Expanding Our Reach. Annual Report

Transcription

1 Expanding Our Reach Annual Report

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3 CONTENTS 02 About Us 03 Chairman s Statement 05 Managing Director s Statement 07 Board of Directors 10 Senior Management Personnel 11 Corporate Information 12 Group Structure 13 Corporate Governance Report 27 Directors Report 31 Statement by Directors 32 Independent Auditors Report 34 Balance Sheets 36 Consolidated Statement of Comprehensive Income 37 Consolidated Statement of Changes in Equity 38 Consolidated Statement of Cash Flows 40 Notes to the Financial Statements 92 Group Properties 93 Statistics of Shareholdings 95 Notice of Annual General Meeting Proxy Form Directory of Lantrovision Network 1

4 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 2 OUR VISION To be the leading global Structured Cabling System Integrator OUR CORPORATE CAPABILITY Lantrovision (s) Ltd is the only Public Listed Company in Asia with 8 RCDDs (Registered Communications Distribution Designer) certified by BISCI (Building Industry Consulting Services International).

5 CHAIRMAN S STATEMENT THE GROUP GENERATED NET CASH OF APPROXIMATELY S$14.8 MILLION FROM ITS OPERATING ACTIVITIES AS A RESULT OF HIGHER OPERATING PROFITS GENERATED IN FY2014. On behalf of the Board of Directors, I am pleased to present to you the Annual Report of Lantrovision (S) Ltd (the Company ) and its subsidiaries (the Group ) for the financial year ended 30 June 2014 ( FY2014 ). YEAR IN REVIEW The Group delivered a 14% improvement in revenue from S$133.5 million to S$151.7 million and a 49% improvement in net profit from S$10.2 million to S$15.2 million, translating into earnings per share rising 38% to 5.15 Singapore cents from 3.72 Singapore cents in our preceding financial year. STATEMENT OF COMPREHENSIVE INCOME The increase in revenue was primarily attributable to more installation projects in Singapore, Hong Kong and China. Distribution and selling expenses has decreased by S$0.5 million as a result of lower net allowance for impairment loss on trade receivables. The reduction of general and administrative expenses by S$0.2 million was mainly due to write-back of allowance for impairment loss on non-trade receivables of S$0.1 million in FY2014 as compared to allowance for impairment loss on non-trade receivables of S$0.1 million made in previous financial year. The increase in other operating expenses by approximately S$2.0 million was mainly due to increased staff costs of approximately S$0.4 million, as well as higher staff incentives provision of S$1.5 million as a result of better performance achieved in FY2014. The contributions from associates has increased by S$0.3 million as a result of improved performance by our associated company in Singapore. Income tax expenses has increased in line with increased profits generated. The strengthening of Singapore dollars against the regional currencies resulted in higher translation losses, thereby increasing the Group s comprehensive expenses. STATEMENT OF FINANCIAL POSITIONS Investment in associates has increased as a result of contributions from our associated companies. Inventories purchased in preparation for the upcoming projects resulted in an increase in the Group s inventories. The higher amount due from customers work-in-progress was mainly due to on-going and new projects undertaken towards the end of FY2014. The increase in the Group s trade receivables and trade payables are in tandem with the increase in revenue generated. The decrease in other receivables by approximately S$0.1 million as a result of repayment of staff loans. Amount due from associates (non-trade) has increased by S$0.7 million was mainly due to loan provided to an associated company in Singapore in FY2014. The increase in translation deficit was primarily attributable to the strengthening of Singapore dollars against regional currencies. 3

6 CHAIRMAN S STATEMENT (CONT D) Non-controlling interest has increased by approximately S$1.3 million was due to the followings: (a) Share of profits earned by subsidiaries of S$1.3 million; and (b) Dilution of equity interest in our subsidiary in Taiwan of approximately S$0.2 million. The above is partially offset by dividends paid to noncontrolling interests of S$0.2 million. The increase in other payables and accruals was due mainly to higher accrued staff costs in FY2014. Amount due to a related party (non-trade) in FY2014 relates to the dividends payable to non-controlling interest. CASH FLOW STATEMENT The group generated net cash of approximately S$14.8 million from its operating activities as a result of higher operating profits generated in FY2014. Net cash used in financing activities was mainly attributable to the dividends paid to shareholders in FY2014. OUTLOOK Management believes that the Group is well positioned to ride on the growing demand for quality structured cabling and its related services, in the wake of growing demand for data centres in both local and regional markets. Always bearing in mind the constant challenges the Group faces in this dynamic economy, the Group remains resilient and adaptable without compromising customers needs and competitive edge in their businesses. Barring any unforeseen circumstances, the Group remains confident of the viability of our business model. APPRECIATION On behalf of the Board, I want to express my sincere gratitude to management and staff, whose hard work made it possible for us to manage the effects of the uncertain global economy and achieve profitability in FY2014. Lastly, I want to thank our customers and business partners as well as our shareholders for your continued support. PROPOSED DIVIDEND To reward our shareholders for their continued support, the Board of Directors has recommended for approval at the forthcoming Annual General Meeting of the Company, a first and final tax-exempt (one-tier) dividend of S$0.03 per ordinary share held as at a book closure date to be announced later. 4

7 MANAGING DIRECTOR S STATEMENT YEAR IN REVIEW Whilst we started the financial year 2014 on a cautious note due to general uncertainty of the global economy, we noted with pleasure that the Group was able to achieve a reasonable growth in 2014 amidst such uncertainties. We attributed this to our steadfast belief in our strategy of expansion and diversification of our market segments and by selling more to our existing and new customers. Our diversification into other markets such as local and multinational projects on health, development and the technological sector had resulted in positive revenue growth and provided a more balanced portfolio compared to with our historical reliance on the financial market sector for key revenue growth. The latter have experienced slower growth over the last few years in part due to the financial crisis in 2008 which resulted in more cautious spending and competitive margins in recent years. Our growth is further compounded by the surge of technology companies building their point of presence in Asia Pacific in preparation for cloud computing services. This led to greater demands for more sizeable data centers in the region and the resultant cabling infrastructure projects. Labour crunch and rising labour cost continues to be a concern and challenge for us. In the short term, we are able to weather through the challenges of labor shortage by outsourcing some of our contracts and prioritizing our services to projects that offer maximum value. At the same time, we developed and expanded our network with recruitment agencies and educational institutions for new recruits in anticipation of any surge in service or project requirements. The market remains price competitive and we continue to seek ideas and strategies to improve our processes not only to reduce cost but also to improve our prices and margins. EXPANDING MARKET SEGMENT We have succeeded in our strategy to explore new opportunities and expand beyond our traditional financial market segment to other industries and market segments. This provided a more balanced portfolio and reduced our dependence on the financial market sector. Having said that, the financial market continues to be and will remain a key driver of our business and revenue. Our expansion and success into other sectors gave us a foothold into industry segments such as health and medical, education, media and commercial developments. Such success encourages us to further explore business opportunities in the areas of intelligent lighting and power technology, industrial and building automation, etc. This will be through collaboration with vendors and customers and regular training to remain relevant when such opportunity arises. Aside from new opportunities in the local market segment, we are also looking into other geographical markets and growing our presence in Indonesia and developing markets such as Indo China and Myanmar. EXPANDING PRODUCT AND SERVICES The proliferation of cloud computing and new data centers provided us with the opportunity to increase our sale of products and services which are complementary to our existing IT cabling infrastructure s solutions. These include both active and passive data center equipment and components, as well as cabling infrastructure containment. With the convergence of data, voice and video technology and with Internet Protocol ( IP ) as the ubiquitous platform, we have the opportunity to offer reliable structure, scalable and high performance cabling solutions in areas of technologies which are bandwidth 5

8 MANAGING DIRECTOR S STATEMENT (CONT D) intensive. Network structured cabling are no longer restricted to data and voice connectivity. Added to the cabling network are the IBMS (Intelligent Building Management System) applications such as Lighting, Video, Fire Alarm, Security, Heating Ventilation and Air Conditioning ( HVAC ) and Building and Industrial Automation Systems. As a result of these applications that demand a share of bandwidth, there will be a need to install a robust cabling infrastructure that is flexible and scalable to support future technologies. EXPANDING OUR LANTRO GLOBAL ALLIANCE PARTNERSHIP ( LGAP ) With our current alliance partners from USA, South Africa, Japan, Indonesia, Australia, UK and Brazil, the Group continues its strategic outreach to achieve breakthrough in new markets. We are selectively on a lookout for suitable partners to optimize our global coverage, conscientiously enhancing processes to maximize the engagement structure, with a common objective to act quickly on opportunities presented in each market that we have a presence in. MANAGING COST Operational costs such as rental, transportation and especially the manpower and labour costs, remained challenging for any good managers. In particular, manpower and labour costs are no longer as stable as they used to be, as a result of regular changes in labour laws and regulations. Such costs are constantly on the increase, both locally and across the region, compounded with the fact that employers are now entrusted to do more for the employees, such as helping employees to achieve greater work life balance, workplace safety, skill upgrading and personal development. Although there are costs attached to such initiatives, as a responsible employer, we strongly believe in and advocate such initiatives. We are mindful of the constant need to motivate and educate our team to be more productive, to do more with less and to optimize our resources to improve our bottom line, focusing on improvements in material management, manpower, operational and business processes. FOCUS AND IMPROVE OUR COMPARATIVE ADVANTAGE One of the major comparative advantages Lantrovision had over our competitors is our ability to engage and fulfill our global customers transnational Infrastructure Communication Technology ( ICT ) cabling project rollout. Together with our LGAP, we have established a global network to serve our global and common customers and in achieving our vision of Your preferred choice of a global partner for a quality implementation, management and maintenance of ICT cabling infrastructure. Our constant synergistic engagement gave us the confidence and success in securing certain global and regional projects. 6 Our diversified and extensive client base is another comparative advantage of which we leverage on. Firstly, to further strengthen our professional relationship and to retain our business continuity and secondly, to continue to sell more products and services which are of value and relevance to support their business operations. OUTLOOK Today, structured cabling no longer handles traditional voice and data connectivity. The adoption of IP based applications and systems accelerated the deployment of IP converged networks. The trend towards the greater adoption of such IP converged networks in integrating voice, data, video, IBMS, industrial automation, energy management system, surveillance and security and other complementary infrastructure products and services presents opportunity for further growth and expansion for the structured cabling business. The IP converged networks are supported over a common cabling infrastructure and cabling pathways and containment leading to more demand for cabling and other related services. The emerging trends in cloud technology coupled with more MNCs expanding and setting up more data centers across the region present additional opportunities in the areas of demand for structured cabling projects and maintenance services. How well we are able to capitalize on such opportunities will greatly depend on the adoption rate of these new technologies, the general global economic and geopolitical environment and the rate we acquire the necessary qualification and technical knowhow. Financial year 2014 was a positive year for us. We are hopeful that the coming year will be equally positive. We will continue to be mindful of the opportunities and challenges ahead and together with our team, we will work towards improving our revenue and margins so as to add value to our shareholders.

9 BOARD OF DIRECTORS LUM CHUE TAT Executive Chairman Mr Lum Chue Tat, one of the Group s co-founders, is the Executive Chairman of the Company and 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. Date of first appointment as a director: 27 June 1992 Date of last re-election as a director: 23 October 2012 Present Directorship: Other Listed Companies Nil Other Principal Commitments Nil Past Directorships in listed companies held over the preceding three years: Nil CHAN THYE YUAN, RCDD Managing Director Mr Chan Thye Yuan, RCDD, one of the Group s co-founders, is the Managing Director of the Company and was appointed to the Board in June Mr Chan 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. Date of first appointment as a director: 27 June 1992 Date of last re-election as a director: 28 October 2011 Present Directorship: Other Listed Companies Nil Other Principal Commitments Nil Past Directorships in listed companies held over the preceding three years: Nil ANG EE TIONG, KENNETH, RCDD Executive Director Mr Ang Ee Tiong, Kenneth, RCDD, an Executive Director, 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. Date of first appointment as a director: 1 November 2003 Date of last re-election as a director: 23 October 2012 Present Directorship: Other Listed Companies Nil Other Principal Commitments Nil Past Directorships in listed companies held over the preceding three years: Nil 7

10 BOARD OF DIRECTORS LIM WOON WAH Lead Independent Director Ms Lim Woon Wah, a Non-Executive 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 of the Company. Ms Lim is a Chartered Accountant with the New Zealand Institute of Chartered Accountants. Date of first appointment as a director: 15 December 2005 Date of last re-election as a director: 28 October 2011 Present Directorship: Other Listed Companies Nil Other Principal Commitments Nil Past Directorships in listed companies held over the preceding three years: Nil YEO JIEW YEW Non-Executive Director Mr 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. He is a member of the Audit, Nominating and Remuneration Committees of the Company. From 1983 to 2006, he was the Managing Director of Magnus Energy Group Ltd ( Magnus ) (f.k.a. Strike Engineering Limited) and was responsible for the overall management of Magnus. He left Magnus in May Date of first appointment as a director: 28 August 2008 Date of last re-election as a director: 23 October 2013 Present Directorship: Other Listed Companies Kingbo Strike Limited (Cayman Islands), Managing Director Other Principal Commitments Victrad Enterprise (Pte)Ltd, Managing Director Strike Electrical Engineering Pte Ltd, Director Past Directorships in listed companies held over the preceding three years: Nil YEO KAN KIANG, ROY Non-Executive Director Mr Yeo Kan Kiang, Roy, a Non-Executive 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. Date of first appointment as a director: 1 August 2005 Date of last re-election as a director: 23 October 2013 Present Directorship: Other Listed Companies Nil Other Principal Commitments Sterling Law Corporation, Director Henderson Community Club, Chairman of Management Committee Past Directorships in listed companies held over the preceding three years: Nil 8

11 LANTROVISION ANNUAL REPORT 2014 With regional offices across 12 COUNTRIES and 26 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. 9

12 SENIOR MANAGEMENT PERSONNEL CHAN SOW HAR Administrative Manager Ms 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 Mr 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 Ms 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 Mr 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 Mr 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 Mr 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 LANTROVISION ANNUAL REPORT 2014 CORPORATE INFORMATION BOARD OF DIRECTORS REMUNERATION COMMITTEE Executive Lum Chue Tat (Chairman) Chan Thye Yuan (Managing Director) Ang Ee Tiong, Kenneth Yeo Kan Kiang, Roy (Chairman) Lim Woon Wah Yeo Jiew Yew SECRETARY Non-Executive Lim Woon Wah (Lead Independent) Yeo Jiew Yew Yeo Kan Kiang, Roy AUDIT COMMITTEE Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew Lim Lee Choo REGISTERED OFFICE 8 Ayer Rajah Crescent Singapore Telephone: (65) Facsimile: (65) SHARE REGISTRAR / SHARE TRANSFER AGENT 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 NOMINATING COMMITTEE AUDIT PARTNER-IN-CHARGE Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew Angeline Tan Lay Hong (Appointed since the financial year ended 30 June 2012) 11

14 GROUP STRUCTURE 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 (HK) LIMITED 100% VRNET (S) PTE LTD 85% LANTRO (TAIWAN) LTD 85% LANTROVISION KOREA CO. LTD 18% LANTRO CO. LTD (HANGZHOU) 70% 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 60% LANTRO MYANMAR CO. LTD 12

15 corporate governance report The Board of Directors (the Board or the Directors ) of Lantrovision (S) Ltd (the Company ) is committed to achieving and maintaining a high standard 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. The Company has substantially complied with the recommendations of the revised Code of Corporate Governance 2012 (the Code ), issued by Monetary Authority of Singapore on 2 May 2012, through effective self-regulatory corporate practices to protect and enhance the interests and value of its shareholders. This report describes the Company s corporate governance processes and activities in conjunction with the requirements of the Singapore Exchange Securities Trading Limited ( SGX-ST ) that issuers describe its corporate governance practices with specific reference to the Code in its annual reports. Unless otherwise stated, the principles and guidelines of the Code have been complied with. 1. BOARD MATTERS a. The Board s Conduct of Affairs (Principle 1) The Board oversees the business affairs of the Company and its subsidiaries (collectively the Group ) and is responsible for setting the strategic direction and establishing goals for Management. In addition, the Board works with Management to achieve these goals set for the Group. To ensure smooth operations, facilitate decision-making and ensure proper controls, the Board has delegated some of its powers to its Committees and Management. The Board Committees and Management remain accountable to the Board. 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 principal functions of the Board are as follows: Formulate corporate strategies, financial objectives and directions for the Group; Ensure effective management leadership of the highest quality and integrity; Provide oversight in the proper conduct of the Group s businesses; Oversee and/or evaluate the adequacy of the risk management, financial reporting and compliance processes; and Oversee and ensure high standards of corporate governance for the Group. The Board also deliberates and makes decisions on material acquisitions and disposal of assets, corporate restructuring, dividend payments and other returns to shareholders and on matters that may involve a conflict of interest for any Director. All new Directors are given an orientation of the Group s business and governance practices, and all Directors have access to information and further training on new developments, including new laws, regulations and changing commercial risks, at the Company s expense. To efficiently discharge its responsibilities, the Board has established several Board Committees, namely, the Audit Committee ( AC ), Nominating Committee ( NC ) and Remuneration Committee ( RC ). These Committees are given specific responsibilities and they are empowered by the Board to deal with matters within the limits of authority set out in the Terms of Reference of their appointments. They assist the Board operationally without the Board losing authority over major issues. The Board holds at least four (4) scheduled meetings each year to review and deliberate on the key activities and business strategies of the Group, including significant acquisitions and disposals, financial performance and to endorse the release of the quarterly and annual financial results. Where necessary, additional meetings are held to address significant transactions or issues arising from the business operations of the Group. 13

16 corporate governance report 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 convened, 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. The number of meetings held by the Board, AC, NC and RC and the attendances of Directors at the meetings during the financial year ended 30 June 2014 are set out below: Name of Director Board of Directors 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 * 2 2* 2 2* Chan Thye Yuan * * Ang Ee Tiong, Kenneth * 2 2* 2 2 Lim Woon Wah Yeo Kan Kiang, Roy Yeo Jiew Yew * Attendance by invitation of the relevant Committees b. Board Composition and Guidance (Principle 2) The Board comprises six (6) Directors, three (3) of whom are Executive Directors and three (3) of whom are Non-Executive Directors of which two (2) are Independent Directors: Executive Directors: Lum Chue Tat Chan Thye Yuan Ang Ee Tiong, Kenneth Non-Executive Directors: Lim Woon Wah Yeo Jiew Yew Yeo Kan Kiang, Roy executive Chairman Managing Director Lead Independent Director The Company believes that there should be a strong and independent element on the Board in order for it to exercise objective judgment on corporate and business affairs. The Company also believes that the Independent Directors should be selected for their diverse expertise so that they can provide a balance of views. The Board considers an Independent Director as one that has no relationship with the Company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Director s independent business judgement with a view to the best interests of the Company. The Board also noted the timeline to comply with the Code s recommendation that Independent Directors should make up at least half of the Board where the Chairman is part of the management team. Thus, the Company is taking deliberate and cautious effort to review and select appropriate candidates to ensure that the benefits are optimized. The NC reviews the independence of each Director annually, and as and when circumstances require. The NC adopts the Code s definition of what constitutes an Independent Director in its review and also considers any other salient factors. The Independent Directors constructively challenge and assist in the development of proposals on strategy, and assist the Board in reviewing the performance of the Management in meeting agreed goals and objectives, and monitor the reporting of performance. 14

17 corporate governance report Although Mr Yeo Kan Kiang, Roy has served on the Board for more than nine years from the date of his first appointment, the Board concurred with the NC s view that he is independent in character and judgement and there were no circumstances which would likely affect or appear to affect his judgement. His length of service and in-depth knowledge of the Group s businesses is viewed by the Board as valuable during board deliberations. While recognizing the benefits of the experience and stability brought by long-standing Directors, the Board remains committed to the progressive renewal of board membership. The Independent Directors meet amongst themselves without the presence of Management when necessary. The NC is of the view that the current composition of the Board exhibits a level of independence that sufficiently enables the Board to exercise objective judgment on corporate affairs independently from Management. The NC is also of the view that no individual or small groups of individuals dominate the Board s decision-making processes. The Board has determined, taking into account the views of the NC, that each Independent Director is independent in character and judgement and that there are no relationships or circumstances which are likely to affect, or could appear to affect, that Director s judgement. Our Directors profiles are set out on pages 7 and 8 of this Annual Report. Our Board members have the appropriate breadth and depth of expertise and experience in the areas of accounting, finance, business, management, industry knowledge and strategic planning. c. Role of Executive Chairman ( Chairman ) and Managing Director ( MD ) (Principle 3) There is a clear division of responsibilities at the top management with clearly defined lines of responsibility between the Board and executive functions of Management of the Company s business. With Mr Lum Chue Tat assuming the designation of Chairman and Mr Chan Thye Yuan as the MD of the Company, the Board believes that this separation of roles is in line with the recommendation of the Code to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making. The Chairman and the MD are not related to each other. The Chairman is responsible for, amongst others, exercising control over quality, quantity and timeliness of information between Management of the Company and the Board, and assisting in ensuring compliance with the Company s guidelines on corporate governance. The Chairman is assisted by the management team in the daily operations and administration of the Group s business activities and in the effective implementation of the Group s business strategies. In maintaining good corporate governance, Ms Lim Woon Wah, the Chairman of the NC, who has been appointed as the Lead Independent Director of the Company, will lead and coordinate the activities of the Independent Directors and contribute to a balance of viewpoints on the Board. She is the principal liaison on Board issues between the Independent Directors and the Chairman of the Board. d. Board Membership (Principle 4) We believe that Board renewal must be an on-going process to ensure good governance and maintain relevance to the changing needs of the Group s businesses. To achieve a formal and transparent process for the appointment and re-appointment of Directors to the Board, the NC is responsible for identifying and selecting new Directors. The Chairman of the NC is an Independent Director and is not associated with any substantial shareholder of the Company and the majority of the NC members are independent. 15

18 corporate governance report The NC comprises the following three (3) members: Ms Lim Woon Wah Mr Yeo Kan Kiang, Roy Mr Yeo Jiew Yew chairman Member Member The NC is regulated by a set of written Terms of Reference and is responsible for making recommendations to the Board on all Board appointments and re-appointments through a formal and transparent process. In respect of re-nominations, the NC will consider the individual Director s contribution and performance and whether the Director has adequate time and attention to devote to the Company, in the case of Directors with multiple board representations. The responsibilities and principal functions of the NC, as set out in its Terms of Reference, include: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Reviewing board succession plans for Directors, in particular, the Chairman and the MD; Reviewing and recommending the appointment and re-appointment of the Directors having regard to the Director s contribution and performance, including attendance, preparedness and participation; Reviewing and recommending to the Board the retirement or re-election of Directors in accordance with the Articles of the Company at each annual general meeting ( AGM ); Recommending to the Board the re-appointment of any Director, who is over 70 years of age, at each AGM; Reviewing the structure, size and composition of the Board annually to ensure that the Board has an appropriate balance of independent and non-independent Directors and ensuring an appropriate balance of expertise, skills, attributes and ability among the Directors; Recommending to the Board the development of evaluation process on the performance of the Board, its Board Committees and individual Directors, and propose objective performance criteria which shall be approved by the Board; Determining annually the independence of Directors, in accordance with applicable codes and guidelines; Reviewing the training and professional development programs for the Board; Reviewing a Director s multiple board representations on various companies and conducting an assessment on the effectiveness of the Board as a whole and to assess the contribution by each individual Director to the effectiveness of the Board so that to decide whether or not such Director is able to and has been adequately carrying out his duties as Director; and Deciding whether the Directors have been and will continue to contribute effectively and demonstrate commitment to their roles and duties as a Director of the Company adequately, taking into consideration each Director s number of listed company board representations and other principal commitments. In accordance with Article 104 of the Company s Articles, every Director shall retire from office at least once every three years and at each AGM, one-third of the Directors shall retire from office by rotation. In addition, Article 105 provides that the retiring Directors are eligible to offer themselves for re-election and Article 108 provides that all newly appointed Directors shall hold office only until the next AGM and are eligible to offer themselves for re-election. The Board has accepted the NC s nomination of the retiring Directors who have given their consent for re-election at the forthcoming AGM of the Company. The retiring Directors are Mr Chan Thye Yuan and Ms Lim Woon Wah who will retire pursuant to Article 104 of the Articles at the forthcoming AGM of the Company. 16

19 corporate governance report The NC has reviewed the independence of Ms Lim Woon Wah and Mr Yeo Kan Kiang, Roy, and is satisfied that there are no relationships which would deem any of them not to be independent. In reviewing the independence, the NC has considered the relationships identified by the Code and additionally, the Independent Directors are also independent of the substantial shareholders of the Company. When a Director has multiple board representations, the NC also considers whether or not the Director is able to and has adequately carried out his duties as a Director of the Company, taking into consideration the Director s number of listed company board representations and other principal commitments. Based on the individual Director s confirmation to the NC on his ability to carry out his duties as a Director of the Company and to address any competing time commitments that may arise, the NC believes that it would not be necessary to put a maximum limit on the number of listed company board representations of each Director. Currently, only one Director holds one directorship in other listed company. The NC has evaluated the competing time commitments faced by Directors serving on multiple boards during the year and is satisfied that the Directors have spent adequate time on the Group s affairs to fulfil their responsibilities. Information in respect of the academic and professional qualification, and directorship or chairmanship, both present and those held over the preceding three years in other listed companies, is set out in the Board of Directors section of the Annual Report. In addition, information on shareholdings in the Company and its related companies held by each Director is set out in the Directors Report section of the Annual Report. e. Board Performance (Principle 5) The NC is responsible for assessing: the effectiveness of the Board as a whole and its Board Committees; and the contribution by the Chairman and each individual Director to the effectiveness of the Board. The Board s performance is assessed through its ability to steer the Group in the right direction and the support it renders to Management during difficult times. For the purpose of evaluating Directors and Board Committees performance, the NC takes into consideration a number of factors including the Directors attendance, participation and contributions at the main Board and Board Committee meetings and other Company s activities. The NC uses its best efforts to ensure that Directors appointed to the Board possess the necessary background, experience, skills and knowledge in management, business and finance, which are critical to the Group s business; and that each Director is able to contribute his/her perspective, thus allowing effective decisions to be made. The NC conducts reviews of the Board s performance taking into account inputs from the other Board members. f. Access to Information (Principle 6) The Board is provided with timely and complete information prior to Board meetings and on an on-going basis and board papers are distributed in advance of each meeting of Directors. The Company circulates copies of the minutes of the meetings of all Board Committees to all members of the Board to keep them informed of on-going developments within the Group. New members are briefed on the business activities of the Group. The Board has separate and independent access to the key management personnel and the Company Secretary at all times. If necessary, the Board may, in furtherance of their duties, obtain independent professional advice at the Company s expense, subject to approval by the Board. 17

20 corporate governance report 2. REMUNERATION MATTERS a. Procedures for developing remuneration policies (Principle 7) We believe in adopting a formal and transparent procedure for fixing the remuneration packages of the Directors and key management personnel so as to ensure that the level of remuneration should be appropriate to attract, retain and motivate the Directors and key management personnel needed to run the Group s business successfully. The RC was formed to achieve this formal and transparent process to evaluate the remuneration packages of the Directors and key management personnel. The RC comprises entirely of Non-Executive Directors, majority of whom, including the Chairman, are independent. The RC comprises the following three (3) members: Mr Yeo Kan Kiang, Roy Ms Lim Woon Wah Mr Yeo Jiew Yew Chairman Member Member The RC is regulated by a set of written Terms of Reference. Its key functions include: (a) (b) (c) (d) (e) (f) Reviewing and recommending to the Board a framework of remuneration for each Director and key management personnel that are competitive and sufficient to attract, retain and motivate key management personnel of the required quality to run the Company successfully; Reviewing, determining and recommending to the Board all matters relating to remuneration packages and terms of employment, which cover all aspect of remuneration including but not limited to Directors fees, salaries, allowances, bonuses, and benefits-in-kind, of each Director and key management personnel; Reviewing and ensuring that the level and structure of remuneration of the Directors and key management personnel should be aligned with the long-term interest and risk policies of the Company; Structuring an appropriate proportion of Executive Directors and key management personnel s remunerations so as to link rewards to corporate and individual performance and ensuring such remunerations are aligned with the interests of shareholders and promote the long-term success of the Company; Determining the appropriateness of the remuneration of Non-Executive Directors taking into consideration the level of contribution such as effort and time spent, duties and responsibilities so that the remuneration packages of the Non-Executive Directors would not be over-compensated to the extent that their independence may be compromised; and Reviewing and recommending to the Board the terms of renewal of the service contracts of Directors and key management personnel, where applicable. The RC meets at least once a year. In its deliberations, the RC takes into consideration the industry practices and norms for remuneration packages. The RC has full authority to obtain independent professional advice on matters relating to remunerations as and when the need arises at the Company s expense. 18

21 corporate governance report All Non-Executive Directors are paid a fixed board fee annually and no additional fees are payable to a Director for appointment as a chairman or member of each Board Committee. The recommendations made by the RC in relation to such board fees are subject to approval by shareholders at the AGM. Each member of the RC abstains from making any recommendation on or voting on any resolutions in respect of his/her own remuneration package, except for providing information and documents specifically requested by the RC to assist it in its deliberations. The RC reviews the terms and conditions of service agreements of the Executive Directors. In the course of such review, the RC will consider the Group s obligations arising in the event of termination of Executive Directors and key management personnel, to ensure that the service agreements contain fair and reasonable termination clauses and are not overly generous so as to avoid rewarding poor performance. None of the Non-Executive Directors is on a service contract with the Company. b. Level and mix remuneration (Principle 8) The annual reviews of the compensation are carried out to ensure that the remuneration of the Directors and key management personnel commensurate with their performance and that of the Company, giving due regard to the financial and commercial health and business needs of the Group. Non-Executive Directors are paid Directors fees in accordance with their level of contributions, taking into account factors such as efforts and time spent, as well as responsibilities and obligations of the Directors. Directors fees are recommended by the Board for approval by the shareholders at the AGM of the Company. The Board has endorsed the remuneration framework. The Company does not use contractual provisions to allow the Group to reclaim incentive components of remuneration from the Executive Directors and key management personnel in exceptional circumstances of misstatement of financial results, or of misconduct resulting in financial loss to the Company. The Company should be able to avail itself to remedies against these personnel in the event of such breach of fiduciary duties. c. Disclosure on remuneration (Principle 9) The Board has not included a separate annual remuneration report to shareholders in the Annual Report on the remuneration of Directors and the top five key management personnel (who are not Directors of the Company) as the Board is of the view that the matters which are required to be disclosed in such annual remuneration report have already been sufficiently disclosed in this report and in the financial statements of the Company. The remuneration of each individual Director and key management personnel of the Group is however not disclosed as the Company believes that disclosure may be prejudicial to its business interests given the highly competitive environment it is operating in. 19

22 corporate governance report Disclosure on Directors Fees and Remuneration The Directors fees and remuneration paid/payable by the Group for the financial year ended 30 June 2014 are set out as follows: Remuneration band and name of Director Between S$750,000 and S$999,999 Salaries % Bonus % Profit Sharing % Benefits and Allowances % Ang Ee Tiong, Kenneth Chan Thye Yuan Lum Chue Tat Fees % Total % Below S$250,000 Lim Woon Wah Yeo Kan Kiang, Roy Yeo Jiew Yew Remuneration Policy and Remuneration of Key Management Personnel The Company adopts a remuneration policy for key management personnel comprising a fixed component and a variable component. The fixed component is in the form of a base salary and allowances. The variable component is in the form of a variable bonus that is linked to the Company and each individual s performance. The Code requires the names of at least the top five key management personnel (who are not Directors of the Company) earning remuneration within bands of S$250,000 to be disclosed. The RC believes that the disclosure of the remuneration of individual executives is disadvantageous to the Group s business interests, given the highly competitive industry conditions where poaching of executive is prevalent. Ms Chan Sow Har, the spouse of our MD, Mr Chan Thye Yuan, and Mr Lai Fu Wing, the brother-in-law of our Executive Director, Mr Lum Chue Tat, both received remuneration which exceeded S$50,000 each for the financial year ended 30 June Save as disclosed, there is no employee occupying managerial positions in the Group who are immediate family members of the Directors. Lantrovision Performance Share Plan Lantrovision Performance Share Plan (the Plan ) was approved by the shareholders at the Extraordinary General Meeting ( EGM ) of the Company held on 31 October The Plan is administered by the RC. The purpose of adopting the Plan is to serve as a motivational tool to recruit, attract and retain employees and the Directors, motivate them to perform and contribute to the Group, instil loyalty and a stronger identification by them with the longterm prosperity of the Group and foster an ownership culture within the Group by aligning their interest with that of the shareholders. 20

23 corporate governance report As at the date of this report, no awards have been granted since the commencement of the Plan. A brief summary of the Plan is set out as follows: (i) (ii) (iii) (iv) 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; 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/her rank, job performance and potential for future development, his/her 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; The total number of new shares of the Company which may be issued pursuant to awards under the Plan 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; 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. 3. ACCOUNTABILITY AND AUDIT a. Accountability (Principle 10) The Board seeks to keep stakeholders updated on the Group s financial performance, position and prospects through quarterly and annual financial reports as well as timely announcements on developments in the Group s businesses. Quarterly results are released to shareholders within 45 days of the reporting period while the full year results are released to shareholders within 60 days of the financial year end. In presenting the financial reports, we aim to provide a balanced and understandable assessment of the Group s performance. Management provides the Board with a continual flow of relevant information on the Group on a timely basis in order that the Board may effectively discharge its duties. b. Risk Management and Internal Controls (Principle 11) The Board is responsible for the governance of risk and sets the direction for the Group in the way risks are managed in the Group s businesses. Management of all forms of business risks 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. In addition, the Company s approach to risk management is set out on pages 81 to 91 of this Annual Report. The Board is committed to maintain a sound system of internal controls, including financial, operational, compliance and information technology controls, and risk management systems to safeguard the interests of the shareholders and the Group s assets. To achieve this, regular internal reviews are undertaken on the holding company and subsidiaries financial and operational processes to ensure that the system of internal controls maintained by the Group is sufficient to provide reasonable assurance that the Group s assets are safeguarded against loss from unauthorised use or dispositions, transactions are properly authorised and proper financial records are being maintained. 21

24 corporate governance report The AC has reviewed the Group s financial controls and risk management policies and processes, and based on its assessment and reports of the external auditors and the results of its internal reviews, the AC is assured that adequate internal controls are in place. As for the operational and compliance controls, the Group has periodically reviewed these control areas through the various heads of department, and has continuously made improvements with the assistance of regular internal review. For the financial year ended 30 June 2014, the Board has received assurance from the MD and the Group Financial Controller that: (a) (b) the financial records have been properly maintained and the financial statements give a true and fair view of the Group s operations and finances; and the system of risk management and internal control in place within the Group (including financial, operational, compliance and information technology controls) are sufficiently adequate and effective in addressing the material risks in the Group in its current business environment. 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 AC, is of the opinion that the Group s internal controls, including financial, operational, compliance and information technology controls, and the risk management systems, are adequate and effective to meet the needs of the Group for the type and volume of businesses conducted in the current business environment. The system of internal controls and risk management established by the Group provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as the Group strives to achieve its business objectives. However, the Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities. Currently, the Group in-house internal review team is responsible in overseeing and assessing the Company s risk management framework and policies, and report directly to the AC. c. Audit Committee (Principle 12) The AC comprises entirely of Non-Executive Directors, majority of whom, including the Chairman, are independent. The AC comprises the following three (3) members: Ms Lim Woon Wah Mr Yeo Kan Kiang, Roy Mr Yeo Jiew Yew chairman Member Member The Board is of the opinion that the AC members are appropriately qualified to discharge their responsibilities. All members have accounting or related financial management background or experience and are familiar with financial statements. The AC s scope of work is governed by written Terms of Reference. Specifically, the AC meets on a periodic basis to perform the following functions: (a) Reviewing the financial reporting process including but not limited to the audit plans of the external auditors and, where applicable, the internal review team, including the results of the auditors review and evaluation of the Group s system of internal accounting, operational and compliance controls and risk management policies and systems and ensuring co-ordination between the internal review team and external auditors and Management at least annually. The AC also ensures that a review of the effectiveness of the Group s internal controls is conducted at least annually; 22

25 corporate governance report (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Reviewing the Group s financial results announcements before submission to the Board for approval prior to release to the SGX-ST; Reviewing the consolidated financial statements and the external auditors report on those financial statements, and discussing any significant adjustments, major risk areas, changes in accounting policies, compliance with Financial Reporting Standard, concerns and issues arising from their audits including any matters which the external auditors may wish to highlight and discuss in the absence of Management, where necessary, before submission to the Board for approval; Reviewing and discussing with the external auditors any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the operating results and/or financial position and Management s response; Reviewing the co-operation of Management with the auditors; Reviewing the non-audit services provided by the external auditors as part of the AC s assessment of the external auditors independence; Considering the appointment, re-appointment and removal, approving the remuneration and engagement of the external auditors and reviewing the independence and objectivity of the external auditors annually; Reviewing any transactions falling within the scope of Chapters 9 and 10 of the SGX-ST Listing Manual; Reviewing all hedging policies of, and instruments used for hedging by, the Group (if any); Undertaking other reviews and projects as may be requested by the Board and reporting to the Board its findings from time to time on matters arising and requiring the attention of the AC; Reviewing potential conflicts of interest (if any); Ensuring that arrangements are in place for employees to raise concerns, in confidence, about possible improprieties in matters of financial reporting or other matters; and Undertaking such other functions and duties as may be required by applicable law or the SGX-ST Listing Manual, and by such amendments made thereto from time to time. Apart from the duties listed above, the AC will: (i) (ii) Commission and review the findings of internal investigations into any matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or regulation which has or is likely to have a material impact on the Company s operating results and/or financial position; and Ensure that the appropriate follow-up actions are taken. The AC is given full access to, and receives full cooperation from Management. The AC has full discretion to invite any Directors or management staff to attend its meetings. It is empowered to investigate any matters relating to the Group s accounting, auditing, internal controls and/or financial practices that are brought to its attention; and has full access to records, resources and personnel to enable it to discharge its functions properly and effectively. 23

26 corporate governance report The AC is authorised by the Board to investigate any matters within its Terms of Reference. It has unrestricted access to information pertaining to the Group, to both internal review team and external auditors, and to all employees of the Group. Reasonable resources have been made available to the AC to enable it to discharge its duties properly. Formal procedures are in place for the external auditors to report their findings and recommendations to Management and the AC. The external auditors have unrestricted access to the AC. In addition, the AC meets up with the external auditors separately at least once a year without the presence of Management, in order to have free and unfiltered access to information that it may require. The AC had undertaken a review of all non-audit services provided by the auditors and was of the opinion that the provision of such services would not affect their independence. Total fees paid by the Group to the external auditors for audit and non-audit services are as disclosed: External Auditor Fees for the financial year ended 30 June 2014 S$ % of Total Total audit fees 152, Total non-audit fees 26, Total Fees payable 178, The AC is satisfied that the appointment of external auditors is in compliance with the requirements of Rule 712 of the SGX- ST Listing Manual. Accordingly, the AC has recommended that Messrs Crowe Horwath First Trust LLP be nominated for re-appointment as external auditors at the forthcoming AGM. In recommending the re-appointment of the external auditors, the AC considered and reviewed a number of key factors, including amongst other things, adequacy of the resources and experience of supervisory and professional staff as well as the audit engagement partner to be assigned to the audit, and the size and complexity of the Group and its businesses and operations. In accordance with the requirements of Rule 716 of the SGX-ST Listing Manual, the AC and the Board, having reviewed the appointment of different auditors for the Company s subsidiaries, are satisfied that these appointments would not compromise the standard and effectiveness of the audit of the Group. The Company has in place a whistle-blowing policy and procedures, pursuant to which employees may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC is satisfied that arrangements are in place for the independent investigation of such matters and for appropriate follow up action. As at the date of this report, there was no report received through the whistle-blowing mechanism. The AC members take measures to keep abreast of changes of accounting standards and issues which have a direct impact on financial statements through attending training and seminars as well as receiving updates from the Group s external auditors. d. Internal Review/Audit (Principle13) The Board recognizes the importance of maintaining a system of internal controls, procedures and processes for the Group to safeguard the shareholders investments and the Group s assets. 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, Management s internal control systems, and defined procedures for the approval of major transactions. 24

27 corporate governance report 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 are reported internally on a monthly basis.the Board shall consider expanding its internal review/audit resources as and when the need arises. The AC reviews the activities of the internal review on a regular basis, including overseeing, monitoring the implementation of the improvements required on internal control weaknesses identified. The AC reviews the adequacy and effectiveness of the internal review team and is satisfied with its adequacy and effectiveness. There is also regular communication between Executive Directors and operational Management with presentation being made by Management of each principal operation on a regular basis. 4. SHAREHOLDERS RIGHTS AND RESPONSIBILITIES (Principles 14, 15 and 16) The Board is mindful of the obligation to provide timely and fair disclosure of information about the Group s business developments and financial performance which would have a material impact on the share price or value of the Company. The Board is accountable to the shareholders while Management is accountable to the Board. Copies of the Annual Report, the Circular and the Notices of the AGM and/or EGM, where applicable, are sent to every shareholder of the Company. The Notices of the general meetings are also advertised in the newspapers, released via SGXNet. The Company allows any shareholder, who is unable to attend the general meetings in person, to appoint not more than two proxies to attend and vote in his/her place at the general meetings via proxy forms submitted in advance (i.e. not less than forty-eight (48) hours before the time appointed for holding the general meeting). The proxy form is sent with the notice of general meetings to all shareholders. The Company places great emphasis on regular, effective and open communication with our shareholders. Price sensitive information is publicly released and the announcements of the Group s financial results and annual reports are announced or issued within the mandatory period to ensure fair disclosure of information on SGXNet. Each distinct issue requiring shareholders approval is proposed as a separate resolution at the general meetings. The Company welcomes the views of the shareholders on matters concerning the Company and encourages shareholders participation at AGMs. At the general meetings, shareholders of the Company are given opportunities to present their views and to put questions concerning the Group of Companies and the Directors and Management. The Chairmen of the Board and the various Board Committees, Management and the external auditors are present at every AGM and/or EGM to address any relevant questions that shareholders may have. The Company records minutes of all general meetings and questions and comments from shareholders together with the responses of the Board and Management. The Board noted that with effect from 1 August 2015, the Company is required by the Listing Rules to conduct the voting of all resolutions put to general meetings by poll for greater transparency and fairness in the voting process. Until such time, voting at general meetings will be by show of hands unless a poll is demanded. Voting on show of hands enables the Company and shareholders to deal with the businesses of general meetings expeditiously as the result of the vote is instantly available. 25

28 corporate governance report 5. DEALING IN SECURITIES The Company has adopted an internal Code of Best Practices on dealing in securities to provide guidance to its Directors and officers with regard to dealings in the Company s securities. The Code of Best Practices prohibits the officers of the Group from dealing in the Company s securities during the period commencing two weeks before the announcements of each of the Company s quarterly financial results and one month before the announcement of the Company s full year financial results and ending on the date of announcement of such results on SGXNet, or when they are in possession of the unpublished price sensitive information of the Group. In addition, Directors and officers of the Group are discouraged from dealing in the Company s securities on shortterm considerations. 6. INTERESTED PERSON TRANSACTIONS The Company has established internal control procedures to ensure the transactions with interested persons are properly recorded and reported. 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. The Company does not have any shareholders mandate for IPT. 7. MATERIAL CONTRACTS Save as disclosed in the financial statements, there were no material contracts or loan entered into by the Company and its subsidiary, involving the interests of any Director or controlling shareholder, which are either subsisting at the end of the financial year of June 2014 or, if not then subsisting, entered into since the end of the previous financial year. 8. CORPORATE DISCLOSURE The Company believes that a high level of disclosure is essential to enhance the standard of corporate governance. Hence, the Company is committed to provide a high level of disclosure in all public announcements and annual reports. 26

29 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 2014 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 and the Lantrovision Performance Share Plan 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 At 1 July 2013 Direct Interests At 30 June 2014 At 21 July 2014 At 1 July 2013 Deemed Interests At 30 June 2014 At 21 July 2014 Ordinary shares in the Company Chan Thye Yuan 27,651,481 27,651,481 27,651,481 Ang Ee Tiong, Kenneth 31,173,181 31,173,181 31,173,181 Lum Chue Tat 25,018,981 25,018,981 25,018,981 Yeo Jiew Yew 15,987,000 20,268,000 20,348,000 Options to subscribe for ordinary shares in the Company Chan Thye Yuan 110,000 40,000 Ang Ee Tiong, Kenneth 110,000 Lum Chue Tat 110,000 27

30 directors' report 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. Share options The Lantrovision Share Option Scheme 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 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 2013 Number of shares under option Expired during Balance at the year 30 June 2014 Exercise price 19 January January 2005 to 18 January ,000 (490,000) $ Aggregate options granted during financial year ended 30 June 2014 Aggregate options granted since commencement of the Scheme to 30 June 2014 Number of shares under option Aggregate options exercised since commencement of the Scheme to 30 June 2014 Aggregate options cancelled due to adjustment / expired since commencement of the Scheme to 30 June 2014 Aggregate options outstanding as at 30 June 2014 Directors of the Company Chan Thye Yuan 2,666,000 (2,666,000) Ang Ee Tiong, Kenneth 1,841,000 (1,841,000) Lum Chue Tat 2,666,000 (2,666,000) 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). 28

31 directors' report 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 be 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. Since the commencement of the 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. The Lantrovision Performance Share Plan The Lantrovision Performance Share Plan (the Plan ) was approved by the shareholders at the Extraordinary General Meeting of the Company held on 31 October The Plan is administered by the Remuneration Committee comprising the following members: Yeo Kan Kiang, Roy, Chairman Lim Woon Wah Yeo Jiew Yew The purpose of adopting the Plan is to serve as motivational tool to recruit, attract and retain employees and the 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. As at the date of this report, no awards have been granted since the commencement of the Plan. Audit committee The members of the Audit Committee ( AC ) at the end of the financial year are as follows: Lim Woon Wah (Chairman) Yeo Kan Kiang, Roy Yeo Jiew Yew The 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 AC 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 2014 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). 29

32 directors' report The AC 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 AC has conducted an annual review of nonaudit 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 Corporate Governance Report set out in the Annual Report of the Company. 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 AC, is of the view that there are adequate internal controls in place for the Group to address financial, operational, compliance risks and information technology controls 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

33 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 34 to 91 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 2014 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

34 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LANTROVISION (S) LTD 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 34 to 91, which comprise the consolidated balance sheet and the balance sheet of the Company as at 30 June 2014, 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). 32