hisaka holdings ltd. ar13_en.pdf · 2013. 12. 23. · hisaka holdings ltd annual report 2013 5...

HISAKA HOLDINGS LTD.A N N U A L R E P O R T 2 0 1 3

VISIONTo be the leading provider of integrated

automation solutions in the Asia Pacific

region through product and service

excellence, while expanding into the

medical, eco-infrastructure and other

industries of high growth potential.

MISSIONTo create long-term sustainable value

for our stakeholders by seeking out and

capitalising on high potential growth

opportunities, and nurturing strong and

synergistic working relationships with our

partners and associates.

Contents

Corporate Information 2

Company Profile 3

Executive Chairman & CEO’s Statement 4

Operations Review 6

Board of Directors 8

Management Team 10

Corporate Governance Report 11

Directors’ Report 21

Statement by Directors 24

Independent Auditor’s Report 25

Consolidated Statement of Profit or Loss and Other 26 Comprehensive Income

Statements of Financial Position 27

Statements of Changes in Equity 28

Consolidated Statement of Cash Flows 29

Notes to the Financial Statements 30

Statistics of Shareholdings 72

Notice of Annual General Meeting 74

Letter to Shareholders 80

Proxy Form

Building Inroads toSustainable Revenue Streams

2

Board of DirectorsAnthony Cheng Ee Chew Executive ChairmanJackie Cheng Ee Lieng Chief Executive OfficerJessica Ong Boon Chin Executive DirectorGoon Kok Loon Lead Independent DirectorChong Weng Hoe Independent DirectorJohn Tan Lee Meng Independent Director

Audit CommitteeGoon Kok Loon ChairmanJohn Tan Lee MengChong Weng Hoe

Remuneration CommitteeChong Weng Hoe ChairmanGoon Kok LoonJohn Tan Lee Meng

Nominating CommitteeGoon Kok Loon ChairmanJohn Tan Lee MengChong Weng Hoe

Company SecretarySoon Kui Eng, CA (Singapore)

Registered Office63 Sungei Kadut Loop Hisaka Industrial Building Singapore 729484 Tel : 6455-1311Fax : 6455-0311 Website : www.hisaka.com.sg

Company Registration Number200508585R

Registrar and Share Transfer OfficeBoardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place #32-01 Singapore Land Tower Singapore 048623

Legal AdviserColin Ng & Partners LLP 36 Carpenter Street Singapore 059915

AuditorsRSM Chio Lim LLP8 Wilkie Road#04-08 Wilkie EdgeSingapore 228095 Partner-in-charge : Goh Swee Hong(appointed with effect from year ended 30 September 2011)

Principal BankersUnited Overseas Bank Limited 80 Raffles Place UOB Plaza 1 Singapore 048624

Oversea-Chinese Banking Corporation Limited65 Chulia Street#01-00 OCBC CentreSingapore 049513

Corporate information

HISAKA HOLDINGS LTD.Annual Report 2013 3

The Group’s principal activities can be broadly classified into the Services and the Manufacturing segments, with Supply Chain Management forming an integral part of both. The Services segment consists of Mechanical Motion Components Management while the Manufacturing segment is made up of Metallic Precision Manufacturing and Mechatronics Integration.

Under Supply Chain Management, the Group provides customer-centric value-added services such as logistics and inventory management; administration and customer service management; as well as technical support services. HISAKA was awarded ISO 9001:2008 certification for its quality management systems in the supply and fabrication of electromechanical parts for the semiconductor and factory automation industries, as well as in the sales, stockholding and integration solutions of electrical energy saving products and related devices. Alleviating its corporate diversification into the medical industry, the Group attained the GDPMDS certification, denoting the presence of quality management systems and good distribution practices imperative for importers and wholesalers of medical devices. In April 2011, HISAKA’s consistent dedication to quality medical products was further recognised with the achievement of the international EN ISO 13485 certification.

As part of the Group’s increasing prominence and proven track record in reliability and excellence over the years, HISAKA has received numerous awards and accolades annually since 2009, including “Enterprise 50”, “SME 500”, “Top Internationalising SME” as well as the “Singapore 1000 Public Listed Company” awards.

In an attempt to diversify and gain access to different equity markets, HISAKA successfully listed 60 million Taiwan Depository Receipts (“TDR”) shares on the Taiwan Stock Exchange in June 2011. The TDR listing widened the investor base, both private and institutional, for the Group; increased the liquidity of HISAKA’s shares and heightened our profile on a corporate level.

As part of the Group’s continuous efforts in seeking out and capitalising on new growth opportunities to create new streams of revenue and value, inroads have been paved into the medical equipment, eco-solutions and infrastructure industries. While the key cornerstones have been set in these industries, HISAKA will continue to explore and seek out new business opportunities to ensure long-term sustainable growth.

Established in Singapore since 1992, HISAKA has transformed into a leading automation solutions provider in the Asia pacific region, specialising in mechanical motion products.

Company profile


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DeAR ShARehoLDeRS,

On behalf of the Board of Directors (the “Board”), we hereby present HISAKA Holdings Ltd.’s (the “Group”) Annual Report and Financial Statements for the financial year ended 30 September 2013 (“FY2013”). Amidst the challenges, the Group turned in a creditable performance for the year and continued to do its best in the interest of all stakeholders.

Medical Journey

After the attainment of the CE mark for our PBBW system last year, we immediately submitted our PBBW system for product approval by the Health Sciences Authority (“HSA”) of Singapore. As a medical device, we first need to attain product registration approval from HSA in order to apply for Free Sale Certificates (“FSC”) which are pre-requisite documents required by the health authorities of our potential markets.

In this light, the Group is also pleased to announce that on 20 August 2013, our PBBW system met the stringent requirements of HSA and was successfully registered on the Singapore Medical Device Register (“SMDR”). With this new milestone, the Group has now attained approval to proceed with the marketing and sale of the PBBW system in Singapore. In addition, we have also started our submissions for approvals to the health authorities of our potential markets. Our medical journey has been a long and arduous one, fraught with a multitude of obstacles that have taken us some effort and time to overcome. Nevertheless, the Group strongly believes that its investments in continuous research and development for new medical devices like our Digital Stereo Microscope (“DSM”) and PBBW system, will come to fruition very soon.

Chennai, India

During the year, new machines were added to our production facility in Chennai, India to increase our production capacity and product mix. Production volume from our major customers is stabilising and gaining momentum. While we attempt to secure more sales from our existing customers, our marketing team is also aggressively penetrating the automotive sector in Chennai.

Performance in FY2013

Despite global economic headwinds and other external challenges, the Group persevered and remained focused on creating value in the areas of its core businesses, making steady progress in overcoming challenges to eventually deliver creditable financial results at the end of FY2013. Driven by its strategies of a dual-pronged approach, the Group continued to drive organic growth in its existing core businesses in its strive to maintain a healthy balance sheet, while at the same time actively seeking out new business ventures and opportunities that will bring about dynamic and sustainable growth in the longer term.

FY2013 commenced amidst challenging market conditions. In the first quarter of FY2013, the global economic outlook remained weak while market conditions continued to be unpredictable, vulnerable and volatile. Business volumes remained slow and there were no strong signs of recovery in the industry. While the second and third quarters of FY2013 saw the manufacturing industry continue on its lacklustre journey, it is notable that the Group’s performance gained some momentum progressing through the year.

While revenue for the first three quarters of the financial year remained weak, leaving the Group’s performance in the red, the last quarter saw some revenue improvement and successfully raised the Group’s overall performance above water.

Against the backdrop of an extremely challenging year, overall Group revenue for FY2013 decreased 30.7% to S$34.0 million from S$49.1 million in FY2012. The Group’s gross profit decreased 28.7% from S$11.3 million in FY2012 to S$8.1 million in FY2013. Nevertheless, gross profit margin increased slightly from 23.1% in FY2012 to 23.7% in FY2013. Overall, the Group ended the year with a net profit after tax of S$402,000.

exeCutive Chairman & Ceo’s statement


Dividends

To reward our valued shareholders for their loyal support, we are pleased to announce that a combined dividend - comprising a final dividend of 0.75 cent and a special dividend of 0.25 cent, amounting to a total of one Singapore cent per ordinary share have been recommended by the Board. This is subject to approval at the forthcoming Annual General Meeting.

outlook

Looking ahead, some economists say recovery in the US and the positive effects arising from ‘Abenomics’ in Japan could bode well for the manufacturing sector. On the other hand, the slowing growth in China, Indonesia and Malaysia might also affect consumer demand. Hence, the outlook for FY2014 for our existing business remained uncertain.

Nevertheless, as part of the Group’s constant and active efforts in seeking out and evaluating potential ventures and growth opportunities that will deliver sustainable growth, the Group had, during the year, entered into an MOU to acquire the entire issued and paid-up share capital of an entity primarily involved in property development and construction predominantly in city of Kuching in Sarawak, Malaysia.

The entity has a proven track record and a strong portfolio of property developments at various stages of construction and completion. The Board is of opinion that the acquisition will pave the way for the Group towards expanding and diversifying its businesses and operations, facilitating more consistent and sustainable financial growth.

We remain bullish that our medical and diversification initiatives will go a long way in generating long-term sustainable revenue streams for the Group.

Acknowledgements

On behalf of the Board, we wish to express our heartfelt gratitude to our customers, shareholders, partners and associates, as well as government agencies, for their continued support, confidence and faith in us. Kudos to our Management and staff for their unstinting support, dedication and conscientious contributions during these difficult times.

We wish to record our deepest appreciation to our fellow Board of Directors for their strategic guidance and counsel. We are confident and optimistic that as a team, we will overcome all challenges to eventually enjoy the fruition of our toils.

Anthony Cheng ee ChewExecutive Chairman

Jackie Cheng ee LiengChief Executive Officer

Anthony Cheng ee ChewExecutive Chairman

Jackie Cheng ee LiengChief Executive Officer


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The Group is pleased to conclude the financial year FY2013 on a profitable note. We have achieved profitability despite the adverse impact on our operating performance caused by the weak market conditions and the feeble global manufacturing sector.

ReVIeW oF FINANCIAL PeRFoRMANCe

Income StatementThe Group’s revenue decreased 30.7% from S$49.1 million in FY2012 to S$34.0 million in FY2013, due largely to the slump in the global manufacturing sector which resulted in lower demand for the Group’s products and services. The Group’s gross profit decreased 28.7% from S$11.3 million in FY2012 to S$8.1 million in FY2013.

The Group’s marketing & distribution costs and administrative expenses decreased 6.8% and 8.3% respectively to S$2.8 million and S$4.4 million respectively in FY2013, against a revenue decrease of 30.7%. The lower percentage decrease was mainly due to fixed cost components such as staff costs and office expenses.

The Group’s finance income of S$188,000 in FY2013 was mainly derived from interest income received from fixed deposit placed with financial institutions. The Group’s finance expenses decreased from S$13,000 in FY2012 to S$2,000 in FY2013, mainly due to the Group’s repayment of the short-term borrowings of S$760,000 in FY2013.

Other credits increased mainly due to the reversal for impairment on trade receivable and gain on disposal of plant and equipment. Other charges decreased mainly due to lower allowance for impairment on inventories, lower foreign exchange loss and no loss on disposal of joint venture in FY2013.

There was no share of loss from China joint venture in FY2013 as the Group had disposed its entire joint venture investment in FY2012.

Share of loss from our associate stood at S$370,000 in FY2013, mainly attributable to the weakening of Indian Rupees and the initial set up cost of the production facility in Chennai India.

The income tax credit of S$133,000 in FY2013 was mainly due to the tax incentive enjoyed by our Singapore subsidiary under the Productivity and Innovation Credit (“PIC”) scheme and over provisions for taxation in prior years.

Balance SheetInventories as at 30 Sep 2013 stood at S$6.5 million compared to S$13.1 million as at 30 Sep 2012. Lower inventory level as at 30 Sep 2013 was mainly due to lower purchases as a result of weak market conditions as well as clearance of existing inventory.

operations review


Trade and other receivables decreased from S$18.4 million as at 30 Sep 2012 to S$12.4 million as at 30 Sep 2013. This was largely due to the amount received from the disposal of joint venture in FY2012 and lower sales revenue in 4QFY13.

Trade and other payables decreased from S$5.6 million as at 30 Sep 2012 to S$4.0 million as at 30 Sep 2013, mainly due to lower purchases which is in line with lower sales volume.

The Group repaid the short term borrowings of S$760,000 in the first quarter of FY2013.

Cash Flow StatementNet cash and cash equivalents held by the Group increased from S$17.5 million as at 30 Sep 2012 to S$26.6 million as at 30 Sep 2013. The increase was primarily due to:

• Net cash inflow from operating activities of S$10.1 million;

• Proceeds from disposal of shares in joint venture of S$1.7 million;

• Interest received of S$188,000;• Offset by dividend paid to shareholders of S$1.8

million, repayment of short term loan of S$760,000 and increase in Investment in associate of S$267,000.

Treasury SharesAs there were no plans for the utilisation of the treasury shares, the Group cancelled 17,481,000 treasury shares in August 2013 for a value of S$6.8 million.

oUTLooK

Recovery in the global semi-conductor manufacturing sector continues to be uncertain as the world economy is still subject to financial and political volatility prevailing in the major economies. Hence, the Group anticipates the challenging market outlook for our existing business to persist in FY2014.

However, with a healthy balance sheet, and the potential diversification into the property construction and development sector in Malaysia, the Group aims to improve the operating performance in the year ahead.

operations review


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Anthony Cheng ee Chew, 48Executive ChairmanExecutive / Non-Independent

Jackie Cheng ee Lieng, 44Chief Executive OfficerExecutive / Non-Independent

Jessica ong Boon Chin, 41Executive DirectorExecutive / Non-Independent

Date of first appointment as a Director: 23 June 2005

Date of last re-election as a Director:10 January 2011

Date of first appointment as a Director: 23 June 2005


Date of first appointment as a Director: 28 Sep 2007


Academic & ProfessionalQualification(s):Diploma in Mechanical Engineering, Singapore Polytechnic

Academic & ProfessionalQualification(s):Diploma in Electronic Engineering, Ngee Ann Polytechnic

Academic & ProfessionalQualification(s):Bachelor of Science in Business Administration, Hawaii Pacific University

Master of Business Administration, Hawaii Pacific University

Present Directorships in other listedcompanies (as at 30 Sep 2013):NIL



Major Appointments(other than Directorships):NIL



Past Directorships in listed companies held over the preceding three years (from 1 Oct 2010 to 30 Sep 2013):NIL



board of direCtors


Goon Kok Loon, 71Lead Independent DirectorNon-Executive / Independent

Chong Weng hoe, 49Independent DirectorNon-Executive / Independent

John Tan Lee Meng, 46Independent DirectorNon-Executive / Independent

Date of first appointment as a Director: 4 March 2008






Board Committee(s) served on:Audit Committee (Chairman)Remuneration Committee (Member)Nominating Committee (Chairman)

Board Committee(s) served on:Audit Committee (Member)Remuneration Committee (Chairman)Nominating Committee (Member)

Board Committee(s) served on:Audit Committee (Member)Remuneration Committee (Member)Nominating Committee (Member)

Academic & ProfessionalQualification(s):Bachelor of Engineering (Electrical) (First Class Honours), University of Liverpool

Chartered Institute of Logistics and Transport (Fellow)

Academic & ProfessionalQualification(s):Bachelor of Engineering (Electrical and Electronics) (Second Class Upper Division Honours), National University of Singapore.

Master of Business Administration (Accountancy), Nanyang Technological University

Singapore National Council for International Electrotechnical Commission (Member)

Academic & ProfessionalQualification(s):Bachelor of Science (Summa Cum Laude), Oklahoma City University

Master of Business Administration (Investment and Finance), University of Hull

Present Directorships in other listedcompanies (as at 30 Sep 2013):Yongnam Holdings LtdJaya Holdings LtdVenture Corporation Ltd

Present Directorships in other listedcompanies (as at 30 Sep 2013):Keong Hong Holdings Ltd

Present Directorships in other listedcompanies (as at 30 Sep 2013):BRC Asia Limited





Past Directorships in listed companies held over the preceding three years (from 1 Oct 2010 to 30 Sep 2013):PCA Technology Limited

Past Directorships in listed companies held over the preceding three years (from 1 Oct 2010 to 30 Sep 2013):See Hup Seng Limited

board of direCtors


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MR ANDY YoNG Vice President, Operations (Singapore and Malaysia)

Mr Yong is in charge of our Group’s overall operations in Singapore. His responsibilities include supervising and managing operations staff, delivery and inventory management and managing our Group’s production facilities. He is also responsible for customer relations and is involved in formulating new strategies to improve the operational processes of our Group.

MR ANG Yee ChUAN Vice President, Mechanical and Metallic Precision

Mr Ang is in charge of developing and expanding the mechanical motion and metallic precision manufacturing businesses of our Group. He is also actively involved in our PRC offices and is overall responsible for the sales of our PRC offices. He is also responsible for sourcing and qualifying PRC suppliers for our Group.

MS SooN KUI eNG Financial Controller

Ms Soon is responsible for the Group’s financial accounting, financial reporting, as well as matters related to corporate finance of our Group. Her responsibilities also include fund flow management, management reporting and tax planning.

Ms Soon is recognised as a Certified Practising Accountant by CPA Austrialia and a Chartered Accountant of Singapore by the Institute of Singapore Chartered Accountants.

MR NeLSoN LIM MeNG LIehGeneral Manager

Mr Lim is in charge of the Sales and Technical Department for our Singapore office. He plays an active role in the development of automation and mechatronics projects, as well as business development for our range of medical products.

MR eRIC LeeVice President, Finance (China)

Mr Lee is responsible for the full spectrum of accounts and finance functions at our China offices.

Prior to joining the Group, Mr Lee was the Financial Controller for both plants in Suzhou and Kunming catering to the Industrial Packaging Division of the Salim Group from 2005 to 2008. In addition, Mr Lee has over 10 years of audit experience working for a reputable accounting firm from 1993 to 2005.

management team

HISAKA HOLDINGS LTD.Annual Report 2013

cOrpOrATe GOverNANce repOrT

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The Board of Directors (the “Board”) of HISAKA Holdings Ltd. (the “Company”) is committed to setting and maintaining a high level of corporate governance to preserve and enhance the interest of shareholders. The Company recognises the importance of practising good corporate governance and supports the Code of Corporate Governance 2012 (the “Code”).

This report outlines the corporate governance framework and practices adopted by the Company with reference given to the principles of the Code.

1. BOARD MATTERS

Principle 1: The Board’s Conduct of Affairs

The Board is responsible for overall corporate governance, strategic direction, formulation of policies and overseeing the investment and business of the Company. The Board supervises the Management on the businesses and affairs of the Company. The main roles of the Board, apart from its statutory responsibilities, are to:

(a) provide entrepreneurial leadership, set strategic objectives, and ensure that the necessary financial and human resources are in place for the Company to meet its objectives;

(b) establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders’ interests and the Company’s assets;

(c) review Management performance;(d) identify the key stakeholder groups and recognise that their perceptions affect the Company’s reputation;(e) set the Company’s values and standards and ensure that obligations to shareholders and other stakeholders are

understood and met; and(f) consider sustainability issues in the formulation of its strategies.

The Board conducts meetings on quarterly basis to coincide with the announcements of the Company’s quarterly results. Ad-hoc meetings are convened as warranted by particular circumstances.

In addition to these meetings, special corporate events and actions requiring the Board’s immediate approval were discussed over electronic mails and telephonic conference and resolved with Directors’ resolutions in writing.

Article 120(2) of the Company’s Articles of Association provides for telephonic conference meetings. The attendance of the Directors at meetings of the Board and Board Committees held in the financial year ended 30 September 2013 is set out as follows:

Attendance Record of the Board & Board Committees

Name of Director Board ofDirectors

AuditCommittee

Remuneration Committee

Nominating Committee

Total Number of Meetings Held 6 4 2 1

Cheng Ee Chew 5* 4 2 1

Cheng Ee Lieng 6 4 2 1

Jessica Ong Boon Chin 6 4 2 1

Tan Lee Meng 6 4 2 1

Goon Kok Loon 5 3* 2 1*

Chong Weng Hoe 6 4 2* 1

* Chairman



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The Company has adopted internal guidelines on the following matters that are reserved for Board’s decision and/ or approval:-

a) overall business strategies;b) corporate governance and compliance;c) financial performance and result announcements;d) audited results and annual reports;e) annual budgets, investment and divestment proposals;f) material acquisition and disposal of assets;g) internal controls and risks management;h) declaration of interim dividends and proposed final dividends; andi) all matters, which are delegated to Board Committees, are to be reported to and monitored by the Board.

Newly appointed Directors are briefed on the Directors’ duties and their disclosure obligations under the Companies Act, Cap. 50 and SGX-ST Listing Rules. Orientation programmes for new Directors are conducted to familiarise them with the business activities of the Company, its strategic plans and direction and corporate governance practices.

Board members are encouraged to attend seminars and receive training to enable them to perform effectively as Directors. Seminar announcements are communicated to them regularly.

Principle 2: Board Composition and Balance

To facilitate effective execution of its function, the Board has established the following Board Committees:

(a) the Audit Committee (“AC”);(b) the Remuneration Committee (“RC”); and(c) the Nominating Committee (“NC”).

The Board Committees operate under clearly defined terms of reference. The Chairman of each of the Board Committees reports to the Board the outcome of the Committees’ meetings.

The Board of Directors comprises six (6) Directors, three (3) of whom are independent.

The Directors of the Company as at the date of this statement are:

ExecutiveMr Cheng Ee Chew (Executive Chairman)Mr Cheng Ee Lieng (Chief Executive Officer)Ms Jessica Ong Boon Chin (Executive Director)

Non-ExecutiveMr Goon Kok Loon (Lead Independent Director)Mr Chong Weng Hoe (Independent Director)Mr Tan Lee Meng (Independent Director)

Key information regarding the Directors is set out on pages 8 and 9 of this Annual Report.

Given the nature and size of the Company’s operations, the Board considers its current board size sufficient and appropriate. The Board is considered to have competent and qualified Directors who provide the Company with a good balance of accounting, finance and management expertise with strategic planning experience and sound industry knowledge.



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The Board considers its independent Directors to be of sufficient calibre and their views to be of sufficient weightage, that no individual or small group can dominate the Board’s decision-making processes. They have no financial or contractual interests in the Company other than by way of their fees.

Principle 3: Executive Chairman and Chief Executive Officer (“CEO”)

The Company keeps the posts of Executive Chairman and CEO separate. There is a clear division of responsibilities between the Executive Chairman and the CEO, which ensures a balance of power and authority at the top of the Company. The Executive Chairman, Mr Cheng Ee Chew is the brother of the CEO, Mr Cheng Ee Lieng.

The CEO holds an executive position as he has considerable industry experience and remains involved in significant corporate matters, especially those of a strategic nature. The Executive Chairman is primarily responsible for the effective working of the Board.

The Executive Chairman’s responsibilities include:

(a) leading the Board to ensure its effectiveness on all aspects of its role;(b) setting the agenda and ensure that adequate time is available for discussion of all agenda items;(c) promoting a culture of openness and debate at the Board;(d) ensuring that the Directors receive complete, adequate and timely information;(e) ensuring effective communication with shareholders;(f) encouraging constructive relations within the Board and between the Board and Management; and(g) promoting high standards of corporate governance.

The Board has delegated the day-to-day running of the Company to the CEO. Both the Executive Chairman and the CEO exercise control over the quality, quantity and timeliness of information flow between the Board and the Management.

As no one individual holds a considerable concentration of power, the Board considers itself to have complied with the Code.

Mr. Goon Kok Loon is the Lead Independent Director, who leads and coordinates the activities of the non-executive Directors and acts as principal liaison on Board issues between the Independent Directors and the Chairman. Where appropriate, the Lead Independent Director meets periodically with the other Independent Directors without other Directors and provides feedback to the Chairman after such meetings. The Lead Independent Director is available to shareholders if they have any concerns relating to matters when contact through the normal channels of the Chairman or the CEO has failed to resolve, or where such contact is inappropriate.

Principle 4: Board Membership

The Nominating Committee (“NC”) comprises of the following three (3) Directors, all of whom, including the Chairman, are independent.

Mr Goon Kok Loon ChairmanMr Tan Lee Meng MemberMr Chong Weng Hoe Member

The role of the NC is to oversee the appointment and induction process for Directors. The responsibilities of the NC include:

(a) re-nomination of the Directors having regard to the Director’s contribution and performance;(b) determining annually whether or not a Director is independent; and(c) assessing the effectiveness of the Board as a whole.



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Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or re-nomination as a Director.

In determining the independence of Directors annually, the NC has reviewed and is of the view that Messrs Goon Kok Loon, Chong Weng Hoe and Tan Lee Meng are independent.

Consistent with the Code, the Chairman of the NC is independent and is not associated with the substantial shareholders of the Company.

The NC considers and recommends to the Board the appropriate structure, size and needs of the Board, with regard to the appropriate skills mix, personal qualities and experience required for the effective performance of the Board. The NC also recommends all appointments and retirements of Directors and considers candidates to fill new positions created by expansion and vacancies that occur by resignation, retirement or for any other reasons.

Candidates are selected based on their character, judgment, business experience and acumen. Where a Director has multiple board representations, the NC will evaluate if a Director is able to and has been adequately carrying out his or her duties as Director of the Company. Though some of the Board members have multiple board representations, the NC is satisfied that the Directors have devoted sufficient time and attention to the Company.

The Board does not see any reason to set the maximum number of listed board representations that any Director may hold as all the Directors are able to devote to the Company’s affairs in light of their commitments. However, as a general guideline to address time commitments that may be faced, a Director who holds more than five listed company board representations may consult the Chairman before accepting any new appointments as a Director. Final approval of a candidate is determined by the Board.

The Company’s Articles of Association provides that at each Annual General Meeting of the Company, not less than one third of the Directors (who have been longest in office since their appointment or re-election) are to retire from office by rotation. A retiring Director is eligible for re-election by the shareholders of the Company at the Annual General Meeting.

The NC has reviewed the independence of Mr. Goon Kok Loon, Mr. Chong Weng Hoe and Mr. Tan Lee Meng. In assessing the independence of the Directors, the NC is satisfied that there are no relationships identified by the Revised Code which would deem any of them to be not independent. Each of the Directors has also declared that they are independent.

Principle 5: Board Performance

The NC will use its best efforts to ensure that Directors appointed to the Board possess the relevant background, experience and knowledge to enable balanced and well-considered decisions to be made.

The NC has assessed the performance and effectiveness of the Board as a whole. The evaluation of the Board performance is based on objective performance criteria which include attainment of agreed targets, performance of the Board, attendance and contribution of each Director during Board meetings.



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Principle 6: Access to Information

Directors receive regular supply of adequate and timely information from the Management about the Company so that they are equipped to effectively participate in Board meetings. Detailed board papers are prepared for each meeting of the Board and are circulated in advance of each meeting. The board papers include sufficient information on financial, business and corporate issues to enable the Directors to be properly briefed on issues to be deliberated at the Board meetings.

All Directors have unrestricted access to the Company’s records and information. The Directors also liaise with senior Management as required and may consult with other employees and seek additional information on request.

In addition, the Directors have separate and independent access to the Company Secretary.

Should a Director require independent professional advice concerning any aspect of the Company’s operations or undertakings in order to fulfil his duties and responsibilities as a Director, the Board may appoint, at the Company’s expense, a professional adviser to assist.

2. REMUNERATION MATTERS

Principle 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of Remuneration

The Remuneration Committee (“RC”) comprises of the following three (3) Directors, all of whom, including the Chairman, are independent.

Mr Chong Weng Hoe ChairmanMr Goon Kok Loon MemberMr Tan Lee Meng Member

The RC reviews and recommends to the Board the specific remuneration packages for the Executive Directors and key executives. No Director or key executive is involved in deliberating his/her own remuneration, compensation or any form of benefit. The RC review covers all aspects of remuneration, including but not limited to Directors’ fees, salaries, allowances, bonuses, options, and benefits-in-kind.

In reviewing the remuneration packages for Executive Directors and key executives, the RC may make comparative study of the remuneration packages in comparable industries and will take into account the performance of the Company and that of its Executive Directors and key executives. The RC’s remuneration policy is to provide compensation packages at competitive market rates which will reward successful performance, attract, retain and motivate Executive Directors and key executives.

The independent Directors receive Directors’ fees, in accordance with their contribution, taking into account factors such as effort, time spent and the responsibilities of the Directors. Directors’ fees are recommended by the Board for approval by shareholders at the Company’s Annual General Meetings.

Messrs Cheng Ee Chew, Cheng Ee Lieng and Jessica Ong Boon Chin are paid based on their Service Agreements with the Company which are subject to review every three years. The Agreements provide for termination by either party upon giving not less than three months’ notice in writing.



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Principal 9: Disclosure on Remuneration

A breakdown showing the level and mix of each individual Director’s remuneration for the financial year ended 30 September 2013 is set out below:

Remuneration Band (in SGD)

Name of DirectorsSalary

(%)Bonus

(%)Fees (%)

Other Benefits

(%)

Total(%)

Options granted during the year

$500,000 to $749,999 Mr Cheng Ee Chew 79.5 6.6 0 13.9 100 0

$250,000 to $499,999Mr Cheng Ee Lieng 75.2 6.3 0 18.5 100 0

Ms Jessica Ong Boon Chin 68.5 5.7 0 25.8 100 0

Below $250,000

Mr Tan Lee Meng 0 0 100 0 100 0

Mr Goon Kok Loon 0 0 100 0 100 0

Mr Chong Weng Hoe 0 0 100 0 100 0

A breakdown showing the level and mix of each individual key executive’s remuneration for the financial year ended 30 September 2013 is set out below:

Name of Key ManagerSalary

(%)Bonus

(%)Fees(%)

Other Benefits(%)

Total(%)

Options granted during the year

Below S$250,000

Yong Yew Seng 67.0 16.7 0 16.3 100 0

Ang Yee Chuan 65.7 16.4 0 17.9 100 0

Soon Kui Eng 78.5 13.1 0 8.4 100 0

Lee Sui Hoi 73.5 11.0 0 15.5 100 0

Lim Meng Lieh 78.4 9.8 0 11.8 100 0

The RC and the Board have considered and are of the view that the Company’s remuneration packages are appropriate and fair.

The Company does not have any employee who is an immediate family member of a Director or CEO whose remuneration exceeds S$150,000 during the year.

3. ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

In presenting the annual financial statements and interim announcements to shareholders, it is the aim of the Board to provide shareholders with a balanced assessment of the Company’s position and prospects. The Management currently provides the Executive Directors with detailed Management accounts of the Company’s performance, position and prospects on a monthly basis. Independent Directors are briefed on significant matters when required and receive appropriately detailed reports on a regular basis.

Principal 11: Risk Management and Internal Controls

Risk Management

The Board oversees the Company’s risk management policies in areas of significant risk to the Company’s operations and put in place the risk management practices to address these risks.



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i. Operational risks

The Company’s operating risks are managed at each operating unit and monitored at the Company level. The Company analyses the costs and benefits of managing operational risks and endeavours to eliminate or contain them as best as possible and to such extent practicably possible. The Internal Auditor will complement the role of the risk management by providing an independent perspective on the controls that help to mitigate any operational risks.

ii. Compliance and legal risks

The various operating business units are responsible to ensure compliance with the relevant laws and regulations and advice from external legal advisors are obtained where and when necessary.

iii. Financial risks

Details of the various financial risk factors and the management of such risks are outlined in Note 25 set out on page 58 of the Annual Report.

Internal Controls

Based on the internal controls established and maintained by the Company, work performed by the internal and external auditors, and reviews performed by Management, as well as various Board Committees and the Board, the Audit Committee and the Board are of the opinion that the Company’s internal controls addressing financial, operational and compliance risks, were adequate as at 30 September 2013.

The Board has received assurance from the CEO & the Financial Controller that:

(a) the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances; and

(b) the Company maintains an effective risk management and internal control systems.

Principle 12: Audit Committee

The Audit Committee (“AC”) comprises of the following three (3) Directors, all of whom, including the Chairman, are independent.

Mr Goon Kok Loon ChairmanMr Tan Lee Meng MemberMr Chong Weng Hoe Member

The Board is of the view that members of the AC are appropriately qualified to discharge their responsibilities.

The main roles and responsibilities of AC includes:

a) reviewing the scope and results of audit work, the cost effectiveness of the audit, and the independence and objectivity of the external auditors;

b) reviewing the nature, extent and costs of non-audit services provided by the external auditors;c) reviewing and reporting to the Board annually the adequacy and effectiveness of the Company’s internal controls,

including financial, operational, compliance and information technology controls;d) reviewing the adequacy of the internal audit function;e) reviewing and assessing the adequacy of the internal controls and regulatory compliance through discussions

with Management, internal and external auditors;f) reviewing the annual and interim financial statements and corresponding SGXNET announcements before

submission to the Board for adoption;



18

g) nominating external auditors to the Board for appointment or re-appointment;h) reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual of the SGX-ST) conducted

during the financial year; andi) considering any other matters as requested by the Board.

The AC is authorised to investigate any matter within its terms of reference. The AC also has full access to the Management and full discretion to invite any Director or key executive to attend its meetings as well as utilise reasonable resources to enable it to discharge its functions properly.

During the year, the AC met with the external auditors separately without the presence of the Management.

The AC has reviewed the volume of non-audit services to the Company by the external auditors and is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. Details of the aggregate amount of audit and non-audit services paid or payable to the external auditors during the financial year ended 30 September 2013 are disclosed in Note 9 set out on Page 45 of the Annual Report. The AC has recommended to the Board on the nomination of Messrs RSM Chio Lim LLP for re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.

The Group has appointed different auditor for its overseas subsidiary as disclosed in Note 14 set out on page 50 of the Annual Report. The Audit Committee and the Board have satisfied themselves that the appointment of different auditor for its overseas subsidiary would not compromise the standard and the effectiveness of the audit of the Group.

The Company is in compliance with Rules 712 and 716 of the Listing Manual in relation to its external auditors.

The external auditors provides regular updates and briefing to the AC on changes or amendments to accounting standards to enable the member of the AC to keep abreast of such changes and its corresponding impact on the financial statements, if any.

The Company has adopted a whistle blowing policy aimed at providing a well-defined and accessible channel in the Company through which employees may raise concerns about improper conduct within the Company.

Principle 13: Internal Audit

The Board acknowledges responsibility for the overall internal control framework of the Company. However, the Board also recognises that no cost effective internal control system will preclude all errors and irregularities as the system is designed to manage rather than eliminate the risk of failure in order to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Company has set up an internal audit team. Currently, there is only one internal audit staff performing the internal audit function. This internal audit staff is responsible for the review of the effectiveness and compliance of the Company’s, its subsidiaries’ and associates’ (both local and overseas) control systems addressing financial, operational and compliance risks. The internal audit staff has conducted her internal audit function on various overseas subsidiaries and associates.

At this point, the AC agrees that it would not be cost effective to outsource the internal audit function in relation to the operations and size of the Company. The AC is satisfied that the internal audit function can be adequately handled by the Company’s internal audit staff. Nevertheless, the AC will continuously review the situation and would recommend outsourcing the internal audit function to professional accounting firms once the need arises.



19

4. SHAREHOLDER RIGHTS AND RESPONSIBILITIES

Principle 14: Shareholder RightsPrinciple 15: Communication with ShareholdersPrinciple 16: Conduct of Shareholder meetings

The Company believes in timely and accurate dissemination of information to its shareholders. The Board makes every effort to comply with continuous disclosure obligations of the Company under the SGX-ST’s Listing Rules and the Singapore Companies Act.

Communication with shareholders is usually made through:

a) annual reports that are prepared and issued to all shareholders;b) announcements of quarterly financial results containing a summary of the financial information and affairs of the

Company;c) disclosures and announcements;d) the Company’s website at http://www.hisaka.com.sg at which shareholders can access information; ande) electronic mails to its corporate email address at [email protected].

The Company’s Articles of Association allow a shareholder to appoint one or two proxies to attend and vote in place of the shareholder.

The Company is in full support of shareholder participation at Annual General Meetings.

Resolutions are as far as possible, structured separately and may be voted upon independently.

The Chairpersons of the Board Committees will normally be present for all General Meetings and available to address questions at these Meetings. External auditors are also present to assist the Directors in addressing any queries by shareholders.

5. INTERESTED PERSON TRANSACTIONS

The Company has in place procedures to comply with the Listing Manual requirements relating to interested person transactions. The Company has set out these procedures for review and approval.

During the financial year ended 30 September 2013, there were no interested person transactions amounting to more than S$100,000.

6. DEALING IN SECURITIES

The Company has an internal policy, which is in line with the requirements of the Listing Manual, governing dealings in the Company’s securities by its Directors and Officers. The Company has devised and adopted its own internal Code of Best Practices on Securities Transactions prohibiting its Directors and Officers from dealing in the Company’s shares when they are in possession of unpublished price-sensitive information. The Company also disapproves of Directors and Officers dealing in Company’s securities based on short-term considerations.

Directors and Officers are also required to observe the “blackout” periods which prohibits them from dealing in the Company’s securities during the period commencing two weeks before the announcement of the Company’s financial statements for each of the first three quarters of its financial year, or one month before the announcement of the Company’s full year results, as the case may be, and ending on the date of the announcement of the respective results. Directors and Officers are informed via email in advance of the respective “blackout” periods.



20

7. MATERIAL CONTRACTS

There were no material contracts entered into by the Company or any of its subsidiaries involving the interest of the Executive Chairman, CEO, any Director, or controlling shareholder.

STATUS REPORT ON USE OF IPO PROCEEDS

As at 30 September 2013, the Company has utilised approximately S$12,500,000, comprising of S$971,000 for expansion of manufacturing facilities, S$2,500,000 for expansion of the sales & marketing team and establishment of a research & development team, S$2,459,000 for potential strategic acquisitions & joint ventures and S$6,570,000 for working capital as indicated in the table below. The Management has confirmed that the utilisation of the proceeds is in accordance with the stated use.

Breakdown of IPO proceeds used for working capital is as follows :- S$

Administrative expense of the company 1,673,000

Operating expenses of subsidiaries 3,949,000

Sales & marketing expense of subsidiaries 948,000

6,570,000

STATUS REPORT ON USE OF TDR PROCEEDS

As at 30 September 2013, the Company has utilised approximately S$9,967,000 comprising of S$149,000 for the setting up of manufacturing facilities for the Portable Blood Bag Warmer (“PBBW”) system and S$9,788,000 to be used as working capital for the PBBW system. As at 30 September 2013, the Company has utilised S$2,420,000 as working capital, as indicated in the table below. The remaining S$7,368,000 has been deposited with the bank. The Management has confirmed that the utilisation of the proceeds is in accordance with the stated use.

Breakdown of TDR proceeds used for PBBW system’s working capital as follows:- S$

Research & development expenses 2,081,000

Test & certification 287,000

Marketing & promotion 52,000

2,420,000


DIrecTOrS’ repOrT

The directors of the company are pleased to present their report together with the audited financial statements of the company and of the group for the reporting year ended 30 September 2013.

1. Directors at Date of Report

The directors of the company in office at the date of this report are:

Cheng Ee ChewCheng Ee LiengChong Weng HoeGoon Kok LoonJessica Ong Boon ChinTan Lee Meng

2. Arrangements to Enable Directors to Acquire Benefits by Means of the Acquisition of Shares and Debentures

Neither at the end of the reporting year nor at any time during the reporting year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.

3. Directors’ Interests in Shares and Debentures

The directors of the company holding office at the end of the reporting year had no interests in the share capital of the company and related companies as recorded in the register of directors’ shareholdings kept by the company under section 164 of the Companies Act, Chapter 50 except as follows:

Name of directorsThe company

Ordinary shares

Shareholding in which the director has direct beneficial interest

Shareholding in which the director is deemed to have a beneficial interest

At beginning of the reporting

year

At endof the reporting

year

At beginning of the reporting

year

At endof the reporting

year

Number of shares of no par value

Cheng Ee Chew 2,969,000 2,969,000 29,134,026 29,134,026

Jessica Ong Boon Chin 1,431,500 1,431,500 – –

The directors’ interests as at 21 October 2013 were the same as those at the end of the reporting year.

4. Contractual Benefits of Directors

Since the beginning of the reporting year, no director of the company has received or become entitled to receive a benefit which is required to be disclosed under section 201(8) of the Companies Act, Chapter 50, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial statements.

There were certain transactions (shown in the financial statements under related party transactions) with corporations in which certain directors have an interest.


22

5. Performance Share Plan

The group operates a Performance Share Plan, HISAKA group Performance Share Plan (“HGPSP”) which was approved by the shareholders at the company’s EGM on 20 January 2010.

The HGPSP is administered by the Remuneration Committee whose members are:-Chong Weng Hoe (Chairman) Goon Kok LoonTan Lee Meng

An executive or non-executive director of any member of the group or a full-time employee of any member of the group who is selected by the Committee is eligible to participate in the plan.

A participant of the HGPSP (“Participant”) who is a member of the Committee shall not be involved in its deliberations in respect of awards (“Awards”) to be granted to or held by the member of the Committee.

The Awards granted under the Share Plan allow a Participant to receive fully-paid shares free of consideration upon the Participant achieving the performance target as are prescribed by the Committee at its absolute discretion.

The Committee has the discretion to impose a further vesting period after the performance period to encourage the Participant to continue serving the group for a further period of time. The Committee also has the discretion to grant Awards at any time in the year, it is currently anticipated that Awards would in general be made once a year.

The HGPSP shall continue in force at the discretion of the Committee, subject to a maximum period of 10 years commencing on the date on which the HGPSP is adopted on 20 January 2010. Any Awards made to Participants prior to expiry or termination date will continue to remain valid.

Mr Cheng Ee Chew, Executive Chairman and Mr Cheng Ee Lieng, Chief Executive Officer are entitled to grant of Awards up to 2,800,000 shares each.

The maximum number of shares may be granted under the HGPSP, when aggregated with the aggregate number of shares over which options are granted under any share option schemes of the company, will be 15 percent of the total number of issued shares (excluding Treasury Shares) from time to time. The number of shares to be granted to an eligible person who is non-executive director of any member of the group (other than the Chairman of the company) shall not exceed 50,000; and the number of shares to be granted to the Chairman of the company shall not exceed 500,000.

No shares were granted to the employees since the inception of the HGPSP.

6. Share Options

During the reporting year, no option to take up unissued shares of the company or any subsidiary was granted.

During the reporting year, there were no shares of the company or any subsidiary issued by virtue of the exercise of an option to take up unissued shares.

At the end of the reporting year, there were no unissued shares of the company or any subsidiary under option.

DIrecTOrS’ repOrT


7. Audit Committee

The members of the audit committee at the date of this report are as follows:

Goon Kok Loon (Chairman of audit committee and independent and non-executive director)

Chong Weng Hoe (Independent and non-executive director)

Tan Lee Meng (Independent and non-executive director)

The audit committee performs the functions specified by section 201B(5) of the Companies Act. Among other functions, it performed the following:

• Reviewedwiththeindependentexternalauditorstheirauditplan;• Reviewedwith the independent external auditors their evaluation of the company’s internal accounting

control, and their report on the financial statements and the assistance given by the company’s officers to them;

• Reviewedwiththeinternalauditorsthescopeandresultsoftheinternalauditprocedures;• Reviewedthefinancialstatementsofthegroupandthecompanypriortotheirsubmissiontothedirectorsof

the company for adoption; and • Reviewedtheinterestedpersontransactions(asdefinedinChapter9oftheListingManualofSGX).

Other functions performed by the audit committee are described in the report on corporate governance included in the annual report. It also includes an explanation of how independent auditor objectivity and independence is safeguarded where the independent auditors provide non-audit services.

The audit committee has recommended to the board of directors that the independent auditors, RSM Chio Lim LLP, be nominated for re-appointment as independent auditors at the next annual general meeting of the company.

8. Independent Auditors

The independent auditors, RSM Chio Lim LLP, have expressed their willingness to accept re-appointment.

9. Subsequent Developments

There are no significant developments subsequent to the release of the group’s and the company’s preliminary financial statements, as announced on 22 November 2013, which would materially affect the group’s and the company’s operating and financial performance as of the date of this report.

On Behalf of the Directors

Cheng Ee Lieng

Director

Jessica Ong Boon Chin

Director

10 December 2013

DIrecTOrS’ repOrT


24

In the opinion of the directors,

(a) the accompanying consolidated statement of profit or loss and other comprehensive income, statements of financial position, statements of changes in equity, consolidated statement of cash flows, and notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company and of the group as at 30 September 2013 and of the results and cash flows of the group and changes in equity of the company and of the group for the reporting year then ended; and

(b) at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

The board of directors approved and authorised these financial statements for issue.

On Behalf of the Directors

Cheng Ee Lieng

Director

Jessica Ong Boon Chin

Director

10 December 2013

STATemeNT By DIrecTOrS


Report on the Consolidated Financial Statements

We have audited the accompanying financial statements of HISAKA Holdings Ltd. (the “company”) and its subsidiaries (the group), which comprise the consolidated statement of financial position of the group and the statement of financial position of the company as at 30 September 2013, and the consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows of the group, and statement of changes in equity of the company for the reporting year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair statement of profit or loss and other comprehensive income and statements of financial position and to maintain accountability of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the group and the statement of financial position and statement of changes in equity of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the group and of the company as at 30 September 2013 and of the results, changes in equity and cash flows of the group and the changes in equity of the company for the reporting year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

RSM Chio Lim LLPPublic Accountants andChartered AccountantsSingapore

10 December 2013

Partner in charge of audit: Goh Swee Hong Effective from financial year ended 30 September 2011

INDepeNDeNT AuDITOrS’ repOrTto the Members of HISAKA HOLDINGS LTD. (Registration No: 200508585R)


26

Group

Note 2013 2012

$’000 $’000

Revenue 4 34,021 49,106

Cost of Sales (25,951) (37,787)

Gross Profit 8,070 11,319

Other Items of Income

Interest Income 5 188 155

Other Credits 6 229 110

Other Items of Expense

Marketing and Distribution Costs (2,795) (2,998)

Administrative Expenses 9 (4,407) (4,804)

Finance Costs 7 (2) (13)

Other Charges 6 (644) (2,537)

Share of Loss from Equity-Accounted Joint Venture – (345)

Share of Loss from Equity-Accounted Associate (370) (184)

Profit Before Tax 269 703

Income Tax Income (Expense) 10 133 (287)

Profit, Net of Tax 402 416

Other Comprehensive Income (Expense)

Items that may be reclassified subsequently to profit or loss:

Exchange Differences on Translating Foreign Operations, Net of Tax 97 (172)

Other Comprehensive Income (Expense) for the Year, Net of Tax 97 (172)

Total Comprehensive Income for the Year 499 244

Profit Attributable to Equity Holders of Parent, Net of Tax 398 420

Profit Attributable to Non-Controlling Interest, Net of Tax 4 (4)

Profit, Net of Tax 402 416

Total Comprehensive Income Attributable to Equity Holders of the Parent 495 248

Total Comprehensive Income Attributable to Non-Controlling Interests 4 (4)

Total Comprehensive Income for the Year 499 244

Earnings Per Share

Earnings per Share Currency Unit Cent Cent

Basic 11 0.23 0.23

Diluted 11 0.23 0.23

cONSOLIDATeD STATemeNT Of prOfIT Or LOSSAND OTHer cOmpreHeNSIve INcOmeYear Ended 30 September 2013

The accompanying notes form an integral part of these financial statements.


Group Company

Note 2013 2012 2013 2012

$’000 $’000 $’000 $’000

ASSETS

Non-Current Assets

Property, Plant and Equipment 13 1,517 1,865 – –

Investment in Subsidiaries 14 – – 6,716 6,716

Investment in Associate 15 986 1,185 1,636 1,369

Deferred Tax Assets 10 281 123 – –

Total Non-Current Assets 2,784 3,173 8,352 8,085

Current Assets

Inventories 16 6,461 13,066 – –

Trade and Other Receivables 17 12,404 18,442 3,769 8,581

Other Assets 18 298 284 25 15

Cash and Cash Equivalents 19 26,556 17,449 20,219 13,911

Total Current Assets 45,719 49,241 24,013 22,507

Total Assets 48,503 52,414 32,365 30,592

EQUITY AND LIABILITIES

Equity

Share Capital 20 27,024 33,851 27,024 33,851

Treasury Shares 20 – (6,827) – (6,827)

Retained Earnings 17,147 18,502 4,712 3,255

Other Reserves, Total 274 177 – –

Equity, Attributable to Equity Holders of Parent, Total 44,445 45,703 31,736 30,279

Non-Controlling Interests – (4) – –

Total Equity 44,445 45,699 31,736 30,279

Non-Current Liabilities

Deferred Tax Liabilities 10 51 38 21 8

Total Non-Current Liabilities 51 38 21 8

Current Liabilities

Income Tax Payable 31 336 – 128

Trade and Other Payables 21 3,976 5,581 608 177

Other Financial Liabilities 22 – 760 – –

Total Current Liabilities 4,007 6,677 608 305

Total Liabilities 4,058 6,715 629 313

Total Equity and Liabilities 48,503 52,414 32,365 30,592

STATemeNTS Of fINANcIAL pOSITIONAs at 30 September 2013



28

TotalEquity

Attributableto ParentSub- Total

ShareCapital

RetainedEarnings

ForeignCurrency

TranslationReserve

TreasuryShares

StatutoryReserve

Non-ControllingInterests

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

GroupCurrent Year:Opening Balance at

1 October 2012 45,699 45,703 33,851 18,502 (34) (6,827) 211 (4)Movements in Equity :Total Comprehensive Income

for the Year 499 495 – 398 97 – – 4Dividend Paid (Note 12) (1,753) (1,753) – (1,753) – – – –Cancellation of Treasury Shares (Note 20) – – (6,827) – – 6,827 – –Closing Balance at

30 September 2013 44,445 44,445 27,024 17,147 63 – 211 –

Previous Year:Opening Balance at

1 October 2011 49,271 49,271 33,851 20,820 138 (5,681) 143 –Movements in Equity :Total Comprehensive Income (Loss) for

the Year 244 248 – 420 (172) – – (4)Transferred from Retained Earnings – – – (68) – – 68 –Dividend Paid (Note 12) (921) (921) – (921) – – – –Purchase of Treasury Shares (Note 20) (2,895) (2,895) – – – (2,895) – –Cancellation of Treasury Shares (Note 20) – – – (1,749) – 1,749 – –Closing Balance at

30 September 2012 45,699 45,703 33,851 18,502 (34) (6,827) 211 (4)

Total Share Treasury Retained

Equity Capital Shares Earnings

$’000 $’000 $’000 $’000

CompanyCurrent Year:Opening Balance at 1 October 2012 30,279 33,851 (6,827) 3,255Movements in Equity :Total Comprehensive Income for the Year 3,210 – – 3,210Dividend (Note 12) (1,753) – – (1,753)Cancellation of Treasury Shares (Note 20) – (6,827) 6,827 –Closing Balance at 30 September 2013 31,736 27,024 – 4,712

Previous Year:Opening Balance at 1 October 2011 28,772 33,851 (5,681) 602Movements in Equity :Total Comprehensive Income for the Year 5,323 – – 5,323Dividend (Note 12) (921) – – (921)Purchase of Treasury Shares (Note 20) (2,895) – (2,895) –Cancellation of Treasury Shares (Note 20) – – 1,749 (1,749)Closing Balance at 30 September 2012 30,279 33,851 (6,827) 3,255


STATemeNTS Of cHANGeS IN equITyYear Ended 30 September 2013


Group

2013 2012

$’000 $’000

Cash Flows From Operating Activities

Profit Before Tax 269 703

Adjustments for:

Depreciation of Property, Plant and Equipment 437 439

Interest Expense 2 13

Interest Income (188) (155)

(Gain) Loss on Disposal of Plant and Equipment (31) 28

Reversal for Impairment on Plant and Equipment (18) –

Loss on Disposal of Investment in Joint Venture – 626

Share of the Loss of Joint Venture – 345

Share of the Loss of Associate 370 184

Net Effect of Exchange Rate Changes in Consolidating Subsidiaries 182 (163)

Operating Cash Flows before Changes in Working Capital 1,023 2,020

Trade and Other Receivables 4,380 (1,898)

Other Assets 89 241

Trade and Other Payables (1,605) (5,215)

Inventories 6,605 (1,549)

Net Cash Flows From (Used in) Operations Before Tax 10,492 (6,401)

Income Tax Paid (415) (1,190)

Net Cash Flows From (Used in) Operating Activities 10,077 (7,591)

Cash Flows From Investing Activities

Purchase of Property, Plant and Equipment (82) (345)

Disposal of Plant and Equipment 48 25

Interest Received 188 155

Increase in Investment in Associate (267) (769)

Dividend Received from Joint Venture – 1,319

Expenses Paid in Relation to Disposal of Shares in Joint Venture – (43)

Proceed from Disposal of Shares in Joint Venture 1,658 –

Net Cash Flows From Investing Activities 1,545 342

Cash Flows From Financing Activities

(Decrease) Increase in Other Financial Liabilities (760) 760

Interest Paid (2) (13)

Dividends Paid (1,753) (921)

Purchase of Treasury Shares – (2,895)

Net Cash Flows Used in Financing Activities (2,515) (3,069)

Net Increase (Decrease) in Cash and Cash Equivalents 9,107 (10,318)

Cash and Cash Equivalents, Statement of Cash Flows, Beginning Balance 17,449 27,767

Cash and Cash Equivalents, Statement of Cash Flows, Ending Balance (Note 19) 26,556 17,449

cONSOLIDATeD STATemeNT Of cASH fLOwSYear Ended 30 September 2013



NOTeS TO THe fINANcIAL STATemeNTS30 September 2013

30

1. General

The company is incorporated in Singapore with limited liability. The financial statements are presented in Singapore dollars and they cover the company (referred to as “parent”) and the subsidiaries.

The board of directors approved and authorised these financial statements for issue on the date of the statement of directors.

The company is an investment holding company. The principal activities of the subsidiaries are as disclosed in Note 14 below.

The company is listed on the Main Board of The Singapore Exchange Securities Trading Limited (“SGX-ST”) since 8 May 2008. 60,000,000 units of Taiwan Depositary Receipts (“TDRs”) comprising 60,000,000 shares of the Company are listed on the Taiwan Stock Exchange Corporation.

The registered office is: 63 Sungei Kadut, Hisaka Industrial Building, Singapore 729484. The company is situated in Singapore.

2. Summary of Significant Accounting Policies

Accounting Convention

The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (“FRS”) and the related Interpretations to FRS (“INT FRS”) as issued by the Singapore Accounting Standards Council and the Companies Act, Chapter 50. The financial statements are prepared on a going concern basis under the historical cost convention except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements. The accounting policies in FRSs need not be applied when the effect of applying them is immaterial. The disclosures required by FRSs need not be made if the information is immaterial. Other comprehensive income comprises items of income and expense (including reclassification adjustments) that are not recognised in the income statement, as required or permitted by FRS. Reclassification adjustments are amounts reclassified to profit or loss in the income statement in the current period that were recognised in other comprehensive income in the current or previous periods.

Basis of Presentation

The consolidated financial statements include the financial statements made up to the end of the reporting year of the company and all of its directly and indirectly controlled subsidiaries. The consolidated financial statements are the financial statements of the group presented as those of a single economic entity and are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including profit or loss and other comprehensive income items and dividends are eliminated on consolidation. The results of any subsidiary acquired or disposed of during the reporting year are accounted for from the respective dates of acquisition or up to the date of disposal which is the date on which effective control is obtained of the acquired business until that control ceases.

Changes in the group’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity. When the group loses control of a subsidiary it derecognises the assets and liabilities and related equity components of the former subsidiary. Any gain or loss is recognised in profit or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost and is subsequently accounted as available-for-sale financial assets in accordance with FRS 39.

30 September 2013



31

2. Summary of Significant Accounting Policies (Cont’d)

Basis of Presentation (Cont’d)

The company’s financial statements have been prepared on the same basis, and as permitted by the Companies Act, Chapter 50, no statement of income is presented for the company.

The equity accounting method is used for joint venture and associate in the group financial statements.

Basis of Preparation of the Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.

Revenue Recognition

The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the reporting year arising from the course of the activities of the entity and it is shown net of any related sales taxes, estimated returns and rebates. Revenue from the sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from rendering of services that are of short duration is recognised when the services are completed. Interest is recognised using the effective interest method. Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established. Rental revenue is recognised on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the lease term.

Employee Benefits

Contributions to defined contribution retirement benefit plans are recorded as an expense as they fall due. The entity’s legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund which is the Central Provident Fund in Singapore (a government managed retirement benefit plan). For employee leave entitlement the expected cost of short-term employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and in the case of non-accumulating compensated absences, when the absences occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive obligation based on past practice.



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Income Tax

The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred income taxes are recognised as income or as an expense in profit or loss unless the tax relates to items that are recognised in the same or a different period outside profit or loss. For such items recognised outside profit or loss the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive income and (b) directly in equity if the tax is related to an item recognised directly in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures except where the reporting entity is able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference will not reverse in the foreseeable future or for deductible temporary differences, they will not reverse in the foreseeable future and they cannot be utilised against taxable profits. As for joint ventures and associates the reporting entity is not in the position to determine their dividend policies. As a result, all significant deferred tax liabilities for all such taxable temporary differences are recognised.

Foreign Currency Transactions

The functional currency is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in profit or loss except when recognised in other comprehensive income and if applicable deferred in equity such as for qualifying cash flow hedges. The presentation is in the functional currency.

Translation of Financial Statements of Other Entities

Each entity in the group determines the appropriate functional currency as it reflects the primary economic environment in which the entity operates. In translating the financial statements of an investee for incorporation in the consolidated financial statements in the presentation currency the assets and liabilities denominated in other currencies are translated at end of the reporting year rates of exchange and the profit and loss items are translated at average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other comprehensive income and accumulated in a separate component of equity until the disposal of that relevant entity.



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Borrowing Costs

All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Other borrowing costs are recognised as an expense in the period in which they are incurred. The interest expense is calculated using the effective interest rate method.

Property, Plant and Equipment

Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows:

Leasehold properties and improvements – Over the term of lease that is 5% to 20%

Plant and equipment – 9% to 331/3%

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements.

Property, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in profit or loss. The residual value and the useful life of an asset is reviewed at least at each reporting year-end and, if expectations differ significantly from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted.

Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset or component to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss when they are incurred.

Cost includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Segment Reporting

The group discloses financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the performance. Generally, financial information is reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.


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hisaka holdings ltd. ar13_en.pdf · 2013. 12. 23. · hisaka holdings ltd annual report 2013 5...

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