Tackling. CHALLENGES Ahead

Transcription

1 Tackling CHALLENGES Ahead ANNUAL REPORT 2013

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3 TACKLING CHALLENGES AHEAD CONTENTS 02 About Us 03 Chairman s Statement 05 Managing Director s Review 08 Board of Directors 10 Key Executives 11 Corporate Information 12 Group Structure 13 Corporate Governance Report 19 Directors Report 23 Statement by Directors 24 Independent Auditors Report 26 Balance Sheets 28 Consolidated Statement of Comprehensive Income 29 Consolidated Statement of Changes in Equity 30 Consolidated Statement of Cash Flows 32 Notes to the Financial Statements 85 Group Properties 86 Statistics of Shareholdings 88 Notice of Annual General Meeting Proxy Form

4 CORPORATE INFORMATION LANTROVISION ANNUAL REPORT 2013 ABOUT US LANTROVISION WAS ESTABLISHED BY OUR MANAGING DIRECTOR CHAN THYE YUAN AS A SOLE PROPRIETORSHIP IN 1990 TO SUPPLY AND INSTALL COMPUTER CABLING TO MEET CUSTOMERS INFORMATION AND TELECOMMUNICATION REQUIREMENTS. THE COMPANY WAS SUBSEQUENTLY INCORPORATED ON 27 JUNE ON 2 NOVEMBER 2001, THE COMPANY WAS LISTED ON THE OFFICIAL LIST OF SGX SESDAQ AND WAS SUBSEQUENTLY TRANSFERRED TO SGX MAINBOARD ON 15 JANUARY OUR MISSION LANdmark provider of a Global Quality InfoComm Technology infrastructure TRO satisfying beyond the needs and growth of our Stakeholders VISION of pride in our work with continuous training, development and effective communication OUR CORPORATE CAPABILITY Lantrovision (S) Ltd is the only Public Listed Company in Asia with dual BiCSi accreditation of Prestige Corporate Platinum Contractor and Prestige Corporate Platinum Consultant status OUR VISION To be the leading global Structured Cabling System Integrator 02

5 TACKLING CHALLENGES AHEAD CHAIRMAN S STATEMENT YEAR IN REVIEW FOR THE 12 MONTHS ENDED 30 JUNE 2013, THE GROUP HAS ACHIEVED A REVENUE OF S$133.5 MILLION. Amidst a year of volatility in the global economy and challenges, we are pleased to report a net profit attributable to equity holders of S$9.1 million for the year ended 30 June 2013 ( FY2013 ). OUR SATISFACTORY PERFORMANCE DEMONSTRATES THE STABILITY AND RESILIENCE OF THE GROUP - A POSITION WE WILL ENDEAVOR TO STRIVE FOR IN MANY MORE YEARS TO COME. PROPOSED DIVIDEND To reward our shareholders for their continued support, the Board of Directors has recommended for approval at the forthcoming Annual General Meeting, a first and final dividend of S$0.02 for each ordinary share held as at a book closure date to be announced later. YEAR IN REVIEW For the 12 months ended 30 June 2013, the Group has achieved a revenue of S$133.5 million. There is no significant change to the group revenue for the two financial year ended 2013 and General and administrative expenses has decreased by S$0.4 million mainly as a result of higher legal fees as well as allowance for impairment loss on non-trade receivables made in the prior financial year. The decrease in other operating expenses by approximately S$0.7 million was mainly due to the following factors: c) Partially offset with the increased staff costs of S$0.5 million and foreign exchange loss of S$0.3 million. The decrease in other comprehensive income by approximately S$0.3 million is attributable mainly to currency translation difference arising from a stronger Singapore dollar against the regional currencies during the year. Deferred tax assets has decreased primarily due to utilisation of tax credit to offset against tax payable during the year. The increase in investment in associates is due to new invesment in an associated company in Singapore and partially offset with the share of losses incurred by our associated companies. Inventories purchased in preparation for the upcoming projects resulted in an increase in Group s inventories. Net amount due from customers for contract work-in-progress was lower due mainly to timing of project completion. Trade receivables has decreased as a result of lower turnover in the quarter ended 30 June 2013 as well as greater effort made by management to improve its debt collection. The increase in other receivables by approximately S$0.6 million is mainly due to higher prepayments and interest receivables as at year end. Non-controlling interest has increased by approximately S$0.7 million due to higher share of profits earned by subsidiaries. The reduction in trade payables of S$5.5 million is due to lower purchases in the last quarter in line with slowing economy as well as timing of normal trade settlement. a) Provision of bank balances of S$0.8 million deposited in a Philippine bank that was placed under sudden receivership in previous year; b) Decrease in net provision for impairment of work-in-progress of S$0.6 million in the current year; and 03

6 CHAIRMAN S STATEMENT LANTROVISION ANNUAL REPORT 2013 Higher accrued staff costs in the current financial year resulted in higher accruals and other payables. Amount due to a related party (non-trade) relates to the dividends payable to non-controlling interest. Net cash generated from operating activities have reduced by S$8.3 million during the year as a result of higher working capital requirements. OUTLOOK The economic outlook continues to be uncertain. With a shrinking pool of the labour workforce, the imposition of minimum wages in certain regions, coupled with volatile raw material costs, the Group is expected to face pressure on its profit margins. THE GROUP WILL CONTINUE TO MAINTAIN FINANCIAL PRUDENCE AND TO RAISE PRODUCTIVITY TO MANAGE THE OPERATING COSTS OF THE GROUP. By leveraging on our track records and regional business infrastructure, continually improving our products and services portfolio that are complementary to our core IT cabling infrastructure business, we strive to meet the needs of our regional customers as well as to expand our customer bases, so as to improve our profitability and add value to our shareholders. APPRECIATION On behalf of the Board, I want to express my sincere gratitude to the management and staff, whose hard work made it possible for us to manage the effects of the uncertain global economy and achieve profitability in FY2013. Lastly, I want to thank our customers and business partners as well as our shareholders for your continued support. 04 LUM CHUE TAT Chairman

7 TACKLING CHALLENGES AHEAD MANAGING DIRECTOR S REVIEW GOING FORWARD WE WILL REMAIN MINDFUL OF THE CONSTANT NEED TO IMPROVE AND ADAPT TO THE CHANGING ECONOMIC ENVIRONMENT TO FULFILL OUR GOALS AND OBJECTIVES AND TO DEVELOP AND MOTIVATE OUR STAFF WITH A CLEAR FOCUS IN EXECUTING OUR STRATEGY TO IMPROVE OUR TURNOVER AND MARGINS. YEAR IN REVIEW We entered FY 2013 on a positive note despite global economic recovery remaining sluggish over a combination of factors such as the impending retraction of the US economy stimulus program, uncertainty of the Euro-zone economic recovery and the less than positive economic data from China. It s also a year where labour crunch and rising labor costs across the region posed a real challenge to our business. Moving on, given the strain on human resources, we will be more selective with projects, and prioritise our service delivery to achieve maximum values to both our valued customers and our shareholders. Despite operating in such challenging conditions and pressures from ever increasing cost of operation, we are proud to announce that our team had done a great job to weather through these challenges. Our strategy of diversifying more into local Multi-National Corporations and Government projects, the sectors which we were not predominantly involved in, has delivered positive results. GIVEN THE GENERAL UNCERTAINTY IN THE GLOBAL ECONOMY, WE WILL CONTINUE WITH OUR STRATEGY OF DIVERSIFYING OUR CLIENTS AND CUSTOMER BASE AND TO IMPROVE OUR TOP LINE BY OFFERING MORE VALUE ADDED PRODUCTS AND SERVICES TO OUR EXISTING AND NEW CUSTOMERS, WHILE CONSTANTLY BEING MINDFUL OF BALANCING OUR RESOURCES TO IMPROVE PRODUCTIVITY THROUGHOUT THE ORGANIZATION. 05

8 MANAGING DIRECTOR S REVIEW LANTROVISION ANNUAL REPORT 2013 EXPANDING MARKET SEGMENT The ever-changing dynamics of the present economic environment had more than frequent derailed our expectations and affected the way business decisions were made. Customers are more conservative with their business expansion plans, leading to a reduction in IT infrastructure projects, both in numbers and sizes. As a result of such development, in addition to the traditionally predominant financial centres, the Group was able to use its experience and redeploy resources to other non-financial sectors, namely the manufacturing sector, high end residential and commercial developments, mega gaming and recreation centers, etc. EXPANDING PRODUCT AND SERVICES We made substantial progress in strengthening and expanding our product portfolio. We experienced more than marginal success in the sale of products and services that are complementary to our IT cabling infrastructure business, namely products and services on IT infrastructure and power management; products and software for data center and enterprise communication rooms; security surveillance products, active and passive datacenter equipment and accessories as well as cabling routing support system. Data Center Infrastructure Management ( DCIM ) is the key trend. There are a multitude of new technologies products and services currently available which can complement our Structured Cabling business to meet the expectations and provide solutions to the data centers owners and operators in the areas of energy efficiency and savings over space cost. AS AUTHORIZED PARTNERS, WE BELIEVE THAT OUR WELL ESTABLISHED REPUTATION AND GEOGRAPHICAL PRESENCE WILL CREATE A WIN- WIN SITUATION FOR BOTH THE GROUP AND THE VENDORS OF SUCH NEW TECHNOLOGIES. MANAGING COSTS With inflationary pressures across the region, authorities are encouraging industries and companies to improve the minimum wages of lower income employees, which may pose a challenge to our margin. This is further compounded with pricing pressure from competition and clients expectation. As such, it is more compelling now for us to accelerate our productivity programs to remain competitive and relevant in the industry. We will continue to educate and motivate our staff on the relevance of productivity and operation cost management, as well as to seek new ways to improve our processes in order to optimise our resources, focusing on areas such as material usage, savings and sourcing. FOCUS AND IMPROVE OUR COMPARATIVE ADVANTAGE I am also proud to mention that our Lantro Global Alliance Partnerships with the members from United States of America, Brazil, Europe, South Africa, Indonesia, Japan and Australia have taken roots and have enabled us to establish a strong global presence. In the short to medium term, this Alliance continues to enhance our marketing efforts in reaching out to potential clients through presentations and joint events. One of the key initiative is to develop processes and business portals to create a unique proposition that best meet our existing and prospective customers budgets and expectations. In the long run, this Alliance will provide us with a competitive edge over our competitors with access into different markets, and give us greater opportunity and confidence to meet our global clients transnational requirements. It is our intention to further enhance our partnership through more synergistic engagement among the Alliance members to create and seize new opportunities from our common global clientele and new prospects. 06

9 TACKLING CHALLENGES AHEAD MANAGING DIRECTOR S REVIEW OUTLOOK Given the continuing uncertainty in the global economy, the Group is generally cautious about the outlook of growth acceleration. Without any clarity and stability in sight, the global business environment remains challenging for us. We will continue with our strategies of expanding and diversifying our market segment, increase our product and services portfolio by selling more to our existing and new customers. WE WILL LEVERAGE ON OUR GLOBAL PRESENCE TO INCREASE OUR BUSINESS OPPORTUNITIES TO MITIGATE ANY SHORTCOMINGS ARISING FROM THE UNCERTAINTIES WE MAY FACE IN THE NEW FINANCIAL YEAR. In the last few years we have made concerted effort to streamline our operations and processes, focusing on manpower and resource management, financial prudence and credit management. We will continue to drive these initiatives and enhance our productivity to mitigate challenges from escalating costs and falling prices. We will also focus on customer profiling to identify value customers to maximise the use of our resources and business returns. As the visibility of the economic environment remains hazy, we are cautiously optimistic about the market opportunities. We will adopt a prudent approach in managing such challenges. Similar to past experiences,we are confident that our strategies, experience and the resilient nature of our business will navigate us through the various challenges we may encounter. We will remain mindful of the constant need to improve and adapt to the changing economic environment to fulfill our goals and objectives and to develop and motivate our staff with a clear focus in executing our strategy to improve our turnover and margins. 07

10 BOARD OF DIRECTORS LANTROVISION ANNUAL REPORT 2013 LUM CHUE TAT Chairman Lum Chue Tat, one of the Group s co-founders, was appointed to the Board in June Mr Lum is primarily responsible for the Group s overall business development. He holds a Diploma in Electronics and Communication from the Singapore Polytechnic and has over 20 years of experience in structured cabling design and marketing. CHAN THYE YUAN RCDD Managing Director Chan Thye Yuan, RCDD, one of the Group s co-founders, is the Managing Director of the Company and is responsible for the strategic initiatives as well as the Group s overall business development. He holds a Bachelor of Business in Business Administration and has been a Registered Communication Distribution Designer since Mr Chan has over 20 years of experience in structured cabling design and related telecommunications expertise. ANG EE TIONG, KENNETH RCDD Executive Director Ang Ee Tiong, Kenneth, RCDD, an Executive Director of the Company, is responsible for operational and administrative matters as well as overseeing our overseas operations. He was appointed to the Board in November Mr Ang has been a Registered Communication Distribution Designer since 1999 and has more than 20 years of experience in structured cabling design and related design. LIM WOON WAH Non-Executive Independent Director Lim Woon Wah, a Non-Executive Independent Director, was appointed to the Board in December Ms Lim has extensive experience in the financial, compliance and special audit. She is the Chairman of the Audit and Nominating Committees as well as a member of the Remuneration Committee. Ms Lim is a Chartered Accountant with the New Zealand Institute of Chartered Accountants. YEO JIEW YEW Non-Executive Director Yeo Jiew Yew, a Non-Executive Director, was appointed to the Board in August Mr Yeo has more than 40 years of extensive experience in electrical installation industry. From 1983 to 2006, he was the Managing Director of Magnus Energy Group Ltd ( Magnus ) (fka. Strike Engineering Limited) and was responsible for the overall management of Magnus. He left Magnus in May Currently, Mr Yeo is the Managing Director of Victrad Enterprise (Pte) Ltd. YEO KAN KIANG, ROY Non-Executive Independent Director Yeo Kan Kiang, Roy, a Non-Executive Independent Director, was appointed to the Board in August He graduated with a Bachelor of Laws (Honours) degree from the University of Bristol, UK and has been in legal practice for more than 15 years. Mr Yeo is active in community service in Tanjong Pagar GRC and is presently the Chairman of the Henderson Community Club Management Committee. For his active involvement and participation in grassroots/ community service in Singapore, Mr Yeo was awarded the Public Service Medal (PBM) by the President of the Republic of Singapore in 2011 National Day Awards. 08

11 TACKLING CHALLENGES AHEAD GLOBAL PRESENCE With regional offices across 11 countries and 25 cities, together with our alliance partners in 7 countries, we strive to fortify our service level capabilities, to capitalise on opportunities as well as to expand our footprint in the region that we are operating in, thereby strengthening our brand and improving our service standards to achieve higher growth. 09

12 KEY EXECUTIVES LANTROVISION ANNUAL REPORT 2013 CHAN SOW HAR Administrative Manager Chan Sow Har, our Administrative Manager, has been with the Group since Her main responsibilities are the management and supervision of administrative staff and she oversees the administrative functions of our Group such as payroll and personnel matters. She has a Certificate of Business Studies from the National Institute of Commerce in LIM KHIA HUAT, VINCENT Head of International Group Lim Khia Huat, Vincent, joined the Group as the Head of International Group in October He is responsible for overseeing regional strategic operations and developments. He obtained a Master of Business Administration (International Management) from the Royal Melbourne Institute of Technology in LIM LEE CHOO Group Financial Controller and Company Secretary Lim Lee Choo, our Group Financial Controller, has been with the Group since She is responsible for our overall financial accounting and corporate finance matters. She obtained a Bachelor of Accountancy degree from Nanyang Technological University in 1993 and is a Chartered Accountant (Singapore) with the Institute of Singapore Chartered Accountants. POH KHENG ANN RCDD Senior Business Development Manager Poh Kheng Ann, RCDD, our Senior Business Development Manager, has been with the Group since Mr Poh, a Registered Communication Distribution Designer, is mainly responsible for identifying and developing strategic customers with long term potential. Mr Poh has extensive experience in the data and network communications industry. He obtained his Diploma from Singapore Polytechnic in TAN CHIN LIM Senior Project Manager Tan Chin Lim is our Senior Project Manager and has been with the Group since He is responsible for the local and regional installation projects. He is also responsible for project management and supervises a team of project engineers in system implementation. He obtained his GCE O levels in TAN KIM HIN Senior Project Manager Tan Kim Hin is our Senior Project Manager and has been with the Group since He is responsible for site supervision and the deployment of manpower and technical resources such as testing equipment. He is also responsible for sales and project management, and has been involved in several significant projects for our Group. He completed his GCE O levels in

13 TACKLING CHALLENGES AHEAD CORPORATE INFORMATION BOARD OF DIRECTORS Executive Lum Chue Tat (Chairman) Chan Thye Yuan (Managing Director) Ang Ee Tiong, Kenneth Non-Executive Lim Woon Wah (Independent) Yeo Jiew Yew (Non-Independent) Yeo Kan Kiang, Roy (Independent) NOMINATING COMMITTEE Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew Chan Thye Yuan REMUNERATION COMMITTEE Yeo Kan Kiang, Roy (Chairman) Lim Woon Wah Yeo Jiew Yew Ang Ee Tiong, Kenneth COMPANY SECRETARY Lim Lee Choo SHARE REGISTRAR Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore Telephone: (65) Facsimile: (65) AUDITORS Crowe Horwath First Trust LLP 8 Shenton Way #05-01 AXA Tower Singapore AUDIT COMMITTEE Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew REGISTERED OFFICE 8 Ayer Rajah Crescent Singapore Telephone: (65) Facsimile: (65) AUDIT PARTNER- IN-CHARGE Angeline Tan Lay Hong (Appointed since FY2012) 11

14 GROUP STRUCTURE LANTROVISION ANNUAL REPORT 2013 LanTroVision (S) Ltd MORE THAN 50% HOLDINGS LESS THAN 50% HOLDINGS 100% LANTRO (S) PTE LTD 50% ALTRO SOLUTIONS PTE LTD 100% LANTRO (MALAYSIA) SDN BHD 100% LANTRO (TAIWAN) 100% SDN BHD 100% LANTRO (HK) LIMITED 100% VRNET (S) PTE LTD 85% LANTROVISION KOREA CO. LTD LANTRO CO. LTD 70% 18% (HANGZHOU) 60% LANTRO (SHANGHAI) CO. LTD 60% APPSILAN ASIA PTE LTD 60% INFILAN PTE LTD 60% LANTRO TECHNOLOGIES INDIA PRIVATE LIMITED 51% LANTRO PHILS. INC. 25% LANTROVISION INC. 51% LANTRO (PENANG) SDN BHD 100% LANTRO (VIETNAM) CO. LTD 49% LANTRO (THAILAND) CO. LTD 100% LANTRO (CAMBODIA) CO. LTD 12

15 TACKLING CHALLENGES AHEAD Corporate Governance Report Lantrovision (S) Ltd ( the Company ) is committed to achieving and maintaining high standards of corporate governance practices and processes in managing the business and affairs, so as to maintain performance and improve accountability and transparency of the Company. BOARD MATTERS The Board of Directors (the Board ) comprises three (3) Executive Directors, two (2) Independent Non-Executive Directors and one (1) Non-Executive Director. The Board is of the opinion that its current size is reasonably effective and efficient considering the nature and size of the Group s activities. The Board s principal role is to protect and enhance long-term shareholders value. It sets the corporate strategies of the Group and determines the strategic goals and directions for the Management. It supervises the overall management of the business and affairs of the Group, and monitors performance of these goals to enhance shareholders value. The Board is responsible for the overall corporate governance of the Group. Regular meetings are held to deliberate the strategic policies of the Company including significant acquisitions and disposals, review performance of the business and approve public release of periodic financial results. The Board has formed Board Committees namely the Audit Committee, the Nominating Committee and the Remuneration Committee to assist in carrying out and discharging its duties and responsibilities efficiently and effectively. Directors Attendance at Board and Board Committee Meetings Board Audit Committee Nominating Committee Remuneration Committee No of Meetings No of Meetings No of Meetings No of Meetings Held Attended Held Attended Held Attended Held Attended Lum Chue Tat 4 4 Chan Thye Yuan Ang Ee Tiong, Kenneth Yeo Jiew Yew Lim Woon Wah Yeo Kan Kiang, Roy The Company s Articles of Association (the Articles ) allows Board meetings to be conducted by way of telephone. Where a decision has to be made before a Board meeting is convene, a Directors Resolution in writing is circulated in accordance with the Articles of the Company and the Directors are provided with all relevant information to allow them to make informed decisions. With Mr Chan Thye Yuan assuming the designation of Managing Director and Mr Lum Chue Tat as the Chairman of the Board, the Board believes that this separation of roles is in line with the recommendation of the Code of Corporate Governance to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision- making. The Chairman is responsible for, among others, exercising control over quality, quantity and timeliness of the flow of information between the Management of the Company and the Board, and assisting in ensuring compliance with the Company s guidelines on corporate governance. In order to assist the Board in carrying out its responsibilities, training is provided when the need arises and any Board Member can seek independent professional advice, if necessary, at the Company s expense, with the Chairman s approval. 13

16 Corporate Governance Report LANTROVISION ANNUAL REPORT 2013 Audit Committee ( AC ) The chairman of the AC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang,Roy and Non-Executive Director, Mr Yeo Jiew Yew. The AC s key functions include, pursuant to its terms of reference, the review of (a) the effectiveness of the Company s material internal control (b) scope and results of the external audit and its cost effectiveness (c) independence and objectivity of the external auditors and (d) the provision of non-audit services. The AC has explicit authority to investigate any matters within its terms of reference and possess reasonable resources to discharge its functions properly. The external auditors have unrestricted access to the AC. The AC had undertaken a review of all nonaudit services provided by the auditors and was of the opinion that the provision of such services would not affect the independence of the auditors. The AC has recommended the re-appointment of the external auditors at the forthcoming AGM. The Company has in place a whistle-blowing policy and procedures, which provide employees with well-defined and accessible channels within the Group through which they may, in confidence, raise concerns about possible improprieties. Employees have ready access to the Chairman and members of the Audit Committee to raise improprieties in matters of financial reporting and other operational matters. The Audit Committee shall ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow-up actions. Upon review by the AC on all interested parties transactions ( IPT ) during the financial year, the AC has noted all IPT were less than S$100,000 and is satisfied that these were carried out at arm s length basis. In accordance with the requirement of Rule 716 of the SGX-ST Listing Manual, the AC and the Board are satisfied that the appointment of different auditors for certain of its subsidiaries would not compromise the standard and effectiveness of the audit of the Group. Control environment and internal audit process The key features of the control environment include the terms of reference for the Board s sub-committees, a clear organisation structure and methods of assigning authority and responsibility, the management s internal control systems, and defined procedures for the approval of major transactions. The Group s internal control process is anchored by the Group s corporate office which assists the Board to monitor its compliance with key internal controls procedures as well as the plan and performance of its subsidiaries and associated companies which is reported internally on a monthly basis. The Board shall consider expanding its internal audit resources as and when the need arises. There is also regular communication between executive Directors and operational Management with presentation being made by the Management of each principal operation on a regular basis. Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted. Nominating Committee ( NC ) The chairman of the NC is Ms Lim Woon Wah. The members are independent Non-Executive Director, Mr Yeo Kan Kiang, Roy, Non-Executive Director, Mr Yeo Jiew Yew and Managing Director, Mr Chan Thye Yuan. 14

17 TACKLING CHALLENGES AHEAD Corporate Governance Report The NC has adopted specific written terms of reference. Accordingly, the members of the NC are responsible for, among others, the review and recommendation of appointment and reappointment of Directors. In accordance with the Company s Article of Association, each Director is required to retire at least once every three years by rotation and all newly appointed Directors will have to retire at the Annual General Meeting ( AGM ) following their appointment. The retiring Directors are eligible to offer themselves for re-election. The NC has recommended the re-appointment of two Directors, namely Mr Yeo Jiew Yew and Mr Yeo Kan Kiang, Roy at the forthcoming AGM. The Board has accepted the NC s recommendation and these 2 Directors will be offering themselves for re-election. Other duties of the NC include the determination of Directors independence, ability of Directors to handle multiple board representations and effectiveness of the Board including the board size and composition. The NC has deemed the current board size and composition to be appropriate after taking into consideration the nature and scope of the Group s operations. The review parameters for evaluating each Director include (a) attendance at board committee meetings; (b) intensity of participation at meetings; (c) quality of involvement in Management; (d) special contribution; and (e) availability for consultation and advice, when required. Remuneration Committee ( RC ) The Chairman of the RC is Mr Yeo Kan Kiang, Roy. The members are independent Non-Executive Director, Ms Lim Woon Wah, Non-Executive Director, Mr Yeo Jiew Yew and Executive Director, Mr Ang Ee Tiong, Kenneth. The main functions and responsibilities as set out in its written code of reference include (a) the setting up and implementation of formal and transparent processes by which the remuneration packages of all the executive Directors (in the form of service agreement) and the top Management executives are formulated and approved, (b) the approval of the Directors remuneration and service agreements which will be reviewed every three years and (c) the administration of the Lantrovision Share Option Scheme and Lantrovision Performance Share Plan. The RC will also have access to expert advice in remuneration matters when the need arises. A breakdown of the level and mix of remuneration paid to each Director in each remuneration bands are as follows: Profit Sharing % Benefits & Allowances % Remuneration band and name of Director Salaries % Bonus % Fees % Total % Between S$500,000 and S$749,999 Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Below S$250,000 Yeo Jiew Yew Yeo Kan Kiang, Roy Lim Woon Wah Remuneration of top 5 key executives FY2013 FY2012 Below $250, Although there are employees occupying managerial positions in the Group who are related to certain executive Directors of the Company, none of their remunerations exceeds S$150,000 for FY2013. The RC and the Board are of the opinion that the remuneration of the Directors are adequate but not excessive in order to attract, retain and motivate them to run the Company successfully. 15

18 Corporate Governance Report LANTROVISION ANNUAL REPORT 2013 The Lantrovision Share Option Scheme 1. The Lantrovision Share Option Scheme ( the Scheme ) approved by the then shareholders of the Company on 31 August 2001, is administered by the RC. 2. Under the Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the share at the time of the grant of the option. The RC, may at its discretion, fix that subscription price at a discount of up to 20% off market price. The consideration for the grant of an option is S$1.00. Options granted with the subscription at the market price shall only be exercised after first anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of the grant of that option. Options granted with the subscription price set at a discount to the market price shall only be exercisable after the second anniversary but before the tenth anniversary (fifth anniversary for non-executive Directors) of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Option will lapse when the option holder ceased to be a full-time employee of the Company or any Company within the Group, subject to certain exceptions at the discretion of the Company. 3. Details of the number of shares under option to subscribe for ordinary shares of the Company are as follows: Balance as at Expired during Balance as at Adjusted Exercise Expiry Grant Date Adjustment* the year Price Date 10 Jan ,015,000 (6,325,000) 690,000 $ Jan Jan ,751,000 (4,261,000) 490, ,000 $ Jan 2014 * Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year. 4. Details of the options to subscribe for ordinary shares of the Company granted to Directors of the Company under the Scheme are as follows: Aggregate options granted since commencement of scheme to end of financial year under review (adjusted for any Rights and those lapsed during the financial year) Aggregate options exercised since commencement of scheme to end of financial year under review Aggregate options outstanding as at end of financial year under review Name of participants Lum Chue Tat 110,000 Nil 110,000 Chan Thye Yuan 110,000 Nil 110,000 Ang Ee Tiong, Kenneth 110,000 Nil 110,000 Yeo Jiew Yew NA Yeo Kan Kiang, Roy NA Lim Woon Wah NA 5. No options were granted to any controlling shareholders and their associates since the commencement of the Scheme. 16

19 TACKLING CHALLENGES AHEAD Corporate Governance Report 6. No participant other than the Executive Directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total options available under the Scheme. 7. Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee falls, which is financial year Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not. The Lantrovision Performance Share Plan 1. The Lantrovision Performance Share Plan was approved by then shareholders of the Company at an Extraordinary General Meeting held on 31 October The Performance Share Plan is also administered by the RC. 2. The purpose of adopting the Performance Share Plan ( the Plan ) in addition to the existing Lantrovision Share Option Scheme is to serve as a motivational tool to recruit, attract and retain Employees and Directors, motivate them to perform and contribute to the Group, instil loyalty and a stronger identification by them with the long-term prosperity of the Group and foster an ownership culture within the Group by aligning their interest with that of the Shareholders. Since the commencement of the Plan, no awards have been granted. Some information on the Plan:- 1. Awards over the Company s ordinary shares may be granted to all executive Directors, non-executive Directors and executives of the Group, except those who are controlling shareholders, as may be determined by the RC from time to time. 2. Under the Plan, awards represent the right of a participant to receive fully paid ordinary shares in the Company free of charge upon the participant achieving prescribed performance targets. The selection of a participant and the number of shares which are the subject of each award to be granted to a participant in accordance to the Plan shall be determined at the absolute discretion of the RC, which shall take into consideration criteria such as his rank, job performance and potential for future development, his contribution to the success and development of the Group and the extent of effort and resourcefulness required to achieve the performance target(s) within the performance period. 3. The total number of new shares of the Company which may be issued pursuant to awards under the Plan, when added to the total number of new shares issued and issuable in respect of all awards granted under the Plan, and all options granted under the Lantrovision Share Option Scheme, shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company on the day preceding the relevant date of Award. 4. Subject to prevailing legislation and SGX-ST guidelines, the Company will have the flexibility to deliver ordinary shares of the Company to participants under the Plan upon vesting of their awards by way of an issue of new ordinary shares; and/or deliver existing shares, whether acquired pursuant to a share purchase mandate or held as treasury shares; and/or pay the equivalent cash value, in lieu of the issue or delivery of all or some of the shares. 17

20 Corporate Governance Report LANTROVISION ANNUAL REPORT 2013 Communication with Shareholders The Board is mindful of its obligation to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the SGX-ST. Results and other material information are released via SGXNET on a timely basis for dissemination to shareholders and the public. All shareholders will receive a copy of the annual report and the notice of AGM ( the AGM Notice ). The AGM Notice is also advertised in the newspapers and released via SGXNET. The Board welcomes the view of the shareholders on matters affecting the Company at shareholders meetings. At AGMs, shareholders are given the opportunity to air their view and to ask the Directors and Management questions regarding the Group. Material Contracts There were no material contracts entered into by the Company and its subsidiaries involving the interest of the Directors that subsisted at the end of the financial year or have been entered into since the end of the previous financial year. Use of proceeds arising from Rights Issue On 16 October 2012, the Company completed a renounceable and non-underwritten rights Issue of 248,992,464 new ordinary shares in the issued share capital of the Company (the Rights Shares ) at an issue price of S$0.09 for each Rights Share. The gross proceeds from the Rights Issue were S$22,409,322 were utiised by the Group as follows: Utilisation of Rights Issue Proceeds S$ 000 General working capital (Payment to trade vendors for trade supplies and services) 22,137 Payment for expenses incurred in connection with the Rights Issue 272 Rights Issue proceeds fully utilised 22,409 Dealings in Company s securities The Company has adopted the SGX-ST Best Practice Guide to provide guidance to its Directors and officers on their dealings in its securities. Directors and officers are prohibited from dealing in the Company s securities two weeks before the announcement of the Company quarters results, and one month before the announcement of the Company s full year results. Directors and officers are also not allowed to deal in the Company s securities on short-term considerations. Risk Management Policies and Processes The management of all forms of business risk continues to be an important part of ensuring that the Group creates and protects values for its shareholders. The main risk faced by the Group is credit risk which is primarily attributable to its trade receivables. Accordingly, stringent credit control policies and processes have been set up and closely monitored to ensure adequate prevention, early detection and resolution of potential bad debts. For further details on the risks faced by the Group, please refer to page 75 of the Annual Report. 18

21 TACKLING CHALLENGES AHEAD DIRECTORS REPORT The directors are pleased to present their report to the members together with the audited financial statements of Lantrovision (S) Ltd (the Company ) and subsidiaries (collectively, the Group ) for the financial year ended 30 June 2013 and the balance sheet of the Company as at 30 June Directors The directors of the Company in office at the date of this report are as follows: Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Lim Woon Wah Yeo Kan Kiang, Roy Yeo Jiew Yew Arrangements to enable directors to acquire benefits by means of the acquisition of shares and debentures Except for the Lantrovision Share Option Scheme as described in the Share options section, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Directors interests in shares or debentures According to the register of directors shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the Act ), none of the directors of the Company holding office at the end of the financial year had any interests in the shares, share options, warrants or debentures of the Company or its related corporations except as follows: Name of Directors Ordinary shares in the Company At 1 July 2012 Direct Interests At 30 June At 21 July At 1 July 2012 Deemed Interests At 30 June 2013 At 21 July 2013 Chan Thye Yuan 176,703,750 22,971,481 27,651,481 Ang Ee Tiong, Kenneth 239,793,750 31,173,181 31,173,181 Lum Chue Tat 192,453,750 25,018,981 25,018,981 Yeo Jiew Yew 103,897,000 15,987,000 15,987,000 Options to subscribe for ordinary shares in the Company Chan Thye Yuan 2,666, , , ,000 40,000 40,000 Ang Ee Tiong, Kenneth 1,841, , ,000 Lum Chue Tat 2,666, , ,000 Directors contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors of those related corporations. 19

22 DIRECTORS REPORT LANTROVISION ANNUAL REPORT 2013 Share options The Lantrovision Share Option Scheme (the Scheme ) approved by shareholders on 31 August 2001 is administered by the Remuneration Committee comprising the following members: Yeo Kan Kiang, Roy, Chairman Lim Woon Wah Yeo Jiew Yew Ang Ee Tiong, Kenneth All options issued under the Scheme to eligible employees, including executive directors, have a term no longer than 10 years and options issued to non-executive directors have a term no longer than 5 years. The exercise period of the options commences on the first anniversary of the date of the grant. Details of the options to subscribe for ordinary shares of the Company granted to eligible employees, including directors of the Group pursuant to the Scheme are as follows: Date of Grant Exercise period Balance at 1 July 2012 Adjustment* Number of shares under option Expired during the year Balance at 30 June 2013 Adjusted Exercise price 10 January January January 2004 to 9 January ,015,000 (6,325,000) 690,000 $ January 2005 to 18 January ,751,000 (4,261,000) 490, ,000 $ ,766,000 (10,586,000) 490, ,000 * Adjustments to the Share Options after the completion of Share Consolidation and Rights Issue during the financial year. Aggregate options granted during financial year ended 30 June 2013 Aggregate options granted since commencement of the Scheme to 30 June 2013 Number of shares under option Aggregate options exercised since commencement of the Scheme to 30 June 2013 Aggregate options cancelled due to adjustment/ expired since commencement of the Scheme to 30 June 2013 Aggregate options outstanding as at 30 June 2013 Directors of the Company Chan Thye Yuan 2,666,000 (2,556,000) 110,000 Ang Ee Tiong, Kenneth 1,841,000 (1,731,000) 110,000 Lum Chue Tat 2,666,000 (2,556,000) 110,000 The aggregate number of options granted to directors and employees since the commencement of the Scheme is 42,072,000 (before adjustment of the Share Consolidation and Rights Issue). Under the Scheme, the duration shall be in force for a maximum period of twenty financial years with offers of Options in every financial year up to the tenth financial year commencing the financial year in which the first Offer Date to any Grantee fall s, which is financial year Accordingly, there will no more offer of Options under this Scheme with effect from beginning financial year 2014, without any prejudice to the rights accrued to Options which have been granted and accepted, whether such Options have been exercised (fully or partially) or not. 20

23 TACKLING CHALLENGES AHEAD DIRECTORS REPORT Since the commencement of scheme to the end of the financial year, (a) (b) No options have been granted to controlling shareholders of the Company or their associates (as defined in the Listing Manual of Singapore Exchange Securities Trading Limited); and No participant other than executive directors, Chan Thye Yuan and Lum Chue Tat, has received 5% or more of the total number of shares under options available under the Scheme. Except as disclosed above, there were: - no options granted by the Company or subsidiaries to any person to take up unissued shares in the Company or subsidiaries; - no shares issued by virtue of any exercise of option to take up unissued shares of the Company or subsidiaries; and - no unissued shares of the Company or subsidiaries under option. Audit committee The members of the Audit Committee at the end of the financial year are as follows: Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew The Audit Committee ( AC ) carried out its functions in accordance with section 201B(5) of the Act, the Listing Manual of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance. In performing those functions, the Audit Committee reviewed: - the audit plan of the Company s independent auditors and any recommendations on internal accounting controls arising from the statutory audit; - the assistance given by the Company s management to the independent auditors; - the periodic results announcements prior to their submission to the Board for approval; - the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 30 June 2013 prior to their submission to the Board of Directors, as well as the independent auditors report on the balance sheet of the Company and the consolidated financial statements of the Group; and - interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited). The Audit Committee has recommended to the Board of Directors that the independent auditors, Crowe Horwath First Trust LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. The Audit Committee has conducted an annual review of non-audit services provided by the independent auditors to satisfy itself that the nature and extent of such services will not affect the independence and objectivity of the external auditors before confirming their re-nomination. In appointing the external auditors for the Company, subsidiaries and significant associated companies, we have complied with Rules 712, 715 and 716 of the Listing Manual of the Singapore Exchange Securities Trading Limited. Further details regarding the AC are disclosed in the Report on Corporate Governance set out in the Annual Report of the Company. 21

24 DIRECTORS REPORT LANTROVISION ANNUAL REPORT 2013 Internal control Based on the on-going review as well as the continuing efforts in enhancing controls and processes which are currently in place, the Board, with the concurrence of the Audit Committee, is of the view that there are adequate internal controls in place for the Group to address financial, operational and compliance risks for the type and volume of businesses conducted. Independent auditors The independent auditors, Crowe Horwath First Trust LLP, have expressed their willingness to accept re-appointment as auditors of the Company. On behalf of the Board of Directors CHAN THYE YUAN Director LUM CHUE TAT Director 25 September

25 TACKLING CHALLENGES AHEAD Statement by Directors In the opinion of the directors, (a) (b) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 26 to 84 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2013 and of the results, changes in equity and cash flows of the Group for the financial year then ended; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors CHAN THYE YUAN Director LUM CHUE TAT Director 25 September

26 InDepenDent auditors report TO THE MEMBERS OF LANTROVISION (S) LTD LANTROVISION ANNUAL REPORT 2013 Crowe Horwath First Trust LLP Chartered Accountants of Singapore Member Crowe Horwath International 8 Shenton Way #05-01 AXA Tower Singapore Fax report on the Financial Statements We have audited the accompanying financial statements of Lantrovision (S) Ltd (the Company ) and subsidiaries (the Group ) set out on pages 26 to 84, which comprise the consolidated balance sheet and the balance sheet of the Company as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information. 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 (the Act ) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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. Crowe Horwath First Trust LLP (UEN: T08LL1312H) is an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A). 24