Casa Holdings Limited 15 Kian Teck Crescent Singapore 628884 Tel: 65 6268-0066 Fax: 65 6266-8069 Casa Holdings Limited
Contents 01 Corporate Profile 03 Chairman s Message 05 Financial Highlights 07 Board of Directors 09 Key Management 11 Corporate Structure 12 Corporate Information 13 Corporate Governance Report 20 Directors Report 23 Statement by Directors 24 Independent Auditors Report 26 Consolidated Income Statement 27 Balance Sheets 29 Consolidated Statement of Changes in Equity 30 Consolidated Cash Flow Statement 32 Notes to the Financial Statements 84 Statistics of Shareholdings 86 Notice of Annual General Meeting Proxy Form
Casa Holdings Limited 0 Corporate Profile The Group had its beginnings in 1976 when Casa (S) Pte Ltd (CSPL) was set up to market and distribute Faber cooker hoods. Since then the Group has forged partnerships with some exclusive brand names for home appliances, consumer electronics and bathroom fixtures from Europe. Eventually they became synonymous with quality home appliances, furnishings and fixtures. Listed on 20 September 1995 on SGX Mainboard the Group has acquired the integrated ability to manufacture, assemble, market, distribute and provide after-sales services/technical supports. In Singapore, the Group has established a wide network of dealers including electrical retailers, chain stores and property developers. The Group has a geographical footprint spanning Southeast Asia, South Asia and certain European countries to distribute its products. The Group has in recent years ventured into the China market and has a manufacturing plant there. Core activities include design, assembly, installation and provision of after-sales maintenance services for commercial air-conditioning and other mechanical ventilating systems and the manufacture of drying machines.
EF RUBINE BLOMBERG ARISTON ELBA
Chairman s Message Casa Holdings Limited 0 2008 has been a steady and successful year for the Group. The Group registered a profit of $3.2 million for the year ended 30 September 2008, as compared to a profit of $7.8 million recorded in 2007. Last year s profit included exceptional gains of $4.1 million from discontinued operations and $1.5 million from compensation received from the termination of our LG distributorship. Excluding these exceptional gains, there is an improvement in the Group s operating profit by 45.5% or $1.0 million, to $3.2 million. The Group s earning per share is 1.62 cents in 2008, as compared to 1.78 cents earning per share for continuing operations in 2007. For the year ended 30 September 2008, our net asset value per share rose to 15.40 cents from 14.15 cents in 2007. The Board proposes a final tax exempt dividend of 0.5 cent per ordinary share. Growing our Business We are concerned that the global recession may impact the Group s growth strategy and profit targets should it be prolonged. While we remain committing in growing our business, we need to exercise continued vigilance in managing our exposure to credit and foreign currency risks. However, I believe the Group is well placed to weather through this tough economic environment, as we has have a healthy balance sheet and strong cash reserves as a result of the rationalization exercise that we embarked in the past. This has allowed us to be competitive and focused in expanding our core business in home appliances with strategic acquisitions. Acknowledgment Dr Toh See Kiat, our former independent director, has resigned from the Board. We would like to thank him for his past contributions and offer him our best wishes for the future. On the same note, lets extend a warm welcome to our newly appointed independent director, Mr Lim Yian Poh. To our shareholders, business associates and clients, I would like to express my appreciation for your continuing confidence in the Group. With the support of our board of directors and the commitment of our dedicated employees, I am confident that the Group will be able to sail through the challenging periods ahead. Lim Soo Kong Chairman and CEO
EF RUBINE BLOMBERG ARISTON ELBA
Financial Highlights Casa Holdings Limited 0 Turnover ($ 000) Net assets ($ 000) 45,669 21,970 31,980 29,879 07 08 07 08 88,030 39,084 30,304 24,720 05 06 05 06 Earnings per share ($ 000) 9,203 3,381 4.38 1.62 07 08 08 07 05 06 05 06-16,266-2,387-7.75-1.14
EF RUBINE BLOMBERG ARISTON ELBA
Board of Directors Casa Holdings Limited 0 MR LIM SOO KONG Chairman / CEO Mr Lim Soo Kong, age 62, is the Chairman/CEO of Casa Holdings Limited. He is a founder member of the Company and was appointed to the Board on 2 September 1994. Mr Lim is a director in all the various subsidiaries in the Group. He is also a non-independent nonexecutive director of Fiamma Holdings Berhad, an associate corporation listed on the Mainboard of the Kuala Lumpur Stock Exchange. He graduated with a Diploma in Mechanical Engineering from the Singapore Polytechnic. MR HU ZHONG HUAI Non-Executive Director Mr Hu Zhong Huai, age 31, is a non-executive and non-independent director of Casa Holdings Limited. He is also a major shareholder of Casa Holdings Limited and was last re-elected as a director on 31 January 2008. Mr Hu is a director of major subsidiaries in the Group. Mr Hu is a businessman and an entrepreneur in home appliances business. He is currently the director of Arda (Zhejiang) Electrical Co., Ltd and Puneng Electric Co., Ltd, China. He holds a Bachelor of International Business degree from the University of Victoria, Canada. DR LOW SEOW CHAY Independent Director Dr Low Seow Chay, age 59, has served as an independent director of Casa Holdings Limited since August 1995. He is the chairman of the Audit Committee. He was last re-elected as a Director on 31 January 2008. Dr Low is currently an associate professor with Nanyang Technological University and an independent director of Hor Kew Corporation Ltd, LK Technology Holdings Ltd, and Heeton Development Ltd. Dr Low holds a PhD in mechanical engineering from Victoria University of Manchaester, United Kingdom. MR LIM YIAN POH Independent Director Mr Lim Yian Poh, age 62, joined the Board on 4 November 2008 as an independent director. He is the Chairman of the Remuneration and Nominating Committee. Mr Lim has extensive experience in the banking and finance industry and is currently the managing director of Yian Poh Associates, a financial consultancy and investment firm, He is also an independent director of Zicom Group Ltd, a company listed on the Australian Stock Exchange, and an Honorary Commercial Advisor to The Administrative Committee of JiaXing Economic Development Zone, China. He holds a Bachelor of Science degree from Nanyang University, Singapore and a Master of Science degree from the University of Hull, England.
EF RUBINE BLOMBERG ARISTON ELBA
Casa Holdings Limited Key Management MR LIM NGEE MENG Finance and Administration Manager Mr Lim Ngee Meng, age 58, is the Finance and Administration Manager responsible for the financial and general administration of the Group s Singapore-based subsidiaries. He joined the Group in 1987 and has more than 25 years of experience in financial accounting and administration. Mr Lim holds a Master of Applied Finance from University of Western Sydney, Australia, Bachelor in Business Administration degree, Thomas Valley University, UK, a Diploma in Management Accounting and Finance from National Productivity Board and Certificate in Banking from Institute of Banking & Finance. MS MARGARET CHAK LEE HUNG Group Financial Controller Ms Margaret Chak Lee Hung, age 36, is the Group Financial Controller and Company Secretary and is responsible for all aspects of financial management, accounting and company secretarial functions of the Group. She joined the Group in October 2005 and has 15 years of experience in financial management and accounting. Ms Chak holds a Bachelor of Economics (major in Accountancy) degree from Macquarie University, Sydney and is a member of the Institute of Certified Public Accountants of Singapore. MR YUAN HEE PENG General Manager Mr Yuan Hee Peng, age 52, is the General Manager and is responsible for the operations in Singapore and is currently overseeing the sales and marketing function as well. He joined the Group in 1980. Mr Yuan holds a Master of Business Administration from the University of Hull, UK and a Bachelor of Business degree from the Royal Melbourne Institute of Technology, Australia and a Diploma in Marketing from the Chartered Institute of Marketing, UK. He is also an ordinary member of the Management Development Institute of Singapore and the Singapore Institute of Management.
EF RUBINE BLOMBERG ARISTON ELBA
Casa Holdings Limited 11 Corporate Structure Casa (S) Pte Ltd Asteras Pte Ltd Casa International Pte Ltd Fiamma International Pte Ltd Fiamma Holdings Berhad Changzhou Asteras Air Conditioning Manufacturer Co Ltd *Subsidaries that are dormant, as at date of issue of annual report, are not included.
12 Casa Holdings Limited Corporate Information BOARD OF DIRECTORS Lim Soo Kong (Chairman / CEO) Hu Zhong Huai (Non-Executive Director) Dr Low Seow Chay (Independent Director) Lim Yian Poh (Independent Director) COMPANY SECRETARIES Margaret Chak Lee Hung Lotus Isabella Lim Mei Hua AUDIT COMMITTEE Dr Low Seow Chay (Chairman) Lim Yian Poh Hu Zhong Huai NOMINATING COMMITTEE Lim Yian Poh (Chairman) Dr Low Seow Chay Lim Soo Kong REMUNERATION COMMITTEE Lim Yian Poh (Chairman) Dr Low Seow Chay SHARE REGISTRAR Tricor Barbinder Share Registration Services (a business division of Tricor Singapore Pte Ltd) 8 Cross Street #11-00 PWC Building Singapore 048424 AUDITORS LTC LLP Certified Public Accountants 1 Raffles Place #20-02 OUB Centre Singapore 048616 AUDIT PARTNER Tsang Siu For Thomas (Appointed since financial year ended 30 September 2006) REGISTERED OFFICE Casa Holdings Limited (Incorporated in Singapore. Registration Number: 199406212Z) 15 Kian Teck Crescent Singapore 628884 Tel: 6268 0066 Fax: 6266 8069
Casa Holdings Limited Corporate Governance Report 13 The Board of Directors of Casa Holdings Limited (the Company ), are committed to high standards of corporate governance and adopting the corporate governance practices contained in the Code of Corporate Governance ( Code ) so as to ensure greater transparency and protection of shareholders interests. This statement outlines the main corporate governance practices that were in place throughout the financial year. The Board confirm that the Group has complied with the best practices of the Code throughout the financial year ended 30 September 2008. 1. Board Matters 1.1 The Board s Conduct of its Affairs The Board has the responsibility for the overall management of the Group. It establishes the corporate strategies of the Group, sets direction and goals for the executive management. It supervises the executive management and monitors performance of these goals to enhance shareholders value. The Board is responsible for the overall corporate governance of the Group. 1.2 Board Composition The Board of Directors comprises 4 directors, 2 of whom are independent directors. The Directors of the Company as at the date of this statement are : (i) (ii) (iii) (iv) Mr Lim Soo Kong (Chairman/Chief Executive Officer) Mr Hu Zhong Huai (Non-Executive Director & Non-Independent Director) Dr Low Seow Chay (Independent Director) Mr Lim Yian Poh (Independent Director) The Board examines its size to satisfy that it is an appropriate size for effective decision making, taking into account the nature and scope of the Company s operations. Key information regarding the Directors is provided on page 7. 1.3 Independent Directors The Board of Directors has two directors who are independent members. The criteria for independence is determined based on the definition as provided in the Code. The Board considers an independent director as one who has no relationship with the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the directors independent judgement of the Group s affairs.
14 Casa Holdings Limited Corporate Governance Report 1.4 Chairman and CEO Mr Lim Soo Kong is the Chairman and Chief Executive Officer ( CEO ) of the Company. The Board is of the opinion that the present Group structure and business scope does not warrant a meaningful split of the role. The Board is of the view that there are sufficient safeguards and checks to ensure that the process of decision making by the Board is independent and based on collective decisions without any individual exercising any considerable concentration of power or influence. The Chairman bears responsibility for the conduct of the Board. The CEO bears executive responsibility for the Company s business. The Chairman ensures that the board meetings are held when necessary and sets the board meeting agenda in consultation with other directors. The Chairman reviews the board papers, prior to presenting them to the Board. The Chairman ensures that Board members are provided with complete, adequate and timely information on a regular basis to enable them to be fully cognisant of the affairs of the Group. 1.5 Board Processes To assist in the execution of its responsibilities, the Board has established an Audit Committee, Nominating Committee and Remuneration Committee. These committees function within clearly defined terms of references and operating procedures, which are reviewed on a regular basis. The effectiveness of each committee is also constantly reviewed by the Board. The full Board meets on a regular basis and as when necessary to address any specific significant matters that may arise. The number of Board and Board Committee meetings held during the Financial Year 2008 and the attendance of each director where relevant are as follows: Board Committee Audit Committee Nominating Committee Remuneration Committee No. of meetings 3 3 1 1 No. of meetings attended by respective directors Lim Soo Kong 3 N.A. 1 N.A. Hu Zhong Huai 3 3 N.A. N.A. Low Seow Chay 3 3 1 1 Toh See Kiat (Resigned on 1 September 2008) 2 2 1 1 Dr Toh See Kiat resigned on 1 September 2008 and Mr Lim Yian Poh was appointed as a Director on 4 November 2008. All directors (other than Dr Toh See Kiat) attended the AGM on 29 January 2008.
Casa Holdings Limited Corporate Governance Report 15 1.6 Matters Requiring Board Approval The Board has identified a number of areas for which the Board has direct responsibility for decision making. Interested Person Transactions and the Group s internal control procedures are also reviewed by the Board. Major investments and funding decisions are approved by the Board. The Board also meets to consider the following corporate matters:- Approval of half yearly and year end result announcements; Approval of the Annual Reports and Accounts; Convening of Shareholder s Meetings; Approval of Corporate Strategies; and Material Acquisitions and Disposal of assets. 1.7 Access to Information The Board has separate and independent access to senior management and the company secretary at all times. Requests for information from the Board are dealt with promptly by management. The Board is informed of all material events and transactions as and when they occur. The management provides the Board with half yearly reports of the Company s performance. The management also consults with Board members regularly whenever necessary and appropriate. The Board is issued with board papers timely and prior to Board meetings. The company secretaries attend all board meetings. The company secretaries administer, attend and prepare minutes of Board meetings, and assist the Chairman in ensuring that Board procedures are followed and reviewed so that the Board functions effectively and the Company s Memorandum and Articles of Association and the relevant rules and regulations applicable to the Company are complied with. The Board in fulfilling its responsibilities, can as a group or individually, when deemed fit, direct the Company to appoint professional adviser to render professional advice. 2. Board Committees 2.1 Nominating Committee The Nominating Committee ( NC ) comprises 3 directors, a majority of whom are independent. The members of the NC are: Mr Lim Yian Poh Chairman and Independent Director Dr Low Seow Chay Independent Director Mr Lim Soo Kong CEO
16 Casa Holdings Limited Corporate Governance Report The NC s principal functions are as follows: (a) (b) (c) (d) recommend to the Board on all board appointments and re-appointments; determine independence of the Directors annually; determine whether or not a Director is able to and has been adequately carrying out his duties as Director of the Company; and evaluate the performance and effectiveness of the Board as a whole. The Articles of Association of the Company require that one-third of the Board retire from office at each Annual General Meeting ( AGM ). Accordingly, the Directors submit themselves for re-nomination and re-election at regular intervals of at least once every 3 years. 2.2 Audit Committee All members of the Audit Committee ( AC ) are non-executive, a majority of whom are independent directors. At the date of this report, the Audit Committee comprises the following members: Dr Low Seow Chay Chairman and Independent Director Mr Lim Yian Poh Independent Director Mr Hu Zhong Huai Non-Executive Director The functions of the AC are as follows: (a) (b) (c) (d) (e) review with the internal and external auditors of the Company, their audit plan, evaluation of the internal accounting controls, audit report and ensures co-operation is given by the Company s management to the internal and external auditors; review the interim and annual financial statements and the Independent Auditor s report on the Company s annual financial statements before they are presented to the Board; review with the management, external and internal auditors the adequacy and effectiveness of the Company s internal controls, business and service systems and practices; review related and interested party transactions; and consider the appointment and re-appointment of the external auditors. The AC has the power to conduct or authorise investigations into any matters within the AC s scope of responsibility. The AC is authorised to obtain independent professional advice if it deems necessary in the discharge of its responsibilities. Such expenses are to be borne by the Company.
Casa Holdings Limited Corporate Governance Report 17 The AC has full access to and co-operation of the Company s management and has full discretion to invite any director or executive officer to attend the meetings, and has been given reasonable resources to enable it to discharge its functions. In the year, the AC met with the external auditors once without the presence of the management. The AC, having reviewed the range and value of non-audit services performed by the external auditors, LTC LLP, and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors, are pleased to confirm their re-nomination. Non-audit service fees paid or payable for the financial year ended 30 September 2008 amount to $19,500. 2.2.1 Internal Audit and Internal Controls The company outsources its internal audit function to an external professional firm, who reports directly to the Chairman of AC and administratively to the the CEO. The objective of the internal audit function is to determine whether the Group s risk management, control and governance processes, as designed by the Company, is adequate and functioning in the required manner. The AC reviews the adequacy of the internal audit function annually and ensures that the internal audit function is adequately resourced and has appropriate standing within the Company. 2.2.2 Internal Controls It is the opinion of the Board that, in the absence of evidence to the contrary, the system of internal controls maintained by the Company s management and that was in place throughout the financial year and up to the date of this report provides reasonable, but not absolute, assurance against material financial misstatements or losses, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulations and best practices, and the identification and containment of financial, operational and compliance risks. The Board notes that all internal control systems contain inherent limitations and no system of internal controls could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error losses, fraud or other irregularities. 2.3 Remuneration Committee All members of the Remuneration Committee ( RC ) are non-executive and independent directors. The members of the RC are: Mr Lim Yian Poh Chairman and Independent Director Dr Low Seow Chay Independent Director The functions of the RC are to review and recommend the remuneration packages of the Executive Directors, CEO and key executives of the Company, oversee and review the administration and management of the Employees Share Option ( ESOS ), if any, and to review the appropriateness of compensation for Non-Executive Directors including but not limited to Directors fees, allowances and share options, if any.
18 Casa Holdings Limited Corporate Governance Report The executive director(s) have service contracts which include a profit share element which is Group performance related. Non-executive Directors have no service contracts. The payment of fees to Non-Executive Directors is subject to approval at the annual general meeting of the Company. No director is involved in deciding his own remuneration. 2.3.1 Remuneration Matters A breakdown showing the level and mix of each individual director s remuneration payable for FY2008 is as follows: 2008 2007 $250,000 to below $500,000 1 1 Below $250,000 3 3 Total 4 4 Name Remuneration Band S$ Salary % Profit Sharing % Fringe Benefits % Directors Fees % # Total Lim Soo Kong $500,000 to below $750,000 54 43 3 100 Hu Zhong Huai Below $250,000 100 100 Low Seow Chay Below $250,000 100 100 Toh See Kiat Below $250,000 100 100 2008 2007 Remuneration of the top 3 key executives Below $250,000 3 3 # Directors fees are subject to Shareholders approval at the forthcoming annual general meeting. The Company does not have any employee who is an immediate family member of a Director or CEO. 3. Communication with Shareholders The Company does not practise selective disclosure. In line with continuous obligations of the Company pursuant to the Singapore Exchange s Listing Rules, the Board s policy is that all shareholders should be equally informed of all major developments impacting the Group. Information is disseminated to shareholders on a timely basis through: SGXNET announcements and news release
Casa Holdings Limited Corporate Governance Report 19 Annual Report prepared and issued to all shareholders At the Company s annual general meetings, shareholders are given the opportunity to voice their views and ask directors or management questions regarding the Company. The Chairman of the Audit, Remuneration and Nominating Committees will normally be present at annual general meetings to answer any questions relating to the work of these committees. 4. Risk Management The Company regularly reviews and improves its business and operational activities to identify areas of significant business risks as well as take appropriate measures to control and mitigate these risks. The Company reviews all significant control policies and procedures and highlights all significant matters to the AC and Board. The risk issues are highlighted on page 69. 5. Dealing in Securities In line with the Listing Rule 1207 (18) of the Listing Manual, the Company has in place a policy prohibiting share dealings by Directors and employees of the Company for the period of one month prior to the announcement of the Company s half yearly and yearly results as the case may be, and ending on the date of the announcement of the relevant results. Directors and employees are expected to observe the insider trading laws at all times even when dealing in securities within permitted trading period. 6. Material Contracts Save as disclosed in the Interested Person Transactions Section, there were no material contracts entered into by the Company or any of its subsidiaries involving the interest of the CEO, any Director, or Controlling Shareholder. 7. Interested Person Transactions The Company has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that transactions are conducted on an arm s length basis and are not prejudicial to the interests of the shareholders. There were no interested person transactions (with value more than $100,000) for the financial year ended 2008 except as follows: Name of interested person Nature Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate) Multicable Manufacturing (S) Pte Ltd Rental income received $222,860
20 Casa Holdings Limited Directors' Report The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 30 September 2008 and the balance sheet of the Company as at 30 September 2008. Directors The directors of the Company in office at the date of this report are as follows: Lim Soo Kong Hu Zhong Huai Low Seow Chay Lim Yian Poh (appointed on 4 November 2008) Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is 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, none of the directors holding office at the end of the financial year had any interest in the share capital or debentures of the Company or its related companies, except as follows: Holdings registered in the name of director or nominee Holdings in which a director is deemed to have an interest At 30.9.2008 At 1.10.2007 At 30.9.2008 At 1.10.2007 The Company (No. of Ordinary Shares) Lim Soo Kong 17,139,670 17,139,670 107,011,330 107,011,330 Hu Zhong Huai 17,380,110 107,011,330 Ultimate holding company - Azzuri Holdings Pte Ltd (No. of Ordinary Shares) Lim Soo Kong 2,000,000 2,000,000 Hu Zhong Huai 2,030,000 The directors interests in the ordinary shares of the Company and of the ultimate holding company as at 21 October 2008 were the same as those as at 30 September 2008.
Casa Holdings Limited Directors' Report 21 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 company with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements and in this report. Share options No option has been granted to subscribe for unissued shares of the Company during the financial year. No share has been issued by virtue of the exercise of options to take up unissued shares of the Company during the financial year. There were no unissued shares of the Company under option at the end of the financial year. Audit Committee The Audit Committee carried out its function in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed: - The scope and the results of internal audit procedures with the internal auditors; - The audit plan of the Company s independent auditor and its report on the weaknesses of internal accounting controls arising from the statutory audit; - The assistance given by the Company s management to the independent auditor; and - The balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 30 September 2008 before their submission to the Board of Directors, as well as the independent auditor s report on the balance sheet of the Company and the consolidated financial statements of the Group. The Audit Committee has recommended to the Board that the independent auditor, LTC LLP, be nominated for re-appointment as auditors of the Company at the forthcoming Annual General Meeting.
22 Casa Holdings Limited Directors' Report Independent Auditor The independent auditor, LTC LLP, has expressed its willingness to accept re-appointment. On behalf of the directors LIM SOO KONG Director HU ZHONG HUAI Director Singapore, 24 December 2008
Casa Holdings Limited Statement by Directors 23 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 83 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 September 2008 and of the results of the business, 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 directors LIM SOO KONG Director HU ZHONG HUAI Director Singapore, 24 December 2008
24 Casa Holdings Limited Independent Auditors' Report To the Members of Casa Holdings Limited We have audited the accompanying financial statements of Casa Holdings Limited (the Company ) and its subsidiaries (the Group ) set out on pages 26 to 83, which comprise the balance sheets of the Company and of the Group as at 30 September 2008, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act ) and Singapore Financial Reporting Standards. This responsibility includes: (a) (b) (c) devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Casa Holdings Limited 25 Independent Auditors' Report Cont'd To the Members of Casa Holdings Limited Opinion In our opinion, a) the balance sheet of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 September 2008 and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act. LTC LLP Public Accountants and Certified Public Accountants Singapore, 24 December 2008
26 Casa Holdings Limited Consolidated Income Statement for the financial year ended 30 September 2008 The Group Notes 2008 2007 $ $ Continuing operations Sales 4 21,970,129 19,097,703 Cost of sales (15,023,935) (14,129,969) Gross profit 6,946,194 4,967,734 Other operating income 4 1,401,181 3,827,287 Expenses - Selling and distribution (2,015,470) (1,627,182) - Administrative and other (4,655,079) (4,300,643) - Finance 7 (105,716) (136,033) Share of results of associated company after tax 1,796,742 1,077,566 Profit before income tax 3,367,852 3,808,729 Income tax expense 9(a) (109,541) (65,709) Profit from continuing operations 3,258,311 3,743,020 Discontinued operations Profit from discontinued operations 5 4,062,160 Total profit 3,258,311 7,805,180 Attributable to: Equity holders of the Company 3,381,745 9,203,168 Minority interests (123,434) (1,397,988) 3,258,311 7,805,180 Earnings per share for profit from continuing operations attributable to equity holders of the Company- basic and diluted (cents) 10 1.62 1.78 Earnings per share for profit from discontinued operations attributable to equity holders of the Company- basic and diluted (cents) 10 2.60 The accompanying notes form an integral part of these financial statements.
Casa Holdings Limited 27 Balance Sheets as at 30 September 2008 The Group The Company Notes 2008 2007 2008 2007 $ $ $ $ ASSETS Current assets Cash and cash equivalents 11 12,022,336 7,137,142 3,085,397 211,056 Financial assets, at fair value through profit or loss 12 505,059 505,059 Trade and other receivables 13 4,863,263 7,877,164 18,858 21,521 Due from subsidiaries 14 426,606 Inventories 15 4,298,651 3,452,667 21,689,309 18,466,973 3,609,314 659,183 Non-current assets Club membership 16 8,560 41,080 Investment in an associated company 17 8,701,726 8,555,689 7,702,400 7,702,400 Investment in subsidiaries 18 13,078,224 14,921,401 Property, plant and equipment 19 9,335,565 9,627,168 Land use rights 20 974,348 952,100 Deferred tax assets 21 38,283 403,878 19,058,482 19,579,915 20,780,624 22,623,801 Total assets 40,747,791 38,046,888 24,389,938 23,282,984 The accompanying notes form an integral part of these financial statements.
28 Casa Holdings Limited Balance Sheets as at 30 September 2008 The Group The Company Notes 2008 2007 2008 2007 $ $ $ $ LIABILITIES Current liabilities Trade and other payables 22 6,403,764 6,129,410 147,914 209,974 Borrowings 23 1,883,880 1,402,800 Current income tax liabilities 9(b) 258,445 434,235 63,809 60,843 Provision for warranty claims 22 222,115 201,943 Due to subsidiaries 14 25,729 Total liabilities 8,768,204 8,168,388 211,723 296,546 NET ASSETS 31,979,587 29,878,500 24,178,215 22,986,438 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 25 32,314,853 32,314,853 32,314,853 32,314,853 Non-distributable reserves (3,497,396) (2,338,637) Retained profit/(accumulated losses) 26 3,104,327 (277,418) (8,136,638) (9,328,415) 31,921,784 29,698,798 24,178,215 22,986,438 Minority interests 57,803 179,702 Total equity 31,979,587 29,878,500 24,178,215 22,986,438 The accompanying notes form an integral part of these financial statements.
Casa Holdings Limited 29 Consolidated Statement of Changes in Equity for the financial year ended 30 September 2008 Share capital Attributable to equity holders of the Company Non-distributable reserve Asset revaluation reserve Foreign currency translation reserve Retained profit/ (accumulated losses) Total attributable to equity holders of the Company Minority interests $ $ $ $ $ $ $ Balance at 1 October 2007 32,314,853 92,206 (2,430,843) (277,418) 29,698,798 179,702 29,878,500 Net exchange differences on translation of financial statements of foreign subsidiaries & associate company (1,158,759) (1,158,759) 1,535 (1,157,224) Adjustment to foreign currency translation reserve (92,206) 92,206 Net income recognised directly in equity (92,206) (1,066,553) (1,158,759) 1,535 (1,157,224) Net profit 3,381,745 3,381,745 (123,434) 3,258,311 Total recognised income and expenses for the year (92,206) (1,066,553) 3,381,745 2,222,986 (121,899) 2,101,087 Balance at 30 September 2008 32,314,853 (3,497,396) 3,104,327 31,921,784 57,803 31,979,587 Balance at 1 October 2006 32,314,853 92,206 (1,885,734) (9,480,586) 21,040,739 3,679,687 24,720,426 Net exchange differences on translation of financial statements of foreign subsidiaries & associate company 407,748 407,748 (996) 406,752 Effect of disposal of a subsidiary (952,857) (952,857) (2,101,001) (3,053,858) Net income recognised directly in equity (545,109) (545,109) (2,101,997) (2,647,106) Net profit 9,203,168 9,203,168 (1,397,988) 7,805,180 Total recognised income and expenses for the year (545,109) 9,203,168 8,658,059 (3,499,985) 5,158,074 Balance at 30 September 2007 32,314,853 92,206 (2,430,843) (277,418) 29,698,798 179,702 29,878,500 Total equity The accompanying notes form an integral part of these financial statements.
30 Casa Holdings Limited Consolidated Cash Flow Statement for the financial year ended 30 September 2008 Notes 2008 2007 $ $ Cash flows from operating activities Profit before tax and after share of results of associated company after tax 3,367,852 7,870,889 Adjustments for: - Amortisation and depreciation charge 876,488 3,393,475 - Interest income (96,667) (130,254) - Interest expense 105,716 449,853 - Dividend income (6,000) (188,978) - Share of results of associated company after tax (1,796,742) (1,077,566) - Reversal of allowance for doubtful debts made in prior year (915,368) - (Reversal of inventory write down in prior year)/ allowance for inventory (276,622) 330,863 - Allowance for doubtful debts 467,458 371,874 - Provision for warranty claims 101,581 58,216 - Net gain on disposal of a subsidiary (7,248,158) - Net gain on disposal of property, plant and equipment (18,953) (3,711) - Impairment loss on club membership 32,520 - Fair value loss on financial assets held for trading 54,200 - Written off of property, plant and equipment 71,369 - Waiver of debts payables (347,018) Operating cash flow before working capital changes 1,619,814 3,826,503 Change in operating assets and liabilities - Inventories (569,363) (344,340) - Trade and other receivables 2,018,932 (2,951,906) - Trade and other payables and provision for warranty claims 539,965 1,742,309 Cash generated from operations 3,609,348 2,272,566 Income taxes recovered 80,264 171,947 Net cash from operating activities 3,689,612 2,444,513 The accompanying notes form an integral part of these financial statements.
Casa Holdings Limited 31 Consolidated Cash Flow Statement for the financial year ended 30 September 2008 Notes 2008 2007 $ $ Cash flows from investing activities Purchases of property, plant and equipment (461,863) (27,954) Payment for land use rights (520,000) Purchase of financial assets, at fair value through profit or loss (559,259) Proceed from disposal of a subsidiary, net of cash disposed 1,443,469 4,249,931 Proceeds from disposal of property, plant and equipment 20,900 2,573,850 Dividends received 470,788 188,978 Interest received 96,667 130,254 Net cash from investing activities 1,010,702 6,595,059 Cash flows from financing activities Proceeds/(repayment) of borrowings 489,793 (2,792,083) Repayment of finance lease liabilities (8,713) (15,016) Interest paid (105,716) (449,853) Net cash from/(used in) financing activities 375,364 (3,256,952) Net increase in cash and cash equivalents 5,075,678 5,782,620 Cash and cash equivalents at beginning of the financial year 11 7,137,142 1,205,500 Effects of exchange rate changes on cash and cash equivalents (190,484) 149,022 Cash and cash equivalents at end of the financial year 11 12,022,336 7,137,142 The accompanying notes form an integral part of these financial statements.
32 Casa Holdings Limited These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1 General The Company is incorporated and domiciled in Singapore and is traded on the Singapore Exchange Securities Trading Limited. The address of its registered office is: 15 Kian Teck Crescent, Singapore 628884. The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries are set out in Note 18 to the financial statements. 2 Basis of preparation and summary of significant accounting policies (I) Basis of preparation (a) Basis of accounting The financial statements are prepared in accordance with Singapore Financial Reporting Standards ( FRS ). The financial statements are expressed in Singapore dollars and prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Company s accounting policies. It also requires the use of accounting estimates and assumptions. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statement, are disclosed in Note 3. (b) Adoption of new and revised Singapore Financial Reporting Standards On 1 October 2007, the Company adopted the new or revised FRS and Interpretations to FRS (INT FRS) that are mandatory for application from that date. Changes to the Group s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The following are the new or amended FRS and INT FRS that are relevant to the Group: Amendment to FRS 1 : Presentation of Financial Statements Capital Disclosures FRS 107 : Financial Instruments: Disclosures The adoption of the above FRS and INT FRS did not result in any substantial changes to the Group s accounting policies nor any significant impact on these financial statements.
Casa Holdings Limited 33 2 Basis of preparation and summary of significant accounting policies (Cont d) (I) Basis of preparation (Cont d) (b) Adoption of new and revised Singapore Financial Reporting Standards (Cont d) Certain new accounting standards have been published that are effective for accounting periods beginning on or after 1 January 2008. The directors anticipate that the adoption of these standards in future periods will have no material impact on the financial statements of the Group and the Company. (II) Summary of significant accounting policies (a) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group s activities. Sales are presented, net of goods and services tax, rebates and discounts, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group s activities are met as follows: (1) Sale of goods Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer, and it is probable that the goods will not be returned. (2) Rendering of services Revenue from rendering of services is recognised on the performance of services. (3) Interest income Interest income is recognised on a time proportion basis using the effective interest method. (4) Dividend income Dividend income is recognised when the right to receive payment is established.
34 Casa Holdings Limited 2 Basis of preparation and summary of significant accounting policies (Cont d) (II) Summary of significant accounting policies (Cont d) (a) Revenue recognition (Cont d) (5) Rental income Rental income from operating leases on leasehold land and building are recognised on a straight line basis over the lease term. (b) Cash and cash equivalents For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents include cash on hand, deposits with financial institutions, security deposit and bank overdrafts, if any. Bank overdrafts are presented as current borrowings on the balance sheet. (c) Financial Asset (a) Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, held to maturity, available for sale and loans and receivables. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. The designation of financial assets at fair value through profit or loss is irrevocable. (i) Financial assets, at fair value through profit or loss This category has two sub categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated as at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date. (ii) Financial assets, held to maturity Financial assets, held to maturity, are non derivative financial assets with fixed or determinable payments and fixed maturities that the Group s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held to maturity financial assets, the whole category would be tainted and reclassified as available for sale. They are presented as non current assets, except for those maturing within 12 months after the balance sheet date which are presented as current assets.
Casa Holdings Limited 35 2 Basis of preparation and summary of significant accounting policies (Cont d) (II) Summary of significant accounting policies (Cont d) (c) Financial Asset (Cont d) (a) Classification (Cont d) (iii) Financial assets, available for sale Financial assets, available for sale, are non derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non current assets unless management intends to dispose off the assets within 12 months after the balance sheet date. (iv) Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non current assets. Loans and receivables are presented as trade and other receivables and cash and cash equivalents on the balance sheet. (b) Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade date the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in the income statement. Any amount in the fair value reserve relating to that asset is transferred to the income statement. (c) Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit and loss are recognised immediately in the income statement.
36 Casa Holdings Limited 2 Basis of preparation and summary of significant accounting policies (Cont d) (II) Summary of significant accounting policies (Cont d) (c) Financial Asset (Cont d) (d) Subsequent measurement Financial assets, both available for sale and at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and financial assets, held to maturity are subsequently carried at amortised cost using the effective interest method. Changes in the fair values of financial assets at fair value through profit or loss including the effects of currency translation, interest and dividends, are recognised in the income statement when the changes arise. Interest and dividend income on financial assets, available for sale are recognised separately in the income statement. Changes in the fair values of available for sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in the income statement and the other changes are recognised in the fair value reserve. Changes in fair values of available for sale equity securities (i.e. non monetary items) are recognised in the fair value reserve, together with the related currency translation differences. (e) Impairment The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the income statement. The allowance for impairment loss account is reduced through the income statement in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost, had no impairment been recognised in prior periods.