) As the members of the AC have many years of experience in accounting and finance related industries, the Board considers that the members of the AC are appropriately qualified to discharge the responsibilities of the AC. The AC has adopted a set of Terms of Reference that include the following functions: (1) Review the audit plans and the scope of examination of the external auditor and the internal audit function of the Company; Review the annual, half-yearly and quarterly financial statements of the Company as well as, where applicable, the external auditors report thereon; Review the reports of the internal audit function; Review the effectiveness of the Companys system of accounting and financial controls;
(2)
(3) (4)
24
(5)
Review and report to the Board at least annually the adequacy and effectiveness of companys internal controls, including financial, operational, compliance and information technology controls; Review interested person transactions to ensure such transactions are conducted at arms length and on normal commercial terms; Review the independence and objectivity of the external auditor annually; Review the nature and extent of non-audit services performed by the external auditor; Consider the re-appointment of external auditor before recommending to the Board for approval;
(6)
(7) (8) (9)
(10) Examine whatever aspects it deems appropriate of the Groups financial affairs, its external audits and its exposure to risks of a regulatory or legal nature; and (11) Conduct investigations into any matter within its terms of reference.
In performing its functions, the AC meets with the external auditor without the presence of management at least once annually. The AC reviews the findings of both the internal and external auditors and the assistance given to them by management. Minutes of the Audit Committee meetings are regularly submitted to the Board for its information and review. The AC has full access to and co-operation by the Companys management, and has full discretion to invite any director or executive officer to attend its meetings. The AC has reasonable resources to enable it to discharge its functions properly. The AC held four meetings during the financial year. The AC has reviewed the nature and extent of non-audit services provided by Ernst & Young LLP (EY) and the fees paid for its audit services, non-audit services and the aggregate amount of fees paid in respect of the financial year ended 31 March 2013. The AC has reviewed the nature and amount of non-audit fees paid to the external auditor and is of the view that the independence of EY as external auditor of the Company has not been compromised. The AC has also reviewed and confirmed that EY is a suitable audit firm to meet the Companys audit obligations, having regards to the adequacy of resources and experience of the firm and the assigned audit engagement partner, EYs other audit engagements, size and complexity of the Fischer Tech Group, number and experience of supervisory and professional staff assigned to the audit. Accordingly, the AC recommended to the Board the re-appointment of EY as External Auditor of the Group for the financial year ending 31 March 2014. The Group has complied with the Rule 715 of the Listing Manual in relation to its auditing firms. EY has been engaged to audit the accounts of the Company and its Singapore-incorporated subsidiaries. The accounts of the significant foreign-incorporated subsidiaries are audited by EY member firms in the respective countries for group consolidation purposes. The Group has one Singapore-incorporated associated company and one foreign-incorporated associated company and the accounts of these associated companies are audited by EY and EY member firm respectively for group consolidation purposes. The Company has also put in place whistle blowing policy, which provides well-defined and accessible channels in the Group through which employees may raise concerns in the event that they may encounter any improper conduct within the Group. PRINCIPLE 12: RISK MANAGEMENT AND INTERNAL CONTROLS The AC, with the assistance of the internal auditor and external auditor, reviews and reports to the Board on the adequacy of the companys system of internal controls, including financial, operational and compliance controls and taking into consideration the risk management perspective. In assessing the effectiveness of internal controls, the AC ensures primarily key objectives are met, material assets safeguarded and financial information is prepared in compliance with applicable internal policies, laws and regulations. The Group is also continually reviewing and improving business and operational activities, which includes reviewing management and manpower resources, updating and improving on work flows, processes and procedures to meet the current and future market conditions.
FISCHER TECH LTD ANNUAL REPORT 2013 25
The risk management process has been integrated in the Group and is an essential part of its business planning and monitoring process. The process formalises the reporting, assessment and monitoring of significant financial, compliance and operational risks that the Group faces in achieving its business objectives. Management regularly reviews the Groups business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Groups policies and strategy. Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the AC. Based on the internal controls established and maintained by the Group, work performed by the internal auditor, statutory audit conducted by the external auditor, and reviews performed by Management, various Board Committees and the Board, the Board with the concurrence of the AC is of the opinion that the Groups system of internal controls, including financial, operational and compliance controls and risk management, are adequate to meet the needs of the Groups existing business objectives, having addressed the critical risks area. While acknowledging their responsibility for the system of internal controls, the Directors are aware that such a system is designed to manage, rather than eliminate risks, and therefore cannot provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors or mis-statements, poor judgment in decision-making, human error, losses, fraud or other irregularities. PRINCIPLE 13: INTERNAL AUDIT The Company appointed BDO Raffles Consultants Pte Ltd (IA) to perform the Groups internal audit function. The Company ensures that the IA meets with the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The IA reports directly to the chairman of the AC on audit matters and to the Chief Executive Officer on administrative matters. The AC shall on an annual basis, ensure that the internal audit function has adequate resources and appropriate standing within the Group. During the financial year, the IA performed audits of the internal controls of Fischer Tech (Suzhou) Co., Ltd and Fischer Tech (Thailand) Co., Ltd, both wholly owned subsidiaries of the Company located in China and Thailand respectively. The IA has reported the findings directly to the AC. The AC approved the internal audit plans and reviewed the findings arising from the internal audit functions. Implementation of the recommendations made by the IA is monitored by the AC. (D) SHAREHOLDERS RIGHTS AND RESPONSIBILITIES PRINCIPLE 14: ENGAGE IN REGULAR, EFFECTIVE AND FAIR COMMUNICATION WITH SHAREHOLDERS PRINCIPLE 15: ENCOURAGE GREATER SHAREHOLDER PARTICIPATION The Board is mindful of the obligation to provide timely and fair disclosure of material information. The annual and half-yearly financial results and other price sensitive information and notices are announced through SGXNET. The Company does not practise selective disclosure in the communication of material information. Communications with the SGX-ST are handled by the Company Secretary, while communications with analyst and fund managers are handled by the Chairman, Chief Executive Officer and/or Chief Financial Officer. All shareholders of the Company receive the Annual Report and Notice of Annual General Meeting. Shareholders are encouraged to attend the Annual General Meeting (AGM) to ensure a greater level of shareholder participation and for them to keep up to date on the Groups businesses and strategies. The Board views the AGM as the principle forum for establishing and maintaining regular dialogue with shareholders and also an opportunity for shareholders to gather inputs and air their views and to ask the directors questions regarding the operations and affairs of the Company. The Companys Articles allow a shareholder to appoint one or two proxies to attend the AGM and vote in place of the shareholder.
26
Normally, all directors do attend general meetings of shareholders. The Chairmen of the Board, AC, NC and RC will be present and available to address questions at general meetings. The external auditor is also requested to be present to address shareholders queries about conduct of audit and preparation and content of auditors report. (E) DEALING IN SECURITIES The Company has issued a policy note to its directors and key employees, setting out the implications of insider trading. The directors and key employees of the Company have been advised of the internal code of conduct on dealings in the securities of the Company accordingly. Under the internal code, the Company, Directors and employees of the Group are prohibited from dealings in securities of the Company while in possession of price-sensitive information, and during the period beginning one month before the announcement of the half-year and full year results and ending on the day after the date of announcement. In addition, directors and employees are expected to observe insider trading laws at all times even when dealing in securities within the permitted period. It also discourages dealings on short-term considerations. Directors are required to report securities dealings to the Company Secretary who will assist in making the necessary announcements. The Company wishes to confirm that to the best of the Companys knowledge, the Company officers do not deal in the Companys securities on short term considerations. (F) MATERIAL CONTRACTS Save for the service contracts of the executive directors, there were no material contracts involving the interests of any directors or substantial shareholders as at 31 March 2013. (G) INTERESTED PERSON TRANSACTIONS The Company has established internal control policies to ensure that transactions with interested persons are properly conducted at arms length basis. The Company had disclosed according to Rule 907 of the SGX-ST Listing Manual in respect of interested persons transactions for financial year ended 31 March 2013 in the following table: Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920 of the SGX-ST Listing Manual) $000 Sale of plastic components and plastic injection moulds Ono Sangyo Co., Ltd Purchase of Equipment Ono Sangyo Co., Ltd Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 of the SGX-ST Listing Manual (excluding transactions less than $100,000)
$000
106
1,719
27
DIRECTORS REPORT
The directors are pleased to present their report to the members together with the audited consolidated financial statements of Fischer Tech Ltd (the Company) and its subsidiary companies (collectively, the Group) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 March 2013. DIRECTORS The directors of the Company in office at the date of this report are: Foo Meng Tong Tan Choon King Tay Kok Leong Ng Boon Yew Moy Kok Leng, James Leong Hong Kiat, Amos Daisuke Ono (Non-Executive Chairman) (President and Chief Executive Officer)
(Appointed on 1 August 2012)
In accordance with Section 153(6) of the Companies Act, Cap. 50, Foo Meng Tong retires and being eligible, offers himself for re-appointment and in accordance with Article 91 and 97 of the Companys Articles of Association, Moy Kok Leng, James and Daisuke Ono retire respectively and, being eligible, offer themselves for re-election. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Except as disclosed in this report, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. DIRECTORS INTERESTS IN SHARES AND DEBENTURES The following directors, who held office at the end of the financial year, had, according to the register of directors shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and share options of the Company and related corporations (other than wholly-owned subsidiaries), as stated below: Held in the name of directors At the beginning At the end of of financial year financial year
Name of director Fischer Tech Ltd Ordinary shares Tan Choon King Tay Kok Leong Foo Meng Tong Ng Boon Yew
47,623,332 4,710,000 200,000 150,000
47,623,332 5,010,000 200,000 150,000
28
DIRECTORS REPORT
DIRECTORS INTERESTS IN SHARES AND DEBENTURES (CONTD) Held in the name of directors At the beginning At the end of of financial year financial year
Name of director Fischer Tech Ltd Tay Kok Leong Options to subscribe to ordinary shares (exercisable at $0.343 per share) Options to subscribe to ordinary shares (exercisable at $0.542 per share) Options to subscribe to ordinary shares (exercisable at $0.325 per share)
500,000
500,000
500,000
500,000
500,000
500,000
There was no change in any of the above-mentioned interests between the end of the financial year and 21 April 2013. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year. DIRECTORS CONTRACTUAL BENEFITS Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive benefits 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. SHARE OPTIONS The Fischer Tech Share Option Scheme (the Scheme) was approved at an Extraordinary General Meeting held on 30 August 2002. The Scheme is opened to full-time employees, executive directors and non-executive directors, subject to certain conditions being satisfied. The Scheme does not extend to Controlling Shareholders or their associates (as defined in the SGX-ST Listing Manual). The subscription price of an option shall be equal to the market price but not less than $0.15 or at a discounted subscription price, whereby the discount shall not exceed 20% of the market price as at the date of grant of the option. The Scheme entitles option holders to exercise their options (other than an option granted at a discount) after one year from the date of grant of the option provided always that an option shall be exercised before the end of 120 months (or 60 months where the option holder is a non-executive director) from the date of grant of that option. Discounted options are exercisable after two years from the date of the grant of the option provided always that such option shall be exercised before the end of 120 months (or 60 months where the option holder is a non-executive director) from the date of grant of the option.
29
DIRECTORS REPORT
SHARE OPTIONS (CONTD) The Scheme will operate for a maximum duration of 10 years and the total number of shares that may be issued cannot exceed 15% of the issued share capital of the Company. The Committee administering the Scheme comprises the following directors: Moy Kok Leng, James Ng Boon Yew Foo Meng Tong (Chairman)
There were no share options granted since the end of the previous financial year. Details of the options to subscribe for ordinary shares of the Company granted to employees of the Company pursuant to the scheme are as follows: Balance outstanding Exercisable Lapsed at 31.03.13 at 31.03.13 (25,000) (420,000) (530,000) (975,000) 1,575,000 3,300,000 3,305,000 8,180,000 1,575,000 3,300,000 3,305,000 8,180,000 Exercise price $ Expiry Date 0.343 0.542 0.325 07.10.2013 05.10.2014 15.11.2015
Date of grant 08.10.2003 06.10.2004 16.11.2005
Balance at 01.04.12 1,600,000 3,720,000 3,835,000 9,155,000
Exercised
These options do not entitle the holders to participate, by virtue of the options, in any share issue of any other corporation. Since the commencement of the Scheme, 9,935,000 options have been exercised as at the date of this report. No unissued shares other than those referred to above, are under options as at the date of this report. The share option scheme expired in August 2012.
30
DIRECTORS REPORT
SHARE OPTIONS (CONTD) Details of the options to subscribe for ordinary shares of the Company granted to directors of the Company pursuant to the Scheme are as follows: Aggregate Aggregate Aggregate options options options granted since exercised since lapsed since commencement commencement commencement of scheme to of scheme to of scheme to Exercise end of end of end of period financial year financial year financial year 2003 2010 2003 2015 2003 2010 2004 2010 2006 2010 800,000 2,000,000 600,000 450,000 150,000 (200,000) (500,000) (150,000) (600,000) (450,000) (450,000) (150,000)
Name of director Foo Meng Tong Tay Kok Leong Ng Boon Yew Moy Kok Leng, James Leong Hong Kiat, Amos
Aggregate options outstanding as at end of financial year 1,500,000
Exercise Price $ 0.181 0.542 0.181 0.542 0.181 0.542 0.325 0.542 0.325
Only one director, Tay Kok Leong has received 5% or more of the total number of options granted under the Scheme. Saved as disclosed above, no other employee or director of the Group has received 5% or more of the total number of options available under the Scheme. There were no options granted at a discounted subscription price. AUDIT COMMITTEE The Audit Committee (AC) carried out its functions in accordance with section 201B(5) of the Singapore Companies Act, Cap. 50, including the following: Reviews the audit plans of the internal and external auditors of the Company, and reviews the internal auditors evaluation of the adequacy of the Companys system of internal accounting controls and the assistance given by the Companys management to the external and internal auditors; Reviews the half-yearly announcements and annual financial statements and the auditors report on the annual financial statements of the Company before their submission to the Board of Directors; Reviews effectiveness of the Companys material internal controls, including financial, operational and compliance controls and risk management via reviews carried out by the internal auditors; Meets with the external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC; Reviews legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators; Reviews the cost effectiveness and the independence and objectivity of the external auditors; Reviews the nature and extent of non-audit services provided by the external auditors; Recommends to the Board of Directors the external auditors to be nominated, and reviews the scope and results of the audit; Reports actions and minutes of the AC to the Board of Directors with such recommendations as the AC considers appropriate; Reviews interested person transactions in accordance with the requirements of the Singapore Exchange Securities Trading Limited (SGX-ST)s Listing Manual.
31
DIRECTORS REPORT
AUDIT COMMITTEE (CONTD) The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence of the external auditors. The AC has also conducted a review of interested person transactions. The AC has recommended to the Board of Directors that the auditor, Ernst & Young LLP, be nominated for re-appointment as auditor at the next annual general meeting of the Company. Further details regarding the audit committee are disclosed in the Corporate Governance Report. AUDITOR Ernst & Young LLP have expressed their willingness to accept re-appointment as auditor.
On behalf of the Board of Directors,
Foo Meng Tong Director Singapore 18 June 2013
Tan Choon King Director
32
STATEMENT BY DIRECTORS
We, Foo Meng Tong and Tan Choon King, being two of the directors of Fischer Tech Ltd (the Company), do hereby state that, in the opinion of the directors, (i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2013 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and 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.
(ii)
On behalf of the Board of Directors,
Foo Meng Tong Director Singapore 18 June 2013
Tan Choon King Director
33
INDEPENDENT AUDITORS REPORT
For the financial year ended 31 March 2013 To the Members of Fischer Tech Ltd
REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying consolidated financial statements of Fischer Tech Ltd (the Company) and its subsidiaries (collectively, the Group) set out on pages 35 to 101, which comprise the balance sheets of the Group and the Company as at 31 March 2013, the statements of changes in equity of the Group and the Company, and the consolidated income statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the 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, Chapter 50 (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 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 judgment, 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 auditor considers internal control relevant to the entitys preparation of 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. OPINION In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity 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 31 March 2013 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the 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.
Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 18 June 2013
34
CONSOLIDATED INCOME STATEMENT
For the financial year ended 31 March 2013
Group Note 2013 $000 2012 $000
Continuing operations Revenue Cost of sales Gross profit Interest income Other income Distribution and selling expenses Administrative expenses Finance costs Share of loss of associated companies Profit/(loss) before taxation from continuing operations Taxation Profit/(loss) from continuing operations, net of tax Discontinued operation Loss from discontinued operation, net of tax Profit/(loss) for the year Attributable to: Owners of the Company Profit/(loss) from continuing operations, net of tax Loss from discontinued operation, net of tax Profit/(loss) for the year attributable to owners of the Company Non-controlling interests Loss from continuing operations, net of tax Loss from discontinued operation, net of tax Loss for the year attributable to non-controlling interests Earning/(loss) per share from continuing operations attributable to owners of the Company (cents per share) Basic and diluted Earning/(loss) per share (cents per share) Basic and diluted
132,523 (105,874) 26,649 29 4,831 (2,730) (15,461) (818) (312) 12,188 (1,836) 10,352
123,676 (109,238) 14,438 23 6,023 (2,663) (20,332) (859) (102) (3,472) (393) (3,865) (474) (4,339)
5 6
8 9
10
(59) 10,293
10,352 (59) 10,293
(3,864) (345) (4,209)
(1) (129) (130)
11(a)
3.79
(1.41)
11(b)
3.77
(1.54)
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
35
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group 2013 $000 Profit/(loss) for the year Other comprehensive income/(loss): Foreign currency translation Share of other comprehensive (loss)/income of associated companies Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Attributable to: Owners of the Company Non-controlling interests Total comprehensive income/(loss) for the year Attributable to: Owners of the Company Total comprehensive income/(loss) from continuing operations, net of tax Total comprehensive loss from discontinued operation, net of tax Total comprehensive income/(loss) for the year attributable to owners of the Company Non-controlling interests Total comprehensive loss from continuing operations, net of tax Total comprehensive loss from discontinued operation, net of tax Total comprehensive loss for the year attributable to non-controlling interests 10,293 2012 $000 (4,339)
159 (13) 146 10,439
1,146 214 1,360 (2,979)
10,439 10,439
(2,831) (148) (2,979)
10,503 (64)
(2,522) (309)
10,439
(2,831)
(8) (140)
(148)
36
BALANCE SHEETS
As at 31 March 2013
Group Note Non-Current Assets Property, plant and equipment Goodwill and other intangible assets Investments in subsidiary companies Interests in associated companies Loans due from subsidiary companies Deferred tax assets Current Assets Inventories Trade and other receivables Other assets Non-current asset held for sale Short-term investments Prepayments Derivatives Cash and short-term deposits Current Liabilities Trade and other payables Loans and borrowings Income tax payable 12 13 14 15 16 26 33,919 5,698 3,753 814 44,184 17 18 19 20 21 22 23 17,030 33,270 982 1,412 1,304 10 28,121 82,129 24 25 26,228 17,383 383 43,994 Net Current Assets Non-Current Liabilities Loans and borrowings Deferred tax liabilities 25 26 38,135 571 658 1,229 Net Assets Equity attributable to owners of the Company Share capital Share option reserve Foreign currency translation reserve Reserve on acquisition of non-controlling interests Retained earnings Statutory reserve Total Equity 27 28 29 30 31 57,787 1,097 (648) 101 20,346 2,407 81,090 57,787 2,913 (794) 101 10,753 1,530 72,290 81,090 30,048 5,601 4,022 715 40,386 17,236 36,088 196 1,347 967 21 23,413 79,268 27,100 19,189 276 46,565 32,703 422 377 799 72,290 2013 $000 2012 $000
Company 2013 2012 $000 $000
1,873 82 27,869 21,239 51,063 175 11,367 83 10 15,119 26,754 7,041 7,705 14,746 12,008 404 404 62,667
826 132 26,805 20,832 48,595 472 16,427 1,347 60 21 12,146 30,473 6,026 9,850 15,876 14,597 200 200 62,992
57,787 1,097 3,783 62,667
57,787 2,913 2,292 62,992
37
38
Attributable to owners of the Company
Note
Equity attributable to owners of the Equity, Company, total total $000 $000 Share capital $000 Share option reserve $000 Retained earnings $000 Statutory reserve $000 Reserve om Foreign acquisition currency of nontranslation controlling reserve interests $000 $000
2013 Group 72,290 10,293 159 (13) 146 146 146 (13) (13) 159 159 72,290 10,293 57,787 2,913 (794) 101 10,753 10,293 1,530
STATEMENTS OF CHANGES IN EQUITY
Opening balance at 1 April 2012 Profit for the year Other comprehensive income Foreign currency translation Share of other comprehensive loss of associated companies Other comprehensive income for the year, net of tax
Total comprehensive income for the year 10,439 10,439
146
10,293
Contributions by and distributions to owners 39 (1,639) (1,639) (1,639)
Dividends on ordinary shares
Others (1,816) (1,816) (877) 1,816 939 877 877
Transfer to statutory reserve Expiry of share options Total Others
Closing balance at 31 March 2013 81,090
81,090
57,787
1,097
(648)
101
20,346
2,407
Attributable to owners of the Company Equity attributable to owners of the Equity, Company, total total $000 $000 Share capital $000 Share option reserve $000 Retained earnings $000 Reserve on Foreign acquisition currency of nontranslation controlling reserve interests $000 $000 NonStatutory controlling reserve interests $000 $000
2012 Group 75,413 (4,339) 75,020 (4,209) 57,787 2,913 (2,172) 15,336 (4,209) 1,156 393 (130)
Opening balance at 1 April 2011 Loss for the year
1,146 214 1,360 (2,979) (2,831) 1,378 1,378 1,378 214 214
1,164
1,164
(4,209)
(18) (18) (148)
Other comprehensive (loss)/income Foreign currency translation Share of other comprehensive income of associated companies Other comprehensive income for the year, net of tax
Total comprehensive (loss)/income for the year
Changes in ownership interests in subsidiary companies that do not result in a loss of control Contributions from minority shareholder Acquisition of non-controlling interests without a change in control 8 (152) 101
101
(253)
Total changes in ownership interests in subsidiary companies (144) 101
101
(245)
Others 72,290 72,290 57,787 2,913 (794) 101 (374) 10,753 374 1,530
Transfer to statutory reserve
Closing balance at 31 March 2012
39
Note
Equity, total $000
Share capital $000
Share option reserve $000
Retained earnings $000
2013 Company Opening balance at 1 April 2012 Profit, net of tax and representing other comprehensive income for the year Total comprehensive income for the year Contributions by and distribution to owners Dividends on ordinary shares Others Expiry of share options (1,816) 1,816 39 (1,639) (1,639) 62,992 1,314 1,314 57,787 2,913 2,292 1,314 1,314
Closing balance as at 31 March 2013 2012 Company Opening balance at 1 April 2011 Loss, net of tax and representing other comprehensive loss for the year Total comprehensive loss for the year Closing balance as at 31 March 2012
62,667
57,787
1,097
3,783
66,183
57,787
2,913
5,483
(3,191) (3,191) 62,992
57,787
2,913
(3,191) (3,191) 2,292
40
CONSOLIDATED CASH FLOW STATEMENT
Group Note Cash flows from operating activities: Profit/(loss) before taxation from continuing operations Loss before taxation from discontinued operation Profit/(loss) from operations before taxation Adjustments for: Interest income Gain on disposal of non-current asset held for sale Gain on disposal of property, plant and equipment Other payables written-back Finance costs Depreciation of property, plant and equipment Impairment loss on property, plant and equipment Impairment loss on goodwill Amortisation of intangible assets Allowance for inventory obsolescence Reversal of allowance on inventory obsolescence Inventories written off Allowance for doubtful trade receivables Reversal of allowance for doubtful trade receivables Property, plant and equipment written off Net fair value loss on derivative financial asset Intangible assets written off Bad debts written off Share of loss of associated companies Currency translation differences Operating profit before working capital changes Increase in inventories Decrease in trade and other receivables Increase in prepayments (Decrease)/increase in trade and other payables Total changes in working capital Cash flows from operations Interest paid Interest received Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Purchase of property, plant and equipment Purchase of intangible assets Down-payments placed for acquisition of plant and machinery Purchases of short-term investments Proceeds from disposal of property, plant and equipment Net proceeds from disposal of non-current asset held for sale Dividend income from associated company Net cash flows used in investing activities Cash flows from financing activities: Dividend paid Proceeds from loans and borrowings Repayment of loans and borrowings Repayment of obligations under finance leases Contributions from minority shareholder Net cash flows (used in)/from financing activities Net increase in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 23 39 12 13 19 21 2013 $000 12,188 (61) 12,127 6 6 7 8 8 13 8 8 18 8 8 (29) (3,752) (122) 818 7,322 208 371 (58) 336 64 117 11 2 55 312 74 17,856 (443) 2,699 (337) (872) 1,047 18,903 (818) 29 (1,607) 16,507 (10,820) (308) (982) (1,412) 444 5,099 (7,979) (1,639) 5,940 (7,728) (308) (3,735) 4,793 109 23,219 28,121 2012 $000 (3,472) (474) (3,946) (23) (7) (152) 859 7,302 38 1,717 188 300 2,762 18 (38) 4,488 142 4 102 836 14,590 (4,796) 1,820 (54) 1,595 (1,435) 13,155 (859) 23 (382) 11,937 (7,181) (53) (196) 154 509 (6,767) 3,399 (2,222) (381) 8 804 5,974 117 17,128 23,219
41
NOTES TO THE FINANCIAL STATEMENTS
31 March 2013
1.
CORPORATE INFORMATION Fischer Tech Ltd (the Company) is a limited liability company incorporated and domiciled in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The registered office and principal place of business of the Company is located at 12 Loyang Way 4, Loyang Industrial Estate, Singapore 507602. The principal activities of the Company are the manufacturing of precision plastic injection moulds, high precision injection moulding, laser marking and decorative finishing for engineering components of automotive, computer peripherals, healthcare and consumer product industries. The principal activities of the subsidiary companies are set out in Note 14 to the financial statements.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 BASIS OF PREPARATION The consolidated financial statements of the Company and its subsidiary companies (collectively, the Group) and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($000) except when otherwise indicated. The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below. 2.2 CHANGES IN ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards that are effective for annual periods beginning on or after 1 April 2012. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company.
42
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.3 STANDARDS ISSUED BUT NOT YET EFFECTIVE The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods beginning on or after 1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014
Description Amendments to FRS 1 Presentation of Items of Other Comprehensive Income Revised FRS 19 Employee Benefits FRS 113 Fair Value Measurement Amendments to FRS 107 Disclosures Offsetting Financial Assets and Financial Liabilities Improvements to FRSs 2012 Amendment to FRS 1 Presentation of Financial Statements Amendment to FRS 16 Property, Plant and Equipment Amendment to FRS 32 Financial Instruments: Presentation Revised FRS 27 Separate Financial Statements Revised FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 111 Joint Arrangements FRS 112 Disclosure of Interests in Other Entities Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities FRS 110, FRS 112 and FRS 27 Amendments to FRS 110, FRS 112 and FRS 27: Investment Entities FRS 110, FRS 111 and FRS 112 Amendments to the transition guidance of FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements and FRS 112 Disclosure of Interests in Other Entities
1 January 2014
Except for the Amendments to FRS 1, FRS 110, Revised FRS 27 and FRS 112, 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 the Amendments to FRS 1, FRS 110, Revised FRS 27 and FRS 112 are described below. Amendments to FRS 1 Presentation of Items of Other Comprehensive Income The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (OCI) is effective for financial periods beginning on or after 1 July 2012. The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard.
43
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.3 STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTD) 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 judgment to determine which entities are controlled, and therefore are required to be consolidated by 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 in the process of reviewing the implications of these standards. FRS 112 Disclosure of Interests in Other Entities FRS 112 Disclosure of Interests in Other Entities is effective for financial periods beginning on or after 1 January 2014. 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. 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. 2.4 BASIS OF CONSOLIDATION (A) Basis of consolidation Basis of consolidation from 1 April 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiary companies as at the end of the reporting period. The financial statements of the subsidiary companies used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within a subsidiary company are attributed to the non-controlling interests even if that results in a deficit balance.
44
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.4 BASIS OF CONSOLIDATION (CONTD) (A) Basis of consolidation (contd) A change in the ownership interest of a subsidiary company, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary company, it: De-recognises the assets (including goodwill) and liabilities of the subsidiary company at their carrying amounts at the date when control is lost; De-recognises the carrying amount of any non-controlling interests; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; Re-classifies the Groups share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.
Basis of consolidation prior to 1 April 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: Acquisition of non-controlling interests, prior to 1 April 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill. Losses incurred by the Group were attributed to the non-controlling interests until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interests had a binding obligation to cover these. Losses prior to 1 April 2010 were not reallocated between non-controlling interests and the owners of the Company. Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying values of such investments as at 1 April 2010 have not been restated.
(B)
Business combinations Business combinations from 1 April 2010 Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. 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.
45
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.4 BASIS OF CONSOLIDATION (CONTD) (B) Business combinations (contd) Business combinations from 1 April 2010 (contd) 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 is not remeasured until it is finally settled within equity. 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. The Group elects for each individual business combination, whether non-controlling interests in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquirees identifiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.8(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Business combinations prior to 1 April 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interests (formerly known as minority interest) was 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. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.
46
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.5 TRANSACTIONS WITH NON-CONTROLLING INTERESTS Non-controlling interests represent the equity in subsidiary companies not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Companys ownership interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary companies. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 2.6 FOREIGN CURRENCY The Groups consolidated financial statements are presented in Singapore Dollars, which is also the Companys functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (a) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiary companies and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as 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. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profi t or loss except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profi t or loss of the Group on disposal of the foreign operation. (b) Consolidated financial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into Singapore Dollars at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. In the case of a partial disposal without loss of control of a subsidiary company that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are reattributed to non-controlling interests and are not recognised in profit or loss. For partial disposals of associated companies or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
47
31 March 2013
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.7 PROPERTY, PLANT AND EQUIPMENT All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.19. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost 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 initial recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets or the lease term as follows: Plant and machinery Motor vehicles Other assets 10 years 5 years 3 to 10 years
Other assets include computer equipment, furniture and fixtures, renovation, electrical fittings and other minor assets. Construction-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in profit or loss in the year the asset is derecognised.
48
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.8 INTANGIBLE ASSETS (a) Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Groups cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cashgenerating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising from the acquisition of foreign operations on or after 1 April 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6. Goodwill and fair value adjustments which arose on acquisition of foreign operations before 1 April 2005 are deemed to be assets and liabilities of the Company and are recorded in Singapore Dollars at the rates prevailing at the date of acquisition. (b) Other intangible assets Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amor tisation and any accumulated impairment losses. The Groups other intangible assets have finite useful lives. Intangible assets with finite useful lives are amortised over the estimated useful lives on a straight-line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful lives or the expected pattern of consumption of future economic benefits embodied in the assets are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.
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31 March 2013
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.8 INTANGIBLE ASSETS (CONTD) The estimated useful lives of the acquired intangible assets with finite useful lives are as follows: Software Licensing Club memberships 3 to 5 years 10 years 10 to 14 years
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and are recognised in the profit or loss when the intangible asset is derecognised. 2.9 INVESTMENTS IN SUBSIDIARY COMPANIES A subsidiary company is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Companys separate financial statements, investments in subsidiary companies are accounted for at cost less impairment losses. 2.10 INTERESTS IN ASSOCIATED COMPANIES An associated company is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. The associated company is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associated company. The Groups investments in associated companies are accounted for using the equity method. Under the equity method, the investment in associated company is carried in the balance sheet at cost plus postacquisition changes in the Groups share of net assets of the associated company. Goodwill relating to an associated company is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Groups share of the net fair value of the associated companys identifiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Groups share of results of the associated company in the period in which the investment is acquired. The profit or loss reflects the share of the results of operations of the associated companies. Where there has been a change recognised in other comprehensive income by the associated companies, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associated companies are eliminated to the extent of the interest in the associated companies. The Groups share of the profit or loss of its associated companies is the profit attributable to equity holders of the associated company and, therefore is the profit or loss after tax and non-controlling interests in the subsidiary companies of associated companies. When the Groups share of losses in an associated company equals or exceeds its interest in the associated company, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company.
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31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.10 INTERESTS IN ASSOCIATED COMPANIES (CONTD) After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associated company. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associated company is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associated company and its carrying value and recognises the amount in profi t or loss. The financial statements of the associated companies are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the associated company, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associated company upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss. 2.11 IMPAIRMENT OF NON-FINANCIAL ASSETS The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units 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 group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset 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 transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Groups cash-generating units to which the individual assets are allocated. These budgets and forecast calculations generally covering a period of five years or the remaining useful lives of the assets or cash-generating units. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year, where applicable. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets 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 increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss.
51
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.12 FINANCIAL ASSETS Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. The Group has classified its derivatives arising from forward currency contracts upon initial recognition at fair value through profit or loss. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss. (b) Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group classifies the following financial assets as loans and receivables: cash and cash equivalents trade and other receivables
52
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.12 FINANCIAL ASSETS (CONTD) Subsequent measurement (contd) (c) Available-for-sale financial assets Available-for-sale financial assets include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is de-recognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. The Group has classified short-term investments as available-for-sale financial assets. De-recognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchase or sale of a financial asset All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. 2.13 IMPAIRMENT OF FINANCIAL ASSETS The Group assesses at each reporting date whether there is any objective evidence that a financial assets impaired. (a) Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.
53
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.13 IMPAIRMENT OF FINANCIAL ASSETS (CONTD) (a) Financial assets carried at amortised cost (contd) If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss. When the financial asset becomes uncollectible, the carrying amount of the impaired financial asset is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (b) Financial assets carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amounts of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. (c) Available-for-sale financial assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of that investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit and loss, is transferred from other comprehensive income and recognised in profit and loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit and loss; increase in their fair value after impairment are recognised directly in other comprehensive income.
54
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.13 IMPAIRMENT OF FINANCIAL ASSETS (CONTD) (c) Available-for-sale financial assets (contd) In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in profit or loss. Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increases can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed in profit or loss. 2.14 INVENTORIES Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows: Raw materials/packing materials purchase costs on a first-in first-out basis; and Finished goods/ work-in-progress cost 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.
Where necessary, allowance is provided for damaged, obsolete and slow-moving items to adjust the carrying value of inventories to lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. 2.15 NON-CURRENT ASSET HELD FOR SALE Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
55
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.16 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash at banks and on hand and short-term deposits 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 that form an integral part of the Groups cash management. 2.17 FINANCIAL LIABILITIES Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus in the case of other financial liabilities not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss. The Group has classified derivatives arising from forward currency contracts upon initial recognition at fair value through profit or loss. (b) Other financial liabilities After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. De-recognition A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
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31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.18 PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.19 BORROWING COSTS Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest expenses and other costs that an entity incurs in connection with the borrowing of funds. 2.20 EMPLOYEE BENEFITS (a) Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. (b) Employee leave entitlement Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period. (c) Employee share options The Company has a share option scheme adopted in 2002 for the granting of share options to eligible employees and directors of the Group to subscribe for ordinary shares in the Company. Employees of the Group receive remuneration in the form of share options as consideration for services rendered (equity-settled transactions). The cost of these equity-settled share based payment transactions with employees for awards granted is measured by reference to the fair value of the options at the date on which the options are granted which takes into account market conditions and non-vesting conditions. This cost is recognised in profit or loss, with a corresponding increase in the share option reserve, over the 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 Groups 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 the beginning and end of that period and is recognised in employee benefits expense.
57
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.20 EMPLOYEE BENEFITS (CONTD) (c) Employee share options (contd) No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market condition or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. In the case where the option does not vest as the result of a failure to meet a non-vesting condition that is within the control of the Group or the employee, it is accounted for as a cancellation. In such case, the amount of the compensation cost that otherwise would be recognised over the remainder of the vesting period is recognised immediately in profit or loss upon cancellation. When the options are exercised, the share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares. The employee share option reserve is transferred to retained earnings upon the expiry of the share option. 2.21 LEASES The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 April 2005, the date of inception is deemed to be 1 April 2005 in accordance with the transitional requirements of INT FRS 104. As lessee Finance lease, which transfers to the Group substantially all the risks and rewards incidental to ownership of the leased item, is capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased asset is depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
58
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.22 REVENUE RECOGNITION Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of plastic injection components Revenue from sale of plastic injection components is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (b) Tooling revenue Revenue from the manufacture of high precision moulds is recognised on the percentage of completion method. Percentage of completion is measured by reference to the stage of mould manufacturing process. (c) Interest income Interest income is recognised using the effective interest method. (d) Dividend income Dividend income is recognised when the Groups right to receive payment is established. (e) Management fee income Management fee income is recognised on an accrual basis upon which corporate services are rendered and earned. 2.23 TAXES (a) Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, 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.
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31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.23 TAXES (CONTD) (b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the ta x bases of assets and liabilities and their carr ying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiary companies and associated companies, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
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: Where 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 subsidiary companies and associated companies, 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 the end of each reporting period 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 the end of each reporting period 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 end of each reporting period. Deferred tax relating to items recognised outside profi t or loss is recognised outside the profi t 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.
60
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.23 TAXES (CONTD) (b) Deferred tax (contd) 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. 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 to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss. (c) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except: Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. 2.24 SEGMENT REPORTING For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment information. 2.25 SHARE CAPITAL AND SHARE ISSUE EXPENSES Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital. 2.26 CONTINGENCIES A contingent liability is: (a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation that arises from past events but is not recognised because: (i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability.
(b)
(ii)
61
31 March 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.26 CONTINGENCIES (CONTD) A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined. 2.27 DISCONTINUED OPERATION A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations. In profit or loss of the current reporting period, and of the comparative period of the previous year, all income and expenses from discontinued operation are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in profit or loss. 2.28 RELATED PARTIES A related party is defined as follows: (a) A person or a close member of that persons family is related to the Group and Company if that person: (i) (ii) (iii) Has control or joint control over the Company; Has significant influence over the Company; or Is a member of the key management personnel of the Group or Company or of a parent of the Company.
(b)
An entity is related to the Group and the Company if any of the following conditions applies: (i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company. The entity is controlled or jointly controlled by a person identified in (a).
(ii)
(iii) (iv) (v)
(vi)
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
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31 March 2013
3.
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES The preparation of the Groups consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods. 3.1 JUDGMENTS MADE IN APPLYING ACCOUNTING POLICIES In the process of applying the Groups accounting policies, management has made the following judgment, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements: (i) Determination of functional currency The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiary companies. In determining the functional currencies of the entities in the Group, judgment is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on managements assessment of the economic environment in which the entities operate and the entities process of determining sales prices. 3.2 KEY SOURCES OF ESTIMATION UNCERTAINTY The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements was prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. (i) Impairment of goodwill Goodwill is tested for impairment annually and at other times when such indications exist. This assessment is made based on a value in use method. Management has estimated the expected future cash flows from the cash-generating units and chosen suitable discount rates in order to calculate the present value of those cash flows. No impairment charge (2012: $1,717,000) was recorded for the financial year ended 31 March 2013. The carrying amount of the Groups goodwill at 31 March 2013 was $5,212,000 (2012: $5,212,000). Further details of the key assumptions applied in the impairment assessment of goodwill are given in Note 13 to the financial statements.
63
31 March 2013
3.
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTD) 3.2 KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTD) (ii) Impairment of non-financial assets The Group determines whether there are any indications of impairment for investments in subsidiary companies, interests in associated companies and property, plant and equipment at least on an annual basis. When indicators of impairment exist, recoverable amount assessment is made based on a value in use method. This requires management to make an estimate of the expected future cash flows, growth rate of the business based on the industry average and an estimate of the relevant weighted average cost of capital as a discount rate. Impairment charge on investments in subsidiary companies, interests in associated companies and property, plant and equipment of $70,000, $Nil and $Nil (2012: $3,952,000, $Nil and $38,000 respectively) were respectively recorded for the financial year ended 31 March 2013. The carrying amount of the Companys investments in subsidiary companies, the Groups interests in associated companies and the Groups property, plant and equipment at 31 March 2013 were $27,869,000 (2012: $26,805,000), $3,753,000 (2012: $4,022,000) and $33,919,000 (2012: $30,048,000) respectively. (iii) Income taxes The Group has exposure to income taxes in numerous jurisdictions. Significant judgment is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the financial period in which such determination is made. The carrying amount of the Groups tax payables at 31 March 2013 was $383,000 (2012: $276,000). The carrying amounts of the Groups deferred tax assets and deferred tax liabilities at 31 March 2013 were $814,000 (2012: $715,000) and $658,000 (2012: $377,000) respectively.
4.
REVENUE Revenue represents net invoiced value of goods supplied and percentage of work completed for sale of moulds, and it is shown net of related sales taxes, estimated returns, discounts and volume rebates. Group 2013 $000 Sale of plastic injection components Tooling revenue 118,716 13,807 132,523 2012 $000 113,436 10,240 123,676
5.
INTEREST INCOME Group 2013 $000 Interest income from: Loans and receivables 2012 $000
29
23
64
31 March 2013
6.
OTHER INCOME Group 2013 $000 Gain on disposal of non-current asset held for sale Gain on disposal of scrap materials Insurance claims Gain on disposal of property, plant and equipment Other payables written-back Grant income from Innovation Development Scheme Other miscellaneous income 3,752 468 296 122 193 4,831 2012 $000 361 4,911 46 152 459 94 6,023
7.
FINANCE COSTS Group 2013 $000 Interest expense on: Bank loans and borrowings Bank overdraft Obligations under finance leases 2012 $000
778 5 35 818
802 28 29 859
8.
PROFIT/(LOSS) BEFORE TAXATION FROM CONTINUING OPERATIONS Group Note 2013 $000 2012 $000
The following items have been included in arriving at profit/(loss) before taxation from continuing operations: Depreciation of property, plant and equipment Impairment loss on property, plant and equipment Impairment loss on goodwill Amortisation of intangible assets Allowance for inventory obsolescence Reversal of allowance for inventory obsolescence Inventories written off Allowance for doubtful trade receivables Reversal of allowance for trade receivables Property, plant and equipment written off Foreign exchange losses Net fair value loss on derivative financial asset Audit fees: Auditors of the Company Other auditors Non-audit fees: Auditors of the Company Other auditors 7,322 208 371 (58) 336 64 117 259 11 108 120 5 7,255 38 1,717 187 286 2,762 (38) 4,403 545 142 146 101 45 35
12 13
17 17 18 18
65
31 March 2013
9.
TAXATION Major components of income tax expense The major components of income tax expense for the financial years ended 31 March 2013 and 2012 are: Group 2013 $000 Consolidated income statement: Current income tax continuing operations: Current income taxation Over provision in respect of prior years Deferred income tax continuing operations (Note 26): Origination and reversal of temporary differences Under provision in respect of prior years Income tax attributable to associated companies Income tax attributable to continuing operations Income tax attributable to discontinued operation (Note 10) Income tax expense recognised in profit or loss Relationship between income tax expense and accounting profit/(loss) A reconciliation between tax expense and the product of accounting profit/(loss) multiplied by the statutory tax rate for the financial years ended 31 March 2013 and 2012 is as follows: Group 2013 2012 $000 $000 Profit/(loss) before taxation from continuing operations Loss before taxation from discontinued operation (Note 10) Profit/(loss) from operations before taxation Tax at the domestic rates applicable to profits/(losses) in the countries where the Group operates Adjustments: Non-deductible expenses Income not subject to taxation Effect of change in tax rates Effect of partial tax exemption and tax relief Benefits from previously unrecognised tax losses Deferred tax assets not recognised Under/(over) provision in respect of prior years Income tax (credit)/expense attributable to associated companies Income tax expense recognised in profit or loss 12,188 (61) 12,127 (3,472) (474) (3,946) 2012 $000
1,723 (15) 1,708 125 59 184 (56) 1,836 (2) 1,834
671 (99) 572 (181) 10 (171) (8) 393 393
1,974 659 (583) (188) (654) 640 42 (56) 1,834
(1,581) 787 (106) 23 (441) (64) 1,857 (89) 7 393
The corporate income tax rate applicable to the Singapore companies of the Group was 17% (2012: 17%). Subsidiary companies and associated companies incorporated in Peoples Republic of China (PRC), Thailand and Malaysia are subjected to corporate tax rate of 25%, 23% and 25% (2012:25%, 30% and 25%) respectively. A subsidiary company incorporated in PRC is subjected to an incentive tax rate of 15% (2012:15%). The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
66 FISCHER TECH LTD ANNUAL REPORT 2013
31 March 2013
10.
DISCONTINUED OPERATION Income statement disclosures The results of discontinued operation for the years ended 31 March are as follows: Group 2013 $000 Revenue Expenses Loss from operations Loss before taxation from discontinued operation (Note 9) Taxation (Note 9) Loss from discontinued operation, net of tax (61) (61) (61) 2 (59) 2012 $000 526 (1,000) (474) (474) (474)
Cash flow statement disclosures The cash flows attributable to discontinued operation are as follows: Group 2013 $000 Operating Investing Net cash outflows Loss per share disclosures Loss per share from discontinued operation attributable to owners of the Company (cents per share) Group 2013 $ Basic and diluted (0.02) 2012 $ (0.13) (98) (98) 2012 $000 (352) 296 (56)
The basic and diluted loss per share from discontinued operation are calculated by dividing the loss from discontinued operation, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year for basic loss per share computation and weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares for diluted loss per share computation respectively. These loss and share data are presented in the tables in Note 11(a).
67
31 March 2013
11.
EARNINGS/(LOSS) PER SHARE (a) Continuing operations Basic earnings/(loss) per share from continuing operations are calculated by dividing the profit/(loss) for the year from continuing operations, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings/(loss) per share from continuing operations are calculated by dividing the profit/(loss) for the year from continuing operations, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The following table reflects the profit/(loss) and share data used in the computation of basic and diluted earnings/(loss) per share for the years ended 31 March: Group 2013 2012 $000 $000 Profit/(loss) for the year attributable to owners of the Company Add back: Loss from discontinued operation, net of tax, attributable to owners of the Company Profit/(loss) from continuing operations, net of tax, attributable to owners of the Company used in the computation of basic and diluted earnings/(loss) per share from continuing operations 10,293 59 (4,209) 345
10,352
(3,864)
Number of shares 2013 2012 000 000 Weighted average number of ordinary shares for basic earnings/(loss) per share and diluted earnings/(loss) per share computation (Note 27) (b) Earnings/(loss) per share computation The basic and diluted earnings/(loss) per share are calculated by dividing the profit/(loss) for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year for basic earnings/(loss) per share computation and weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares for diluted earnings/(loss) per share computation respectively. 8,180,000 (2012: 9,155,000) of share options granted to employees under the existing employee share option plans have not been included in the calculation of diluted earnings/(loss) per share because they are antidilutive for the current and previous financial year presented. There have been no transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.
273,205
273,205
68
12. Note Leasehold property $000 Total $000 Plant and machinery $000 Motor vehicles $000 Other Construction assets in-progress $000 $000
PROPERTY, PLANT AND EQUIPMENT
Group Cost: At 1 April 2011 Additions ^ Disposals and write-offs Transfer to non-current asset held for sale Exchange differences 20 2,930 (2,930) 62,856 1,826 20,783 58,827 225 7,692 (3,952) 64 1,428 834 (440) 4 16,507 1,617 3,055 (346) (50) 1,842 (1,842) 17 17 62,093 4,192 (7,783) 325 1,544 213 (334) 5 22,017 1,741 (7,412) 161 1,842
88,584 7,988 (15,529) (2,930) 491 78,604 11,598 (4,738) 18 85,482
At 31 March 2012 and 1 April 2012 Transferred from construction-in-progress Additions ^ Disposals and write-offs Exchange differences
At 31 March 2013
31 March 2013
Accumulated depreciation and impairment loss: At 1 April 2011 Depreciation charge for the year Disposals and write-offs Impairment loss Transfer to non-current asset held for sale Exchange differences 8 20 1,494 89 (1,583) 37,190 5,192 (3,521) 15 38,876 37,047 5,173 (5,130) 38 62 961 151 (298) 2 816 241 (275) 5 787
13,976 1,889 (5,451) 136 10,550 1,889 (499) (40) 11,900
53,478 7,302 (10,879) 38 (1,583) 200 48,556 7,322 (4,295) (20) 51,563
At 31 March 2012 and 1 April 2012 Depreciation charge for the year Disposals and write-offs Exchange differences
At 31 March 2013
Net carrying amount: At 31 March 2012
21,637 23,980
612 1,039
5,957 8,883
1,842 17
30,048 33,919
At 31 March 2013
^ Additions of $11,598,000 (2012: $7,988,000) included an amount of deposit of $196,000 (2012: $635,000) paid in the previous year.
69
31 March 2013
12.
PROPERTY, PLANT AND EQUIPMENT (CONTD) Plant machinery $000 Company Cost: At 1 April 2011 Transfer from subsidiary company Transfer to subsidiary companies Additions Disposals and write-offs At 31 March 2012 and 1 April 2012 Transfer to subsidiary companies Additions Disposals and write-offs At 31 March 2013 Accumulated depreciation: At 1 April 2011 Depreciation charge for the year Transfer to subsidiary companies Disposals and write-offs At 31 March 2012 and 1 April 2012 Depreciation charge for the year Transfer to subsidiary companies Disposals and write-offs At 31 March 2013 Net carrying amount: At 31 March 2012 At 31 March 2013 Construction-in-progress The Groups construction-in-progress relates to cost incurred in the course of renovating the leasehold properties. Capitalisation of borrowing costs No borrowing costs were capitalised during the financial year. (2012: Nil). Assets held under finance leases During the financial year, the Group acquired plant and machinery and motor vehicles with an aggregate cost of $834,000 (2012: $160,000) by means of finance leases. The net cash outflow on acquisition of property, plant and equipment amounted to $10,820,000 (2012: $7,181,000). Leased assets are pledged as security for the related finance lease liabilities. Motor vehicles $000 Other assets $000
Total $000
1,906 1 (55) 7 (1,608) 251 (83) 740 908
580 580 764 (394) 950
4,463 6 (2,200) 2,269 (150) 22 (27) 2,114
6,949 1 (55) 13 (3,808) 3,100 (233) 1,526 (421) 3,972
1,450 126 (47) (1,405) 124 18 (38) 104
315 60 375 125 (229) 271
3,618 201 (2,044) 1,775 104 (129) (26) 1,724
5,383 387 (47) (3,449) 2,274 247 (167) (255) 2,099
127 804
205 679
494 390
826 1,873
70
31 March 2013
12.
PROPERTY, PLANT AND EQUIPMENT (CONTD) Included in property, plant and equipment are assets under finance leases as follows: Group 2013 $000 Net carrying value of motor vehicles Net carrying value of plant and machinery Impairment of assets No impairment loss (2012: $38,000) was recognised for the financial year ended 31 March 2013. The recoverable amount of the property, plant and equipment was based on its value in use. 936 153 2012 $000 463 261 Company 2013 2012 $000 $000 679 205
13.
GOODWILL AND OTHER INTANGIBLE ASSETS Other intangible assets Goodwill $000 Group Cost: At 1 April 2011 Additions Written off Exchange differences At 31 March 2012 and 1 April 2012 Additions Written off Exchange differences At 31 March 2013 Accumulated amortisation and impairment loss: At 1 April 2011 Amortisation Impairment loss (Note 8) Written off Exchange differences At 31 March 2012 and 1 April 2012 Amortisation Written off Exchange differences At 31 March 2013 Net carrying amount: At 31 March 2012 At 31 March 2013 Software $000 Club Licensing memberships $000 $000 Total $000
6,929 6,929 6,929
1,084 53 (33) 13 1,117 301 (115) 4 1,307
153 153 153
83 83 7 (23) 67
8,249 53 (33) 13 8,282 308 (138) 4 8,456
1,717 1,717 1,717 5,212 5,212
664 169 (29) 6 810 187 (113) 5 889 307 418
97 15 112 15 127 41 26
38 4 42 6 (23) 25 41 42
799 188 1,717 (29) 6 2,681 208 (136) 5 2,758 5,601 5,698
71
31 March 2013
13.
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTD) Other intangible assets Software $000 Company Cost: At 1 April 2011, 31 March 2012, 1 April 2012 and 31 March 2013 Accumulated amortisation: At 1 April 2011 Amortisation At 31 March 2012 and 1 April 2012 Amortisation At 31 March 2013 Net carrying amount: At 31 March 2012 At 31 March 2013 Club Licensing memberships $000 $000 Total $000
300
153
60
513
219 31 250 30 280
97 15 112 15 127
15 4 19 5 24
331 50 381 50 431
50 20
41 26
41 36
132 82
Remaining amortisation period Software, licensing and club memberships have respective remaining amortisation period of 0.2 to 4.8 years (2012: 0.1 to 4.8 years), 1.5 to 2.1 years (2012: 2.5 to 3.1 years) and 8.4 to 11.8 years (2012: 9.4 years). Amortisation expense The amortisation of software is included in the Cost of sales and Administrative expenses line items in profit or loss. The amortisation of licensing and club memberships is included in the Administrative expenses line item in profit or loss. Impairment testing of goodwill Goodwill arising from business combinations has been allocated to two individual cash-generating units (CGU), which are reportable segments, for impairment testing as follows: High precision plastic injection; and Mould design and fabrication
72
31 March 2013
13.
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTD) Impairment testing of goodwill (contd) The carrying amount of goodwill allocated to each of the CGU is as follows: Group 2013 $000 High precision plastic injection Mould design and fabrication 5,212 5,212 Less: impairment losses 5,212 2012 $000 5,212 1,717 6,929 (1,717) 5,212
The recoverable amount of the CGUs has been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period. The pre-tax discount rate applied to the cash flow projections and the forecasted growth rates used to extrapolate cash flow projections beyond the one-year period are as below: Group High precision plastic injection 2013 2012 % % Growth rate 2 to 5 years 5.00 5.00 Mould Design and fabrication 2013 2012 % % N.A 5.00
The calculations of value in use for the CGUs are most sensitive to the following assumptions: Budgeted gross margins Gross margins are based on the average gross margins achieved in the year immediately before the budgeted year. These are increased over the budgeted year for anticipated efficiency improvements. Growth rate Weighted average growth rate used to extrapolate cash flows for the budget period do not exceed the long-term average growth rate for the industries relevant to the CGUs. The weighted average growth rate used is based on management experience on the growth rate of the industry. Pre-tax discount rate Discount rate reflects managements estimate of the risks to the CGUs. In determining appropriate discount rate, regard has been given to the weighted average cost of capital of the Group (WACC). The WACC takes into account both debt and equity. Impairment loss recognised No impairment loss (2012: $1,717,000) was recognised for the financial year ended 31 March 2013. In the previous year, the impairment loss had been recognised in profit or loss under the line item Administrative expenses.
73
31 March 2013
14.
INVESTMENTS IN SUBSIDIARY COMPANIES Company 2013 2012 $000 $000 Unquoted shares, at cost Impairment losses 32,381 (4,512) 27,869 Details of the subsidiary companies at the end of the financial year are as follows: Percentage of equity held by the Group 2013 2012 % % 31,247 (4,442) 26,805
Name of Company
Country of incorporation
Principal activities
Cost 2013 2012 $000 $000
Held by the Company # Fischer Tech International Pte Ltd Fischer Medtech Pte Ltd Singapore Investment holding 2,127 2,127 100 100
Singapore
Manufacture of high precision plastic components Manufacture of high precision moulds
500
500
100
100
Fon-Fischer Pte Ltd
Singapore
2,580
2,580
100
100
Fischer Technology Pte Ltd
Singapore
Manufacture of IML 5,355 plastic key pads and IML plastic components Manufacture of high precision moulds Investment holding Manufacture of high precision moulds and plastic components Manufacture of high precision moulds and plastic components 3,196
5,355
100
100
AP-Fischer Pte Ltd
Singapore
3,196
100
100
# @
CPP-Fischer Pte Ltd Fischer Tech (Thailand) Co., Ltd
Singapore Thailand
1,023 6,500
1,023 5,366
100 100
100 100
M-Fischer Tech Sdn Bhd
Malaysia
11,100
11,100
100
100
32,381
31,247
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31 March 2013
14.
INVESTMENTS IN SUBSIDIARY COMPANIES (CONTD) Percentage of equity held by the Group 2013 2012 % %
Name of Company
Held through Fischer Tech International Pte Ltd *@ Fischer Tech (Suzhou) Co., Ltd Peoples Republic of China Peoples Republic of China Manufacture of high precision moulds and plastic components Manufacture of high precision plastic components 100 100
^ @ Fischer Solution (Suzhou) Co., Ltd
100
100
Held through CPP-Fischer Pte Ltd * CPP-Fischer (Suzhou) Co., Ltd Peoples Republic of China Manufacture of high precision plastic components 100 100
# Audited by Ernst & Young LLP, Singapore. Fon-Fischer Pte Ltd and AP-Fischer Pte Ltd have commenced voluntary liquidation. Hence, these companies were not audited with effect from financial year ended 31 March 2013. @ Audited by member firms of Ernst & Young Global in the respective countries for the purpose of consolidation. * Audited by Welsen Certified Public Accountants Co., Ltd for local statutory audit purpose. Liquidation of CPP-Fischer (Suzhou) Co., Ltd was completed in April 2013. ^ Audited by Suzhou Fanben Certified Public Accountants for local statutory audit purpose. Impairment testing of investments in subsidiary companies During the financial year, an impairment loss of $70,000 (2012: $3,952,000) was recognised to write down the costs of investments in CPP-Fischer Pte Ltd to its recoverable amounts based on realised values of net assets. Additional investment in a subsidiary company The Company has made an additional investment of $1,134,000 in Fischer Tech (Thailand) Co., Ltd during the financial year.
75
31 March 2013
15.
INTERESTS IN ASSOCIATED COMPANIES Group 2013 $000 Unquoted shares, at cost Share of post-acquisition reserves Share of changes recognised directly in associated companies equity Carrying amount of investments 206 4,052 (505) 3,753 2012 $000 206 4,308 (492) 4,022
Name of Company
Percentage of equity held by the Group 2013 2012 % %
Held through Fischer Technology Pte Ltd # @^ Zeito International Pte Ltd DongGuan Hyform Electronic Co., Ltd Singapore Peoples Republic of China Investment holding Manufacture of plastic key pads and components 38 38 38 38
# Audited by Ernst & Young LLP, Singapore. ^ Audited by Guangdong CCAT Certified Public Accountants for local statutory audit purpose. @ Audited by member firm of Ernst & Young Global for the purpose of consolidation. The summarised financial information of the associated companies, not adjusted for the proportion of ownership interest held by the Group, is as follows: Group 2013 $000 Assets and liabilities: Total assets Total liabilities Results: Revenue Loss before tax Loss for the year 10,632 (822) (672) 12,420 (268) (246) 15,817 5,940 15,966 5,382 2012 $000
The Group has no contingent liabilities or commitments in respect of its interests in associated companies.
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31 March 2013
16.
LOANS DUE FROM SUBSIDIARY COMPANIES Company 2013 2012 $000 $000 Loans due from subsidiary companies 21,239 20,832
The non-current loans due from subsidiary companies are non-trade related. These long term loans have no repayment terms and are repayable only when cash flows of the subsidiary companies permit. However, it is not expected to be repaid within the next twelve months. Accordingly, the fair values are not determinable as the timing of the future cash flows arising from the loans cannot be estimated reliably. Included in loans due from subsidiary companies is $2,694,000 (2012: $2,790,000) which bear interest at 3.74% to 3.81% (2012: 3.75% to 4.11%) per annum. Loans due from subsidiary companies denominated in foreign currencies as at balance sheet date are as follows: Company 2013 2012 $000 $000 United States Dollar 17. INVENTORIES Group 2013 $000 Balance sheet: Finished goods Work-in-progress Raw materials Packing materials 6,248 4,931 5,736 115 17,030 5,219 6,246 5,652 119 17,236 140 33 2 175 417 43 11 1 472 2012 $000 Company 2013 2012 $000 $000 5,061 5,966
77
31 March 2013
17.
INVENTORIES (CONTD) Group 2013 $000 Consolidated income statement: Inventories recognised as an expense in cost of sales and administrative expenses Inclusive of the following charges: Allowance for inventory obsolescence Reversal of allowance on inventory obsolescence Inventories written off 2012 $000
49,107
53,681
371 (58) 336
286 2,762
The allowance for inventory obsolescence was made based on lower of cost and net realisable values of the inventories. The Group has written off inventories when the related inventories were identified as obsolete. 18. TRADE AND OTHER RECEIVABLES Group 2013 $000 Trade receivables due from external parties, net of allowances Accrued revenue Amounts due from subsidiary companies Amounts due from related parties Total trade receivables Deposits Sundry receivables- third parties Sundry receivables- subsidiary companies Sundry receivables- related parties Total trade and other receivables Add: Cash and short-term deposits (Note 23) Total loans and receivables Trade receivables due from external parties Trade receivables are unsecured, non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts, which represent their fair values on initial recognition. 2012 $000 Company 2013 2012 $000 $000
27,284 5,103 241 32,628 551 60 31 33,270 28,121 61,391
31,593 2,433 892 34,918 506 641 23 36,088 23,413 59,501
4,032 418 5,219 237 9,906 5 1 1,455 11,367 15,119 26,486
6,824 59 6,124 892 13,899 5 559 1,964 16,427 12,146 28,573
78
31 March 2013
18.
TRADE AND OTHER RECEIVABLES (CONTD) Amounts due from subsidiary companies and related parties Amounts due from subsidiary companies are trade related and unsecured. These amounts are to be settled in cash. Included in amounts due from subsidiary companies is $3,536,000 (2012: $5,394,000) which bear interest ranging from 3.74% to 3.81% (2012: 3.75% to 4.11%) per annum. Amounts due from related parties are trade related, unsecured, non-interest bearing and are generally on 30 to 90 days terms. These amounts are to be settled in cash. Sales to subsidiary companies and related parties are made at terms equivalent to those prevailing at arms length transactions with third parties. Included in trade receivables are the following balances denominated in foreign currencies which are mainly in: Group 2013 $000 Chinese Renminbi United States Dollar Thai Baht Euro Malaysia Ringgit Trade receivables that are past due but not impaired The Group has trade receivables amounting to $6,213,000 (2012: $9,195,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows: Group 2013 $000 Trade receivables past due but not impaired: Less than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days 2012 $000 15,215 12,511 2,771 865 178 2012 $000 12,900 16,101 2,743 968 295 Company 2013 2012 $000 $000 6,621 11,187
4,904 784 91 41 393 6,213
6,866 1,568 273 86 402 9,195
79
31 March 2013
18.
TRADE AND OTHER RECEIVABLES (CONTD) Trade receivables that are impaired The Groups trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows: Group 2013 $000 Trade receivables nominal amounts Less: Allowance for impairment 65 (65) Movement in allowance accounts Group 2013 $000 At 1 April Charge for the year Continuing operations (Note 8) Discontinuing operation Reversal of allowance for trade receivables (Note 8) Write off Exchange differences At 31 March 64 55 (55) 1 65 2012 $000 60 18 (38) (39) (1) 2012 $000
Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. 19. OTHER ASSETS Group 2013 $000 Down-payments placed for the acquisition of plant and machinery 982 2012 $000 196
80
31 March 2013
20.
NON-CURRENT ASSET HELD FOR SALE Group and Company 2013 2012 $000 $000 Reclassified from property, plant and equipment (Note 12) Cost Accumulated depreciation Net carrying amount 2,930 (1,583) 1,347
On 22 March 2012, the Group entered into a conditional Sale and Purchase Agreement to sell the factory building at 3 Loyang Street, Singapore 508838 for a cash consideration of $5,200,000. The sale was completed in July 2012. 21. SHORT-TERM INVESTMENTS Group 2013 $000 Current: Available-for-sale financial assets Unquoted structured deposits 22. DERIVATIVES Group and Company 2013 Contract/ notional amount $000 Forward currency contracts Financial assets at fair value through profit or loss 2,484 Contract/ notional amount $000 2,527 2012 2012 $000
1,412
Assets $000 10
Liabilities $000
Assets $000 21
Liabilities $000
10
21
Forward currency contracts are used to hedge foreign currency risk arising from the Groups sales and purchases denominated in USD for which firm commitments existed at the end of the reporting period (Note 36(a)). The Group does not apply hedge accounting.
81
31 March 2013
23.
CASH AND SHORT-TERM DEPOSITS Group 2013 $000 Cash at banks and on hand Short-term deposits Cash and short-term deposits 17,295 10,826 28,121 2012 $000 17,163 6,250 23,413 Company 2013 2012 $000 $000 4,303 10,816 15,119 5,896 6,250 12,146
Cash at banks earn interest at floating rates based on daily bank deposit rates. Short-term deposits are renewed on a weekly or yearly basis and earn interests at the respective short-term deposit rates. Included in cash and short-term deposits are the following balances denominated in foreign currencies which are mainly in: Group 2013 $000 United States Dollar Chinese Renminbi Thai Baht Euro Malaysia Ringgit Cash and cash equivalents Cash and cash equivalents included in the consolidated cash flow statement comprise the following amounts: Group 2013 $000 Cash and short-term deposits Continuing operations Discontinued operation Bank overdraft (Note 25) Total cash and cash equivalents 2012 $000 4,962 4,533 1,322 589 500 2012 $000 6,573 2,925 4,080 332 630 Company 2013 2012 $000 $000 1,749 2 4,221 2
28,121 28,121 28,121
23,315 98 23,413 (194) 23,219
82
31 March 2013
24.
TRADE AND OTHER PAYABLES Group 2013 $000 Trade payables due to external parties Amounts due to subsidiary companies Amounts due to related parties Total trade payables Employee related payables Accrued expenses Other payables Total trade and other payables Add: Loans and borrowings (Note 25) Total financial liabilities carried at amortised cost Trade payables due to external parties Trade and other payables are unsecured, non-interest bearing and are normally settled on 30 to 90 days terms. Amounts due to subsidiary companies and related parties Amounts due to subsidiary companies and related parties are trade related, unsecured, non-interest bearing and are normally settled on 30 to 90 days terms. These amounts are to be settled in cash. Purchases from subsidiary companies and related parties are made at terms equivalent to those prevailing at arms length transactions with external parties. The carrying amounts of trade and other payables approximate their fair value due to their short-term nature. Included in trade payables are the following balances denominated in foreign currencies which are mainly in: Group 2013 $000 Chinese Renminbi United States Dollar Thai Baht Malaysian Ringgit 9,603 3,714 1,968 1,037 2012 $000 11,010 2,327 3,043 1,758 Company 2013 2012 $000 $000 1,965 3,175 18,027 107 18,134 5,828 2,130 136 26,228 17,954 44,182 2012 $000 20,621 611 21,232 3,481 2,210 177 27,100 19,611 46,711 Company 2013 2012 $000 $000 831 2,515 3,346 2,542 1,077 76 7,041 8,109 15,150 892 3,470 8 4,370 768 741 147 6,026 10,050 16,076
83
31 March 2013
25.
LOANS AND BORROWINGS Group Effective interest rate per annum Current: Obligations under finance leases secured (Note 34(c)) Bank loans: SGD bank loans, unsecured Malaysian Ringgit bank loans, unsecured 3.66% 12.27% (2012: 3.66%12.27%) 2013-2014 185 188 77 55 2013 $000 2012 $000 Company 2013 $000 2012 $000
Maturity
1.82% 5.00% (2012: 2.13% 5.00%) 5.46% (2012: 5.51% 5.52%)
2013
9,328
9,995
7,628
9,795
2013
1,203
1,228
Thai Baht bank overdraft, Nil unsecured (Note 23) (2012: 7.48% 7.90%) Thai Baht bank loans, unsecured Renminbi bank loans, unsecured USD bank loans, unsecured Total current amount Non-current: Obligations under finance leases secured (Note 34(c)) Bank loans SGD bank loans, unsecured Total non-current amount Total loans and borrowings 5.00% 7.00% (2012: 5.30% 7.13%) 6.44% (2012: 7.32%) 3.51% 4.70% (2012: 3.68% 6.50%)
On demand
194
2013
2,280
2,627
2013
1,154
2,988
2013
3,233 17,383
1,969 19,189
7,705
9,850
3.66% 5.14% (2012: 3.66% 12.27%)
2014 2019
571
293
404
71
Nil (2012: 5.00%)
2013
571 17,954
129 422 19,611
404 8,109
129 200 10,050
Included in total loans and borrowings is an amount of $7,869,000 (2012: $8,813,000) that was obtained with corporate guarantees issued to subsidiary companies. Obligations under finance leases These obligations are secured by a charge over the leased assets (Note 12). These obligations are denominated in the respective functional currencies of the relevant entities in the Group.
84
31 March 2013
26.
DEFERRED TAX Deferred tax as at 31 March relates to the following: Group Consolidated balance sheet 2013 2012 $000 $000 Deferred tax liabilities: Differences in depreciation Provisions Undistributed earnings of subsidiary company Consolidated income statement 2013 2012 $000 $000
365 (57) 350 658
356 (129) 150 377
9 72 200 281
(175) 28 150 3
Deferred tax assets: Differences in depreciation Provisions Unutilised capital allowance Utilised tax losses Exchange differences Deferred tax expense/(credit) (Note 9) Unrecognised tax losses
3 195 551 69 (4) 814
(216) 65 870 (4) 715
(207) (126) 301 (65) (97) 184
(192) (6) 26 (2) (174) (171)
At the end of the reporting period, the Group has tax losses of approximately $16,306,000 (2012: $25,387,000) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. Unrecognised temporary differences relating to investments in subsidiary companies At the end of the reporting period, earnings of subsidiary companies of approximately $11,558,000 (2012: $6,684,000), have not been provided for deferred tax liabilities as the Group, which has control over the dividend distribution of the subsidiary companies, has determined that undistributed earnings of its subsidiary companies will not be distributed in the foreseeable future. The deferred tax liability is estimated to be $1,155,800 (2012: $668,400). Tax consequences of proposed dividends There are no income tax consequences (2012: Nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements (Note 39).
85
31 March 2013
27.
SHARE CAPITAL Group and Company 2013 No. of shares 000 Issued and fully paid ordinary shares At 1 April and 31 March 273,205 57,787 273,205 57,787 No. of shares 000 2012
$000
$000
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 are outstanding options to subscribe to the Companys shares granted under the employee share option scheme as disclosed in Note 32. 28. SHARE OPTION RESERVE Share option reserve represents the equity-settled share options granted to eligible employees and directors of the Group (Note 32). The share option reserve comprises the cumulative value of services received from employees and directors recorded over the vesting period commencing from the grant date of equity settled share options. 29. FOREIGN CURRENCY TRANSLATION RESERVE The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign subsidiary companies and share of other comprehensive (loss)/income of associated companies whose functional currencies are different from that of the Groups presentation currency. 30. RESERVE ON ACQUISITION OF NON-CONTROLLING INTERESTS The reserve on acquisition of non-controlling interests arose from the acquisition of the remaining 49% interest in CPP Group in the last financial year ended 31 March 2012. 31. STATUTORY RESERVE In accordance with laws and regulations in the Peoples Republic of China (PRC), the Groups subsidiary companies established in PRC are required to appropriate not less than 10% of its profit after tax to the statutory reserve until the cumulative reserve balance reaches 50% of the subsidiarys registered capital. Accordingly, a portion of the profits has been transferred to the statutory reserve. Subject to approval from the relevant PRC authorities, the statutory reserve may be used to offset any accumulated losses or increase the registered capital of the subsidiary companies. The reserve is not available for dividend distribution to shareholders. 32. EMPLOYEE BENEFITS Group 2013 $000 Employee benefits expense (including directors): Salaries and bonuses Central Provident Fund contributions Other employee benefits 2012 $000
32,320 2,477 2,171 36,968
29,440 2,334 2,765 34,539
86
31 March 2013
32.
EMPLOYEE BENEFITS (CONTD) Employee Share Option Scheme The Company has an employee share option scheme for the granting of non-transferable options to all eligible employees and directors of the Group. Options are granted for terms of 5 and 10 years to purchase the Companys ordinary shares at market price but not less than $0.15 or at a discounted subscription price, whereby the discount shall not exceed 20% of the market price as at the date of grant. All options granted are exercisable beginning on the first anniversary of the date of grant. There has been no cancellation or modification to the employee share option scheme during both financial years 2013 and 2012. Movement of employee share options during the financial year The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, options during the financial year: Group and Company No. of share options 2013 000 Outstanding at 1 April Expired during the year Outstanding at 31 March Exercisable at 31 March 9,155 (975) 8,180 8,180 WAEP No. of share ($) options 2013 2012 000 0.416 0.419 0.416 0.416 9,545 (390) 9,155 9,155 WAEP ($) 2012
0.416 0.400 0.416 0.416
The range of exercise prices for options outstanding at the end of the year was $0.325 to $0.542 (2012: $0.325 to $0.542). The weighted average remaining contractual life for these options is 1.78 years (2012: 2.81 years). Fair value of employee share options granted The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Binomial valuation model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value. No expenses were recognised in profit or loss for the employee share option scheme for the Group and the Company for the years ended 31 March 2013 and 31 March 2012. The amount recognised in the Groups and the Companys share option reserve relating to the above equity-settled employee share option scheme at 31 March 2013 is $1,097,000 (2012: $2,913,000).
87
31 March 2013
33.
RELATED PARTY TRANSACTIONS (a) Sale and purchase of goods and services In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place during the year at terms agreed between the parties: Group 2013 $000 Corporate shareholders and its related entities Sales of goods Purchases of goods Purchases of machinery and equipment Commission paid Associated companies Purchases of goods (b) Compensation of key management personnel Group 2013 $000 Directors fees Short-term employee benefits Central Provident Fund contributions Total compensation paid to key management personnel Comprise amounts paid to Directors of the Company Other key management personnel 227 5,212 145 5,584 2012 $000 230 2,685 125 3,040 360 5,640 (2,192) 106 38 (1,991) 1,273 47 2012 $000
2,481 3,103 5,584
1,171 1,869 3,040
Directors interests in employee share option plan At the end of the reporting period, the total number of outstanding share options granted by the Company to a director amounted to 1,500,000 (2012: 1,500,000). There are no outstanding share options granted to the Companys non-executive directors.
88
31 March 2013
34.
COMMITMENTS (a) Capital commitments Capital expenditure contracted for as at the balance sheet date but not recognised in the financial statements are as follows: Group 2013 $000 Capital commitments in respect of purchase for plant and equipment (b) Operating lease commitments - as lessee The Group has entered into commercial leases principally for land rent, office and production floor with remaining lease terms of 1 to 4 years. The operating leases do not contain any escalation clauses and do not provide for contingent rents. Certain leases include renewal options for additional lease period of up to 3 years at rental rates to be based on negotiation or prevailing market conditions. There are no restrictions placed upon the Group by entering into these leases. Rental expense (principally for factory building) was $2,735,000 (2012: $2,678,000) for the financial year ended 31 March 2013. Future minimum lease payments for all leases with remaining terms of one year or more as at the end of the reporting period are as follows: Group 2013 $000 Not later than one year Later than one year but not later than five years More than five years 2,152 2,584 4,736 2012 $000 2,264 2,118 607 4,989 Company 2013 2012 $000 $000 1,051 1,821 2,872 941 1,444 607 2,992 885 2012 $000 587
89
31 March 2013
34.
COMMITMENTS (CONTD) (c) Finance lease commitments as lessee The Group has finance leases for certain items of plant and equipment, and motor vehicles (Note 12). The finance lease liabilities expire over the next seven years. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Present value of lease liabilities 2013 $000 Present value of lease liabilities 2012 $000
Minimum lease payments 2013 $000 Group Not later than one year Later than one year but not later than five years More than five years Total minimum lease payments Less: amounts representing finance charges Present value of minimum lease payments Company Not later than one year Later than one year but not later than five years More than five years Total minimum lease payments Less: amounts representing finance charges Present value of minimum lease payments
Minimum lease payments 2012 $000
203 512 141 856 (100) 756
185 448 123 756 756
211 284 37 532 (51) 481
188 260 33 481 481
88 344 123 555 (74) 481
77 297 107 481 481
59 76 135 (9) 126
55 71 126 126
These leases do not contain term of renewals or purchase options or escalation clauses. There are no restrictions placed upon the Group by entering into these leases. The finance leases bear effective interest ranging from 3.66% to 12.27% (2012: 3.66% to 12.27%) per annum and expire between 2013 to 2019.
90
31 March 2013
35.
FAIR VALUE OF FINANCIAL INSTRUMENTS A. Fair value of fi nancial instruments that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: Group and Company Significant other observable inputs (Level 2) Total $000 $000 Financial assets: Derivatives (Note 22) Forward currency contracts At 31 March 2013 Derivatives (Note 22) Forward currency contracts At 31 March 2012 Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in the measurements of financial instruments. The fair value hierarchy has the following levels: Level 2 Inputs other than quoted prices that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
10 10 21 21
10 10 21 21
There has been no transfer in or out of Level 2 fair value measurements during the financial years ended 2013 and 2012. Determination of fair value Derivatives (Note 22): Forward currency contracts are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include forward pricing, using present value calculations. The models incorporate various inputs including the foreign exchange spot and forward rates.
91
31 March 2013
35.
FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTD) B. Fair value of fi nancial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Trade and other receivables (Note 18), short-term investments (Note 21), trade and other payables (Note 24), cash and short-term deposits (Note 23) and loans and borrowings at floating interest rates (Note 25) The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. Current loans and borrowings and obligations under finance lease (Note 25) Management has determined the carrying amount of current loans and borrowings and obligations under finance lease to be reasonably approximate of their fair value, as the interest rates are not materially different from the market interest rates on or near the end of the reporting period. C. 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 value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows: Carrying amount 2013 $000 Financial liabilities: Obligation under finance lease (non-current) (Note 25) Loans due from subsidiary companies (Note 16) The loans due from subsidiary companies are long-term loans with no repayment terms and are repayable only when cash flows of the subsidiary companies permit. Accordingly, the fair values are not determinable, as the timing of the future cash flows arising from the loans cannot be estimated reliably. Carrying amount 2012 $000
Fair value 2013 $000
Fair value 2012 $000
571
481
293
266
92
31 March 2013
36.
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 (a) foreign currency risk, (b) interest rate risk, (c) liquidity risk and (d) credit risk. The board of directors reviews and agrees policies and procedures for the management of these risks. It is and has been throughout the current and previous financial year the Groups policy that no derivatives shall be undertaken except for the use as hedging instruments, where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Groups and Companys exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. There has been no change to the Groups exposure to these financial risks, or the manner in which it manages and measures the risks. (a) Foreign currency risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily Singapore Dollar (SGD), Chinese Renminbi (RMB), Thai Baht (Baht) and Malaysian Ringgit (Ringgit). The main foreign currency in which these transactions are denominated is the US Dollar (USD). Approximately 94% (2012: 91%) of the Groups sales are denominated in foreign currencies, whilst almost 73% (2012: 68%) of costs are denominated in the respective functional currencies of the Group entities. The Groups trade receivable and trade payable balances at the balance sheet date have similar exposures to the same foreign currencies. The Group and the Company also hold cash and short-term deposits denominated in foreign currencies for working capital purposes. At the balance sheet date, such foreign currency balances (mainly in USD and RMB) amounted to $11,973,000 and $1,751,000 (2012: $14,540,000 and $4,223,000) for the Group and the Company respectively. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit/(loss) net of tax to a reasonably possible change in the RMB, USD, Ringgit and Baht exchange rates against the respective functional currencies of Group entities, with all other variables held constant. Group Impact to income statement, net of tax 2013 2012 $000 $000 RMB USD Ringgit Baht strengthened 5% (2012: 5%) weakened 5% (2012: 5%) strengthened 5% (2012: 5%) weakened 5% (2012: 5%) strengthened 5% (2012: 5%) weakened 5% (2012: 5%) strengthened 5% (2012: 5%) weakened 5% (2012: 5%) +307 -307 +237 -237 -81 +81 -17 +17 -46 +46 -772 +772 +96 -96 -16 +16
93
31 March 2013
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) (b) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial instruments will fluctuate because of changes in market interest rates. The Groups and the Companys exposure to interest rate risk arises primarily from their loans and borrowings. All of the Groups and the Companys financial assets and liabilities at floating rates are contractually repriced at intervals of not more than 6 months (2012: not more than 6 months) from the balance sheet date. The Groups policy in managing interest cost by entering into short term loans and borrowings for working capital purposes which allow the interest rate to be repriced at intervals not more than 6 months (2012: not more than 6 months). Sensitivity analysis for interest rate risk At the end of the reporting period, if interest rates had been 75 (2012: 75) basis points higher/lower with all other variables held constant, the Groups profit/(loss) before tax would have been $129,000 lower/higher (2012: $135,000 higher/lower). This arises mainly as a result of higher/lower interest expense on floating rate loans and borrowings. (c) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groups and the Companys objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Groups policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liability requirements in the short and longer term. At the end of the reporting period, approximately 96.8% (2012: 97.8%) of the Groups loans and borrowings will mature in less than one year based on the carrying amount reflected in the financial statements, excluding discontinued operation. 95.0% (2012: 98.0%) of the Companys loans and borrowings will mature in less than one year at the end of the reporting period. The Group assessed it has sufficient cashflows to meet its obligations, and further assessed the risk with respect to refinancing its debt and concluded it to be low. Access to sources of financing is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.
94
31 March 2013
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) (c) Liquidity risk (contd) The table below summarises the maturity profile of the Groups and the Companys financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. 2013 $000 One year or less Group Financial assets: Trade and other receivables Short-term investments Derivatives Cash and short-term deposits Total undiscounted financial assets Financial liabilities: Trade and other payables Loans and borrowings Total undiscounted financial liabilities Total net undiscounted financial assets/(liabilities) One to five years More than five years One year or less 2012 $000 One to five years More than five years
Total
Total
33,270 1,412 10
33,270 1,412 10
36,088 21
36,088 21
28,121
28,121
23,413
23,413
62,813
62,813
59,522
59,522
26,228 17,556
510
142
26,228 18,208
27,100 19,482
413
37
27,100 19,932
43,784
510
142
44,436
46,582
413
37
47,032
19,029
(510)
(142)
18,377
12,940
(413)
(37)
12,490
95
31 March 2013
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) (c) Liquidity risk (contd) 2013 $000 One to More than five years five years 2012 $000 One to five years
One year or less Company Financial assets: Trade and other receivables Derivatives Cash and short-term deposits Total undiscounted financial assets Financial liabilities: Trade and other payables Loans and borrowings Total undiscounted financial liabilities Total net undiscounted financial assets/(liabilities)
Total
One year or less
Total
11,367 10
11,367 10
16,427 21
16,427 21
15,119
15,119
12,146
12,146
26,496
26,496
28,594
28,594
7,041 7,777
342
124
7,041 8,243
6,026 9,965
206
6,026 10,171
14,818
342
124
15,284
15,991
206
16,197
11,678
(342)
(124)
11,212
12,603
(206)
12,397
96
31 March 2013
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) (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 Groups and the Companys exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and short-term deposits, short-term investments and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Groups 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. It is the Groups policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Groups exposure to bad debts is not significant. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Groups trade receivables at the balance sheet date is as follows: Group 2013 $000 By country: Asia Pacific America Singapore Europe % of total 2012 $000 % of total
22,238 7,116 1,355 1,919 32,628
68.2 21.8 4.1 5.9 100.0
21,527 8,779 2,803 1,809 34,918
61.7 25.1 8.0 5.2 100.0
At the end of the reporting period, approximately 35.8% (2012: 37.7%) of the Groups trade receivables were due from 5 major customers who are multi-national companies. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. Cash and short-term deposits, short-term investments and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 18 (Trade and other receivables).
97
31 March 2013
37.
CAPITAL MANAGEMENT The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made to the objectives, policies or processes during the years ended 31 March 2013 and 31 March 2012. As disclosed in Note 31, subsidiary companies of the Group are required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the subsidiary companies for the financial years ended 31 March 2013 and 31 March 2012. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Groups policy is to keep the gearing ratio not more than 60%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and short-term deposits. Capital includes equity attributable to owners of the Company. Group 2013 $000 Loans and borrowings (Note 25) Trade and other payables (Note 24) Less: Cash and short-term deposits (Note 23) Net debt Equity attributable to owners of the Company Less: Statutory reserve (Note 31) Total capital Capital and net debt Gearing ratio 17,954 26,228 (28,121) 16,061 81,090 (2,407) 78,683 94,744 17.0% 2012 $000 19,611 27,100 (23,413) 23,298 72,290 (1,530) 70,760 94,058 24.8%
38.
SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their products and services, and has two reportable operating segments as follows: (1) The high precision plastic injection (plastic injection) segment manufactures plastic components used in products for the automotives, smart phones, computer peripherals, healthcare and consumer product industries. The mould design and fabrication (tooling) segment manufactures moulds used in the manufacture of plastic injection components.
(2)
98
31 March 2013
38.
SEGMENT INFORMATION (CONTD) Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with third parties. Per consolidated financial statements 2013 2012 $000 $000
Plastic injection 2013 2012 $000 $000 Revenue: Sales to external customers
Tooling 2013 2012 $000 $000
Adjustments and eliminations 2013 2012 $000 $000
Note
118,716 113,436
13,807
10,240
132,523 123,676
Results: Interest income 27 Depreciation and amortisation 7,012 Share of loss of associated companies (312) Impairment of non-financial assets Other expenses 883 Finance cost 765 Segment profit/(loss) from continuing operations 10,693 Loss on discontinued operation before tax Assets: Interests in associated companies Additions to non-current assets Segment assets Segment liabilities
22 6,960 (102) 35 7,220 827 (2,068)
2 518 18 53 1,495
1 482 1,720 335 32 (1,404)
29 7,530 (312) 901 818 12,188 (61)
23 7,442 (102) 1,755 7,555 859 (3,472) (474)
3,753 11,015
4,022 7,451
891 9,628 1,836
590 7,680 2,327
814 1,041
715 653 B C
3,753 11,906
4,022 8,041
115,871 111,259 42,346 44,384
126,313 119,654 45,223 47,364
99
31 March 2013
38.
SEGMENT INFORMATION (CONTD) A Other expenses consist of allowance for inventory obsolescence, inventories written-off, allowance on doubtful trade receivables, net fair value loss on derivative financial asset and property, plant and equipment written off as presented in the respective notes to the financial statements. The following items are added to segment assets to arrive at total assets reported in the consolidated balance sheet: 2013 $000 Deferred tax assets C 814 2012 $000 715
The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated balance sheet: 2013 $000 Deferred tax liabilities Income tax payable 658 383 1,041 2012 $000 377 276 653
Geographical information Revenue and non-current assets information based on the geographical location of operations are as follows: Revenue* 2013 2012 $000 $000 South East Asia North Asia 62,507 70,016 132,523 * Excludes amount relating to discontinued operation. Non-current assets exclude deferred tax assets. South East Asia comprise of Singapore, Thailand and Malaysia. North Asia comprise of China. Information about a major customer Revenue from one major customer amount to $15,605,000 (2012: $13,711,000), of which $13,710,000 (2012: $13,458,000) arises from the plastic injection segment and $1,895,000 (2012: $253,000) from the tooling segment. 74,568 49,108 123,676 Non-current assets 2013 2012 $000 $000 28,622 14,748 43,370 25,862 13,809 39,671
31 March 2013
39.
DIVIDENDS Group and Company 2013 2012 $000 $000 Proposed but not recognised as liability as at 31 March: Dividends on ordinary shares, subject to shareholders approval at the AGM Final tax exempt (one-tier) dividend for 2013: 0.9 cent (2012: 0.6 cent) per share
2,459
1,639
40.
AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE The financial statements for the year ended 31 March 2013 were authorised for issue in accordance with a resolution of the directors on 18 June 2013.
STATISTICS OF SHAREHOLDINGS
As at 18 June 2013
(i) (ii) (iii) (iv)
Number of fully issued and paid Shares Amount of issued and paid up Shares Class of Shares Voting rights
: : : :
273,204,948 S$57,835,594.01 Ordinary Shares 1 vote per share
DISTRIBUTION OF SHAREHOLDINGS No. of Shareholders 8 512 577 16 1,113 No. of Shares 516 2,930,000 41,435,255 228,839,177 273,204,948
Size of Shareholdings 1 - 999 1,000 -10,000 10,001 - 1,000,000 1,000,001 and above TOTAL
% 0.72 46.00 51.84 1.44 100.00
% 0.00 1.07 15.17 83.76 100.00
TWENTY LARGEST SHAREHOLDERS Number of Shares 52,333,334 52,333,334 47,623,332 44,273,177 7,350,000 5,010,000 4,660,000 2,490,000 2,174,000 2,125,000 1,739,000 1,614,000 1,517,000 1,332,000 1,204,000 1,061,000 942,000 889,000 880,000 700,000 232,250,177
No. Shareholders Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Amtek International Pte Ltd Univac Precision Engineering Pte Ltd Tan Choon King HSBC (Singapore) Nominees Pte Ltd Lee Ah Bee Tay Kok Leong Phillip Securities Pte Ltd See Beng Lian Janice DBSN Services Pte Ltd OCBC Securities Private Ltd AmFraser Securities Pte Ltd Citibank Nominees Singapore Pte Ltd Ling Lee Yong United Overseas Bank Nominees Pte Ltd Yong Kin Sen DBS Nominees Pte Ltd Tan Lee Hong Maybank Kim Eng Securities Pte Ltd Goh Bee Lan Henry Lim Beng Huat TOTAL
% 19.16 19.16 17.43 16.21 2.69 1.83 1.71 0.91 0.80 0.78 0.64 0.59 0.56 0.49 0.44 0.39 0.34 0.33 0.32 0.26 85.04
SUBSTANTIAL SHAREHOLDERS
As at 18 June 2013
SUBSTANTIAL SHAREHOLDERS AS SHOWN IN THE REGISTER OF SUBTANTIAL SHAREHOLDERS Number of Ordinary Shares Direct Interest Deemed Interest 47,623,332 52,333,334 52,333,334 52,333,334 52,333,334 42,893,177 42,893,177
Substantial Shareholders Tan Choon King Univac Precision Engineering Pte Ltd Amtek International Pte Ltd Venture Corporation Limited (1) Amtek Engineering Ltd (2) Ono Sangyo Co., Ltd (3) Daisuke Ono (4)
(1)
Notes: Venture Corporation Limited is deemed to be interested in the shares of the Company through its interests in Univac Precision Engineering Pte Ltd. Amtek Engineering Ltd is deemed to be interested in the shares of the Company through its interests in Amtek International Pte Ltd. Ono Sangyo Co., Ltds deemed interest is held through HSBC (Singapore) Nominees Pte Ltd. Daisuke Ono is deemed to be interested in the shares of the Company held through his interest in Ono Sangyo Co., Ltd.
(2)
(3)
(4)
Based on information available to the Company as at 18 June 2013 approximately 26.1% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by Singapore Exchange Securities Trading is complied with.
FISCHER TECH LTD Company Registration Number: 199404532R (Incorporated in the Republic of Singapore)
NOTICE OF ANNUAL GENERAL MEETING AND NOTICE OF BOOKS CLOSURE DATE
Notice is hereby given that the Annual General Meeting of Fischer Tech Ltd (the Company) will be held on 30 July 2013 at 3:00 p.m. at 39 Scotts Road, Sheraton Towers Singapore, Diamond ALL, Lower Lobby, Level B1, Singapore 228230 for the purpose of transacting the following business: ORDINARY BUSINESS 1. To receive and adopt the Directors Report and Audited Financial Statements for the financial year ended 31 March 2013 and the Independent Auditors Report thereon. (Resolution 1) To declare a first and final tax exempt (one tier) dividend of 0.6 cent per ordinary share for the financial year ended 31 March 2013. (Resolution 2) To declare a special tax exempt (one tier) dividend of 0.3 cent per ordinary share for the financial year ended 31 March 2013. (Resolution 3) To re-appoint Mr Foo Meng Tong, who is retiring under Section 153(6) of the Companies Act, Cap. 50 to hold office from the date of this Annual General Meeting until the next Annual General Meeting. [see explanatory note (a)] (Resolution 4) To re-elect Mr James Moy Kok Leng, a director retiring pursuant to Article 91 of the Companys Articles of Association. [see explanatory note (b)] (Resolution 5) To re-elect Mr Daisuke Ono pursuant to Article 97 of the Companys Articles of Association. (Resolution 6)
2.
3.
4.
5.
6. 7.
To approve the proposed directors fees of S$226,720 for the financial year ended 31 March 2013 (2012: S$229,800). (Resolution 7) To re-appoint Ernst & Young LLP as Auditor and to authorise the Directors to fix their remuneration. (Resolution 8)
8.
9.
To transact any other business of the Company which may properly be transacted at an Annual General Meeting.
SPECIAL BUSINESS To consider and, if thought fit, to pass the following as ordinary resolutions: 10. Share Issue Mandate
That authority be given to the Directors of the Company to issue shares in the Company (whether by way of bonus issue, rights issue or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit provided: (1) that the aggregate number of shares to be issued pursuant to this resolution shall not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro-rata basis to shareholders of the Company shall not exceed 20% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); [subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (SGX-ST)] for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the total number of shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Resolution is passed, after adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding at the time this Resolution is passed; and any subsequent bonus issue, consolidation or subdivision of shares;
(2)
(ii)
(3)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and (unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. [see explanatory note (c)] (Resolution 9)
(4)
11.
The Proposed Renewal of the Shareholders Mandate for Interested Person Transactions THAT: (a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (Chapter 9) of the SGX-ST, for the Company, its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of interested person transactions described in the Addendum to the Companys annual report for the financial year ended 31 March 2013 (the Annual Report) with any party who is of the class of interested persons described in the Addendum to the Annual Report, provided that such transactions are made on normal commercial terms and in accordance with the review procedures as set out in the Addendum for such interested person transactions; the approval given in paragraph (a) above (the IPT Mandate) shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they and/or he may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this Resolution. [see explanatory note (d)] (Resolution 10)
(b)
(c)
NOTICE IS HEREBY GIVEN that the Transfer Books and Register of Members of the Company will be closed on 16 August 2013 for the purpose of determining shareholders entitlements to the proposed first and final dividend and special dividend (the Proposed Dividends) for the financial year ended 31 March 2013. Duly completed transfers received by the Companys Registrar, Boardroom Corporate & Advisory Services Pte Ltd of 50 Raffles Place, Singapore Land Tower #32-01, Singapore 048623 up to the close of business at 5:00 p.m. on 15 August 2013 will be registered to determine shareholders entitlements to the Proposed Dividends. Shareholders (being Depositors) whose securities accounts with the Central Depository (Pte) Limited are credited with shares as at 5:00 p.m. on 15 August 2013, will rank for the Proposed Dividends. The Proposed Dividends, if approved at the Annual General Meeting of the Company to be held on 30 July 2013, will be paid on 30 August 2013.
By Order of the Board Tan Ching Chek Company Secretary
12 July 2013 Singapore
Explanatory Notes: (a) Mr Foo Meng Tong, if re-appointed, will continue to serve as the Chairman of the Board, Chairman of the Nominating Committee and a member of the Compensation Committee and Audit Committee. Mr Foo Meng Tong is considered by the Board of Directors as an Independent Director. Mr James Moy Kok Leng, if re-elected, will continue to serve as the Chairman of the Compensation Committee and a member of the Audit Committee. Mr James Moy Kok Leng is considered by the Board of Directors as an Independent Director. The proposed Resolution 9, if passed, will empower the Directors of the Company from the date of the above meeting until the next Annual General Meeting to issue shares in the Company up to the limits as specified in the resolution for such purposes as they consider would be in the interests of the Company. This authority will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting. The proposed ordinary Resolution 10 is to renew the general IPT Mandate to allow the Company, its subsidiaries and target associated companies or any of them to enter into interested person transactions on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in the Addendum. This authority will continue in force until the conclusion of the Companys next Annual General Meeting. An independent financial advisers opinion is not required for renewal of this general IPT mandate as the Companys Audit Committee has confirmed that: (i) the methods or procedures for determining the transaction prices under the IPT Mandate have not changed since the last shareholders approval on 28 July 2010, 29 July 2011 and 30 July 2012; and that such methods or procedures referred to in (i) above are sufficient to ensure that the interested person transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders.
(b)
(c)
(d)
(ii)
The following persons will abstain from voting on the proposed ordinary Resolution 10 relating to the IPT Mandate: a. b. Mr Amos Leong Hong Kiat and his associates; and Amtek Engineering Ltd, Amtek International Pte Ltd, Ono Sangyo Co., Ltd., Mr Daisuke Ono, Univac Precision Engineering Pte Ltd, Venture Corporation Ltd and their respective associates.
Notes to Proxy Form: (i) A member entitled to attend and vote at this meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company. If a proxy is to be appointed, the form must be deposited at the registered office of the Company, 12 Loyang Way 4, Loyang Industrial Estate, Singapore 507602 not less than 48 hours before the time set for the meeting. The form of proxy must be signed by the appointor or his attorney duly authorised in writing. In the case of joint shareholders, all holders must sign the form of proxy.
(ii)
(iii) (iv)
FISCHER TECH LTD Company Registration Number: 199404532R (Incorporated in the Republic of Singapore)
Important 1. For investors who have used their CPF monies to buy Fischer Tech Ltd shares, this Annual Report is sent to them at the request of their CPF Agent Banks and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF investors who wish to attend the Annual General Meeting as OBSERVERS must submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format with the Company Secretary, by the time frame specifi ed. (Agent Banks: Please see Note 9 on required format) Any voting instructions must also be submitted to their Agent Banks within the time frame specifi ed to enable them to vote on the CPF investors behalf.
ANNUAL GENERAL MEETING
3.
PROXY FORM
I/We (Name) _______________________________________, NRIC/Passport No./Co.Regn. No: ___________________ of (Address) _______________________________________________________________________________________, being a member/members of FISCHER TECH LTD (the Company) hereby appoint: Name Address NRIC/Passport Number Proportion of Shareholdings (%)
and/or (delete as appropriate) Name Address NRIC/Passport Number Proportion of Shareholdings (%)
or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting, as my/our proxy/ proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company (the Meeting) to be held on 30 July 2013 at 3:00 p.m. at 39 Scotts Road, Sheraton Towers Singapore, Diamond ALL, Lower Lobby, Level B1, Singapore 228230 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. No. 1. 2. 3. 4. 5. 6. 7. 8. Ordinary Resolutions Ordinary Business To Adopt the Reports and Audited Financial Statements To declare first and final dividend To declare special dividend To re-appoint Mr Foo Meng Tong pursuant to Section 153(6) of Companies Act, Cap 50 To re-elect Mr James Moy Kok Leng, a director retiring under Article 91 of the Article of Association To re-elect Mr Daisuke Ono, a director retiring under Article 97 of the Article of Association To approve Directors Fees To re-appoint Ernst & Young LLP as Auditor and authorisation of directors to fix their remuneration Any other business Special Business 9. 10. To approve the Share Issue Mandate To approve the renewal of the Shareholders Mandate for Interested Person Transactions For Against
If you wish to exercise all your votes For or Against, please tick with . Alternatively, please indicate the number of votes For or Against each resolution. Dated this ___________ day of ____________________ 2013.
Signature(s) of Member(s)/Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF
Total No. of Shares Held
NOTES: 1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the Meeting. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all shares held by the member. The instrument appointing a proxy or proxies must be deposited at the Companys registered office at 12 Loyang Way 4, Loyang Industrial Estate, Singapore 507602 not less than 48 hours before the time set for the Meeting. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with section 179 of the Companies Act, Chapter 50 of Singapore. Agent Banks acting on the request of CPF Investors who wish to attend the Meeting as observers are requested to submit in writing, a list of details of the Investors names, NRIC/Passport numbers, addresses and numbers of shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company Secretary, at the registered office of the Company not later than 48 hours before the time appointed for the Meeting.
2.
3.
4.
5.
6.
7.
8.
9.
GENERAL The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
Fischer Tech Ltd No. 12, Loyang Way 4, Loyang Industrial Estate, Singapore 507602 Tel: (65) 6542 2338 Fax: (65) 6542 3088 Email: admin@mail.fischer.com.sg Website: www.fischer.com.sg Fischer Medtech Pte Ltd No. 12, Loyang Way 4, Loyang Industrial Estate, Singapore 507602 Tel: (65) 6542 2338 Fax: (65) 6542 3088 Email: admin@mail.fischer.com.sg Fischer Technology Pte Ltd No.10, Loyang Way 4, Loyang Industrial Estate, Singapore 507603 Tel: (65) 6546 8628 Fax: (65) 6546 3832 Email: admin@mail.fischer.com.sg Fischer Tech (Suzhou) Co., Ltd No.288, Tang Zhuang Road, Loufeng North District Hi-Tech Development Zone Suzhou Industrial Park, Jiangsu, China 215021 Tel: (86) 512 6274 6288 Fax: (86)512 6274 6988 Email: admin@mail.fischer.com.sg Fischer Solution (Suzhou) Co., Ltd Block C, Unit 16, Suzhou New & Hi-tech District Export Processing Zone, No 20 Da Tong Road, SND, Suzhou, Jiangsu, China 215151 Tel: (86) 512 8860 6555 Fax: (86) 512 8860 6566 Email: admin@mail.fischer.com.sg
M-Fischer Tech Sdn Bhd No 31 Jalan Petaling Kawasan Perindustrian Larkin, 80350 Johor Bahru Johor, Malaysia Tel: (607) 238 1648 Fax: (607) 238 7599 Email: admin@mfischer.com.my Fischer Tech (Thailand) Co., Ltd 109/519 Moo7, Tumbol Klongsong, Amphur Klongluang, Patumtanee Province, Thailand Tel: (66) 029 016011 Fax: (66) 029 016015 Email: admin@mail.fischer.com.sg DongGuan Hyform Electronic Co., Ltd Plant 1 Block C9 Nan Mian Road Nan Mian Chun Industrial Park Humen Town, DongGuan City Guangdong Province China 523910 Tel: (86) 769 519 6312 Fax: (86) 769 519 6311 Email: peterchen@zeitohyform.com Plant 2 Block C1-A Nan Mian Road Nan Mian Chun Industrial Park Humen Town, DongGuan City Guangdong Province China 523910 Tel: (86) 769 519 6312 Fax: (86) 769 519 6311 Email: peterchen@zeitohyform.com
Fischer Tech Ltd No. 12 Loyang Way 4, Loyang Industrial Estate, Singapore 507602 Tel Fax Website : (65) 6542 2338 : (65) 6542 3088 : www.fischer.com.sg
Company Registration No.: 199404532R
ADDENDUM DATED 12 JULY 2013 THIS ADDENDUM IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. This Addendum is circulated to shareholders of Fischer Tech Ltd (the Company) together with the Companys Annual Report. Its purpose is to provide Shareholders with the information and to explain the rationale for the proposed renewal of the shareholders mandate for interested person transactions to be tabled at the Annual General Meeting to be held on Tuesday, 30 July 2013 at 3:00 p.m. at 39 Scotts Road, Sheraton Towers Singapore, Diamond ALL, Lower Lobby, Level B1, Singapore 228230. The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Addendum.
(Incorporated in the Republic of Singapore) Company Registration Number: 199404532R
FISCHER TECH LTD

ADDENDUM TO SHAREHOLDERS
in relation to
THE PROPOSED RENEWAL OF THE GENERAL MANDATE FROM SHAREHOLDERS FOR TRANSACTIONS WITH INTERESTED PERSONS OF THE COMPANY
Contents
DEFINITIONS
1. INTRODUCTION
2. RENEWAL OF THE IPT MANDATE
3. GENERAL MANDATE FROM SHAREHOLDERS FOR INTERESTED PERSON TRANSACTIONS
4. STATEMENT OF THE AUDIT COMMITTEE
13
5. VALIDITY PERIOD OF THE IPT MANDATE
13
6. DISCLOSURE IN THE ANNUAL REPORT
13
7. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS
14
8. DIRECTORS RECOMMENDATION
15
9. ABSTENTION FROM VOTING
15
10. DIRECTORS RESPONSIBILITY STATEMENT
15
11. DOCUMENTS FOR INSPECTION
16
DEFINITIONS
In this Addendum, the following definitions apply throughout unless otherwise stated: 2010 Addendum 2010 AGM 2013 AGM AGM Amtek Amtek Engineering Amtek Group Annual Report associate : : : : : : : : Has the meaning ascribed to it in paragraph 4.2 of this Addendum Has the meaning ascribed to it in paragraph 2 of this Addendum Has the meaning ascribed to it in paragraph 2 of this Addendum Annual General Meeting of the Company Amtek International Pte Ltd Amtek Engineering Ltd Amtek Engineering and its subsidiaries The annual report of the Company for the financial year ended 31 March 2013 (a) in relation to any director, chief executive officer, substantial shareholder or controlling shareholder (being an individual) means: (i) his immediate family; (ii) the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and
(iii) any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more; and in relation to a substantial shareholder or a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more
(b)
associated company
A company in which at least 20% but not more than 50% of its shares are held by Fischer Tech or the Group and that is not listed on the SGXST or an approved exchange, provided that the Group has control over the company Audit committee of the Company comprising Mr Ng Boon Yew, Mr Foo Meng Tong and Mr Moy Kok Leng, James as at the date of this Addendum The Board of Directors of the Company An employee holding the position of Business Manager or the equivalent of the Company or the relevant subsidiary or associated company in the Group The Central Depository (Pte) Limited The chief executive officer of the Company
Audit Committee
Board Business Manager
: :
CDP CEO
: :
DEFINITIONS
Companies Act Company or Fischer Tech controlling shareholder
Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Fischer Tech Ltd A person who: (a) holds directly or indirectly 15% or more of the total number of issued shares excluding treasury shares in the Company. The SGX-ST may determine that a person who satisfies this paragraph is not a controlling shareholder; or (b) in fact exercises control over the Company
: :
Directors : Discloseable Transaction : External Auditor : General Manager
The directors of the Company as at the date of this Addendum Has the meaning ascribed to it in paragraph 3.3(e) of this Addendum The external auditor of the Company as may be appointed from time to time An employee holding the position of General Manager or the equivalent of the Company or the relevant subsidiary or associated company in the Group The Company, its subsidiaries and associated companies Has the meaning ascribed to it in paragraph 4.2 of this Addendum Has the meaning ascribed to it in paragraph 8 of this Addendum The interested persons of the Company who fall within the IPT Mandate, as set out in paragraph 3.3 of this Addendum The types of transactions with Interested Persons which fall within the IPT Mandate, as set out in paragraph 3.4 of this Addendum The general mandate from Shareholders for the purposes of Chapter 9 of the Listing Manual for the Group to enter into certain types of transactions with specified classes of the Interested Persons The latest practicable date prior to the printing of this Addendum, being 18 June 2013 The listing manual of the SGX-ST Has the meaning ascribed to it in paragraph 8 of this Addendum Net tangible assets Ono Sangyo Co., Ltd. OSK and its subsidiaries
Group IFA Independent Directors Interested Persons or IPs Interested Person Transactions IPT Mandate
: : : :
Latest Practicable Date Listing Manual Non-Independent Directors NTA OSK OSK Group
: : : : :
DEFINITIONS
Project Manager
An employee holding the position of Project Manager or the equivalent of the Company or the relevant subsidiary or associated company in the Group An employee holding the position of Purchasing Manager or the equivalent of the Company or the relevant subsidiary or associated company in the Group Has the meaning ascribed to it in paragraph 4.3(a) of this Addendum A securities account maintained by a depositor with CDP Singapore Exchange Securities Trading Limited Registered holders of Shares except that where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the depositors into whose Securities Accounts those Shares are credited. Any reference to Shares held by Shareholders shall include Shares standing to the credit of the respective Shareholders Securities Accounts Ordinary shares in the capital of the Company A person (including a corporation) who has an interest in not less than 5% of the total votes attached to all the voting shares of the Company Univac Precision Engineering Pte Ltd Univac and its subsidiaries Venture Corporation Limited Venture and its subsidiaries (excluding the Univac Group) Singapore dollars and cents respectively Per centum
Purchasing Manager
Review Procedures Securities Account SGX-ST or Singapore Exchange Shareholders
: : : :
Shares substantial shareholder Univac Univac Group Venture Venture Group S$ and cents % or per cent
: :
: : : : : :
The terms depositor and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference in this Addendum to any enactment is a reference to that enactment for the time being amended or re-enacted. Any term defined under the Companies Act, the Listing Manual or any modification thereof and used in this Addendum shall, where applicable, have the same meaning assigned to it under the Companies Act, the Listing Manual or any modification thereof, as the case may be, unless otherwise provided. Any reference to a time of day in this Addendum shall be a reference to Singapore time unless otherwise stated.
(Incorporated in the Republic of Singapore)

Directors: Foo Meng Tong (Non-Executive Chairman & Independent Director) Tan Choon King (President & CEO) Tay Kok Leong (Executive Director) Leong Hong Kiat, Amos (Non-Executive Director) Daisuke Ono (Non-Executive Director) Ng Boon Yew (Independent Director) Moy Kok Leng, James (Independent Director) Registered Office: 12 Loyang Way 4 Loyang Industrial Estate Singapore 507602
FISCHER TECH LTD
To: The Shareholders of Fischer Tech Ltd 12 July 2013 Dear Sir/Madam
THE PROPOSED RENEWAL OF THE SHAREHOLDERS MANDATE FOR TRANSACTIONS WITH INTERESTED PERSONS OF THE COMPANY 1. INTRODUCTION We refer to item 11 of the Notice of AGM which is an Ordinary Resolution to be proposed at the AGM for the proposed renewal of the Companys mandate for interested person transactions (as set out in Resolution 10). The purpose of this Addendum is to provide the Shareholders with information relating to the said Ordinary Resolution. 2. RENEWAL OF THE IPT MANDATE Under Chapter 9 of the Listing Manual, a general mandate for transactions with interested persons is subject to annual renewal. The IPT Mandate was modified and approved at the AGM held on 28 July 2010 (the 2010 AGM), has been renewed at the 2011 AGM and the last AGM and will continue to be in force until the conclusion of the upcoming AGM, which is scheduled to be held on 30 July 2013 (the 2013 AGM). Accordingly, it is proposed that the IPT Mandate be renewed at the 2013 AGM, to take effect from the passing of the Ordinary Resolution relating thereto at the 2013 AGM, and will (unless revoked or varied by the Company in general meeting) continue in force until the next AGM. The rationale of the IPT Mandate, the classes of Interested Persons, the categories of Interested Person Transactions, the benefits of the IPT Mandate to the Group and the Review Procedures for Interested Person Transactions in respect of which the IPT Mandate is sought to be renewed remain unchanged and are set out in paragraph 3 of this Addendum.
3. GENERAL MANDATE FROM SHAREHOLDERS FOR INTERESTED PERSON TRANSACTIONS 3.1 Background Fischer Tech is a specialist manufacturer of high precision engineering plastic components for new electronic products innovations established in 1994 by Mr Tan Choon King, in alliance with Univac and Amtek Engineering (through its whollyowned subsidiary, Amtek). The Group is principally engaged in the manufacture of engineering plastic components of precise dimensions that are used in the production of high end electronic products such as automobiles, computer peripherals, as well as healthcare and consumer electronics products. Such products include car stereo components and decorative panels for cars, printer parts, disposable inkjet cartridges and medical devices and instruments. The Groups forte is in 2-shot injection moulding, thin-wall injection moulding, Nd-YAG (Neo dynium-yitrium aluminium garnet) laser marking and decorative finishing technologies, including in-mould labelling, and cosmetic moulding for electronic, automobile and consumer product industries. It is anticipated that the Group would, in the ordinary course of its business, enter into certain transactions with persons who are considered interested persons as defined in Chapter 9 of the Listing Manual. It is likely that such transactions will occur with some degree of frequency and could arise at any time from time to time. Such transactions include the Interested Person Transactions described in paragraph 3.4 below. In view of the time-sensitive nature of such Interested Person Transactions and to ensure continuation of the business, the Directors are seeking approval from the Shareholders (save for Univac, Amtek and OSK which will abstain from voting) for the renewal of the IPT Mandate, pursuant to Chapter 9 of the Listing Manual, to authorise the Group to enter into the Interested Person Transactions in the ordinary course of business provided that such transactions are on the Groups normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. 3.2 Rationale for and Benefits of the IPT Mandate The renewal of the IPT Mandate would eliminate the need to make announcements as and when an Interested Person Transaction is entered into and to convene separate general meetings from time to time to seek Shareholders approval as and when potential Interested Person Transactions with a specific class of Interested Persons arise. This would substantially reduce administrative time and expense in making such announcements and convening such meetings, without compromising the corporate objectives and adversely affecting operations and business opportunities available to the Group. The renewal of the IPT Mandate is intended to facilitate transactions which would be time-sensitive and frequent in nature which are transacted from time to time in the normal course of business of the Group with specified classes of Interested Persons, provided that they are carried out on the Groups normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders.
3.3 Classes of Interested Persons (a) The IPT Mandate will apply to the Interested Person Transactions which are carried out with the following Interested Persons: (i) Univac Group and its associates; (ii) Venture Group and its associates; (iii) Amtek Group and its associates; and (iv) OSK Group and its associates, (hereinafter collectively referred to as the IPs). (b) Univac, which is wholly owned by Venture, is Fischer Techs controlling shareholder. Mr Leong Hong Kiat, Amos being a Non-Executive Director is also the President and Chief Executive Officer of Univac. Save as disclosed above, none of the other Directors is related to or has any interest in Univac. Univac is principally engaged in the business of designing and fabricating precision engineering plastic injection moulds. Univac has also expanded into the production of precision engineering plastic components through its own production facilities and its investment in various companies including the Company. (c) Venture is principally engaged in the business of providing manufacturing, designing, engineering, customisation and logistic services to electronics companies worldwide. (d) Amtek is Fischer Techs controlling shareholder and is wholly owned by Amtek Engineering. Amtek is an investment holding company wholly owned by Amtek Engineering. The principal activities of Amtek Group are the design and manufacture of precision toolings, stamping of precision metal parts and casings, prototype making and the mechanical sub-assembly of semi-finished products. Amtek Engineering also has subsidiaries engaged in the business of designing and fabricating precision engineering plastic injection moulds as well as the production of precision engineering plastics components. (e) OSK is Fischer Techs controlling shareholder. Mr Daisuke Ono being a Non-Executive Director is also the Chairman and Chief Executive Officer of OSK. He is a deemed controlling shareholder of Fischer Tech by virtue of his interest in OSK. OSK is a company listed on the JASDAQ Securities Exchange, and carries on the business of manufacturing and selling plastic moulds, moulded products and related equipment. OSK had previously supplied injection moulding related equipment to the Company and the Company has also previously fabricated certain plastic injection moulds for OSK. The aggregate value of the Groups transactions with OSK, including the transaction with OSK set out in the announcement by the Company dated 29 May 2013 (the Discloseable Transaction), for the financial year ended 31 March 2013 was approximately S$2,336,000. Save for the Discloseable Transaction, each other transaction undertaken with OSK had a value of less than S$100,000 and was therefore not undertaken pursuant to the IPT Mandate since the threshold and aggregation requirements contained in Chapter 9 of the Listing Manual would not apply to such Interested Person Transactions.
3.3 Classes of Interested Persons (Contd) (f) As at the Latest Practicable Date, Univac and Amtek each have a direct interest of 19.16 per cent in the issued share capital of the Company. Venture, by virtue of its interest in Univac, is deemed to be interested in 19.16 per cent of the issued share capital of the Company. Amtek Engineering, by virtue of its interest in Amtek, is deemed to be interested in 19.16 per cent of the issued share capital of the Company. As at the Latest Practicable Date, OSK has a deemed interest of 15.70 per cent in the issued share capital of the Company. Mr Daisuke Ono is deemed to be interested in the 15.70 per cent in the issued share capital of the Company by virtue of his interest in OSK. As such, Univac Group, Venture Group, Amtek Group, OSK Group and Mr Daisuke Ono are considered interested persons of the Company as defined in Chapter 9 of the Listing Manual. (g) The IPT Mandate will not cover Interested Person Transactions which are below S$100,000 each in value as the threshold and aggregation requirements contained in Chapter 9 of the Listing Manual would not apply to such Interested Person Transactions. 3.4 Nature and Scope of Interested Person Transactions Contemplated under the IPT Mandate The Interested Person Transactions covered by the IPT Mandate are set out below: (a) Sales of plastic components, plastic injection moulds and raw materials n the ordinary course of its business, the Group sells plastic components and plastic injection moulds to Univac I Group, Venture Group, Amtek Group, OSK Group and their respective associates and will continue to sell to these IPs so long as there is demand from them and such sales are commercially beneficial, after taking into consideration the profit margins on such sales and the Groups available production capacity. rom time to time, the Group sub-contracts orders of plastic components received from its customers to third F parties due to its limited capacity. In such instances, the sub-contractors may obtain certain raw materials such as plastic resins from the Group when it can obtain a better price through the Groups bulk purchases of raw materials. The sub-contractors to whom the raw materials are sold to may include the IPs. (b) Purchases of plastic components, plastic injection moulds and raw materials In the ordinary course of its business, the Group purchases plastic components, plastic injection moulds and raw materials from both third parties and the IPs to meet its production requirements. Raw materials purchased by the Group are plastic resins and packaging materials. The Group purchases plastic components and raw materials from the IPs so long as such purchases can meet the Groups requirements and are on terms no less favourable than those from third parties. nivac is a well known manufacturer of complex fabricated precision engineering plastic injection moulds. From U time to time, due to the complexity of the plastic injection moulds required by the Group and in instances where the Groups customers request for their orders for such plastic injection moulds to be produced by Univac Group by reason of Univac Groups known expertise, the Group will purchase such moulds from Univac Group to meet its customers demands.
3.5 Guidelines and Review Procedures for Interested Person Transactions To ensure that the Interested Person Transactions arising from the normal course of business of the Group are undertaken on the Groups normal commercial terms, and will not be prejudicial to the interests of the Company and its minority Shareholders, the Group has implemented the following guidelines for the review and approval of Interested Person Transactions under the IPT Mandate: (a) Sales of plastic components, plastic injection moulds and raw materials Plastic components manufactured are engineering plastic components of precise dimensions for high end products which vary according to dimension, size of machine, complexity of manufacture, production time and type of packaging. Plastic injection moulds vary according to material type, surface texture, machine complexity and the extent of technical capability of each mould. A plastic injection mould is manufactured according to specifications by the customer. Identical plastic injection mould orders are not common unless they are repeat orders from customers. In the case of raw materials, they are sold to the Groups sub-contractors for the purpose of facilitating the subcontractors fulfilment of the Groups customers orders of plastic components. The pricing for plastic components, plastic injection moulds and raw materials are proposed by the Business Manager or Project Manager, taking into account general market pricing for similar products in the industry. The General Manager is responsible for the review and negotiation of the sale of plastic components, plastic injection moulds and raw materials. He therefore has ample knowledge of the general market pricing of plastic components, plastic injection moulds and raw materials in the industry. The prices and terms of two other successful sales of similar products to third parties will be used as comparison whenever possible, to ascertain that the transactions between the Group and the IPs are conducted on such terms that are no more favourable to the IPs than those extended to third parties by the Group. The Group will undertake its best endeavours to obtain independent quotes for comparison. The General Manager will record the Groups attempts at procuring such independent quotes for comparison. If there are no similar products in the industry, the General Manager and the Business Manager or Project Manager will conduct an estimated costing of the plastic components, plastic injection moulds and raw materials to be sold and a mark-up on the cost will be made when providing the fee quote to the IPs. In determining the mark up, the profit margin achieved will not be lower than when providing similar products to unrelated third parties. In addition, if independent quotes are not available for comparison, the General Manager will present to the Audit Committee for review the records of the Groups attempts at procuring the quotes, to ensure that the Group has made every effort to procure independent quotes for comparison.
10
3.5 Guidelines and Review Procedures for Interested Person Transactions (Contd) (a) Sales of plastic components, plastic injection moulds and raw materials (Contd) Each transaction between the Group and the IPs in relation to the sale of plastic components, plastic injection moulds and raw materials will be monitored as an individual transaction and, based on the value of the transaction, will require the prior approval of the corresponding approving authority who is a Director or management employee of the Group (not being an Interested Person or his associate) and does not have any interest, whether direct or indirect, in relation to the transaction as follows: Approval Limits Relevant Approving Authority General Manager and any one of the following - Project Manager or Business Manager Jointly approved by General Manager; and any one of the following CEO, Chief Operating Officer, Chief Financial Officer or Group General Manager The Audit Committee
< 1% of latest audited NTA
1% but < 3% of latest audited NTA
3% of latest audited NTA
The above approval limits have been arrived at by the Group after taking into consideration the nature and size of the transactions, so as to provide for business efficiency and at the same time ensure that material transactions with the IPs are reviewed by the Audit Committee. All Interested Person Transactions will be properly documented and a quarterly report will be forwarded to the Audit Committee for its review. The total sales of plastic components and plastic injection moulds to IPs for the financial year ended 31 March 2013 amounted to approximately S$2,192,000. Save for the Discloseable Transaction, each transaction undertaken with the relevant IP had a value of less than S$100,000 and was therefore not undertaken pursuant to the IPT Mandate since the threshold and aggregation requirements contained in Chapter 9 of the Listing Manual would not apply to such Interested Person Transactions. (b) Purchases of plastic components, plastic injection moulds and raw materials In respect of purchases of plastic components, plastic injection moulds and raw materials from IPs, the Group will as far as practically possible obtain two quotations from two independent third party suppliers as comparison to ensure that the price payable to an IP is at a comparable market rate. The Group will undertake its best endeavours to obtain independent quotes for comparison. The General Manager will record the Groups attempts at procuring such independent quotes for comparison. Where it is impractical or not possible for such quotes to be obtained, the General Manager and the Purchasing Manager will ensure that the terms of the purchase are fair and reasonable, in accordance with industry norms and in line with business practices of the relevant industry, taking into consideration factors such as, but not limited to, pricing of the plastic components, plastic injection moulds and raw materials of similar specifications, payments terms and market conditions. The General Manager and the Purchasing Manager will ascertain that the pricing for such products by the IPs are no less favourable than those offered by third parties for the same or similar type of products. In addition, if independent quotes are not available for comparison, the General Manager will present to the Audit Committee for review the records of the Groups attempts at procuring the quotes, to ensure that the Group has made every effort to procure independent quotes for comparison.
11
3.5 Guidelines and Review Procedures for Interested Person Transactions (Contd) (b) Purchases of plastic components, plastic injection moulds and raw materials (Contd) Each transaction between the Group and the IPs in relation to the purchase of plastic components, plastic injection moulds and raw materials will be monitored as an individual transaction and, based on the value of the transaction, will require the prior approval of the corresponding approving authority who is a Director or management employee of the Group (not being an Interested Person or his associate) and does not have any interest, whether direct or indirect, in relation to the transaction as follows: Approval Limits Relevant Approving Authority
< 1% of latest audited NTA
General Manager and Purchasing Manager Jointly approved by General Manager; and any one of the following CEO, Chief Operating Officer, Chief Financial Officer or Group General Manager The Audit Committee
1% but < 3% of latest audited NTA
3% of latest audited NTA
The above approval limits have been arrived at by the Group after taking into consideration the nature and size of the transactions, so as to provide for business efficiency and at the same time ensure that material transactions with the IPs are reviewed by the Audit Committee. All transactions will be properly documented and a quarterly report will be forwarded to the Audit Committee for its review. (c) O ther review procedures For the purpose of the review and approval process, if any member of the Board or the Audit Committee has an interest in the transaction to be reviewed, he will abstain from any decision in respect of that transaction. A register will be maintained by the Company to record all Interested Person Transactions which are entered into pursuant to the IPT Mandate. The Audit Committee will, on a quarterly basis, review all Interested Person Transactions entered into pursuant to the IPT Mandate to ensure that the relevant approvals have been obtained and the review procedures in respect of such transactions are adhered to. In addition, the Audit Committee will carry out an annual review to ascertain that the established guidelines and procedures, as set out in this IPT Mandate for the Interested Person Transactions have been complied with. If during these annual reviews by the Audit Committee, the Audit Committee is of the view that the review procedures as stated above have become inappropriate or insufficient in view of changes to the nature of, or the manner in which, the business activities of the Group are conducted, to ensure that the mandated Interested Person Transactions will be conducted based on normal commercial terms and hence, will not be prejudicial to the interests of the Company and its minority Shareholders, the Company will then go back to the Shareholders for a fresh mandate based on new guidelines and procedures for transactions with the Interested Persons to ensure that Interested Person Transactions will be on an arms length basis and on normal commercial terms. During the period prior to obtaining a fresh mandate from the Shareholders, all Interested Person Transactions, including those covered under the IPT Mandate, will be subject to prior review and approval by the Audit Committee. All Interested Person Transactions will also be subject to the review by the External Auditor in the course of their audit of the Groups financial statements.
12
4. STATEMENT OF THE AUDIT COMMITTEE 4.1 The Audit Committee comprises three (3) Independent Directors, Mr Ng Boon Yew, Mr Foo Meng Tong and Mr Moy Kok Leng, James. 4.2 The existing IPT Mandate was tabled and approved by the Shareholders at the 2010 AGM as set out in the Addendum dated 12 July 2010 (the 2010 Addendum). The 2010 Addendum included an opinion by Provenance Capital Pte. Ltd., who was appointed as the Independent Financial Adviser (IFA). The IFAs opinion, as set out in Appendix A of the 2010 Addendum, states that the methods or procedures for determining the terms of the IPT Mandate, if adhered to are sufficient to ensure that the Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. 4.3 An IFAs opinion is not required for the renewal of the IPT mandate to be proposed at the 2013 AGM as the Audit Committee has confirmed the following pursuant to Rule 920(1)(c) of the Listing Manual: (a) the review procedures for determining the transaction prices of the Interested Person Transactions set out in Paragraph 3.5 of this Addendum (the Review Procedures) have not changed since Shareholders approved the IPT Mandate at the 2010 AGM; and (b) the Review Procedures are sufficient to ensure that the Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. 5. VALIDITY PERIOD OF THE IPT MANDATE The renewal of the IPT Mandate will take effect from the passing of the Ordinary Resolution relating thereto at the 2013 AGM, and will (unless revoked or varied by the Company in general meeting) continue in force until the next AGM. Approval from the Shareholders will be sought for the renewal of the IPT Mandate at the next AGM and at each subsequent AGM, subject to satisfactory review by the Audit Committee of its continued application to the transactions with the Interested Persons. 6. DISCLOSURE IN THE ANNUAL REPORT The Company will announce the aggregate value of transactions conducted with the IPs pursuant to the IPT Mandate for the relevant financial periods which the Company is required to report on pursuant to the Listing Manual and within the time required for the announcement of such reports. Disclosure will also be made in the Companys annual report of the aggregate value of transactions conducted with the Interested Persons pursuant to the IPT Mandate during the financial year, and in the annual reports for subsequent financial years that the IPT Mandate continues in force, in accordance with the requirements of Chapter 9 of the Listing Manual. The name of interested persons and the corresponding aggregate value of the Interested Person Transactions will be presented in the following format: Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920 of the Listing Manual)
Name of interested person
Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 of the Listing Manual (excluding transactions less than S$100,000)
13
7. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS 7.1 Directors interests he interests of the Directors in the Shares, as extracted from the Register of Directors Shareholdings, as at the Latest T Practicable Date, are set out below: Foo Meng Tong Tan Choon King Tay Kok Leong Leong Hong Kiat, Amos Daisuke Ono Ng Boon Yew Moy Kok Leng, James 7.2 Substantial shareholders interests The interests of the substantial shareholders in the Shares, as extracted from the Register of Substantial Shareholders, as at the Latest Practicable Date, are set out below: Tan Choon King Univac Precision Engineering Pte Ltd Venture Corporation Limited Amtek International Pte Ltd Amtek Engineering Ltd Ono Sangyo Co., Ltd. Daisuke Ono Number of Shares Deemed Interest Number of Shares Deemed Interest 42,893,177
Direct Interest 200,000 47,623,332 5,010,000 150,000
Total Interest 200,000 47,623,332 5,010,000 42,893,177 150,000
% of Issued Shares 0.07 17.43 1.83 15.70 0.05
Direct Interest 47,623,332 52,333,334 52,333,334
Total Interest 47,623,332 52,333,334
% of Issued Shares 17.43 19.16 19.16 19.16 19.16 15.70 15.70
52,333,334(1) 52,333,334 52,333,334
52,333,334(2) 52,333,334 42,893,177(3) 42,893,177 42,893,177(4) 42,893,177
Notes: (1) Deemed through its interest in Univac Precision Engineering Pte Ltd. (2) Deemed through its interest in Amtek International Pte Ltd. (3) Deemed through HSBC (Singapore) Nominees Pte Ltd. (4) Deemed through his interests in Ono Sangyo Co., Ltd.
14
8. DIRECTORS RECOMMENDATION The Directors who are considered independent for the purpose of the proposed renewal of the IPT Mandate are Mr Foo Meng Tong, Mr Tan Choon King, Mr Tay Kok Leong, Mr Ng Boon Yew and Mr Moy Kok Leng James (collectively, the Independent Directors). Having fully considered the rationale set out in paragraph 3.2 of this Addendum, the Independent Directors believe that the renewal of the IPT Mandate is in the interests of the Company. The Independent Directors are of the opinion that the review procedures for determining transaction prices as stated in paragraph 3.5 of this Addendum for mandated Interested Person Transactions, as well as the annual reviews to be made by the Audit Committee in relation thereto, are sufficient to ensure that Interested Person Transactions will be made with the Interested Persons on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. Accordingly, they recommend that Shareholders vote in favour of the Ordinary Resolution relating to the proposed renewal of the IPT Mandate as set out in the Notice of AGM. The Directors, namely, Mr Leong Hong Kiat, Amos and Mr Daisuke Ono (who are either directly or indirectly interested, or do not consider themselves independent for purpose of considering the proposal relating to the renewal of the IPT Mandate) (the Non-Independent Directors), have abstained from making any recommendation to the Shareholders in relation to the Ordinary Resolution relating to the proposed renewal of the IPT Mandate to be proposed at the 2013 AGM. 9. ABSTENTION FROM VOTING The Non-Independent Directors will abstain from voting their shareholdings, if any, and will also undertake to ensure that their respective associates will abstain from voting on the Ordinary Resolution relating to the proposed renewal of the IPT Mandate at the 2013 AGM. In accordance with the requirements of Chapter 9 of the Listing Manual, Univac Group, Venture Group, Amtek Group, OSK Group and Mr Daisuke Ono, being Interested Persons in relation to the proposed renewal of the IPT Mandate will abstain from voting and will undertake to ensure that their respective associates will abstain from voting, on the Ordinary Resolution in respect of the same to be proposed at the 2013 AGM. Save as disclosed herein, none of the Directors or substantial shareholders of the Company has any interest, direct or indirect, in the Interested Person Transactions. 10. DIRECTORS RESPONSIBILITY STATEMENT The Directors of the Company collectively and individually accept full responsibility for the accuracy of the information given in the Addendum and confirm, after having made all reasonable enquiries, to the best of their knowledge and belief, the Addendum constitutes full and true disclosure of all material facts about the proposal to renew the IPT Mandate at the AGM, and about the Company and its subsidiaries which are relevant to the proposal, and the Directors are not aware of any facts the omission of which would make any statement in the Addendum misleading. Where information in the Addendum has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Addendum in its proper form and context.
15
11. DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected at the registered office of the Company during normal office hours from the date of this Addendum up to and including the date of the AGM: (a) the 2010 Addendum; (b) Memorandum and Articles of Association of the Company; and (c) the annual reports of the Company for the financial years ended 31 March 2012 and 31 March 2013.
Yours faithfully For and on behalf of the Directors
Foo Meng Tong Non-Executive Chairman and Independent Director Fischer Tech Ltd
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Fischer Tech 2012

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ANNUAL REPORT 2013

Consolidated Cash Flow Statement Notes to the Financial Statements

FISCHER TECH LTD ANNUAL REPORT 2013

2-shot injection moulding

Thin-wall injection moulding

FISCHER TECH LTD ANNUAL REPORT 2013

quality reliability consistency = fischer-tech

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

customers = lasting partnership

OUR REVENUE BY INDUSTRY

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

Performance at a Glance Financial Year Ended 31 March

PROFIT/(LOSS) FOR THE YEAR (S$000)

2009 129,580 7,976 5,325 (3,881) (206) (4,087)

2010 121,161 12,053 11,838 2,846 (1,737) 1,109

2011 137,039 19,005 11,517 2,911 (1,063) 1,140

2012 123,676 14,438 4,829 (3,472) (393) (4,339)

2013 132,523 26,649 20,536 12,188 (1,836) 10,293

Earnings before interest, taxation, depreciation and amortisation

2009 57,461 54,832 112,293 41,866 1,871 68,556 2009 #

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

Fischer Tech International Pte Ltd 100%

FISCHER TECH LTD

Fischer Technology Pte Ltd 100%

Fischer Tech (Suzhou) Co., Ltd 100%

Fischer Solution (Suzhou) Co., Ltd 100%

Zeito International Pte Ltd 38%

Fischer Medtech Pte Ltd 100%

DongGuan Hyform Electronic Co., Ltd 100%

Fischer Tech (Thailand) Co., Ltd 100%

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

AUDIT COMMITTEE No of Meetings attended 4 4 4 4 4 -

COMPENSATION COMMITTEE No of Meetings attended 2 2 2 2 -

NOMINATING COMMITTEE No of Meetings attended 1 1 1 -

FISCHER TECH LTD ANNUAL REPORT 2013

(5) (6) (7) (8)

FISCHER TECH LTD ANNUAL REPORT 2013

Hiroaki Miyauchi (3)

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

Bonus/ Profit Sharing (1) % 67 54

% 100 100 100 100 100 100

% 100 100 100 100 100 100 100 100

Hiroaki Miyauchi (6)

FISCHER TECH LTD ANNUAL REPORT 2013

Bonus/ Profit Sharing % 68 38 32 59 20

Total % 100 100 100 100 100

FISCHER TECH LTD ANNUAL REPORT 2013

(7) (8) (9)

FISCHER TECH LTD ANNUAL REPORT 2013

FISCHER TECH LTD ANNUAL REPORT 2013

(Appointed on 1 August 2012)

47,623,332 4,710,000 200,000 150,000

47,623,332 5,010,000 200,000 150,000

FISCHER TECH LTD ANNUAL REPORT 2013