50 50 YEARS OF INNOVATION 1967 2017
Rakon Limited Annual Report 2017 50 YEARS OF INNOVATION Table of Contents
Directors’ Report
t te ent o o pre ensi e Inco e
t te ent o n es in uit
nce eet
t te ent o s o s
otes to t e in nci t te ents
Independent Auditor’s Report
re o der In or tion
orpor te o ern nce
Director
1
1 Directors’ Report
The Directors are responsible for ensuring that the financial statements present fairly the financial position of the Group as at 31 March 2017 (FY2017) and their financial performance and cash flows for the year ended on that date. The Directors consider that the financial statements of the Company and the Group have been prepared using appropriate accounting policies, consistently applied and supported by reasonable judgements and estimates and that all relevant financial reporting and accounting standards have been followed. The Directors believe that proper accounting records have been kept which enable, with reasonable accuracy, the determination of the financial position of the Company and the Group and facilitate compliance of the financial statements with the Financial Markets Conduct Act 2013. The Directors consider they have taken adequate steps to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities. During the year the Company increased its investment in Thinxtra Pty Limited, an Internet of Things company, with the Company investing to initiate Thinxtra’s start-up. The Directors note that there were no other material changes in the nature of the business undertaken by the Company and the Group in the past year. The Directors present the financial statements set out in pages 3 – 49, of Rakon Limited and subsidiaries for the year ended 31 March 2017. The Board of Directors of Rakon Limited authorised these financial statements for issue on 18 May 2017. in nci resu ts Rakon Limited has reported a full year net loss after tax of $13.6 million (2016: net loss after tax of $1.7 million). Sales revenue for the year was $94.7 million, down $18.0 million or 16% on the prior year. The Group’s sales revenue reduced as a result of a decline in revenues from the telecommunications market as equipment manufacturers reduced spend. Revenues declined also in the global positioning market due to a decline in sales of consumer products for which Rakon’s products are embedded. Gross profit for the year was $33.7 million, down $14.3 million or 30% on the prior year. Gross profit declined in line with revenue and was also negatively impacted as the Company increased its obsolescence provisions. Share of losses from associates and joint venture was $2.1 million as expected losses were reported for Thinxtra in its start-up period. Operating expenses for the year of $41.9 million are down $5.9 million compared to the prior year, as the Group completed initiatives to reduce costs. Net debt as at 31 March 2017 was $4.5 million, down $8.1 million on the prior year. During the year the Company reduced net debt as cash proceeds were generated from a share placement and technology license arrangement to Taiwan company Siward Crystal Technology Co. Limited. As at 31 March 2017 Rakon’s shareholders’ equity stood at $74.6 million, funding 72% of total assets. The Board maintains a dividend policy, such that a dividend will be paid of up to 50% of the after tax profit, if considered fiscally appropriate by the Directors. The Board has determined that no dividend will be paid for FY2017. Don tions nd udit ees The Group made donations totalling $4,000 during the year. Amounts paid to PricewaterhouseCoopers for audit and other services are shown in section B2 b) of the financial statements. t er st tutor in or tion Additional information required by the Companies Act 1993 is set out in the Shareholder Information section.
On behalf of the Directors
B W Mogridge B J Robinson Chairman CEO, Managing Director
2
2 tatement of omprehensive ncome
or t e e r ended rc
ote s s ontinuin oper tions Revenue a ost of sales ross pro it ther operatin income peratin expenses c ther ains net D a mpairment d per tin oss pro it inance income D c inance costs D c hare of loss of associates and oint venture oss e ore inco e t ncome tax expense D d et oss or t e e r
t er co pre ensi e inco e tems that may e reclassified su sequently to profit or loss ncrease in fair value cash flow hed es Decrease increase in fair value currency translation differences ncome tax relatin to components of other comprehensive income t er co pre ensi e osses inco e or t e e r net o t ot co pre ensi e osses inco e or t e e r
oss ttri ut e to e uit o ders o t e o p n ot co pre ensi e osses pro it ttri ut e to e uit o ders o t e o p n
rnin s per s re or osses ttri ut e to t e e uit o ders o t e o p n ro ents ents continuin oper tions asic losses earnin s per share D a Diluted losses earnin s per share D
The accompanyin notes form an inte ral part of these financial statements
3 tatement of han es in quity
or t e e r ended rc
Ret ined re c pit e rnin s t er reser es ot e uit ote s s s s nce t rc et profit after tax for the year ended arch urrency translation differences D ash flow hed es net of tax D ot co pre ensi e osses inco e or t e e r mployee share schemes alue of employee services D nce t rc et loss after tax for the year ended arch urrency translation differences D ash flow hed es net of tax D ot co pre ensi e osses or t e e r ontri ution of equity net of transaction costs mployee share schemes alue of employee services D nce t rc
The accompanyin notes form an inte ral part of these financial statements
4 alance heet
As t rc
ote s s Assets urrent ssets ash and cash equivalents D a Trade and other receiva les c ssets classified as held for sale d Derivatives – held for trading D Derivatives – cash flow hedges D nventories a urrent income tax asset ot current ssets on current ssets Derivatives – cash flow hedges D Trade and other receiva les c roperty plant and equipment D a ntan i le assets nvestment in associate nterest in oint venture Deferred tax asset D ot non current ssets ot ssets i i ities urrent i i ities ank overdraft d orrowin s d Trade and other paya les e Derivatives – held for trading D Derivatives – cash flow hedges D rovisions D Deferred revenue ot current i i ities on current i i ities Derivatives – cash flow hedges D orrowin s d rovisions D Deferred tax lia ilities D ot non current i i ities ot i i ities et ssets
uit hare capital ther reserves D ccumulated losses ot e uit
The accompanyin notes form an inte ral part of these financial statements
5 tate ent of ash lows
or t e e r ended rc
ote s s per tin cti ities s pro ided ro ecei ts fro c sto ers nco e ta ref nd Dividend received fro oint vent re D grants received iward technolog license agree ent ther inco e received s s pp ied to a ent to s liers and others a ent to e lo ees nterest aid nco e ta aid et c s o ro oper tin cti ities In estin cti ities s s pro ided ro ale of ro ert lant and e i ent s s pp ied to rchase of ro ert lant and e i ent rchase of intangi les nvest ent in shares associates et c s o ro in estin cti ities in ncin cti ities s s pro ided ro ss ance of share ca ital roceeds fro orrowings s s pp ied to hare iss ance cost e a ent of rinci al on orrowings s s pp ied to in ncin cti ities et incre se in c s nd c s e ui ents ffects of e change rate changes on cash and cash e ivalents ash and cash e ivalents at the eginning of the ear s nd c s e ui ents t t e end o t e period o position o c s nd c s e ui ents ash and cash e ivalents D a an overdraft d ot c s nd c s e ui ents
he acco an ing notes for an integral art of these financial state ents
6 tate ent of ash lows
or t e e r ended rc
ote s s Reconci i tion o net oss pro it to net c s o s ro oper tin cti ities Reported net oss pro it ter t
De reciation e ense D a ortisation e ense air ent d Decrease increase in esti ated do tf l de ts rovision for restr ct re D lo ee share ased e ense D ove ent in foreign c rrenc onetised cash flow hedge net of ta Deferred reven e iward technolog license agree ent hare of rofit and dividends fro oint vent re and associates Deferred ta oss on dis osal of ro ert lant and e i ent D a oss on dis osal of intangi les D a ot ite s c s o d usted or I p ct o c n es in or in c pit ite s rade and other receiva les rovision for restr ct re nventories rade and other a a les a rovisions ot i p ct o c n es in or in c pit ite s et c s o ro oper tin cti ities
he acco an ing notes for an integral art of these financial state ents
7 otes to the inancial tate ents
A ener in or tion
cu tion o e nu ers B1. Segment information ______9 B2. Profit & loss information ______11 B3. Financial assets and liabilities______13 B4. Interests in associates and joint venture ______17 B5. Non-financial assets & liabilities ______21 B6. Contributed equity ______26
Ris C1. Critical accounting estimates and assumptions ______27 C2. Financial risk management ______27 C3. Capital management ______32
D t er in or tion D1. Other profit and loss information ______33 D2. Other financial assets and liabilities ______35 D3. Other non-financial assets and liabilities ______37 D4. Deferred income tax ______39 D5. Other reserves ______41 D6. Contingencies ______41 D7. Commitments ______41 D8. Related party information ______42 D9. Events after balance date ______43 D10. Earnings per share ______44 D11. Share based payments ______44 D12. Summary of other significant accounting policies ______45 D13. Imputation balances ______49 D14. Principal subsidiaries ______49
8 A ener in or tion
a on i ited (‘the o an ’) and its s sidiaries (‘the ro ’) design and an fact re fre enc control sol tions for a wide range of a lications a on has leading ar et ositions in the s l of cr stal oscillators to the teleco nications glo al ositioning and s ace defence ar ets he o an is a li ited lia ilit co an incor orated and do iciled in ew ealand t is registered nder the o anies ct with its registered office at lvia ar oad t ellington c land he financial state ents of the ro have een resented in ew ealand dollars nless otherwise indicated he financial state ents have een a roved for iss e Rakon’s oard of Directors (‘the Board’) on a
cu tion o e nu ers
e ent in or tion he chief o erating decision a er assesses the erfor ance of the o erating seg ents ased on a non GAAP measure of ‘Underlying EBITDA’ defined as: “Earnings before interest, tax, depreciation, amortisation, impairment, employee share schemes non controlling interests ad st ents for associates and joint ventures’ share of interest, tax & depreciation, loss on disposal of assets and other cash and non cash ite s nderl ing EBITDA).” nderl ing D is a non eas re that has not een resented in accordance with he Directors resent nderl ing D as a sef l non eas re to investors in order to nderstand the nderl ing o erating erfor ance of the ro and each o erating seg ent efore the ad st ent of s ecific non cash charges and efore cash i acts relating to the ca ital str ct re and ta osition nderl ing D is considered the Directors to e the closest eas re of how each o erating seg ent within the ro is erfor ing anage ent ses the non eas re of nderl ing D internall to assess the nderl ing o erating erfor ance of the ro and each o erating seg ent nderl ing D as non financial infor ation has een e tracted fro the financial state ents for the eriod ce t for nderl ing D other infor ation rovided to the chief o erating decision a er is eas red in a anner consistent with he Directors rovide a reconciliation of nderl ing D to net rofit or loss for the ear refer note c
Accountin po ic erating seg ents are re orted in a anner consistent with the internal re orting rovided to the chief o erating decision a er he chief o erating decision a er who is res onsi le for allocating reso rces and assessing erfor ance of the o erating seg ents has een identified as the anaging Director ales and ar eting Director and hief inancial fficer
e ent resu ts
Indi in entu r nce er R on t er ot s s s s s s s ales to e ternal c sto ers nter seg ent sales eg ent reven e nderl ing D De reciation and a ortisation air ent nco e ta e ense credit otal assets nvest ent in associates nvest ent in oint vent re dditions of ro ert lant e i ent and intangi les otal lia ilities
9 rc
Indi in entu r nce er R on t er ot s s s s s s s ales to external customers , , , Inter segment sales egment revenue , , , Underlying EBITDA , , ( , ) , , Depreciation and amortisation , , , Income tax (expense) credit ( ) ( , ) ( ) Total assets , , , , , , , Investment in associates , , , Investment in joint venture , , Additions of property, plant, e uipment and intangibles , , ,
, , , Total liabilities
Includes Rakon Limited’s 40% share of investment in hengdu hen Timemaker rystal Technology o. imited, hengdu Timemaker rystal Technology o. imited and hen hen Taixiang afer o. imited, refer note B . Includes Rakon Limited’s 49% share of investment in Centum Rakon India Private Limited, refer note B . Includes investments in subsidiaries, Rakon inancial ervices imited, Rakon U oldings imited, Rakon Investment imited, Rakon imited and Rakon Limited’s interest in Thinxtra Pty imited refer note B d). The measure of assets has been disclosed for each reportable segment as it is regularly provided to the chief operating decision maker and excludes intercompany balances eliminated on consolidation. The measure of liabilities has been disclosed for each reportable segment as it is regularly provided to the chief operating decision maker and excludes intercompany balances eliminated on consolidation. or this includes one off restructure costs in e ealand of , and in rance of , , (refer also note D b) and income from technology license agreement ith i ard of , , (refer note B b) also in the e ealand segment.
c Reconci i tion o nder in I DA to net oss pro it or t e e r
ontinuin oper tions s s Underlying EBITDA , , Depreciation and amortisation ( , ) ( , ) ne off cash gains realised on derivatives closed out ( , ) Employee share schemes ( ) ( ) inance costs net ( , ) ( , ) Adjustment for associates and joint venture share of interest, tax & depreciation ( , ) ( , ) Impairment ( , ) oss on asset sales disposal ( ) ( ) ther non cash items ( ) oss e ore inco e t Income tax expense ( ) ( ) et oss or t e e r
10 ro it oss in or tion
Re enue
Accountin po ic Revenue com rises the fair value of amounts received and receiva le the rou for oods and services su lied in the ordinar course of usiness Revenue is stated net of oods and services ta or value added ta collected from customers Revenue from the sale of oods is reco nised in the statement of com rehensive income hen the si nificant risks and re ards of o nershi have een transferred to the u er and the amount can e measured relia l Revenue from services rendered is reco nised in the statement of com rehensive income in ro ortion to the sta e of com letion of the transaction at the alance date
re do n o re enue oods nd ser ices Revenue from all sources is as follo s
s s ales of oods 9 Revenue from services 4 0 ot re enue
re do n o re enue re ion he rou ’s trading revenue is derived in the following regions. Revenue is allocated ased on the countr in hich the customer is located s s sia 4 04 4 orth merica 9 uro e 9 4 thers 9 ot re enue re ion
re do n o re enue r et se ent
s s elecommunications 4 9 lo al Positionin 4 4 ace and efence 0 4 ther 440 ot re enue r et se ent
t er oper tin inco e
re do n o ot er oper tin inco e
s s ividend income Rental income ther income 9 0 Income from technolo license a reement ith i ard 4 4
ot ot er oper tin inco e
Accountin po ic ividend income is reco nised hen the ri ht to receive a ment is esta lished Ro alt income is reco nised on an accruals asis in accordance ith the su stance of the relevant a reements
In est ent i rd r st ec no o o p n i ited ‘ i rd’ nd ttri ution o proceeds i ard is a ai an ased cr stal manufacturer hich is listed on the ai an tock chan e In e ruar 0 i ard aid 0m cash in return for 0 ne full aid ordinar shares of Rakon and ri hts arisin from a technolo license a reement i ard has taken u one new appointment to Rakon’s board
11 Critical accounting estimates and assumptions
Apportionment of proceeds
f the m pro eeds . m has been attributed to the new full paid ordinar shares based on an independent valuation report. he balan e of . m is allo ated to the te hnolog li ense agreement. e udgements and assumptions in lude
Rakon’s volume weighted average share price immediately before the agreement was executed . remium to refle t the abilit of iward to influen e strateg and dire tion –
Recognition of technology license agreement revenue he implied ro alt rate of . for the te hnolog li ense agreement is lose to the median ro alt rate for li ensing of and tra king te hnologies. he . m attributed to the te hnolog li ense agreement will be re ognised as revenue on the basis of the stage of ompletion of the transa tion. his involves udgement in assigning value to ea h of the four ke te hnologies to be transferred and allo ation of these between te hnolog transfer and deplo ment. his resulted in being ompleted during the ear a ordingl revenue of is re ognised in with e pe ted to be re ognised in refer also note .
elling and marketing Resear h and development eneral and administration Depreciation – inclusive of depreciation included in cost of sales (note D3 a) mortisation note b Resear h and development e pense Resear h and development government grant Resear h and development ta redit Restru ture osts in lusive of restru ture osts in luded in ost of sales note b Rental e pense on operating leases
ad debt write offs
ire tors fees
rin ipal auditors udit fees for urrent ear overnment R redits reviews hare registr audit reasur advisor servi es udit servi es other auditors
onations
12 Restructure costs ignificant reorganisations which took place during the year are explained below
reorganisation of the ew ealand operation including a reduction in headcount Restructure costs of were incurred and paid out by 3 arch
proposal for reorganisation was discussed with the ork nspection dministration and orkers ouncil in rance and communicated to the employees of Rakon rance as a plan to restructure Restructure related costs of were incurred refer also note D3 b)
he roup as re uired by R has assessed as at 3 arch whether any indicators of impairment exist n undertaking such an assessment indicators of impairment were identified and as a result of a detailed consideration of asset values the following impairments were made roperty plant e uipment (note D3 a) ntangible assets excluding goodwill (note b) oodwill (note c) nvestment in R (note c) 3
During the year specific e uipment spare parts were deemed to be no longer useful due to technical obsolescence or age s a result these spare parts were fully impaired hese spare parts are included in the plant and e uipment category and form part of the ew ealand cash generating unit refer also note D3 a)
During the year specific product development pro ects and pro ects in progress were reviewed for recoverability his was based on the expected cash flows to be generated by the pro ects t was found the expected cash flows on specific items had reduced and were unlikely to support the carrying values s a result these specific pro ects were fully impaired he impairment was within the ew ealand and rance cash generating units (‘CGUs’) refer also note b)
he future cash flow pro ections for the specific products manufactured in ndia are lower than at the time of the previous review his is due to revenue forecasts from these specific products reducing as they are replaced by newer technology products which are expected to be manufactured in other locations within the roup his results in an impairment of goodwill held in the rance (refer note c) and an impairment to the Group’s investment in CRI (refer note c) ollowing these impairment assessments the Directors consider the net asset value of the roup to be appropriate
inancial instruments comprise of cash and cash e uivalents trade and other receivables trade and other payables borrowings and derivative financial instruments (forward foreign exchange contracts collar options interest rate swaps) Refer also note D b)
13 3
erivative finan ia instruments (note ) ra e an other re eiva es Cash an ash e uiva ents (note a)
orro in s erivative finan ia instruments (note ) ra e an other pa a es
erivative finan ia instruments (note ) ra e an other re eiva es Cash an ash e uiva ents (note a)
orro in s erivative finan ia instruments (note ) ra e an other pa a es he ine items in the ta es a ove on in u e finan ia instruments ra e an other re eiva es in note ) an tra e an other pa a es in note e) in u e oth finan ia an non finan ia items
14
ra e an other re eiva es are re o nise initia at fair va ue an su se uent measure at amortise ost usin the effe tive interest metho ess provision for impairment Co e ta i it of tra e re eiva es is revie e on an on oin asis e ts hi h are no n to e un o e ta e are ritten off provision for impairment of tra e re eiva es is esta ishe hen there is o e tive evi en e that the Group i not e a e to o e t a amounts ue a or in to the ori ina terms of re eiva es The amount of the provision is the difference between the asset’s carrying amount and the present va ue of estimate future ash f o s is ounte at the effe tive interest rate he amount of the provision is re o nise in the statement of omprehensive in ome
ra e re eiva es ess provision for impairment of tra e re eiva es ( ) ( ) et tra e re eiva es repa ments G re eiva e Re eiva es from re ate parties (note ) ther re eiva es ess non urrent other re eiva es
ther re eiva es in u es resear h an eve opment ta re its an overnment rants he fair va ues of tra e an other re eiva es are e uiva ent to the arr in va ues In u e in tra e an other re eiva es as at ar h ( ) ere fu performin one of the finan ia assets that are fu performin have een rene otiate In u e in tra e an other re eiva es as at ar h ( ) ere past ue ut not impaire hese re ate to a num er of ustomers for hom there is no re ent histor of efau t
he a ein ana sis of tra e re eiva es is as fo o s
Up to months to months ver months
s of ar h tra e re eiva es of ( ) ere impaire an provi e for hese re eiva es main re ate to ustomers ho are in finan ia iffi u t or ispute
he arr in amounts of the Group’s trade and other receivables are denominate in the fo o in urren ies
U UR G ther
he ma imum e posure to re it ris at a an e ate is the arr in va ue of ea h ass of re eiva e mentione a ove he Group oes not ho an o atera as se urit
15
nterest bearing borrowings are recognised initially at fair value net of transaction costs incurred ubse uent to initial recognition interest bearing borrowings are measured at amortised cost with any difference between the proceeds net of transaction costs and the redemption amount recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method rrangement fees are amortised over the term of the loan facility orrowings are classified as current liabilities unless the roup has an unconditional right to defer settlement of the liability for at least months after balance date
bligations under finance lease an overdrafts an borrowings
bligations under finance lease an borrowings
Bank borrowings uring the year the ompany reduced its borrowings after application of proceeds from iward related to the investment in a on and rights arising from a technology license agreement efer note b and note rior to e piry the irectors anticipated renewing the facilities on similar terms and conditions The average interest rate during the year on this facility was an overdrafts and borrowings are secured by first mortgage over all the underta ings of a on imited and any other wholly owned present and future subsidiaries The e posure of the roup’s bank borrowings to interest rate changes and the contractual re pricing dates at the balance dates are as follows
months or less 6 – 12 months 1 – 5 years ver years
The carrying amounts and fair values of the non current ban borrowings are as follows
an borrowings
The fair value of current borrowings e uals the carrying amount The fair value of the non current ban borrowings e uals the carrying amount as interest is charged at mar et rates The carrying amounts of the roup’s non current ban borrowings are denominated in
The m debt facility with was renewed on ay with a new maturity date of ay dditional to this the roup has agreed a reduction of m of its overdraft facility from m to m that was assessed as surplus to the Group’s requirements. s described in note d the land and buildings at rgenteuil rance is held for sale The funds from the sale once complete are to be applied to reduce the debt facility under the renewed facility
16 acilities are secured by a general security deed o er all the present and uture assets and undertakings o the Group and the Group has agreed to certain capital requirements restrictions on di idend distributions and capital e penditure. he inancial co enants include net tangible assets to total tangible assets net debt to and to interest. nterest is based on wholesale market interest rates bank margin and applicable line ee. e er also to note b .
rade and other payables are recognised initially at air alue and subsequently measured at amortised cost using the e ecti e interest method.
rade payables 1 5 6 2 mounts due to related parties note b 2 622 mployee entitlements 5 11 ccrued e penses 1 56 2 15
he carrying amounts o trade and other payables are assumed to be the same as their air alues due to their short term nature.
ssociates are entities o er which the Group has signi icant in luence but not control generally accompanying a shareholding o between 2 and 5 o the oting rights. n estments in associates are accounted or using the equity method o accounting and are initially recognised at cost. oint arrangements are classi ied as either oint operations or oint entures. he classi ication depends on the contractual rights and obligations o each in estor rather than the legal structure o the oint arrangement. The Group’s oint enture is accounted or using the equity method. nder the equity method o accounting the in estments are initially recognised at cost and ad usted therea ter to recognise the Group’s share o the post acquisition pro its or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income o the in estee in other comprehensi e income. i idends recei ed or recei able rom associates and oint entures are recognised as a reduction in the carrying amount of the investment. When the Group’s share of losses in an equity accounted in estment equals or e ceeds its interest in the entity including any other unsecured long term recei ables the Group does not recognise urther losses unless it has incurred obligations or made payments on behal o the other entity. nrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction pro ides e idence o an impairment o the asset trans erred. ccounting policies o equity accounted in estees ha e been changed where necessary to ensure consistency with the policies adopted by the Group. he carrying amount o equity accounted in estments is tested or impairment in accordance with the policy described in note 12 e .
et out below are the associates and oint enture o the Group. he entities listed below ha e share capital consisting solely o ordinary shares which are held directly by the Group. he country o incorporation or registration is also their principal place o business and the proportion o ownership interest is the same as the proportion o oting rights held.
17 1 hengdu hen Timema er rystal hina ssociate quity method , , Technology o. td hengdu Timema er rystal hina ssociate quity method , , Technology o. td hen hen Taixiang Wafer o. td hina ssociate quity method Total Timema er Group , , Thinxtra ty imited ustralia ssociate quity method , , , entum a on ndia rivate td ndia oint enture quity method , ,
The Group has a interest in three related companies hengdu hen Timema er rystal Technology o. imited, hengdu Timema er rystal Technology o. imited and hen hen Taixiang Wafer o. imited, hich provide products and services to the frequency control products industry. The Group has a interest in entum a on ndia rivate imited ‘ ’ , a joint venture hich provides products and services to the frequency control industry. The Group has a 42% interest in Thinxtra Pty Limited (‘Thinxtra'), an 'Internet of Things' business, refer note d .
The carrying amounts of the investment in is revie ed at each alance date to determine hether there is any indication of impairment. f any such indication exists, the asset’s recoverable amount is estimated being the higher of an asset’s fair value less costs to sell and the asset’s value in use. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. mpairment losses are recognised in the statement of comprehensive income. This calculation requires the use of estimates hich are outlined in note c .
The future cash flo projections for the products manufactured in ndia are lo er than at the time of the previous revie , due to the long range revenue forecast hich has reduced as a result of expected technology replacement, resulting in products eing manufactured in other GUs ithin the Group. This results is an impairment of , , nil . The carrying value is equivalent to the recovera le amount determined on a value in use asis.
Thinxtra Pty Limited (‘Thinxtra') is an 'Internet of Things' or ‘ oT’ usiness that started in . Thinxtra s focus is on esta lishing an oT net or in ustralia, e ealand and ong ong and providing products, services and solutions ena ling connectivity of devices to the net or . Thinxtra’s business model is based on subscription for access to the net or , platform solutions and the sale of oT products. urther information is availa le at .thinxtra.com. uring the year a on invested a further U .2m in Thinxtra. Rakon’s shareholding would reduce from . to . in the event that Thinxtra’s founding shareholders chose to exercise all their outstanding options. The Directors have concluded that Rakon does not have control over Thinxtra and continues to e accounted for as an associate. The Group commenced equity accounting its investment in Thinxtra from ecem er .
uring the prior year the operations of hengdu hen Timema er rystal Technology o. imited ere closed do n, ith all manufacturing transferred to hengdu Timema er rystal Technology o. imited. process for merger of these t o entities is under ay and expected to e completed during .
There are no other commitments or contingent liabilities in respect of the Group’s investment in associates and the joint venture.
18 RI has received income tax assessments for the 2 to 2 4 years which are being appealed. The assessments show
A decrease in tax losses of . m (tax value 4 , ) for the 2 year compared with the return filed
An increase in taxable income of 2.2m (tax value , ) and 2. m (tax value 2 , ) for the 2 and 2 2 years respectively. The directors of RI believe the positions are likely to be upheld, accordingly no provision was made in CRI’s financial statements.
The tables below provide summarised financial information for the associates and oint venture of the Group. The information disclosed reflects the amounts presented in the financial statements of the relevant associates and oint venture and not the Group’s share of those amounts. They have been amended to reflect ad ustments made by the entity when using the e uity method, including fair value ad ustments and modifications for differences in accounting policy. igures for the total Timemaker group are an aggregate of hengdu hen Timemaker rystal Technology o. Limited, hengdu Timemaker rystal Technology o. Limited and hen hen Taixiang afer o. Limited.
ash cash e uivalents , 2, , 2 ,4 2 ther current assets ,4 ,2 , 44 inancial liabilities (excluding trade payables) 2, 4 2,4 4 ther current liabilities 2, 2 ,2 2, ther non current liabilities 4 4
Revenue , 2 , Interest Income Depreciation and amortisation (2, 44) (2,2 ) Interest expenses ( 2) (244) (Loss) profit for the period ( ) (4, ) (2 )
19
R o s sh re o sso tes o t e ture s et ssets
Goo r s t o o e e t G o sh re pr e ut o ot re o se pe et ssets pr u t ou te oss pro t ore e h e o e e t t o p t o tr ut o ur the e r e re e e I p r e t oo e or the e r e e r h
C sh sh e u e ts ther urre t ssets t es e u tr e p es ther urre t t es ther o urre t t es
20 Re e ue epre t o ort s t o I terest e pe ses oss pro t or the per o
R o s sh re o sso tes o t e ture s et ssets ther o prehe s e o e pr or e r ust e t pe et ssets pr u t ou te oss pro t ore e h e o e e t
I e tor es re st te t the o er o ost e hte er e ost or et re s e ue et re s e ue s the est te se pr e the or r ourse o us ess ess the est te osts o o p et o se e pe ses
R ter s or pro ress she oo s
e tor o so es e e pro s o o s u e the e tor ures o e t u e e ts e eter the pro s o u e e o e tor
ore st re e ue e o su pt o o e tor
21 stor re e ue tu o su pt o o e tor
pe e t t o o te s o e tor es or h h the et re s e ue s ee e to e o er th ost ur the e r e tor o s s r ppe o h h s pro e or the pr or e r he et ou t u e ost o s es ro the o e e t the o so es e e pro s o s
Amortisation ort s t o s h r e to the st te e t o o prehe s e o e o str ht e s s o er the est te use u es e o
Goo te ts e rs o t re – e rs ro u t e e op e t – e rs ssets u er ourse o o stru t o o t re ssets p t se osts o e e op s ste s re re or e s t e ssets ort se u ess the re re t re te to spe te o h r re th t se re re or e s propert p t e u p e t Patents and software I e t e t e ssets th t re u re the Group re st te t ost ess u u te ort s t o p r e t osses u se ue t e pe ture o t e ssets s p t se o he t re ses the uture e o o e e ts e o e the spe sset to h h t re tes other e pe ture s e pe se s urre Research and development pe ture o rese r h t t es u ert e th the prospe t o e s e t or te h o e e u erst s re o se the st te e t o o prehe s e o e s e pe se s urre rese r h e e op e t t t o re ts o er e t r t u or rese r h e e op e t re re o se he e t r ter h e ee et tre te s re u t o e pe ses pe ture o e e op e t t t es here rese r h s re pp e to p or es or the pro u t o o e or su st t pro e pro u ts pro esses s p t se the pro u t or pro ess s te h o er e s e the Group h s su e t resour es to o p ete e e op e t ther e e op e t e pe ture s re o se the st te e t o o prehe s e o e s e pe se s urre
ur the e r spe pro u t e e op e t pro e ts pro e ts pro ress ere re e e or re o er t h s s se o the e pe te sh o s to e e er te the pro e ts It s ou the e pe te sh o s h re u e ere u e to support the rr ues s resu t these spe pro e ts ere u p re he p r e t s th the e e r e sh e er t u ts I p r e t o oo h h re tes to the s e su set o pro u ts u ture I or the te e o u t o s r et se e t s out e ote
22 Breakdown of intangible assets
23
value of the Group’s net i ‘interest ’ Group’
India – OCXO products transferred from France
The recoverable amount of a CGU is determined based on ‘value in use’ calculations. These calculations use pre Key assumptions used in ‘value in use’ calculations
1 Sales growth –
24 2 Gross margin – ana ement forecasted ross mar in based on past performance and its e pectations of mar et development also ta in into account radual decline in avera e sellin prices. nticipated industr trends product innovations manufacturin efficienc and ra material cost improvements have also been factored into these ross mar in assumptions. China, net profit – ana ement forecasted net profit based on a combination of factors includin industr forecasts for the e mar et se ments future product innovation and estimations of its o n share of the mar et reflective of the ualit of its product ran e and technolo advanta es. India, net profit – ana ement forecasted net profit based on a combination of factors includin industr forecasts for the e mar et se ments future product innovation and estimations of its o n share of the mar et reflective of the ualit of its product ran e and technolo advanta es. These assumptions have been used for the anal sis of each CGU ithin the business se ment. The discount rates used are pre ta and reflect specific ris s relatin to the relevant se ments.
New Zealand CGU
If the sales used in the value in use calculation had been 2.5% lower than management’s estimates the Group would have recognised an impairment a ainst the carr in amount of net assets of . m. If the ross mar in used in the value in use calculation had been 2.5% lower than management’s estimates the Group would have reco nised an impairment a ainst the carr in amount of net assets of . m. If the pre ta discount rate applied to the cash flo pro ections as . instead of . the recoverable amount of the CGU ould e ual its carr in amount.
France CGU The recoverable amount is estimated to be . m . m . If the sales used in the value in use calculation had been . % lower than management’s estimates the Group ould have reco nised an impairment a ainst the carr in amount of net assets of . If the ross mar in used in the value in use calculation had been 2.5% lower than management’s estimates the Group would have reco nised an impairment a ainst the carr in amount of net assets of . m. If the pre ta discount rate applied to the cash flo pro ections as . instead of . the recoverable amount of the CGU ould e ual its carr in amount.
China CGU The recoverable amount is estimated to be . m . m . This e ceeds the carr in amount of the CGU at balance date b . m . m . There are no reasonabl possible chan es in an of the e assumptions that ould have caused the carr in amount to e ceed its recoverable amount.
India CGU The recoverable amount is estimated to be . m . m . This e ceeds the carr in amount of the CGU at balance date b . m . n chan es to the e assumptions ould li el cause the carr in amount to e ceed its recoverable amount. Cash flo s be ond the five ear period are e trapolated usin the estimated ro th rates stated belo .
e ealand . . . . United in dom . . . . France . . . . China . . . . India . . . .
Current assets are classified as held for sale if their carr in amount ill be recovered principall throu h a sale transaction rather than throu h continuin use and a sale is considered hi hl probable. The are measured at the lo er of their carr in amount and fair value less costs to sell e cept for assets such as deferred ta assets assets arisin from emplo ee benefits financial assets and investment propert that are carried at fair value and contractual ri hts under insurance contracts hich are specificall e empt from this re uirement. n impairment loss is reco nised for an initial or subse uent rite do n of the asset to fair value less costs to sell. ain is reco nised for an subse uent increases in fair value less costs to sell of an asset but not in e cess of an cumulative impairment loss previousl reco nised. ain or loss not previousl reco nised b the date of the sale of the current asset is reco nised at the date of dereco nition. Current assets are not depreciated or amortised hile the are classified as held for sale. Interest and other e penses attributable to the liabilities of a disposal roup classified as held for sale continue to be reco nised.
25 urrent assets classi ied as held or sale are presented separatel rom the other assets in the balance sheet.
and building
uring the ear a conditional agreement or the sale o land and buildings at rgenteuil rance was entered into. n arch 2 the irectors consider the contract was su icientl progressed to consider the sale highl li el and e pected to be completed be ore eptember 2 . t this time the land and buildings were reclassi ied as held or sale and measured at the lower o their carr ing amount and air value less costs to sell. he air value o the land was based on the sale price in the agreement which was higher than the carr ing amount there ore no change to the carr ing amount was made.
rdinar shares are classi ied as e uit . ncremental costs directl attributable to the issue o new shares or options are shown in e uit as a deduction net o ta rom the proceeds.
Shares issued rdinar shares – cash Shares issued rdinar shares – cash 5 .
t arch 2 the total number o ordinar shares including treasur shares is 22 55 2 2 shares 2 5 made up as ollows 22 are ull paid shares 2 5 2
2 2 unpaid ordinar shares were on issue and held in trust on behal o participants in the a on hare lan 2 2
unpaid ordinar shares were on issue and held b a on rustee imited or uture allocation to participants 2 . iward is a aiwan based cr stal manu acturer which is listed on the aiwan toc change. n ebruar 2 iward paid m cash in return or new ull paid ordinar shares o a on and rights arising rom a technolog license agreement. iward has ta en up one new appointment to Rakon’s board. e er also note 2 b .
2 26
e ro p makes estimates and ass mptions on ernin t e t re e res tin a o ntin estimates wi b de inition rare e a t e re ated a t a res ts e estimates and ass mptions t at in o ed a i er de ree o d ement or omp e it and o items w i are more ike to be materia ad sted d e to estimates and ass mptions t rnin o t to be wron are in ded in se tion and pe i i a t ese are
n estment b iward attrib tion and apportionment o pro eeds note b
mpairment o in estment in R note
a ation o in entor obso es en e note a
stimated se i e o intan ib e assets note b
stimated oodwi impairment note
oin on ern note stimate and d ements not in ded abo e are detai ed be ow
e ro p as re ired b R as assessed as at ar w et er an indi ators o impairment e ist n doin so mana ement and t e ire tors a e onsidered a tors in din t e rrent pro itabi it o t e ro p and t e market apita isation a e o t e ompan in omparison to t e ro p s net asset a e n ndertakin s an assessment impairments were taken p as detai ed in note d o ot er impairments were identi ied and t e ire tors onsider t e net asset a e o t e ro p to be appropriate
e ro p is s b e t to in ome ta es in n mero s risdi tions i ni i ant d ement is re ired in determinin t e wor dwide pro ision or in ome ta es and re o nition o de erred ta assets in re ation to osses ere are man transa tions and a ations or w i t e timate ta determination is n ertain d rin t e ordinar o rse o b siness e ro p re o nises iabi ities or anti ipated ta a dit iss es based on estimates o w et er additiona ta es wi be d e ere t e ina ta o t ome o t ese matters is di erent rom t e amo nts t at were initia re orded s di eren es wi impa t t e in ome ta and de erred ta pro isions in t e period in w i s determination is made
e ro p as e pos re to t e o owin risks redit risk
i idit risk
arket risk is se tion presents in ormation abo t t e ro p’s exposures to each of the above risks in din t e ro p’s objectives, policies pro esses or meas rin and mana in risk and t e ro p’s management of capital. rt er antitati e dis os res are in ded t ro o t t ese onso idated inan ia statements e oard as o era responsibi it or t e estab is ment and o ersi t o t e ro p’s risk management framework. e oard as estab is ed t e dit and Risk ana ement ommittee w i to et er wit t e oard is responsib e or de e opin and monitorin t e ro p’s risk management policies. e ro p’s risk management policies are established to identify and analyse the risks faced by the ro p to set appropriate risk imits and ontro s and to monitor risk ad eren e to imits Risk mana ement po i ies and s stems are re iewed re ar to re e t an es in market onditions and t e ro p’s activities. e ro p t ro its trainin and mana ement standards and pro ed res aims to de e op a dis ip ined and onstr ti e ontro en ironment in w i a emp o ees nderstand t eir ro es and ob i ations e oard and dit and Risk ana ement ommittee o ersees ow mana ement monitors omp ian e wit t e ro p’s risk management po i ies and pro ed res and re iews t e ade a o t e risk mana ement ramework in re ation to t e risks a ed b t e ro p
redit risk is t e risk o inan ia oss to t e ro p i a stomer or o nterpart to a inan ia instr ment ai s to meet its ontra t a ob i ations and arises prin ipa rom t e ro p’s receivables from customers.
e ro p’s exposure to credit risk is influenced mainly by t e indi id a ara teristi s o ea stomer e demo rap i s o t e ro p’s stomer base in din t e de a t risk o t e ind str and o ntr in w i stomers operate as ess in en e on redit risk e ro p’s most significant customer acco nts or o e terna re en e wit t e ne t most si ni i ant stomer a o ntin or o e terna re en e The Group’s most significant customer accounts for $9.5m m re en e is in t e oba positionin se ment and is s pp ied o t o ew ea and
27 The Group has established credit policies under which each new customer is analysed individually for creditworthiness before payment and delivery terms and conditions are agreed. The Group’s review includes trade references and external ratings, where appropriate and in some cases bank references. urchase limits are established for each customer, which represents the maximum open amount these limits are reviewed periodically. ustomers that fail to meet the Group’s benchmark creditworthiness, may transact with the Group only on a prepayment basis. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at arch is set out below other than for derivatives which is shown in note b .
inancial assets at fair value through profit or loss note b Trade and other receivables note c 9, 9,9 ash and cash e uivalents note a , 5 , orward exchange contracts and collar options used for hedging note b 9 ,9 5
The maximum exposure to credit risk for trade receivables at arch by currency of denomination is set out in note c .
i uidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing li uidity is to ensure, as far as possible, that it will always have sufficient li uidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of days, including the servicing of financial obligations this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. n addition, the Group maintains the following lines of credit
$ . m cash advance facility with . The interest rate is reset every – 9 days and interest is payable based on the bank bill rate for that interest period, the term funding premium and the applicable margin. The drawn down balance at balance date was $ .5m and the facility expiry date is ay . $9. m overdraft limit. nterest is payable at the orporate ndicator ate plus applicable margin. lso refer to note d . acilities are secured by a general security deed over all the present and future assets and undertakings of the Group and the Group has agreed to certain capital re uirements, restrictions on dividend distributions and capital expenditure. The financial covenants include net tangible assets to total tangible assets, net debt to T and T to interest. nterest is based on wholesale market interest rates, bank margin and applicable line fee. uring the year the ompany reduced its cash advance facilities after application of proceeds from the investment by iward. efer note b and note . n ay akon renewed its facilities with , refer also notes d and b .
$ 5. m cash advance facility with . The interest rate is reset every – 9 days and interest is payable based on the bank bill rate for that interest period, the term funding premium and the applicable margin. The drawn down balance at balance date was $ m and the facility expiry date is ay .
$ . m cash advance facility with . The interest rate is reset every – 9 days and interest is payable based on the bank bill rate for that interest period, the term funding premium and the applicable margin. The facility expiry date is eptember .
$9. m overdraft limit. nterest is payable at the orporate ndicator ate plus applicable margin. lso refer to note d . acilities are secured by a general security deed over all the present and future assets and undertakings of the Group.
28 he following are the contractual undiscounted cash flow maturities of financial liabilities including interest pa ments and e cluding the impact of netting agreements
6 – 12 months 1 – 2 years 2 – 5 years Financial liabilities ecured ban loans note d erivatives note b rade and other pa ables note e an overdraft note d inance leases note d
6 – 12 months 1 – 2 years 2 – 5 years Financial liabilities ecured ban loans note d erivatives note b rade and other pa ables note e an overdraft note d inance leases note d
ar et ris is the ris that changes in mar et prices such as foreign e change rates interest rates and e uit prices will affect the roup’s income or the value of its holdings of financial instruments. he ob ective of mar et ris management is to manage and control mar et ris e posures within acceptable parameters whilst optimising the return on ris . he roup enters into derivatives in the ordinar course of business and also incurs financial liabilities in order to manage mar et ris s. ll such transactions are carried out within the guidelines set b the oard and udit and is anagement ommittee. enerall the roup see s to appl hedge accounting in order to manage volatilit in the statement of comprehensive income.
he roup is e posed to currenc ris on sales and purchases that are denominated in a currenc other than the respective functional currencies of the roup’s entities, primarily ew ealand ollars terling and the uro . he currencies in which these sales and purchases transactions are primaril denominated are ollars apanese en and . he roup uses foreign currenc forward e change contracts and collar options to hedge its currenc ris . nder the roup’s Treasury anagement olic minimum hedging of and of estimated foreign currenc e posure in respect of forecast sales and purchases is re uired over the ne t – and – months respectivel sub ect to an variation approved b the oard. t arch and of currenc e posures over the ne t – and – months respectivel are hedged with outstanding foreign currenc forward e change contracts and collar options.
29 os re to rren y r s T e ta le el summarises t e rei n e an e e p sure n t e net m netary assets ea r up entity a ainst its respe ti e un ti nal urren y, e presse in
1 ar h 2 1 s s s s a n imite , , a n imite a n ran e , a on ro 2 2 1 1
1 ar h 2 16 s s s s a n imite , , a n imite a n ran e , a on ro 2 15 25 1 1 2
T e ll in si ni i ant e an e rates applie urin t e year
era e rate e ort n ate rate 2 1 2 16 2 1 2 16
ens t ty ana ys s ea enin t e a ainst t e ll in urren ies at ar ul a e in rease e rease e uity an pr it r l ss y t e am unts s n el ase n ist ri al m ements, a in rease r e rease in t e is nsi ere t e a reas na le estimate T is analysis assumes t at all t er aria les, in parti ular interest rates remain nstant T e analysis as per rme n t e same asis r
ty ro t or oss 1 ar h 2 1 s s , ,
ty ro t or oss 1 ar h 2 16 s s , ,
stren t enin t e a ainst t e a e urren ies at ar ul a e a t e e ual ut pp site e e t n t e a e urren ies t t e am unt s n a e, n t e asis t at all t er aria les remain nstant
30 ea enin t e pur ase urren ies el a ainst t e r ar rei n e an e ntra ts utstan in at ar , ul a e in rease e rease e uity an pr it r l ss y t e am unts s n el T is analysis assumes t at all t er aria les, in parti ular interest rates, remain nstant T e analysis is per rme n t e same asis r
a r a e ty ro t or oss 1 ar h 2 1 s s s or ar ore n e han e ontra ts – ash o he es et uy sell , et uy sell
or ar ore n e han e ontra ts – he or tra n et uy sell et uy sell et uy sell
a r a e ty ro t or oss 1 ar h 2 16 s s s or ar ore n e han e ontra ts – ash o he es et uy sell , et uy sell
or ar ore n e han e ontra ts – he or tra n et uy sell et uy sell et uy sell
stren t enin t e pur ase urren ies el , a ainst t e r ar rei n e an e ntra ts utstan in at ar ul a e in rease e rease e uity an pr it r l ss y t e am unts s n el T is analysis assumes t at all t er aria les, in parti ular interest rates remain nstant T e analysis is per rme n t e same asis r
a r a e ty ro t or oss 1 ar h 2 1 s s s or ar ore n e han e ontra ts – ash o he es et uy sell , et uy sell
or ar ore n e han e ontra ts – he or tra n et uy sell et uy sell et uy sell
a r a e ty ro t or oss 1 ar h 2 16 s s s or ar ore n e han e ontra ts – ash o he es et uy sell , et uy sell
or ar ore n e han e ontra ts – he or tra n et uy sell et uy sell et uy sell Under the Group’s Treasury Management Policy, a minimum term e t is re uire t e n i e interest rates T e r up a pts a p li y t mana e its e p sure t interest rates y nsi erin i e rate interest rate s ap a reements
31 Profile t the March the interest rate pro ile o the Group’s interest earing inancial instruments as
inancial assets note a , , inancial lia ilities , , inancial assets inancial lia ilities , ,
Sensitivity analysis n increase o asis points in interest rates at March ould ha e increased decreased e uity and pro it or loss y the amounts sho n elo This analysis assumes that all other aria les, in particular oreign e change rates, remain constant The analysis or as per ormed on the same asis as
aria le rate instruments i ed rate instruments
aria le rate instruments i ed rate instruments
decrease o asis points in interest rates at March ould ha e the opposite impact to hat is sho n a o e
The oard’s policy is to maintain a capital base made up o de t and e uity so as to sustain uture de elopment o the usiness There ere no changes to the Group’s approach to capital management during the year.
or the year ended March the Group reported a net loss a ter ta or the year o m loss o m and net operating cash in lo s o m in lo o m s at March the Group had net assets o m m , or ing capital o m m and cash alances o , , n the year the Group as ad ersely impacted y a challenging mar et, particularly reduced spend in telecommunications in rastructure resulting in a decline in re enues o m in the telecommunication segment The Group results ha e also een ad ersely impacted rom restructures that ere carried out in the e ealand and rance cash generating units This resulted in non recurring costs negati ely impacting the current year earnings The Group ensured unding as in place to assist ith operational cash re uirements and the ongoing strategic plan or the usiness through the arrangement o an acilities and e uity in ection rom i ard o m The Group is reliant on its an acility re er note d and e uity as the principal sources o capital management The a ility o the Group to remain in compliance ith its an ing co enants has een considered y the irectors in the adoption o the going concern assumption during the preparation o these inancial statements
– The m de t acility ith as rene ed on May ith a ne maturing date o May dditional to this, the Group has agreed a reduction of $1.5m of its overdraft facility (from $9.3m to $7.8m) that was assessed as surplus to the Group’s requirements t pril the last management reporting date , the Group s net de t ta ing into account these acilities and the cash on hand is , and additional acilities o m as a aila le
32 acilities are secured by a general security deed over all the present and future assets and underta ings of the Group and the Group has agreed to certain capital requirements restrictions on dividend distributions and capital e penditure. he financial covenants include net tangible assets to total tangible assets net debt to and to interest. nterest is based on wholesale mar et interest rates ban margin and applicable line fee. Compliance with bank covenants is dependent on the Group’s financial performance. he irectors have approved a five year forecast and business valuation impairment model. he irectors forecast that the Group will trade at levels appropriate to manage its wor ing capital requirements and meet its ban covenants for the period of 1 months from the date of authorisation of these financial statements under its new facility agreement signed on 8 ay 17 as detailed in note 3 d). he irectors have considered the achievability of the assumptions underlying those forecasts including forecast sales and positioning the business for the future. orecasts indicate that the Group will meet all covenants and net cash requirements for the 1 months from the date of authorisation of these financial statements and that there is sufficient headroom to allow for downward sensitivities should the actual revenue and margin levels be lower than forecast. s described in note 5 d) the land and buildings at rgenteuil rance is held for sale. he funds from the sale once complete will be applied to reduce the debt facility under the renewed facility.
hile current financial forecasts for the Group show continued compliance with its obligations under its ban facility agreement the irectors consider there are potential uncertainties within the forecast assumptions required to meet profitability forecasts related predominantly to achieving forecast sales and margins. n assessing the going concern assumption the irectors have considered the ris and mitigating actions that can be ta en if the Group was unable to continue meeting its obligations under its ban facility agreement and was unable to renegotiate the facility meet profitability forecasts or obtain alternative sources of funding. he irectors believe that the options set out below are available to address any ris associated with doubt over the ability to continue as a going concern should they be required he planned sale of the land and buildings at rgenteuil rance (where covenant calculations do not rely on the proceeds)
educing operating costs (providing immediate benefit in earnings and cash flow)
educing the level of planned capital e penditure relating to investment for longer term benefit (providing a potential immediate benefit in cash flow of $ m annually) rade debtor financing (due to the quality of debtors and history of recoverability)
aising of new capital
ale of investments
icense of intellectual property. fter assessing the uncertainties and options described above the irectors reached the conclusion that the Group is a going concern.
–
oss on disposal of property plant equipment and intangibles (33 ) (11 ) Foreign exchange gains/(losses) – net orward foreign e change contracts eld for trading 798 75 ( osses) gains on revaluation of foreign denominated monetary assets and liabilities 1 ( 9) 71 Total foreign exchange gains – net Total other gains – net
1 ncludes realised and unrealised gains (losses) arising from accounts receivable and accounts payable. edge accounting is sought on the initial sale of goods and purchase of inventory subsequent movements are recognised in trading foreign e change. uring the year derivatives were closed out to ta e advantage of favourable e change rates resulting in a gain of $9 5 which related to forecast sales e pected to occur during 17. dditional derivatives closed out related to forecast sales e pected to occur during 18. t balance date a gain of $1 9 (2016: nil) is held within the ‘cash flow hedge reserve – realised’ on the balance sheet in relation to these. his is e pected to be recognised in the statement of comprehensive income during 18 as the original forecast transactions occur.
33 ) lo ee enefits ex enses
cco nting olic mplo ee entitlements to salaries wages and annual leave to be settled within 12 months of balance date represent present obligations resulting from emplo ees’ services provided up to the balance date. hese are calculated at undiscounted amounts based on remuneration rates that the entit e pects to pa .
rea o n of e lo ee enefits ex enses
s s ages and salaries 22 1 0 Contributions to defined contribution plans 6 ( ecrease) increase in liabilit for rench retirement indemnit plan (note b) ( ) 2 ncrease in liabilit for long service leave (note b) 1 102 edundanc cost (note b) 0 1 mplo ee share scheme (note ) 2 1 Total e lo ee enefits ex enses
c) et finance (costs)/inco e
cco nting olic nterest income is recognised in the statement of comprehensive income as it accrues using the effective interest method.
rea o n of finance (costs)/inco e
s s Financial inco e nterest income Financial ex enses nterest e pense on bank borrowings (1 16) (1 12 ) nwinding of provision discount (1 ) Total financial ex enses (1 ) (1 12 ) et finance costs ( ) ( )
) nco e tax ex ense
s s Current ta ( 2 ) ( 1 ) eferred ta credit (e pense) (note ) (161) nco e tax ex ense ( ) ( )
he ta on the Group s result before ta differs from the theoretical amount that would arise using the weighted average ta rate applicable to the results of the consolidated entities.
34 econciliation of inco e tax ex ense s s nco e tax ex ense ( ) ( )
ther financial assets an lia ilities
a) ash an cash e i alents
cco nting olic
rea o n of cash an cash e i alents s s
Total cash an cash e i alents ( )
35 ) eri ati e financial instr ents
ssets ia ilities ssets ia ilities s s s s Interest rate swaps – cash flow hedge Forward foreign exchange contracts – held for trading Forward foreign exchange contracts – cash flow hedges Forward foreign exchange collar option – cash flow hedges Forward foreign exchange collar option – held for trading Total eri ati e financial instr ents Less: non-current forward foreign exchange – cash flow hedges rrent eri ati e financial instr ents
For ar foreign exchange contracts
nterest rate s a contracts
c) ecognise fair al e eas re ents
–
–
– ’s foreign ear en e ear en e arch arch s s Financial assets – derivative instruments – – Financial liabilities – derivative instruments – –
36 ther non financial assets an lia ilities
a) ro ert lant an e i ent
cco nting olic Ite s of propert plant and e uip ent are stated at cost less accu ulated depreciation and i pair ent losses he cost of purchased propert plant and e uip ent is the alue of the consideration gi en to ac uire the assets and the alue of other directl attri uta le costs which ha e een incurred in ringing the assets to the location and condition necessar for their intended ser ice here parts of an ite of propert plant and e uip ent ha e different useful li es the are accounted for as separate ite s of propert plant or e uip ent he roup recognises in the carr ing a ount of an ite of propert plant or e uip ent the cost of replacing part of such an ite when that cost is incurred onl when it is pro a le that the future econo ic enefits e odied with the ite will flow to the roup and the cost of the ite can e easured relia l ll other costs are recognised in the state ent of co prehensi e inco e as an expense when incurred epreciation of propert plant and e uip ent other than freehold land is calculated on a straight line asis so as to expense the cost of the assets to their expected residual alues o er their useful li es as follows:
Land il uildings – ears Leasehold i pro e ents – ears o puter hardware – ears lant and e uip ent – ears Furniture and fittings – ears ssets under course of construction il The assets’ residual values and useful lives are reviewed and ad usted if appropriate at each alance date ains and losses on disposals are deter ined co paring the proceeds with the carr ing a ount and are recognised within ‘other gains losses – net’ in the state ent of co prehensi e inco e
air ent uring the ear specific e uip ent spare parts were dee ed to e no longer useful due to technical o solescence or age s a result these spare parts were full i paired hese spare parts are included in the plant and e uip ent categor and for part of the ew ealand cash generating unit
rea o n of ro ert lant an e i ent he following ta le includes land and uildings at rgenteuil France which ha e een reclassified as held for sale refer note d
37 an an easehol lant an o ter ssets n er il ings i ro e ents e i ent har are ther constr ction Total s s s s s s s t arch st u ulated de re iati n i air ent
et oo al e
ear en e arch enin net value rei n e han e differen es dditi ns is sals e re iati n har e e re iati n reversal n dis sals Transfers losing net oo a o nts
t arch st u ulated de re iati n i air ent
et oo al e ear en e arch enin net value rei n e han e differen es dditi ns is sals ssets lassified as held f r sale e re iati n har e e re iati n reversal n dis sals air ent Transfers losing net oo a o nts
t arch st u ulated de re iati n i air ent et oo al e
) ro isions for other lia ilities an charges
cco nting olicies r visi n is re nised in the alan e sheet when the r u has a resent le al r nstru tive li ati n as a result f a ast event and it is r a le that an utfl w f e n i enefits will e re uired t settle the li ati n f the effe t is aterial r visi ns are deter ined dis untin the e e ted future ash fl ws at a re ta rate that refle ts urrent ar et assess ents f the ti e value f ne and where a r riate the ris s s e ifi t the lia ilit
38 The Group’s net obligation in res e t f the ren h retire ent inde nit lan is the a unt f future enefit that e l ees have earned in return f r their servi e in the urrent and ri r eri ds The li ati n is al ulated usin the r e ted unit redit eth d and is dis unted t its resent value and the fair value f an related assets is dedu ted The ren h retire ent inde nit lan entitles er anent French employees to a lump sum on retirement. The payment is dependent on an employee’s final salary and the number of years f servi e rendered ren h e l ees are entitled t a retire ent a ut n e the have et s e ifi riteria This is a ne ff a ent ased n servi e ti e at retire ent date r visi n has een reated t re nise this st ta in in nsiderati n f the ti e served r a ilit f attain ent and dis unt rates n a tuarial valuati n was erf r ed at ar h The r u ’s net obligation in respect of long service leave is the amount of future benefit that employees have earned in return f r their servi e in the urrent and ri r eri ds The li ati n is al ulated usin the r e ted unit redit eth d and is dis unted t its resent value ew ealand e l ees are entitled t l n servi e leave after the leti n f ears ntinu us servi e in the f r f s e ial h lida s and all wan e r visi n has een reated t re nise this st ta in int nsiderati n the ti e served r a ilit f attain ent and dis unt rates a n is re uired t rest re the leased re ises at t ellin t n u land ew ealand t their ri inal nditi n at the end f the res e tive lease ter s r visi n has een re nised f r the resent value f the esti ated e enditure re uired t re ve an leaseh ld i r ve ents These sts have een a italised as art f the st f leaseh ld i r ve ents and are a rtised ver the lease ter s
n e te er the r sal f r re r anisati n was a e ted the r ns e ti n d inistrati n and the r ers un ils in ran e and uni ated t the e l ees f a n ran e as a lan t restru ture urin a r sal f r re r anisati n was dis ussed with the r ns e ti n d inistrati n and r ers un il in ran e and uni ated t the e l ees f a n ran e as a lan t restru ture estru ture related sts f were in urred t ar h the alan e f the restru turin r visi n re resents the esti ated sts t lete the a n ran e e te er and ve er lans t restru ture
rea o n of ro isions for other lia ilities an charges
etire ent ong ser ice estr ct re ease a e Total ro ision lea e ro ision goo s s s s s t arch
har ed redited t the state ent f rehensive in e sed durin the ear t arch
har ed redited t the state ent f rehensive in e sed durin the ear t arch e resente urrent rti n n urrent rti n
Total ro isions for other lia ilities an charges
eferre inco e tax eferred in e ta assets and lia ilities are ffset when there is a le all enf r ea le ri ht t ffset urrent ta assets and urrent ta lia ilities and when the deferred in e ta es relate t the sa e fis al auth rit The ffset a unts are as f ll ws
39 s s eferre tax assets eferred ta assets to be recovered after more than months eferred ta assets to be recovered ithin months Total eferre tax assets eferre tax lia ilities eferred ta liabilities to be recovered after more than months eferred ta liabilities to be recovered ithin months Total eferre tax lia ilities ( ) ( ) et eferre tax asset
s s t arch Foreign e change differences osses transferred to subsidiaries eferred ta on cash flo hedge eferred ta on net investment hedge ncome statement credit e pense note d
t arch
The movement in deferred income ta assets and liabilities during the year ithout ta ing into consideration the offsetting of balances ithin the same urisdiction is as follo s
ro ert F t re lant lo ee inco e tax e i ent ntangi les enefits ther enefit Total s s s s s s t arch ( ) harged credited to income statement osses transferred to subsidiaries redited to e uity Foreign e change difference t arch harged credited to income statement osses transferred to subsidiaries harged to e uity Foreign e change difference t arch ncludes deferred ta arising from financial arrangements and inventory provisioning. eferred income ta assets are recognised for ta losses to the e tent the related ta benefit is e pected to be realised through future ta able profits. t balance date a on imited had ta losses of hich have not been recognised in deferred income ta assets and have no e piry date. uring the year a e ealand ta audit as completed for the years to resulting in the forfeiture of of ta losses. uring the prior year a on imited recognised ta losses of not previously recognised in deferred income ta assets. These ere utilised against prior year ta able income.
40 ther reser es
Foreign c rrenc translation e ging hare o tion reser e reser e reser e Total s s s s t arch ( ) ( ) ( ) ash flo hedges Fair value gains losses in year Ta on fair value gains Transfers to sales Ta on transfers to income ta e pense urrency translation differences ubsidiaries ssociates and oint venture Net investment hedge – gross Net investment hedge – tax ther Fair value of share options issued t arch ( ) ( ) ash flo hedges Fair value gains losses in year Ta on fair value gains Transfers to sales Ta on transfers to income ta e pense urrency translation differences ubsidiaries ssociates and oint venture ther Fair value of share options issued t arch ( ) ( )
ontingencies t is not anticipated that any material liabilities ill arise from the contingent liabilities.
o it ents
a) a ital co it ents apital e penditure contracted for at the balance date but not yet incurred is as follo s
s s roperty plant and e uipment ntangible assets Total ca ital co it ents
) eases
cco nting olic The Group is the lessee. eases here the lessor retains substantially all the ris and re ards of o nership are classified as operating leases. ayments made under operating leases net of any incentives received from the lessor are charged to the statement of comprehensive income on a straight line basis over the period of the lease.
41 inan e eases hi h trans er to the ro s stantia a the ris s and ene its in identa to o nershi o the eased item are a ita ised at the in e tion o the ease at the air va e o the eased asset or i o er at the resent va e o the minim m ease a ments ease a ments are a ortioned et een the inan e harges and red tion o the ease ia i it so as to a hieve a onstant rate o interest on the remaining a an e o the ia i it inan e harges are re ognised in inan e osts in ro it or oss a ita ised eased assets are de re iated over the shorter o the estimated se i e o the asset and the ease term i there is no reasona e ertaint that the ro i o tain o nershi the end o the ease term
Finance lease – ro as lessee he ro has one inan e ease or hoto o iers ith a arr ing amo nt o his ease ontra t ex ires in
s s No ater than ear ater than ear and no ater than ears Total ini lease a ents ess amo nts re resenting inan e harges resent al e of ini lease a ents
n ded in the inan ia statements as rrent orro ings note d Non rrent orro ings note d Total finance lease incl e in orro ings
erating lease co it ents – ro as lessee he ro eases vario s a tories o i es and areho ses nder non an e a e o erating ease agreements he ease terms are et een and ears and the ma orit o ease agreements are rene a e at the end o the ease eriod at mar et rate he ro a so eases motor vehi es nder o erating ease agreements he ease terms are or ears he ease ex endit re harged to the statement o om rehensive in ome d ring the ear is dis osed in note he t re aggregate minim m ease a ments nder non an e a e o erating eases are as o o s
s s No ater than ear ater than ear and no ater than ears ater than ears Total non cancella le o erating leases
elate art infor ation ring the rior ear a on imited eased remises rom rident nvestments imited (‘ rident’) rident is o ned three ire tors o a on imited arren o inson rent o inson and arren o inson Norma ommer ia ease agreements ere in a e or the remises he ease osts harged rident to a on imited or the rior ear ere rident so d the eased remises in e r ar to an nre ated art no amo nts are o tstanding and a a e to rident at ar h ni No amo nts o ed a re ated art have een ritten o or orgiven d ring the ear
a) e anage ent co ensation
s s a aries and other short term em o ee ene its hare ased a ments
42
( ) ( ) ( ) ( )
( )
( )
)
a reduction of $1.5m of its overdraft facility (from $9.3m to $7.8m) that was assessed as surplus to the Group’s requir ) )
43
asic earnin s per share is calculated y dividin the profit or loss attri uta le to equity holders of the Group y the wei hted avera e num er of ordinary shares on issue durin the year. urin the year 38 1 81 ordinary shares were issued refer note a) and note .
ei hted avera e num er of ordinary shares on issue 195 81 188 9 5
ontinuin operations oss attri uta le to equity holders of the Group ($13 558) ($1 731)
iluted earnin s per share is calculated y ad ustin the wei hted avera e num er of ordinary shares outstandin to assume conversion of all dilutive potential ordinary shares. he Group has two cate ories of dilutive potential ordinary shares restricted ordinary shares and share options. urin the year 38 1 81 ordinary shares were issued refer note ) and note .
ei hted avera e num er of ordinary shares on issue 195 81 188 9 5 d ustments for dilutive potential ordinary shares (restricted ordinary shares and share 3 9 3 5 1 options) ei hted avera e num er of ordinary shares for diluted earnin s per share 199 18 19 1 7
ontinuin operations oss attri uta le to equity holders of the Group ($13 558) ($1 731)
he Group’s management awards qualifying employees bonuses in the form of share options and conditional ri hts to redeema le ordinary shares from time to time on a discretionary asis. hese are su ect to vestin conditions and their fair value is reco nised as an employee enefit e pense with a correspondin increase in other reserve equity over the vestin period. he fair value determined at rant date e cludes the impact of any non mar et vestin conditions such as the requirement to remain in employment with the Group. on mar et vestin conditions are included in the assumptions a out the num er of options that are e pected to vest and the num er of redeema le ordinary shares that are e pected to transfer. t each alance date the estimate of the num er of options e pected to vest and the num er of redeema le ordinary shares e pected to transfer is revised and the impact of any chan e in this estimate is reco nised in the statement of comprehensive income with a correspondin entry to equity. he proceeds received net of any directly attri uta le transaction costs are credited to share capital when the options are e ercised or the conditional ri hts to redeema le ordinary shares are transferred.
n arch a on imited esta lished a share plan to ena le selected employees of a on imited to acquire shares in the ompany throu h the plan trustee a on rustee imited. nder the terms of the share plan 759 ordinary shares were issued at deemed mar et value at that time to a on rustee imited to hold on ehalf of the participatin employees. ollowin a share split on 13 pril the resultin num er of shares under this plan was 859 137. ll shares issued to a on rustee imited have een allocated. he shares ran equally in all respects with all other ordinary shares issued y the ompany. he outstandin loan alance provided y a on imited to participatin employees in respect of these shares totals $195 ( 1 $ 8 ). oans are provided on an interest free asis and the employee may repay all or part of the loan at any time. o repayments were due at 31 arch 17 ( 1 nil). he rust eed ma es provision for the ompany to require repayment of the loans in certain circumstances. s at 31 arch 17 3 1 983 (31 arch 1 ) shares were held y a on rustee imited. hares issued under the share plan are held on trust y a on rustee imited. participatin mana er may request the trustee to transfer the relevant shares to him or her provided the loan to that mana er has een repaid in full. he ompany may remove and appoint trustees at any time. he irectors and shareholders of a on rustee imited are ryan o rid e and ruce rvine.
44 ares eld by t e s are plan represent appro imately of t e ompany s total s ares on issue as at balan e date
n uly a on imited establis ed an employee s are option s eme wit options issued to sele ted employees a option granted will on ert to one ordinary s are on e er ise parti ipant may e er ise up to alf of is or er options any time after t e se ond and t ird anni ersaries sub e t to t e weig ted a erage s are pri e on t e days pre eding t e date of e er ise e eeding a ben mar s are pri e ptions lapse on t eir fourt anni ersary
pening balan e ranted an elled
are options outstanding at ar and e piring in t e year to ar
e weig ted a erage fair alue of options granted of per option was determined using t e la oles aluation model e signifi ant inputs into t e model were t e following weig ted a erage s are pri e of at t e grant date e er ise pri e s own abo e olatility of di idend yield of an a erage e pe ted option life of years and an annual ris free interest rate of e olatility was measured at t e standard de iation of ontinuously ompounded s are returns based on statisti al analysis of daily s are pri es from t e mont s pre eding uly uring t e year options were an elled due to parti ipants easing employment ere a e been no allo ations sin e uly
e prin ipal a ounting poli ies adopted in t e preparation of t ese onsolidated finan ial statements a e been set out in se tions to along wit t e asso iated se tions dditional rele ant poli ies are detailed below and a e been onsistently applied to all t e years presented unless ot erwise stated
e ompany is registered under t e ompanies t and is a reporting entity under art of t e inan ial ar ets ondu t t e finan ial statements of t e roup a e been prepared in a ordan e wit t e requirements of art of t e inan ial ar ets ondu t t and t e ain oard isting ules ese onsolidated finan ial statements for t e year ended ar a e been prepared in a ordan e wit ew ealand enerally epted ounting ra ti e ey omply wit ew ealand equi alents to nternational inan ial eporting tandards ot er ew ealand a ounting standards and aut oritati e noti es t at are appli able to entities t at apply e onsolidated finan ial statements also omply wit nternational inan ial eporting tandards e roup is a profit oriented entity for t e purposes of omplying wit ese finan ial statements omprise a on and its subsidiaries e finan ial statements a e been prepared on a istori al ost basis e ept for deri ati e finan ial instruments – measured at fair alue and assets eld for sale – measured at ost e preparation of finan ial statements in a ordan e wit requires management to ma e udgements estimates and assumptions t at affe t t e appli ation of poli ies and reported amounts of assets and liabilities in ome and e penses tual results may differ from t ese estimates refer to se tion
inan ial assets and finan ial liabilities are re ognised on t e Group’s balan e s eet w en t e roup be omes a party to t e ontra tual pro isions of t e instrument inan ial assets are dere ognised w en t e rig ts to re ei e as flows from t e in estments a e e pired or a e been transferred and t e roup as transferred substantially all ris s and rewards of owners ip
e fair alue of finan ial assets and finan ial liabilities must be estimated for re ognition and measurement or for dis losure purposes e fair alue of finan ial instruments t at are not traded in an a ti e mar et is determined using aluation te niques e roup uses a ariety of met ods and ma es assumptions t at are based on mar et onditions e isting at ea balan e date e niques su as estimated dis ounted as flows are used to determine fair alue for finan ial instruments e fair alue of forward e ange ontra ts and ollar options is determined using forward e ange mar et rates at t e balan e date
45 o u r u o r r p r u o ppro r r u r u o or o ur purpo ou u ur o r u o urr r r r o Group or r ru
Group o o or r u rou pro or o or o r o p o purpo or r u r r o o r o o r u o r por or o u or or r o r u rou pro or o o r o o or ou purpo r r or or r u r or r urr r r or r or r p o r o o r u rou pro o r rr r u u r o r ro in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the statement of co pr o p r o r he Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s len r o o ru or o r ru r u ou o Group r r o or roup o p r p r o r r r o o r r o r or r p r o uo r r Group pro o oo or r r o u o r o o o r r u urr p or o ur r r o r r o urr Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet. ur o r r o o r o Group o o pur or o r r rr or o u r o Group u r ru o po ur o or r r r Group o o o or u r ru or r purpo o r r o o u or ou r ou or r ru r ru r r o r u o r o r r o r r ur r r u u u r por o o r o r u or o p o r r ru o ur o Group r r o p r u r r o r o or pro or r o o Group o u p o o r o r o p ru r o r or u r r ou r o Group o o u o p o o o o o r r r u r o r o o o u r u o r o urr or r ur o or o urr or r ur o o r r r urr or por o o r u o r r u o r o o r o pr o or o r o por o r o o o pr o o r o – ou u u u r r o o pr o p r o pro or o or p or p or o r o por o o r r p r r orro r o o o pr o o or o r o por o o or r or o r por r o o o pr o or o r o por o o or r or o r r r pur r o o o pr o ru p r or o or o o r r r or ou u u or o u r u r o or r o u r o o o pr o or r o o o r p o o ur u u or o r por u r rr o o o pr o o r o – r r ru o o u or ou r u o r ru o o u or ou r r o o o pr o o r o –
46
There are no ne standards amendments and interpretations adopted by the Group as of pril .
ertain ne accounting standards and interpretations have been published that are not mandatory for arch reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out belo . addresses the classification measurement and de recognition of financial assets and financial liabilities introduces ne rules for hedge accounting and a ne impairment model for financial assets. The Group has yet to underta e a detailed assessment of the classification and measurement of financial assets and liabilities. inancial assets not in a hedge relationship appear to satisfy the conditions for classification as fair value through profit or loss and hence there ould be no change to the accounting for these. inancial assets in a hedge relationship ould continue to be accounted for under the hedge accounting rules. inancial liabilities not in a hedge relationship appear to satisfy the conditions for classification as fair value through profit or loss or amortised cost and hence there ould be no change to the accounting for these. inancial liabilities in a hedge relationship ould continue to be accounted for under the hedge accounting rules. The Group does not e pect the ne guidance to have a significant impact on the classification and measurement of its financial assets or financial liabilities. The ne hedge accounting rules ill align the accounting for hedging instruments more closely ith the Group’s risk management practices. s a general rule more hedge relationships might be eligible for hedge accounting as the standard introduces a more principles based approach. hile the Group is yet to underta e a detailed assessment it ould appear that the Group’s current hedge relationships would qualify as continuing hedges upon the adoption of . ccordingly the Group does not e pect a significant impact on the accounting for its hedging relationships. The ne impairment model requires the recognition of impairment provisions based on e pected credit losses rather than only incurred credit losses as is the case under . t applies to financial assets classified at amortised cost debt instruments measured at fair value through other comprehensive income contract assets under evenue from ontracts ith ustomers lease receivables loan commitments and certain financial guarantee contracts. hile the Group has not yet underta en a detailed assessment of ho its impairment provisions ould be affected by the ne model it does not e pect a significant impact on the recognition of credit losses. The ne standard also introduces e panded disclosure requirements and changes in presentation. These are e pected to change the nature and e tent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the ne standard. must be applied for financial years commencing on or after anuary . ased on the transitional provisions in the completed early adoption in phases as only permitted for annual reporting periods beginning before ebruary . fter that date the ne rules must be adopted in their entirety. The Group does not intend to adopt before its mandatory date. The has issued a ne standard for the recognition of revenue. This ill replace hich covers contracts for goods and services and hich covers construction contracts. The ne standard is based on the principle that revenue is recognised hen control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. anagement is currently assessing the effects of applying the ne standard on the Group’s financial statements. s the significant portion of the Group’s revenue is from the sale of goods here the customer ta es immediate control the Group does not e pect the ne standard to have a significant impact on the financial statements. The ne standard must be applied for financial years commencing on or after anuary . The Group does not intend to adopt before its mandatory date. as issued in anuary . t ill result in almost all leases being recognised on the balance sheet as the distinction bet een operating and finance leases is removed. nder the ne standard an asset the right to use the leased item and a financial liability to pay rentals are recognised. The only e ceptions are short term and lo value leases. The accounting for lessors ill not significantly change. The standard ill affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non cancellable operating lease commitments of . m refer note b . hilst underlying cash flo s ill be no different amounts paid in respect of leases ill be reclassified from operating to financing in the cash flo statement. urther interest and depreciation e pense is e pected to increase offset by a similar reduction in rental cost. The Group has not yet quantified the impact to net profit and equity ho ever based on preliminary assessments the Group has determined that 16 will have a significant impact on the Group’s balance sheet and income statement disclosures. The balance sheet ill be impacted by the recognition of a right of use asset and a corresponding lease liability. The income statement ill be impacted by the recognition of an interest e pense and an amortisation e pense and the removal of the current rental e pense. The full impact on these statements has yet to be finalised. ome of the commitments may be covered by the e ception for short term and lo value leases and some commitments may relate to arrangements that ill not qualify as leases under . The ne standard must be applied for financial years commencing on or after anuary . t this stage the Group does not intend to adopt the standard before its effective date.
47 here are no other standards that are not et effective and that would be e pected to have a material impact on the entit in the current or future reporting periods and on foreseeable future transactions.
tems included in the financial statements of each entit in the Group are measured using the currenc that best reflects the economic substance of the underl ing events and circumstances relevant to that entit (‘the functional currenc ’). he consolidated financial statements are presented in ew ealand dollars, (‘the presentation currenc ’), which is the functional currenc of the parent.
ransactions in foreign currencies are translated at the foreign e change rate ruling at the date of the transaction. onetar assets and liabilities denominated in foreign currencies at the balance date are translated to ew ealand dollars at the foreign e change rate ruling at that date. oreign e change differences arising on translation are recognised in the statement of comprehensive income, within other gains losses – net, e cept when deferred in other comprehensive income as ualif ing cash flow hedges and ualif ing net investment hedges. on monetar assets and liabilities that are measured in terms of historical cost in a foreign currenc are translated using the e change rate at the date of the transaction. on monetar assets and liabilities denominated in foreign currencies that are stated at fair value are translated to ew ealand dollars at foreign e change rates ruling at the dates the fair value was determined.
he assets and liabilities of all of the group companies none of which have a currenc of a h per inflationar econom that have a functional currenc that differs from the presentation currenc , including goodwill and fair value ad ustments arising on consolidation, are translated to ew ealand dollars at foreign e change rates, ruling at the balance date. he revenues and e penses of these foreign operations are translated to ew ealand dollars, at rates appro imating to the foreign e change rates ruling at the dates of the transactions. change differences arising from the translation of foreign operations are recognised in the foreign currenc translation reserve. orrowings and other currency instruments designated as hedges of such investments are taken to shareholders’ equity. Goodwill and fair value ad ustments arising on the ac uisition of a foreign entit are treated as assets and liabilities of the foreign entit and are translated at the foreign e change rates ruling at the balance date.
he carr ing amounts of the Group’s non financial assets are reviewed at each balance date to determine whether there is an indication of impairment. f an such indication exists, the asset’s recoverable amount is estimated being the higher of an asset’s fair value less costs to sell and the asset’s value in use. An impairment loss is recognised whenever the carr ing amount of an asset or its cash generating unit e ceeds its recoverable amount. mpairment losses are recognised in the statement of comprehensive income. or goodwill, the recoverable amount is estimated at each balance date. mpairment losses recognised in respect of cash generating units are allocated first to reduce the carr ing amount of an goodwill allocated to cash generating units group of units and then, to reduce the carr ing amount of the other assets in the unit group of units on a pro rata basis. An impairment loss is reversed onl to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
he Group’s ew ealand and overseas operations participate in their respective government superannuation schemes whereb the Group is re uired to pa fi ed contributions into a separate entit . he Group has no legal or constructive obligations to pa further contributions if the fund does not have sufficient assets to pa all emplo ees the benefits relating to the emplo ee service in the current and prior periods. he Group has no further pa ment obligations once the contributions have been paid. he contributions are recognised as an emplo ee benefit e pense when the are due.
ncome ta on the profit or loss for the ears presented, comprises current and deferred ta . ncome ta is recognised in the statement of comprehensive income e cept to the e tent that it relates to items recognised directl in other comprehensive income, in which case it is recognised in other comprehensive income. urrent ta is the e pected ta pa able on the ta able income for the ear, using ta rates enacted or substantiall enacted at the balance date and an ad ustment to ta pa able in respect of previous ears. eferred ta is provided using the balance sheet liabilit method, providing for temporar differences between the carr ing amounts of assets and liabilities for financial reporting purposes and the amounts used for ta ation purposes. he following temporar differences are not provided for goodwill not deductible for ta purposes, the initial recognition of assets or liabilities that affect neither accounting nor ta able profit and differences relating to investments in subsidiaries, associates and oint venture to the e tent that the will probabl not reverse in the foreseeable future. he amount of deferred ta provided is based on the e pected manner of realisation or settlement of the carr ing amount of assets and liabilities, using ta rates enacted or substantivel enacted at the balance date.
48 deferred tax asset shall be recognised for the carry forward of unused tax losses and unused tax credits, to the extent that it is robable that future taxable rofit will be available against which the unused tax losses and unused tax credits can be utilised.
m utation credit available for use in subsequent eriods , ,
ubsidiaries are all entities over which the rou has control. he rou controls an entity when the rou is ex osed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its ower over the entity. ubsidiaries are fully consolidated from the date on which control is transferred to the rou . hey are deconsolidated from the date that control ceases. usiness combinations are accounted for using the acquisition method. he consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the following the total of the acquisition date fair values of the assets transferred by the rou , the liabilities incurred by the rou to former owners, the equity issued by the rou and the amount of any non controlling interest in the acquiree either at fair value or at the proportional share of the acquiree’s identifiable net assets. Acquisition related costs are ex ensed as incurred. ll material transactions between subsidiaries or between the arent com any and subsidiaries are eliminated on consolidation. ccounting olicies of subsidiaries have been changed where necessary to ensure consistency with the olicies ado ted by the rou .
hen the rou ceases to have control, any retained interest in the entity is re measured to its fair value at the date when control is lost, with the change in carrying amount recognised in rofit or loss. he fair value is the initial carrying amount for the ur oses of subsequently accounting for the retained interest as an associate, oint venture or financial asset. n addition, any amounts reviously recognised in other com rehensive income in res ect of that entity are accounted for as if the rou had directly dis osed of the related assets or liabilities. his may mean that amounts reviously recognised in other com rehensive income are reclassified to rofit or loss.
akon merica arketing su ort ar akon inga ore ( te) imited arketing su ort inga ore ar akon inancial ervices imited inancing ew ealand ar akon nternational imited arketing su ort ew ealand ar akon oldings imited olding com any nited ingdom ar akon imited esearch and develo ment nited ingdom ar akon rance anufacturing and sales rance ar akon imited olding com any ong ong ar akon ( auritius) imited olding com any auritius ar akon nvestment imited olding com any ong ong ar akon rystal lectronic arketing su ort hina ar nternational imited
n April 2016, a share transfer from the Company to the minority shareholders of Rakon HK Limited (RHK) resulted in the Group’s interest of reducing from to . he share transfer results from a delayed com letion of a rior agreement between the shareholders of and has no im act on the financial results for the year.
49 Independent Auditor’s Report to the shareholders of Rakon Limited
Rakon Limited’s consolidated financial statements comprise: the balance sheet as at 31 March 2017; the statement of comprehensive income for the year then ended; the statement of changes in equity for the year then ended; the statement of cash flows for the year then ended; and the notes to the consolidated financial statements, which includes significant accounting policies. Our opinion In our opinion, the consolidated financial statements of Rakon Limited (the Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as at 31 March 2017, its financial performance and its cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm carries out other services for the Group in the areas of other assurance and treasury advisory services. The provision of these other services has not impaired our independence as auditors of the Group.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
50 Our audit approach Overview An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Overall Group materiality: $947,000, which represents 1% of revenue. Given the changes in the business during the year, in our judgement, revenue provided a more stable measure for establishing our materiality benchmark because the Group is operating near break-even. Going concern assessment. Impairment risk of goodwill, intangible assets and property, plant and equipment. Valuation of research and development costs associated with the development of new products, included within product development and assets under construction categories of intangible assets. Accounting for the Siward investment in Rakon and technology transfer agreement.
Materiality The scope of our audit was influenced by our application of materiality. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial statements as a whole. Audit Scope We designed our audit by assessing the risks of material misstatement in the consolidated financial statements and our application of materiality. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. We conducted full scope audit work over the two segments which make up 100% of external revenue New Zealand and France. We conducted specific audit procedures over the investments in the Timemaker, Centum Rakon India and Thinxtra, including analytical review, enquiry and testing key balances and reconciliations. In performing our risk assessment of the remaining entities in the Group against our materiality, in our judgement, the other entities in aggregate do not represent a material risk of error.
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51 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed this matter Going concern assessment Our audit procedures included: Going concern was a key focus area for the audit Assessing and evaluating management’s because of the judgements and assumptions processes and controls over preparing cash applied by management in preparing their flow forecasts used in support of the forecasts, as well as the judgements underlying financial statements. the alternative options available to them. Assessing the disclosures in the financial As disclosed in the financial statements, the statements against the requirements of the Company has reported a current year net loss of accounting standards. $13.6 million, total equity of $74.6 million, Comparing the trends in cash flow forecasts positive working capital of $31.4 million and against actual Group performance, including positive net cash flows from operating activities results to date for the 2018 financial year. In of $9.5 million for the year to 31 March 2017. particular, we obtained an understanding of The Group has reported net losses after tax the factors driving the increase in revenues throughout its recent history. and gross profit margin and the decline in As at 31 March 2017 there was $3.3 million of operating expenses in the last year. cash on hand and no secured funding facilities in We performed a look back at historical place. performance and compared this to the Management are responsible for monitoring expected revenues. We also assessed the performance against budgets and preparing cash confirmed and pipeline contracts with flow forecasts. Management prepared a cash respect to the anticipated revenues for these flow forecast that supported their conclusion that had been included in the forecasts. that the Group has sufficient cash to continue to Our procedures indicated that the forecast operate for at least one year from the date of revenue growth was most susceptible to signing the financial statements. This included volatility. We considered the potential cash flow considering sensitivities to the key assumptions impact by reducing the growth assumptions and of revenue and margin growth. The forecasts the overall impact on the cash flows of the Group were approved by the Board on 24 April 2017. for the next 12 months. In the event that the forecast results do not Our analysis of the historical accuracy of eventuate, management also considered forecasts prepared by management identified alternative options that could provide ongoing that actual results did not closely align to those funding that would enable the Company to forecasts. Our audit response to this was to continue its operations. These options are listed challenge the alternative cash flow options in note C3. detailed in note C3. Subsequent to balance date, The Capital Management disclosures in note C3 the Directors have renewed the Company’s bank reflect the Directors’ considerations and funding and are continuing to monitor the need conclusions. to implement alternative options. Our procedures did not identify matters that were inconsistent with the Directors’ conclusions on going concern.
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52 Key audit matter How our audit addressed this matter Impairment risk of goodwill, intangible ur audit procedures included the following assets and property, plant and equipment e updated our understanding of the As noted in note c the Directors assess assets processes and controls around identifying annually for impairment he Directors loo indicators of impairment and assessing the initially for indicators of impairment which level of impairment if any re uires a level of udgement As noted a ove due to mar et volatility hen the mar et capitalisation is lower than the management have not een a le to net asset value of the roup this can e an accurately forecast performance results indicator of potential impairment ris to non ur response to this was to complete financial assets held y the roup ar et alternative procedures to assess the overall capitalisation of the roup was million at recovera le values of assets recorded on arch compared to net assets of the alance sheet compared to the asset million values recorded he Directors performed an assessment of pecifically we performed the following impairment indicators on an asset y asset asis alternative audit procedures to assess the as well as performing a usiness valuation using difference etween the mar et capitalisation a discounted cash flow model to support the and reported net assets value in the alance valuation of the roup as a whole on a value in sheet use asis Accounts eceiva le and nventory e he ey assumptions used y the Directors and considered the historical recovera ility and management in creating their usiness valuation whether there was any indication of any model are included in note c of the financial current recovera ility restrictions statements ntangi les – D which has een he ey udgements in performing this discussed in the A elow assessment include nvestments e considered the evenue and margin growth rates mar et recovera ility of investments and erminal growth rates and land held for sale using e ternal data and whether there were any specific indicators Discount rates of impairment on property plant and As detailed in note d as a result of these e uipment impairment assessments the Directors have Deferred ta Audit considered the impact recognised certain impairments should there e no recovery of deferred ta for the purposes of the impairment analysis As a result of these procedures we did not propose any adjustments to management’s reported results
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53 Key audit matter How our audit addressed this matter Valuation of research and development ur aud t pro edures n uded t e o o ng costs associated with the development of e updated our understand ng o o t e new products osts or resear and de e opment are a on n urs osts t respe t to de e op ng aptured and appro ed or ap ta sat on ne produ ts s n uded t n produ t and t e ontro s o er t ese pro esses de e opment and assets under onstru t on e o ta ned an understand ng o t e ategor es o ntang e assets ere s t e r s proje ts a e een ap ta sed dur ng t at t e osts t at are e ng ap ta sed or t e year and on a samp e as s e agreed de e opment may not meet t e r ter a or osts n urred to support ng ap ta sat on do umentat on and appro a n part u ar t ere s o ten judgement and e assessed o era osts ap ta sed or un erta nty around t e potent a or su ess o omp an e t roup po es and t e ne proje ts and t e a d ty o ap ta sed osts re u rements de ned n t e nan a n terms o t e te n a eas ty and pro a e report ng standard or re ogn t on o t e uture e onom ene ts asso ated t ne resear and de e opment osts and e st ng proje ts re ated pr mar y to or t ose produ ts n produ t on ere e e ommun at ons n rastru ture osts a e een ap ta sed e a enged produ ts the Directors’ assessment of the future o a pos t on ng produ ts n ome e pe ted rom t ose produ ts y pa e and de en e produ ts oo ng at and ompar ng t e e e o sa es e re tors assessed t e uture n ome e ng a e ed generat ng a ty o ap ta sed de e opment We challenged the Directors’ assessment of e pend ture y re err ng to urrent demand or t e uture n ome e pe ted rom ne t e produ ts no n produ t on and to t e produ ts y oo ng at and ompar ng t e us ness ase or uture sa es o produ ts not yet e e o sa es urrent y generated rom n produ t on n ud ng management ore asts pre ous generat ons o e er to note ntang e assets n t e te e ommun at ons n rastru ture nan a statements produ ts t t e produ ts urrent y n produ t on t respe t to t e a uat on o asso ated t de e opment o ne produ ts e a enged management’s ore asts t respe t to t e assumpt ons app ed to t ose spe ore asted re enues ear ng n m nd t e a enges n ore ast ng re erred to a o e our pro edures n uded - re t onta t t ustomers on e tent o ne produ t de e opment - on rmat on o stage o de e opment t ustomers - uture orders n p a e on rmed t ustomers s a resu t o t ese pro edures e d d not propose any urt er mpa rments t an t ose re orded
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54 Key audit matter How our audit addressed this matter Accounting for the Siward investment in ur audit rocedures included the follo ing Rakon and technology transfer We assessed the re uirements of financial agreement re orting standards to account for the t o s descri ed in note during the ear there com onents of the transaction s ecificall as a significant transaction underta en ith s litting out aluing and recognising i ard r stal echnolog om an imited re enue and e uit at the a ro riate time here i ard made a a ment of D We utilised our internal s ecialists to assist million to a on us in the re ie of the methodolog and he a ment from i ard to a on is in res ect assum tions and in challenging the e of t o contracts irstl for the issuance of in uts to the aluation of the e uit and million shares and secondl ro iding an re enue com onents of the transaction indefinite licence to certain technolog through including; Rakon’s share price, the the transfer of intellectual ro ert remium aid and the im lied ro alt rate his as a significant focus area ecause the t o and com ared this to our o n mar et com onents of these lin ed contracts need to e research and e erience alued se aratel in order to determine the We challenged the Directors’ assessment amount that relates to the sale of technolog and relating to hen re enue is recognised for the amount that relates to the alue of the the sale of technolog understanding shares and alidating the e milestones of the he timing of the recognition of re enue related technolog transfer through discussing the to the sale of a on technolog also re uires hases of the transfer ith the engineering udgement as to hen a on has fulfilled its team – these hases or milestones relate to o ligations in transferring the no ledge ro iding documentation and training needed to use the technolog to i ard his Siward’s engineers. We further confirmed re uires consideration of the com letion status ith i ard ersonnel hen of e hases of the technolog transfer and documentation as ro ided and the stage related training of com letion of training he Directors ha e determined the fair alue of ased on our anal sis of the contracts and each com onent of the transaction and the underl ing assum tions our results did not e tent that re enue should e recognised for the re uire an significant ad ustments technolog transfer he e assum tions used the Directors and management are included in note of the financial statements he most significant udgements in aluing each com onent of the transaction include Rakon’s share rice remium related to influence ased on the num er of shares su scri ed and gaining a oard seat m lied ro alt rate for the indefinite licence to the technolog sold
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55 Information other than the financial statements and auditor’s report he Directors are responsi le for the annual report. ur opinion on the consolidated financial statements does not co er the other information and we do not and will not e press an form of assurance conclusion on the other information. n connection with our audit of the consolidated financial statements, our responsi ilit is to read the other information and, in doing so, consider whether the other information is materiall inconsistent with the consolidated financial statements or our knowledge o tained in the audit, or otherwise appears to e materiall misstated. f, ased on the work we ha e performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are re uired to report that fact. We ha e nothing to report in this regard. esponsibilities of the irectors for the consolidated financial statements he Directors are responsi le on ehalf of the ompan for the preparation and fair presentation of these consolidated financial statements in accordance with RS and RS and for such internal control as the Directors determine is necessar to ena le the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. n preparing the consolidated financial statements, the Directors are responsi le for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern asis of accounting unless the directors either intend to li uidate the roup or to cease operations, or ha e no realistic alternati e ut to do so. Auditor’s responsibilities for the audit of the consolidated financial statements ur o ecti es are to o tain reasona le assurance a out whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with S s and S s will alwa s detect a material misstatement when it e ists. isstatements can arise from fraud or error and are considered material if, indi iduall or in the aggregate, the could reasona l e e pected to influence the economic decisions of users taken on the asis of these consolidated financial statements. further description of our responsi ilities for the audit of the financial statements is located at the ternal Reporting oard’s website at: https r .go t.n Site uditing ssurance Standards urrent Standards age .asp his description forms part of our auditors’ report.
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56 ho e report to This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest e tent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we ha e formed. The engagement partner on the audit resulting in this independent auditor’s report is isa Crooke.
or and on behalf of
Chartered ccountants uckland ay
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57 hareholder nformation
on e ecutive directors receive fees determined by the oard on the recommendation of the Remuneration Committee plus reasonable travellin , accommodation and other e penses incurred in the course of performin duties or e ercisin po ers as directors. hareholders approved a total pool of 60,000 for the remuneration of non e ecutive directors in eptember 2012. Annual directors’ fees were set at 120,000 for the Chairman and 60,000 for each non e ecutive director ith effect from 1 April 2016. rent Robinson and arren Robinson (ceased as a director 16 eptember 2016) are employed by Rakon as ana in irector and arketin irector respectively and receive salary and other remuneration and benefits in respect of their employment. arren Robinson ceased as a director on 16 eptember 2016 and continues to be employed as Rakon’s Marketin irector. he follo in people held office as a director durin the year and received the follo in remuneration includin benefits durin the year
ryan o rid e ndependent Chairman 120,000 120,000 rent Robinson ecutive 6 1, 1 0 , 2 arren Robinson1 ecutive ,2 6 ,60 arren Robinson on ecutive 60,000 60,000 ir eter aire2 on ecutive ,000 60,000 ruce rvine ndependent 60,000 60,000 Herbert Hunt ndependent 1 ,6 60,000 Lorraine itten ndependent , Keith liver ndependent , in an sen on ecutive ,
1 ceased as a director of Rakon Limited effective 16 eptember 2016 2 resi ned as a director of Rakon Limited effective 22 ebruary 201 resi ned as a director of Rakon Limited effective uly 2016 appointed as director effective 10 arch 201 irectors of the Company’s subsidiaries do not receive any remuneration or other benefits in respect of their appointments. he remuneration and other benefits of any such directors (not bein directors of Rakon Limited) ho are employees of the Group totallin 100,000 or more durin the year ended 1 arch 201 are included in the relevant bandin s for remuneration disclosed on pa e 60 of this Annual Report. he follo in people held office as directors of subsidiary companies at 1 arch 201
Rakon America LLC ohn undschau (authorised representative) Rakon in apore ( te) Limited rent Robinson, arren Robinson, arren Robinson, amian oon Rakon inancial ervices Limited rent Robinson, arren Robinson Rakon nternational Limited rent Robinson Rakon K Holdin s Limited rent Robinson, arren Robinson, inan Altu , hilip avies Rakon K Limited rent Robinson, arren Robinson, inan Altu , hilip avies Rakon rance A rent Robinson rent Robinson, arren Robinson, eernaysin h adhour, Kamalam illay Rakon ( auritius) Limited Run apadiachy Rakon nvestment HK Limited rent Robinson Rakon Crystal lectronic nternational Limited aryoush hahidi (authorised representative) Rakon HK Limited rent Robinson, arren Robinson, hu hi e, Ron uo Chen Rakon rustee Limited ryan o rid e, ruce rvine Rakon rustee Limited ryan o rid e, ruce rvine Directors’ As permitted by the Companies Act 1 and the Company’s constitution, the Company has ranted certain indemnities to the irectors and specified employees of the Company or any related company in respect of liability and le al costs incurred by those irectors and specified employees in their capacity as irectors and or employees of the Company or any related company. As permitted by the Companies Act 1 and the Company’s constitution, the Company has arran ed a policy of irectors’ and officers’ liability insurance hich insures those persons indemnified for certain liabilities and costs.
58 he Company maintains an interests re ister in accordance with the Companies ct 1 and the inancial Markets Conduct ct 201 he followin are particulars of entries made in the Company’s interests re ister for the year 1 pril 2016 to 1 March 201
r i i o ri e irector of
Resi ned as irector of ara on ew ealand Com imited on 1 March 2016
ppointed as irector of ea iew ineyards aiheke imited on 1 May 2016
ppointed as irector of hin tra ty imited on 1 uly 2016
ppointed as irector of imited on 20 eptember 2016 hareholder in
eneficial interest in 60 000 ordinary shares in hin tra ty imited followin the purchase of 60 000 shares by the Mo rid e amily rust on 2 pril 201 for total consideration of 0 0
er ert De is t irector of
Resi ned as irector of Rakon imited on uly 2016
r ce o ertso r i e irector of Resi ned as irector of Christchurch City oldin s imited on 1 pril 201
r es eter ire irector of
Resi ned as irector of Rakon imited on 22 ebruary 201
eit i i i er irector of
ppointed as irector of Rakon imited on 10 March 201
lto Capital imited lackhawk rackin ystems imited
ealthvision
i il Monitorin imited
re t o o i so irector of ppointed irector of hin tra ty imited on 1 March 201
D rre o i so irector of
Ceased as irector of Rakon imited on 16 eptember 2016
i se irector of ppointed as irector of Rakon imited on 10 March 201
ecurita ssembly roup Co imited
orr i e r itte irector of ppointed as irector of Rakon imited on 10 March 201
Resi ned as irector of ordia roup imited on 0 pril 201
imply ecurity imited
59 i s i i
i i
i i
i i i i i Directors’ s re o i s Directors’ shareholdings a s s
e te or i s s i i i i s s s i i i i s i s s s i i i i s ss i s s i s s s i i i i s ss i s s i s s i i i i s s s i i i i s s s i i i i s i i i s i s s s s s s i i Employees’ re er tio i s s i i i s s si i i s i i s i i i i i i i s i ss i i s
er o er o e er tio e o ees e er tio e o ees – – – – – – – – – – – – – – – – – – – – – –
i i s i i s s s st ti sec rit o ers i i i is i s i i i s i i s i i i s i s ss i i s s i s s s s i s i s i s i s i i s s s ss iss isi i s s
e re o i re o i i s i i i i i s s s i i i i i s i s i i i s i s i i i i s i i i s i s i i i i s i i i s
60 pre o sec rity ol ers s t y
m er o ot l m er i e o s re ol i ol ers el – – – – – – – – – – – –
ot l r est sec rity ol ers s t y
me re ol i i ard r stal echnolog o i ited arren ohn o inson r sts i ited e ealand entral ec rities De ositor i ited ahia n est ents i ited rent ohn o inson Darren a l o inson ere o inees i ited ti es ro nternational i ited conic n est ents i ited a on r stee i ited ichael alter Daniel igel eo re edgard rton ichael rra en a in airahi raig ohn ho son erg s Da id lliott ro n oldings o an i ited at ed ath onnor a onnor o ert or an rnes ill ie t art o ert idd ing e hilli alcol oo an eng ee anla r odr ng ogridge ssociates i ited
61
me re ol i i ers re it r ti o tio s ompany’s subsidiaries
62 orpora e o ernan e
e role o t e o r e oard as u ima e responsibi i y or e s ra e i dire ion o a on and o ersi o e mana emen o a on or e bene i o s are o ders pe i i a y e responsibi i ies o e oard in ude e o o in
or in i mana emen o es ab is e s ra e i dire ion o a on
oni orin mana emen and inan ia per orman e
oni orin omp ian e and ris mana emen
s ab is in and moni orin e ea and sa e y po i ies o a on
s ab is in and ensurin imp emen a ion o su ession p ans or senior mana emen
nsurin e e i e dis osure po i ies and pro edures n dis ar in eir du ies dire ors have direct access to and may rely upon Rakon’s senior management and external advisers ire ors a e e ri i e appro a o e airman or by reso u ion o e oard o see independen e a or inan ia ad i e a e e pense o a on or e proper per orman e o eir du ies e oard omprises o se en dire ors a non e e u i e airman one e e u i e dire or and i e non e e u i e dire ors nder e ons i u ion e ndependen airman o ds a as in o e a board mee in s oard members a e an appropria e ran e o pro i ien ies e perien e and s i s o ensure a a o ernan e responsibi i ies are u i ed and o a ie e e bes possib e mana emen o resour es n a ordan e i e ons i u ion e oard as reso ed a e ana in ire or i no be re uired o re ire by ro a ion e oard on irms a e orpora e o ernan e prin ip es a i as adop ed and o o s do no ma eria y di er rom e orpora e o ernan e es ra i e ode ur er in orma ion and ea o e indi idua po i ies and ar ers re erred o be o are a ai ab e on our ebsi e a ra on om orpora e in es or ir o Directors’ meeti s e oard p an o mee no ess an nine imes durin any inan ia year in udin sessions o onsider e s ra e i dire ion o a on and Rakon’s forward oo in business p ans ideo and or p one on eren es are a so used as re uired or e year ended ar ere ere board and s ra e i p annin mee in s e d
irector eeti s el eeti s tte e ryan o rid e erb un ru e r ine e er aire ei i er ren obinson arren obinson arren obinson in an sen orraine i en o r committees e oard ommi ees re ie and ana yse po i ies and s ra e ies i are i in eir erms o re eren e ey e amine proposa s and ere appropria e ma e re ommenda ions o e u oard ommi ees do no a e a ion or ma e de isions on be a o e oard un ess spe i i a y manda ed by prior board au ori y o do so e ommi ees are as o o s
it is eme t ommittee e udi and is ana emen ommi ee is responsib e or o erseein e ris mana emen in udin reasury and inan in po i ies insuran e a oun in and audi a i i ies o a on and re ie in e ade ua y and e e i eness o in erna on ro s mee in i and re ie in e per orman e o e erna audi ors re ie in e onso ida ed inan ia s a emen s and ma in re ommenda ions on inan ia and a oun in po i ies e members o e udi and is ana emen ommi ee as a ar are ru e r ine airman ryan o rid e arren obinson and orraine i en orraine i en as appoin ed o e ommi ee on ar
63 Director eeti s e eeti s tte e ruce rvine ryan ogridge arren Ro inson orraine itten
em er tio ommittee he Remuneration ommittee is responsi le for overseeing management succession planning esta lishing employee incentive schemes reviewing and approving the compensation arrangements for the executive directors and senior management and recommending to the full oard the compensation of directors he mem ers of the Remuneration ommittee as at arch are ryan ogridge hairman eith liver and orraine itten er ert unt and eter aire resigned from the ommittee on their effective date of resignation as directors eith liver and orraine itten were appointed to the ommittee on arch
Director eeti s e eeti s tte e ryan ogridge er ert unt eter aire eith liver orraine itten
omi tio ommittee he omination ommittee is responsi le for ensuring the oard is composed of directors who contri ute to the successful management of the roup ensuring formal review of the performance of the oard individual directors and the oard’s committees and ensuring effective induction and training programmes are in place for new and existing directors he mem ers of the omination ommittee as at arch are ryan ogridge hairman eith liver and orraine itten er ert unt and eter aire resigned from the ommittee on their effective date of resignation as directors eith liver and orraine itten were appointed to the ommittee on arch
Director eeti s e eeti s tte e ryan ogridge er ert unt eter aire eith liver orraine itten Di ersit reakdown of gender composition of directors and officers as at arch is shown elow
irectors – male – female fficers – male – female
fficers are defined as eing the hief xecutive fficer and specific direct reports of the having key functional responsi ility ercise o isci i r o ers he or the have not taken any disciplinary action against the ompany during the financial year ended arch
64 irector
e istere ice
a on imited ia ar oad t e ington uc and e e one acsimi e e site ra on com
i i ress
a on imited ri ate ag e mar et uc and Directors
ruce r ine r an ogridge eit i er rent o inson arren o inson in ang seng orraine itten ri ci ers
e u o ort and treet uc and itors
rice ater ouse oo ers ri ate ag uc and re e istr r
om uters are n estor er ices imited ri ate ag ictoria treet est uc and
o c ange our address u date our a ment instructions and to ie our in estment ort o io inc uding transactions ease isit in estorcentre com n en uir com uters are co n e e one acsimi e ers
an o ort and treet uc and
65 50 YEARS OF INNOVATION
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