IR PRACTICE CHARTERED ACCOUNTANTS OF SINGAPORE

Transcription

1 IR PRACTICE CHARTERED ACCOUNTANTS OF SINGAPORE 60 Paya Lebar Road,#12-55 Paya Lebar Square. Singapore Tel: Fax: Report on the Financial Statements INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ZICOM SECURITY PROJECTS PTE. LTD. We have audited the accompanying financial statements of ZICOM SECURITY PROJECTS PTE. LTD. which comprise the statement of financial position as at 3 1 March 201 5, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's 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 fiom 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. Auditor's 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 fiom 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 auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fiaud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal 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 financial statements 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 Company as at 3 1 March and the results, changes in equity and cash flows of the Company for the year ended on that date.

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3 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015 ASSETS Current Assets Advances Cash & cash equivalents Note US$ US$ Total Assets EQUITY AND LIABILITIES Capital and Reserves Share capital Accumulated losses Current Liabilities Accruals Term loan - secured Non-current Liabilities Term loan - secured Loan from related party Loan from holding company Other loan Total Equity and Liabilities The annexed notes form an integral part of and should be read in conjunction with this statement. 6

4 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH Note US% US% Revenue Other income Director's fee Other operating expenses Finance costs Profit/(loss) before tax Taxation Profit/(loss) after tax Other comprehensive income Total comprehensive income/(loss) for the year The annexed notes form an integral part of and should be read in conjunction with this statement. 7

5 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2015 Share Accumulated capital losses Total US$ US% US% Balance as at (23,702) (23,70 1) Total comprehensive loss for the year (143,459) (143,459) Balance as at (167,161) (167,160) Total comprehensive income for the year 30,845 30,845 The annexed notes form an integral part of and should be read in conjunction with this statement. 8

6 STATEMENT OF CASH mows FOR THE YEAR ENDED 31 MARCH 2015 Cash flows from operating activities Profit/(loss) before income tax & working capital changes Changes in working capital Accruals Note US$ US% Net cash from/( used) in operations Cash flows from investing activities Advances Cash flows from financing activities Term loan - repaid Loan 6om related party Loan 6om holding company Other loan Net cash from financing activities Net increase/(decrease) in cash & cash equivalents Cash & cash equivalents at the beginning of year Cash & cash equivalents at the end ofyear The annexed notes form an integral part and should be read in conjunction with this statement. 9

7 The notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. GENERAL The Company, which is incorporated and domiciled in Singapore, has its registered office at 89 short street # Golden wall centre Singapore However on 27 April 20 15, the Company changed its registered office to 60 Paya Lebar Road #12-55 Paya Lebar Square Singapore The immediate and ultimate holding company is Zicom Electronic Security Systems Limited, which is incorporated in India. The principal activities of the Company are those of manufacturing, assembling and trading in security and safety products, and other investment holding companies. However, the Company remains dormant during the financial year. The financial statements of the Company for the year ended 3 1 March were authorised for issue in accordance with a resolution of the directors on the date of the Statement by Directors. 2. SIGNIFICANT ACCOUNTING POLICIES a. Basis of Preparation The financial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS) and the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about canying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision only affects that period, or in the period of the revision and future periods, if the revision affects both current and future periods. The adoption of the new or revised FRS or Interpretations of FRS (INT FRS) that are applicable in the current financial year and relevant to the Company does not have material impact on the accounting policies and figures presented in the financial statements for the financial year ended 31 March The Company has not applied any new or revised FRS or INT FRS that have been issued as of the balance sheet date but are not yet effective. The initial application of these standards and interpretations are not expected to have any material impact on the Company's financial statements. Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (functional currency). The financial statements are presented in United States Dollar (USD), which is the Company's functional currency.

8 b. Financial Assets Financial assets are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition. The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial instruments "at fair value through profit or loss". Trade receivables are stated at original invoice value less any allowance for doubtful receivables based on a review of all outstanding amounts at the period end. An allowance for doubthl receivables is made when there is objective evidence that the Company will not be able to collect all amounts due according to original terms of receivable. Bad debts are written off when identified. Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as "loans and receivables". Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method. Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the "substance over form" based on derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control. c. Financial Liabilities Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis. Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Company's accounting policy for borrowing costs.

9 d. Impairment of Financial Assets Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity. e. Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered fiom a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. f. Cash and Cash Equivalents Cash and cash equivalents are stated in the statement of financial position at cost. For the purposes of statement of cash flows, cash and cash equivalents comprise of cash at bank, bank overdrafts and other short-term highly liquid investments those are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

10 g. Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction flom the proceeds. Where the Company reacquires its own equity instruments as treasury shares, the consideration paid, including any directly attributable incremental cost is deducted from equity attributable to the Company's equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders and no gain or loss is recognised in the income statement. h. Associate Associated companies are entities, over which the Company has significant influence, but not control, and generally accompanied by a shareholding giving rise to between and including 20% and 50% of the voting rights. Investments in associated companies are accounted for in the financial statements using the equity method of accounting less impairment losses. Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. In applying the equity method of accounting, the Company's share of its associated companies' post acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Company's share of losses in an associated company equals or exceeds its interest in the associated Company, including any other unsecured non-current receivables, the Company does not recognise fbrther losses, unless it has obligations or has made payments on behalf of the associated company. Such obligations are recognised as liabilities on the balance sheet. Unrealised gains on transactions between the Company and its associated companies are eliminated to the extent of the Company's interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Company. i. Income Tax Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it fbrther excludes items that are not taxable or tax deductible. The Company's liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company operates by the end of the reporting period.

11 i. Income Tax (continued) Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the statement of fmancial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer's interest in the net fair value of the acquirer's identifiable assets, liabilities and contingent liabilities over cost. j. Foreign Currency Transactions in foreign currencies are recorded in United States Dollar at the rate of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance shed date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and loss& are recognised directly in equity. k Related Party FRS 24 defines a related party as an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common or joint control with, the entity in governing the financial and operating policies, or that has an interest in the entity that gives insignificant influence over the entity in financial and operating decisions. It also includes members of the key management personnel or close members of the family of any individual referred to herein and others, who have the ability to control, jointly control or significantly influence by or for which significant voting power in such entity resides with, directly or indirectly, any such individual.

12 I. Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. m. Financial Risk Management The Company's overall risk management policy seeks to minimise potential adverse effect on the financial performance of the Company. The Company however does not have any written risk management policies and guidelines. The directors monitor the following risk management of the Company and believe that the financial risks associated with financial instruments are minimal. Interest rate risk The Company's exposure to market risk for changes in interest rate related to the Company's long term debt obligations. The Company does not use derivative financial instruments to hedge its exposure to interest rate fluctuation. Liquidity risk The Company maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities. The directors manage the liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available. The table below analyses the Company's non-derivative financial liabilities into relevant maturity grouping based on the remaining period ftom the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undisclosed cash flows. Balance due within 12 months equal their carrying balances. Accruals Term loan - secured Loan from related party Loan from holding company Other loan One year More than or less one year Total US$ US$ US$

13 m. Financial Risk Management (continued) Accruals Term loan - secured Loan fiom related party Loan fiom holding company Other loan One year More than or less one year Total US$ US$ US$ n. Fair Value of Financial Assets and Financial Liabilities The carrying amounts of cash and cash equivalents, trade and other receivables and payables, provisions and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. 3. ADVANCES The above are for the fbture investment in two companies. As at the date of the report, the above h ds have been advanced to two companies for the fbture allotment of shares by the respective companies. The amounts are non-trade in nature, unsecured and receivable on demand. 4. CASH AND CASH EQUIVALENTS Cash at bank 106,704 64,729 The carrying amounts of cash and cash equivalents approximate their fair values. 5. SHARE CAPITAL Issued and fully paid with no par value I ordinary share The holder of ordinary share is entitled to receive dividends as declared fiom time to time. -

14 6. TERM LOAN - SECURED The secured term loan was obtained to subscribe to convertible preference shares of the investment in available for sale financial assets amounting to USD 7,500,000 and other investment. Interest is charged at 1.25% to 2.75% per annum over Libor Rate. Due within 1 year Due within 2-5 years The term loan is secured by the following: a) SBLC, which is collectively the five standby letter of credits issued by a bank; and b) a charge over the DSRA (Debt Service Reserve Account) in the form of a fixed deposit account or current account maintained by the Company. 7. LOAN FROM RELATED PARTY The amount is non-trade in nature, unsecured, interest-free and repayable on demand. 8. LOAN FROM HOLDING COMPANY The amount is non-trade in nature, unsecured, interest-fiee and repayable on demand. The immediate and ultimate holding company is Zicom Electronic Security Systems Limited, which is incorporated in India. 9. OTHERLOAN The amount is non-trade in nature, unsecured, interest-free and has no fixed repayment terms. 10. OTHER INCOME Interest income Miscellaneous receipt

15 11. FINANCE COSTS Bank term loan interest Other loan interest 12. PROFITLOSS BEFORE TAXATION Items charged in arriving at loss before tax: Legal & professional fees Corporate guarantee charges 13. TAXATION The income tax expense varies 6-om the amount of income tax determined by applying the Singapore income tax rate of 17% to profit/(loss) before income tax due to the following factors: Profit/(Loss) before tax Tax at 17% Effect of tax on: -Exempt income - benefit forfeited 14. RELATED PARTY TRANSACTIONS The Company's transactions are made in the ordinary course of business and are reflected in these financial statements. The following are the transactions with the related parties during the financial year ended 3 1 March and were at terms and rates agreed between the parties: Income Interest received Expenses Other loan interest Corporate guarantee charges

16 15. CAPITAL MANAGEMENT The objectives when managing capital are to safeguard the entity's ability to continue as a going concern so that it can continue to provide returns for owners and benefits for other stakeholders, and to provide an adequate return to owners by pricing products and services commensurately with the level of risk. The management sets the amount of capital to meet its requirements and the risk taken. There were no changes in the approach to capital management during the year. The management manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in conditions and the risk characteristics of the underlying assets. The Company is not subject to externally imposed capital requirements. 16. GOING CONCERN As at 3 1 March 20 15,the company has a capital deficiency of US$136,3 15(2014 :US$167,160).The directors have reviewed the projected cash flows and business outlook of the Company and are of the opinion that the basis upon which the financial statements are prepared is appropriate in the circumstances. The Company will have funding from the holding company and related party to meet its financial obligations as and when they fall due.

17 SUPPLEMENTARY INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2015 Revenue Other Income Interest income Miscellaneous receipt Director's fee Other Operating Expenses Audit fee Bank charges Corporate guarantee charges Legal & professional fees Finance Costs Bank term loan interest Other loan interest Profit Before Tax The above statement does not form part of the audited accounts of the Company.