KOON HOLDINGS LIMITED
DELIVERING GROWTH THROUGH TRANSFORMATION
KOON HOLDINGS LIMITED
ANNUAL REPORT 2012 ANNUAL REPORT 2012
Company Registration No. 200303284M only use personal For ARBN 105 734 709 11 Sixth Lok Yang Road Singapore 628109 Tel: (65) 6261 5788 Fax: (65) 6266 0117 Website: www.koon.com.sg Email: [email protected] GENERAL INFORMATION VISION & MISSION Board of Directors Australia Share Registrar 24 Kranji Way To be an innovative builder and developer Ang Sin Liu and Share Transfer Office Singapore 739434 (Non-Executive Chairman) Boardroom Pty Limited Size: 16,268 sq m creating value for all stakeholders Tan Thiam Hee Level 7, 207 Kent Street Title: Leasehold (Managing Director and Chief Executive Officer) Sydney NSW 2000, Australia Lot 1944 & Lot 1946 Yuen Kai Wing We are dedicated to providing quality (Chief Operating Officer and Executive Director) Mukim Jeram Batu Service excellence Auditors Bt 23 1/2 Pekan Nenas works, innovative solutions and effective We provide services exceeding Oh Keng Lim Deloitte & Touche LLP (Executive Director) 81500 Pekan Nenas customers’ expectations, safe Certified Public Accountants professional services to our customers. and timely delivery, and to adopt Johor, Malaysia Oh Koon Sun 6 Shenton Way #32-00 corporate social responsibility (Executive Director) Size: 48,539 sq m DBS Building Tower 2 Title: Freehold We strive to establish lasting relationships Ang Ah Nui Singapore 068809 with our customers by exceeding their (Non-Executive Director) Partnership – 11 & 15 Sixth Lok Yang Road expectations and gaining their trust Christopher Chong Meng Tak forge partnership (Non-Executive and Independent Director) Partner: Patrick Tan Hak Pheng Singapore 628109 & 628111 based on safety, quality, timely service Size: 16,965 sq m with stakeholders Glenda Mary Sorrell-Saunders (Appointed on June 1, 2008) and anticipation of their needs. We strive to develop lasting (Non-Executive and Independent Director) Title: Leasehold win-win relationship with our Ko Chuan Aun Principal Bankers We respect and treat all employees stakeholders. (Non-Executive and Independent Director) Land and Retail lot fairly and encourage them to be United Overseas Bank Limited Lot PTD 32161 Innovation Singapore 80 Raffles Place #11-00 Mukim Plentong initiative, innovative and productive UOB Plaza 1 Johor Bahru, Malaysia We always look for ways to do things Company Secretary and nurture them to achieve cheaper, faster and better. Singapore 048624 Size: 1,448 sq m Ong Beng Hong, LLB (Hons) Title: Freehold their fullest potential. Tan Swee Gek, LLB (Hons) Resource – DBS Bank Limited people development Lot 68319 12 Marina Boulevard We believe everyone has their Australia Mukim Plentong Marina Bay Financial Centre Tower 3 strength and we strive to develop Company Secretary Johor Bahru, Malaysia Singapore 018982 our staff to their fullest potential to Leanne Ralph Size: 42,938 sq m achieve organisation goals. Title: Freehold Standard Chartered Bank Singapore Lot PTD 32151 to 32160 Integrity 8 Marina Boulevard We uphold ourselves with Registered Office Mukim Plentong Marina Bay Financial Centre Tower 1 professionalism, honesty and sincerity 11 Sixth Lok Yang Road Johor Bahru, Malaysia Level 24 CONTENTS and deliver what we promised through Singapore 628109 Size: 1,803.5 sq m adopting best practices. Singapore 018981 Corporate Profi le 01 Title: Freehold Financial Year Review 02 Teamwork and unity Australia Our Share Price 05 Registered Office Land & Building Lot No. G 08 We can achieve more together Kota Point Shopping Complex Message From Chairman & CEO 08 Level 5, 151 Castlereagh Street Office and Yards through mutual respect and trust, Kota Tinggi, Malaysia Infrastructure Construction and Civil Engineering 18 open sharing and communication. Sydney NSW 2000, Australia 26 Kranji Way Size: 36.3 sq m Precast 22 Singapore 739436 Size: 16,316 sq m Title: Freehold Property 24 Singapore Share Registrar Title: Leasehold For personal use only use personal For Electric Power Generation 26 and Share Transfer Office Our principal place of business is at Our People 28 Boardroom Corporate & 11 Sixth Lok Yang Road Board of Directors 32 Advisory Services Pte. Ltd. 16 Kranji Way Singapore 628109 Key Management 35 50 Raffles Place #32-01 Singapore 739442 Our telephone number is (65) 62615788 Corporate Structure 38 Singapore Land Tower Size: 5,102 sq m Our facsimile number is (65) 62660117 Singapore 048623 Title: Leasehold Our website address is www.koon.com.sg Corporate Governance Statement 39 i CORPORATE PROFILE Koon Holdings Limited (ASX stock code: KNH, SGX stock code: 5DL) is one of Singapore’s leading infrastructure and civil engineering service providers specialising in reclamation and shore protection works.
With a history tracing back to 1975, we have accumulated more than 38 years of experience and expertise in providing comprehensive civil engineering and infrastructure solutions to our customers.
Since we embarked on our transformation journey, Koon has grown from a construction company with single focus in civil engineering into an integrated construction player with businesses in civil engineering, precast,
property and energy infrastructure. For personal use only use personal For
KOON HOLDINGS LIMITED 01 ANNUAL REPORT 2012 FINANCIAL YEAR REVIEW
Financial Performance (S$ million) FY2012 FY2011 REVENUE INCREASED Due to increase in Construction division project Revenue revenue, increase in Precast division business 212.72 88.06 activities, increase in Property division revenue Cost of sales (192.12) (79.83) and contribution from Tesla. Gross profit 20.60 8.23 GROSS PROFIT INCREASED Due to improved margin from Construction Other income 2.99 14.04 division, higher contribution from Property division and the maiden contribution from Tesla Distribution costs (3.43) (1.20) Administrative expenses (20.99) (13.13) OTHER INCOME DECREASED Due to FY2011 there was the gain on disposal of Finance costs (1.50) (0.24) leasehold property of S$5.6 million and dividend income received from Koon Zinckon of S$6.5 Share of loss of associate (0.08) (0.96) million. In FY2012 there was one-off gain on deemed disposal of previously held interest in (Loss) Profit before income tax (2.41) 6.74 associate, Tesla S$0.6 million. Income tax 2.43 0.80
DISTRIBUTION COSTS INCREASED PROFIT FOR THE YEAR 0.02 7.54 In line with the increase in turnover by Precast division and increase from Property division in line with the increase in its revenue for new property launches.
ADMINISTRATIVE EXPENSES INCREASED Largely due to the inclusion of the property, Cashflow (S$ million) electric power generation (Tesla) business and FY2012 FY2011 allowance for doubtful trade receivable. Net cash (used in) from operating FINANCE COSTS INCREASED actitivities (9.34) 3.68 Due to the purchase of plant and equipment by Tesla, Construction and Precast division through Net cash used in investing activities (30.78) (10.65) bank borrowings and hire purchase fi nance arrangement. Net cash from financing activities 38.55 4.07
SHARE OF LOSS OF ASSOCIATE AROSE Net decrease in cash and cash From previously held interest of Tesla before it equivalents (1.57) (2.90) became a subsidiary of the Group. Cash and cash equivalents at INCOME TAX BENEFIT INCREASED January 1 19.62 22.52 Mainly due to recognition of deferred tax assets allowed to carry forward to offset against its Effects of exchange rate changes future assessable income by tax authority and under provision in prior year deferred tax assets. on balance of cash and cash equivalents held in foreign
CASHFLOW REDUCED currencies 0.49 – Due to net cash used in operating activities due to increase in trade receivables, contract Cash and cash equivalents at work-in-progress, and inventories for Precast and Construction division in line with increase December 31 18.54 19.62 in activities. And acquisition of Malaysian Add: Pledged fixed deposits 3.89 0.07 properties for S$17million, Sixth Lok Yang road properties, gantry cranes, mould and construction of power plants. This was offset by Total cash at the end of the period 22.43 19.69
For personal use only use personal For net cash from fi nancing activities due to loan and trade fi nancing and proceeds from issuance of right shares to shareholders S$18.3 million.
KOON HOLDINGS 02 LIMITED ANNUAL REPORT 2012 Financial Position (S$’ million) PLEDGED FIXED DEPOSITS INCREASED FY2012 FY2011 Due to the consolidation of Tesla which was ASSETS previously an associate became a subsidiary in March 2012. Current assets Cash and cash equivalents 18.54 19.62 TRADE RECEIVABLE INCREASED Due to higher sale volume of Precast concrete Pledged fixed deposits 3.89 0.07 components, increase in Construction progress Trade receivables 58.08 35.17 billing and higher commission receivable by the Other receivables 6.76 5.31 Property division. Inventories 14.12 10.55 INVENTORIES INCREASED Contract work-in-progress 20.95 8.43 Due to higher fi nished goods held for awarded Held for trading investments 0.02 0.04 contracts for Precast division and in line with increased in precast activities. Total current assets 122.36 79.19 OTHER RECEIVABLE Non-current assets (NON CURRENT) INCREASED Other receivables 8.38 6.15 Due to increase in shareholder loan receivable of Development properties S$0.7 million from HUGE Development Pte. Ltd. 16.97 – in the joint development of Pasir Ris executive Associates * 8.15 condominium project. Joint venture * – Property, plant and equipment DEVELOPMENT PROPERTIES INCREASED 76.08 25.68 Due to acquisition of Malaysian companies Available for sale investment 0.15 0.15 which own properties located in Johor. Goodwill on consolidation 5.44 1.90 Deferred income tax ASSOCIATES DECREASED 3.19 0.96 Due to the reversal of investment in an associate Total non-current assets 110.21 42.99 when Tesla became a subsidiary of the Group. PROPERTY, PLANT AND Total assets 232.57 122.18 EQUIPMENT INCRASED Due to acquisition of Tesla, purchase of 11&15 LIABILITIES AND EQUITY Sixth Lok Yang road properties and purchase of Current liabilities gantry cranes, moulds, excavators and motor Bank loan and bills payable vehicles. 26.27 8.85 Trade payables 71.70 41.32 GOODWILL ON CONSOLIDATION INCREASED Provision for loss on sales commitment 0.60 – Due to the increased equity stake in Tesla to Other payables 15.46 7.64 71.2% in March 2012. Contract work-in-progress 1.16 1.91 DEFERRED INCOME TAX ASSETS INCREASED Current portion of finance leases 5.50 1.31 Due to Contech Precast Pte Ltd’s pre- Derivative financial instrument – – acquisition tax losses allowed to carry forward to offset against its future assessable income by Income tax payable 0.61 0.41 tax authority and under provision of prior year its Total current liabilities 121.30 61.44 deferred assets S$1.5 million. Non-current liabilities BANK LOAN AND BILLS PAYABLE INCREASED Long-term bank loans 7.75 0.75 Due to the increase in short-term trade fi nancing by the Precast division for its purchase of raw Finance leases 25.35 2.81 material for production, bank loan to fi nance Other payables 0.09 – the construction of Tesla’s power plants and Deferred income tax 2.05 1.84 purchase of properties at 11 & 15 Sixth Lok Yang Road. Total non-current liabilities 35.24 5.40
TRADE PAYABLES INCREASED Total liabilities 156.54 66.84 Due to an increase in the production activities for Capital and Reserves Precast and Construction division and addition from Property division. Share capital 25.37 7.03 Capital reserve 13.31 13.01 OTHER PAYABLES INCREASED Accumulated profits 31.23 32.82 Due to an increase in production activities for Translation reserve (0.52) (0.06) For personal use only use personal For Precast projects and liabilities arising from Tesla’s power plant connections costs from Western Equity attributable to owners of the Power. Company 69.39 52.80 FINANCE LEASES INCREASED Non-controlling interests 6.64 2.54 Due to the purchase of power plants in Tesla, the purchase of gantry cranes, moulds and Total equity 76.03 55.34 other plant and equipment for Precast division Total liabilities and equity 232.57 122.18 and purchase of excavators and motor vehicles for Construction division.
KOON HOLDINGS LIMITED 03 ANNUAL REPORT 2012 FINANCIAL YEAR REVIEW
Revenue (S’000) Basic Earnings Per Share (Singapore Cents)
212,724 13.13
135,305 122,286 7.95
88,055 79,381 4.63
2.43
0.03
FY2012 FY2011 FY2010 FY2009 FY2008 FY2012 FY2011 FY2010 FY2009 FY2008
Profi t Attributable To Shareholders (’000) Net Tangible Assets Per Share (Singapore Cents)
44.76 13,032
10,666 32.56 32.73 30.36 26.87 7,605
1,971
46
FY2012 FY2011 FY2010 FY2009 FY2008 FY2012 FY2011 FY2010 FY2009 FY2008 For personal use only use personal For
KOON HOLDINGS 04 LIMITED ANNUAL REPORT 2012 OUR SHARE PRICE
KOON’S PERFORMANCE ON ASX
ASX Stock Code: KNH.AX Share Price (In A$) Share
Source: ASX
KOON’S PERFORMANCE ON SGX
SGX Stock Code: 5DL.SI
Share Price (In S$) Share For personal use only use personal For
Source: Share Investor
KOON HOLDINGS LIMITED 05 ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS 06 LIMITED ANNUAL REPORT 2012 BREAKING BARRIERS Established construction group with businesses in civil engineering, precast, property
and energy infrastructure For personal use only use personal For
KOON HOLDINGS LIMITED 07 ANNUAL REPORT 2012 MESSAGE FROM CHAIRMAN & CEO
DEAR SHAREHOLDERS, PRECAST Growth in the Construction, Precast and 2012 was another strong year for our Precast Property divisions drove total revenue to a record division. Riding on housing demand, revenue from S$212.7 million in the financial year ended the Precast division had leaped from S$8.9 million 31 December 2012 (“FY2012”), a 141.6% jump in 2010, the year we acquired our precast business, from S$88.1 million a year ago. During this period, to S$31.5 million in FY2011, and subsequently we posted a net profit attributable to owners of the almost tripled to S$92.6 million in FY2012. Precast company of S$46,000, down from S$7.6 million in is a volume business and we are encouraged by FY2011 because the Group recorded a one-off gain the fact that we are gaining momentum in this line on disposal of leasehold property and non-recurrent of business. dividend income amounting to S$12.1 million in FY2011. In addition, the Group’s net profit was In early 2013, we acquired the remaining 25% affected by provisions made for doubtful debts and stake in Econ Precast Pte. Ltd. (“Econ”) from JKM allowances of inventories, which amounted to S$4.8 Engineers Pte. Ltd. for a consideration of S$5.5 million for the production, supply and delivery of million. As a result, we now hold 100% stake in precast components to Poh Lian Construction Pte Econ. Ltd, which applied for judicial management as it encountered financial difficulties. PROPERTY Despite a challenging operating environment CONSTRUCTION following a slew of property cooling measures Civil engineering and infrastructure construction implemented by the Government over the past few remain as our core focus for this division and in years, our Property division performed well. FY2012, the Group secured six major construction projects, of which, five are based in Singapore and Number of accredited property salespersons one in Malaysia. Some of these contracts include under our real estate agency unit, Global Property the construction of Sea Water Intake facilities, Strategic Alliance Pte. Ltd. (“GPS”) has grown construction works at Pasir Panjang Terminal significantly from 99 in 2011 to 573 in 2012. In the Phase III, infrastructure works in Jurong Island, and fourth quarter of 2011, Koon entered into a joint shore protection works in Johor, Malaysia. venture with a 15% stake to develop Watercolours, a 416-unit Executive Condominium development in Koon takes pride in its commitment to construction Pasir Ris. The project was launched in June 2012 quality and timely delivery. To this end, we have and GPS was appointed to spearhead the marketing appointed industry veteran Mr Yuen Kai Wing as and operation of this project. To date, close to Koon’s Chief Operating Officer and Executive Director 80% of the units have been sold. GPS is often a with effect from April 2012, to ensure that the Group top performer when appointed as co-marketing maintains a tight rein on construction quality and
For personal use only use personal For agent by developers in launching new development timely delivery amid growing orders. With more projects. Several other successful projects marketed than 20 years of experience, Mr Yuen’s expertise by GPS include Heron Bay – a 394-unit Executive and contribution will be an added advantage to our division.
KOON HOLDINGS 08 LIMITED ANNUAL REPORT 2012 From left to right: ANG SIN LIU Non-Executive Chairman TAN THIAM HEE Managing Director and CEO
Koon takes pride in its commitment to
For personal use only use personal For construction quality and timely delivery
KOON HOLDINGS LIMITED 09 ANNUAL REPORT 2012 MESSAGE FROM CHAIRMAN & CEO
Condominium project in Upper Serangoon which Order Book for was 90% sold within one week of its launch(1) and Construction Division CityLife – a 514-unit Executive Condominium project in Tampines which was 100% sold within 2 months.
In August 2012, the Group undertook a right issue exercise to fund the acquisition of four properties in Johor, Malaysia, which comprised of lands as well as one retail unit in Kota Point Shopping Complex for a total consideration of S$17.0 million.
As announced in early 2013, the Group is exploring Order Book for Precast the possibility of the proposed listing of its Property Concrete Work Division division under GPS Alliance Holdings Pte. Ltd. Announcements will be made in due course to update shareholders on this front.
For personal use only use personal For ELECTRIC POWER GENERATION We have made good progress for our Electric Power Generation business in Western Australia as well, following the successful completions of three additional 9.9 MW diesel power plants in Western Australia in
KOON HOLDINGS 10 LIMITED ANNUAL REPORT 2012 Financial Performance for the Year Ended 31 December (S$’000)
2008 2009 2010 2011 2012 Revenue 122,286 135,305 79,381 88,055212,724 Gross Profit 3,785 16,421 16,101 8,223 20,598 Other Income 4,154 2,455 7,181 14,038 2,994 Administrative Expenses 5,629 6,603 9,446 13,129 20,991 Net Profit (Loss) before Tax 2,120 12,127 14,897 6,736 (2,409) Net Profit after Tax 1,971 10,666 12,798 7,533 23 Profit Attributable to Shareholders 1,971 10,666 13,032 7,605 46
late 2012. The first plant was commissioned in August hectares to 76,600 hectares(3), an increment that 2011. With all four plants being operational, Tesla has is equivalent to nine Ang Mo Kio Towns(4). The generated additional recurring revenue to the Group. reclamation projects would be mainly around Pulau Tekong and Tuas as well as some areas around Earlier in March 2012, we announced the increase of Pasir Panjang Port and Jurong Island(3). our ownership in Tesla to 71.2%, resulting in Tesla becoming subsidiary of the Group. Given our established track record of more than three decades in reclamation works, we are well- BUSINESS OUTLOOK positioned to capture opportunities ahead. The Building and Construction Authority of Singapore (BCA) estimated construction demand to range The precast sector will continue to benefit from from S$26-32 billion in 2013. Boosted by public housing demand and Government policies that housing and rail construction projects, public sector encourage wider adoption of prefabrication, given is expected to contribute about S$14-17 billion of that over 70 per cent of a typical HDB flat is construction works in 2013(2). constructed using precast components(5). The Housing and Development Board (“HDB”) launched In January 2013, the Government released the 3,346 new flats in January 2013(6) and is targeting For personal use only use personal For Population White Paper which projected Singapore’s to launch 25,000 BTO units for 2013(7). population could rise up to 6.9 million by 2030 from 5.3 million. Through reclamation works, the Against this backdrop, while we are expecting Government also plans to increase land supply by sustainable demand from public sector and approximately 5,200 hectares from the current 71,400 housing projects, rising raw material prices,
KOON HOLDINGS LIMITED 11 ANNUAL REPORT 2012 MESSAGE FROM CHAIRMAN & CEO
Financial Performance for the Year Ended 31 December (S$’000)
2008 2009 2010 2011 2012 Current Assets 62,071 67,315 72,771 79,181 122,365 Non-Current Assets 17,091 15,486 25,928 42,997 110,210 Total Assets 79,162 82,801 98,699 122,178 232,575 Current Liabilities 49,799 43,612 45,574 61,443 121,307 Non-Current Liabilities 2,853 2,485 3,346 5,396 35,239 Total Liabilities 52,652 46,097 48,920 66,839 156,546 Shareholders’ Fund 26,510 36,704 47,676 52,801 69,385 Non-controlling interests – – 2,103 2,538 6,644 Total Liabilities and Equity 79,162 82,801 98,699 122,178 232,575 Current Assets to Current Liabilities 125% 154% 160% 129% 101% Gearing Ratio* 6% 4% 5% 11% 28% * Gearing Ratio = (bills payable, bank loan and finance lease)/Total assets
competition, and further tightening of inflow S$153.5 million and S$72.5 million respectively. of foreign manpower will continue to be of The Group expects the majority of these orders to concerns to the industry. The Government has be progressively delivered over the next two years. recently announced higher levies for an unskilled construction worker, from S$750 in 2013, to PROPOSED FINAL DIVIDEND OF S$950 in 2014, and to S$1,050 in 2015(8). 0.5 SINGAPORE CENT PER SHARE In appreciation of our shareholders’ support, the As for our Property division, the current economic Board of Directors will be proposing a final cash situation has created both challenges and opportunities dividend of 0.5 Singapore cent per share at the for the Group. In January 2013, the Government forthcoming Annual General Meeting on 25 April introduced its seventh cooling measures in its attempt 2013. Combined with the interim dividend of 0.5 to create a stable and sustainable residential property Singapore cents per ordinary share, total dividend market. Among the new restrictions are higher stamp payout for FY2012 will be approximately S$2.1 million. duties and rules limiting buyers on how much they are allowed to borrow(9). Thus, transaction volume is ACKNOWLEDGEMENTS
For personal use only use personal For expected to moderate in the near future as market As the Group bids farewell to Mr Yao, we are absorbs the impact of the latest measure. pleased to welcome our new Chairman and Board members: Mr Ang Sin Liu – Non-Executive To date, the Construction and Precast division Chairman; Mr Ang Ah Nui – Non-Executive Director; has an outstanding order book of approximately and Mr Yuen Kai Wing – Chief Operating Officer and
KOON HOLDINGS 12 LIMITED ANNUAL REPORT 2012 Executive Director. We are confident that under the Footnotes: new leadership, Koon will continue to take steady (1) “Owners of S$1.77m condo unit are a young couple”, steps forward. Channel News Asia, 01 November 2012 (2) “Public sector projects to boost construction demand in Our progress would not be possible without the 2013”, BCA, 16 January 2013 (3) “Plan to grow space for rising population”, Straits Times, support of our clients, partners, management, staff 01 February 2013 and all stakeholders. We would like to extend our (4) “Reclamation will add land the size of nine AMK towns”, sincere gratitude to all of them. Straits Times, 01 February 2013 (5) “Simply “Prefabulous”!”, Ministry of National Development, May/June 2010 issue Last but not least, our appreciation to our shareholders (6) “HDB’s first Launch for 2013 – 3,346 new flats in 6 for your confidence in Koon and we look forward to towns”, HDB, 29 January 2013 your continued support. (7) “Govt to drive down prices of BTO flats”, Business Times, 09 March 2013 (8) “Monthly levies for foreign workers to breach $1,000 mark”, Business Times, 27 February 2013 (9) “Tough action to cool property market”, Straits Times, 12 January 2013
For personal use only use personal For ANG SIN LIU TAN THIAM HEE Non-Executive Managing Director Chairman and CEO
KOON HOLDINGS LIMITED 13 ANNUAL REPORT 2012 MESSAGE FROM CHAIRMAN & CEO
PERFORMANCE REVIEW Significant revenue growth, along with the Group’s Driven by the growth in the Construction, Precast expansion plans, led to the corresponding increase and Property divisions, the Group’s FY2012 revenue in administrative expense and distribution cost. reached a record S$212.7 million in FY2012, a 141.6% jump from S$88.1 million a year ago. The Administrative expenses increased by S$7.9 million Group ensured a smooth transition of ownership or 59.9% to S$21.0 million. Of the S$7.9 million following Koon’s acquisitions of the Precast business increase, S$2.2 million was due to an additional in 2010 and Property business in 2011, and these allowance for doubtful trade receivables to Poh acquired business units were contributing positively Lian Construction Pte Ltd, which applied for judicial to the Group. management in March 2013.
For the full year ended 31 December 2012 Distribution cost increased by S$2.2 million or (“FY2012”), the Group posted S$46,000 net profit 187.7% to S$3.4 million largely due to increase in attributable to shareholders on the back of a record business activities in Precast as well as advertising revenue of S$212.7 million. and marketing expenditures from the Property division. Revenue from the Construction division jumped 96.5% from S$49.1 million in FY2011 to S$96.5 In FY2011, the Group recorded a one-off gain on million in FY2012. Some of the major construction disposal of leasehold property and non-recurrent projects include (i) Tampines Logistic Park project dividend income totalling S$12.1 million, while (ii) the rehabilitation and earthworks at a landfill for FY2012 there was a one-off gain of S$0.6 site off Tampines Road; (iii) the construction of the million on deemed disposal of previously held Seletar Link vehicular bridge and the widening of interest in associate company, Tesla before it the Tampines Expressway, (iv) the shore protection became a subsidiary of the Group in March 2012. works for T-Bund construction at Jurong Island; and If the above mentioned non-operating income (v) the construction of Sea Water Intake facilities. in both years were excluded, net operating loss before tax would have been approximately S$3 On the Precast side, revenue surged 193.6% from million in FY2012 as compared to a net operating S$31.5 million a year ago to S$92.6 million in loss before tax of approximately S$5.4 million in FY2012. FY2011. In addition, the Group’s net profit was also affected by provisions made for doubtful debts Revenue from the Property division that was and allowances of inventories, which amounted acquired in July 2011 more than tripled from S$7.6 to S$4.8 million related to the supply of precast million to S$25.1 million in FY2012. components to Poh Lian Construction Pte Ltd as Australia-based Tesla Holdings Pty Ltd (“Tesla”) mentioned earlier on Page 08. which became the Group’s subsidiary in March 2012 contributed S$3.4 million in revenue. BALANCE SHEET Following the Group’s expansion in 2012, the Gross profit increased by 150.5% from S$8.2 million Group total asset grew from S$122.2 million a in FY2011 to S$20.6 million in FY2012 mainly due year ago to S$232.6 million in FY2012 while total liabilities increased from S$66.8 million to S$156.5 For personal use only use personal For to (i) improved margin from the Construction division as a result of cost saving initiatives implemented in million. As at end of the reporting period, net FY2012; (ii) higher contribution from the Property tangible asset per share was 26.87 Singapore division; and (iii) additional contribution from Tesla. cents, down from 32.56 Singapore cents. Cash and As a result, gross profit margin improved from 9.3% cash equivalents stood steady at approximately a year ago to 9.7% in FY2012. S$18.5 million.
KOON HOLDINGS 14 LIMITED ANNUAL REPORT 2012 Trade receivables increased by 65.2% to S$58.1 million mainly to due to higher sales volume of Precast concrete components, increase in Construction progress billing and higher commission receivable by the Property division.
In line with the increase in precast activities, inventories was recorded at S$14.1 million, a 33.9% increase as compared to S$10.5 million in FY2011 due to higher finished goods held for awarded contracts for the Precast division.
During the period, property, plant and equipment increased by 196.2%, from S$25.7 million a year ago to S$76.1 million as at end December 2012. The increase was mainly due to (i) acquisition of Tesla, (ii) purchase of properties at 11 and 15 Sixth Lok Yang Road, (iii) purchase of gantry cranes, moulds and other plant and equipment for the Precast division; and (iv) new excavators and motor vehicles for the Construction division.
Corresponding with the increase in overall business activities and expansions within the Group, current liabilities increased by 97.4% from S$61.4 million to S$121.3 million. Non-current liabilities also increased by S$29.8 million from S$5.4 million to S$35.2 million. properties Malaysia, purchase of property, plant CASH FLOW and equipment mainly due to the construction of For FY2012, cash used in operations of S$9.3 power plants, acquisition of gantry cranes and million was derived from the Group’s pre-tax loss moulds by Precast division and the acquisition of of S$2.4 million, after adjusting for non-cash items Lok Yang Road properties, excavators and motor and changes in working capital. Cash outflow from vehicles in the Construction division. working capital changes was mainly due to an increase in the trade receivables, contract work- Net cash from financing activities in FY2012 in-progress and inventories for the Precast and amounted to S$38.6 million was mainly due to (i)
For personal use only use personal For Construction divisions. loan financing for construction of Tesla’s power plants and purchase of Lok Yang Road properties, Capital expenditure and acquisition of properties (ii) the increase in trade financing utilised by Precast resulted in net cash used in investing activities division and (iii) proceeds from issuance of right of S$30.8 million. Among them are acquisition of shares of S$18.3 million.
KOON HOLDINGS LIMITED 15 ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS 16 LIMITED ANNUAL REPORT 2012 BUILDING EXCELLENCE Strong commitment to
quality construction project For personal use only use personal For
KOON HOLDINGS LIMITED 17 ANNUAL REPORT 2012 INFRASTRUCTURE CONSTRUCTION AND CIVIL ENGINEERING
Koon was accorded the BCA Construction Excellence Award 2012 in Civil Engineering for the technically challenging Serangoon Reservoir project.
Koon is registered with the Building and Construction Authority (“BCA”) under the A1 category, the highest grade which allows the Group to tender for public civil engineering projects of unlimited value in Singapore.
As a civil engineering specialist, Koon has undertaken numerous infrastructure construction works encompassing reclamation, shore protection and terminal/port projects. The Group has set foot in reclamation works since two decades ago, building its reputation in this niche sector with a list of projects that has helped expanded Singapore’s land area by about 20%.
These completed projects now form the new coastal lines of Singapore:
• North: Punggol • South: Marina Bay, Tanjung Rhu, Sentosa Cove & Pasir Panjang • East: Changi • West: Jurong Island & Tuas View
Over the past few years, we have executed For personal use only use personal For
KOON HOLDINGS 18 LIMITED ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS LIMITED 19 ANNUAL REPORT 2012 INFRASTRUCTURE CONSTRUCTION AND CIVIL ENGINEERING
and completed a high percentage of public civil QUALITY AND SAFETY STANDARDS infrastructure projects. Amongst the more noticeable It is our culture to embrace high quality and safety ones are the S$126 million Serangoon Reservoir standard in our operating environment. We are ISO project, the S$81 million Construction Industries 9001:2008 (quality), ISO 14001:2004 (environment) Park at Seletar, the S$30 million Infrastructure and OHSAS 18001:2007 (safety) certified. The Package 1 for Gardens by the Bay at Marina South Group was also accorded the BCA Construction and the S$19 million Wetlands at Lorong Halus Excellence Award 2012 in Civil Engineering for the Landfill. technically-challenging Serangoon Reservoir project.
The Group adopts a flexible model and has different Recognised for its commitment to incorporate safety approaches to different projects, depending on as part of its business model, Koon obtained the the nature of the projects. We operate as a main Bizsafe Partner Certification in 2009. contractor on many of our projects. On larger scale projects, particularly those related to reclamation, GREEN AWARENESS we forge partnership with other internationally In line with the global theme of moving towards renowned infrastructure and construction companies sustainable development, Koon demonstrates its such as Penta-Ocean Construction Company Ltd environmentally conscious efforts by winning the and Hyundai Engineering & Construction Co. Ltd. Green and Gracious Builder Award (Merit) from BCA. This is mainly due to project requirement reasons, as few groups have all the required resources to win
and execute such projects alone. For personal use only use personal For
KOON HOLDINGS 20 LIMITED ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS LIMITED 21 ANNUAL REPORT 2012 PRECAST
We are aapprovedpproved pprecastrecastwor worksk suppliers to Housing and Development Board projects with the highest grading (L6) from the Building and Construction Authority of Singapore.
Koon moved into the upstream precast industry through the acquisitions of Econ Precast Pte. Ltd. (“Econ”) and Contech Precast Pte. Ltd. (“Contech”) in 2010.
With a combined track record of more than 30 years, both Econ and Contech are approved precast works suppliers to Housing and Development Board projects with the highest grading (L6) from the BCA, enabling them to tender for precast works of unlimited value.
We manufacture and market a comprehensive range of precast products ranging from standard RC piles to other more complex products such as: space adding item, staircase flight integrated with wall and mid landing, facade with cast-in window frame and planter box. Our extensive customer base includes the Housing and Development Board (“HDB”) and the Land
Transport Authority. For personal use only use personal For
KOON HOLDINGS 22 LIMITED ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS LIMITED 23 ANNUAL REPORT 2012 PROPERTY
We have ha e mademade ssignifiignifi cantcant progressprog in expanding our business activities to new areas such as property advisory services, property development as well as home furnishing.
Koon owns a 51% stake in GPS Alliance Holdings Pte. Ltd. (“GPS Alliance”). GPS Alliance is an investment holding company that owns the premier real estate agency, Global Property Strategic Alliance Pte. Ltd., which is involved in a wide spectrum of real estate services that includes Corporate Leasing services; Investment Sales; En-bloc Sales; Full-time Sales; Domestic and International Project Sales.
Within two years, our Property division has made significant progress in expanding its business network and business activities to new areas such as property advisory services, property development as well as home furnishing. Our real estate agency is considered as one of Singapore’s top 15 agencies with 573 accredited salespersons in 2012.
The Group owns a 15% stake in Watercolours, an Executive Condominium housing development project in Pasir Ris. The project is a joint venture with Ho Lee Group, UE E&C Ltd., and EVIA Real Estate Pte Ltd. GPS Alliance has taken proactive roles in spearheading the marketing and operation of this Executive Condominium development that offers a total of 416 units of apartments. To date, close to 80% of the units has been sold.
Through its subsidiary, Muse Living Pte. Ltd. (“MUSE”), GPS Alliance provides home furnishings, design consultancy and installation services. MUSE has secured the sole right to distribute Arrex Le Cucine branded home furnishing products in Singapore and Malaysia. Arrex Le Cucine is one of Italy’s four largest manufacturers of kitchen/bath/ bedroom systems.
Demonstrating our competency and business
excellence, GPS Alliance won three awards in For personal use only use personal For 2012: Top Five Most Promising Entrepreneur Award in Global Entrepreneurs Roundtable 2012, Top Five SME One Asia Awards 2012 winners for the Emerging Award category and Most Promising Entrepreneurship Awards at Asia Pacific Entrepreneurship Award 2012.
KOON HOLDINGS 24 LIMITED ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS LIMITED 25 ANNUAL REPORT 2012 ELECTRIC POWER GENERATION
We own and operate four 9.9MW diesel power plants that provide peak power electricity in Western Australia.
As part of its strategy to generate additional recurring income to the Group, Koon acquired a stake in Tesla Holdings Pty Ltd (“Tesla”) in July 2010. Tesla is an Australian energy infrastructure company which has successfully attained capacity credit allocations from the Independent Market Operator (“IMO”) of Western Australia. These allocations provide Tesla an incentive by granting a recurring source of income for the initial capital investment of power generation plants.
Tesla now owns and operates a total of four 9.9MW diesel power plants in Western Australia. The first plant was commissioned in August 2011 and the remaining three was completed in late 2012. With all four plants being operational, Tesla shall generate recurring revenue based on a two-tier revenue matrix (standby fee and actual usage fee). Geraldton To date, Koon owns 71.2% equity stakes in
Tesla. For personal use only use personal For
Kemerton
KOON HOLDINGS 26 LIMITED ANNUAL REPORT 2012
Picton For personal use only use personal For
Northam
KOON HOLDINGS LIMITED 27 ANNUAL REPORT 2012 OUR PEOPLE
At Koon, we are supported by more than 1000 staffs of multi-nationalities
The Group believes that a sustainable business is built upon the contributions of our people. Human capital development remains as our priority as we step forward to achieve our business objectives. We support our people with professional trainings and development programme. At the same time, we continue to adopt reward system that encourages our people to deliver excellence and professionalism.
Staff engagement is crucial in providing a working environment that is conducive to productivity. We promote an open corporate culture that encourages communication and feedback. Seeking opportunities to serve our society, we participated in several charity events in 2012. Among these activities were the Clean A Home project organised by the Singapore Contractor Association Limited to help families in Telok Blangah to clean and repaint their houses, Race Against Cancer Run, and the charity fundraising run organised by Rainbow Centre Singapore, an organisation that serves
children with special needs. For personal use only use personal For
KOON HOLDINGS 28 LIMITED ANNUAL REPORT 2012 Cancer Run
Charity Walk For personal use only use personal For
KOON HOLDINGS LIMITED 29 ANNUAL REPORT 2012 For personal use only use personal For
KOON HOLDINGS 30 LIMITED ANNUAL REPORT 2012 FORGING AHEAD Dedicated teams of professionals with strong
sense of responsibility For personal use only use personal For
KOON HOLDINGS LIMITED 31 ANNUAL REPORT 2012 BOARD OF DIRECTORS
FROM LEFT TO RIGHT: FROM LEFT TO RIGHT: FRONT BACK Christopher Chong Meng Tak Ko Chuan Aun
For personal use only use personal For Glenda Mary Sorrell-Saunders Oh Koon Sun Ang Sin Liu Ang Ah Nui Yuen Kai Wing Oh Keng Lim Tan Thiam Hee
KOON HOLDINGS 32 LIMITED ANNUAL REPORT 2012 ANG SIN LIU YUEN KAI WING OH KOON SUN Non-Executive Chairman Chief Operating Officer and Executive Director Mr. Ang Sin Liu is the founder and Executive Director Mr. Oh Koon Sun and the late Mr. Aw advisor of ASL Marine Holdings Limited. Mr. Yuen joined the Group in April 2012 Joo Kim (his father) co-founded the Mr. Ang is an astute businessman with and brought with him more than 20 predecessor to the Company in diverse business interest including years of experience in the construction 1975. The predecessor was a sole the trading of scrapped steel material, industry. Before joining the Company, proprietorship involved in the business building construction works, property Mr. Yuen was the Regional Manager of transporting stone and rocks. leasing, shipbuilding and ship repair. of North East Asia, Van Oord NV. and Mr. Oh Koon Sun was in charge of the General Manager of Van Oord that sole proprietorship, namely as (Shanghai) Dredging Co. Ltd. He a sub-contractor for Obayashi on TAN THIAM HEE was responsible for business and the East Coast V reclamation. Prior Managing Director and operations in the Region of North East to founding the sole proprietorship, Chief Executive Officer Area including countries of Eastern Part Mr. Oh Koon Sun was involved in the Mr. Tan joined the Group in 2008 and of Russia, Japan, Korea and Greater family’s trading business. His extensive brings with him more than 15 years China such as Taiwan, China, Macau hands-on experience in trading and experiences from various industries. and Hong Kong. deep familiarity of local businesses, Before joining the Company, Mr. Tan benefi ts Koon, as his principal task had been the Group Financial Controller Mr. Yuen has a Master of Business at the Company is the negotiation of and Company Secretary with Haw Administration from the China Europe quantity, quality and price of stone, Par Corporation Limited since 2006. International Business School in rock, equipments, tugs & barges, with Prior to joining Haw Par Group, he China and a Bachelor Degree in Civil selected sub-contractors and for the had worked in the same capacity for Engineering from Hogeschool Utrecht sourcing of consumables. Mr. Oh Koon ASL Marine Holdings Ltd for 3 years in Netherlands. Sun is also the main contact person for between 2003 and 2006. Before 2003, Koon-Zinkcon. he was with Hua Kok International Limited (now known as Abterra Ltd) for OH KENG LIM 7 years, as its Group Financial Controller Executive Director ANG AH NUI and Company Secretary, as well as Mr. Oh Keng Lim joined the predecessor Non-Executive Director an Executive Director. Prior to joining to Koon in 1976, when the sole A member of the Audit and Hua Kok Group, he had worked as an proprietorship was preparing for its Remuneration Committees auditor with various reputable medium conversion into a private partnership in Mr. Ang Ah Nui joined the Group in April and large sized international public 1977. Before this Mr. Oh Keng Lim was 2012 and brought with him more than accounting fi rms. involved in several trading ventures. 20 years of experience and extensive Over the last 27 years, Mr. Oh Keng marine industry knowledge. Mr. Ang Ah Mr. Tan has a Master of Business Lim has been involved in the project Nui is the Deputy Managing Director of Administration in International Business accounting, administration and risk ASL Marine Holdings Limited. His core and a Bachelor of Accountancy (Merit) controls of the Company. He has responsibilities for ASL Marine Group from the Nanyang Technological since devolved many of his day-to- include the Group’s business strategies University of Singapore. He is also a day duties and now primarily serves in and direction, corporate plans and
Fellow of the Institute of Certifi ed Public a supervisory and oversight capacity. policies, and general management of For personal use only use personal For Accountant of Singapore and CPA Mr. Oh Keng Lim remains very familiar the Group’s ship repair and conversion Australia, a member of the Singapore with all aspects of the Company’s and ship chartering operations, Institute of Directors and a Graduate businesses, particularly with the including business development and member of the Australian Institute of Company’s many suppliers. operations. Company Directors.
KOON HOLDINGS LIMITED 33 ANNUAL REPORT 2012 BOARD OF DIRECTORS
CHRISTOPHER CHONG Australian Institute of CPAs, a Fellow KO CHUAN AUN MENG TAK of the Singapore Institute of Directors, Non-Executive and Independent Director Non-Executive and Independent a Fellow of the Australian Institute of Director Company Directors and a Master A Member of the Nominating Committee Chairman of the Audit and Stockbroker of the Securities & Remuneration Committees and Derivatives Industry Association of Mr. Ko is currently the Chief Executive a Member of the Nominating Australia. Offi cer/Executive Director of Scorpio Committee East Holdings Ltd. Prior to that, Mr. Ko Christopher is a resident of Australia was the Executive Chairman of Athena and a partner of ACH Investments Pte Corporation Pte Ltd. Prior to joining GLENDA MARY Ltd., a specialist corporate advisory Athena Corporation Pte Ltd, he was fi rm regulated by the Monetary SORRELL-SAUNDERS Non-Executive and Independent the Executive President, International Authority of Singapore. Prior to co- Director Business Development of Ananda founding ACH Investments Pte Ltd, Chairman of the Nominating Group of Companies. He has more than Christopher was a multi-award winning Committee and a Member of 15 years of working experience with analyst and the Managing Director the Remuneration and Audit the then Trade Development Board of of HSBC James Capel Securities Committees Singapore (“TDB”). His last appointment (Singapore) Pte Ltd (now known as Glenda is the Managing Director of with then TDB was Head of China HSBC Securities (Singapore) Pte Matrix Management Group Pty Ltd, Operations. Ltd), a member of the HongkongBank a Project Management and Quantity Group of companies. Surveying fi rm with operations in Mr. Ko also holds chairmanships Victoria and Tasmania. Prior to founding and directorships in various private Christopher has signifi cant experience Matrix Management Group, Glenda and public companies. Mr. Ko was in corporate governance and worked as a Director, with Rawlinson appointed as an Independent Director corporate affairs. Christopher is also a (Aust) Pty. Ltd. of Super Group Ltd and San Teh Ltd on Director of 5 other public companies 8 November 2006, and 16 August 2010 and funds listed on the Australian, Glenda started her professional life respectively. Hong Kong and Singapore Stock with Farrow Laing and Partners in Exchanges and on the advisory board South Africa. Glenda has considerable Mr. Ko holds a Diploma in Export of the Centre for Stewardship and experience in major industrial and Marketing, which is equivalent to Danish Corporate Governance. Christopher is civil projects including infrastructure Niels Brock International Business also a Director and/or adviser to public works; steel-processing plants; and Degree Programme. In the past 20 and private companies, to several on coal, diamond & gold mines. years, Mr. Ko has been very actively signifi cant Asian families and to a Glenda also lectured at the University involved in business investments in regulatory branch of the Singapore of the Witwatersrand in the Faculty of the PRC market. In year 2001, Mr. Ko Government. Architecture during the 1990’s prior to was appointed as a Member of the her immigration to Australia. Steering Committee of the Network Christopher has a Bachelor of China. Between the year 2003 to 2005, Science (Econ), a Master of Business Glenda has a Bachelor of Science Mr. Ko served as the Chairman of the Administration, is a member of the (Quantity Surveying) from the University Tourism Sub-Committee under the Institute of Chartered Accountants of Witwatersrand, South Africa and Singapore-Sichuan Trade & Investment For personal use only use personal For of Scotland, a Fellow of the Hong is a Tasmanian Division Councillor of Committee. In addition, Mr. Ko also Kong Institute of Certifi ed Public the Property Council of Australia. She serves as Investment Advisor to the Accountants, a Fellow of the is also a member of the Australian Fushun Foreign Trade & Economic Institute of Quantity Surveyors. Cooperation Bureau.
KOON HOLDINGS 34 LIMITED ANNUAL REPORT 2012 KEY MANAGEMENT
01 02 03
01. BEN TEO TECK SING includes IT infrastructure and human resources Chief Financial Officer for the construction division. In 2008, Juslene was As Chief Financial Officer, Ben is responsible for promoted to the position of Group HR and Admin Corporate Finance & treasury, Accounts, Tax and Manager handling all corporate administration Risk management of Koon Holdings Limited and works for the Group. oversees these functions across the Group. He also handles investor relations matters for the Juslene has a Diploma in Human Resource Group. Management from the Singapore Human Resources Institute and a Diploma in Business Prior to joining the Group in May 2010, he has over Administration from the Productivity and Standards 15 years of experience in audit and accounting and Board. had experience in a few public listed companies on the Singapore Exchange Securities Trading Limited 03. LOO WOEI HARNG of which Ben was responsible for overseeing the Executive Director (Construction & financial management, corporate governance, Precast Division) and General Manager (Construction Division) listing requirement compliance, and other finance Woei Harng joined the Group in March 2013 related matters. as Executive Director and General Manager. He has 30 years of working experience in the Ben is a Fellow member of the Association of construction industry and related business Chartered Certified Accountants, United Kingdom areas covering engineering design, building and the Institute of Certified Public Accountants of construction, civil engineering construction, Singapore. infrastructure development, mining, property development and management. He had worked 02. JUSLENE AW in various corporations ranging from multi-national, Group HR & Admin. Manager governmental and private companies, both listed Juslene joined the Group in 1990 as a Project and unlisted, in Singapore, Indonesia and Malaysia. Administrative Officer handling administrative He has been CEO of two listed companies in works, including staff and workers welfare, and For personal use only use personal For Singapore. providing support to the Project Manager. After several years of site experience, Juslene was Woei Harng graduated from the National University transferred to the head office where she was tasked of Singapore with Bachelor of Engineering (Honours) to handle corporate administration works which and a Master of Science (Civil Engineering).
KOON HOLDINGS LIMITED 35 ANNUAL REPORT 2012 KEY MANAGEMENT
04 05 06
04. MICHAEL YEW precast industry. She had worked with Econ WING KIONG Group since 1979, holding various appointments Executive Director within the Group. She oversees a team of (Precast Division) managers, managing the various projects Michael has joined the Precast Division as undertaken by the Group’s precast division and Executive Director since 2009. With 15 years of is also in-charge of developing and promoting experience, Michael has extensive knowledge business opportunities with existing and on the precast concrete industry. potential clients, suppliers and sub-contractors.
Michael’s insight has been instrumental in Jessie has a Bachelor of Engineering (Hons) in expanding the Precast Division. His key areas of Civil Engineering from Glasgow University, UK. expertise encompass both operational aspect and strategic planning for the Division. Heading all business development activities within the 06. CHEW WENG KEE Precast Division, he is in charge of formulating Deputy General Manager (Construction expansion strategies for both existing and new Division) markets. Weng Kee joined the Group in 1989 as a Civil Engineer. His role then was to handle all Michael graduated with a Bachelor in matters related to the construction project. He Engineering (Civil & Structural Engineering) from was subsequently promoted to the position of Nanyang Technological University in 1998. Project Manager before being promoted to the position of Senior Project Manager in year 2009. His responsibility is to oversee larger and more 05. JESSIE ONG complex construction projects. Currently, Weng General Manager Kee is appointed as the Deputy General Manager (Precast Division) overseeing the local construction operations. Jessie joined the Group in 2010 as General Manager (Precast Division). She has more than Weng Kee has a Bachelor of Engineering (Civil) 30 years of experience in the construction and
from The National University of Singapore. For personal use only use personal For
KOON HOLDINGS 36 LIMITED ANNUAL REPORT 2012 07 08 09
07. DENNIS YONG Jeffrey’s much-envied foresight in the local Group CEO and Executive Director property scene has made him extremely popular (Property Division) with the local media, and resulted in numerous Dennis joined the Group in 2011 as Group CEO requests for interviews from The Straits Times, and Executive Director (Property Division). He The Business Times, Lianhe Zaobao and has more than 14 years of experience in the Channel NewsAsia. real estate industry. Dennis Yong is a prominent figure in this industry, counting many high-profile Jeffrey has a Master of Science in Marketing individuals among his corporate and personal from the Baruch College at The City University clients. He oversees the entire operations of GPS of New York. Group of Companies. 09. BEN TAN Before joining the real estate sector, he spent 10 CEO years managing companies that dealt in interior (Electric Power Generation Division) design, designer furniture, building materials Ben co-founded the Tesla Group of Companies (import and export) and landed property in 2008 as CEO and Managing Director. Ben is construction. currently responsible for the running of the Tesla Group companies which includes the operating Dennis has a diploma in building from the power station facilities at Picton, Kemerton, Singapore Polytechnic and a BSc in Real Estate Geraldton and Northam and development of Management from Heriot-Watt University in various new projects. the UK. He has previous experience in Electrical Engineering and Investment Banking. He is 08. JEFFREY HONG a current member of the Market Advisory ENG LEONG Committee of the Independent Market Operator Group COO and Executive Director (Property Division) of Western Australia – the peak Advisory Board Jeffrey joined the Group in 2011 as Group COO in the West Australian Electricity Market.
For personal use only use personal For and Executive Director (Property Division). He has more than 18 years of experience and an Ben holds Bachelor Degrees in Electrical acknowledged trailblazer and trendsetter in Engineering (Honours), Science and Commerce, the Real Estate Industry. Jeffrey oversees the a Graduate Diploma in Finance and Investment entire operations of GPS Group of Companies. and a Masters in Business Administration.
KOON HOLDINGS LIMITED 37 ANNUAL REPORT 2012 CORPORATE STRUCTURE
Koon Construction & Transport Sdn Bhd (100%) Koon Zinkcon Pte Ltd (50%) Jurong & Tuas Rock Contractors JV (75%) Mesco Sdn Bhd (50%)
Koon-Top Pave Joint Venture (100%)
Penta-Ocean/Koon/Hyundai/Van Oord Joint Venture - JV 1 (20%) Koon Construction & Penta-Ocean/Koon-Ham-Dredging Transport Co Pte Ltd International-Boskalis Joint Venture - (100%) JV 2 (20%)
Penta-Ocean/Koon/Dredging Entire Construction Pte Ltd International/Boskalis/Ham Joint (100%) Venture - JV 3 (20%) Entire Engineering Pte Ltd Penta-Ocean/Hyundai/Koon Joint (100%) Venture - JV 4 (20%) Metro Coast Sdn Bhd (100%) KOON Seven Star Development Sdn Bhd (100%) HOLDINGS Koon Properties Pte Ltd Triumph Heights Sdn Bhd (100%) LIMITED (100%) Unison Progress Sdn Bhd (100%)
Econ Precast Pte Ltd Econ Precast Sdn Bhd (100%) (100%) Contech Precast Pte Ltd (100%)
Global Property Strategic Alliance Pte Ltd (100%) GPS Alliance Holdings GPS Alliance Home Muse Living Pte Ltd Pte Ltd Solutions Pte Ltd (100%) (85%) (51%) GPS Alliance IT Pte Ltd (100%) GPS Alliance Development Huge Development & Investment Pte Ltd (100%) Pte Ltd (15%) GPS Alliance International Pte Ltd (100%) GE Development Pte Ltd (51%)
Tesla Holdings Pty Ltd Tesla Corporation (71.2%) Management Pty Ltd (100%) Tesla Corporation Pty Ltd (100%) For personal use only use personal For Tesla Geraldton Pty Ltd (100%) Tesla Kemerton Pty Ltd (100%) Tesla Northam Pty Ltd (100%)
KOON HOLDINGS 38 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
The Board of Directors is committed to ensuring good corporate governance practices, to promote corporate transparency and to protect and enhance shareholder value.
Functions and Responsibilities of the Board
The Board of Directors is responsible for setting the strategic direction of the Group and for overseeing and monitoring the Group’s businesses and affairs. The Directors are accountable to the shareholders for the Group’s performance. Day- to-day management of the Group’s affairs and the implementation of its strategy are delegated to the Executive Directors and senior executives.
The principal functions of the Board include:
• Setting the corporate strategy and direction of the Group, including but not limited to approval of broad policies, strategies and financial objectives of the Group. • Monitoring the implementation of the strategy, the business performance and the results and ensuring appropriate resources are available. • Approving financial plans and key management recommendations. • Appointing the Executive Directors and other key personnel and reviewing their performance. • Identifying and reviewing of risk and the establishment of monitoring and feedback systems with respect to risk management, internal controls, financial reporting and compliance. • Overseeing the management of occupational health & safety and environmental performance.
The Board’s approval is required for matters such as the Group’s financial plans and annual budget, key operational initiatives, acceptance of bank facilities, major investment and divestment proposals, material acquisitions and disposal of assets, interested person transactions of a material nature and release of the Group’s half yearly and full year financial results to the Australian Securities Exchange (“ASX”) and the Singapore Exchange Securities Trading Limited (“SGX-ST”). Apart from matters that specifically require the Board’s approval, the Board approves transactions exceeding certain threshold limits and delegates authority for transactions below those limits to management so as to optimise operational efficiency.
Board’s Composition and Balance
The Board comprises nine Directors, two of whom are non-executive directors and three of whom are non-executive, independent directors. Whilst the majority of the Board is not comprised of independent directors, the Board believes that there is the appropriate composition of skills amongst existing Directors and all Directors ensure that they approach their roles with independent judgement. In view of the scope and nature of the operations of the Group, the Board and the Nominating Committee are of the view that there is no individual or small group of individuals dominating the Board’s decision-making process and the Board’s current size is appropriate for facilitating effective decision-making.
The Board comprises business leaders and professionals with industry and financial backgrounds. Its composition enables the management to benefit from a diverse and objective external perspective on the issues raised before the Board.
To assist the Board in the execution of its responsibilities and to provide independent oversight of management, various Board Committees, namely the Audit Committee, Nominating Committee and Remuneration Committee, have been
For personal use only use personal For constituted with clear written terms of reference. These Committees are made up mainly of independent non-executive Directors and the effectiveness of each Committee is constantly monitored by the Board.
KOON HOLDINGS LIMITED 39 ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
Four directors (two non-executive directors, one non-executive, independent director and one executive director) were appointed by the Company during the financial year ended December 31, 2012. No new directors were appointed after the financial year ended December 31, 2012. Any newly-appointed director will be given a formal letter setting out his duties and obligations upon his appointment and will undergo an orientation program to be familiar with the Group’s businesses and governance practices. Directors are also invited to sites to meet with management and gain a better understanding of the Group’s business operations. To keep pace with regulatory changes, the director’s own initiatives are supplemented from time to time with information updates and sponsored seminars conducted by external professionals, including any changes in legislation and financial reporting standards, government policies and regulations and guidelines from ASX and SGX-ST that affect the Company and/or the directors in discharging their duties. During the year, certain Directors had attended seminars on updates concerning guidance to the best practices of a director and the regulatory environment in Singapore and/or Australia.
Chairman and Managing Director/Chief Executive Officer
The Chairman is a non-executive director. The roles of Chairman and Managing Director, who is the Chief Executive Officer, are separated. The separation of roles is to ensure that the working of the Board and the executive responsibility of the Group’s business are kept distinct, increasing the accountability and capacity of the Board for independent decision- making. While the Chairman is not an independent director, the Board is confident that he remains free from bias in carrying out his role as Chairman, and is able to bring independent judgment to bear on Board decisions without interference from business or other relationships that could materially interfere with his independent judgment.
The Chairman and the Audit Committee Chairman share responsibility for scheduling meetings to enable the Board to discharge its duties and to coordinate the activities of the independent non-executive Directors and act as principal liaison between the independent non-executive Directors and the Managing Director/Chief Executive Officer on sensitive issues. The Chairman, with the assistance of the Management, and the Executive Directors prepare the agenda and other material for meetings and ensure that the information is of a sufficient quality and quantity to enable the Board to make informed decisions. The Executive Directors are responsible for ensuring compliance with the Group’s guidelines on corporate governance.
The Chairman is also available to shareholders where they have concerns, and which contact through the normal channels of the Managing Director has failed to resolve or for which such contact is inappropriate.
Board Membership
The Nominating Committee (“NC”) shall, from time to time, make recommendations on the number and composition of the Board of Directors, subject to the conditions set out in the Company’s Articles and Memorandum of Association.
The Nominating Committee currently comprises three members, all of whom are independent. It is chaired by Ms Glenda Mary Sorrell-Saunders and has as its members, Mr Christopher Chong Meng Tak and Mr Ko Chuan Aun.
The Nominating Committee has a formal written Charter and, accordingly, is mainly responsible for:
• Monitoring the contribution and performance of the Directors and the Board. • Deciding how the Directors are enhancing long-term shareholder value.
For personal use only use personal For • Re-nominating and/or proposing new Directors.
KOON HOLDINGS 40 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
For appointment of new directors to the Board, if a vacancy arises, the NC will, in consultation with the Board, evaluate and determine the selection criteria with due consideration to the mix of skills, knowledge and experience of the existing Board. The NC does so by evaluating the existing strengths and capabilities of the Board, assessing the likely future needs of the Board, assessing whether this need can be fulfilled by the appointment of one person and if not, consulting with the Board in respect to the appointment of two people, seeking likely candidates widely and sourcing resumes to review, undertaking background checks on the resumes received, narrowing the list of possible candidates to a short list and then inviting the shortlisted candidates to an interview which may include a briefing of the duties required to ensure that there is no expectation gap. The NC will seek candidates widely and beyond people directly known to the directors and is empowered to engage professional search firms and also give due consideration to candidates identified by any person. The NC will interview all potential candidates in frank and detailed meetings and make recommendations to the Board for approval.
Every year, the NC reviews and affirms the independence of the Company’s independent non-executive Directors. Each director is required to complete a Director’s independence checklist annually to confirm their independence. This checklist is based on guidelines provided in the Code and requires each director to assess whether they consider themselves independent despite not being involved in any relationship which would interfere or be reasonably perceived to interfere with the exercise of independent judgment in carrying out functions as an independent non-executive Director of the Company. Among the items included in the Checklist are disclosure pertaining to any employment, including compensation received from the Company or any of its related corporations, relationship to an Executive Director of the Company or its related corporations, immediate family member employed by the company or any of its related corporations as senior executive officer whose remuneration is determined by the Remuneration Committee, shareholding, or partnership or directorship (including those held by immediate family members) in an organisation to which the Company or its subsidiaries received, significant payments in the current or immediate past financial year. The NC will then review the checklist completed by each director to determine whether the director is independent.
The NC also reviews directors with multiple directorships. With the exception of (i) Mr. Ang Ah Nui who currently holds one concurrent directorship in another company listed on SGX-ST, (ii) Mr. Ko Chuan Aun who currently holds three concurrent directorships in other companies listed on SGX-ST (including as the Chief Executive Officer of Scorpio East Holdings Ltd, a company listed on SGX-ST), and (iii) Mr. Christopher Chong Meng Tak who currently holds five concurrent directorships in other listed companies, the remaining directors do not hold any concurrent directorships in any other listed companies.
The NC is satisfied that the directors with multiple directorships have given adequate time and attention to the affairs of the Company, through attendance at meetings of the Board and Board Committees, including electronic and telephone communications.
Pursuant to Article 91 of the Company’s Articles of Association, every director (other than the Managing Director) shall retire from office once every three years and for this purpose, one-third of the Board are to retire from office by rotation and be subject to re-election at the Company’s Annual General Meeting (“AGM”). Article 97 of the Company’s Articles of Association also provides that a newly appointed director must retire and submit himself for re-election at the next AGM following his appointment and such re-election shall not be taken into account in determining the number of directors who are to retire by rotation under Article 91 as set out above. Thereafter, he is subject to re-election at least once in every three years. In addition, pursuant to Section 153 of the Companies Act, Chapter 50, of Singapore, a director of or over
the age of seventy years must retire and submit himself for re-appointment at each AGM. For personal use only use personal For
KOON HOLDINGS LIMITED 41 ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
Directorships or Chairmanships held by the Company’s directors in other listed companies:
Directorship in other listed companies Name of Director Date Appointed/ Current Past 3 years last re-elected Ang Sin Liu April 27, 2012 Nil Nil (Chairman, Non-executive Director) Ang Ah Nui April 27, 2012 ASL Marine Holdings Ltd Nil (Non-executive Director) Tan Thiam Hee July 1, 2008/ Nil Passion Holdings Limited (Managing Director and Chief Executive Officer) April 27, 2009 JES International Holdings Limited Yuen Kai Wing April 27, 2012 Nil Nil (Chief Operating Officer and Executive Director) Oh Koon Sun April 9, 2003/ Nil Nil (Executive Director) April 29, 2011 Oh Keng Lim April 9, 2003/ Nil Nil (Executive Director) March 26, 2010 Christopher Chong Meng Tak April 11, 2003/ ASL Marine Holdings Ltd Xpress Holdings Ltd (Non-executive and Independent Director) April 29, 2011 GLG Corp Ltd1 (resigned with effect from 30 Koda Ltd November 2012) Lorenzo International Limited SKY China Petroleum Ying Li International Real Services Limited Estate Limited Imagi International Holdings Limited2 Win Fund3 Glenda Mary Sorrell-Saunders April 11, 2003/ Nil Nil (Non-executive and Independent Director) March 26, 2010 Ko Chuan Aun January 16, 2012 Super Group Ltd Brothers (Holdings) Limited (Non-executive and Independent Director) Scorpio East Holdings Ltd (resigned with effect from 2 Sah Teh Limited October 2012)
1 Listed in Australia Stock Exchange 2 Listed in Hong Kong Stock Exchange 3 Listed in Luxembourg Stock Exchange
Board Performance
The Nominating Committee, in considering the re-appointment of a Director, must evaluate the Director’s contribution and performance, such as his or her attendance at meetings of the Board or Board Committees, and also his or her participation, candour and other contributions.
The Nominating Committee assesses the Board’s performance taking into consideration quantitative and qualitative criteria
such as the success of the strategic and long-term objectives set by the Board. For personal use only use personal For The performance criteria includes the evaluation of the size and composition of the Board, the Board’s access to information, Board processes and accountability and the Board’s performance in relation to discharging its principal functions and responsibilities, the Directors’ standards of conduct and financial targets such as return on assets, return on equity and the Company’s share price performance vis-a-vis the Singapore Straits Times Index and a benchmark index of its industry peers. In assessing the individual Director’s performance and the effectiveness of the Board, the
KOON HOLDINGS 42 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
NC takes into consideration the individual Director’s industry knowledge and/or functional expertise, contribution and workload requirements. The Board, however, notes that the financial indicators provide only a snapshot of the Company’s performance, and do not fully reflect on-going risk or measure the sustainable long-term wealth and value creation of the Company.
Directors’ Attendance at Board and Committee Meetings
The Board conducts regular scheduled meetings and ad-hoc Board meetings are convened when warranted by circumstances relating to matters that are material to the Group. Telephonic attendance and video conferencing at Board meetings are allowed under the Company’s Articles of Association. The following table sets out the Directors’ attendance at Board and Committee meetings held in 2012.
No. of meetings attended Name Main Board Audit Committee Nominating Remuneration Committee Ang Sin Liu# 21*–– Ang Ah Nui# 221*1 Yao Chee Liew@ 11–– Tan Thiam Hee 4 3* 2* 1* Yuen Kai Wing# 2 2*1*1* Oh Koon Sun 4 3* 2* 1* Oh Keng Lim 4 3* 2* 1* Christopher Chong Meng Tak 4311 Glenda Mary Sorrell-Saunders 4321 Ko Chuan Aun 4 3* 2 1*
No. of meetings held 4321
Note: * Attended as an invitee to meeting # Mr Ang Sin Liu, Mr Ang Ah Nui and Mr Yuen Kai Wing were only appointed as directors on April 27, 2012. @ Mr Yao Chee Liew resigned as director on April 27, 2012.
Training of Directors
The Company does not have a formal training programme for new directors. However, to assist the Board in discharging its duties, a newly appointed director will be briefed on the business operations and regulatory issues relating to the Group. Directors are also informed of regulatory changes affecting the Group. In addition, the Board encourages its members to participate in seminars and receive training to improve themselves in the discharge of their duties as directors.
Access to Information
All Directors have separate, independent and unrestricted access to all levels of senior executives in the Group and the Company Secretaries. All Directors are continuously updated by management on the developments within the Group and are furnished with complete and adequate information in a timely manner to enable full deliberation on the issues to be For personal use only use personal For considered at the respective meetings. Board papers with sufficient background and explanatory information are circulated before each meeting. From time to time, managerial staff, lawyers, the Company’s auditors or external consultants engaged on specific projects are invited to attend the Board and Board Committee meetings so as to provide additional insight into the matters for discussions.
KOON HOLDINGS LIMITED 43 ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
Hence, the Board is of opinion that, under the present arrangement, information provided to the Board is sufficient and timely for it to perform its duties effectively.
Access to Independent Professional Advice
Any director has the right to seek independent legal, accounting or other professional assistance at Company’s expense on matters relevant to carrying out their duties as a director. Directors must ensure that the costs are reasonable and must inform the Chairman and seek approval from the Board before such advice is sought.
Remuneration
The Remuneration Committee comprises three members, all of whom are non-executive Directors and two of whom are Independent Directors. The Remuneration Committee is chaired by Mr Christopher Chong Meng Tak and has as its members, Mr Ang Ah Nui and Ms Glenda Mary Sorrell-Saunders.
The Remuneration Committee has a formal written Charter and, accordingly, is mainly responsible for:
(i) in consultation with the Chairman of the Board, recommending to the Board for its endorsement, a framework of remuneration for the Board and the key executives of the Company, covering all aspects of remuneration, including and without limitation, Director’s fees, salaries, allowances, bonuses, employees performance shares and benefits-in-kind;
(ii) determining the specific remuneration packages for each Executive Director and the Chief Executive Officer of the Company (or Executive of similar rank if he is not an Executive Director);
(iii) reviewing the remuneration of senior management/key executives;
(iv) proposing, for approval by the Board, appropriate and meaningful measures for assessing the Executive Directors’ performance;
(v) considering what compensation commitments the Executive Directors’ contracts of service, if any, would entail in the event of early termination;
(vi) considering whether Directors should be eligible for benefits under long-term incentive schemes;
(vii) overseeing the administration of the Company’s Employees Performance Shares Plan (“EPSP”), including without limitation, as follows:
(a) identifying Directors and employees of the Company and its related companies to whom employee performance shares should be granted,
(b) determining the number, the timing and the vesting period for the granting of employee performance shares.
The Group’s remuneration policy is to provide remuneration packages appropriate to attract, retain and motivate the
For personal use only use personal For Executive Directors and senior executives required to run the Group successfully. The Company has in place service contracts for each of its Executive Directors which set out the framework of their remuneration. The Remuneration Committee will, upon the expiry of such service contracts, recommend to the Board a framework for the remuneration of such Executive Directors. Senior executives, including the Executive Directors, are also subject to an annual performance review in which performance is measured against objectives related to the Company’s strategy and business plans. The performance reviews for the financial year ended 31 December 2012 have been satisfactorily completed.
KOON HOLDINGS 44 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
The Company has replaced the previous Employee Share Option Scheme with the Employee Performance Shares Plan (“EPSP”) which was approved by the Shareholders of the Company at an Extraordinary General Meeting held on October 12, 2009. Since the approval and adoption of the EPSP, as at the date of annual report 1,489,000 ordinary shares have been issued under EPSP. More information regarding the EPSP can be found in Report of the Directors.
Directors’ Fees and Incentives
The Executive Directors do not receive directors’ fees. The fees for non-executive Directors comprised a basic retainer fee and additional fees for other appointments.
The remuneration bands of the Directors and top five Key Executives of the Group for the financial year ended December 31, 2012 are:–
Remuneration Bands Salary Bonus Fees Other Total % % % benefits % % Directors of the Company S$250,000 to S$499,000
Tan Thiam Hee 76% 18% – 6% 100% Oh Koon Sun 78% 16% – 6% 100% Oh Keng Lim 78% 16% – 6% 100% Yuen Kai Wing 65% – – 35% 100%
Up to S$250,000
Ang Sin Liu – – 100% – – Ang Ah Nui – – 100% – – Yao Chee Liew# – – 100% – – Christopher Chong Meng Tak – – 100% – – Glenda Mary Sorrell-Saunders – – 100% – – Ko Chuan Aun – – 100% – –
Top Five Key Executives of the Group S$250,000 to S$499,000
Dennis Yong 93% – – 7% 100%
Top Five Key Executives of the Group Up to S$250,000
Ben Teo Teck Sing 72% 17% – 11% 100% Tay Tiak Poh 77% 13% – 10% 100% Jessie Ong Soon Tee 79% 18% – 3% 100%
For personal use only use personal For Ben Tan 81% 19% – – 100%
# Mr Yao Chee Liew resigned as director on April 27, 2012.
KOON HOLDINGS LIMITED 45 ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
Accountability
The Board recognises its responsibility to provide shareholders with a balanced and understandable assessment of the Group’s performance, position and prospects on a regular basis. Further, the Board has adopted the practice of communicating major developments in its business and operations to shareholders, the ASX and SGX-ST, employees and other stakeholders.
Audit Committee
The Audit Committee comprises three members, all of whom are non-executive Directors and two of whom are Independent Directors. The Audit Committee is chaired by Mr Christopher Chong Meng Tak and has as its members Mr Ang Ah Nui and Ms Glenda Mary Sorrell-Saunders. The Audit Committee has a formal written Charter and, accordingly, is mainly responsible for reviewing and approving the following:
Internal Control
(i) ensuring that a review (which may be carried out by the internal auditors) of the effectiveness of the company’s material internal controls, including financial, operational and compliance controls, and risk management, is conducted at least annually;
(ii) appraising and reporting to the Board on the audit undertaken by the external auditors and internal auditors, the adequacy of disclosure of information and appropriateness/quality of the system of management and internal control;
(iii) approving changes or new policies related to its area of responsibility.
Internal and External Audit
(i) ensuring that the internal audit function is adequately resourced and has appropriate standing within the Company;
(ii) reviewing and approving the audit plans of the external and internal auditors in ensuring that audit resources are allocated according to the key business and financial risk areas, focusing on optimum coverage and efforts between the external and internal auditors;
(iii) reviewing the internal auditors’ evaluation of the system of internal accounting controls;
(iv) reviewing the reports of the external auditors and internal auditors and considering the effectiveness of responses/ actions taken by management on the audit recommendations and observations;
(v) reviewing the assistance given by management to the external and internal auditors;
(vi) reviewing the cost effectiveness of the audit, the independence and objectivity of the external auditors annually, and the nature and extent of non-audit services supplied by the external auditors, seeking to balance the maintenance
of objectivity and value for money; For personal use only use personal For (vii) recommending to the Board the appointment, reappointment or removal of the external auditors for the ensuing year, and to reviewing and recommending for the approval of the Board the remuneration and terms of engagement of the external auditors;
KOON HOLDINGS 46 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
(viii) reviewing the suitability of audit firms to meet its audit obligations, having regard to the adequacy of the resources and experience of the audit firm and the audit engagement partner assigned to the audit, the firm’s other audit engagements, the scope and results of audit, the cost effectiveness, the independence and objectivity of the auditors and the number and experience of supervisory and professional staff assigned to the particular audit.
Financial Reporting
(i) reviewing and approving/recommending for approval the half yearly financial statements (including the annual financial statements and, in particular, any significant financial reporting issues and judgments to ensure the integrity of the financial statements), the annual report of the Company and any formal announcements relating to the Company’s financial performance with management and the external auditors.
The Audit Committee has full access to, and co-operation of, the management and has been given the resources required for it to discharge its functions properly. It may also invite any Director and Executive Officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee Chairman and the Audit Committee. The external auditors and internal auditors meet with the Audit Committee without the presence of management at least once annually.
Diversity Policy
The Company has not established a policy concerning diversity because diversity issues are covered under the Companies Code of Conduct, Mission, Vision and Value Statements already. As a result of the Company not having a formal policy on diversity, there are no measurable objectives for achieving gender diversity. However, the Company is an equal opportunity employer and has no discrimination against gender, age or race. The Board has nine Board members with one member being female.
Across the Group the current gender split as at December 31, 2012 is as follows:
Female Male All employees 66 959 Senior Executives –6 Managers 14 27 Directors 19
Recognising and Managing Risks
The Management is responsible for identifying and managing risks. The Board is responsible for satisfying itself that a sound system of risk oversight and management exists and that internal controls are effective. In addition to maintaining appropriate insurance and other risk management measures, identified risks are managed through:
• Established policies and procedures for the management of funding and financial instruments.
• Standards and procedures in relation to environmental and health and safety matters.
• Training programs in relation to legal and compliance issues. For personal use only use personal For • Procedures requiring significant capital and revenue expenditure and other contractual commitments are approved at an appropriate level or by the Board.
• Risk management systems and policies that govern the management of risk.
KOON HOLDINGS LIMITED 47 ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
The internal audit function as part of its activities monitors the management’s actions to manage risk. The external and internal audit functions are separate and independent of each other.
The Board and the Audit Committee are satisfied that the Company’s framework of internal controls is adequate to provide reasonable assurance of the integrity, effectiveness and efficiency of the Company in safeguarding its assets and Shareholders’ investments. Such framework serves to provide reasonable assurance against material misstatement or loss.
The Board has received assurance from the CEO and the CFO:
• That the Company’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and are in accordance with the relevant accounting standards.
• That the risk management and internal compliance and control systems which implement the policies adopted by the Board in relation to financial reporting risks are sound, appropriate and operating efficiently and effectively in all material respects.
Code of Conduct
Conduct of Directors and employees is addressed in “Vision and Mission Statement” on page (i). This statement outlines expected conduct and ethical behaviour expected from Directors, Management and all employees.
Communication with Shareholders
While there are no written policies in relation to the Company’s communication with its shareholders, the Board is mindful of its obligations to provide timely disclosure of material information presented in a fair and objective manner to shareholders and does so through the Annual Report, results announcements, its website at www.koon.com.sg and other announcements on developments within the Group or in relation to disclosures required by the stock markets. The information is released through ASX and SGX-ST websites and is also available on the Company’s website.
The date of the release of result announcement is disclosed before the date of announcement through ASX and SGX-ST websites. On the day of announcement, the financial statements as well as the accompanying press release and/or presentation slides are released onto the ASX and SGX-ST websites. For half and full year results announcements, results briefing by Management is held for media and analysts to explain the financial results and provide insight to the development and outlook of the industry.
The Company also engages an external investor relation consultant firm to support the Group in promoting communication with shareholders and investment community.
The Board regards the Annual General Meeting (“AGM”) as an opportunity to communicate directly with shareholders and encourages greater shareholder participation. The Chairman and other Directors attend the AGM and are available to answer questions from shareholders at the AGM. The external auditors are also present to assist Directors in addressing any relevant queries from shareholders.
For personal use only use personal For All shareholders will receive the annual report of the Company and notice of AGM by post and through notices published in the newspapers within the mandatory period. The shareholders can also access information on the Group at the Group’s corporate website at www.koon.com.sg. The website provides, inter alia, all publicly disclosed financial information, corporate announcements, press release, annual reports and profiles of the Group.
KOON HOLDINGS 48 LIMITED ANNUAL REPORT 2012 CORPORATE GOVERNANCE STATEMENT
Interested Person Transactions
There were no material contracts entered into by the Group involving the interest of the substantial shareholder or Director, which were either subsisting at the end of the financial year or, entered into since the end of the previous financial year.
Dealing in Company’s Securities by Directors and Employees
A policy regarding Directors and employees trading in the Company’s securities was approved by the Board in February 2011 in accordance with new ASX Listing Rules which came into effect on January 1, 2011.
The policy is provided to all Directors and employees.
The Share Trading Policy restricts Directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the securities’ price.
Under the Policy, Directors and Prescribed Employees are restricted from dealing in the Company’s securities during the following Blackout Periods, except in exceptional circumstances:
– The period commencing two weeks before the half year results and one month before the full year results are released and ending on the date of their release; and
– Any other period determined by the Board from time to time.
A copy of the Share Trading Policy can be found on the Company website. For personal use only use personal For
KOON HOLDINGS LIMITED 49 ANNUAL REPORT 2012 FINANCIAL CONTENTS PAGE
Report of the directors 51-56
Statement of directors 57
Independent auditors’ report 58-59
Statements of financial position 60-61
Consolidated statement of comprehensive income 62
Statements of changes in equity 63
Consolidated statement of cash flows 64-65
Notes to financial statements 66-126 For personal use only use personal For
KOON HOLDINGS 50 LIMITED ANNUAL REPORT 2012 REPORT OF THE DIRECTORS
The directors present their report together with the audited consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended December 31, 2012.
1 Directors
The directors of the Company in office at the date of this report are:
Ang Sin Liu (Appointed on April 27, 2012) Ang Ah Nui (Appointed on April 27, 2012) Tan Thiam Hee Yuen Kai Wing (Appointed on April 27, 2012) Oh Koon Sun Oh Keng Lim Christopher Chong Meng Tak Glenda Mary Sorrell-Saunders Ko Chuan Aun
2 Arrangements to enable directors to acquire benefits by means of the acquisition of shares and debentures
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate.
3 Directors’ interests in shares and debentures
The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:
Shareholdings registered in name of director At beginning of year or date At Name of directors and companies of appointment, At end January 21, in which interests are held if later of year 2013 Koon Holdings Limited (Ordinary shares)
Ang Sin Liu 8,038,000 12,860,800 12,860,800 Ang Ah Nui 39,452,930 122,571,819 122,571,819 Tan Thiam Hee 546,000 921,000 951,000 Oh Keng Lim 10,119,996 10,139,996 10,159,996
For personal use only use personal For Oh Koon Sun 7,165,378 7,185,378 7,205,378 Christopher Chong Meng Tak 160,000 160,000 160,000
KOON HOLDINGS LIMITED 51 ANNUAL REPORT 2012 REPORTREPORT OOFF THE DIREDIRECTORSCTORS
4 Directors’ receipt and entitlement to contractual benefits
Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation 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 financial statements.
5 Employee performance share plan
(a) Terms and conditions of the Koon Holdings Employee Performance Share Plan (“Koon EPSP”)
The Koon EPSP was approved by the Shareholders of the Company at an Extraordinary General Meeting held on October 12, 2009.
The terms of the Koon EPSP include the following:
(1) Eligibility
(i) Employees who are eligible to participate in the Koon EPSP must:
– be confirmed in his employment with the Group; – have attained the age of 21 years on or before the date of award; and – not be an un-discharged bankrupt.
(ii) An executive director who meets the eligibility criteria above is eligible to participate in the Koon EPSP. However, controlling shareholders (including controlling shareholders who are executive directors) and their associates are not eligible to participate in the Koon EPSP.
(iii) Non-executive directors are not eligible to participate in the Koon EPSP.
(2) Awards
(i) Awards represent the right of a participant to receive fully paid-up shares free of charge, provided certain prescribed performance target(s) are met and upon the expiry of the prescribed vesting periods (if any).
(ii) The Remuneration Committee shall decide, in relation to each award to be granted to a Participant:
– the date on which the award will be granted; – the number of shares which are the subject of the award; – the prescribed performance targets; – the performance period during which the prescribed performance targets are to be satisfied;
For personal use only use personal For – the imposition of a vesting period and the duration of this vesting period, if any; – the extent to which the shares under that award shall be released on the or prescribed performance target(s) being satisfied (whether fully or partially) exceeded, as the case may be, at the end of the prescribed performance period and upon the expiry of the prescribed vesting period; and – such other conditions as the Remuneration Committee may deem appropriate, in its absolute discretion.
KOON HOLDINGS 52 LIMITED ANNUAL REPORT 2012 REPORT OF THE DIRECTORS
(3) Selection of Participants
The Koon EPSP is administrated by the Remuneration Committee whose members are:
Christopher Chong Meng Tak – Chairman Glenda Mary Sorrell-Saunders Ang Ah Nui
A participant of the Koon EPSP who is a member of the Remuneration Committee shall not be involved in the deliberation of the Award to be granted to that member of the Remuneration Committee.
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 with the Koon EPSP shall be determined at the absolute discretion of the Remuneration Committee, which shall take into account criteria such as his rank, job performance, years of service and potential for future development, his contribution to the success and development of the Group and the extent of effort required to achieve the performance target within the performance period.
(4) Timing
Awards may be granted at any time in the course of a financial year. Any Award made but prior to the vesting shall lapse, inter alia, if any of the following events occur:
(i) the misconduct of a participant; (ii) the termination of the employment of a participant; (iii) the bankruptcy of a participant; (iv) the retirement, ill health, injury, disability or death of a participant; (v) the participant, being an executive director, ceasing to be a director of the Company for any reason whatsoever; (vi) a winding-up of the Company; and (vii) any other event approved by the Remuneration Committee.
(5) Size and Duration of the Koon EPSP
The total number of shares which may be granted under the Koon EPSP shall not exceed 5% of the issued ordinary shares of the Company on the day preceding the relevant date of award. In line with the SGX-ST Listing Manual requirements, in the event the Company establishes any other share plan(s) or any other option scheme(s), the aggregate of shares under all such share plan(s) and options granted under all such option scheme(s) will not exceed 15%.
The Company may also deliver shares pursuant to awards granted under the Koon EPSP in the form of existing shares purchased from the market or from shares held in treasury. Such methods will not be subject to any limit as they do not involve the issuance of any new shares. The Company shall obtain shareholders’ approval through a Share Buyback Mandate prior to purchasing its shares
from the market. For personal use only use personal For The Koon EPSP will continue in force at the discretion of the Remuneration Committee up to a maximum of 10 years commencing from the date of its adoption by the Company provided that the Koon EPSP may continue beyond this stipulated period with the approval of its shareholders in a general meeting and the required approval by relevant authorities.
Notwithstanding the expiry or termination of the Koon EPSP, any award made prior to expiry or termination will remain valid.
KOON HOLDINGS LIMITED 53 ANNUAL REPORT 2012 REPORTREPORT OOFF THE DIREDIRECTORSCTORS
(6) Operation of the Koon EPSP
Awards granted under the Koon EPSP to whom they are given shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the approval of the Remuneration Committee. However the Shares granted to a Participant pursuant to a grant of the Award may be transferred, charged, assigned, pledged otherwise disposed of, in whole or in part.
The terms of employment or appointment of a Participant in the Koon EPSP shall not be affected by any Award to be made therein.
(b) In 2011, the Remuneration Committee approved the grant of awards comprising 360,000 shares to selected employees of the Company and its subsidiaries which will vest equally over a period of two years. During the year, 30,000 shares were forfeited due to the resignation of employees.
110,000 (2011: 110,000) ordinary shares have been issued pursuant to the Koon EPSP.
Accumulated shares awarded were as follows:
Number of shares Not issued Issued 2012 2011 2012 2011 Directors: Tan Thiam Hee 30,000 60,000 110,000 80,000 Oh Koon Sun 20,000 40,000 84,000 64,000 Oh Keng Lim 20,000 40,000 80,000 60,000 70,000 140,000 274,000 204,000
Other members of key management 165,000 200,000 260,000 225,000 Other employees 205,000 240,000 680,000 675,000 Total number of shares granted under the Koon EPSP 440,000 580,000 1,214,000 1,104,000
(c) At the end of the financial year, there were no unissued shares of the Company or any corporations in the
Group under option. For personal use only use personal For
KOON HOLDINGS 54 LIMITED ANNUAL REPORT 2012 REPORT OF THE DIRECTORS
6 Audit committee
The Audit Committee of the Company is chaired by Christopher Chong Meng Tak, and includes Glenda Mary Sorrell-Saunders and Ang Ah Nui. Christopher Chong Meng Tak and Glenda Mary Sorrell-Saunders are independent directors. The Audit Committee has met four times since the last AGM and had reviewed the following, where relevant, with the executive directors and external auditors of the Company:
(a) the audit plans of the internal and external auditors;
(b) the reports of the internal auditors’ examination and evaluation of the Group’s systems of internal accounting controls;
(c) the Group’s financial and operating results and accounting policies;
(d) the statement of financial position and statement of changes in equity of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and the external auditors’ report on those financial statements;
(e) the half-yearly and annual announcements as well as the related press release on the results and financial position of the Company and the Group;
(f) the co-operation and assistance given by the management to the Group’s external auditors; and
(g) the re-appointment of the external auditors of the Group.
The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its functions properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee.
The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-
appointment as external auditors of the Group at the forthcoming AGM of the Company. For personal use only use personal For
KOON HOLDINGS LIMITED 55 ANNUAL REPORT 2012 REPORTREPORT OOFF TTHEHE DIREDIRECTORSCTORS
7 Auditors
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
Tan Thiam Hee
Yuen Kai Wing
March 21, 2013 For personal use only use personal For
KOON HOLDINGS 56 LIMITED ANNUAL REPORT 2012 STATEMENT OF DIRECTORS
In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company set out on pages 60 to 126 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2012 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the 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 when they fall due.
ON BEHALF OF THE DIRECTORS
Tan Thiam Hee
Yuen Kai Wing
March 21, 2013 For personal use only use personal For
KOON HOLDINGS LIMITED 57 ANNUAL REPORT 2012 INDEPENDENT AAUDITORS’UDITORS’ REPREPORTORT to the members of Koon Holdings LimitedLimited
Report on the Financial Statements
We have audited the accompanying financial statements of Koon Holdings Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and the Company as at December 31, 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 60 to 126.
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 reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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 auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2012 and of the results, changes in equity and cash flows of the Group and changes in equity of the
Company for the year ended on that date. For personal use only use personal For
KOON HOLDINGS 58 LIMITED ANNUAL REPORT 2012 INDEPENDENT AUDITORS’ REPORT to the members of Koon Holdings Limited
Emphasis of Matter
We draw attention to Note 39(b) to the financial statements which sets out the basis of management’s assessment on an event after the reporting period. Impairment losses have been recognised on the relevant carrying amounts of the trade receivables and inventories relating to a property project as at the end of the reporting period as management has determined that the amounts are not recoverable. Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Deloitte & Touche LLP Public Accountants and Certified Public Accountants Singapore
Patrick Tan Hak Pheng Partner Appointed on June 1, 2008
March 21, 2013 For personal use only use personal For
KOON HOLDINGS LIMITED 59 ANNUAL REPORT 2012 STATEMENTSSTATEMENTS OOFF FINANFINANCIALCIAL PPOSITIONOSITION December 31,31, 2012
Group Company Note 2012 2011 2012 2011 $’000 $’000 $’000 $’000 ASSETS Current assets Cash and cash equivalents 6 18,543 19,620 2,275 6,212 Pledged fixed deposits 6 3,885 70 – – Trade receivables 7 58,086 35,169 – – Other receivables 8 6,759 5,303 15,151 14,925 Inventories 9 14,120 10,549 – – Contract work-in-progress 10 20,949 8,434 – – Held for trading investments 11 23 36 – – Total current assets 122,365 79,181 17,426 21,137
Non-current assets Other receivables 8 8,384 6,153 1,500 – Development properties 12 16,973 – – – Subsidiaries 13 – – 56,802 25,197 Associates 14 * 8,145 – 9,321 Joint venture 15 – – – – Property, plant and equipment 16 76,077 25,683 483 373 Available-for-sale investments 17 150 150 – – Goodwill on consolidation 18 5,438 1,902 – – Deferred income tax 24 3,188 964 – – Total non-current assets 110,210 42,997 58,785 34,891
Total assets 232,575 122,178 76,211 56,028 For personal use only use personal For
KOON HOLDINGS 60 LIMITED ANNUAL REPORT 2012 STATEMENTS OF FINANCIAL POSITION December 31, 2012
Group Company Note 2012 2011 2012 2011 $’000 $’000 $’000 $’000 LIABILITIES AND EQUITY Current liabilities Current portion of long-term bank loans and bills payable 19 26,266 8,851 – – Trade payables 20 71,706 41,326 – – Provision for loss on sales commitments 21 600 – – – Other payables 22 15,461 7,643 18,809 15,039 Contract work-in-progress 10 1,164 1,906 – – Current portion of finance leases 23 5,504 1,310 80 43 Income tax payable 606 407 6 – Total current liabilities 121,307 61,443 18,895 15,082
Non-current liabilities Long-term bank loans 19 7,749 750 – – Finance leases 23 25,348 2,807 201 123 Other payables 22 93 – – – Deferred income tax 24 2,049 1,839 – – Total non-current liabilities 35,239 5,396 201 123
Capital and reserves Share capital 25 25,373 7,030 25,373 7,030 Capital reserve 26 13,305 13,006 13,006 13,006 Accumulated profits 31,230 32,826 18,736 20,787 Translation reserve (523) (61) – – Equity attributable to owners of the Company 69,385 52,801 57,115 40,823 Non-controlling interests 6,644 2,538 – – Total equity 76,029 55,339 57,115 40,823
Total liabilities and equity 232,575 122,178 76,211 56,028
* Less than $1,000 For personal use only use personal For
See accompanying notes to financial statements.
KOON HOLDINGS LIMITED 61 ANNUAL REPORT 2012 CONSOLIDATED STATEMENTSTAT OF COMPREHENSIVE ININCOMECOME YearYear endedended DDecemberecember 3131,, 20120122
Note 2012 2011 $’000 $’000 Revenue 27 212,724 88,055 Cost of sales (192,126) (79,832) Gross profit 20,598 8,223
Other income 28 2,994 14,038 Distribution costs (3,438) (1,195) Administrative expenses (20,991) (13,129) Finance costs 29 (1,496) (240) Share of loss of associate 14 (76) (961)
(Loss) Profit before income tax 30 (2,409) 6,736
Income tax 31 2,432 797
Profit for the year 23 7,533
Other comprehensive income: Exchange difference on translation of foreign operation, net of tax (672) (51)
Total comprehensive income for the year (649) 7,482
Profit for the year attributable to: Owners of the Company 46 7,605 Non-controlling interests (23) (72) 23 7,533
Total comprehensive income attributable to: Owners of the Company (416) 7,554 Non-controlling interests (233) (72) (649) 7,482
Earnings per share (cents): 32 – Basic 0.03 4.63
– Diluted 0.03 4.62 For personal use only use personal For
See accompanying notes to financial statements.
KOON HOLDINGS 62 LIMITED ANNUAL REPORT 2012 STATEMENTS OF CHANGES IN EQUITY Year ended December 31, 2012
Attributable Non- Share Capital Accumulated Translation to owners of controlling capital reserve profits reserve the Company interests Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group
Balance at January 1, 2011 6,998 13,006 27,682 (10) 47,676 2,103 49,779
Issue of share capital (Note 25) 32 – – – 32 – 32 Acquisition of subsidiaries (Note 34) – – – – – 1,054 1,054 Total comprehensive income for the year – – 7,605 (51) 7,554 (72) 7,482 Dividends (Note 38) – – (2,461) – (2,461) – (2,461) Effects of acquiring non-controlling interests in a subsidiary – – – – – (547) (547)
Balance at December 31, 2011 7,030 13,006 32,826 (61) 52,801 2,538 55,339
Issue of share capital (Note 25) 18,343 – – – 18,343 – 18,343 Share-based payment (Note 26) – 283 – – 283 114 397 Acquisition of subsidiaries (Note 34) – – – – – 4,188 4,188 Total comprehensive income for the year – – 46 (462) (416) (233) (649) Dividends (Note 38) – – (1,642) – (1,642) – (1,642) Effects of dilution of interest in a subsidiary – 16 – – 16 37 53
Balance at December 31, 2012 25,373 13,305 31,230 (523) 69,385 6,644 76,029
Company
Balance at January 1, 2011 6,998 13,006 9,043 – 29,047 – 29,047
Issue of share capital (Note 25) 32 – – – 32 – 32 Total comprehensive income for the year – – 14,205 – 14,205 – 14,205 Dividends (Note 38) – – (2,461) – (2,461) – (2,461)
Balance at December 31, 2011 7,030 13,006 20,787 – 40,823 – 40,823
Issue of share capital (Note 25) 18,343 – – – 18,343 – 18,343 Total comprehensive income
For personal use only use personal For for the year – – (409) – (409) – (409) Dividends (Note 38) – – (1,642) – (1,642) – (1,642)
Balance at December 31, 2012 25,373 13,006 18,736 – 57,115 – 57,115
See accompanying notes to financial statements.
KOON HOLDINGS LIMITED 63 ANNUAL REPORT 2012 CONSOLIDATEDCONSOLIDATED SSTATEMENTTATEMENT OOFF CCASHASH FLFLOWSOWS YearYear ended December 31,31, 20120122
2012 2011 $’000 $’000 Operating activities (Loss) Profit before income tax (2,409) 6,736 Adjustments for: Depreciation expense 10,010 5,159 Dividend income from available-for-sale investment – (6,500) Provision for anticipated losses on projects 1,465 1,966 Allowance for doubtful trade receivables 2,242 – Allowance (Reversal of allowance) for inventories 2,660 (317) Provision for loss on sales commitment 600 – Gain on disposal of non-current assets classified as held-for-sale – (5,602) Loss (Gain) on disposal of property, plant and equipment 621 (76) Interest income (740) (466) Interest expense 1,496 240 Charge to profit or loss on held for trading investments – 13 Gain on disposal of held for trading investment (7) – Share-based payment expense 397 64 Share of loss of associate 76 961 Impairment loss on available-for-sale investment – 500 Gain on deemed disposal of previously held interest in associate (561) – Impairment loss on property, plant and equipment 147 – Operating cash flows before movements in working capital 15,997 2,678
Trade receivables (24,950) (9,590) Other receivables 3,770 2,326 Contract work-in-progress (14,722) 2,096 Inventories (6,157) (5,484) Trade payables 15,495 10,280 Other payables 608 2,046 Cash (used in) generated from operations (9,959) 4,352
Income tax refund (paid) 617 (673)
Net cash (used in) from operating activities (9,342) 3,679 For personal use only use personal For
KOON HOLDINGS 64 LIMITED ANNUAL REPORT 2012 CONSOLIDATED STATEMENT OF CASH FLOWS Year ended December 31, 2012
2012 2011 $’000 $’000 Investing activities Acquisition of subsidiaries (Note 34) 3,333 (1,571) Deposit paid for acquisition of non-controlling interest (1,500) – Acquisition of interest in associate – (4,702) Acquisition of available-for-sale investment – (150) Proceeds on disposal of property, plant and equipment 720 323 Purchase of property, plant and equipment (Note A) (16,134) (6,306) Purchase of properties under development (16,973) – Proceeds on disposal of held for trading investment 20 – Dilution of equity shares 37 – Proceeds on disposal of non-current assets classified as held-for-sale – 7,500 Loan to investee company (598) (6,153) Interest received 308 413 Net cash used in investing activities (30,787) (10,646)
Financing activities Issue of share capital 18,343 – Advance from non-controlling interest 1,400 – Repayment of obligations under finance lease (Note A) (2,549) (1,455) Proceeds from bank loans 15,889 2,904 Repayment of bank loans (7,295) (215) Proceeds from bills payable 64,196 13,768 Repayment of bills payable (48,832) (8,214) Interest paid (1,496) (240) Decrease (Increase) in pledged fixed deposits 544 (18) Dividend paid (1,642) (2,461) Net cash from financing activities 38,558 4,069
Net decrease in cash and cash equivalents (1,571) (2,898) Cash and cash equivalents at beginning of year 19,620 22,518 Effects of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies 494 – Cash and cash equivalents at end of year 18,543 19,620
Note A – Purchase of property, plant and equipment
During the year, the Group acquired property, plant and equipment with an aggregate cost of $39,135,000 (2011: $8,520,000) of which $23,001,000 (2011: $2,214,000) was acquired under finance lease arrangement. Cash payment of
For personal use only use personal For $16,134,000 (2011: $6,306,000) was made for the purchase of property, plant and equipment.
See accompanying notes to financial statements.
KOON HOLDINGS LIMITED 65 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
1 General
The Company (Registration No. 200303284M) is incorporated in Singapore with its registered office and principal place of business at 11 Sixth Lok Yang Road, Singapore 628109. The Company is listed on the Australian Stock Exchange and on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”).
The principal activity of the Company is that of investment holding.
The principal activities of the subsidiaries are disclosed in Note 13 to the financial statements.
The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended December 31, 2012 were authorised for issue by the Board of Directors on March 20, 2013.
2 Summary of significant accounting policies
BASIS OF ACCOUNTING – The financial statements have been prepared in accordance with the historical cost basis, except as disclosed in accounting policies note below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).
ADOPTION OF NEW AND REVISED STANDARDS – On January 1, 2012, the Group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are effective from that date and are relevant to its operations. The adoption of these new/revised FRS and INT FRS does not result in changes to the Group’s accounting policies and has no material effect on the amounts reported for the current or prior periods.
At the date of authorisation of these financial statements, the following FRS and amendments to FRS that are relevant to the Group were issued but not effective:
• Amendments to FRS 1 Presentation of Financial Statements – Amendments relating to Presentation of Items of Other Comprehensive Income (“OCI”) • FRS 19 Employment benefits • FRS 32 Offsetting of Financial Assets and Financial Liabilities • FRS 107 Disclosures – Offsetting of Financial Assets and Financial Liabilities • FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements • FRS 111 Joint Arrangements and FRS 28 Investments in Associates and Joint Ventures • FRS 112 Disclosure of Interests in Other Entities • FRS 113 Fair Value Measurements
Consequential amendments were also made to various standards as a result of the new standard/revised standards.
Management anticipates that the adoption of the above FRSs and amendments to FRS in future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial
application except for the following: For personal use only use personal For
KOON HOLDINGS 66 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Amendments to FRS 1 Presentation of Financial Statements – Amendments relating to Presentation of Items of Other Comprehensive Income (“OCI”)
The amendment on Other Comprehensive Income (“OCI”) presentation will require the Group to present in separate groupings, OCI items that might be recycled i.e., reclassified to profit or loss (e.g., those arising from cash flow hedging, foreign currency translation) and those items that would not be recycled (e.g. revaluation gains on property, plant and equipment under the revaluation model). The tax effects recognised for the OCI items would also be captured in the respective grouping, although there is a choice to present OCI items before tax or net of tax.
Changes arising from these amendments to FRS 1 will take effect from financial years beginning on or after July 1, 2012, with full retrospective application.
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12 Consolidation – Special Purpose Entities.
FRS 110 defines the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated financial statements. It also provides more extensive application guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate financial statements.
FRS 110 will take effect from financial years beginning on or after January 1, 2013, with full retrospective application.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently does not consolidate may qualify for consolidation. The Group do not expect that the adoption of FRS 110 on its investments to have a significant impact on the overall financial statements.
FRS 111 Joint Arrangements and FRS 28 Investments in Associates and Joint Ventures
FRS 111 classifies joint arrangements either as joint operations or joint ventures based on the parties’ rights and obligations under the arrangement. The existence of a separate legal vehicle is no longer the key factor. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets. The Group do not expect that the adoption of FRS 111 on its investments to have a significant impact on the overall financial statements.
FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated with
For personal use only use personal For its interest in subsidiaries, associates, joint arrangements and unconsolidated structured entities. FRS 112 will take effect from financial years beginning on or after January 1, 2013. The Group do not expect that the adoption of FRS 112 to have a significant impact on the overall financial statements.
KOON HOLDINGS LIMITED 67 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
FRS 113 Fair Value Measurement
FRS 113 is a single new Standard that applies to both financial and non-financial items. It replaces the guidance on fair value measurement and related disclosures in other Standards, with the exception of measurement dealt with under FRS 102 Share-based Payment, FRS 17 Leases, net realisable value in FRS 2 Inventories and value- in-use in FRS 36 Impairment of Assets.
FRS 113 provides a common fair value definition and hierarchy applicable to the fair value measurement of assets, liabilities, and an entity’s own equity instruments within its scope, but does not change the requirements in other Standards regarding which items should be measured or disclosed at fair value. FRS 113 will be effective prospectively from annual periods beginning on or after January 1, 2013. Comparative information is not required for periods before initial application.
The Group do not expect that the adoption of FRS 113 to have a significant impact on the financial statements.
BASIS OF CONSOLIDATION – The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interest of non-controlling shareholders that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured (at date of original business combination) either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly
in equity and attributed to owners of the Company. For personal use only use personal For
KOON HOLDINGS 68 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.
In the Company’s financial statements, investments in subsidiaries, associates and joint venture are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.
BUSINESS COMBINATIONS – The accounting treatment adopted for subsidiaries acquired pursuant to the Restructuring Exercise is described in Note 26 to the financial statements. Other than the effect of the Restructuring Exercise, the acquisition of subsidiaries is accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by the Group to the former owners of the acquire, and equity interest issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits
For personal use only use personal For respectively;
• liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment awards transactions with share-based payment awards transactions of the acquirer in accordance with the method in FRS 102 Share-based Payment at the acquisition date; and
KOON HOLDINGS LIMITED 69 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
• assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year from acquisition date.
The accounting policy for initial measurement of non-controlling interests is described above.
FINANCIAL INSTRUMENTS – Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income is recognised on an effective interest rate basis for debt instruments other than those financial instruments “at fair value through profit or loss”.
Financial assets
Investments are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time-frame established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.
Other financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss”, “held-to-maturity investments”, “available-for-sale” financial assets and “loans and receivables”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial
recognition. For personal use only use personal For
KOON HOLDINGS 70 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Financial assets (Continued)
Available-for-sale financial assets
Certain shares held by the Group are classified as being available-for-sale and are stated at fair value. Fair value is determined in the manner described in Note 3. Where reliable fair value estimates are not available, these investments are stated at cost less any impairment losses. Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the other comprehensive income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
• it has been incurred principally for the purpose of selling in the near future; or
• it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and FRS 39 Financial instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as
at FVTPL. For personal use only use personal For Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 3 to the financial statements.
KOON HOLDINGS LIMITED 71 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
Financial assets (Continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and are subject to insignificant changes in fair value.
Loans and receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “Loans and receivables”. Loans and receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investments have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss, is recognised in other comprehensive income.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
For personal use only use personal For entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
KOON HOLDINGS 72 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity investment is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities “at fair value through profit or loss” or other financial liabilities.
Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing in the near future; or
• it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and FRS 39 Financial instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as
For personal use only use personal For at FVTPL.
Financial liabilities at fair value through profit or loss are initially measured at fair value and subsequently stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note 3 to the financial statements.
KOON HOLDINGS LIMITED 73 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
Financial liabilities and equity instruments (Continued)
Other financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method with interest expense recognised on an effective yield basis.
Interest-bearing bank loans and bills payable are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount recognised as a provision and the amount initially recognised less cumulative amortisation in accordance with the revenue recognition policies described below.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
CONSTRUCTION CONTRACTS – Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
LEASES – Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the
For personal use only use personal For leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term on the same basis as the lease income.
KOON HOLDINGS 74 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Financial liabilities and equity instruments (Continued)
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the date of acquisition. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
INVENTORIES – Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.
PROPERTY, PLANT AND EQUIPMENT – Leasehold building for production, rental or administrative purposes, are carried at cost, less depreciation and any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Freehold land is stated at cost, except in the case where an impairment is deemed to have occurred. Loss on the impairment is recognised in profit or loss. Other property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets, other than freehold land and capital work-in-progress, over their estimated useful lives, using the straight-line method, on the following bases:
Freehold buildings – 3.3% Leasehold buildings – 7% (over the terms of lease) Leasehold improvements – 10% or over leasehold period (if shorter)
For personal use only use personal For Plant and machinery – 10% to 20% Barges and tugboats – 6.7% Dump trucks and motor vehicles – 10% Office equipment, furniture and fittings – 10% to 33%
KOON HOLDINGS LIMITED 75 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Fully depreciated assets still in use are retained in the financial statements.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.
DEVELOPMENT PROPERTIES – Development properties are stated at the lower of cost and estimated net realisable value. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing and selling.
Cost comprises costs that relate directly to the development, such as acquisition costs, and related costs that are attributable to development activities and can be allocated to the development project, including attributable borrowings costs (see accounting policy for borrowing costs below).
GOODWILL – Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash- generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or the relevant cash generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
IMPAIRMENT OF NON-FINANCIAL ASSETS EXCLUDING GOODWILL – At the end of each reporting period, the
For personal use only use personal For Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
KOON HOLDINGS 76 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
ASSOCIATES – An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.
INTERESTS IN JOINT VENTURE – A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.
The results and assets and liabilities of joint venture are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in joint venture are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of a joint venture in
For personal use only use personal For excess of the Group’s interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint venture) are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
KOON HOLDINGS LIMITED 77 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Where a group entity transacts with a joint venture of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant joint venture.
PROVISIONS – Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provision for losses on sales commitments represents the estimated losses arising from the difference between the committed selling price and estimated cost of sales for the unfulfilled sales quantities committed at the end of the reporting period.
SHARE-BASED PAYMENTS – The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value of the equity instruments at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods
or the counterparty renders the service. For personal use only use personal For
KOON HOLDINGS 78 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
REVENUE RECOGNITION – Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated rebates and other similar allowances.
Long-term construction contracts
Revenue and profits from long-term construction contracts are recognised based on the percentage of completion as at the end of the reporting period by reference to the proportion of cost incurred to date in relation to the estimated total costs for the respective contracts, provided that the work is at least 20% completed and the outcome can be reliably estimated.
Provision is made in full for estimated losses on uncompleted contracts and liquidated damages in the year in which such losses are anticipated, regardless of the stage of completion of the contracts.
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the entity; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Supply of services and personnel, including real estate brokerage services
Revenue from the supply of services and personnel is recognised when services are rendered.
Supply of machinery and equipment
Revenue from the supply of machinery and equipment is recognised on a straight-line basis over the lease term.
Charter income
Charter income is recognised on a straight-line basis over the term of the charter agreement.
Power station capacity credit
For personal use only use personal For Power station capacity credits are notional units of capacity that are valid for a particular reserve capacity year and are allocated to a specific generating plant by the Independent Market Operator in Australia. Capacity credits revenue is recognised in the month when the benefits are derived.
KOON HOLDINGS LIMITED 79 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
Rental income
Rental income is recognised on a straight-line basis over the lease term.
Dividend income
Dividend income is recognised when the shareholders’ right to receive the payment have been established.
BORROWING COSTS – Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
RETIREMENT BENEFIT COSTS – Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
EMPLOYEE LEAVE ENTITLEMENT – Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.
INCOME TAX – Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary
For personal use only use personal For differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
KOON HOLDINGS 80 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
2 Summary of significant accounting policies (Continued)
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates (and tax laws) that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive income or directly in equity), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION – The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement of financial position of the Company are presented in Singapore dollars, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.
For personal use only use personal For Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
KOON HOLDINGS LIMITED 81 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
2 Summary of significant accounting policies (Continued)
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity under the header of foreign currency translation reserve.
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of applying the Group’s accounting policies which are described in Note 2 above, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
(i) Critical judgements in applying the Group’s accounting policies
The following critical judgement, apart from those involving estimations (see below), has been made by management in the process of applying the Group’s accounting policies and that has the most significant effect on the amounts recognised in the financial statements:
Event after the end of the reporting period
As described in Note 39(b) to the financial statements, management has determined that the carrying
For personal use only use personal For amounts of the certain trade receivables and inventories as at the end of the reporting period are not recoverable and an impairment loss amounting to $2,242,000 and $2,542,000 respectively has been recognised in profit or loss for the year ended December 31, 2012.
KOON HOLDINGS 82 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
3 Critical accounting judgements and key sources of estimation uncertainty (Continued)
(ii) Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
(a) Revenue from contract work-in-progress
As described in Note 2 to the financial statements, revenue and costs associated with a project are recognised as revenue and expenses respectively by reference to the proportion of cost incurred to date in relation to the estimated total costs for the respective contracts, provided that the work is at least 20% completed and the outcome can be reliably estimated. When it is probable that the total project costs will exceed the total project revenue, the expected loss is recognised as an expense immediately. These computations are based on the presumption that the outcome of a project can be estimated reliably.
Management has performed cost studies, taking into account the costs to date and costs to complete each project, foreseeable losses and applicable liquidated damages, if any. Management has also reviewed the status of such projects and is satisfied that the estimates to complete are realistic, and the estimates of total project costs and sales proceeds indicate full project recovery.
(b) Impairment in and fair value of available-for-sale investments
Management has determined that the fair value of the Group’s available-for-sale investments cannot be reliably measured and accordingly, the investments are stated at cost, less impairment, if any.
The carrying amount of available-for-sale investments and impairment loss recognised during the year are disclosed in Note 17 to the financial statements.
(c) Impairment of investment in subsidiaries
Determining whether investments in subsidiaries are impaired requires an estimation of the value in use of those investments. The value-in-use calculation requires the Company to estimate the future cash flows expected from these investment and an appropriate discount rate in order to calculate the present value of the future cash flows. Management has evaluated the recoverability of the investment based on such estimates and is confident that the allowance for impairment, where necessary, is adequate. The carrying amount of the Company’s investment in subsidiaries at the end of the reporting period is disclosed in Note 13 to the financial statements.
(d) Impairment of goodwill on consolidation
Determining whether goodwill on consolidation is impaired requires an estimation of the value in use of the cash-generating units to which such goodwill has been allocated. The value-in-use
For personal use only use personal For calculation requires the Group to estimate the future cash flows expected from the cash-generating units and an appropriate discount rate in order to calculate the present value of the future cash- flows. Management has evaluated the recoverability of the goodwill on consolidation based on such estimates and is confident that the carrying amount of such goodwill will be recovered in full. The carrying amount of goodwill is disclosed in Note 18 to the financial statements.
KOON HOLDINGS LIMITED 83 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
3 Critical accounting judgements and key sources of estimation uncertainty (Continued)
(ii) Key sources of estimation uncertainty (Continued)
(e) Allowance for doubtful debts
The Group makes allowances for doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade and other receivables and doubtful debts expenses in the year in which such estimate has been changed. The carrying amounts of the trade and other receivables are disclosed in Notes 7 and 8 to the financial statements respectively.
(f) Allowance for inventories
Inventories are valued at the lower of the actual cost or net realisable value. Net realisable value is generally the merchandise’s selling price, less costs to sell. The Group reviews its inventory levels in order to identify slow-moving and obsolete items which have market prices that are lower than their carrying amounts. Allowances for inventories are recognised in profit or loss. The carrying amount of the inventories is disclosed in Note 9.
(g) Useful lives and residual value of property, plant and equipment
The Group reassesses the estimated useful lives and residual value of property, plant and equipment at the end of each reporting period. Management is satisfied that there is no change in the useful lives and residual value of the property, plant and equipment from prior year. The carrying amount of property, plant and equipment is disclosed in Note 16 to the financial statements.
(h) Acquisition of subsidiary
As disclosed in Note 34, the net assets acquired and previously held interest in relation to the acquisition of subsidiary are stated at fair value based on the valuation performed by an independent professional valuer. The independent professional valuer determined the fair values based on a method of valuation which involves the use of certain estimates. Management is of the view that
the estimates used by the professional valuers and the fair values are reasonable. For personal use only use personal For
KOON HOLDINGS 84 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
4 Financial instruments, financial risks and capital risks management
The Group’s activities expose it to a variety of financial risks, including the effects of: changes in debt and equity market prices, foreign currency exchange rates and interest rates. The Group does not use derivative financial instruments such as foreign exchange forward contracts to hedge certain exposures. The Group does not hold or issue derivative financial instruments for speculative purposes.
(a) Categories of financial instruments
The following table sets out the financial instruments as at the end of the reporting period:
Group Company 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Financial assets
Fair value through profit or loss (FVTPL): Held for trading 23 36 – – Loans and receivables (including cash and cash equivalents) 91,097 65,445 17,383 21,093 Available-for-sale financial assets 150 150 – – 91,270 65,631 17,383 21,093
Financial liabilities
Borrowings and payables at amortised cost 152,127 62,687 19,090 15,205
(b) Financial risk management policies and objectives
The Group has documented financial risk management policies. These policies set out the Group’s overall business strategies and its risk management philosophy. The Group’s overall financial risk management programme seeks to minimise potential adverse effects of financial performance of the Group. The Board of Directors provide written principles for overall financial risk management and written policies covering specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, cash flow interest rate risk, use of derivative financial instruments and investing excess cash.
Such written policies are reviewed annually by the Board of Directors and periodic reviews are undertaken to ensure that the Group’s policy guidelines are complied with. Risk management is carried out by the management under the policies approved by the Board of Directors.
There has been no change to the Group’s exposure to these financial risks or the manner in which it
For personal use only use personal For manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.
KOON HOLDINGS LIMITED 85 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(i) Foreign exchange risk management
The Group’s and Company’s activities are mainly conducted in the functional currencies of the respective entities. Hence, the Group’s exposure to foreign exchange risk is minimal.
(ii) Interest rate risk management
Interest-bearing financial assets are mainly bank balances, fixed deposit and loan to investee company. The interest rates for finance leases, loan to investee company and certain bank loans are fixed on the date of inception. Any variation in the short-term interest rates will not have a material impact on the results of the Group.
The Group is exposed to interest rate risk on certain bank loans and bills payable, which varies accordingly to prime lending rate. Management is of the view that any variation of the prime lending rate is not likely to have a material impact on the results of the Group. Accordingly, the Group does not hedge against interest rate risk relating to its bank loans and bills payable.
(iii) Equity price risk management
The Group is exposed to equity risks arising from equity investments classified as held for trading and available-for-sale. Available-for-sale equity investments are held for strategic rather than trading purposes. The Group does not actively trade available-for-sale investments.
Further details of these equity investments can be found in Notes 11 and 17 to the financial statements.
Equity price sensitivity
The available-for-sale equity investments are unquoted and sensitivity details have not been presented due to non-availability of a reliable valuation model.
In respect of held for trading equity investments, management is of the view that any variation of
the equity prices will not have a significant impact on the results of the Group. For personal use only use personal For
KOON HOLDINGS 86 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(iv) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by the counterparty limits that are reviewed and approved by management annually.
The Group’s bank balances are placed with credit-worthy financial institutions.
Concentration of credit risk exists when economic, industry or geographical factors similarly affect Group counter parties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure.
The Group’s customers are located in Singapore and Australia, and in addition, the Group has significant concentration of credit risk in that its top 5 debtors accounted for $28,307,000 (2011: $16,071,000) or 37% (2011: 46%) of the gross trade receivables balance at year end.
The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
Further details of credit risks on trade and other receivables are disclosed in Notes 7 and 8 to the financial statements respectively.
(v) Liquidity risk management
The Group maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities. Management finances the Group’s liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available. Management expects that the Company is not exposed to undue liquidity risk as it expects that the amount payable to subsidiaries will be set-off against future dividend payments.
Liquidity and interest risk analyses
Non-derivative financial liabilities
The following tables detail the remaining contractual maturity for non-derivative financial liabilities.
For personal use only use personal For The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statements of financial position.
KOON HOLDINGS LIMITED 87 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(v) Liquidity risk management (Continued)
Liquidity and interest risk analyses (Continued)
Non-derivative financial liabilities (Continued)
Weighted On average demand Within effective or within 2 to After interest rate 1 year 5 years 5 years Adjustment Total % $’000 $’000 $’000 $’000 $’000 Group
2012
Non-interest bearing – 87,260–––87,260 Finance lease liability (fixed rate) 6.81 7,382 28,539 – (5,069) 30,852 Bank loan (fixed rate) 2.33 3,624 7,855 904 (546) 11,837 Variable interest rate instruments 2.06 22,204 200 – (226) 22,178 120,470 36,594 904 (5,841) 152,127
2011
Non-interest bearing – 48,969–––48,969 Finance lease liability (fixed rate) 3.73 1,434 2,933 – (250) 4,117 Bank loan (fixed rate) 4.08 788 2,170 – (221) 2,737 Variable interest rate instruments 2.38 6,737 182 – (55) 6,864
57,928 5,285 – (526) 62,687 For personal use only use personal For
KOON HOLDINGS 88 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(v) Liquidity risk management (Continued)
Liquidity and interest risk analyses (Continued)
Non-derivative financial liabilities (Continued)
Weighted On average demand Within effective or within 2 to After interest rate 1 year 5 years 5 years Adjustment Total % $’000 $’000 $’000 $’000 $’000 Company
2012
Non-interest bearing – 18,809–––18,809 Finance lease liability (fixed rate) 3.68 89 211 – (19) 281 18,898 211 – (19) 19,090
2011
Non-interest bearing – 15,039–––15,039 Finance lease liability (fixed rate) 3.80 48 130 – (12) 166
15,087 130 – (12) 15,205 For personal use only use personal For
KOON HOLDINGS LIMITED 89 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(v) Liquidity risk management (Continued)
Liquidity and interest risk analyses (Continued)
Non-derivative financial assets
The following table details the expected maturity for non-derivative financial assets, other than available-for-sale financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the Group’s liquidity risk is managed on a net asset and liability basis. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group and the Company anticipates that the cash flow will occur in a different period. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the financial asset on the statements of financial position.
Weighted On average demand Within effective or within 2 to After interest rate 1 year 5 years 5 years Adjustment Total % $’000 $’000 $’000 $’000 $’000 Group
2012
Non-interest bearing – 80,024–––80,024 Fixed deposits (fixed rate) 3.35 4,490 – – (145) 4,345 Other fixed interest rate instruments 6.50 – 7,428 – (677) 6,751 84,514 7,428 – (822) 91,120
2011
Non-interest bearing – 58,251–––58,251 Fixed deposits (fixed rate) 0.33 1,078 – – (1) 1,077 Other fixed interest
rate instruments 6.50 – 6,953 – (800) 6,153 For personal use only use personal For 59,329 6,953 – (801) 65,481
KOON HOLDINGS 90 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(v) Liquidity risk management (Continued)
Liquidity and interest risk analyses (Continued)
Non-derivative financial assets (Continued)
Weighted On average demand Within effective or within 2 to After interest rate 1 year 5 years 5 years Adjustment Total % $’000 $’000 $’000 $’000 $’000 Company
2012
Non-interest bearing – 17,383–––17,383
2011
Non-interest bearing – 20,086–––20,086 Fixed deposits (fixed rate) 0.31 1,008 – – (1) 1,007
21,094 – – (1) 21,093 For personal use only use personal For
KOON HOLDINGS LIMITED 91 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
4 Financial instruments, financial risks and capital risks management (Continued)
(b) Financial risk management policies and objectives (Continued)
(vi) Fair value of financial assets and financial liabilities
Management considers that the carrying amounts of non-derivative financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. As described in Note 3 to the financial statements, management has determined that the fair value of the available-for-sale investments cannot be reliably measured and accordingly, the investments are stated at cost, less impairment, if any.
The fair values of financial assets and financial liabilities are determined as follows:
• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and
• the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.
The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Held for trading investments are measured at fair value based on Level 1 of the fair value hierarchy. The carrying amounts and the basis of determining fair value are disclosed in Note 11.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy in 2011 and 2012.
(c) Capital risk management policies and objectives
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.
For personal use only use personal For The capital structure of the Group consists of equity attributable to owners of the Company, comprising share capital and reserves and accumulated profits.
The Group’s overall strategy remains unchanged from 2011.
KOON HOLDINGS 92 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
5 Related party transactions
Some of the Group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties are reflected in these financial statements. The balances are unsecured, interest- free, repayable on demand and expected to be settled in cash unless stated otherwise.
During the year, the Group entered into the following transactions with related parties (related by way of common shareholder) that are not members of the Group:
Group 2012 2011 $’000 $’000 Proceeds from disposal of leasehold property – (7,500) Other income (451) (242) Rental income (228) (829) Cost on upkeep and hire of tugs and barges 532 340 Rental expenses 218 195 Subcontract costs 29 77 Other expenses 76 31
Compensation of directors and key management personnel
The remuneration of directors and other members of key management during the year were as follows:
Group 2012 2011 $’000 $’000 Short-term benefits 2,392 2,047 Post-employment benefits 57 57 Share-based payment expense 20 64 2,469 2,168
The remuneration of directors and key management is determined by the Remuneration Committee having regard
to the performance of individuals and market trends. For personal use only use personal For
KOON HOLDINGS LIMITED 93 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
6 Cash and cash equivalents
Group Company 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Cash at bank and on hand 18,083 18,613 2,275 5,205 Fixed deposits 4,345 1,077 – 1,007 22,428 19,690 2,275 6,212
Less: Pledged fixed deposits (3,885) (70) – – Cash and cash equivalents 18,543 19,620 2,275 6,212
The Group has certain fixed deposits amounting to $3,885,000 (2011: $70,000) pledged to banks for bank loans facilities granted (see Notes 19 and 36). The pledged fixed deposits have a tenure of approximately 80 days (2011: approximately 92 days) and bear interest at an average effective rate of 3.74% (2011: 0.15%) per annum. Management expects the pledge on the fixed deposits to be discharged within the next twelve months. Accordingly, the pledged fixed deposits have been presented under current assets.
Other fixed deposits bear interest at an average effective rate of 0.05% (2011: 0.15% to 0.31%) per annum and for a tenure of approximately 92 days (2011: 91 to 365 days).
These fixed deposits are considered as cash and cash equivalents as management is of the view that these deposits may be withdrawn as and when required without having to incur penalty.
The Group’s and Company’s total cash and cash equivalents are denominated in the functional currencies of the respective entities.
7 Trade receivables
Group 2012 2011 $’000 $’000 Outside parties 51,065 33,764 Retention monies receivable (Note 10) 3,528 1,186 Related parties (Note 5) 91 219 Unbilled receivables 5,644 – Less: Allowance for doubtful unbilled receivables (2,242) – 58,086 35,169
Movements in allowance for doubtful debts:
Charge to profit or loss and balance at end of year 2,242 – For personal use only use personal For The average credit period on the outstanding trade receivables is 30 days (2011: 30 days). No interest is charged on trade receivables.
KOON HOLDINGS 94 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
7 Trade receivables (Continued)
Included in the Group’s trade receivable balance are debtors with a carrying amount of $12,455,000 (2011: $11,721,000) which are past due at the reporting date for which the Group has not provided for any impairment allowance. These overdue balances include $11,072,000 (2011: $11,496,000), which arise out of back-to-back contract arrangements under which the Group does not retain any credit risk. Management expects that as there has not been a significant change in the credit quality and the amounts are still considered recoverable, no impairment allowance is necessary. The Group does not hold any collateral over these balances.
The table below is an analysis of trade receivables:
Group 2012 2011 $’000 $’000 Not past due and not impaired 43,914 23,448 Past due but not impaired 12,455 11,721 56,369 35,169
Impaired receivables – individually assessed [Note 39(b)] 3,959 – Less: Allowance for impairment (2,242) – 1,717 – Total trade receivables, net 58,086 35,169
The table below is an analysis of age of debts which are past due but not impaired:
Group 2012 2011 $’000 $’000 3 months to 6 months 1,064 207 6 months to 12 months 319 2,915 12 months to 24 months 2,473 8,599 24 months to 36 months 8,599 – 12,455 11,721
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Accordingly, management believes that there is no further credit provision required in excess of the allowance for the doubtful debts.
The trade receivables that are neither past due nor impaired related to customers that the Group has assessed to be creditworthy, based on the credit evaluation process performed by management.
For personal use only use personal For The Group’s and Company’s total receivables are denominated in the functional currencies of the respective entities.
KOON HOLDINGS LIMITED 95 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
8 Other receivables
Group Company 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Receivable for sale of property, plant and equipment 700 – – – Deposit paid for acquisition of non-controlling interest (Note 39) 1,500 – 1,500 – Other deposits 1,136 356 – – Prepayments 1,587 870 43 44 Loan to investee company (Note 17b) 6,751 6,153 – – Interest receivable on loan to investee company (Note 17b) 485 – – – Advance to suppliers 1,473 – – – Others 1,511 882 461 – Subsidiaries (Note 13) – – 14,647 11,686 Associate (Note 14) – 3,195 – 3,195 15,143 11,456 16,651 14,925
Analysed as:
Current 6,759 5,303 15,151 14,925 Non-current 8,384 6,153 1,500 – 15,143 11,456 16,651 14,925
Loan to investee company is unsecured and bears fixed interest rate of 6.50% (2011: 6.50%) per annum. The loan is repayable when a subsidiary of the Company, GPS Alliance Development & Investment Pte Ltd (Note 13) ceases to be a shareholder of the investee company or if the investee company’s cash flow permits.
Management does not expect the loan to be repaid within the next twelve months. Accordingly, the loan has been presented under non-current assets.
The amounts due from the subsidiaries and associate, which represent advances to these entities, are unsecured, interest-free and repayable on demand. The Company has not made any allowance on these receivables as management is of the view that these receivables are collectible.
The Group’s and Company’s other receivables are denominated in the functional currencies of the respective
entities. For personal use only use personal For
KOON HOLDINGS 96 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
9 Inventories
Group 2012 2011 $’000 $’000 Raw materials 5,912 5,045 Finished goods 8,208 5,504 14,120 10,549
During the year, the cost of inventories recognised as an expense includes a write-down of inventory of $2,660,000 in respect of write-down of inventory to net realisable value.
In 2011, the cost of inventories recognised as an expense includes a write-back of provision of $317,000. Previous write-downs have been reversed as a result of increase in selling prices.
10 Contract work-in-progress
Group 2012 2011 $’000 $’000 Costs and recognised profit of uncompleted contracts in excess of related billings (included in current assets):
Accumulated costs 305,228 242,160 Recognised profits 13,352 11,750 Anticipated loss (287) (184) Accumulated billings (297,344) (245,292) 20,949 8,434
Billings in excess of costs and recognised profit on uncompleted contracts (included in current liabilities):
Accumulated billings 28,542 137,862 Recognised (profits) losses (538) 4,156 Anticipated loss 110 862 Accumulated costs (26,950) (140,974)
1,164 1,906 For personal use only use personal For
KOON HOLDINGS LIMITED 97 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
10 Contract work-in-progress (Continued)
Group 2012 2011 $’000 $’000 Movements in provision for specific anticipated loss:
Balance at beginning of year 1,046 1,961 Charge to profit or loss 1,465 1,966 Amount utilised (2,114) (2,881) Balance at end of year 397 1,046
As at December 31, 2012, retentions held by customers for construction contracts amounted to $3,528,000 (2011: $1,186,000), and are included in trade receivables (Note 7). The contract work-in-progress is classified as current because they are expected to be realised in the normal operating cycle.
11 Held for trading investments
Group 2012 2011 $’000 $’000 Quoted equity shares: At cost 80 116 Cumulative fair value adjustments (57) (80) At fair value 23 36
Movements in cumulative fair value adjustments:
Balance at beginning of year 80 67 Charge to profit or loss – 13 Disposal (23) – Balance at end of year 57 80
The investments above include investments in quoted equity securities that offer the Group the opportunity for return through dividend income and fair value gains. They have no fixed maturity nor coupon rate. The fair value
of these securities are based on the quoted closing market prices on the last market day of the financial year. For personal use only use personal For
KOON HOLDINGS 98 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
12 Development properties
Development properties (see Note 33) mainly comprises vacant freehold land located in Malaysia which was acquired for future development.
13 Subsidiaries
Company 2012 2011 $’000 $’000 Unquoted equity shares, at cost 45,730 31,125 Deemed investment in subsidiary 17,000 – Allowance for impairment loss (5,928) (5,928) 56,802 25,197
Details of the subsidiaries at the end of the reporting period are as follows:
Name of subsidiaries Principal activity Proportion of ownership (Country of incorporation/operation) interest/voting power held 2012 2011 %% Contech Precast Pte Ltd Manufacture of reinforced concrete 75 75 piles and precast components (Singapore)
Entire Engineering Pte Ltd Rental of construction and civil engineering 100 100 machinery and equipment (Singapore)
Entire Construction Pte Ltd Contractors for civil and engineering works 100 100 (Singapore)
Econ Precast Pte Ltd Manufacture of reinforced concrete piles 75 75 and precast components and supply of high tensile deformed baseline rods (Singapore)
Econ Precast Sdn Bhd(2) Manufacture of reinforced concrete piles and 75 75 precast components (Malaysia)
GPS Alliance Holdings Investment holding (Singapore) 51 51 Pte Ltd
Global Property Strategic Provision of services as real-estate agency 51 51
For personal use only use personal For Alliance Pte Ltd (Singapore)
KOON HOLDINGS LIMITED 99 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
13 Subsidiaries (Continued)
Details of the subsidiaries at December 31, 2012 are as follows:
Name of subsidiaries Principal activity Proportion of ownership (Country of incorporation/operation) interest/voting power held 2012 2011 %% GPS Alliance Home Provision for home interior solutions (Singapore) 51 51 Solutions Pte Ltd
GPS Alliance IT Pte Ltd Provision of IT solutions and services (Singapore) 51 51
GPS Alliance Development Provision of real estate consultancy and 51 51 & Investment Pte Ltd investment (Singapore)
GPS Alliance Appraisal Provision of property valuation services 51 51 Pte Ltd (Singapore)
GE Development Pte Ltd Provision of business consultancy and property 26 – Pte Ltd(5) (6) investments and development (Singapore)
Koon Construction & Contractors for civil and drainage 100 100 Transport Co. Pte Ltd engineering, building, shore protection and marine and foundation works (Singapore)
Koon Construction & Contractors for civil engineering and 100 – Transport Sdn. Bhd.(1) (5) building works (Malaysia)
Koon Properties Pte Ltd Provision of tugboats and barges services 100 100 (Singapore)
Koon-Top Pave Contractors for civil and drainage 100 100 Joint Venture(3) engineering, building, shore protection and marine and foundation works (Singapore)
Muse Living Pte Ltd(7) Wholesale of furniture, home furnishings 43 51 and other household equipment (Singapore)
Metro Coast Sdn. Bhd.(3) (4) Property development (Malaysia) 100 –
Seven Star Development Property development (Malaysia) 100 – Sdn. Bhd.(3) (4)
For personal use only use personal For Triumph Heights Property development (Malaysia) 100 – Sdn. Bhd.(4) (5)
Tesla Holdings Pty Ltd(1) (8) Investment holding (Australia) 71 –
KOON HOLDINGS 100 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
13 Subsidiaries (Continued)
Name of subsidiaries Principal activity Proportion of ownership (Country of incorporation/operation) interest/voting power held 2012 2011 %% Tesla Corporation Holding company for electric power 71 – Pty Ltd(1) (8) generation business (Australia)
Tesla Corporation Owns and operates power plant (Australia) 71 – Management Pty Ltd(1) (8)
Tesla Northam Pty Ltd(1) (8) Owns and operates power plant (Australia) 71 –
Tesla Geralton Pty Ltd(1) (8) Owns and operates power plant (Australia) 71 –
Tesla Kemerton Pty Ltd(1) (8) Owns and operates power plant (Australia) 71 –
Unison Progress Property development (Malaysia) 100 – Sdn. Bhd.(3) (4)
Notes:
The above subsidiaries are audited by Deloitte & Touche LLP, Singapore other than those mentioned below.
(1) Audited by Overseas Practices of Deloitte Touche Tohmatsu.
(2) Audited by SJ Grant Thornton.
(3) Audited by Deloitte & Touche LLP for consolidation purpose.
(4) Acquired during the year (Note 33).
(5) Incorporated during the year.
(6) This represents the effective equity interest held by the Group. The subsidiary is a subsidiary of another subsidiary, GPS Alliance Development & Investment Pte Ltd.
(7) This represents the effective equity interest held by the Group. The subsidiary is a subsidiary of another subsidiary, GPS Alliance Home Solutions Pte Ltd.
(8) The entities become subsidiaries of the Group during the year (Note 14). For personal use only use personal For
KOON HOLDINGS LIMITED 101 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
14 Associates
Group Company 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Unquoted ordinary equity shares, at cost * 3,816 * 3,816 Unquoted preference shares: At cost – 4,702 – 4,702 Fair value of derivative financial instrument previously recognised – 803 – 803 Share of post-acquisition loss – (1,115) – – Share of translation reserve – (61) – – Total * 8,145 * 9,321
* Less than $1,000.
Details of the associates at the end of the reporting period are as follows:
Name of associates Place of Proportion of ownership Principal activity incorporation interest/voting and operation power held 2012 2011 %% Tesla Holdings Pty Ltd Australia 71(note) 49 Electric power generation business
Mesco Sdn Bhd * Brunei 50 50 Dormant
* Not required to be audited in its country of incorporation.
Note
On July 30, 2010, the Group invested in a 49% stake in Tesla Holdings Pty Ltd (“Tesla”), an Australian energy infrastructure company. The total consideration for the acquisition of the stake in Tesla amounted to AUD3,000,000 ($3,816,000).
Under the investment agreement, a put option was granted to Tesla in which Tesla has the right but not the obligation to require the Group to subscribe for 2,400,000 preference shares in the issued and paid up capital of Tesla within 6 months from the date of certain conditions being met. At the same time, a call option was also granted to the Group in which the Group has the right but not the obligation (unless Tesla exercises the put option) to subscribe for 2,400,000 preference shares at any time following the date of the investment agreement. If the put or call option is exercised, all other things being equal, the Group will increase its stake in Tesla to approximately 68% for a consideration of another AUD3,600,000. The preference shares have limited voting rights, but are For personal use only use personal For convertible into ordinary shares at any time after 18 months or at anytime within 18 months, in the event Tesla increases its forecast expenditure or on any major expenditure item by more than 15% over the amount stated in business plan originally.
KOON HOLDINGS 102 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
14 Associates (Continued)
If the Group holds more than half of the ordinary shares on issue in Tesla at any point in time, it must make a once only offer to purchase the remaining shares on issue in Tesla at independent valuation or AUD1.80 per share ordinary share, whichever is higher.
The fair values of the put and call options of $803,000 as at December 31, 2010 was determined on the basis of valuations carried out at the year end date by an independent valuer not connected with the Group, by using the Binomial Option Pricing Model. The valuation conforms to International Valuation Standards.
On June 29, 2011, Tesla exercised the put option to require the Group to subscribe for 2,400,000 preference shares at a consideration of AUD3,600,000 ($4,702,000).
Management assessed that the fair values of the put and call options as at the exercise date did not differ significantly from the net fair value of the call and put options as at December 31, 2010 of $803,000. The amount was accounted for as part of the cost of investment in the associate.
On March 9, 2012, Tesla Holdings Pty Ltd (“Tesla”) issued a total of 5,000,000 fully paid ordinary shares at AUD1 ($1) per share to raise AUD5,000,000 ($6,685,000) from its existing shareholders, including the Group. The Group acquired 3,929,788 of these newly issued ordinary shares for a cash consideration of AUD3,930,000 ($5,254,000).
On March 9, 2012 the Group also exercised its option to convert all its 2,400,000 preference shares in Tesla into ordinary shares.
Consequently, the Group’s resultant shareholding interest (and voting power held) in Tesla has increased to
approximately 71.2%, resulting Tesla becoming a subsidiary (Note 13) of the Group. For personal use only use personal For
KOON HOLDINGS LIMITED 103 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
14 Associates (Continued)
Summarised financial information in respect of the Group’s associates is set out below:
Group 2012 2011 $’000 $’000 Statement of financial position
Total assets * 19,902 Total liabilities – (11,792) Net assets * 8,110
Group’s share of associates’ net assets * 3,974
Statement of comprehensive income
Revenue 333 745 Loss for the year (155) (1,961)
Group’s share of associates’ loss for the year (76) (961)
15 Joint venture
During the year, a subsidiary of the Group entered into a joint venture partnership, Penta-Ocean/Hyundai/Koon Joint Venture (“PHKJV”), with another two third parties. PHKJV is incorporated in Singapore and is principally engaged as contractors for civil engineering and building works in Singapore.
The Group has a 20% participating interest in PHKJV.
Pursuant to the joint venture agreement, when required, all parties to the agreement will contribute to the joint venture’s working capital requirements. As at the end of the reporting period, there has been no contribution made
by the Group to PHKJV and PHKJV remains dormant since incorporation. For personal use only use personal For
KOON HOLDINGS 104 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
16 Property, plant and equipment
Dump Office Capital Plant trucks equipment, work-in- Freehold Freehold Leasehold Leasehold and Barges and and motor furniture progress land buildings buildings improvements machinery tugboats vehicles and fittings Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group
Cost: At January 1, 2011 – 859 677 356 – 21,094 1,360 3,511 1,134 28,991 Additions 1,322 – 278 274 122 5,739 30 442 313 8,520 Acquired on acquisition of subsidiaries (Note 34) ––––342–––185527 Transfer ––––57(57) –––– Disposals –––––(845) – (215) (141) (1,201) At December 31, 2011 1,322 859 955 630 521 25,931 1,390 3,738 1,491 36,837 Additions 13,085 – 165 – 64 22,121 – 2,761 1,011 39,135 Acquired on acquisition of subsidiaries (Note 34) 15,369 1,307–––8,144 – – 34 24,854 Disposals –––––(4,279) – (310) (100) (4,689) Transfer (20,151) ––––20,151–––– Exchange difference – (175) (9) – – (1,235) – – (2) (1,421) At December 31, 2012 9,553 1,991 1,111 630 585 70,833 1,390 6,189 2,434 94,716
Accumulated depreciation: At January 1, 2011 – – 18 59 – 4,024 151 1,969 728 6,949 Depreciation – – 26 139 86 4,115 201 395 197 5,159 Disposals –––––(626) – (195) (133) (954) At December 31, 2011 – – 44 198 86 7,513 352 2,169 792 11,154 Depreciation – – 37 156 156 8,529 199 559 374 10,010 Disposals –––––(2,373) – (257) (18) (2,648) Exchange difference –––––(23) – – (1) (24) At December 31, 2012 – – 81 354 242 13,646 551 2,471 1,147 18,492
Impairment: Impairment recognised in 2012 and balance at December 31, 2012 ––––147––––147 Carrying amount: At December 31, 2012 9,553 1,991 1,030 276 196 57,187 839 3,718 1,287 76,077
At December 31, 2011 1,322 859 911 432 435 18,418 1,038 1,569 699 25,683 For personal use only use personal For
During the year, interest on bank loans amounting to $490,000 was capitalised.
KOON HOLDINGS LIMITED 105 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
16 Property, plant and equipment (Continued)
During the year, an impairment of $147,000 was made to write down the carrying amount of certain leasehold improvements due to the relocation of a subsidiary’s office premise.
Property, plant and equipment with carrying amount of $46,871,000 (2011: $4,542,000) are pledged under finance lease agreements and bank loans.
Office equipment, Motor furniture vehicles and fittings Total $’000 $’000 $’000 Company
Cost: At January 1, 2011 500 139 639 Additions 14 – 14 At December 31, 2011 514 139 653 Additions 260 1 261 At December 31, 2012 774 140 914
Accumulated depreciation: At January 1, 2011 43 109 152 Depreciation 119 9 128 At December 31, 2011 162 118 280 Depreciation 142 9 151 At December 31, 2012 304 127 431
Carrying amount: At December 31, 2012 470 13 483
At December 31, 2011 352 21 373
Motor vehicles with carrying amount of $382,000 (2011: $222,000) are pledged under finance lease agreement. For personal use only use personal For
KOON HOLDINGS 106 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
17 Available-for-sale investments
Group 2012 2011 $’000 $’000 Unquoted equity shares, at cost (a) 500 500 Less: Allowance for impairment loss (500) (500) – – Unquoted equity shares, at cost (b) 150 150 Net 150 150
Movement in allowance for impairment loss:
Balance at beginning of year 500 – Charge to profit or loss – 500 Balance at end of year 500 500
Management has determined that the fair value of the available-for-sale investments cannot be reliably measured and accordingly, the investment is stated at cost, less impairment, if any.
(a) The investment in unquoted equity shares represent an investment in a company that is engaged in construction projects. The Group and other shareholder of the investee have determined that the Group does not have significant influence over the investee.
In 2011, an interim dividend income from the investee of $6.5 million was recognised in profit or loss. The investee’s net asset position was significantly reduced after the dividend declaration. Management has evaluated the recoverability of the carrying amount of the investment and determined that the investment was fully impaired as at December 31, 2011.
(b) The investment in unquoted equity shares represents investment in a company that is engaged in property development.
18 Goodwill on consolidation
Group 2012 2011 $’000 $’000 Balance at beginning of year 1,902 – Arising from acquisition of subsidiaries (Note 34) 3,536 1,902
Balance at end of year 5,438 1,902 For personal use only use personal For
KOON HOLDINGS LIMITED 107 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
18 Goodwill on consolidation (Continued)
Goodwill is allocated to cash generating units (“CGU”) identified that are expected to benefit from the business combination. The carrying amounts of goodwill of each CGU are as follows:
Group 2012 2011 $’000 $’000 Property (Note A) 1,902 1,902 Electric power generation (Note B) 3,536 – 5,438 1,902
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
Note A
The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by management for the next 5 years using discount rate of 10.39% (2011: 10.39%) being the CGU’s internal rate of return and a growth rate of 10% (2011: 10%) per annum.
Note B
The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by management for the next 25 years using discount rate of 12.82% being the CGU’s internal rate of return and a growth rate of 5% per annum.
Management estimates that any reasonable changes in the estimates and assumptions used in the discounted
cash flow model would not change the conclusion on the goodwill impairment assessment. For personal use only use personal For
KOON HOLDINGS 108 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
19 Bank loans and bills payable
Group 2012 2011 $’000 $’000 Long-term bank loans and bills payable 34,015 9,601 Less: Current portion (26,266) (8,851) Non-current portion 7,749 750
The Group has/had the following bank loans and bills payable:
Loan A 1,298 1,755 Loan B 1,618 982 Loan C 176 226 Loan D 520 – Loan E 335 – Loan F 6,717 – Loan G 1,000 – Loan H 349 – Bills payable 22,002 6,638 34,015 9,601
Loan A bears fixed interest of 3.40% per annum (2011: 3.40% per annum). It is repayable in 48 monthly instalments commencing September 2011. The loan is secured by a charge over subsidiaries plant and machinery and motor vehicle with a carrying amount of $514,000 (2011: $934,000) as at the end of the reporting period.
Loan B bears fixed interest of 5.30% per annum (2011: 5.30% per annum). It is repayable in 48 monthly instalments commencing December 2011 and June 2012.
Loan C is repayable in 96 monthly instalments commencing April 2008 and bears interest at the following rates:
(i) 1st year: 3.48% per annum; (ii) 2nd year: 1.00% per annum below the bank’s base lending rate; and (iii) 3rd year onwards: 0.80% per annum above the bank’s base lending rate.
The effective interest rate during the year is 7.10% per annum (2011: 7.10% per annum). The loan is secured by way of first legal charge over a subsidiary’s freehold land with a carrying amount of $859,000 (2011: $859,000) and is guaranteed by another subsidiary.
Loan D bears fixed interest of 3.17% per annum. It is repayable in 48 monthly instalments commencing June 2012. The loan is secured by a subsidiary’s plant and machinery with a carrying amount of $754,000 as at December
31, 2012. For personal use only use personal For
KOON HOLDINGS LIMITED 109 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
19 Bank loans and bills payable (Continued)
Loan E bears fixed interest of 8.58% per annum. It is repayable in 72 monthly instalments commencing August 2011. The loan is used to finance the construction of the power plants in Australia. The loans are secured by a corporate guarantee from the Company and all assets under the Tesla group of companies.
Loan F relates to a mortgage loan for the purchase of leasehold properties. The loan bears fixed interest at 1.09% per annum during the year and is repayable in 72 monthly instalments commencing October 2012. It is secured by a corporate guarantee from the Company and the mortgage title of the capital work-in-progress with a carrying amount of $9,370,000.
Loan G bears fixed interest rate of 1.55% per annum during the year, unsecured and is repayable by January 21, 2013.
Loan H bears fixed interest rate of 3.42% per annum during the year, unsecured and is repayable in 48 monthly instalments commencing January 2013.
Bills payable relates to import financing facility provided by banks. The facility limit is $51,200,000 (2011: $38,050,000). The interest rate for credit advance range between 1.77% swap offer rate and 2.40% above swap offer rate (2011: range between 1.75% swap offer rate and 2% above swap offer rate). The bills payable bears effective interest rate of 2.01% (2011: 2.14%) per annum during the year. This facility is secured by a corporate guarantee from the Company.
The Group is in compliance with externally imposed capital requirements.
The bank loans and bills payable are denominated in the functional currencies of the respective entities.
20 Trade payables
Group 2012 2011 $’000 $’000 Outside parties 71,552 41,169 Related parties (Note 5) 154 157 71,706 41,326
The average credit period on the outstanding trade payables is 60 days (2011: 60 days). No interest is payable on overdue balances.
The Group’s trade payables are denominated in the functional currencies of the respective entities. For personal use only use personal For
KOON HOLDINGS 110 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
21 Provision for loss on sales commitments
Group 2012 2011 $’000 $’000 Charge to profit or loss and balance at end of year 600 –
The provision for losses on sales commitments represents management’s estimation of the losses as a result of the difference between the committed selling price and estimated cost of sales for the unfulfilled sales quantities committed at the end of the reporting period. The estimated cost of sales is based on costing estimated by the production department.
22 Other payables
Group Company 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Accrued expenses 5,071 2,747 718 617 Advance from investee company (Note 17a) 1,250 1,250 – – Advance from a non-controlling interest 1,400 – – – Deposits received 4,070 1,800 24 – Others 3,763 1,846 247 136 Subsidiaries (Note 13) – – 17,820 14,286 15,554 7,643 18,809 15,039
Analysed as:
Current 15,461 7,643 18,809 15,039 Non-current 93 – – – 15,554 7,643 18,809 15,039
The advance from investee company and non-controlling interest and the payables to subsidiaries (representing advance from subsidiaries) are unsecured, interest free and repayable on demand.
The Group’s other payables are denominated in the functional currency of the respective entities. For personal use only use personal For
KOON HOLDINGS LIMITED 111 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
23 Finance leases
Minimum Present value of minimum lease payments lease payments 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Group
Amounts payable under finance leases: Within one year 7,458 1,434 5,504 1,310 In the second to fifth years inclusive 28,463 2,933 25,348 2,807 35,921 4,367 30,852 4,117 Less: Future finance charges (5,069) (250) N/A N/A Present value of lease obligations 30,852 4,117 30,852 4,117 Less: Amount due for settlement within 12 months (5,504) (1,310) Amount due for settlement after 12 months 25,348 2,807
Minimum lease Present value of minimum payments lease payments 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Company
Amounts payable under finance leases: Within one year 89 48 80 43 In the second to fifth years inclusive 211 130 201 123 300 178 281 166 Less: Future finance charges (19) (12) N/A N/A Present value of lease obligations 281 166 281 166 Less: Amount due for settlement within 12 months (80) (43) Amount due for settlement after 12 months 201 123
It is the Group’s and Company’s policy to lease certain of its plant and equipment under finance leases. All leases were on a fixed repayment basis and no arrangement had been entered into for contingent rental payments.
The Group’s and Company’s lease obligations are denominated in the functional currency of the respective entities.
For personal use only use personal For The fair value of the Group’s and Company’s lease obligations approximated their carrying amount.
The Group’s and Company’s obligations under finance leases are secured by the lessors’ title to the leased assets.
KOON HOLDINGS 112 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
23 Finance leases (Continued)
Group
The average lease term is 4 years (2011: 3 years). The effective borrowing rates ranged between 2.50% and 8.54% (2011: 3.35% and 4.30%) per annum. Interest rates are fixed at contract date and thus expose the Group to fair value interest rate risk.
Company
The average lease term is 5 years (2011: 5 years). The effective bearing rate is 3.70% (2011: 3.80%) per annum. Interest rates are fixed at contract date and thus the Company is exposed to fair value interest rate risk.
24 Deferred income tax assets (liabilities)
Group 2012 2011 $’000 $’000 Deferred income tax assets 3,188 964 Deferred income tax liabilities (2,049) (1,839) Net 1,139 (875)
The following are the major deferred tax (liabilities) assets recognised by the Group, and the movements thereon, during the current and prior reporting periods:
Arising from fair Excess of Provision value adjustment (tax over book) for on property, plant book over tax anticipated and equipment depreciation losses Total $’000 $’000 $’000 $’000 Group
At January 1, 2011 (567) (721) 234 (1,054) Credit (charge) to profit or loss for the year – 1,062 (155) 907 Effects of amount transferred under Group Relief – (728) – (728) At December 31, 2011 (567) (387) 79 (875) Credit (charge) to profit or loss for the year 180 2,061 (15) 2,226 Effects of amount transferred under Group Relief – (212) – (212)
At December 31, 2012 (387) 1,462 64 1,139 For personal use only use personal For
KOON HOLDINGS LIMITED 113 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
25 Share capital
Group and Company 2012 2011 2012 2011 Number of ordinary shares $’000 $’000 Issued and paid up: At beginning of year 164,098,000 163,988,000 7,030 6,998 Issued during the year: Issue of shares pursuant to rights issue exercise, net of expense 98,524,800 – 18,318 – Other shares issued 110,000 110,000 25 32 At end of year 262,732,800 164,098,000 25,373 7,030
During the year, the Company issued 98,524,800 ordinary shares at $0.19 each in connection with a rights issue exercise. Share issue expenses incurred for the rights issue amounting to $402,000 were set off against share capital.
The Company’s Koon Holdings Employee Performance Share Plan (“Koon EPSP”) applies to the executive directors of the Company and the employees of the Group. However, controlling shareholders, including controlling shareholders who are executive directors and their associates are not eligible to participate in the Koon EPSP.
The shares were valued based on the five-day average prevailing share prices before the date of issue.
Details of the shares granted to directors of the Company under Koon EPSP are disclosed in Paragraph 5 of the Directors’ Report.
During the year, the Group issued 110,000 (2011: 110,000) shares to the participants of the Koon EPSP. The shares were valued based on the five-day average prevailing share prices of $0.23 (2011: $0.29) before the date of issue.
The Company has one class of ordinary shares which carry one vote per share, has no par value and carries a right to dividend as and when declared by the Company.
26 Capital reserve
Group 2012 2011 $’000 $’000 Capital reserve arising from Restructuring exercise 13,006 13,006 Share-based payment 283 – Others 16 –
Net 13,305 13,006 For personal use only use personal For
KOON HOLDINGS 114 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
26 Capital reserve (Continued)
Restructuring Exercise
(a) On April 10, 2003, pursuant to a Restructuring Exercise, the then existing shareholders of Koon Construction & Transport Co. Pte Ltd (“KCTC”) transferred their entire equity interest comprising 16,006,400 ordinary shares of $1 each in KCTC to the Company in exchange for the issue of 59,999,998 ordinary shares of $0.05 each in the Company to the then existing shareholders. As a result, KCTC became a wholly-owned subsidiary of the Company.
(b) For accounting purposes, the Company accounted for its investment in KCTC as if it had owned KCTC from the date of incorporation and adopted the following to account for the effects of the Restructuring Exercise:
(i) The Company recorded a cost of investment in KCTC of $16,006,000 (being the issued and paid up capital of KCTC) and a capital reserve of $13,006,000 (being the difference between the par value of the 59,999,998 ordinary shares of $0.05 issued and cost of investment in KCTC); and
(ii) The Group recorded a credit in its accumulated profits of $615,000, being the audited accumulated profits of the KCTC Group as at December 31, 2002, net of certain adjustments.
Share-based payment
The share-based payment relates to the issuance of 200,000 shares of a subsidiary, Tesla Holdings Pty Ltd (“Tesla”), to 3 directors of the subsidiary in March 2012 at no consideration as a recognition for their services to Tesla. This has been accounted for as share-based payment expense of AUD200,000 ($283,000) based on a value of AUD1 per share offered to other shareholders during a capital raising exercise described in Note 14.
27 Revenue
Group 2012 2011 $’000 $’000 Revenue from contracts 94,559 47,404 Sale of goods 87,915 31,437 Real estate brokerage income 25,125 7,481 Power station capacity credits 3,392 – Rental of equipment machinery and equipment 1,657 868 Rendering of services 76 17 Charter income – 499 Supply of machinery, equipment and labour – 76 Others – 273
212,724 88,055 For personal use only use personal For
KOON HOLDINGS LIMITED 115 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
28 Other income
Group 2012 2011 $’000 $’000 Dividend income from investee company (Note 17a) – 6,500 Gain on disposal of non-current assets classified as held-for-sale – 5,602 Gain on deemed disposal of previously held interest in associate (Note 34) 561 – Gain on disposal of property, plant and equipment – 76 Gain on disposal of held for trading investment 7 – Rental income from leasehold properties 220 889 Rental income from office space 218 – Interest income: Loan to investee company 485 – Fixed deposits 255 466 Sale of scrap 312 121 Foreign exchange gain – net 23 67 Liquidated damages * 407 – Diesel and fuel rebates 194 – Others 312 317 2,994 14,038
* Represents liquidated damages received from a contractor of the power plants in Australia arising from the compensation for the loss of income from the Australian Independent Market Operator due to a delay in construction delivery.
29 Finance costs
Group 2012 2011 $’000 $’000 Interest on: Bank loans and bills payables 712 85 Bank overdraft 3 1 Finance leases 781 154
1,496 240 For personal use only use personal For
KOON HOLDINGS 116 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
30 (Loss) Profit before income tax
(Loss) Profit before income tax has been arrived at after charging (crediting):
Group 2012 2011 $’000 $’000 Employee benefits expense (including directors’ remuneration) 27,195 16,701 Directors’ remuneration: – directors of the Company 1,504 1,035 – director of a subsidiary 529 673 Cost of defined contribution plans included in employee benefits expense 1,886 1,240 Directors’ fee 215 99 Audit fees: – paid to auditors of the Company 202 162 – paid to other auditors 52 35 Non-audit fees paid to auditors of the Company 64 154 Foreign exchange adjustment gain 23 67 Provision for anticipated losses (Note 10), recognised under cost of sales 1,465 1,966 Loss (Gain) on disposal of property, plant and equipment 621 (76) Cost of inventories recognised as an expense 85,464 26,460
31 Income tax
Group 2012 2011 $’000 $’000 Current tax 691 400 Overprovision of current tax in prior years (897) (290) Deferred tax (1,593) (907) Overprovision of deferred tax in prior years (633) – Income tax for the year (2,432) (797)
Domestic income tax is calculated at 17% (2011: 17%) of the estimated assessable profit for the year. Taxation
for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. For personal use only use personal For
KOON HOLDINGS LIMITED 117 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
31 Income tax (Continued)
The income tax for the year can be reconciled to the accounting (loss) profit as follows:
Group 2012 2011 $’000 $’000 (Loss) Profit before income tax (2,409) 6,736
Tax (benefit) expense at the statutory income tax rate of 17% (410) 1,145 Tax effect of income not taxable and expenses not deductible – net (408) (2,112) Deferred tax benefit not recognised 56 69 Tax effect of different tax rate of subsidiary operating in other jurisdiction (17) 209 Tax effect of share of results of associate 13 163 Overprovision in prior years – net (1,530) (290) Effect of partial tax exempt income (73) (83) Others (63) 102 Income tax for the year (2,432) (797)
The Group has tax loss carryforwards available for offsetting against future taxable income as follows:
Group 2012 2011 $’000 $’000 At beginning of year 1,447 1,040 Amount arising during the year 330 407 At end of year 1,777 1,447 Deferred tax benefit on above not recorded 302 246
No deferred tax asset has been recognised in respect of the above tax loss carryforwards due to the unpredictability of future profit streams.
The realisation of the future income tax benefits from tax loss carryforwards is available for an unlimited future
period subject to the conditions imposed by the relevant tax authorities. For personal use only use personal For
KOON HOLDINGS 118 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
32 Earnings per share
2012 2011 Profit for the year attributable to owners of the Company (in $’000) 46 7,605
Weighted average number of ordinary shares for the purpose of basic earnings per share (in ’000) 172,418 164,094 Effect of dilutive potential ordinary shares: Employee performance share plan (in ’000) 440 580 Weighted average number of ordinary shares for the purpose of Diluted earnings per share (in ’000) 172,858 164,674
Earnings per share (cents): – Basic 0.03 4.63
– Diluted 0.03 4.62
33 Acquisition of assets
During the financial year, the Group acquired the entire issued share capital of Metro Coast Sdn. Bhd., Triumph Heights Sdn. Bhd., Unison Progress Sdn. Bhd, and Seven Star Development Sdn. Bhd. (Note 13) which own the entire interest in four plots of land in Malaysia for a consideration of $16,973,000. The transaction was determined by management to be an acquisition of assets rather than a business combination as defined in FRS 103 Business Combinations.
The development activities have not commenced and the land acquired is recorded under development properties as at the end of the reporting period (Note 12).
34 Acquisition of subsidiaries
(a) As described in Note 14, on March 9, 2012, the Group’s shareholding interest and voting power held in Tesla increased from 48.9% to approximately 71.2%, thereby resulting in Tesla becoming a subsidiary of the Group.
The effective date of the completion of the acquisition, as determined by management, is March 9, 2012. For personal use only use personal For
KOON HOLDINGS LIMITED 119 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
34 Acquisition of subsidiaries (Continued)
The net assets acquired in the transaction, and the goodwill arising, are as follows:
Acquiree’s carrying amount after combination $’000 Property, plant and equipment 24,854 Trade receivables 209 Other receivables 4,174 Cash and cash equivalents 1,902 Pledged deposits 4,359 Inventories 74 Trade payables (14,885) Other payables (5,903) Bank loans (456) Finance lease (6,283) Net assets acquired 8,045
Cash proceeds from new shares issued 6,685 Less: Non-controlling interest (4,188) Less: Fair value of previously held interest (4,011) Goodwill 3,536 Total fair value of consideration for acquisition of controlling interest 10,067
Less: Conversion of preference shares (4,813) Cash consideration for subscription of new shares 5,254
Net cash inflow from acquisition
Cash consideration for subscription of new shares (5,254) Net cash and bank balances acquired 8,587 3,333
Goodwill arising on acquisition
Total consideration transferred 18,266 Less: Fair value of the identified net assets acquired (14,730)
Goodwill 3,536 For personal use only use personal For Previously held interest
The previously held equity interest of 48.9% and preference shares in Tesla was previously recorded as an investment in associate. It was re-measured at fair value at the date of acquisition. The difference between the fair value of $8,824,000 and the carrying amount of 48.9% equity interest immediately prior to the date of acquisition of $8,263,000 amounting to $561,000 was recognised in other income (Note 28).
KOON HOLDINGS 120 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
34 Acquisition of subsidiaries (Continued)
Non-controlling interest
The non-controlling interest recognised at the acquisition date has been measured at the non-controlling interest’s proportionate share of the fair value of the acquiree’s identifiable net assets.
The fair values of the previously held interest on March 9, 2012 have been determined on the basis of valuations carried out by an independent valuer not connected with the Group, by using the Multi Period Excess Earning Method. The valuation conforms to International Valuation Standards.
Tesla contributed $3,392,000 to the Group’s revenue and contributed a gain of $594,000 to the Group’s profit after tax for the period between the date of acquisition and December 31, 2012.
If the acquisition had been completed on January 1, 2012, total Group’s revenue and profit for the period would have been $213,057,000 and $3,915,000 respectively.
The related cost of acquisition have been excluded from the consideration transferred and have been recognised as an expense during the year.
(b) On July 1, 2011, the Group acquired 51% of the issued share capital of GPS Alliance Holdings Pte Ltd (Formerly known as GA Property Management Pte Ltd) and its subsidiaries for a cash consideration of $3,000,000. These subsidiaries were acquired as a synergistic addition to the Group’s business model of diversifying its revenue base and accelerating recurring revenue growth. This transaction has been accounted for by the purchase method of accounting.
The effective date for the completion of the acquisition, as determined by management, is July 1, 2011.
The net assets acquired in the transaction, and the goodwill arising amounted to $2,152,000 and $1,902,000 respectively.
Acquisition-related costs amounting to $49,000 have been excluded from the consideration transferred and have been recognised as an expense during the year within the “administrative expenses” line item in the statement of comprehensive income.
The interests of a non-controlling shareholder recognised at the acquisition date was measured at the non- controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets.
35 Operating segment information
Products and services from which reportable segments derive their revenues
Information reported to the Group’s chief operating decision maker for the purposes of resource allocation and assessment of segment performance is more specifically focused on the functionality of services provided. The
For personal use only use personal For Group’s reportable segments are as follows:
– Construction – Precast – Property – Electric power generation
KOON HOLDINGS LIMITED 121 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
35 Operating segment information (Continued)
Products and services from which reportable segments derive their revenues (Continued)
The “Construction” segment relates to the construction projects related to land reclamation, roads and bridges.
The “Precast” segment relates to the supply and manufacturing of reinforced concrete piles and precast components and supply of high tensile deformed bars/wire rods.
The “Property” segment relates to real estate agency services and property development activities.
The “Electric power generation” segment relates to the operation of electricity power stations.
In 2011, the reportable segments are Construction, Marine logistic, Plant and equipment rental, Precast and Property. Due to changes in the composition of reportable segments, the segment information for 2011 has been restated.
Information regarding the Group’s reportable segments is presented below.
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Revenue Results 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Construction 96,453 49,074 1,578 7,676 Precast 92,614 31,539 (3,646) 671 Property 25,125 7,599 1,283 (81) Electric power generation 3,392 – 605 – 217,584 88,212 (180) 8,266 Elimination (4,860) (157) (3,651) (13,867) Total 212,724 88,055 (3,831) (5,601)
Unallocated corporate income 2,433 14,038 Share of loss of associate (76) (961) Gain in deemed disposal of previously held interest in associate 561 – Allowance for impairment loss on available-for-sale investments – (500) Finance costs (1,496) (240) (Loss) Profit before income tax (2,409) 6,736 Income tax 2,432 797
For personal use only use personal For Profit for the year 23 7,533
Revenue reported above represents revenue generated from external customers and inter-segmental sales amounting to $4,860,000 (2011: $157,000) which have been eliminated on consolidation. Revenue from external customers of construction, precast, property and electric power generation segments was $96,292,000 (2011: $49,019,000), $87,915,000 (2011: $31,437,000), $25,125,000 (2011: $7,599,000) and $3,392,000 (2011: $Nil) respectively.
KOON HOLDINGS 122 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
35 Operating segment information (Continued)
Segment revenues and results (Continued)
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2. Segment profit represents the profit earned by each segment without allocation of other income, share of loss of associate, gain on deemed disposal of previously held interest in associate, impairment loss on investments, finance costs, and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.
Segment assets
2012 2011 $’000 $’000 Construction 103,786 74,387 Precast 79,484 54,396 Property 42,447 11,851 Electric power generation 42,419 – 268,136 140,634 Elimination (43,511) (38,565) Total segment assets 224,625 102,069 Unallocated corporate assets 7,950 20,109 Total assets 232,575 122,178
For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible and financial assets attributable to each segment.
All assets are allocated to reportable segments other than deferred income tax asset and the assets of Koon Holdings Limited which are included under unallocated corporate assets representing cash and bank balances, deposits and prepayments.
Other segment information
Depreciation Additions to property, plant and equipment and development properties 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Construction 2,730 2,528 14,601 2,411 Precast 6,513 2,552 11,643 6,048 Property 195 79 17,255 588
For personal use only use personal For Electric power generation 572 – 37,499 – Total 10,010 5,159 80,998 9,047
The Construction segment includes provision of anticipated losses amounting to $1,465,000 (2011: $1,966,000).
KOON HOLDINGS LIMITED 123 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS December 31,31, 2012
35 Operating segment information (Continued)
Other segment information (Continued)
The Precast segment includes allowance for inventories amounting to $2,660,000 (2011: reversal of allowance of $317,000), allowance for doubtful debts amounting to $2,242,000 (2011: Nil), impairment loss on property, plant and equipment amounting to $147,000 (2011: Nil) and a provision for loss on sales commitment amounting $600,000 (2011: Nil).
Geographical information
The Group mainly operates in two principal geographical areas – Singapore (country of domicile) and Australia.
The Group’s revenue from external customers and information about its segment assets (non-current assets excluding investments in associates, finance lease receivables and “other” financial assets) by geographical location are detailed below.
Revenue from Non-current external customers assets 2012 2011 2012 2011 $’000 $’000 $’000 $’000 Based on location of customer
Singapore 209,332 88,055 74,318 42,997 Australia 3,392 – 35,892 – Total 212,724 88,055 110,210 42,997
Information about major customers
Included in revenue arising from construction projects are $31,892,000 (2011: $12,496,000) which arose from sales to the Group’s largest customer.
36 Bank guarantees, performance bonds and commitments
As at the end of the reporting period, the Group has:
(a) given unsecured letters of indemnity and performance bonds amounting to $18,687,000 (2011: $22,043,000) to third parties in the ordinary course of business in respect of construction contracts undertaken;
(b) obtained secured bankers guarantee issued in favour to third parties amounting to $22,186,000 (2011: $1,980,000) in the ordinary course of business in respect of construction contracts undertaken;
The Company has undertaking to provide continued financial support to a subsidiary with a net exposure of For personal use only use personal For $6,882,000 (2011: $4,574,000) as and when required.
KOON HOLDINGS 124 LIMITED ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS December 31, 2012
37 Operating lease arrangements
Lessee
Group 2012 2011 $’000 $’000 Minimum lease payments under operating leases recognised as an expense in the year 5,118 2,704
At the end of the reporting period, the Group has outstanding commitments under non-cancellable operating leases which fall due as follows:
Group 2012 2011 $’000 $’000 Within one year 2,720 3,018 In the second to fifth year inclusive 3,190 3,271 In the sixth to tenth year inclusive 1,773 – 7,683 6,289
Operating lease payments represent rentals payable by the Group for rental of office and yard premises. Leases are negotiated for an average term of 4 years (2011: 5 years).
Lessor
The Group rents out part of its premises under certain non-cancellable operating leases. Rental income earned during the year was $438,000 (2011: $889,000).
At the end of the reporting period, the Group has contracted with tenants for the following future minimum lease payments:
Group 2012 2011 $’000 $’000
Within one year – 163 For personal use only use personal For
KOON HOLDINGS LIMITED 125 ANNUAL REPORT 2012 NOTESNOTES TTOO FFINANCIALINANCIAL SSTATEMENTSTATEMENTS DecemberDecember 3131,, 20120122
38 Dividends
Group 2012 2011 $’000 $’000 Final dividend of $0.01 per share on 164,098,000 ordinary shares in respect of financial year ended December 31, 2010 – 1,641
Interim dividend of $0.005 per share on 164,098,000 ordinary shares in respect of financial year ended December 31, 2011 – 820
Final dividend of $0.005 per share on 164,208,000 ordinary shares in respect of financial year ended December 31, 2011 821 –
Interim dividend of $0.005 per share on 164,208,000 ordinary shares in respect of financial year ended December 31, 2012 821 – 1,642 2,461
39 Event after the reporting period
a) On December 21, 2012, the Group entered into a sale and purchase agreement with JKM Engineers Pte. Ltd. to acquire the remaining 25% of the issued and paid up share capital of a subsidiary, Econ Precast Pte. Ltd. for a cash consideration of $5,500,000 of which $1,500,000 (Note 8) was paid prior to the end of the financial year. The transaction was completed on January 2, 2013. Consequently, Econ Precast Pte. Ltd. and its subsidiaries, Contech Precast Pte. Ltd. and Econ Precast Sdn Bhd became wholly owned subsidiaries of the Group.
b) On March 7, 2013, a customer of the Group (the “Customer”), a main contractor to a property project (the “Project”) in Singapore, made an application in the High Court of Singapore to place itself under judicial management. As at December 31, 2012, the Group has outstanding trade receivables from this Customer and inventories on hand for sale to the Customer amounting to $3,959,000 and $3,601,000 respectively.
Subsequent to the end of the financial year but prior to March 7, 2013:
(i) $1,717,000, representing 43.4% of the trade receivables, was collected by the Group and $2,242,000 of the year end receivables remain outstanding; and
(ii) $2,542,000 of the inventories on hand as at December 31, 2012 were sold to the Customer and the receivables remain outstanding.
Based on the information currently available, the Group has made an allowance for trade receivables and
inventories amounting to $2,242,000 and $2,542,000 respectively for the year ended December 31, 2012. For personal use only use personal For
KOON HOLDINGS 126 LIMITED ANNUAL REPORT 2012 STATISTICS OF SHAREHOLDINGS As at March 5, 2013
DISTRIBUTION OF SHAREHOLDINGS
NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % NO. OF SHARES %
1 – 1,000 31 3.93 11,991 0.00 1,001 – 5,000 60 7.60 211,759 0.08 5,001 – 10,000 130 16.48 1,210,493 0.46 10,001 – 100,000 436 55.26 15,725,597 5.98 100,001 AND ABOVE 132 16.73 245,847,960 93.48 TOTAL 789 100.00 263,007,800 100.00
TWENTY LARGEST SHAREHOLDERS
NO. NAME NO. OF SHARES %
1 ANG AH NUI 122,571,819 46.60 2 SAMSU 16,000,000 6.08 3 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 14,894,800 5.66 4 OH KENG LIM 10,159,996 3.86 5 OH LIAN LING 7,238,487 2.75 6 OH KOON SUN 7,205,378 2.74 7 MAYBANK KIM ENG SECURITIES PTE LTD 5,389,200 2.05 8 ONG SOH HOON 4,000,000 1.52 9 ONG LYE BENG 3,344,024 1.27 10 YEO SEE TEE 3,000,000 1.14 11 AW GIM KOON 2,101,224 0.80 12 ANG JUI KHOON 1,853,600 0.70 13 TEE SWEE KHENG 1,758,196 0.67 14 LIM PANG HERN 1,722,000 0.65 15 LAU KOI FONG @ LAU THIM THAI 1,580,800 0.60 16 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 1,482,000 0.56 17 PHILLIP SECURITIES PTE LTD 1,436,010 0.55 18 TAN TONG GUAN 1,400,000 0.53 19 CITIBANK CONSUMER NOMINEES PTE LTD 1,286,000 0.49 20 HARRY OH TUAY KEE 1,246,000 0.47 TOTAL 209,669,534 79.69
SUBSTANTIAL SHAREHOLDERS (as recorded in the Register of Substantial Shareholders as at March 5, 2013)
Name of Substantial Shareholder Direct Interest % Indirect Interest %
For personal use only use personal For ANG AH NUI 122,571,819 46.60 – – SAMSU 16,000,000 6.08 – –
KOON HOLDINGS LIMITED 127 ANNUAL REPORT 2012 NOTICENOTICE OOFF AANNUALNNUAL GGENERALENERAL MMEETINGEETING
KOON HOLDINGS LIMITED (Company Registration No. 200303284M) (ARBN 105 734 709)
NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of the Company will be held at 48 Boon Lay Way, Singapore 609961, The Chevrons, Violet Room Level 3, on April 25, 2013 at 9.00 am for the following purposes: AS ORDINARY BUSINESS
1. To receive and adopt the Audited Accounts for the financial year ended December 31, 2012 together with the Reports of the Directors and the Auditors of the Company. (Resolution 1)
2. To declare a final dividend of S$0.005 per ordinary share in respect of the financial year ended December 31, 2012. (Resolution 2)
3. To consider and, if thought fit, pass the following resolution:
“That Mr Oh Keng Lim, who is above 70 years of age and whose office as Director shall be vacant at the conclusion of this Annual General Meeting in accordance with section 153(2) of the Companies Act, Cap 50 be and is hereby re-appointed as a Director of the Company to hold office until the next Annual General Meeting.” (Resolution 3)
[See Explanatory Note (I)]
4. To appoint Mr Ang Sin Liu, who is above 70 years of age and whose office as Director shall be vacant at the conclusion of this Annual General Meeting in accordance with section 153(2) of the Companies Act, Cap 50 be and is hereby re-appointed as a Director of the Company to hold office until the next Annual General Meeting.” (Resolution 4)
[See Explanatory Note (I)]
5. To re-elect Mr Christopher Chong Meng Tak who is retiring under Article 91 of the Company’s Articles of Association.
Mr Christopher Chong Meng Tak will, upon re-election as a Director of the Company, remain the Chairman of each of the Audit Committee and Remuneration Committee and a member of the Nominating Committee and will be considered independent of management. (Resolution 5)
6. To re-elect Ms Glenda Mary Sorrell-Saunders who is retiring under Article 91 of the Company’s Articles of Association.
Ms Glenda Mary Sorrell-Saunders will, upon re-election as a Director of the Company, remain the Chairman of the Nominating Committee and a member of the Audit Committee and Remuneration Committee and will be considered independent of management. (Resolution 6)
7. To re-elect Mr Ang Ah Nui who is retiring under Article 97 of the Company’s Articles of Association.
Mr Ang Ah Nui will, upon re-election as a Director of the Company, remain a member of each of the Audit Committee and Remuneration Committee. (Resolution 7)
8. To re-elect Mr Yuen Kai Wing who is retiring under Article 97 of the Company’s Articles of Association. (Resolution 8)
For personal use only use personal For 9. To approve Directors’ fees of S$188,000 for the financial year ended December 31, 2012. (Resolution 9)
10. To re-appoint Deloitte & Touche LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 10)
11. To transact any other business that may be transacted at an Annual General Meeting.
KOON HOLDINGS 128 LIMITED ANNUAL REPORT 2012 NOTICE OF ANNUAL GENERAL MEETING
AS SPECIAL BUSINESS
12. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications:
“That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, authority be and is hereby given to the Directors to allot and issue:
(i) shares in the capital of the Company (whether by way of bonus, rights or otherwise); or (ii) convertible securities; or (iii) additional convertible securities arising from adjustments made to the number of convertible securities previously issued in the event of rights, bonus or capitalisation issues; or (iv) shares arising from the conversion of convertible securities in (ii) and (iii) above,
at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of equity securities to be issued pursuant to this Resolution does not exceed fifty per cent (50%) of the total number of issued shares excluding treasury shares as at the date of this Resolution, or such other limit as may be prescribed by the listing rules of the Singapore Exchange Securities Trading Limited and ASX Listing Rules 7.1, of which the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to shareholders of the Company does not exceed fifteen per cent (15%) of the total number of issued shares excluding treasury shares as at the date of this Resolution, or such other limit as may be prescribed by the listing rules of the Singapore Exchange Securities Trading Limited and ASX Listing Rules 7.1, and, unless revoked or reduced by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. For the purpose of determining the aggregate number of shares that may be issued pursuant to this Resolution, the percentage of the total number of issued shares excluding treasury shares is based on the total number of issued shares excluding treasury shares at the date of this Resolution after adjusting for new shares arising from the conversion or exercise of any convertible securities or employee stock options in issue as at the date of this Resolution and any subsequent consolidation or subdivision of the Company’s shares.” (Resolution 11)
[See Explanatory Note (II)]
13. To consider and, if thought fit, pass the following ordinary resolution with or without any modifications:
“That the Board of Directors of the Company be and is hereby authorised to grant awards (“Awards”) in accordance with the provisions of the Koon Holdings Employee Performance Share Plan (“Koon EPSP”) and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to grant of Awards under the Koon EPSP and in the event a share buyback mandate is subsequently approved by the shareholders, to apply any shares purchased under the Share Buyback Mandate toward the satisfaction of Awards For personal use only use personal For granted under the Koon EPSP provided that the aggregate number of Shares available under the Koon EPSP shall not exceed five per cent (5%) of the total issued share capital of the Company from time to time.” (Resolution 12)
[See Explanatory Note (III)]
KOON HOLDINGS LIMITED 129 ANNUAL REPORT 2012 NOTICENOTICE OOFF AANNUALNNUAL GGENERALENERAL MMEETINGEETING
NOTICE OF BOOKS CLOSURE DATE AND PAYMENT DATE FOR FINAL DIVIDEND
Notice is hereby given that the Transfer Books and the Register of Members of the Company will be closed at 5.00 p.m. on May 14, 2013 (the “Books Closure Date”) for the purpose of determining the entitlement of Shareholders to the final dividend of S$0.005 per ordinary share (the “Final Dividend”) in respect of the financial year ended December 31, 2012.
For Shareholders whose shares are deposited with the Central Depository (Pte) Limited (“CDP”)
Shareholders whose shares are deposited with the CDP, whose securities account with CDP are credited with Shares as at 5.00 p.m. on the Books Closure Date will be entitled to the Final Dividend on the basis of the number of Shares standing to the credit of their securities accounts with CDP as at 5.00 p.m. on such date.
Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on May 14, 2013 by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. will be registered to determine shareholders’ entitlements to the Final Dividend.
For Shareholders who are registered as holders of the Company’s shares through CHESS Depository Nominees Pty Ltd (the “Australian Investors”)
Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. (local time in Victoria) on May 14, 2013 by the Company’s Australian Share Registrar, Registries Limited, will be registered to determine shareholders’ entitlements to the Final Dividend. Australian Investors who are recorded on the Australian Branch Share Register as at 5.00 p.m. on the Australian Record date of May 14, 2013 will be entitled to the Final Dividend.
For Australian Investors, their dividend entitlements will be converted at the Singapore-Australian currency conversion rate of one of the Company’s principal bankers, United Overseas Bank Limited, on the date of the record date, being May 14, 2013. These dividends will be unfranked for Australian tax purposes.
The Final Dividend will be paid on or about May 30, 2013 if approved by the shareholders of the Company at an Annual General Meeting to be held on April 25, 2013.
By Order of the Board
Ong Beng Hong/Tan Swee Gek Joint Company Secretaries
March 25, 2013 For personal use only use personal For
KOON HOLDINGS 130 LIMITED ANNUAL REPORT 2012 NOTICE OF ANNUAL GENERAL MEETING
Explanatory Notes:
I. To appoint Mr Ang Sin Liu and Mr Oh Keng Lim, who are over 70 years of age as directors of the Company under Section 153(6) of the Companies Act, Chapter. 50.
II. The Ordinary Resolution proposed in item 12 above, if passed, will empower the Directors from the passing of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company up to an amount not exceeding, in total, 50% of the issued share capital of the Company at the time of passing of this resolution, of which up to 15% may be issued other than on a pro-rata basis to shareholders.
III. The Ordinary Resolution proposed under item 13 above, if passed, will authorise the Directors to grant award of shares in accordance with the provisions of the Koon EPSP and pursuant to Section 161 of the Companies Act, Cap. 50 to allot and issue shares under the Koon EPSP. The Koon EPSP was approved by the shareholders of the Company in general meeting on October 10, 2009. Please refer to the Circular dated September 10, 2009 for further details.
Notes:
1) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company.
2) The instrument appointing a proxy or proxies must be under the hand of the appointor or of his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.
3) The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 11
Sixth Lok Yang Road, Singapore 628109 at least 48 hours before the time fixed for the Meeting. For personal use only use personal For
KOON HOLDINGS LIMITED 131 ANNUAL REPORT 2012 For personal use only use personal For
This page has been intentionally left blank. PROXY FORM FOR MEMBERS WHO HOLD SHARES THROUGH THE CENTRAL DEPOSITORY (PTE) LIMITED (CDP) OR HAVE SHARES REGISTERED IN THEIR NAMES IN THE REGISTER OF MEMBERS OF KOON HOLDINGS LIMITED.
Koon Holdings Limited (Incorporated in the Republic of Singapore) Company Registration No. 200303284M, ARBN 105 734 709
I/We (Name)
of (Address) being a member/members of Koon Holdings Limited (the “Company”) hereby appoint
Name Address NRIC/Passport Proportion of my/our Shareholding (%) Number No. of shares %
and/or (delete as appropriate)
Name Address NRIC/Passport Proportion of my/our Shareholding (%) Number No. of shares %
as my/our proxy/proxies to vote for me/us on my/our behalf at the Tenth Annual General Meeting of the Company, to be held at 48 Boon Lay Way, Singapore 609961, The Chevrons, in the Violet Room on Level 3, on April 25, 2013 at 9.00 am, and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.
No. Resolutions Relating To: For Against Ordinary Business 1. Adoption of Accounts and Reports 2. Declaration of final dividend 3. Re-appointment of Mr Oh Keng Lim 4. Re-appointment of Mr Ang Sin Liu 5. Re-appointment of Mr Christopher Chong Meng Tak 6. Re-appointment of Ms Glenda Mary Sorrell-Saunders 7. Re-appointment of Mr Ang Ah Nui 8. Re-appointment of Mr Yuen Kai Wing 9. Approval of Directors’ Fees 10. Re-appointment of Auditors Special Business 11. Authority to allot and issue new shares 12. Authority to grant awards under the Koon Holdings Employee Performance Share Plan
(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.)
For personal use only use personal For Dated this day of 2013 Total number of Shares held
Signature of Shareholder(s) or Common Seal Important: Please read notes overleaf
Notes:
1. The proxy form set out overleaf is to be used ONLY by members who hold shares through The Central Depository (Pte) Limited (CDP) or have shares registered in their names in the Register of Members of the Company. If you hold shares through CHESS Depository Nominees Pty Ltd, please use the CDI Voting Instruction Form designated for members who hold Shares through CHESS Depository Nominees Pty Ltd.
2. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares registered in your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.
3. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.
4. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.
5. A proxy need not be a member of the Company.
6. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 11 Sixth Lok Yang Road, Singapore 628109, not less than 48 hours before the time set for the Meeting
7. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.
8. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy; failing which the instrument may be treated as invalid.
9. The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time
appointed for holding the Meeting, as certified by the Central Depository (Pte) Limited to the Company. For personal use only use personal For GENERAL INFORMATION VISION & MISSION Board of Directors Australia Share Registrar 24 Kranji Way To be an innovative builder and developer Ang Sin Liu and Share Transfer Office Singapore 739434 (Non-Executive Chairman) Boardroom Pty Limited Size: 16,268 sq m creating value for all stakeholders Tan Thiam Hee Level 7, 207 Kent Street Title: Leasehold (Managing Director and Chief Executive Officer) Sydney NSW 2000, Australia Lot 1944 & Lot 1946 Yuen Kai Wing We are dedicated to providing quality (Chief Operating Officer and Executive Director) Mukim Jeram Batu Service excellence Auditors Bt 23 1/2 Pekan Nenas works, innovative solutions and effective We provide services exceeding Oh Keng Lim Deloitte & Touche LLP (Executive Director) 81500 Pekan Nenas customers’ expectations, safe Certified Public Accountants professional services to our customers. and timely delivery, and to adopt Johor, Malaysia Oh Koon Sun 6 Shenton Way #32-00 corporate social responsibility (Executive Director) Size: 48,539 sq m DBS Building Tower 2 Title: Freehold We strive to establish lasting relationships Ang Ah Nui Singapore 068809 with our customers by exceeding their (Non-Executive Director) Partnership – 11 & 15 Sixth Lok Yang Road expectations and gaining their trust Christopher Chong Meng Tak forge partnership (Non-Executive and Independent Director) Partner: Patrick Tan Hak Pheng Singapore 628109 & 628111 based on safety, quality, timely service Size: 16,965 sq m with stakeholders Glenda Mary Sorrell-Saunders (Appointed on June 1, 2008) and anticipation of their needs. We strive to develop lasting (Non-Executive and Independent Director) Title: Leasehold win-win relationship with our Ko Chuan Aun Principal Bankers We respect and treat all employees stakeholders. (Non-Executive and Independent Director) Land and Retail lot fairly and encourage them to be United Overseas Bank Limited Lot PTD 32161 Innovation Singapore 80 Raffles Place #11-00 Mukim Plentong initiative, innovative and productive UOB Plaza 1 Johor Bahru, Malaysia We always look for ways to do things Company Secretary and nurture them to achieve cheaper, faster and better. Singapore 048624 Size: 1,448 sq m Ong Beng Hong, LLB (Hons) Title: Freehold their fullest potential. Tan Swee Gek, LLB (Hons) Resource – DBS Bank Limited people development Lot 68319 12 Marina Boulevard We believe everyone has their Australia Mukim Plentong Marina Bay Financial Centre Tower 3 strength and we strive to develop Company Secretary Johor Bahru, Malaysia Singapore 018982 our staff to their fullest potential to Leanne Ralph Size: 42,938 sq m achieve organisation goals. Title: Freehold Standard Chartered Bank Singapore Lot PTD 32151 to 32160 Integrity 8 Marina Boulevard We uphold ourselves with Registered Office Mukim Plentong Marina Bay Financial Centre Tower 1 professionalism, honesty and sincerity 11 Sixth Lok Yang Road Johor Bahru, Malaysia Level 24 CONTENTS and deliver what we promised through Singapore 628109 Size: 1,803.5 sq m adopting best practices. Singapore 018981 Corporate Profi le 01 Title: Freehold Financial Year Review 02 Teamwork and unity Australia Our Share Price 05 Registered Office Land & Building Lot No. G 08 We can achieve more together Kota Point Shopping Complex Message From Chairman & CEO 08 Level 5, 151 Castlereagh Street Office and Yards through mutual respect and trust, Kota Tinggi, Malaysia Infrastructure Construction and Civil Engineering 18 open sharing and communication. Sydney NSW 2000, Australia 26 Kranji Way Size: 36.3 sq m Precast 22 Singapore 739436 Size: 16,316 sq m Title: Freehold Property 24 Singapore Share Registrar For personal use only use personal For Title: Leasehold Electric Power Generation 26 and Share Transfer Office Our principal place of business is at Our People 28 Boardroom Corporate & 11 Sixth Lok Yang Road Board of Directors 32 Advisory Services Pte. Ltd. 16 Kranji Way Singapore 628109 Key Management 35 50 Raffles Place #32-01 Singapore 739442 Our telephone number is (65) 62615788 Corporate Structure 38 Singapore Land Tower Size: 5,102 sq m Our facsimile number is (65) 62660117 Singapore 048623 Title: Leasehold Our website address is www.koon.com.sg Corporate Governance Statement 39 i KOON HOLDINGS LIMITED
DELIVERING GROWTH THROUGH TRANSFORMATION
KOON HOLDINGS LIMITED
ANNUAL REPORT 2012 ANNUAL REPORT 2012
Company Registration No. 200303284M For personal use only use personal For ARBN 105 734 709 11 Sixth Lok Yang Road Singapore 628109 Tel: (65) 6261 5788 Fax: (65) 6266 0117 Website: www.koon.com.sg Email: [email protected]