1. food and drink
2. beverages
3. non alcoholic beverages
4. coffee and tea

ANNUAL
REPORT
20
14
远
见
卓
识
潜
心
深
笃
谋
勇
于
开
拓
志
远
虑
持
之
以
恒
锐
意
进
取
yong
COURAGE
DARING TO FORGE AHEAD, EFFECT
CHANGE AND BREAK NEW GROUND.
COURAGE
CALCULATE
COMMITMENT
suàn
CALCULATE
POSSESSING THE FORESIGHT AND
PRECISION TO PLOT THE PATH TO SUCCESS.
COURAGE
CALCULATE
COMMITMENT
COMMITMENT
STAYING ON COURSE WITH FOCUS, PERSEVERANCE, AND
DEDICATION.
COURAGE
CALCULATE
COMMITMENT
COURAGE
CALCULATE
COMMITMENT
开拓进取，
重新定义健康未来！
PIONEERING, REDEFINING
A N D C R E AT I N G T H E F U T U R E
OF WELL-BEING.
Indicators
691
Turnover ($m)
Turnover
2014
2013
Sales
$691m
$648m
$152m
$132m
$102m
$140m
$129m
$102m
$462m
$438m
$276m
13
56
6
23%
$299m
$271m
$144m
14
36
6
37%
842
3,927
861
3,571
Results
Operating profit (EBITDA)
Profit before tax
Profit after tax and attributable to shareholders
Financial and management indicators
Cash & cash equivalent and fixed income investment
Shareholders’ funds
Net cash and fixed income investments
Basic earnings per share (cents)
Net asset value per share (cents)
Dividend per share (cents)
ROE (return on equity)
Other relevant information
Number of stores
Number of employees
602
509
2010
Profit after tax ($m)
648
87
554
2011
50
2012
2013
2014
2010
Rest of the
World
102
102
2013
2014
69
2012
2011
Cash & cash equivalent and fixed
income investment ($m)
7%
2014
462
2013
South
Asia
40%
Turnover by region
53%
North
Asia
299
2012
235
2011
2010
205
73
02
5
45
Chairman and CEO
Corporate Governance
and Managing Risk
Milestones of the Year
Corporate Governance Report
Our Presence Worldwide
Managing Risk
Online Sales Platform
Corporate Information
Annual Review
Evolution of Main Indicators
Retail Formats
23
Table of Contents
49
Financial Report
Director’s Report
Sustainable Model
Statement by Directors
Value Chain
Independent Auditor’s Report
Inspiring Well-being
Balance Sheet
Company Relations with Stakeholders
Consolidated Statement of
Comprehensive Income
31
Statement of Changes in Equity
Challenges, Objectives
and Opportunities
Realising New Innovative Products
Manufacturing Responsible Products
Branding and Marketing in the
Digital Era
Ongoing Development of Teams’
Motivation
Strengthening Customer Services
Consolidated Cash Flow Statement
Notes to the Financial Statements
174
Annexures
Notice of Annual General Meeting
Appendix I
Appendix II
Proxy Form
Contribution to Community
04
Annual Review
06
Leading with Courage,
Inspiration, and Dedication.
Recognising the fast changing landscape today
and having the ability to adapt quickly be it
technology, online or offline and innovation
are keys to maintaining our sustainable
growth.
Challenging
In this report, I intend to outline to our
For 2014, I am pleased to announce that our full
stakeholders the challenges, objectives and
year sales increased by $43 million to a record
opportunities driving our business processes
$691 million. The increase in sales was driven
and brands and how we will continue to improve
primarily by consumer demand for OSIM, GNC
and grow a sustainable business model for the
and TWG Tea products.
future with good corporate governance being
our guiding principle.
PBT was a record of $132 million and return on
equity was 23%. For shareholders, dividend per
I therefore invite our stakeholders to join us as
world
economic
conditions
dominate our news today with many expecting
it to continue for the rest of 2015. However, we
maintain our optimistic outlook especially for
our North Asia and International consumer
markets which are seen as the primary
beneficiaries from the drop in global oil prices.
We are prepared to seize the opportunity to
drive growth regardless of global economic
conditions through:
• continuous innovation of products and
services,
• growing retail presence in new key markets
for all of our brands,
• leveraging on the power of digital branding
and communications, and
• reinforcing our core values and strengths in
building sustainable brands, people and
good operational practices.
share was 6 cents.
we commit ourselves in heart and mind through
three simple yet powerful Chinese characters
Globally, we have a total of 842 OSIM, GNC and
guiding our growth:
TWG Tea outlets. As at 31 December 2014,
our cash, cash equivalent and fixed income
Courage – Daring to forge ahead, effect change
investments totaled $462 million.
and break new ground
Calculate – Possessing the foresight and
I would like to thank my directors, team,
precision to plot the path to success
vendors, shareholders and bankers who have
Commitment – Staying on course with focus,
worked closely with me on this journey. Let us
perseverance and dedication
focus, commit ourselves, and build an even
stronger foundation and ride along the digital
In September 2014, $170 million was raised
wave in our next phase of growth.
through zero coupon convertible bonds due in
2019.
This
zero
coupon
issuance
was,
considering today’s rising global interest rates,
evidence of the confidence investors placed in
us to grow our business through strategic and
synergistic investments in new and existing
markets.
Mr Ron Sim
Founder, Chairman and CEO
08
Milestones
of the
Year
JANUARY
FEBRUARY
APRIL
JUNE
JULY
AUGUST
OSIM launches innovative
whole body workout product
“uShape”
OSIM celebrates its 35th
Anniversary
OSIM launches massage sofa
“uDiva”
ONI Global receives 3 awards
for USD One Million Dollar
Sales Stores by GNC US
headquarters
TWG Tea opens Taiwan’s 2nd
flagship salon at Taipei 101
TWG Tea opens Shanghai’s
1st flagship salon at
Grand Gateway
TWG Tea opens Taiwan’s 1st
flagship salon at Breeze
Centre, Taipei
TWG Tea launches “Iced
Teabag Collection”
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
OSIM introduces Lee Min Ho,
uDiva celebrity on key Asia
market tour
OSIM wins SIAS Most
Transparent Company Award
OSIM launches massage chair
“uInfinity Luxe”
TWG Tea launches “The
Christmas Around The World
Tea Set”
OSIM opens Korea’s flagship
store at Lotte Tower, Seoul
ONI Global launches LAC
Panabloc and Taut for Men
OSIM wins Asiamoney “Best
Managed Company in
Singapore”
OSIM issues S$170M
zero coupon convertible
bonds due in 2019
10
Our
Presence
Worldwide
North Asia
Markets by Brand (Retail Outlets)
OSIM
Singapore
China
Taiwan
Hong Kong
Malaysia
Australia
Bahrain
Cambodia
India
Indonesia
Kuwait
Mongolia
Myanmar
New Zealand
Pakistan
Philippines
RichLife/GNC
Saudi Arabia
South Africa
South Korea
Thailand
UAE
UK
Singapore
Malaysia
China
Taiwan
Australia
Malaysia
Philippines
South Korea
Thailand
UAE
UK
Rest of the World
Total
markets
outlets
markets
outlets
markets
outlets
markets
outlets
OSIM
4
365
10
158
8
38
22
561
RichLife/GNC
2
55
2
156
1
27
5
238
TWG Tea
5
11
6
28
2
4
13
43
TWG Tea
Singapore
China
Taiwan
Hong Kong
Cambodia
Indonesia
Japan
South Asia
Total
431
342
69
842
Distribution Presence
12
Online Sales Platform
OSIM
Australia
China
Hong Kong
India
Malaysia
New Zealand
Philippines
Singapore
11 ONLINE STORES
WORLDWIDE
Taiwan
Thailand
United Kingdom
GNC
TWG Tea
Singapore
Malaysia
Taiwan
Australia
e-Boutique
m-Boutique
4 ONLINE STORES
WORLDWIDE
2 GLOBAL DIGITAL
PLATFORMS
14
Evolution of Main Indicators
5-Year Profit & Loss Accounts
Year ended
Turnover
Profit before tax
Profit after tax
5-Year Cash Flows
2010
$’m
2011
$’m
2012
$’m
2013
$’m
2014
$’m
509
68
50
554
98
69
602
115
87
648
129
102
691
132
102
2010
$’m
2011
$’m
2012
$’m
2013
$’m
2014
$’m
Year ended
2010
$’m
2011
$’m
2012
$’m
2013
$’m
2014
$’m
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Cash and cash equivalents at the end of the year
94
(19)
(62)
73
99
(78)
97
194
94
(36)
(45)
202
104
(3)
(42)
267
108
(22)
73
428
2010
$’m
2011
$’m
2012
$’m
2013
$’m
2014
$’m
73
205
235
299
462
5-Year Summarised Balance Sheets
Year ended
Cash & Cash Equivalent and Fixed Income Investment
Year ended
Non-current assets
Current asset
Current liabilities
Non-current liabilities
70
169
108
322
126
344
260
420
266
588
(127)
(2)
(140)
(122)
(146)
(124)
(297)
(39)
(158)
(204)
110
168
200
344
492
15
22
26
36
56
Cash & cash equivalent and fixed income investment
Other ratio:
Net asset value per share (cents)
16
OSIM
Retail Concept
With over 35 years of experience, OSIM envisions to be the global leader with uncompromising
dedication in its development of innovative and reliable healthy lifestyle products. OSIM
maintains control in the entire process, from research and development, conceptualisation, design,
testing, production, marketing & sales, and after sales and service support.
OSIM’s core business and products currently come under four complementary categories of
well-being: Relax and Relief, Tone and Shape, Clean and Purify, Check and Measure. Each category
carries the fundamental theme of well-being, lifestyle and positive attitude. Together, they reflect
OSIM’s holistic and integrated approach to a healthy lifestyle. Known for its range of innovative
massage chairs, OSIM has produced some of the most iconic products such as uDivine, uInfinity,
uAngel and uDiva, and has also engaged Asia’s top celebrities such as Andy Lau, Lee Min Ho and
Sammi Cheng to successfully market these products to the mass.
NO. OF OUTLETS
MARKET PRESENCE
ONLINE MARKET
561 OUTLETS
22 COUNTRIES
11 COUNTRIES
18
ONI
Global
Retail Concept
ONI Global is the specialty retailer of nutritional products, vitamins, minerals, herbal and other
specialty supplements and sports nutrition, diet and energy products. ONI Global is the sole
franchisee for GNC in Singapore, Malaysia, Taiwan and Australia and is also the owner of the
RichLife brand in China.
ONI Global’s key GNC Brand products include Triflex™, Mega Men ®, Fish Oil and its range of
supplements. ONI Global’s key own brand products are MASQUELIER’s ® French Pine Bark Extract,
LAC Taut ® Premium Collagen Drink, StemC™ and LAC Activated Liver Protector™.
NO. OF OUTLETS
MARKET PRESENCE
ONLINE MARKET
238 OUTLETS
5 COUNTRIES
4 COUNTRIES
20
TWG Tea
Salon & Boutique
Concept
TWG Tea, the finest luxury tea brand in the world, was established in Singapore in 2007 and
celebrates the year 1837 when the island became a trading post for teas, spices, and fine epicurean
products. TWG Tea incorporates unique and original retail outlets, exquisite tea rooms and an
international distribution network to professionals. Committed to offering teas directly from
source gardens, TWG Tea’s collection is the largest in the world, with fine harvests from every tea
producing country and exclusive hand crafted tea blends. Internationally recognised as a true
innovator with the creation of new tea varieties every season in collaboration with the world’s
most renowned estates, TWG Tea also offers exquisite signature modern tea accessories and
delicate tea-infused sweets and savouries.
In 2014, TWG Tea opened 17 tea salons & boutiques in Asia and the Middle East, including the
opening of flagship salons in China and Taiwan.
TWG Tea is also the premier tea supplier to the finest hotels, restaurants, and international airlines
including Singapore Airlines Business Class, First Class and Suites as well as All Nippon Airways
Business Class.
Taipei 101
NO. OF OUTLETS
MARKET PRESENCE
ONLINE MARKET
43 OUTLETS
13 COUNTRIES
2 GLOBAL DIGITAL
PLATFORMS
22
Sustainable Model
24
Value
Chain
>
>
Branding & Strategic
Marketing and Product
Marketing
>
Global leader in branded healthy lifestyle
products and luxury tea
Building branding power and channel
presence
Specialty
Retail Store
Production
Selection of highest quality of materials
and tea leaves
Sustainable contract manufacturers, food
production and tea packaging facilities
Quality control and audits
Daily sales analysis
Customer feedback
Strategic retail locations
Human team
(3,900 plus professionals)
Customer
Research & Technology,
Product Design & Innovation,
Merchandising
>
100 plus professionals and engineers
1,000 plus innovative products
842 retail outlets
23 countries
11 online markets
Customer Services
Efficient customer services &
maintenance accessibility
CRM analysis and feedback
26
Inspiring
Well-being
Brand OSIM is about inspiring customers to live the good life, by taking control
of their well-being. Channeling the brand at every customer touch point, OSIM
communicates its values through its brands, products, outlets, services and
in-depth knowledge of holistic health.
The OSIM Group is innovation-driven and is an IP (intellectual property)
developer. OSIM uses innovative retail concepts and constantly enhances its
research and development capabilities to produce the most successful
well-being products with superior designs, technologies and quality. As an IP
developer, OSIM controls its brands, designs, technologies and concepts.
With more than 35 years of experience, OSIM International Limited is Asia’s
number one brand in healthy lifestyle products, with brands and retail outlets
spanning across the markets of Asia, Oceania, Africa, the Middle East, Europe
and North America. The current suite of well-being lifestyle brands under the
OSIM Group includes GNC and the luxury tea brand, TWG Tea.
28
Company Relations
with
Stakeholders
Milestones of the year
Customers
Employees
Shareholders
Objectives 2015
Customers
Employees
Shareholders
Enhanced customers’ experience
Dedicated in-house trainers and
Fostered continued trust with
Introducing customer loyalty
To promote employees’
Identifying potential synergistic
through constant innovation and
training facilities by individual
shareholders and investors through
programme to further improve
professional growth to enhance
investments and growing key
introduction of new products.
brands on product knowledge to
effective communication of its
customer service standards and
customers’ experience.
market presence.
meet the demands of customers.
activities and future.
measures.
Suppliers
Community
Suppliers
Community
Dedicated in-house team to
In Singapore, OSIM participated in
Ensuring traceability of the supply
Strengthening social investment
conduct production audits and
the Singapore National Day Parade
chain and maintaining continuous
projects, while promoting
ensure quality control.
2014 and contributed to the
improvement of quality, health and
educational and social welfare.
NUS-LKY School of Public Policy
safety of products.
and Straits Times School Pocket
Money Fund aid project.
In Taiwan, OSIM donated NT$3M
to help victims and relief efforts in
the aftermath of the Kaoshiung
gas explosion disaster.
30
Challenges, Objectives
and Opportunities
32
Realising New
Innovative Products
OBJECTIVE
OPPORTUNITY
CHALLENGES
Create new innovative
products and services that
exceeds and excites market
expectation
Research and adopt
new technologies to
humanise our products
Protect product
technology designs
and process innovation
against infringement of
intellectual property
OSIM has continuously created and innovated new massage technologies to provide humanised
massage feelings for our customers. Our team of mechanical, electrical and software engineers
have created many World's first massage innovations which are patented, one of which is the
ability to download new lifestyle massage programs through a smart phone App.
In the massage chair category, we created numerous new patented massage mechanisms,
rollers, motors and electrical controls to achieve new massage capabilities while the software
programs are specially designed by Japanese masseurs to meet the varying massage needs and
lifestyles of our customers.
For us, innovation is not just about science and technology. It’s also about how we apply it. Both
our nutritional and TWG Tea businesses continue to develop and introduce unique products,
enriching the diets and lives of all our consumers.
34
Manufacturing
Responsible Products
OBJECTIVE
OPPORTUNITY
CHALLENGES
Manufacturing responsible
products
Constant improvement of
quality, health and safety of
products
Product quality, health
and safety regulation
changes
OSIM is committed to its customers and ensures that all products marketed meet the most
demanding health and safety standards in the world.
OSIM’s strategy in this field covers all phases of the production cycle, from product design,
research & technology, testing, manufacture, customer services, and maintenance.
For TWG Tea, whose products are designed and crafted in-house, the production cycle involves the
finest choice of teas for signature blends, packaging and accessories. In addition, all of TWG Tea’s
food production facilities are monitored and inspected, meeting the high food safety standards
and conditions approved by the Agri-Food & Veterinary Authority of Singapore.
Our objective is to study, regulate and supervise all the methods, processes and installations
involved in production. All of these elements are analysed separately and together in order to
continuously improve the quality of the products, increase efficiency in the use of resources and
reduce any potential impact on the environment.
Responsibility in the production of safe products is not solely limited to the supervision and control
of processes. The supporting industry and its suppliers of raw materials also play a fundamental
role. Therefore, OSIM’s strategy of action includes audits throughout the supply chain and
consultative sessions for the design team, as well as technology audits and training for suppliers.
36
Branding and Marketing
in the Digital Era
OBJECTIVE
OPPORTUNITY
CHALLENGES
Building leadership brand
equity in the digital era
Increased potential in
e-commerce and availability
of new digital platforms for
branding and product
marketing
Navigating the change from
brick and mortar to
omni-channel retailing
As a global leader in well-being and healthy lifestyle products, OSIM Group faces both
opportunities and challenges in the exciting digital era.
While we continue to leverage key pillars of success such as brand strength, innovative products
and strategic marketing through our signature retail presence, we have increased our marketing
investment to harness the power of digital branding and communication. No longer relying just on
traditional media, we reach out through a rich variety of digital media and platforms, such as
mobile and social, to extend our brand influence and presence. Effective use of these digital
avenues allows us to further expand our brand and product reach, to innovatively connect and
engage our consumers.
The digital era also presents highly lucrative new business channels and opportunities for all our
brands, in the form of e-commerce sales to extend our market potential beyond traditional
retailing, deepening our penetration in existing markets, while reaching new and untapped ones.
Operating in an industry with a lifestyle product range that is often quoted as “high-touch”, OSIM
Group’s core business strikes a delicate balance, to maximise and harness the power of traditional
retail, while it calibrates skillfully going forward, committing to making transformational changes
towards an omni-channel model, creating a seamless brand experience for its customers on both
traditional and digital sales channels.
38
Ongoing
Development
of Teams’ Motivation
OBJECTIVE
OPPORTUNITY
CHALLENGES
The development of engaged
and responsible staff
To encourage the professional
and personal growth of
employees along with the
development of the business
Working practices
Attraction and retention
of talent
Development of human
capital
Our people are at the heart of what makes OSIM Group different. We continue to ensure that our
employees throughout the Group are confident, engaged and knowledgeable. It is crucial that all
our people understand our priorities and objectives and are engaged passionately to better serve
our customers.
Recruitment, training and development are key fundamental factors to the success of OSIM Group
as majority of our outlets worldwide are directly operated and managed. We provide in-house
training for our employees in Singapore, overseas subsidiaries and franchisees. Such training
programs are conducted by a dedicated in-house team of trainers to train our outlet sales force on
our range of healthy lifestyle products, allowing them to meet the needs of customers.
During the year, TWG Tea established its own TWG Tea Institute, a training facility which acts as the
global central academy for both local and overseas TWG Tea staff and affiliates to ensure delivery of
consistent messaging and a high level of retail and tea salon customer service and experience.
The Group also engages external professionals to conduct customised courses. As practical training
is also very important, all newly recruited sales personnel will understudy with the shop managers
to learn the finer points of the job. Periodically, the Group also sends senior management staff
overseas to attend seminars and exhibitions.
The Group also runs its own in-house Talent Management program to identify key talents and skills
for development for both new staff as well as existing employees, giving them greater internal
progression opportunities.
40
Strengthening
Customer Services
OBJECTIVE
OPPORTUNITY
CHALLENGES
To offer and maintain
qualified customer services
segmented by country and
service
To strengthen customer
guidance and care
Customer relations and
satisfaction
Changes in consumer tastes
and preferences
Delivery and maintenance
time and cost
Customers play a central role in OSIM Group’s business model. Qualified customer services are
therefore key to the OSIM Group.
Courteous, knowledgeable, efficient and prompt services are key attributes in providing quality
customer experience by all of the Group’s outlet sales staff. OSIM Group has an in-house team of
trainers to provide such continuous training to its frontline staff. OSIM Group, through it’s
individual brands, has also invested in numerous seminars and training, placing emphasis on
customer service and raising staff awareness in this area. Our capability in providing a high level
of customer service experience is one of the Group’s competitive advantages in staying ahead.
Customers can also contact the Group’s different brands through their customer service phone
numbers or through each brand’s webpage. The comments and suggestions by customers allow us
to improve on the quality of our products and services offered through the different brands and
sales channels.
42
Contribution to
Community
OBJECTIVE
OPPORTUNITY
CHALLENGES
To improve the quality of
life of people via education
and social welfare
To maximise the company’s
positive impact on society
Social action and local
community development
Underlining our commitment to be a force for good in the communities we operate in, we have
established long-term partnerships with various foundations to strengthen our corporate social
responsibilities. These includes the Singapore School Pocket Money Fund initiated by The Straits
Times to provide pocket money to children from low-income families to help them through school,
giving every child a promising future, and financial aid given to support and develop tomorrow’s
leaders and skilled policymakers under the Lee Kuan Yew School of Public Policy (National
University of Singapore).
In Taiwan, OSIM contributed NT$3M towards helping victims and relief efforts in the aftermath of
the Kaoshiung gas explosion disaster on 31 July 2014.
We were also honoured to be invited to form a contingent to participate in Singapore’s National
Day Parade in commemoration of Singapore’s independence on 9 August 2014 and in celebration
of Our People, Our Home.
We have progressed over more than three decades alongside Singapore’s development and hope
to continue channeling our efforts to contribute to the future development of Singapore and play
a bigger role in the future of Asia.
44
Corporate Governance
and Managing Risk
46
Corporate Governance Report
OSIM International Ltd (“OSIM” or the “Company”)
is committed to ensuring a high standard of corporate
governance within the Group to protect the interests of
its shareholders and maximise long-term shareholders’
value. This report is in compliance with the continuing
obligations stipulated under Chapter 7 of the Singapore
Exchange Securities Trading Limited (“SGX-ST”) Listing
Manual. This report describes the Group’s corporate
governance practices and structures that were in place
during the financial year ended 31 December 2014, with
specific reference to the principles and guidelines of the
Code of Corporate Governance 2012 (“Code”), and where
applicable, the Listing Manual of the SGX-ST and the
Singapore Companies Act.
OSIM has complied substantially with the requirements
of the Code and will continue to review its practices on
an ongoing basis. It has provided an explanation for any
deviation from the Code, where applicable.
Board MATTERS
Principle 1: Board’s Conduct of its Affairs
The primary function of the Board of Directors (the
Board) is to provide effective leadership and direction
to enhance the long-term value of the Company to its
shareholders and other stakeholders. The Board oversees
the business affairs of the Company. The Board has the
overall responsibility for reviewing the strategic plans
and performance objectives, financial plans and annual
budget, key operational initiatives, major funding and
investment proposals, financial performance reviews, and
corporate governance practices.
In addition, the principal functions of the Board are:
• Approving the broad policies, strategies and financial
objectives of the Company and monitoring the
performance of management;
• Overseeing the processes for evaluating the adequacy
of internal controls, including financial, operational,
compliance and information technology controls, and
risk management.
• Approving the nominations of board directors and
appointment of key personnel;
• Approving annual budgets, major funding proposals,
investment and divestment proposals; and
• Assuming responsibility for corporate governance.
Independent Judgement
All directors exercise due diligence and independent
judgement, and make decisions objectively in the best
interests of the Group. This is one of the performance
criteria for the peer and self-assessment on effectiveness
of the individual directors. The current members of the
Board and their membership on the board committees of
the Company are as follows:
The present Board comprises eight members. Of the eight
Board members, four are non-executive and three are
independent directors.
Board appointments
Name of
Director
Ron Sim
(Chairman,CEO)
Charlie Teo
Richard Leow
Peter Lee
Teo Sway Heong
Sin Boon Ann
Tan Soo Nan
Colin Low
47
Executive
director
Nonexecutive
director
Board Committees as Chairman or Member
NonIndependent
independent
director
director
Audit & Risk
Nominating Remuneration
Management
Committee Committee
Committee
√
√
–
Member
Member
√
√
√
√
√
√
√
–
–
–
–
Member
Chairman
Member
Member
–
–
–
Chairman
Member
Member
Member
–
–
–
Chairman
Member
Member
√
√
√
√
√
√
√
Delegation by the Board
The Board has delegated certain functions to various
board committees, namely the Audit & Risk Management
Committee (ARMC), Nominating Committee (NC), and
Remuneration Committee (RC). Each of the various board
committees has its own written terms of reference and
whose actions are reported to and monitored by the
Board. The Board accepts that while these various board
committees have the authority to examine particular issues
and will report back to the Board with their decisions and/
or recommendations, the ultimate responsibility on all
matters lies with the Board.
Key features of board processes
The dates of Board and board committee meetings as well
as annual general meeting (AGM) are scheduled one year
in advance. To assist directors in planning their attendance,
the Company Secretary consults every director before
fixing the dates of these meetings. The Board conducts
regular scheduled meetings on a quarterly basis. When
circumstances require, ad-hoc meetings are arranged.
Telephonic attendance and conference via audio-visual
communication at Board and board committee meetings
are allowed. The details of the number of Board meetings
and board committees held in the year as well as the
attendance of each board member at those meetings are
disclosed below.
Directors’ attendance at Board and board committee
meetings in FY2014
Audit & Risk
Remuneration
Management Nominating
Committee
Committee
Committee
Meeting of
Board
Total held in
FY2014
16
4
1
1
16
16
16
16
16
-
1
1
-
1
1
-
16
16
16
4
4
3
1
1
1
1
1
1
Ron Sim
Charlie Teo
Richard Leow
Peter Lee
Teo Sway
Heong
Sin Boon Ann
Tan Soo Nan
Colin Low
-
Board approval
The Group has adopted guidelines setting forth matters that
require Board approval. The types of material transactions
that require Board approval under such guidelines are:
• Strategies and objectives of the Group
• Announcement of quarterly and full year results and
relase of annual reports
• Issuance of shares
• Declaration of interim dividends and proposed final
dividends
• Convening of shareholders’ meeting
• Material acquisition/investment, divestment or capital
expenditure
• Corporate or financial restructuring
• Interested person transaction
Induction and training of directors
The Company conducts a comprehensive orientation
programme, which is presented by the CEO and senior
management, to familiarise new directors with business
and governance policies. The orientation programme gives
directors an understanding of the Company’s businesses
to enable them to assimilate into their new roles. The
programme also allows the new director to get acquainted
with senior management, thereby facilitating board
interaction and independent access to senior management.
The Company worked closely with a professional corporate
secretarial firm, SAMAS Management Consultants Pte Ltd.,
to provide its Directors with regular updates on the latest
corporate governance and listing policies. All Directors
are also updated regularly concerning any changes in the
Company policies.
The Company also has an ongoing training budget for
the existing Directors to fund the Directors’ participation
at industry conferences and seminars, and to fund
directors’ attendance at any course of instruction/
training programme in connection with their duties as
directors, if such participation or attendance is required.
This budget may be utilised by each Director subject to
approval by the Chairman.
The Company has adopted a policy that Directors are
also welcome to request further explanations, briefings
or informal discussions on any aspects of the Company’s
operations or business issues from the management. The
Chairman will make the necessary arrangements for the
briefings, informal discussions or explanations required by
the Directors.
48
Principle 2: Board Composition and Guidance
The Board consists of three Independent NonExecutive Directors, one Non-Executive Director and
four Executive Directors.
Key Information on directors
Ron Sim
Founder, Chairman and Chief Executive Officer
A multi-awarded businessman and an inspiration, not just to
the OSIM team but to other entrepreneurs as well. Inspiring
and leading by example, his spirited business sense has
earned him multiple awards and esteemed recognition.
Peter Lee
Chief Financial Officer
A certified public accountant who looks after corporate
finance and control, information systems, human resources
and investor relations. He joined OSIM in 2000 and has
been a Board member since 2006.
Charlie Teo
Executive Director and Chief Operating Officer (HQ)
Has over 20 years of leadership experience in OSIM and
achieves goals with aplomb. His leadership and insight
make him a key figure in OSIM. He was appointed to the
Board in 2000.
Richard Leow
Executive Director and Chief Operating Officer (China)
With extensive experience in handling the North Asia
operations, he effectively tackles the challenges in China
and looks after OSIM’s China business. He was appointed
to the Board in 2000.
Teo Sway Heong
Non-Executive Director
During OSIM’s formative years, she played a crucial role as
the Group’s Head of Administration and Human Resources.
She was appointed to the Board in March 2000.
Tan Soo Nan
Independent Director
Mr Tan is a Non-Independent Director of Raffles Medical
Group and he was formerly the Chief Executive Officer
of Singapore Pools (Private) Limited, a wholly owned
subsidiary of Singapore Totalisator Board. He serves on the
boards of private and public listed companies and has over
29 years of experience in the banking industry. Mr Tan was
appointed a Board member on 1 February 2010.
49
Sin Boon Ann
Independent Director
Mr Sin is the Deputy Managing Director of the Corporate &
Finance Department at Drew & Napier LLC. He is principally
engaged in corporate finance and general corporate
matters. Mr Sin was appointed a Board member on
1 February 2010.
The NC is of the view that the current Board comprises
persons who, as a group, provide core competencies
necessary to meet the Company’s targets.
Colin Low
Independent Director
Mr Low brings to the Group over 25 years of global,
international business experience in corporate finance,
marketing, sales, business and market development,
including mergers and acquisition. He is currently the
President & CEO of SIDC. Mr Low was appointed a Board
member on 10 December 2010.
Role of the non-executive directors
The Board and management fully appreciate that an
effective and robust Board whose members engage in
open and constructive debate, and challenge management
on its assumptions and proposals, is fundamental to good
corporate governance.
Each year, the NC reviews the size and composition of
the Board and board committees and the skills and core
competencies of its members to ensure an appropriate
balance of skills and experience. These competencies
include banking, accounting and finance, business
acumen, management experience, industry knowledge,
strategic planning experience, familiarity with regulatory
requirements and knowledge of risk management. The
Board considers that its directors possess the necessary
competencies and knowledge to lead and govern the
Company effectively.
Directors’ independence review
Director who has no relationship with the Company, its
related corporations, officers or its shareholders with
shareholdings of 10% or more in the voting shares of the
Company that could interfere, or be reasonably perceived
to interfere, with the exercise of the director’s independent
business judgement in the best interests of the Group, is
considered to be independent. An Independent Director is a
Director who has no abovementioned relationship.
The independence of each Director is reviewed annually by
the Nominating Committee (“NC”), which was constituted
on 27 December 2002. The NC adopts the Code’s definition
of what constitutes an Independent Director in its review.
As a result of the NC’s review of the independence of the
Independent Directors, the NC is of the view that the
Independent Directors of OSIM are independent and
further, that no individual or small group of individuals
dominate the Board’s decision making process and no
independent director has served on the Board for more than
nine years from the date of his appointment.
The NC is of the view that the current size of its Board of
Directors is appropriate, taking into account the nature and
scope of the Company’s operations.
A Board should also aid in the development of strategic
proposals and oversee effective implementation by
management to achieve set objectives.
For this to happen, the Board and non-executive directors
(NEDs), in particular, must be kept well informed of the
Company’s businesses and be knowledgeable about the
industry the Group operates in.
The Company is currently in the process of adopting
guidelines as to the maximum number of listed company
board representations each Director may hold.
Principle 3: Role of Chairman and Chief Executive Officer
(“CEO”)
The Company has the same Chairman and CEO, Mr Ron
Sim and he is an Executive Director.
OSIM believes that the Independent Directors have
demonstrated high commitment in their role as Directors
and have ensured that there is a good balance of power
and authority. As the respective Independent Directors
are well known personages in their fields of expertise, the
appointment of a lead independent director for ease of
contact by shareholders is therefore unnecessary.
The Chairman and CEO is the most senior executive in
the Company and bears executive responsibility for the
Company’s business, as well as the responsibility for the
workings of the Board. The Chairman and CEO ensures
that board meetings are held when necessary and sets the
board meeting agenda in consultation with the Directors.
The Chairman and CEO reviews most board papers before
they are presented to the Board and ensures that board
members are provided with complete, adequate and
timely information. The role of the Chairman and CEO
is not separate as there is adequate accountability and
transparency reflected by internal controls established
within the Company. This leadership arrangement
ensures that the decision-making process for seizing good
growth prospects for the Company would not be
unnecessarily impeded.
As a general rule, board papers are sent to Directors in
advance in order for Directors to be adequately prepared
for the meeting. Management staffs who have prepared
the papers, or who can provide additional insight into the
matters to be discussed, are invited to present the paper or
attend at the relevant time during the board meeting. The
Chairman assists to ensure that procedures are introduced
to comply with the Code.
Principle 4: Board Membership
The NC comprises the following five members, three of
them are independent non-executive Directors:
•
•
•
•
•
Sin Boon Ann (NC Chairman)
Tan Soo Nan
Colin Low
Ron Sim
Charlie Teo
The NC’s principal functions are:
• To identify candidates and review all nominations for
the appointment or re-appointment of members of
the Board of Directors; the CEO of the Company; and
the members of the various Board Committees, for the
purpose of proposing such nominations to the Board for
its approval.
• To determine the criteria for identifying candidates
and reviewing nominations for the appointments. One
of the criteria for the appointment of a Director is the
independent status of the candidate.
• To decide how the Board’s performance may be
evaluated and propose objective performance criteria
for the Board’s approval.
50
• To assess the effectiveness of the Board as a whole,
and the contribution by each individual director to the
effectiveness of the Board.
are properly qualified for re-appointment by virtue of their
skills, experience and their contribution of guidance and
time to the Board’s deliberations.
• To evaluate whether or not a Director is able to and has
been adequately carrying out his/her duties as director
of the company, when he/she has multiple board
representations.
Principle 5: Board Performance
• To assess Independent Directors and confirm their
independence. The NC reviews the independence
of each director annually, and as and when
circumstances require.
• To review the training and professional development
programmes for the Board.
• To review the Board succession plans for directors.
Process for re-appointment of directors
The NC is responsible for re-appointment of directors.
In its deliberations on the re-appointment of existing
directors, the NC takes into consideration the director’s
contribution and performance (including his or her
contribution and performance as an independent
director, if applicable).
The assessment parameters include attendance record,
preparedness, intensity of participation and candour at
meetings of the Board and board committees as well as
the quality of intervention and special contribution.
All directors submit themselves for re-nomination and reappointment at regular intervals of at least once every three
years. Article 92 of the Company’s Articles of Association
provides that one-third of the directors shall retire from
office by rotation and be subject to re-appointment at the
Company’s AGM. New Directors are at present appointed
by way of a board resolution, after the NC approves their
appointment. Such new directors must submit themselves
for re-election at the next AGM of the Company.
Pursuant to the one-third rotation rule, Mr. Charlie Teo
and Mr. Peter Lee will retire and submit themselves for
re-appointment at the forthcoming AGM. Mr. Charlie Teo
and Mr. Peter Lee are Executive Directors of the Company.
The NC is satisfied that the directors retiring in accordance
with the Article of Association 92 at the forthcoming AGM
51
The NC, in considering the re-appointment of any
Director, evaluates the performance of the director. The
Chairman & CEO will assess each director’s contribution
to the Board, and discuss the results with the chairman of
the NC. The assessment parameters includes attendance
record at meetings of the Board and Board committees,
intensity of participation at meetings, the quality of
interventions and special contributions.
The NC will evaluate the Board’s performance as a whole.
The assessment process adopted both quantitative and
qualitative criteria, such as return on equity, the success
of the strategic and long-term objectives set by the
Board, and the effectiveness of the Board in monitoring
management’s performance against the goals that have
been set by the Board.
During FY2014, the Board engaged an external
consultant specialising in board evaluation and human
resources to facilitate the evaluation of the Board and
board committees, as well as the contributions by each
director. Based on the results of the evaluation, the Board
is satisfied its performance objectives are met.
The Board believes that the use of an independent
external consultant not only encourages directors to be
more candid in their evaluation of the Board performance
but also enhances the objectivity and transparency of
the evaluation process.
Evaluation process
The NC Chairman, in conjunction with the Chairman
of the Board, conducts an annual assessment of the
effectiveness of the Board as a whole, effectiveness
of its board committees and the contribution by each
individual director.
The Company sends out a customised Board Evaluation
Performance Form (“Form”) to each director for
completion. Each director is required to complete the
Form and all completed Forms will be sent to the external
consultant.
An Explanatory Note is attached to the Form to clarify
the background, rationale and objectives of the various
performance criteria used in the Form with the aim
of achieving consistency in the understanding and
interpretation of the questions.
Based on the returns from each of the director, the
independent external consultant prepares a consolidated
report and presents the report for discussion at NC. The
NC Chairman then holds a discussion with all directors to
agree on future action plans.
Board performance criteria
The performance criteria for the board evaluation are
as follows:
•
•
•
•
•
Board size and composition.
Board independence.
Board processes.
Board information and accountability.
Board performance in relation to discharging its
principal functions.
• Board committee performance in relation to
discharging their responsibilities set out in their
respective terms of reference.
• Financial targets which include profit before tax, profit
after tax, dividend pay-out ratio, and total shareholder
return (i.e., dividend plus share price increase over the
year).
Individual director’s performance criteria
The individual director’s performance criteria are
categorised into five segments; namely,
• Interactive skills (whether the director works well with
other directors and participate actively).
• Knowledge (the director’s industry and business
knowledge, functional expertise, whether the
director provides valuable inputs, the director’s
ability to analyse, communicate and contribute to
the productivity of meetings, and understanding of
finance and accounts, are taken into consideration).
• Director’s duties (the director’s board committee work
contribution, whether the director takes his/her role
as director seriously and works to further improve
his/her own performance, whether he/she listens
and discusses objectively and exercises independent
judgment, and meeting preparation are taken into
consideration).
• Availability (the director’s attendance at Board and
board committee meetings, whether the director
is available when needed, and his/her informal
contribution via email, telephone, written notes etc
are considered).
• Overall contribution, bearing in mind that each
director was appointed for his/her strength in certain
areas which taken together provides the Board with
the required mix of skills and competencies.
The assessment of the Chairman of the Board is based on
his ability to lead, whether he has:
• Established proper procedures to ensure the effective
functioning of the Board.
• Ensured that the time devoted to board meetings
were appropriate (in terms of number of meetings
held a year and duration of each board meeting)
for effective discussion and decision-making by the
Board.
• Ensured that information provided to the Board was
adequate (in terms of adequacy and timeliness) for
the Board to make informed and considered decisions.
• Guided discussions effectively so that there was timely
resolution of issues.
• Ensured that meetings were conducted in a manner
that facilitated open communication and meaningful
participation.
• Ensured that board committees were formed where
appropriate, with clear terms of reference, to
assist the Board in the discharge of its duties and
responsibilities.
The performance of individual directors is taken into
account in their re-appointment. Specific needs which
arise from time to time are taken into account in any
appointment of new directors.
52
Principle 6: Access to Information
Management recognises the importance of ensuring
the flow of complete, adequate and timely information
to the directors on an ongoing basis to enable them to
make informed decisions to discharge their duties and
responsibilities.
To allow directors sufficient time to prepare for the
meetings, all Board and board committee papers are
distributed to directors a week in advance of the meeting.
Any additional material or information requested by the
directors is promptly furnished.
In order to ensure that the Board is able to fulfill its
responsibilities, management provides the board
members with regular updates of the financial position
of the Company. Analysts’ reports on the Company are
forwarded to the Directors on an ongoing basis as and
when received. The Directors have also been provided
with the phone numbers and email particulars of the
Company’s senior management and company secretary
to facilitate independent access.
Should Directors, whether as a group or individually,
need independent professional advice, the company
secretary will, upon direction by the Board, appoint
a professional advisor selected by the group or the
individual, and approved by the Chairman and CEO, to
render the advice. The cost of such professional advice
will be borne by the Company.
Company Secretary
Directors have separate and independent access to
the Company Secretary. The Company Secretary is
responsible for, among other things, ensuring that
Board procedures are observed and that Company’s
Memorandum and Articles of Association, relevant rules
and regulations, including requirements of the Securities
and Futures Act, Companies Act and SGX-ST’s Listing
Manual, are complied with. He also assists the Chairman
and the Board in implementing and strengthening
corporate governance practices and processes, with a
view to enhancing long-term shareholder value.
The Company Secretary assists the Chairman in
ensuring good information flows within the Board
and its board committees and between management
and NEDs. The Company Secretary also facilitates the
53
orientation and assists with professional development
as required.
The Company Secretary attends and prepares minutes
for all Board meetings. As secretary for all board
committees, the Company Secretary assists in ensuring
coordination and liaison between the Board, the
board committees and management. The Company
Secretary assists the Chairman of the Board, the
Chairman of board committees and management in
the development of the agendas for the various Board
and board committee meetings.
REMUNERATION MATTERS
Principle 7: Procedures for Developing Remuneration
Policies
Principle 8: Level and Mix of Remuneration
Principle 9: Disclosure on Remuneration
The RC comprises the following five members; three of
them are independent non-executive Directors:
• Sin Boon Ann (RC Chairman)
• Tan Soo Nan
• Colin Low
• Ron Sim
• Charlie Teo
The RC principal responsibilities are to review and
recommend, for the endorsement of the Board, which
include the following:
• The structure of the compensation programme for
Directors and senior management to ensure that the
programme is competitive and sufficient to attract,
retain and motivate senior management of the required
quality to run the Company successfully;
• Directors’ and senior management’s compensation
annually and determine appropriate adjustments;
and
The CEO and Executive Directors’ remuneration
packages include a variable bonus element which is
performance-related.
Directors’ fees are set in accordance with a remuneration
framework comprising basic fees. Executive Directors do
not receive directors’ fees. Non-Executive Directors are
paid directors’ fees, subject to shareholders’ approval at
the AGM.
For competitive reasons, the Company is not disclosing the
identity and remuneration of Directors and Key Executives.
The Company is instead disclosing the remuneration
(Note 36) in bands of S$250,000 up to S$500,000.
Number of Directors of the Company in remuneration
bands:
2014
2013
$500,000 to above
$250,000 to $499,000
Below $250,000
The Board reviews and approves the results as well as any
announcements before its release. The Board provides
shareholders with quarterly and annual financial reports. In
presenting the annual and quarterly financial statements to
shareholders, the Board aims to provide shareholders with a
balanced and clear assessment of the Group’s position and
prospects. The Board also ensures timely and full disclosure
of material corporate developments to shareholders.
The Board also reviews legislation and regulatory
compliance report from management to ensure that the
Group complies with the relevant regulatory requirements.
2
2
2
2
4
4
8
8
The Company adopts a remuneration policy for staff
comprising a fixed component and a variable component.
The fixed component is in form of a base salary. The
variable component is in the form of a variable bonus that
is linked to the Company and individual performance. Staff
appraisals are conducted twice in a year.
For the financial year under review, the Chairman and CEO
and the CFO have provided assurance to the Board on the
integrity of the financial statements for the Company and
its subsidiaries.
There are a total of six Key Executives of which two Key
Executives (excluding Directors of the Company) received
remuneration within S$250,000 to S$500,000.
• Tan Soo Nan (ARMC Chairman)
• Sin Boon Ann
• Colin Low
No employee of the Company was an immediate family
member of a Director or the CEO and whose remuneration
exceeded S$150,000 during the financial year.
The chairman of the ARMC, Mr Tan Soo Nan, and the other
members of the ARMC bring together a wealth of many
years of experience in business management, finance and
legal services. The Board is of the view that the members of
the ARMC have recent and relevant accounting or related
financial management expertise or experience to discharge
the ARMC’s functions.
ACCOUNTABILITY AND AUDIT
Principle 10: Accountability
The Company recognises the importance of providing the
Board with accurate and relevant information on a timely
basis. Hence, Board members receive quarterly financial
and business reports from management. Such reports
keep the Board members informed of the Company’s and
Group’s performance, position and prospects and consist of
the consolidated profit and loss accounts, analysis of sales,
operating profit, pre-tax profit by operating segments
together with explanations for significant variances for the
quarter and year-to-date.
Principle 11 & 12: Audit & Risk Management Committee
and Internal Controls (ARMC)
The ARMC comprises the following three members, all of
whom are independent non-executive Directors:
The ARMC performs the following functions:
• Reviews the audit plans of the internal and external
auditors of the Company and ensures the adequacy of
the company’s system of accounting controls and the
co-operation given by the Company’s management to
the external and internal auditors;
• Reviews the quarterly and annual financial statements
and the auditor’s report on the annual financial
statements of the Group and the Company before their
submission to the Board of Directors;
54
• Reviews effectiveness of the Group and the Company’s
material internal controls, including financial,
operational, compliance and information technology
controls and risk management via reviews carried out
by the internal auditors;
• Meets with the external auditor, other committees,
and management in separate executive sessions to
discuss any matters that these groups believe should be
discussed privately with the ARMC;
• Reviews legal and regulatory matters that may have a
material impact on the financial statements, related
compliance policies and programmes and any reports
received from regulators;
• Reviews the cost effectiveness and the independence
and objectivity of the external auditor;
• Reviews the nature and extent of non-audit services
provided by the external auditor;
• Recommends to the Board of Directors the external
auditor to be nominated, approves the compensation of
the external auditor, and reviews the scope and results
of the audit;
• Reports actions and minutes of the ARMC to the Board
of Directors with such recommendations as the ARMC
considers appropriate; and
• Reviews interested person transactions in accordance
with the requirements of the Singapore Exchange
Securities Trading Limited (SGX-ST)’s Listing Manual.
Summary of the ARMC’s activities
The ARMC met four times during the year under review.
Details of members and their attendance at meetings
are provided in page 48. The CFO, internal auditors and
external auditor are invited to these meetings. Other
members of senior management are also invited to attend
as appropriate to present reports.
During FY2014, the ARMC had two meetings with
external auditor and internal auditors separately,
without the presence of management. These meetings
enable the external auditor and internal auditors to raise
issues encountered in the course of their work directly
55
to the ARMC. The ARMC attended trainings on changes
in accounting standards, risk management, corporate
governance and regulatory related topics which have a
direct impact on financial statement during the year.
Financial reporting
The ARMC met on a quarterly basis and reviewed
the quarterly and full year announcements, material
announcements and all related disclosures to the
shareholders before submission to the Board for approval.
In the process, the ARMC reviewed the audit plan and
ARMC report presented by the external auditor.
The ARMC reviewed the annual financial statements and
also discussed with management, the CFO and the external
auditor the significant accounting policies, judgment
and estimate applied by the management in preparing
the annual financial statements. The ARMC focused
particularly on:
• Significant adjustments resulting from the audit;
• The appropriateness of the going concern assumption
in the preparation of the financial statements; and
• Significant deficiencies in internal controls over
financial reporting matters that came to external
auditor’s attention during their audit together with their
recommendations. Following the review and discussions,
the ARMC then recommended to the Board for approval
of the audited annual financial statements.
External audit processes
The ARMC manages the relationship with the Group’s
external auditor, on behalf of the Board. During FY2014,
the ARMC carried out its annual assessment of the cost
effectiveness of the audit process, together with the
auditor’s approach to audit quality and transparency.
The ARMC concluded that the auditor demonstrated
appropriate qualifications and expertise and that
the audit process was effective. Therefore, the ARMC
recommended to the Board that Ernst & Young LLP be reappointed as the external auditor. The Board accepted
this recommendation and has proposed a resolution
to shareholders for the re-appointment of Ernst &
Young LLP.
Pursuant to the requirement in the SGX-ST’s Listing
Manual, an audit partner may only be in charge of a
maximum of five consecutive annual audits and may
then return after two years. The current Ernst & Young
LLP’s audit partner for the Company took over from
the previous audit partner with effect since FY2013.
• Significant internal audit observations and
management’s response thereto; and
• Budget and staffing for the internal audit functions.
In appointing auditors for the Company, subsidiaries
and significant associated companies, the Company
has complied with Rules 712 and 715 of the SGX-ST’s
Listing Manual.
The ARMC has reviewed the adequacy of the internal
audit function and is satisfied that the team is
adequately resourced. The ARMC also reviewed the
training costs and programs attended by the internal
auditors to ensure that staff continued to update their
technical knowledge and auditing skills.
Auditor independence
The ARMC, having reviewed all non-audit services
provided by the external auditor to the Group,
is satisfied that the nature and extent of such
services would not affect the independence of the
external auditor.
Having undertaken a review of the non-audit services
provided during the year, the ARMC remains confident
that the objectivity and independence of the external
auditor are not in any way impaired by reason of the
non-audit services which they provide to the Group.
Moreover, the ARMC is satisfied that these services
were provided efficiently by the external auditor as a
result of their existing knowledge of the business.
Internal Controls
The Company’s external auditor, Ernst & Young
LLP, carry out, in the course of their statutory audit
annually to the extent of their scope as laid out
in their audit plan. Material non-compliance and
internal control weaknesses noted during their audit,
and the auditor’s recommendations, are reported to
the ARMC. The Internal Audit follows up on Ernst &
Young LLP’s recommendations as part of its role in the
review of the Company’s internal control systems.
During FY2014, the ARMC has reviewed and assessed
the adequacy of the Company’s system of internal
controls and regulatory compliance through discussion
with management, the Manager of Internal Audit, and
external auditor.
The ARMC considered and reviewed with management
and the Manager of Internal Audit on the following:
• Annual internal audit plans to ensure that the plans
covered sufficiently a review of the internal controls
of the Group;
Interested person transactions
The ARMC reviewed the Company’s (“IPTs”) to ensure
that the transactions were carried out on normal
commercial terms and are not prejudicial to the interests
of the Company or its non-controlling shareholders. On
a quarterly basis, management reports to the ARMC the
IPTs in accordance with the Company’s Shareholders’
Mandate for IPT.
Management reported that the internal control
procedures for determining the transaction prices of
IPTs had not changed since the date of the last Annual
General Meeting, at which the shareholders’ mandate
for IPTs was last renewed.
The ARMC is satisfied that the internal controls over the
identification, evaluation, review, approval and reporting
of IPTs was effective.
Whistle blowing
The ARMC also reviewed the adequacy of the whistle
blower arrangements instituted by the Company through
which staff may, in confidence, raise concerns about
possible improprieties in matters of financial reporting
or other matters.
The ARMC also conducts a review to ensure that there
are no improper activities of the Company (if any).
For the financial year under review, the CEO and the CFO
have provided assurance to the Board on the effectiveness
of the Group’s risk management and internal control
system. Based on the internal controls established
and maintained by the Group, work performed by the
internal auditors, statutory audit conducted by the
external auditor and reviews performed by management
throughout the financial year 2014, the Board, with
56
the concurrence of the Audit & Risk Management
Committee, is of the opinion that adequate internal
controls including financial, operational, compliance and
information technology controls and risk management
systems are in place and meet the needs of the Group in
its current business environment.
Principle 13: Internal Audit
The IA function is currently performed by an Audit & Risk
Management (“A&RM”) team. The A&RM team reports
directly to the chairman of the ARMC on audit matters and
to the CFO on administrative matters. The ARMC reviews
A&RM team’s reports on a quarterly basis. The ARMC also
reviews and approves the annual audit plans and resources
to ensure that the A&RM team has the necessary resources
to adequately perform its functions. The A&RM team has
adopted the Standards for Professional Practice of Internal
Auditing set by The Institute of Internal Auditors.
To ensure the adequacy of the internal audit function,
the ARMC reviews the A&RM team’s activities on a
quarterly basis. The Company has implemented Control
Self-Assessment and reviewed Enterprise Risk Management
programmes for the Group.
COMMUNICATION WITH SHAREHOLDERS
Principle 14: Communication with Shareholders
Principle 15: Greater Shareholder Participation
Disclosure of information on a timely basis
The Group is committed to maintaining high standards of
corporate disclosure and transparency. The Company holds
a media and analysts briefing of its quarterly, half-year
and full-year results. The results are published through the
SGXNET, news releases and the Company’s website and
investor relations sites AsiaOne.com and Shareinvestor.
All information on the Company’s new initiatives are first
disseminated via SGXNET followed by a news release,
which is also available on the website.
The Company is committed to providing shareholders
with adequate, timely and sufficient information
pertaining to changes in the Company’s business which
could have a material impact on the Company’s share
price. Price sensitive information is first publicly released,
57
either before the Company meets with any group
of investors or analysts or simultaneously with such
meetings. Results and annual reports are announced or
issued within the mandatory period and are available on
the Company’s website. The Company does not practise
selective disclosure. The Company communicates with its
investors on a regular basis and attends to their queries.
The Company also retained a Public & Investor Relations
firm. All shareholders of the Company receive the annual
report and notice of AGM. The notice is also advertised
in newspapers and made available on the SGXNET. At
AGMs, shareholders are given the opportunity to air
their views and ask Directors or management questions
regarding the Company.
The Articles allow a member of the Company to appoint one
or two proxies to attend and vote instead of the member.
Interaction with shareholders
The Company conducts road shows (together with key
management personnel) and participates in investor
seminars and conferences to keep the market and investors
apprised of the Group’s corporate developments and
financial performance.
The aims of such engagements are to:
• Provide shareholders and investors with relevant
information promptly, to enable them to have a better
understanding of the Company’s businesses and
performance; and
• Solicit feedback from the investment community,
including shareholders, on a range of strategic and
topical issues. Such engagements provide invaluable
insights to the Board and management on investors’
views. It also helps the Company to identify areas of
improvement for investor communication.
Dividend policy
In considering the level of dividend payments, the Board
takes into account various factors including:
The level of our available cash;
• The return on equity and retained earnings; and
• Our projected levels of capital expenditure and other
investment plans.
Dealings in Securities
In compliance with Listing Rule 1207 sub-Rule (19) of
the SGX–ST Listing Manual, the Group issues quarterly
reminders to its Directors, officers and employees on the
restrictions in dealings in listed securities of the Group
during the period commencing (i) two weeks prior to the
announcement of financial results of each of the first three
quarters of the financial year, and (ii) one month before the
announcement of full year results, and ending on the date
of such announcements. Directors, officers and employees
are also reminded not to trade in listed securities of the
Group at any time while in possession of unpublished
price sensitive information and to refrain from dealing
in the listed securities of the Group at anytime while in
possession of unpublished price sensitive information and
to refrain from dealing in the Group’s securities on shortterm considerations.
Interested Person Transactions
The Company has adopted an internal policy in respect of
any transactions with interested persons and has set out
the procedures for review and approval of the Company’s
interested person transactions.
The aggregate value of interested person transactions
entered into during the financial year under review is as
follows:
Aggregate value of all IPT conducted
under shareholder’s mandate pursuant
to Rule 920 (excluding transactions <
$100,000)
12 months ended 31 Dec
2014
2013
$’000
$’000
Sales
FK Marketing
1,014
1,014
1,034
1,034
Material Contracts
No material contracts to which the Company or its subsidiary,
is a party and which involve interests of the Chief Executive
Officers, each Director or controlling shareholders subsisted
at the end of the financial year or have been entered into
since the end of the previous financial year.
Peter Lee
Company Secretary
58
Managing Risk
Corporate Information
COMPANY SPECIFIC RISKS
1. Changes in consumer tastes
As with all other consumer products, sales of our
products are dependent on consumers’ demand for our
products and are susceptible to changes in consumer
tastes. There is no assurance that our intensive efforts
in niche marketing, brand management and product
innovation will continue to enable us to satisfy the
evolving consumer tastes.
4.
Inferior quality and unsubstantiated product
performance claims by imitators may lead to adverse
media publicity and negative market segments.
BOARD OF DIRECTORS
REGISTERED OFFICE
COMPANY SECRETARY
PRINCIPAL BANKERS
Chairman & CEO
Mr Ron Sim
Peter Lee
A number of our products have always attracted
imitation product traders. Their inferior quality and
unsubstantiated product performance claims may
lead to adverse media publicity and negative market
sentiments and may have a material adverse effect
on sales.
Executive Directors
Mr Charlie Teo
Mr Richard Leow
Mr Peter Lee
65 Ubi Avenue 1
OSIM Headquarters
Singapore 408939
Tel: (65) 67476866
Fax: (65) 67489192
Email: [email protected]
http://www.osim.com.sg
The Hongkong and
Shanghai Banking
Corporation Limited
The Royal Bank of Scotland PLC
United Overseas Bank Limited
RHB Bank Berhad
Non-Executive Director
Ms Teo Sway Heong
AUDITOR
5. Foreign exchange risks
Independent Non-Executive
Directors
Mr Colin Low
Mr Sin Boon Ann
Mr Tan Soo Nan
2. Susceptibility to downturns in economic cycles
59
The nature of our healthy lifestyle products makes
us more susceptible to reduced demand in times of
economic downturn than other kinds of business
because our products may not be considered as
essential health products.
While our sales are mainly denominated in the
respective local currencies in which the sales arise,
namely the S$, RM, HK$, RMB, NT$, A$ and US$, our
costs of procurement of products from our contract
manufacturers are incurred mainly in US$. There is
therefore an exchange transaction risk.
3.Health epidemics, terror alerts, terror attacks
and other acts of violence or war may adversely
affect sales.
6. Expansion of business and franchisee network
A large part of our outlets are located at high traffic
malls and airports. Any of the above events will lead to a
decrease in consumer traffic in malls and consequently
may have a material adverse effect on sales.
SHARE REGISTRAR
B.A.C.S. Private Limited
63 Cantonment Road
Singapore 089758
Ernst & Young LLP
One Raffles Quay
North Tower, Level 18
Singapore 048583
Partner in charge for the
financial year ended 31
December 2014:
Yee Woon Yim
We plan to open stores in existing and new geographical
markets and sign on new franchisees. There are risks
that these initiatives may not be successful.
60
Financial Report
DIRECTORS’ REPORT
DIRECTORS’ REPORT (CONT’D)
The directors are pleased to present their report to the members together with the audited consolidated financial statements
of OSIM International Ltd (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and
statement of changes in equity of the Company for the financial year ended 31 December 2014.
Directors’ interests in shares and debentures (cont’d)
for the year ended 31 December 2014
(Amounts in Singapore Dollars)
At 1 January
2014
At 31 December
2014
Exercise price
Directors
The directors of the Company in office at the date of this report are:
$
OSIM International Ltd
Options to subscribe for ordinary shares
Ron Sim - Chairman and CEO
Teo Sway Heong
Charlie Teo
Richard Leow
Peter Lee
Tan Soo Nan
Sin Boon Ann
Colin Low
Richard Leow
Directors’ interests in shares and debentures
The following directors, who held office at the end of the financial year, had, according to the register of directors’
shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and
share options of the Company and related corporations (other than wholly-owned subsidiaries), as stated below:
Other shareholdings in which the director
is deemed to have an interest
Held by director
At the beginning
of financial year
At the end of
financial year
At the beginning
of financial year
At the end of
financial year
OSIM International Ltd
Ordinary shares
316,057,335
355,657,335
195,911,199
134,311,199
Teo Sway Heong
6,692,020
6,692,020
505,276,514
483,276,514
Charlie Teo
2,863,162
2,863,162
300,000
300,000
Richard Leow
2,804,614
2,804,614
–
–
Peter Lee
2,804,000
–
895,000
2,195,000
25,000
25,000
–
25,000
Tan Soo Nan
40
–
0.917
15.02.2014
By virtue of section 7 of the Singapore Companies Act, Cap. 50, both Ron Sim and Teo Sway Heong are deemed to have
interests in the shares held by the Company in its subsidiaries.
Arrangements to enable directors to acquire shares and debentures
Except as described below, neither at the end of nor at any time during the financial year was the Company a party to any
arrangement whose objects are, or one of whose objects is, to enable directors of the Company to acquire benefits by means
of the acquisition of shares or debentures of the Company or any other body corporate.
Ron Sim
Expiry
date
There was no change in any of the above-mentioned interests in the Company between the end of the financial year and
21 January 2015.
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share
options or debentures of the Company, or of related corporations, either at the beginning or at the end of the financial year.
Directors’ contractual benefits
Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company
has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation
with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial
financial interest.
Share options
The OSIM Share Option Scheme (the “Option Scheme”) is administered by the Remuneration Committee comprising the
following members:
Sin Boon Ann (Chairman)
Colin Low
Tan Soo Nan
Ron Sim
Charlie Teo
The movement of share options of the Company during the year is as follows:
Date of grant
1 March 2004
Exercisable
period
16.02.2005 15.02.2014
Balance as at
1 January
2014
23,040
Exercised
Cancelled/
Lapsed
Balance as at
31 December
2014
–
(23,040)
–
Exercise
price
$
0.917
The Option Scheme expired on 15 February 2014 and the remaining share option lapsed on this date.
63
64
DIRECTORS’ REPORT (CONT’D)
DIRECTORS’ REPORT (CONT’D)
Share options (cont’d)
Audit and risk management committee (cont’d)
The principal features of the Option Scheme were disclosed in previous years’ Directors’ Reports.
• Recommends to the board of directors the external auditor to be nominated, approves the compensation of the external
auditor, and reviews the scope and results of the audit;
Since the commencement of the Option Scheme till the end of the financial year:
• No options have been granted to the controlling shareholders of the Company and their associates;
• Reports actions and minutes of the ARMC to the board of directors with such recommendations as the ARMC considers
appropriate; and
• No participant has received 5% or more of the total options available under the Option Scheme;
• Reviews interested person transactions in accordance with the requirements of the SGX-ST’s Listing Manual.
• No options that entitle the holder to participate, by virtue of the options, in any share issue of any other corporation have
been granted; and
The ARMC, having reviewed all non-audit services provided by the external auditor to the Group, is satisfied that the nature
and extent of such services would not affect the independence of the external auditor. The ARMC has also conducted a
review of interested person transactions.
• No options have been granted at a discount.
Audit and risk management committee
The Audit and Risk Management Committee (the “ARMC”) comprises three independent non-executive directors.
The members of the ARMC are:
Tan Soo Nan (Chairman)
Sin Boon Ann (Non-executive Director)
Colin Low (Non-executive Director)
The ARMC performs the functions in accordance with section 201B(5) of the Singapore Companies Act, Cap. 50, including
the following:
The ARMC convened four meetings during the year with full attendance from all members. The ARMC has also met with
internal and external auditors, without the presence of the Company’s management, at least once a year.
Further details regarding the ARMC are disclosed in the Report on Corporate Governance.
Auditor
Ernst & Young LLP have expressed their willingness to accept re-appointment as auditor.
On behalf of the board of directors,
• Reviews the audit plans of the internal and external auditors of the Company and reviews the internal auditors’ evaluation
of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Company’s
management to the external and internal auditors;
• Reviews the quarterly and annual financial statements and the auditor’s report on the annual financial statements of the
Group and the Company before their submission to the board of directors;
• Reviews effectiveness of the Group’s and the Company’s material internal controls, including financial, operational and
compliance controls and risk management via reviews carried out by the internal auditors;
Ron Sim
Director
• Meets with the external auditor, other committees and management in separate executive sessions to discuss any matters
that these groups believe should be discussed privately with the ARMC;
• Reviews legal and regulatory matters that may have a material impact on the financial statements, related compliance
policies and programmes and any reports received from regulators;
Peter Lee
Director
• Reviews the cost effectiveness and the independence and objectivity of the external auditor;
• Reviews the nature and extent of non-audit services provided by the external auditor;
65
Singapore
4 March 2015
66
STATEMENT BY DIRECTORS
INDEPENDENT AUDITOR’S REPORT
to the Members of OSIM International Ltd
We, Ron Sim and Peter Lee, being two of the directors of OSIM International Ltd, do hereby state that, in the opinion of the
directors,
(i) the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in equity
and consolidated cash flow statement together with notes thereto, are drawn up so as to give a true and fair view of the
state of affairs of the Group and of the Company as at 31 December 2014 and the results of the business, changes in
equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and
(ii)at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they fall due.
On behalf of the board of directors,
Ron Sim
Director
Peter Lee
Director
Report on the Financial Statements
We have audited the accompanying financial statements of OSIM International Ltd (the “Company”) and its subsidiaries
(collectively, the “Group”) set out on pages 70 to 168, which comprise the balance sheets of the Group and the Company as
at 31 December 2014, the statements of changes in equity of the Group and the Company and the consolidated statement
of comprehensive income and consolidated cash flow statement of the Group for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising
and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are
safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are
recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain
accountability of assets.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance 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 the financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Singapore
4 March 2015
67
68
INDEPENDENT AUDITOR’S REPORT to the Members of OSIM International Ltd (cont’d)
BALANCE SHEETS
as at 31 December 2014
Opinion
In our opinion, the consolidated financial statements of the Group and the balance sheet 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 31 December
2014 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the 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.
Ernst & Young LLP
Public Accountants and Chartered Accountants
Singapore
4 March 2015
Note
Non-current assets
Fixed assets
Investment properties
Subsidiaries
Associates and a joint venture
Intangible assets
Long-term investments
Long-term receivables
Deferred tax assets
Current assets
Inventories
Trade debtors
Other debtors, deposits and prepaid operating
expenses
Income tax recoverable
Due from associates
Due from subsidiaries
Short-term investments
Fixed deposits
Cash and bank balances
Current liabilities
Trade and other creditors
Deferred revenue
Provisions
Due to associates
Due to subsidiaries
Dividend payable
Provision for income tax
Bank loan
Obligations under finance leases – current portion
Liability component of convertible bonds
Bills payable to banks (unsecured)
Net current assets/(liabilities)
69
Group
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
31,370
5,054
–
18,411
180,647
15,264
10,172
4,656
25,176
–
–
18,454
189,891
14,527
7,480
5,017
2,469
–
172,762
2,657
–
15,264
944
–
3,141
–
143,779
2,657
–
14,527
1,184
–
265,574
260,545
194,096
165,288
10
11
71,644
42,637
72,508
42,276
5,205
4,276
8,122
5,791
12
14,977
–
2,793
–
28,838
276,332
151,234
12,230
646
861
–
23,537
149,740
117,607
3,286
–
2,793
10,112
28,838
171,729
58,977
2,255
–
861
9,570
23,537
10,544
49,881
588,455
419,405
285,216
110,561
76,948
4,197
6,541
21,085
–
7,744
24,416
–
18
–
17,152
90,359
4,463
6,824
16,406
–
7,227
17,017
6,030
14
119,038
29,493
22,069
–
3,473
16,686
6,559
7,744
6,184
–
–
–
17,152
31,905
–
3,620
11,954
2,551
7,227
5,065
–
–
119,038
29,493
158,101
296,871
79,867
210,853
430,354
122,534
205,349
(100,292)
3
4
5
6
7
8
9
33c
13
14
8
16
16
17
18
19
13
14
35
20
15
70
BALANCE SHEETS as at 31 December 2014 (cont’d)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
Note
Non-current liabilities
Liability component of convertible bonds
Obligations under finance leases –
non-current portion
Provision for pension benefits
Deferred tax liabilities
Note
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
15
168,259
–
168,259
–
20
32
33c
40
2568
33,121
61
2,018
37,076
–
–
608
–
–
38
203,988
39,155
168,867
38
491,940
343,924
230,578
64,958
22
23
24
25
114,459
(12,033)
634
307,048
545
28,460
341
2,724
65,036
(36,962)
3,773
251,252
545
6,206
341
2,724
114,459
(12,033)
634
104,065
–
23,112
341
–
65,036
(36,962)
3,773
31,912
–
858
341
–
26
27
2,142
(5,947)
(14,532)
(7,156)
Net assets
Equity attributable to equity holders of the
Company
Share capital
Treasury shares
Equity component of convertible bonds
Accumulated profits
Enterprise expansion funds
Capital reserves
Fair value adjustment reserve
Revaluation reserve
Discount/(premium) on purchase of non-controlling
interests’ (NCIs’) shares
Foreign currency translation reserve
Group
21a
21b
15
–
–
–
–
Non-controlling interests
438,373
53,567
271,227
72,697
230,578
–
64,958
–
Total equity
491,940
343,924
230,578
64,958
Revenue
Other income
Changes in inventories of trading goods
Trading goods purchased
Employee benefits expense
Depreciation and amortisation expenses
Other operating expenses
Interest expenses
Interest income
Share of profits of associates
Profit before taxation
Taxation
28
29
32
31a
31b
30
33a
Profit for the year
Other comprehensive income:
Item that will not be reclassified to profit or loss
Remeasurement of defined benefit obligation
Items that may be reclassified subsequently to profit or loss
Gain on fair value changes of available-for-sale financial asset
Foreign currency translation:
Net effect of exchange difference during the year
Reclassification of translation loss to profit or loss
647,616
56,761
18,702
(211,254)
(110,560)
(13,742)
(260,846)
(5,787)
5,344
2,919
132,305
(30,100)
129,153
(27,558)
102,205
101,595
(1,270)
–
341
1,226
–
6,577
18,463
820
24,111
Total comprehensive income for the year
103,025
125,706
Profit attributable to:
Equity holders of the Company
Non-controlling interests
102,193
12
101,575
20
102,205
101,595
102,996
29
125,839
(133)
103,025
125,706
13.41
13.20
14.03
13.58
Other comprehensive income for the year, net of tax
Earnings per share (cents)
Basic
Diluted
71
2013
$’000
691,130
18,992
(864)
(203,973)
(121,998)
(22,096)
(231,401)
(3,459)
4,997
977
(406)
Total comprehensive income attributable to:
Equity holders of the Company
Non-controlling interests
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Group
2014
$’000
34
34
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
72
STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2014
Attributable to equity holders of the Company
2014
Group
At 1 January 2014
Profit for the year
Treasury shares
(Note 21b)
$’000
65,036
–
(36,962)
–
3,773
–
Accumulated
profits
$’000
251,252
102,193
Enterprise
expansion
funds
(Note 22)
$’000
Capital
reserves
(Note 23)
$’000
Fair value
adjustment
reserve
(Note 24)
$’000
Revaluation
reserve
(Note 25)
$’000
(Premium)/
discount on
purchase of
NCIs’ shares
(Note 26)
$’000
Foreign
currency
translation
reserve
(Note 27)
$’000
(14,532)
–
(7,156)
–
545
–
6,206
–
341
–
2,724
–
Total
$’000
271,227
102,193
Non- controlling
interests
$’000
72,697
12
Total equity
$’000
343,924
102,205
Other comprehensive income
Remeasurement of defined benefit obligation
Foreign currency translation
–
–
–
–
–
–
(406)
–
–
–
–
–
–
–
–
–
–
–
–
1,209
(406)
1,209
–
17
(406)
1,226
Other comprehensive income for the year
–
–
–
(406)
–
–
–
–
–
1,209
803
17
820
Total comprehensive income for the year
–
–
–
101,787
–
–
–
–
1,209
102,996
29
103,025
–
(484)
–
5
–
–
–
–
–
(5)
484
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,002)
–
–
–
–
–
(12,002)
–
–
–
–
–
–
21,775
–
–
–
–
–
–
–
–
–
–
–
–
–
–
56,919
634
–
Contributions by and distributions to
equity holders
Lapse of employees’ share options
Redemption of convertible bonds
Purchase of treasury shares
Treasury shares reissued pursuant to
conversion of convertible bonds
Issuance of convertible bonds
Dividend paid to NCI
New shares issued pursuant to convertible
bonds conversion
Dividends on ordinary shares (Note 35)
Total contributions by and distributions to
equity holders
–
–
–
–
–
(12,002)
–
–
–
36,931
–
–
(1,787)
634
–
49,423
–
–
–
(1,502)
–
–
(45,996)
–
–
–
–
–
–
–
–
–
–
–
–
47,921
(45,996)
49,423
24,929
(3,139)
(45,991)
–
22,254
–
–
–
–
47,476
(2,093)
45,383
Changes in ownership interests in subsidiaries
that do not result in a loss of control
Discount on purchase of NCIs’ shares
(Note 5e)
Acquisition of NCI
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16,674
–
–
–
16,674
–
(16,927)
(139)
(253)
(139)
Total changes in ownership interests in
subsidiaries that do not result in a loss
of control
–
–
–
–
–
–
–
–
16,674
–
16,674
(17,066)
(392)
49,423
24,929
–
22,254
–
–
16,674
–
64,150
(19,159)
44,991
114,459
(12,033)
545
28,460
341
2,724
2,142
438,373
53,567
491,940
Total transactions with equity holders in their
capacity as equity holders
At 31 December 2014
73
Share capital
(Note 21a)
$’000
Equity
component
of
convertible
bonds
(Note 15)
$’000
(3,139)
634
(45,991)
307,048
(5,947)
–
–
(2,093)
–
–
56,919
634
(2,093)
47,921
(45,996)
74
STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2014 (cont’d)
Attributable to equity holders of the Company
2013
Group
At 1 January 2013
Profit for the year
Other comprehensive income
Remeasurement of defined benefit obligation
Foreign currency translation:
Net effect of exchange difference during
the year
Reclassification of translation loss to profit
or loss
Gain on fair value changes of available-forsale financial asset
Other comprehensive income for the year
Total comprehensive income for the year
Contributions by and distributions to
equity holders
Exercise of employees’ share options
Purchase of treasury shares
Treasury shares reissued pursuant to
purchase of NCIs’ shares (Note 5e)
Dividends on ordinary shares (Note 35)
Total contributions by and distributions
to equity holders
Changes in ownership interests in subsidiaries
that do not result in a loss of control
Acquisition of a subsidiary
Discount on purchase of NCIs’ shares
(Note 5e)
Acquisition of NCI
Total changes in ownership interests in
subsidiaries that do not result in a loss
of control
Total transactions with equity holders in their
capacity as equity holders
At 31 December 2013
75
Share capital
(Note 21a)
$’000
Treasury shares
(Note 21b)
$’000
Equity
component
of
convertible
bonds
(Note 15)
$’000
64,539
–
(29,166)
–
3,773
–
Accumulated
profits
$’000
194,359
101,575
Capital
reserves
(Note 23)
$’000
Fair value
adjustment
reserve
(Note 24)
$’000
Revaluation
reserve
(Note 25)
$’000
Premium
on purchase of
NCIs’ shares
(Note 26)
$’000
Foreign
currency
translation
reserve
(Note 27)
$’000
(14,544)
–
(32,349)
–
545
–
6,321
–
–
–
2,724
–
–
–
–
–
–
–
Total
$’000
196,202
101,575
4,170
20
200,372
101,595
–
–
–
–
–
–
–
–
–
–
6,730
6,730
–
–
–
–
–
–
–
–
–
18,463
18,463
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
341
341
341
–
–
–
–
–
–
–
25,193
25,193
341
24,264
125,839
–
–
(129)
–
–
–
–
–
–
–
–
–
368
(7,815)
–
–
368
(7,815)
–
–
497
–
(7,815)
19
–
(7,796)
–
–
–
–
–
–
(153)
(133)
6,577
18,463
341
24,111
125,706
–
(43,412)
–
–
14
–
–
–
–
–
–
–
–
–
33
(43,412)
–
–
33
(43,412)
–
(43,412)
–
(115)
–
–
–
–
(50,826)
–
(50,826)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12
–
–
–
12
–
–
–
–
–
–
–
–
–
12
–
12
–
341
–
2,724
(7,796)
(36,962)
(153)
(1,270)
–
–
–
497
65,036
–
Total equity
$’000
–
–
(1,270)
100,305
(1,270)
Non- controlling
interests
$’000
–
497
–
(1,270)
Enterprise
expansion
funds
(Note 22)
$’000
–
3,773
(43,412)
251,252
–
545
(115)
6,206
12
(14,532)
–
(7,156)
(50,814)
271,227
68,766
–
(106)
68,766
12
(106)
68,660
68,672
68,660
72,697
17,846
343,924
76
STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2014 (cont’d)
2014
Company
At 1 January 2014
Profit for the year, representing total
comprehensive income for the year
Contributions by and distributions to
equity holders
Lapse of employees’ share options
Redemption of convertible bonds
Treasury shares reissued pursuant to
convertible bonds conversion
Purchase of treasury shares
Issuance of convertible bonds
New shares issued pursuant to
convertible bonds conversion
Dividends on ordinary shares
(Note 35)
Total transactions with equity holders
in their capacity as equity holders
At 31 December 2014
Equity
component
of
Share
Treasury convertible
capital
shares
bonds
(Note 21a) (Note 21b) (Note 15)
$’000
$’000
$’000
65,036
(36,962)
–
–
–
–
–
–
–
–
–
36,931
(12,002)
–
49,423
–
–
–
49,423
24,929
114,459
(12,033)
Accumulated
profits
$’000
Fair value
Capital adjustment
reserves
reserve
(Note 23) (Note 24)
$’000
$’000
STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2014 (cont’d)
Total
equity
$’000
3,773
31,912
858
341
64,958
–
118,144
–
–
118,144
–
–
–
–
–
(484)
5
–
(1,787)
–
634
–
–
–
21,775
–
–
–
–
–
56,919
(12,002)
634
(1,502)
–
–
–
47,921
(45,996)
–
–
(45,996)
(45,991)
22,254
–
47,476
104,065
23,112
341
230,578
–
(3,139)
634
(5)
484
2013
Company
At 1 January 2013
Profit for the year, representing total
comprehensive income for the year
Other comprehensive income
Gain on fair value changes of
available-for-sale financial asset
Other comprehensive income
for the year
Total comprehensive income for
the year
Contributions by and distributions to
equity holders
Exercise of employees’ share options
Purchase of treasury shares
Treasury shares reissued pursuant to
purchase of NCI’s shares
Dividends on ordinary shares
(Note 35)
Total transactions with equity holders
in their capacity as equity holders
At 31 December 2013
Equity
component
of
Share
Treasury convertible
capital
shares
bonds
(Note 21a) (Note 21b) (Note 15)
$’000
$’000
$’000
Accumulated
profits
$’000
Fair value
Capital adjustment
reserves
reserve
(Note 23) (Note 24)
$’000
$’000
Total
equity
$’000
64,539
(29,166)
3,773
49,429
973
–
89,548
–
–
–
25,895
–
–
25,895
–
–
–
–
–
341
341
–
–
–
–
–
341
341
–
–
–
25,895
–
341
26,236
497
–
–
(7,815)
–
–
–
–
(129)
–
–
–
368
(7,815)
–
19
–
–
14
–
33
–
–
–
(43,412)
–
–
(43,412)
497
65,036
(7,796)
(36,962)
–
3,773
(43,412)
31,912
(115)
858
–
341
(50,826)
64,958
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
77
78
CONSOLIDATED CASH FLOW STATEMENT
Consolidated Cash Flow Statement for the year ended 31 December 2014 (cont’d)
for the year ended 31 December 2014
Note
Cash flows from operating activities
Profit before taxation
Adjustments for:
Share of profits of associates
Depreciation of fixed assets
Depreciation of investment properties
Amortisation of intangible assets
Gain on disposal of quoted equity shares
(Gain)/loss on disposal of fixed assets
Fair value (gain)/loss on short-term investments, net
Impairment loss on unquoted debt securities
Impairment loss on quoted equity shares
Impairment loss on fixed assets
Write-off of fixed assets
Write-off of intangible assets
Dividend income from quoted equity shares
Interest income
Gain on partial disposal of an associate
Reclassification adjustment for translation loss included in profit or loss
Gain on re-measurement of previously held interest in an associate
to fair value
Negative goodwill upon business combination achieved in stages
of a subsidiary
Negative goodwill upon increase in ownership of an associate
Interest expenses
Provision for warranties
3
4
7
29
29,30
29,30
30
8
3
30
30
29
31b
6c
30
2014
$’000
2013
$’000
132,305
129,153
(977)
12,259
17
9,820
(107)
(2)
(1,187)
–
654
208
23
–
(380)
(4,997)
–
–
(2,919)
11,382
–
2,360
(9)
58
116
12,498
863
17
377
18
(260)
(5,344)
(250)
18,463
5d
–
(22,582)
5d
6b
31a
19
–
–
3,459
1,233
(4,261)
(15,212)
5,787
1,297
Operating cash flows before working capital changes
(Increase)/decrease in:
Inventories
Trade debtors
Other debtors, deposits and prepaid operating expenses
Due from associates
(Decrease)/increase in:
Trade creditors
Other creditors and accruals
Due to associates
152,328
131,552
998
(361)
(5,499)
(1,933)
(7,843)
1,484
3,070
1,054
(2,030)
(13,760)
4,679
1,370
(945)
3,711
Cash flows generated from operations
Income tax paid, net of refund
134,422
(25,957)
133,453
(29,158)
Net cash flow generated from operating activities
108,465
104,295
Note
2014
$’000
2013
$’000
A
4
(17,938)
(4,940)
58
–
4,997
380
1,209
–
–
(596)
(5,398)
(10,538)
–
86
70
5,537
260
1,359
(3,417)
7,300
(335)
(3,263)
(22,228)
(2,941)
(392)
(2,093)
(12,341)
(6,030)
(14)
(12,002)
–
(15,614)
167,970
(45,479)
(573)
(61)
–
4,507
–
(26)
(7,815)
368
–
–
(36,185)
(2,281)
73,432
(41,493)
159,669
59,861
550
5,755
Cash and cash equivalents at beginning of year
267,347
201,731
Cash and cash equivalents at end of year (Note 16)
427,566
267,347
Cash flows from investing activities
Purchase of fixed assets
Purchase of investment properties
Proceeds from disposal of fixed assets
Proceeds from partial disposal of an associate
Interests received
Dividend received from investment securities
Dividend income from an associate
Net cash outflow on acquisition of a subsidiary
Repayment of loan from an associate
Acquisition of intangible assets
Increase in investment securities, net
6c
29
5d
7
Net cash flow used in investing activities
Cash flows from financing activities
Acquisition of non-controlling interests
Dividends paid to non-controlling interests
(Decrease)/increase in bills payable to banks
Repayment of bank loans
Repayment of finance lease obligations
Purchase of treasury shares
Proceeds from exercise of employee’ share options
Payment for redemption of convertible bonds (net)
Proceeds from issuance of convertible bonds (net)
Dividends paid on ordinary shares
Interest paid
Net cash flow generated from/(used in) financing activities
Net increase in cash and cash equivalents
5e
21b
B
Net effect of exchange rates changes
Note A: Purchase of fixed assets
During the financial year, the Group acquired fixed assets with an aggregate cost of $18,680,000 (2013: $11,580,000), of which
$Nil (2013: $93,000) was acquired by means of finance lease. Cash payments of $17,938,000 (2013: $10,538,000) were made
to purchase the fixed assets. The Group has provided for additional restoration cost of $742,000 (2013: $949,000) for shop
renovations.
Note B: Dividends paid on ordinary shares
During the year ended 31 December 2014, out of the dividend on ordinary shares of $45,996,000 (2013: $43,412,000), the
Group paid $38,252,000 (2013: $36,185,000) and $7,744,000 (2013: $7,227,000) was payable as at 31 December 2014.
The Group has paid another $7,227,000 (2013: $Nil) for dividend on ordinary shares declared in the prior year.
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
79
80
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
31 December 2014
1.
Corporate information
2.
Summary of significant accounting policies (cont’d)
OSIM International Ltd (the “Company”) is a limited liability company, which is domiciled and incorporated in
Singapore and listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”).
2.3
The registered office and principal place of business of the Company is located at 65 Ubi Avenue 1, OSIM Headquarters,
Singapore 408939.
The principal activities of the Company are those of marketing, distributing and franchising of healthy lifestyle
products. The principal activities of its subsidiaries are as shown in Note 5 to the financial statements.
2.
Summary of significant accounting policies
2.1
The consolidated financial statements of the Group and the balance sheet and statement of changes in equity
of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).
The financial statements have been prepared on a historical cost basis except as disclosed in the accounting
policies below.
The financial statements are presented in Singapore dollars (SGD or $) and all values in the tables are rounded
to the nearest thousand ($’000), except when otherwise indicated.
Changes in accounting policies
2.2
Description
Improvements to FRSs (February 2014)
(a)Amendments to FRS 103 Business Combinations
(b)Amendments to FRS 113 Fair Value Measurement
Amendments to FRS 27 Equity Method in Separate Financial Statements
FRS 115 Revenue from Contracts with Customers
FRS 109 Financial Instruments
Basis of preparation
2.3
The accounting policies adopted are consistent with those of the previous financial year except in the current
financial year, the Group has adopted all the new and revised standards which are effective for annual financial
periods beginning on or after 1 January 2014. The adoption of these standards did not have any effect on the
financial performance or position of the Group and the Company.
Standards issued but not yet effective
The Group has not adopted the following standards that have been issued but not yet effective and relevant to
the Group:
Description
Amendments to FRS 19 Defined Benefit Plans: Employee Contributions
Improvements to FRSs (January 2014)
(a)Amendments to FRS 103 Business Combinations
(b)Amendments to FRS 108 Operating Segments
(c) Amendments to FRS 113 Fair Value Measurement
(d)Amendments to FRS 16 Property, Plant and Equipment and
FRS 38 Intangible Assets
(e)Amendments to FRS 24 Related Party Disclosures
Effective for annual periods
beginning on or after
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
Effective for annual periods
beginning on or after
1 July 2014
1 July 2014
1 January 2016
1 January 2017
1 January 2018
Except for Amendments to FRS 27, FRS 115 and FRS 109, the directors expect that the adoption of the other
standards above will have no material impact on the financial statements in the period of initial application.
The nature of the impending changes in accounting policy on adoption of FRS 109, FRS 115 and Amendments
to FRS 27 is described below.
Amendments to FRS 27 Equity Method in Separate Financial Statements
Amendments to FRS 27 are effective for financial periods beginning on or after 1 January 2016. These
amendments allow the equity method as an accounting option for investments in subsidiaries, joint ventures
and associates in an entity’s separate financial statements. Upon adoption of Amendments to FRS 27, the
dividend is recognised in profit or loss unless the entity elects to use the equity method, in which case the
dividend is recognised as a reduction from the carrying amount of the investment.
FRS 115 Revenue from Contracts with Customers
FRS 115 is effective for financial periods beginning on or after 1 January 2017. FRS 115 establishes a five-step
model that apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the
type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and
measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s
ordinary activities (e.g., sales of property, plant and equipment or intangibles).
Extensive disclosures will be required, including disaggregation of total revenue; information about
performance obligations; changes in contract asset and liability account balances between periods and
key judgements and estimates.
FRS 109 Financial Instruments
FRS 109 is effective for financial periods beginning on or after 1 January 2018. FRS 109 uses a single approach
to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different
rules in FRS 39. The approach in FRS 109 is based on how an entity manages its financial instruments (its
business model) and the contractual cash flow characteristics of the financial assets, and enables companies
to reflect their risk management activities better in their financial statements, and, in turn, help investors to
understand the effect of those activities on future cash flows. FRS 109 is principle-based, and will more closely
align hedge accounting with risk management activities undertaken by companies when hedging their financial
and non-financial risk exposures. The impairment requirements in FRS 109 are based on an expected credit loss
model and replace the FRS 39 incurred loss model.
81
Standards issued but not yet effective (cont’d)
The Group is currently evaluating the impact of the changes and assessing whether the adoption of Amendments
to FRS 27, FRS 115 and FRS 109 will have an impact on the Group.
82
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.4
Significant accounting estimates and judgments
2.4
The preparation of the Group’s consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities at the end of each reporting period.
b)
a)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the
end of the reporting period are discussed below. The Group based its assumptions and estimates
on parameters available when the financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances
arising beyond the control of the Group. Such changes are reflected in the assumptions when
they occur.
i)
Impairment of goodwill
As disclosed in Note 7 to the financial statements, the recoverable amounts of the cash generating
units which goodwill has been allocated to are determined based on value in use calculations. The
value in use calculations are based on a discounted cash flow model. The recoverable amount
is most sensitive to the discount rate used for the discounted cash flow model, budgeted gross
margin, the growth rate used for extrapolation purposes and market share assumptions. The key
assumptions applied in the determination of the value in use are disclosed and further explained
in Note 7 to the financial statements.
The carrying amount of the goodwill as at 31 December 2014 is $10,812,000 (2013: $10,812,000).
ii)
Deferred revenue
The Group allocates the consideration received from the sale of goods to the goods sold and
the points or rebates issued under its subsidiaries’ VIP card programme and award rebates
programme. The consideration allocated to the points or rebates issued are measured at their
fair value. Fair value is determined by applying statistical techniques, of which factors such as
changing patterns in the redemption rates were considered.
Critical judgments made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
i)
Impairment of financial assets
The Group follows the guidance of FRS 39 on determining when a financial asset is considered
impaired. This determination requires significant judgment. The Group evaluates, among other
factors, the duration and extent to which the fair value of a financial asset is less than its cost;
and the financial health of and the near-term business outlook of the issuer of the instrument,
including factors such as industry performance, changes in technology and operational and
financing cash flows.
ii)
Allowance for inventory obsolescence
Management makes allowance for inventory obsolescence based on historical obsolescence and
slow-moving experiences. An allowance for inventory obsolescence is made if inventories are
deteriorated, damaged, obsolete or slow-moving.
iii)
Taxes
The Group establishes provisions, based on reasonable estimates, for possible consequences of
audits by the tax authorities of the respective countries in which it operates. The amount of such
provisions is based on various factors, such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity and the relevant tax authority. Such
differences of interpretation may arise on a wide variety of issues depending on the conditions
prevailing in the respective company’s domicile.
Given the wide range of international business relationships and the long-term nature and
complexity of existing contractual agreements, differences arising between the actual results
and the assumptions made, or future changes to such assumptions, could necessitate future
adjustments to tax provisions already recorded. Where the final tax outcome of these matters is
different from the amounts that were initially recognised, such differences will impact the income
tax and deferred tax provisions in the period in which such determination is made.
iv)
Determination of functional currency
The Group measures foreign currency transactions in the respective functional currencies of the
Company and its subsidiaries. In determining the functional currencies of the entities in the Group,
judgement is required to determine the currency that mainly influences sales prices for goods
and services and of the country whose competitive forces and regulations mainly determines
the sales prices of its goods and services. The functional currencies of the entities in the Group
are determined based on management’s assessment of the economic environment in which the
entities operate and the entities’ process of determining sales prices.
The carrying amount of deferred revenue allocated to the points/rebates issued at 31 December
2014 was $4,197,000 (2013: $4,463,000).
iii)
Defined benefit plan
The cost of defined benefit pension plans and other post-employment medical benefits as well
as the present value of the pension obligation are determined using actuarial valuations. The
actuarial valuation involves making various assumptions. These include the determination of
the discount rates, expected rates of return of assets, future salary increases, mortality rates and
future pension increases. Due to the complexity of the valuation, the underlying assumptions
and its long-term nature, defined benefit obligations are highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date. The net benefit liability as at
31 December 2014 is $2,568,000 (2013: $2,018,000). Further details are provided in Note 32.
83
Significant accounting estimates and judgments (cont’d)
These estimates, assumptions and judgments are however not expected to have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities as disclosed in the notes
to the financial statements within the next financial year.
84
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.5
2.5
Basis of consolidation and business combinations
a)
85
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used
in the preparation of the consolidated financial statements are prepared for the same reporting date
as the Company. Consistent accounting policies are applied to like transactions and events in similar
circumstances.
Basis of consolidation and business combinations (cont’d)
b)
Business combinations and goodwill (cont’d)
In business combinations achieved in stages, previously held equity interests in the acquiree are
remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit
or loss.
The Group elects for each individual business combination, whether non-controlling interest in the
acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s
proportionate share of the acquiree’s identifiable net assets. Other components of non-controlling
interests are measured at their acquisition date fair value, unless another measurement basis is required
by another FRS.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the
amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously
held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets
and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the
excess is recognised as negative goodwill in profit or loss on the acquisition date.
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of
the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
The cash-generating units to which goodwill have been allocated is tested for impairment annually
and whenever there is an indication that the cash-generating unit may be impaired. Impairment is
determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of
cash-generating units) to which the goodwill relates.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such control ceases.
Losses within a subsidiary are attributed to the non-controlling interest even if that results in a
deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
-
De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying
amounts at the date when control is lost;
-
De-recognises the carrying amount of any non-controlling interest;
-
De-recognises the cumulative translation differences recorded in equity;
-
Recognises the fair value of the consideration received;
-
Recognises the fair value of any investment retained;
-
Recognises any surplus or deficit in profit or loss; and
-
Re-classifies the Group’s share of components previously recognised in other comprehensive
income to profit or loss or accumulated profits, as appropriate.
b)
Business combinations and goodwill
Business combinations are accounted for by applying the acquisition method. Identifiable assets
acquired and liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the
costs are incurred and the services are received.
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to equity
holders of the Company, and are presented separately in the consolidated statement of comprehensive
income and within equity in the consolidated balance sheet, separately from equity attributable to equity
holders of the Company.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed
to be an asset or liability will be recognised in profit or loss.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions. In such circumstances, the carrying amounts of the
controlling and non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted
and the fair value of the consideration paid or received is recognised directly in equity and attributed
to equity holders of the Company.
2.6
Transactions with non-controlling interests
86
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.7
Foreign currency
2.9
The Group’s consolidated financial statements are presented in Singapore Dollars, which is also the parent
company’s functional currency. Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that functional currency.
A joint arrangement is classified either as joint operation or joint venture, based on the rights and obligations
of the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the assets and obligations for the liabilities
relating to the arrangement, the arrangement is a joint operation. To the extent the joint arrangement provides
the Group with rights to the net assets of the arrangement, the arrangement is a joint venture.
a)
Exchange differences arising on the settlement of monetary items or on translating monetary items at
the end of the reporting period are recognised in profit or loss.
Exchange differences arising on monetary items that form part of the Group’s net investment in foreign
operations, which are recognised initially in other comprehensive income and accumulated under foreign
currency translation reserve in the equity. The foreign currency translation reserve is reclassified from
equity to profit or loss on disposal of the foreign operations.
b)
Consolidated financial statements
For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at
the rate of exchange ruling at the end of the reporting period and their profit or loss are translated
at the exchange rates prevailing at the date of the transactions. The exchange differences arising on
the translation are recognised in other comprehensive income. On disposal of a foreign operation, the
component of other comprehensive income relating to that particular foreign operation is recognised in
profit or loss.
Joint venture
The Group recognises its interest in a joint venture as an investment and accounts for the investment using the
equity method. The accounting policy for investment in joint venture is set out in Note 2.10.
2.10 Joint venture and associates
An associate is an entity over which the Group has the power to participate in the financial and operating policy
decisions of the investee but does not have control or joint control of those policies.
The Group account for its investments in associates and joint venture using the equity method from the date on
which it becomes an associate or joint venture.
Under the equity method, the investment in associates or joint venture is carried in the balance sheet at cost
plus post-acquisition changes in the Group’s share of net assets of the associates or joint venture. The profit or
loss reflects the share of results of the operations of the associates or joint venture. Distributions received from
joint ventures or associates reduce the carrying amount of the investment. Where there has been a change
recognised in other comprehensive income by the associates or joint venture, the Group recognises its share of
such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between
the Group and associate or joint venture are eliminated to the extent of the interest in the associates or joint
venture.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or
joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate or joint venture.
After application of the equity method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group’s investment in associate or joint venture. The Group determines at the end of
each reporting period whether there is any objective evidence that the investment in the associate or joint
venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between
the recoverable amount of the associate or joint venture and its carrying value and recognises the amount in
profit or loss.
For partial disposals of associates that are foreign operations, the proportionate share of the accumulated
exchange differences is reclassified to profit or loss.
A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is exposed,
or has the rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any
impairment losses.
Joint arrangements
2.9
A joint arrangement is a contractual arrangement whereby two or more parties have joint control. Joint control
is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties sharing control.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair
value of the investee’s identifiable assets and liabilities is accounted as goodwill and is included in the carrying
amount of the investment. Any excess of the Group’s share of the net fair value of the investee’s identifiable
assets and liabilities over the cost of the investment is included as income in the determination of the entity’s
share of the associate or joint venture’s profit or loss in the period in which the investment is acquired.
2.8Subsidiaries
87
Transactions and balances
Transactions in foreign currencies are measured in the respective functional currencies of the Company
and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates
approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as at the dates of the initial transactions.
Joint arrangements (cont’d)
88
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.10 Joint venture and associates (cont’d)
2.12 Fixed assets (cont’d)
Upon loss of significant influence or joint control over the associate or joint venture, the Group measures the
retained interest at fair value. Any difference between the fair value of the aggregate of the retained interest
and proceeds from disposal and the carrying amount of the investment at the date the equity method was
discontinued is recognised in profit or loss.
If the Group’s ownership interest in an associate or a joint venture is reduced, but the Group continues to apply
the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously
been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or
loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.
2.11 Convertible bonds
Convertible bonds are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible bonds, the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond. This amount is classified as a financial liability measured at amortised
cost (net of transaction costs) until it is extinguished on conversion or redemption in accordance with the
accounting policy set out in Note 2.21.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in
shareholders’ equity. Transaction costs are deducted from equity. The carrying amount of the conversion option
is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible bonds
based on the allocation of proceeds to the liability and equity components when the instruments are initially
recognised.
89
The financial statements of the associates and joint venture are prepared as the same reporting date as
the Company. Where necessary, adjustments are made to bring the accounting policies in line with those
of the Group.
2.12 Fixed assets
All items of fixed assets are initially recorded at cost. Subsequent to recognition, fixed assets are measured at
cost less accumulated depreciation and accumulated impairment losses.
Freehold land has an unlimited useful life and therefore is not depreciated.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
Freehold buildings
Leasehold building
Leasehold improvements
Plant and machinery
Computers
Motor vehicles
Shop renovations
Furniture and fittings
Office equipment
The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted
prospectively, if appropriate.
An item of fixed assets is de-recognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss on de-recognition of the asset is included in the profit or loss in the year the
asset is de-recognised.
50 years
Over the lease term of 63 years
Over remaining lease term
3 to 10 years
1 to 3 years
5 years
Over lease terms
3 to 10 years
3 to 5 years
2.13 Investment properties
Investment properties are properties that are either owned by the Group or leased under a finance lease that
are held to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of
goods or services, or for administrative purposes, or in the ordinary course of business. Investment properties
comprise completed investment properties. Properties held under operating leases are classified as investment
properties when the definition of an investment property is met.
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment losses.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year
of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For both transfer from
investment property to owner occupied property or owner occupied property to investment property, the
deemed cost for subsequent accounting is the cost at the date of acquisition of property. In addition, for a
transfer from owner occupied property to investment property, the property is accounted for in accordance with
the accounting policy for fixed assets set out in Note 2.12 up to the date of change in use.
90
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.14Leases
2.15 Intangible assets (cont’d)
a)
As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or,
if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to
the amount capitalised. Lease payments are apportioned between the finance charges and reduction of
the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the
periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and
the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the
lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the
lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of
rental expense over the lease term on a straight-line basis.
b)
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same bases as
rental income. The accounting policy for rental income is set out in Note 2.26(f). Contingent rents are
recognised as revenue in the period in which they are earned.
2.15 Intangible assets
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period
and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted
for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates.
91
Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible
assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is
reflected in profit or loss in the year in which the expenditure is incurred.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,
or more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of
an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life
assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a
prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset
is de-recognised.
The following classes of intangible assets are acquired by the Group through the acquisition of subsidiaries:
i)
Franchise and development rights
Franchise and development rights were acquired in business combinations. The franchise rights granted
by the franchisor, General Nutrition International, Inc., entitles the Group the right to operate each retail
store using the franchisor’s trademarks, trade names and operating system. The development rights
arising from the development agreements grants the Group the rights to establish and operate a specified
number of GNC stores in the respective countries. The useful lives of the franchise and development
rights are 5 to 20 years and 20 years respectively.
Franchise agreements with distributors of TWG Tea products entitle the Group to franchise fees and
royalties in exchange for the grant of the franchise rights to franchisees to operate stores and sell TWG
Tea products in various geographical regions. The useful lives of franchise agreements, based on expected
renewal rates, are 20 years.
ii)
Distribution rights
Distribution rights relate to fees paid to GNC for the exclusive rights to distribute GNC products to other
retailers, distributors and merchants in Singapore and rights granted to third parties to distribute certain
products exclusively in a specified territory for a limited period of time. The distribution fees paid to GNC
are amortised over 20 years on a straight-line basis, and the third party distribution rights are amortised
over the agreement period ranging from 1 to 5 years.
iii)
Brand and trademarks
The brand and trademarks were acquired in a business combination and relates to a subsidiary’s
reputation as a luxury tea brand. The useful lives of brand and trademarks are estimated to be 20 years.
iv)
Customer relationships
Customer relationships relate to excess earnings that the Group earns on sales of TWG Tea products to
corporate and franchise customers, who have very low rates of non-renewal. The useful lives of customer
relationships are estimated to be 20 years.
2.16 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset (i.e. an intangible asset with an indefinite
useful life, an intangible asset not yet available for use, or goodwill acquired in a business combination) is
required, the Group makes an estimate of the asset’s recoverable amounts.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell
and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. Where the carrying amount of an
asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
92
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.16 Impairment of non-financial assets (cont’d)
2.17 Financial assets (cont’d)
Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously
revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also
recognised in other comprehensive income up to the amount of any previous revaluation.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised
previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which
case the reversal is treated as a revaluation increase.
2.17 Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions
of the financial instrument. The Group determines the classification of its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.
b)
Loans and receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables
are measured at amortised cost using the effective interest method, less impairment. Gains and losses
are recognised in profit or loss when the loan and receivables are de-recognised or impaired, as well as
through the amortisation process.
c)
Available-for-sale financial assets
The Group classifies its long-term investments as available-for-sale financial assets.
Available-for-sale financial assets include equity and debt securities. Equity investments classified as
available-for sale are those which are neither classified as held for trading nor designated at fair value
through profit or loss. Debt securities in this category are those which are intended to be held for an
indefinite period of time and which may be sold in response to needs for liquidity or in response to
changes in the market conditions.
After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any
gains or losses from changes in fair value of the financial asset are recognised in other comprehensive
income, except that impairment losses, foreign exchange gains and losses on monetary instruments and
interest calculated using the effective interest method are recognised in profit or loss. The cumulative
gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or
loss as a reclassification adjustment when the financial asset is de-recognised.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
a)
93
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition at fair value through profit or loss. Financial
assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing
in the near term. This category includes derivative financial instruments entered into by the Group
that are not designated as hedging instruments in hedge relationships as defined by FRS 39.
Derivatives, including separated embedded derivatives are also classified as held for trading unless
they are designated as effective hedging instruments.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair
value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit
or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange
differences, interest and dividend income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair
value if their economic characteristics and risks are not closely related to those of the host contracts
and the host contracts are not held for trading or designated at fair value through profit or loss. These
embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss.
Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the
cash flows that would otherwise be required.
Subsequent measurement (cont’d)
De-recognition
A financial asset is de-recognised where the contractual rights to receive cash flows from the asset have expired.
On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum
of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss.
Regular way purchase or sale of a financial asset
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that
the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace concerned.
2.18 Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is
impaired.
94
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.18 Impairment of financial assets (cont’d)
2.18 Impairment of financial assets (cont’d)
Available-for-sale financial assets (cont’d)
In the case of debt instruments classified as available-for-sale, impairment is assessed based on the
same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment
is the cumulative loss measured as the difference between the amortised cost and the current fair value,
less any impairment loss on that investment previously recognised in profit or loss. Future interest
income continues to be accrued based on the reduced carrying amount of the asset, using the rate of
interest used to discount the future cash flows for the purpose of measuring the impairment loss. If, in
a subsequent year, the fair value of a debt instrument increases and the increases can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed in profit or loss.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for
financial assets that are not individually significant. If the Group determines that no objective evidence
of impairment exists for an individually assessed financial asset, whether significant or not, it includes the
asset in a group of financial assets with similar credit risk characteristics and collectively assesses them
for impairment. Assets that are individually assessed for impairment and for which an impairment loss is,
or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has
been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimate future cash flows discounted at the financial asset’s original effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The
impairment loss is recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced
directly or if an amount was charged to the allowance account, the amount charged to the allowance
account is written off against the carrying value of the financial asset.
Inventories are valued at the lower of cost (assigned on a weighted average basis) and net realisable value.
Costs include expenses incurred in bringing the inventories to their present location and condition.
Where necessary, allowance is made for damaged, obsolete and slow moving items to adjust the carrying value
of inventories to the lower of cost and net realisable value.
To determine whether there is objective evidence that an impairment loss on financial assets has
been incurred, the Group considers factors such as the probability of insolvency or significant financial
difficulties of the debtor and default or significant delay in payments.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
necessary to make the sale.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortised
cost at the reversal date. The amount of reversal is recognised in profit or loss.
b)
Available-for-sale financial assets
In the case of equity investments classified as available-for-sale, objective evidence of impairment
include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes
with an adverse effect that have taken place in the technological, market, economic or legal environment
in which the issuer operates, and indicates that the cost of the investment in equity instrument may not
be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs.
95
b)
a)
If an available-for-sale financial asset is impaired, an amount comprising the difference between its
acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any
impairment loss previously recognised in profit or loss, is transferred from other comprehensive income
and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not
recognised in profit or loss; increase in their fair value after impairment are recognised directly in other
comprehensive income.
2.19Inventories
2.20 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in values. These also include bank overdrafts that form an integral part of the Group’s cash
management.
2.21 Financial liabilities
Initial recognition and measurement
Financial liabilities include trade and other amounts payable, which are normally settled on 30-90 day terms,
payables to subsidiaries, associates, a joint venture, related parties and interest-bearing loans and borrowings.
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual
provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair value plus in the case of other financial liabilities not at fair
value through profit or loss, directly attributable transaction costs.
96
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
2.
Summary of significant accounting policies (cont’d)
2.23 Borrowing costs
Summary of significant accounting policies (cont’d)
2.21 Financial liabilities (cont’d)
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. Financial
liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This
category includes derivative financial instruments entered into by the Group that are not designated as hedging
instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless
they are designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair
value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or
loss.
The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss.
Other financial liabilities
After initial recognition, other financial liabilities are subsequently measured at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised,
and through the amortisation process.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
de-recognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.
Government grants are recognised when there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. Where the grant relates to an asset, the fair value is recognised as
deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the
relevant asset by equal annual instalments.
Borrowing costs are capitalised as part of a qualifying asset if they are directly attributable to the acquisition,
construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended
use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing of funds.
2.24Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it
is no longer probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as finance costs.
a)
Provision for warranties
The Group and the Company provides free repair services and free replacement of major components of
its products for a period of one to two years after sales.
The costs of the warranty obligation under which the Group and the Company agree to remedy defects
in its products are accrued at the time the related sales are recognised. Provision for warranty is accrued
based on the estimated costs of fulfilling the total obligation, including handling and transportation
costs. The costs are estimated by management based on historical experience. The assumptions used to
estimate warranty provision are reviewed periodically in light of actual experience.
b)
Provision for restoration costs
In accordance with the lease agreements, the Group and the Company has an obligation to restore the
retail outlets and leasehold properties to their original state and condition as at the expiry of the lease
and to the satisfaction of the landlord. A provision is recognised for expected restoration costs based on
past experience of sale outlets closure.
2.22 Government grants
97
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheets, when
and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an
intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.25 Employee benefits
a)
Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which
it has operations. In particular, the Singapore companies in the Group make contributions to the Central
Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to national
pension schemes are recognised as an expense in the period in which the related service is performed.
98
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.25 Employee benefits (cont’d)
2.25 Employee benefits (cont’d)
b)
Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they accrue to employees.
The estimated liability for leave is recognised for services rendered by employees up to the end of the
reporting period.
c)
Defined benefit plans
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit
obligation (derived using a discount rate based on high quality corporate bonds) at the end of the
reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a net
defined benefit asset to the asset ceiling. The asset ceiling is the present value of any economic benefits
available in the form of refunds from the plan or reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit plans is determined separately for each plan
using the projected unit credit method.
Defined benefit costs comprise the following:
-
Service cost
-
Net interest on the net defined benefit liability or asset
-
Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognised as expense in profit or loss. Past service costs are recognised when plan
amendment or curtailment occurs.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the discount
rate based on high quality corporate bonds to the net defined benefit liability or asset. Net interest on
the net defined benefit liability or asset is recognised as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the
effect of the asset ceiling (excluding net interest on defined benefit liability) are recognised immediately
in other comprehensive income in the period in which they arise. Remeasurements are recognised in
accumulated profits within equity and are not reclassified to profit or loss in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies.
Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group.
Fair value of plan assets is based on market price information. When no market price is available, the fair
value of plan assets is estimated by discounting expected future cash flows using a discount rate that
reflects both the risk associated with the plan assets and the maturity or expected disposal date of those
assets (or, if they have no maturity, the expected period until the settlement of the related obligations).
99
The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined
benefit obligation is recognised as a separate asset at fair value when and only when reimbursement
is virtually certain.
d)
Employee share option plans
Employees of the Group receive remuneration in the form of share options as consideration for
services rendered (‘equity-settled transactions’). The cost of these equity-settled share based payment
transactions with employees for awards granted after 22 November 2002 is measured by reference to
the fair value of the share options at the date on which the share options are granted, which takes
into account market conditions and non-vesting conditions. The cost of equity-settled transactions is
recognised in profit or loss with a corresponding increase in the employee share option reserve, over the
vesting period. The cumulative expenses recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the vesting period has expired and the Group’s
best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit
or loss for a period represents the movement in cumulative expense recognised as at the beginning and
end of that period and is recognised in the employee benefits expense.
The employee share option reserve is transferred to accumulated profits upon expiry of the share options.
2.26Revenue
Revenue is recognised to the extent that it is probable the economic benefits will flow to the Group and the
revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair
value of consideration received or receivable, taking into account contractually defined terms of payment and
excluding taxes or duty.
The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has
concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition
criteria must also be met before revenue is recognised:
a)
Sale of goods
Revenue is recognised upon the transfer of significant risk and rewards of ownership of the goods to the
customer, usually on the delivery of the goods. Revenue is not recognised to the extent where there are
significant uncertainties regarding recovery of the consideration due, associated costs or the possible
return of goods.
b)
Franchise fees
Franchise fees are recognised upon the execution of the Master Franchise Agreements unless collectability
is in doubt.
c)
Royalty income
Royalty income is recognised upon the sale of goods by franchise outlets and the amount is determined
based on a certain percentage of net sales in accordance with the terms of the Master Franchise
Agreements unless collectability is in doubt.
100
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.26Revenue
2.27 Taxes (cont’d)
d)
Interest income
Interest income is recognised using the effective interest method unless collectability is in doubt.
e)
Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
f)
Rental income
Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms.
The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over
the lease terms on a straight-line basis.
2.27Taxes
a)
Current income taxes are recognised in profit or loss except that tax relating to items recognised
outside profit or loss, either in other comprehensive income or directly in equity. Management
periodically evaluates positions taken in the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes provisions where appropriate.
b) Deferred tax
Deferred income tax is provided using the liability method on temporary differences at the end of the
reporting period between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-
where the deferred income tax liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
-
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interest in joint venture, where the timing of the reversal of the temporary differences can
be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
101
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the end
of the reporting period, in the countries where the Group operates and generates taxable income.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised except:
-
where the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
and
-
in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interest in joint venture, deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of
each reporting period and are recognised to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the end of each reporting period.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive
income or directly in equity and deferred tax arising from a business combination is adjusted against
goodwill on acquisition.
c) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
-
where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable; and
-
receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the balance sheet.
2.28 Segment reporting
For management purposes, the Group is organised on a world-wide basis into two major divisions, namely retail
and distribution. The divisions are the basis on which the Group reports its primary segment information.
Segment revenue, expenses and results include transfers between business segments and between geographical
segments. Such transfers take place at terms agreed between the parties during the financial year.
102
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.
Summary of significant accounting policies (cont’d)
2.29 Share capital and share issuance expenses
2.32 Related parties (cont’d)
Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly
attributable to the issuance of ordinary shares are deducted against share capital.
2.30Contingencies
A contingent liability is:
a)
a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Group; or
b)
a present obligation that arises from past events but is not recognised because:
(i)
It is not probable that an outflow of resources embodying economic benefits will be required to
settle the obligation; or
(ii)
The amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent
liabilities assumed in a business combination that are present obligations and which the fair values can be
reliably determined.
b)
An entity is related to the Group and the Company if any of the following conditions applies:
(i)
The entity and the Company are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others);
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member);
(iii)
Both entities are joint ventures of the same third party;
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Company
or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers
are also related to the Company;
(vi)
The entity is controlled or jointly controlled by a person identified in (a); and
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
The Group’s own equity instruments which are reacquired (treasury shares) are recognised at cost and
deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation
of the Group’s own equity instruments. Any difference between the carrying amount of treasury shares and the
consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are
nullified for the Group and no dividends are allocated to them respectively.
2.32 Related parties
A related party is defined as follows:
a)
A person or a close member of that person’s family is related to the Group and the Company if that
person:
(i)
(ii)
(iii)
103
A related party is defined as follows (cont’d):
2.31 Treasury shares
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Group.
Has control or joint control over the Company;
Has significant influence over the Company; or
Is a member of the key management personnel of the Group or the Company or of a parent
of the Company.
104
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
3.
Fixed assets
Group
Cost
As at 1 January 2013
Acquisition of a subsidiary
Additions
Disposals
Write-off
Reclassification
Net exchange differences
As at 31 December 2013 and 1 January 2014
Additions
Disposals
Write-off
Transfer to investment properties
(Note 4)
Net exchange differences
As at 31 December 2014
105
Freehold
land
$’000
Freehold
buildings
$’000
Leasehold
building
$’000
3,140
–
813
–
–
–
–
1,294
–
457
–
–
–
–
364
–
–
–
–
–
10
3,953
3,262
–
–
1,751
2,016
–
–
(120)
8
7,103
–
5
3,772
Leasehold
improvements
$’000
Plant and
machinery
$’000
Computers
$’000
Motor vehicles
$’000
Shop renovations
$’000
Furniture
and fittings
$’000
Office equipment
$’000
Total
$’000
578
–
–
–
–
–
–
10,646
748
580
(33)
–
362
11
9,337
148
752
(1,140)
(345)
–
25
3,217
–
847
(320)
–
–
42
45,063
2,280
7,634
(10,603)
(706)
305
649
11,910
957
284
(108)
(69)
(667)
120
3,618
23
213
(47)
(172)
–
42
89,167
4,156
11,580
(12,251)
(1,292)
–
899
374
–
–
–
578
–
–
–
12,314
1,214
(151)
–
8,777
873
(283)
(6)
3,786
680
(144)
–
44,622
9,999
(4,763)
(290)
12,427
340
(199)
(305)
3,677
296
(72)
(4)
92,259
18,680
(5,612)
(605)
–
3
377
–
–
578
–
41
13,418
–
46
9,407
–
33
4,355
–
523
50,091
–
40
12,303
–
31
3,928
(120)
730
105,332
106
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
3.
Fixed assets (cont’d)
Group
Freehold
buildings
$’000
Leasehold
building
$’000
Leasehold
improvements
$’000
Plant and
machinery
$’000
Computers
$’000
Motor vehicles
$’000
Shop renovations
$’000
Furniture
and fittings
$’000
Office equipment
$’000
Total
$’000
Accumulated depreciation and impairment
As at 1 January 2013
Depreciation charge for the year
Disposals
Write-off
Reclassification
Impairment loss
Net exchange differences
52
–
–
–
–
–
–
209
27
–
–
–
–
–
239
2
–
–
–
–
2
48
58
–
–
–
–
–
10,273
365
(21)
–
131
–
3
8,171
1,026
(1,121)
(302)
–
–
5
1,975
414
(316)
–
–
–
23
34,932
8,584
(10,503)
(502)
110
17
552
9,058
529
(104)
(63)
(241)
–
(14)
3,153
377
(42)
(48)
–
–
25
68,110
11,382
(12,107)
(915)
–
17
596
As at 31 December 2013 and 1 January 2014
Depreciation charge for the year
Disposals
Write-off
Impairment loss
Net exchange differences
As at 31 December 2014
52
–
–
–
–
–
52
236
45
–
–
–
–
281
243
60
–
–
–
1
304
106
–
–
–
–
–
106
10,751
644
(140)
–
–
16
11,271
7,779
804
(275)
(1)
–
41
8,348
2,096
558
(132)
(1)
–
22
2,543
33,190
8,982
(4,742)
(284)
208
431
37,785
9,165
769
(197)
(291)
–
4
9,450
3,465
397
(70)
(5)
–
35
3,822
67,083
12,259
(5,556)
(582)
208
550
73,962
7,051
3,901
3,491
1,515
73
131
472
472
2,147
1,563
1,059
998
1,812
1,690
12,306
11,432
2,853
3,262
106
212
31,370
25,176
Net carrying amount
As at 31 December 2014
As at 31 December 2013
107
Freehold
land
$’000
108
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
3.
4.
Fixed assets (cont’d)
Company
Leasehold
improve- Plant and
ments
machinery Computers
$’000
$’000
$’000
Cost
As at 1 January 2013
Additions
Disposals
As at 31 December 2013
and 1 January 2014
Additions
Disposals
As at 31 December 2014
Accumulated depreciation
and impairment
As at 1 January 2013
Depreciation charge for
the year
Disposals
Impairment loss
As at 31 December 2013
and 1 January 2014
Depreciation charge for
the year
Disposals
Impairment loss
As at 31 December 2014
Net carrying amount
As at 31 December 2014
As at 31 December 2013
109
Motor
vehicles
$’000
Shop
Furniture
Office
renovations and fittings equipment
$’000
$’000
$’000
9,733
500
–
1,574
32
–
1,398
221
–
3,724
963
(205)
3,111
53
(22)
860
14
–
20,978
1,783
(227)
578
–
–
578
10,233
–
–
10,233
1,606
59
–
1,665
1,619
288
–
1,907
4,482
95
(786)
3,791
3,142
8
(58)
3,092
874
98
–
972
22,534
548
(844)
22,238
48
9,733
1,548
548
58
–
–
50
–
–
46
–
–
241
–
–
106
9,783
1,594
789
58
–
–
164
50
–
–
9,833
42
–
–
1,636
278
–
–
1,067
414
472
400
450
29
12
840
830
3,014
641
(205)
17
2,669
155
(22)
–
836
16
–
–
Freehold
land
$’000
Freehold
building
$’000
Total
$’000
Cost
Balance sheet:
As at 1 January and 31 December 2013 and 1 January 2014
Additions
Transfer from fixed assets (Note 3)
Exchange differences
As at 31 December 2014
–
3,119
120
7
3,246
–
1,821
–
4
1,825
–
4,940
120
11
5,071
Accumulated depreciation
Balance sheet:
As at 1 January and 31 December 2013 and 1 January 2014
Depreciation charge for the year
As at 31 December 2014
–
–
–
–
17
17
–
17
17
3,246
–
1,808
–
5,054
–
2014
$’000
70
2013
$’000
–
11
–
Group
Total
$’000
578
–
–
Investment properties
18,396
1,207
(227)
17
Net carrying amount
As at 31 December 2014
As at 31 December 2013
3,467
2,802
852
19,393
Included in Consolidated Statement of Comprehensive Income:
511
(786)
114
3,306
147
(58)
–
2,891
20
–
–
872
1,106
(844)
114
19,769
Rental income from investment properties
Direct operating expenses (including repairs and maintenance) arising from rental
generating properties
485
1,015
201
340
100
22
Transfer from property, plant and equipment
On 1 October 2014, the Group transferred the car park located at No. 268 Lian Cheng Road, 7F, Chung Ho District,
Taiwan that was held as owner-occupied property to investment property. On that date, the Group has commenced
renting of the car park lots to non-related parties.
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to
purchase, construct or develop investment properties or for repairs, maintenance or enhancements.
2,469
3,141
Assets held under finance leases
As at 31 December 2014 and 2013, the carrying amount of fixed assets held under finance leases had been fully
impaired. Leased assets are pledged as security for the related finance lease liabilities.
110
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
4.
Investment property (cont’d)
5.Subsidiaries
The investment properties held by the Group as at 31 December are as follows:
a)
Composition of the Group
The Group has the following investment in subsidiaries.
Description and location
Office building and land at No.176 Jian Yi Road, 4F, Chung Ho District, Taiwan
Car park lots at No. 268 Lian Cheng Road, 7F, Chung Ho District, Taiwan
Existing use
Tenure
Office
premises
Car park
Freehold
Freehold
Valuation of investment property
Except for the freehold land, investment properties are stated at cost less accumulated depreciation. Depreciation is
charged on a straight line basis over an estimated useful life of 50 years. Freehold land is stated at cost.
The carrying values of the investment properties approximate their fair values as these were acquired near to the end
of the reporting period.
Name of company
Principal activities
Country of
incorporation
Percentage of
effective equity
held
2014
2013
%
%
Unquoted equity
shares, at cost
2014
2013
$’000
$’000
Held by the Company
OSIM International Trading Import, trading
and distribution
(Shanghai) Co., Ltd #
of healthy lifestyle
products
People’s
Republic
of China
(“PRC”)
100
100
295
295
OSIM (M) Sdn Bhd #
Sale and marketing
of healthy lifestyle
products
Malaysia
100
99.50
13,024
12,925
OSIM (HK) Company
Limited #
Sale and marketing
of healthy lifestyle
products
Hong Kong
100
100
17,700
17,700
OSIM (Taiwan) Co., Ltd #
Sale and marketing
of healthy lifestyle
products
Taiwan
100
100
7,989
7,989
ONI Global Pte Ltd #
Specialty retailer
and distributor
of nutraceutical
products
94.91
94.76
50,088
50,033
OSIM (China) Co., Ltd #
Sale and marketing
of healthy lifestyle
products
PRC
100
100
11,008
11,008
TWG Tea (North Asia)
Pte Ltd #
Sale and marketing
of luxury tea
products
Singapore
87.96
81.48
11,364
3,504
OSIM Services Pte Ltd @
Training and
development of
employees
Singapore
100
100
10
10
Paris Investment Pte Ltd @
Investment holding
Singapore
100
100
8,955
8,955
TWG Tea Company Pte
Ltd #
Production, sale and
marketing of luxury
tea products
Singapore
69.91
53.70
52,329
31,360
Singapore
172,762 143,779
111
112
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
5.
Subsidiaries (cont’d)
5.
Subsidiaries (cont’d)
a)
a)
Composition of the Group (cont’d)
Name of company
Principal activities
Country of
incorporation
Percentage of
effective equity
held
2014
2013
%
Name of company
Sale and marketing of luxury tea
products
TWG Tea (Macau) Company
Limited +
Sale and marketing of luxury tea
products
Macau
87.96
81.48
TWG Tea (Taiwan) Company
Limited #
Sale and marketing of luxury tea
products
Taiwan
87.96
81.48
OSIM Xinya (Beijing) Trading
Co., Ltd &
TWG Tea (Shanghai) Company
Limited #
Sale and marketing of luxury tea
products
PRC
87.96
81.48
Hong Kong
87.96
81.48
Held through TWG Tea Company Pte Ltd
Sale and marketing of luxury tea United Kingdom
products
69.91
53.70
Held through ONI Global Pte Ltd
Nutri Active Pte Ltd
Wholesale of nutraceutical
products and supplements
Singapore
–
94.76
ONI Global (Trading) Pte Ltd #
Retailing of nutraceutical products
and supplements
Singapore
94.91
94.76
ONI Global (Australia) Pte Ltd ##
Retailing of nutraceutical products
and supplements
Australia
94.91
94.76
RichLife (Shanghai) Co., Ltd
Wholesale and retailing of
nutraceutical products and
supplements
PRC
94.91
94.76
RichLife (Beijing) Co., Ltd ^^
Wholesale and retailing of
nutraceutical products and
supplements
PRC
94.91
94.76
RichLife (Guangzhou) Co., Ltd ^^^
Wholesale and retailing of
nutraceutical products and
supplements
PRC
94.91
94.76
ONI Global (Taiwan) Co., Ltd #
Retailing of nutraceutical products
and supplements
Taiwan
94.91
94.76
Hong Kong
94.91
94.76
###
^
ONI Global (HK) Company Limited + Dormant
Percentage of
effective equity
held
2014
2013
%
%
Held through ONI Global (Trading) Pte Ltd
The Wellbeing Group (HK)
Company Limited (formerly
known as TWG Tea (HK)
Company Limited) #
TWG Tea Limited @@
Principal activities
Country of
incorporation
%
Held through TWG Tea (North Asia) Pte Ltd
113
Composition of the Group (cont’d)
ONI Global (Malaysia) Sdn Bhd #
Retailing of nutraceutical
products and supplements
Malaysia
94.91
94.76
Nutri Active Sdn Bhd #
Wholesale of nutraceutical
products and supplements
Malaysia
94.91
94.76
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM Xinya (Shenyang) Trading
Co., Ltd &
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM Xinya (Tianjing) Trading
Co., Ltd &
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM (Hangzhou) Trading
Co., Ltd &&
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM (Chengdu) Trading
Co., Ltd &&&
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM (Chongqing) Trading
Co., Ltd &&&&
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM (Shenzhen) Trading Co., Ltd *
Sale and marketing of healthy
lifestyle products
PRC
100
100
OSIM (Guangzhou) Trading
Co., Ltd **
Sale and marketing of healthy
lifestyle products
PRC
100
100
Held through OSIM (China) Co., Ltd
#
##
###
@
@@
^
^^
^^^
&
&&
&&&
&&&&
*
**
+
Audited by member firms of Ernst & Young Global, in the respective countries.
Audited by Banks Group Assurance Pty Ltd, Chartered Accountants, Australia.
The subsidiary has been struck off on 16 April 2014.
Audited by YC Tan & Co, CPA, Singapore.
Audited by Lam & Co Chartered Accountants, UK.
Audited by Ruihua Certified Public Accountants Shanghai Branch.
Audited by Beijing ZhengYiDe CPAs Co., Ltd.
Audited by Guangzhou Reputation Union Certified Public Accountants.
Audited by Beijing XinzhengTai, CPA, PRC.
Audited by Zhejiang Zhejing Tiance, CPA, PRC.
Audited by Sichuan Lixin, CPA, PRC.
Audited by Chongqing Yuzheng CPA, PRC.
Audited by Shenzhen Lianjie, CPA, PRC.
Audited by Guangdong Baide, Certified Public Accountants Co., Ltd (“CPA”), PRC.
Not required to be audited under the laws of its country of incorporation.
114
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
5.
5.
Subsidiaries (cont’d)
c)
Subsidiaries (cont’d)
b)
Interest in subsidiaries with material NCI
The Group has the following subsidiaries that have NCI that are material to the Group.
Name of Subsidiary
Principal place
of business
Proportion
of ownership
interest held by
NCI
%
Loss allocated
to NCI during
the reporting
period
$’000
Accumulated
NCI at the end
of reporting
period
$’000
Singapore
30.09
(979)
52,003
Summarised statement of comprehensive income
TWG Tea
2014
2013
$’000
$’000
Loss after tax
Other comprehensive income
31 December 2014:
TWG Tea Company Pte Ltd
(“TWG Tea”)
Summarised financial information about subsidiaries with material NCI (cont’d)
Total comprehensive income
Singapore
46.30
(532)
Summarised balance sheet
TWG Tea
2014
2013
$’000
$’000
Net cash flows from operations
Acquisition of significant fixed assets
(17)
(3,267)
(1,166)
Assets
36,143
21,657
Liabilities
(8,429)
(19,549)
Net current assets
27,714
2,108
Non-current
Assets
172,890
178,452
Liabilities
(27,836)
(29,578)
Net non-current assets
145,054
148,874
Net assets
172,768
150,982
3,786
3,673
887
190
d)
Acquisition of subsidiaries in the financial year ended 31 December 2013
On 18 October 2013 (the “acquisition date”), the Group acquired 100% equity interest of Paris Investment
Pte Ltd (“Paris Investment”), an investment holding company. Upon the acquisition, Paris Investment became
a subsidiary of the Group.
Paris Investment holds an 8.7% equity interest in TWG Tea Company Pte Ltd (“TWG Tea”). TWG Tea was
previously an associate of the Group (Note 13b). Upon the acquisition of Paris Investment, TWG Tea also
became a subsidiary of the Group.
The Group had made the acquisition in order to strengthen its presence as the “world’s finest luxury tea brand”
and driving diversification across the region and investment portfolio. The Group is confident that it will further
enhance the quality, diversity and income profile of the different brands which the Group holds.
The Group has elected to measure the non-controlling interest of TWG Tea at the non-controlling interest’s
proportionate share of TWG Tea’s net identifiable assets.
Current
115
(14)
TWG Tea
2014
2013
$’000
$’000
69,905
c)
Summarised financial information about subsidiaries with material NCI
Summarised financial information including goodwill on acquisition and consolidation adjustments but before
intercompany eliminations of subsidiaries with material non-controlling interests are as follows:
(1,149)
Other summarised information
31 December 2013:
TWG Tea
(3,253)
116
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
5.
Subsidiaries (cont’d)
5.
Subsidiaries (cont’d)
d)
d)
Acquisition of subsidiaries in the financial year ended 31 December 2013 (cont’d)
The fair value of the identifiable assets and liabilities of Paris Investment and TWG Tea as at the acquisition
date were:
Consideration transferred for the acquisition
Cash paid
Fair value of equity interest in TWG Tea held by the Group immediately before the acquisition
Recognised
on
acquisition
$’000
Fixed assets
68,818
Customer relationships
89,061
Franchise and developments rights
14,280
Inventories
10,976
Trade and other debtors
3,784
Other assets
2,775
Cash and bank balances
Effective settlement of loan due from TWG Tea
Total consideration transferred
4,156
Brand name and trademarks
5,538
Acquisition of subsidiaries in the financial year ended 31 December 2013 (cont’d)
Consideration settled in cash
Less: Cash and bank balances of subsidiaries acquired
Net cash outflow on acquisition
e)
Acquisition of additional interests in a subsidiary for the year ended 31 December 2014
Trade and other creditors
7,504
•
Bank loan
6,037
29,577
Total identifiable net assets at fair value
156,270
Non-controlling interest measured at its proportionate share of TWG Tea’s net identifiable
assets
(68,766)
Negative goodwill upon business combination achieved in stages
(4,261)
83,243
83,243
8,955
(5,538)
3,417
ONI Global Pte Ltd (“ONI”)
In 2014, the Group acquired additional shares of ONI totalling 0.15% (2013: 0.13%) from the noncontrolling interests, thereby bringing the total equity interest in ONI to 94.91% (2013: 94.76%) as at
31 December 2014.
The aggregate cash consideration and fair value of treasury shares issued for acquiring the additional
interests were $293,000 (2013: $61,000) and $Nil (2013: $33,000) respectively. These resulted in
increase in premium on purchase of non-controlling interests’ shares of $186,000 (2013: decrease of
$12,000).
•
TWG Tea
In 2014, the Group subscribed to the rights issue by TWG Tea, thereby increasing its effective shareholding
of TWG Tea to 69.91% as at 31 December 2014.
The aggregate cash consideration for subscribing to the rights issue was $25,025,000. The discount on
the deemed acquisition resulted in decrease in premium on purchase of non-controlling interests’ shares
of $16,927,000.
OSIM (M) Sdn Bhd (“OSIM Malaysia”)
In 2014, the Company acquired additional shares of OSIM Malaysia totalling 0.5% from the noncontrolling interests, thereby bringing the total equity interest in OSIM Malaysia to 100% as at 31
December 2014.
•
117
5,832
The Group recognised a gain of $22,582,000 as a result of measuring at fair value its 45% equity interest in
TWG Tea held before the business combination. The gain was included in the “Other income” line item in the
Group’s profit or loss for the year ended 31 December 2013.
43,118
8,955
68,456
Effect of the acquisition on cash flows
199,388
Deferred tax liabilities
$’000
The aggregate cash consideration for acquiring the additional interests was $99,000. This resulted in
increase in premium on purchase of non-controlling interests’ shares of $67,000.
118
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
6.
Associates and a joint venture
6.
a)
a)
The Group’s material investments in associates are summarised below (cont’d):
Dividends of $1,209,000 (2013: $1,359,000) were received from DT-OSIM Healthcare Appliances (Suzhou)
Co., Ltd.
The Group’s material investments in associates are summarised below:
Group
DT-OSIM Healthcare Appliances (Suzhou) Co., Ltd
Other associates
Impairment losses
2014
$’000
2013
$’000
14,189
4,279
18,468
(57)
18,411
14,491
4,020
18,511
(57)
18,454
Company
2014
2013
$’000
$’000
346
2,368
2,714
(57)
2,657
The investments in associates do not have published price quotations.
Name of company
Principal activities
Country of
incorporation
and place of
business
Percentage of
effective equity
held
2014
2013
%
%
346
2,368
2,714
(57)
2,657
Unquoted equity
shares, at cost
2014
2013
$’000
$’000
PRC
30
30
346
346
Aggregate information about the Group’s investments in associates that are not individually material is
as follows:
Profit after tax
Other comprehensive income
Total comprehensive income
Summarised balance sheet
Kingdom of
Thailand
30
OSIM (Thai) Co., Ltd +
Sale and marketing
of healthy lifestyle
products
Kingdom of
Thailand
24
Daito-Healthcare
Appliances (Taicang) Co.,
Ltd #
Manufacturer and
exporter of healthy
lifestyle products
PRC
32@
32@
408
408
Suzhou Daitec Exercising
Machine Co., Ltd ##
Manufacturer and
exporter of healthy
lifestyle products
PRC
30
30
1,336
1,336
2,714
2,714
30
2013
$’000
905
90
995
2,468
120
2,588
2013
$’000
Current assets
Non-current assets
59,427
13,051
58,844
13,194
Total assets
72,478
72,038
(25,181)
(23,736)
567
567
47,297
48,302
30%
30%
14,189
14,491
2,252
532
2,784
7,240
616
7,856
Net assets
Proportion of the Group’s ownership
24
2014
$’000
2014
$’000
Current and total liabilities
Daito-OSIM (Thailand) Co., Manufacturer and
Ltd ^
exporter of healthy
lifestyle products
@
*
^
+
#
##
119
Manufacturer and
exporter of healthy
lifestyle products
The summarised financial information in respect of DT-OSIM Healthcare Appliances (Suzhou) Co., Ltd.:
Held by the Company:
DT-OSIM Healthcare
Appliances (Suzhou) Co.,
Ltd *
Associates and a joint venture (cont’d)
57
57
Carrying amount of the investment, representing Group’s share of net assets
Summarised statement of comprehensive income
Profit after tax
Other comprehensive income
Total comprehensive income
Inclusive of 13% interest held indirectly by associates of the Company.
Audited by Welsen Certified Public Accountants Co., Ltd, PRC.
Audited by Me Bless Audit Office Co., Ltd, CPA, Kingdom of Thailand.
Audited by Sunantanawat Karnbanchee, CPA, Kingdom of Thailand.
Audited by Suzhou Leader Co., Ltd, CPA, PRC.
Audited by Suzhou Jinding CPA, PRC.
120
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
6.
Associates and a joint venture (cont’d)
7.
b)
Acquisition of additional interests in an associate
On 22 July 2013, the Company acquired 10% equity interest in TWG Tea for a consideration of $2, pursuant to
the shareholding increment clause of the sale and purchase agreement between the Company and sellers of
TWG Tea on 18 March 2011, thereby bringing the equity interest held in TWG Tea to 45%. A negative goodwill
of $15,212,000 arose from this acquisition and was included in the “Other income” line item in the Group’s
profit or loss for the year ended 31 December 2013.
On 18 October 2013, the Company acquired another 8.7% equity interest in TWG Tea through acquiring the
holding company of TWG Tea, namely, Paris Investment. This brought the effective shareholding of TWG Tea
to 53.7% and resulted in TWG Tea becoming a subsidiary in 2013 (Note 5d).
c)
Partial disposal of an associate
On 9 July 2013, the Company disposed of 25% equity interest in OSIM (Thai) Co., Ltd (“OSIM Thai”) whose
principal activities are sale and marketing of healthy lifestyle products, for a consideration of $250,000, out of
which $70,000 had been received in 2013. The gain arising from the partial disposal amounted to $250,000.
OSIM Thai continues to be an associated company.
d)
Details of a joint venture are as follows:
Name of company
Held by the Company
OSIM-Brookstone
Holdings, Inc. (“OBH”) #
Principal activities
Innovative
product
development and
sales of specialty
lifestyle products
Country of
incorporation
United States of
America (“USA”)
Percentage of
equity held
2014
2013
%
%
–
55.56
Unquoted equity
shares, at cost
2014
2013
$’000
$’000
–
145,298
========= =========
# Audited by PriceWaterhouseCoopers, Boston, United States of America.
By virtue of a partnership agreement, the Company only had joint control, together with the rest of the jointventure partners, over the financial and operating policies of OBH.
Intangible assets
Group
Cost
As at 1 January 2013
Acquisition of a subsidiary
Additions
Write-off
Net exchange differences
As at 31 December 2013 and
1 January 2014
Additions
Net exchange differences
As at 31 December 2014
Accumulated amortisation
As at 1 January 2013
Amortisation for the year
Write-off
Net exchange differences
As at 31 December 2013 and
1 January 2014
Amortisation for the year
Net exchange differences
As at 31 December 2014
Net carrying amount
As at 31 December 2014
As at 31 December 2013
Franchise
and development
rights
$’000
Brand
Distribution name and
Customer
rights
trademarks relationships
$’000
$’000
$’000
Goodwill
$’000
Total
$’000
20,105
14,280
310
–
(58)
2,001
–
25
(115)
(21)
–
68,818
–
–
–
–
89,061
–
–
–
24,105
–
–
–
–
46,211
172,159
335
(115)
(79)
34,637
584
(38)
35,183
1,890
12
(1)
1,901
68,818
–
–
68,818
89,061
–
–
89,061
24,105
–
–
24,105
218,511
596
(39)
219,068
11,328
984
–
(29)
1,773
38
(97)
(8)
–
583
–
–
–
755
–
–
13,293
–
–
–
26,394
2,360
(97)
(37)
12,283
1,630
(19)
13,894
1,706
21
–
1,727
583
3,561
–
4,144
755
4,608
–
5,363
13,293
–
–
13,293
28,620
9,820
(19)
38,421
174
184
64,674
68,235
83,698
88,306
10,812
10,812
21,289
22,354
180,647
189,891
Upon the occurrence of certain events as stipulated in the partnership agreement, the management of OBH
will be entitled to receive common shares of OBH. This would have the effect of diluting the Group’s interest
in the joint venture.
In December 2013, there was a disposal of the joint venture in accordance with FRS 21 The Effects of Changes
in Foreign Exchange Rates, and accordingly, the translation loss of $18,463,000 accumulated in the foreign
currency translation reserve was reclassified to the Group’s profit or loss in 2013 (Note 27).
On 3 April 2014, OBH filed for Creditors’ Protection (Chapter 11 Protection) in the USA. Subsequently,
an auction sale of OBH was approved by the US Court on 23 June 2014, following which the Group’s equity
interests in the joint venture were cancelled by law.
121
122
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
7.
7.
Intangible assets (cont’d)
Impairment testing of goodwill (cont’d)
Market share assumptions – These assumptions are important because management assesses how the CGU’s position,
relative to its competitors, might change over the budget period. Management expects the Group’s share of the
nutraceutical retail and wholesale markets to be stable over the budget period.
Sensitivity to changes in assumptions
With regard to the assessment of value in use for the above segments, management believes that no reasonably
possible changes in any of the above key assumptions would cause the carrying values of the segments to materially
exceed their recoverable amounts.
8.
Long-term investments
Short-term investments
Intangible assets (cont’d)
Franchise and
Brand
Customer
developDistribution name and relationment rights
rights
trademarks ships
$’000
$’000
$’000
$’000
Group
Average remaining amortisation period (years) - 2014
Average remaining amortisation period (years) - 2013
18
19
10
11
19
20
19
20
Impairment testing of goodwill
Goodwill acquired through business combinations has been allocated to three individual cash-generating units
(“CGUs”) of a subsidiary for impairment testing as follows:
•
•
•
Carrying amount of goodwill is allocated to the following CGUs of the subsidiary:
Singapore segment
Taiwan segment; and
Malaysia segment
Group and Company
2014
2013
$’000
$’000
Current:
Held for trading investments
Quoted equity shares, at fair value
Quoted debt securities, at fair value
Goodwill
2014
2013
$’000
$’000
Singapore segment
Taiwan segment
Malaysia segment
123
10,373
269
170
10,812
10,373
269
170
10,812
The recoverable amount of a CGU is determined based on value-in-use calculation, using cash flow projections based
on financial budgets approved by management covering a five year period. The pre-tax discount rate applied to the
cash flow projections and the forecasted growth rate during the five-year period is 11.2% (2013: 10.1%) and 2.0%
(2013: 7.8%) per annum respectively.
The calculation of value in use for the CGU is most sensitive to the following assumptions:
Budgeted gross margin – Gross margin is based on average value achieved in the five years preceding the start of the
budget period. The budgeted gross margin is kept constant over the five year period of cash flow projection.
Growth rate – Growth rate is based on average value achieved in the five years preceding the start of the budget period.
Pre-tax discount rates – Discount rates reflect the current market assessment of the risks specific to the CGU, regarding
the time value of money and individual risks of the underlying assets which have not been incorporated in the cash
flow estimates. The discount rate calculation is based on the specific circumstances of the CGU and derived from its
weighted average cost of capital (“WACC”). The WACC takes into account both debt and equity. The cost of equity is
derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interestbearing borrowings the CGU is obliged to service. Segment-specific risk is incorporated by applying individual beta
factors. The beta factors are evaluated annually based on publicly available market data.
Non-current:
Available-for-sale financial assets
Quoted equity shares, at fair value
Quoted debt securities, at fair value
9.
5,814
17,723
23,537
3,014
12,250
15,264
2,277
12,250
14,527
Impairment losses
During the financial year, the Group and the Company recognised an impairment loss of $654,000 (2013: $863,000)
for the quoted equity shares designated as available-for-sale financial assets as there were significant decline in the
fair value of these investments below their costs. The Group and the Company treats “significant” generally as 30%
decline in the fair value of investment below its original cost.
Long-term receivables
Group
Long-term deposits
8,663
20,175
28,838
2014
$’000
2013
$’000
10,172
7,480
Company
2014
2013
$’000
$’000
944
1,184
Long-term deposits relate to deposits placed for the lease of retail outlets and building.
124
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
10.Inventories
11.
Trade debtors (cont’d)
Trade receivables denominated in currencies other than the respective functional currencies of Group entities at 31
December are as follows:
Group
Company
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Group
Balance sheet
Trading goods
Goods in transit
Company
2014
2013
$’000
$’000
2014
$’000
2013
$’000
71,220
424
71,644
62,334
10,174
72,508
5,027
178
5,205
7,255
867
8,122
192,552
6,603
–
95,322
–
(1,244)
98,648
589
–
United States Dollar
Renminbi
Statement of comprehensive income:
Inventories recognised as an expense, being cost of sales 204,837
Inventories written-down
–
Reversal of write-down of inventories
(3,436)
The reversal of write-down of inventories was made as the related inventories were sold above their carrying amounts
in 2014.
11.
Trade debtors
Group
Trade debtors
Allowance for doubtful debts
2014
$’000
2013
$’000
43,406
(769)
42,637
44,965
(2,689)
42,276
Company
2014
2013
$’000
$’000
4,683
(407)
4,276
6,325
(534)
5,791
Trade debtors are non-interest bearing and are generally on 30 to 90 day terms. They are recognised at their original
invoice amounts which represents their fair values on initial recognition. In 2013, included in trade debtors was an
amount due from a joint venture of $311,000.
At the end of the reporting period, trade receivables arising from export sales amounting to $546,000 (2013: $470,000)
are arranged to be settled via letter of credits issued by reputable banks in countries where the customers are based.
2,416
–
2,982
112
915
–
1,112
–
Receivables that are past due but not impaired
The Group has trade receivables amounting to $6,250,000 (2013: $5,311,000) that are past due at the end of reporting
period but not impaired. These receivables are unsecured and the analysis of their aging at the end of reporting period
is as follows:
Group
2014
2013
$’000
$’000
Trade debtors past due:
Lesser than 30 days
3,050
3,624
30-60 days
1,252
1,010
61-90 days
325
121
91-120 days
1,143
529
More than 120 days
480
27
6,250
5,311
125
126
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
11.
Trade debtors (cont’d)
13.
Receivables that are impaired
The Group’s trade receivables that are impaired at the end of reporting period and the movement of the allowance
account used to record the impairment is as follows:
Group
Individually impaired
2014
2013
$’000
$’000
Group
Trade debtors - nominal amounts
Less: Allowance for impairment
910
(769)
141
Movement in allowance account:
At 1 January
2,689
2,529
Charge for the year
44
2,596
Write back
(126)
(1,439)
Written off
(1,844)
(818)
Exchange differences
6
(179)
At 31 December
769
2,689
Trade receivables that are individually determined to be impaired at the end of reporting period relate to debtors
that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any
collateral or credit enhancements.
Allowance for doubtful debts
For the year ended 31 December 2014, an impairment loss of $44,000 (2013: $2,596,000) is recognised in the “other
operating expenses” in the statement of comprehensive income subsequent to a debt recovery assessment performed
on trade debtors as at 31 December 2014. In the same year, an impairment loss of $126,000 (2013: $1,439,000)
previously recognised for a customer was written back due to recovery of the debt during the year.
Due to associates
- trade
- non-trade
14.
Deposits
Advances to employees
Other debtors
Prepaid operating expenses
2014
$’000
2013
$’000
3,904
766
2,548
7,759
14,977
5,732
202
1,900
4,396
12,230
Company
2014
2013
$’000
$’000
799
–
1,238
1,249
3,286
477
–
643
1,135
2,255
2014
$’000
2013
$’000
875
1,918
2,793
637
224
861
(21,058)
(27)
(21,085)
(16,406)
–
(16,406)
Company
2014
2013
$’000
$’000
875
1,918
2,793
(16,659)
(27)
(16,686)
637
224
861
(11,954)
–
(11,954)
The non-trade amounts are unsecured, interest free, repayable on demand and are to be settled in cash. The non-trade
amounts due from associates relate to advances and settlement of liabilities on their behalf. The non-trade amounts
due to associates relate to deposits for goods received in advance.
Due from/(to) subsidiaries
Company
2014
2013
$’000
$’000
Due from subsidiaries
- trade
- non-trade
- loan
Due to subsidiaries
- trade
- non-trade
Other debtors, deposits and prepaid operating expenses
Group
127
Due from associates
- trade
- non-trade
3,079
(2,689)
390
12.
Due from/(to) associates
4,963
1,093
4,056
10,112
2,654
1,416
5,500
9,570
(3,052)
(3,507)
(6,559)
(18)
(2,533)
(2,551)
The non-trade amounts due from subsidiaries are unsecured, interest free, repayable on demand and are to be settled
in cash. The non-trade amounts relate to advances and settlement of liabilities on their behalf.
The loan to a subsidiary is unsecured, non-interest bearing, repayable on demand and is to be settled in cash.
The non-trade amounts due to subsidiaries relate to deposits for goods received in advance.
128
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
15.
Convertible bonds
15.
Convertible bonds (cont’d)
120 million convertible bonds due 2016
On 5 July 2011, the Company issued 120 million convertible bonds (the “Bonds due 2016”) at nominal value of
$1 per bond, which are listed on the SGX-ST. The contractual interest rate on the Bonds due 2016 is 2.75% per
annum. Excluding the equity conversion option, the effective interest rate is 4.39% per annum. The interests on
the Bonds due 2016 are payable on a half yearly basis, i.e. 5 January and 5 July.
The carrying amount of the equity and liability components of the Bonds due 2016 and 2019 at the end of the
reporting period is arrived at as follows:
The Bonds due 2016 mature 5 years from the issue date at the principal amount together with the unpaid
interest (if any) unless converted into the Company’s ordinary shares at the holder’s option at the rate of $2.025
per share. The Bonds due 2016 are callable at the option of the Company at the principal amount together with
the interest accrued any time after 5 July 2014, subject to the satisfaction of certain conditions. During the year,
the Bonds due 2016 were either converted by the holders or redeemed by the Company.
170 million convertible bonds due 2019
On 18 September 2014, the Company issued 170 million convertible bonds (the “Bonds due 2019”) at a nominal value
of $1 per bond, which are listed on the SGX-ST. Excluding the equity conversion option, the effective interest rate is
2.643% per annum.
The Bonds due 2019 mature 5 years from the issue date at 110.46% of their principal amount in accordance with
the terms and conditions of the Bonds due 2019, unless converted into the Company’s ordinary shares at the holder’s
option at the rate of $3.525 per share. The holder of each convertible bond has the right to require the Company to
redeem the Bond on 18 September 2017 at the principal amount together with the interest accrued. The Bonds due
2019 are callable at the option of the Company at the principal amount together with the interest accrued any time
after 18 September 2017, subject to the satisfaction of certain conditions. Any bondholder may request that the
Company redeems all of the Bonds in the event that the Company’s shares ceased to be listed on the SGX-ST.
The Bonds due 2016 and 2019 comprise financial liabilities at amortised cost and equity components. The fair
values of the liability components are calculated using a market interest rate for an equivalent non-convertible
bond at the respective dates of issue. The residual amounts, representing the values of the equity conversion
components, are included in the shareholder’s equity.
Group and Company
2014
2013
$’000
$’000
Bonds due 2016
Face value
Less: - Fair value of the liability component
- Issue cost
- Conversion of convertible bonds during the year
- Transfer of equity component of convertible bonds not converted to capital reserves (Note 23(d))
Equity component at the end of the financial year
(484)
–
120,000
(114,527)
(1,700)
–
–
3,773
Liability component on initial recognition
Add: Accumulated amortisation of discount
- Opening balance at 1 January
- Amortisation of discount during the financial year
- Closing balance at 31 December
Less: Conversion of convertible bonds during the year
Redemption of convertible bonds during the year
Liability component at end of the financial year
114,527
114,527
4,511
1,417
5,928
(104,841)
(15,614)
–
2,647
1,864
4,511
–
–
119,038
Bonds due 2019
Face value
Less: - Fair value of the liability component
- Deferred tax liabilities
- Issue cost
Equity component at the end of the financial year
170,000
(166,790)
(546)
(2,030)
634
–
–
–
–
–
166,790
–
1,469
168,259
–
–
634
3,773
–
168,259
168,259
119,038
–
119,038
Liability component on initial recognition
Add: Accumulated amortisation of discount
- Amortisation of discount during the financial year and closing balance at
31 December
Liability component at end of the financial year
Total equity component of the Bonds due 2016 and 2019 at the end of the
financial year
Total liability component of the Bonds due 2016 and 2019 at end of the financial year:
- Current
- Non-current
129
120,000
(114,527)
(1,700)
(3,289)
130
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
16.
18.
Deferred revenue
Deferred revenue relate to:
•
the consideration received from the sale of goods that is allocated to the reward points issued under a
subsidiary’s “VIP cards” programme; and
•
the consideration received from the sale of goods to corporate customers that is allocated to the award rebates
issued under a subsidiary’s “Transparent Pricing Programme”.
Deferred revenue is recognised in the statement of comprehensive income as revenue when the VIP points and award
rebates are redeemed in exchange for free goods.
Cash and cash equivalents
Group
Cash and bank balances
Fixed deposits
Cash and cash equivalents in the consolidated cash flow
statement
2014
$’000
2013
$’000
151,234
276,332
117,607
149,740
58,977
171,729
49,881
10,544
427,566
267,347
230,706
60,425
Cash at banks earns interest at floating rates based on daily bank deposit rates. Fixed deposits are made for varying
period between one day and three months depending on the immediate cash requirements of the Group, and earn
interests at the respective fixed deposit rates. The weighted effective interest rate of fixed deposits ranges from 1.13%
to 3.97% (2013: 0.50% to 4.25%) per annum.
Cash and bank balances denominated in currencies other than the respective functional currencies of Group entities
at 31 December are as follows:
Group
United States Dollar
Renminbi
17.
2014
$’000
2013
$’000
18,525
3,952
17,226
9,857
Company
2014
2013
$’000
$’000
14,683
40
14,599
8,543
Trade and other creditors
Group
Trade creditors
Accrued operating expenses
Accrued payroll costs
Deposits received
2014
$’000
2013
$’000
44,769
20,014
6,254
5,911
76,948
48,846
27,834
5,727
7,952
90,359
Company
2014
2013
$’000
$’000
10,770
7,694
1,011
2,594
22,069
12,110
14,460
1,361
3,974
31,905
19.Provisions
Provision for
warranties
(Note A)
2014
2013
$’000
$’000
Group
At beginning of year
Provided during the year
Acquisition of a subsidiary
Utilised during the year
Net exchange differences
At end of year
Company
Provision for
restoration costs
(Note B)
2014
2013
$’000
$’000
Total
2014
$’000
2013
$’000
3,635
949
381
(130)
(188)
4,647
6,824
1,975
–
(2,274)
16
6,541
5,780
2,246
381
(1,397)
(186)
6,824
Provision for
warranties
(Note A)
2014
2013
$’000
$’000
Provision for
restoration costs
(Note B)
2014
2013
$’000
$’000
2014
$’000
2013
$’000
810
685
(810)
685
2,810
13
(35)
2,788
3,620
698
(845)
3,473
3,139
1,450
(969)
3,620
2,177
1,233
–
(2,096)
5
1,319
2,145
1,297
–
(1,267)
2
2,177
Trade creditors are non-interest bearing and are normally settled on 30 to 150 day terms.
Trade and other creditors denominated in currencies other than the respective functional currencies of Group entities
at 31 December are as follows:
Note A
Provision for warranties
The Group provides one to two years of warranty to its customers on certain of its products, during which
faulty products are repaired or replaced. The amount of the provision for warranty is estimated based on
sales volumes and past experience of the level of repairs and returns. The estimation basis is reviewed on
an ongoing basis and revised where appropriate.
Note B
Provision for restoration costs
Provision for restoration costs of $5,222,000 (2013: $4,647,000) is the estimated costs of restoring
leasehold premises and retail outlets, which are capitalised and included in the cost of the fixed assets.
The provision is expected to be utilised at the end of the lease terms.
United States Dollar
Japanese Yen
2013
$’000
18,956
8
24,065
44
Company
2014
2013
$’000
$’000
7,287
8
8,387
44
2,300
540
(30)
2,810
Total
2014
$’000
839
910
(939)
810
4,647
742
–
(178)
11
5,222
At beginning of year
Provided during the year
Utilised during the year
At end of year
Group
131
Company
2014
2013
$’000
$’000
132
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
20.
Obligations under finance leases
21.
Share capital and treasury shares (cont’d)
The Group has finance leases for motor vehicles (Note 3). Leases do not contain restrictions concerning dividends,
additional debt or further leasing. The effective interest rate in the leases is 6.28% (2013: 6.30%) per annum.
b)
Future minimum lease payments under finance leases together with the present value of the net minimum lease
payments are as follows:
Group
Maturities
2014
Not later than 1 year
Later than 1 year but not later than 5 years
2013
Not later than 1 year
Later than 1 year but not later than 5 years
21.
Share capital and treasury shares
a)
2015
2018
2014
2018
Minimum
lease
payments
$’000
Interest
$’000
Present
value of
payments
$’000
21
44
65
(3)
(4)
(7)
18
40
58
17
70
87
(3)
(9)
(12)
14
61
75
Exercise of options under the OSIM Share
Option Scheme :
- Exercise price at $0.917 per share
At 31 December
2014
No. of shares
‘000
$’000
Issued and fully paid:
At 1 January
Acquired during the year
Treasury shares reissued pursuant to conversion
of convertible bonds
Treasury shares reissued pursuant to purchase
of NCIs’ shares
At 31 December
Group and Company
2014
2013
No. of shares
No. of shares
‘000
$’000
‘000
$’000
New shares issued pursuant to conversion of
convertible bonds :
- Conversion at $1.845 per share
Group and Company
(30,544)
(6,234)
(36,962)
(12,002)
30,518
36,931
–
(6,260)
–
(12,033)
2013
No. of shares
‘000
$’000
(26,445)
(4,115)
–
16
(30,544)
(29,166)
(7,815)
–
19
(36,962)
Treasury shares relate to ordinary shares of the Company that is being held by the Company.
Share capital
Issued and fully paid:
At 1 January
Treasury shares
753,264
65,036
752,863
64,539
25,888
49,423
–
–
–
–
401
497
779,152
114,459
753,264
65,036
The Company acquired 6,234,000 (2013: 4,115,000) shares in the Company through purchases on the SGX-ST
during the financial year. The total amount paid to acquire the shares was $12,002,000 (2013: $7,815,000) and
this was presented as a component within shareholders’ equity.
In 2013, the Company reissued 16,000 treasury shares pursuant to acquisition of non-controlling interests’
shares at a weighted average exercise price of $1.202 each.
During the year, the Company reissued 30,518,000 (2013: Nil) treasury shares pursuant to conversion of
convertible bonds at a weighted average price of $1.210 (2013: $Nil) each.
22.
Enterprise expansion funds
Up to the financial year ended 31 December 2002, in accordance with the relevant laws and regulations of the PRC,
subsidiaries in the PRC appropriated tax refunds from accumulated profits to enterprise expansion funds. The enterprise
expansion funds may be used to increase the registered capital of these subsidiaries, subject to approval from the PRC
authorities. The enterprise expansion funds are not available for dividend distribution to the shareholder. The Group
has resolved to discontinue such annual transfer since 2003.
The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared
by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no
par value.
133
The Company had an employee share option scheme under which options to subscribe for the Company’s
ordinary shares had been granted to employees. The share option scheme expired on 15 February 2014 and the
23,040 outstanding options had since lapsed.
134
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
23.
Capital reserves
23.
Capital reserves (cont’d)
a)
China statutory reserve fund
c)
In accordance with the relevant laws and regulations of the PRC, subsidiaries in the PRC are required to make
appropriation to a statutory reserve fund (“SRF”). At least 10% of the statutory profits after tax as determined
in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until
the cumulative total of the SRF reaches 50% of the subsidiaries’ registered capital. Subject to approval from
the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered
capital of the subsidiary. The subsidiary companies have discontinued such annual transfers as the SRF has
reached 50% of the subsidiaries’ registered capital. The SRF is not available for dividend distribution to the
shareholder.
Group
At beginning and end of year
b)
2014
$’000
2013
$’000
5,348
5,348
–
Employees share option reserve represents the equity-settled share options granted to employees. The reserve
is made up of the cumulative value of services received from employees recorded over the vesting period
commencing from the grant date of equity-settled share options, and is reduced by the expiry and exercise of
the share options.
At beginning of year
Expiry of employees share options
Exercise of employees share options
At end of year
135
At beginning of year
Treasury shares reissued pursuant to conversion of
convertible bonds
Treasury shares reissued pursuant to purchase of
non-controlling interests’ shares
At end of year
Employees share option reserve
Group
2014
$’000
2013
$’000
5
(5)
–
–
134
–
(129)
5
Company
2014
2013
$’000
$’000
5
(5)
–
–
134
–
(129)
5
This capital reserve records the excess of fair value over the weighted average exercise price of reissued
treasury shares.
Group
Company
2014
2013
$’000
$’000
–
Reissuance of treasury shares
d)
Company
2014
2013
$’000
$’000
2014
$’000
2013
$’000
853
839
853
839
21,775
–
21,775
–
–
22,628
14
853
–
22,628
14
853
Transfer of equity component of convertible bonds not converted
This capital reserve records the transfer of the equity component of convertible bonds that were not converted.
Group
At beginning of year
Transfer of equity component of convertible bonds
not converted
At end of year
Total
Company
2014
2013
$’000
$’000
2014
$’000
2013
$’000
–
–
–
–
484
484
28,460
–
–
6,206
484
484
23,112
–
–
858
136
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
24.
Fair value adjustment reserve
28.Revenue
Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial
assets until they are disposed of or impaired.
Income from sale of goods is recognised upon delivery of goods and acceptance by customers.
29.
Other income
Group and Company
2014
2013
$’000
$’000
At beginning of year
Gain on fair value changes of available-for-sale financial
assets
At end of year
341
–
–
341
341
341
25.
Revaluation reserve
The revaluation reserve records the adjustment to the fair value of a subsidiary’s identifiable net assets at the date of
acquisition attributable to previously held ownership interests.
Group
At beginning and end of year
26.
2014
$’000
2013
$’000
2,724
2,724
Discount/(premium) on purchase of non-controlling interests’ (NCIs’) shares
Group
At beginning of year
Discount arising from purchase of NCIs’ shares
At end of year
2014
$’000
2013
$’000
(14,532)
16,674
2,142
(14,544)
12
(14,532)
27.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Group’s presentation
currency.
Group
At beginning of year
Net effect of exchange differences arising from translation of financial statements of
foreign operations
Reclassification of translation loss to profit or loss (Note 6d)
At end of year
137
2014
$’000
2013
$’000
(7,156)
1,209
(32,349)
6,730
–
(5,947)
18,463
(7,156)
Group
Royalty income
Repair income
Rental income
Spare parts income
Service income
Income for extension of product warranty
Financial subsidy received from government (Note A)
Franchise fee
Foreign currency gains, net
Handling income
Gain on disposal of fixed assets
Gain on partial disposal of an associate
Gain on disposal of quoted equity shares
Fair value gain on quoted equity shares
Fair value gain on quoted debt securities
Dividend income from quoted equity shares
Dividend income from an associate
Transportation income
Gain on re-measurement of previously held interest in associate to fair value (Note 5d)
Negative goodwill upon business combination achieved in stages of a subsidiary
(Note 5d)
Negative goodwill upon increase in ownership of an associate (Note 6b)
Reversal of write-down of inventories (Note 10)
Write-back of allowance for doubtful debts – trade (net) (Note 11)
Others
2014
$’000
2013
$’000
2,563
1,248
1,197
949
462
1,736
2,352
689
–
–
2
–
107
104
1,105
380
1,209
375
–
2,356
2,345
627
724
187
1,582
2,107
936
334
103
–
250
9
145
422
260
1,359
589
22,582
–
–
3,436
82
996
18,992
4,261
15,212
–
–
371
56,761
Note A:
During the financial year ended 31 December 2011, the relevant authority in China has announced the introduction
of financial subsidy to foreign-invested enterprises operating in Waigaoqiao Free Trade Zone under the Financial
Support and Economic Development Plan (the “Plan”), which is effective from 2011 to 2015. The financial subsidy is
in a form of refund of a certain percentage of taxes retained by local government. During the financial year ended 31
December 2014, the Group met the criteria stipulated under the Plan and received financial subsidy of $2,352,000
(2013: $2,107,000).
138
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
30.
Profit before taxation
31.
The following items have been included in arriving at profit before taxation:
Interest expenses and interest income
Group
Group
2014
$’000
Operating lease expense:
- Minimum lease payments
- Contingent rents
Loss on disposal of fixed assets
Reclassification adjustment for translation loss included in profit or loss (Note 6d)
Depreciation of fixed assets (Note 3)
Write-off of fixed assets (Note 3)
Impairment loss on fixed assets (Note 3)
Depreciation of investment properties (Note 4)
Impairment loss on quoted equity shares (Note 8)
Impairment loss on unquoted debt securities
Amortisation of intangible assets (Note 7)
Write off of intangible assets (Note 7)
Fair value loss on quoted equity shares
Inventories written down (Note 10)
Allowance for doubtful debts – trade (net) (Note 11)
46,884
6,091
–
–
12,259
23
208
17
654
–
9,820
–
22
–
–
2013
$’000
54,970
4,820
58
18,463
11,382
377
17
–
863
12,498
2,360
18
683
6,603
1,157
(a) Interest expenses
- bank loan
- lease obligations
- bills payable
- convertible bonds
- others
(b)Interest income
- fixed deposits
- bank balances
- loan to an associate
- quoted debt securities (a corporate bond)
- others
32.
Employee benefits
Employee benefits expense (including executive directors):
2014
$’000
2013
$’000
37
420
112
2,886
4
3,459
69
1
482
5,163
72
5,787
2,889
1,654
27
386
41
4,997
4,064
169
647
386
78
5,344
Group
Wages, salaries, bonuses and other costs
Contributions to defined contribution plans
Pension costs
139
2014
$’000
2013
$’000
114,783
7,150
65
121,998
105,128
5,408
24
110,560
140
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
32.
Employee benefits (cont’d)
32.
Employee benefits (cont’d)
Pension benefits plan
Pension benefits plan (cont’d)
This relates to the amount of pension cost provided for by a subsidiary in Taiwan. This subsidiary has a retirement plan
covering all its regular employees. Benefits under the plan are based on the length of service and estimated base pay
at the time of retirement. The subsidiary made a monthly contribution at certain percentage of the salaries to the
pension fund, which is administered by a pension committee and deposited in its name with the Central Trust of China.
iii)
i)
ii)
Group
Based on the actuarial report which measures the pension assets and liabilities, the amount included
in the consolidated balance sheet arising from the Group’s obligation in respect of its pension benefit
plan is as follows:
Group
2014
2013
$’000
$’000
Present value of benefit obligation
Fair value of plan assets
Provision for pension benefits
3,833
(1,265)
2,568
3,249
(1,231)
2,018
Changes in the fair value of plan assets are as follows:
Fair value at beginning of year
Expected returns
Contribution by employer
Actuarial gain
Fair value at end of year
(1,231)
(4)
(5)
(25)
(1,265)
(1,211)
5
(4)
(21)
(1,231)
The plan assets, comprising cash and cash equivalents, are deposited with the Bank of Taiwan and are managed
by the government of ROC. The plan assets do not have quoted market prices in active market.
Key actuarial assumptions are as follows:
iv)
Group
Group
2014
$’000
2013
$’000
3,249
65
23
3,368
24
54
63
433
3,833
(182)
(15)
3,249
Discount rate used in determining present values
Future salary increase rate
Expected rate of return of plan assets
2014
%
2013
%
2.25
3.00
2.25
2.00
3.00
2.00
The sensitivity analysis below has been determined based on reasonably possible changes of each significant
assumption on the defined benefit obligation as of the end of the reporting period, assuming if all other
assumptions were held constant:
Group
Increase/
2014
(decrease)
$’000
Discount rates used in determining present values
Future salary increase
Expected rate of return of plan assets
141
2013
$’000
Changes in the present value of the projected benefit obligation are as follows:
Benefit obligation at beginning of year
Current service cost
Interest cost
Actuarial loss/(gain) arising from changes in demographic and financial
assumptions
Exchange differences on foreign plan
Benefit obligation at end of year
2014
$’000
+ 50 basis
points
– 50 basis
points
+ 1.0 %
– 1.0 %
+ 0.5 %
– 0.5 %
(9)
10
21
(16)
(3)
3
The pension benefit plans is funded by the subsidiary in Taiwan. The subsidiary contributes 6% of certain
employees’ pensionable salary and the remaining residual contributions are paid by those employees in Taiwan.
The Group expects to contribute $65,000 to the defined benefit pension plans in 2015. The average duration of
the defined benefit obligation at the end of the reporting period is 23 years.
142
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
33.Taxation
33.
Taxation (cont’d)
c)
a)
Major components of income tax expense
The major components of income tax expense for the years ended 31 December 2014 and 2013 are:
Group
2014
2013
Consolidated statement of comprehensive income:
$’000
$’000
Current income tax
- Current year
- Over provision in respect of previous years
Deferred tax
- Movement in temporary differences
- Under provision in respect of previous years
Withholding tax
Income tax expenses recognised in profit or loss
b)
28,612
(2,066)
(4,272)
132
2,725
30,100
674
172
166
27,558
Reconciliation between tax expense and accounting profit 1
A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax
rate for the years ended 31 December 2014 and 2013 is as follows:
Group
2014
2013
$’000
$’000
Accounting profit before income tax
Tax at the domestic rates applicable to profits in the countries where the
Group operates
Adjustments:
Permanent differences/expenses not deductible for tax purpose
Income not subject to taxation
Difference between corporate tax rate and Global Trader Programme
concessionary tax rate
Effect of change in tax rates
Over provision in respect of previous years
Deferred tax assets not recognised
Effect of partial tax exemption and tax relief
Utilisation of tax losses/unabsorbed capital allowances from previous years
Deferred tax on undistributed earnings of overseas subsidiaries
Reversal of deferred tax upon distribution of earnings of overseas subsidiaries
Share of results of associates
Withholding tax
Others
Income tax expense recognised in profit or loss
1
143
31,700
(185)
132,305
129,153
26,631
24,870
1,106
(1,262)
3,336
(2,458)
–
–
(53)
1,635
(448)
(13)
–
(481)
(166)
2,725
426
30,100
(2,449)
(423)
(1,894)
3,432
(403)
–
3,880
–
(598)
166
99
27,558
Deferred tax assets and liabilities as at 31 December relate to the following:
Group
Consolidated
statement of
Consolidated
comprehensive
balance sheet
income
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Deferred tax liabilities
Excess of net carrying value over tax
written down value of fixed assets (1,077)
(1,049)
(28)
193
Fair value adjustments on
acquisition of subsidiary
(27,505)
(29,577)
2,072
–
Undistributed earnings of overseas
subsidiaries
(4,053)
(6,450)
2,397
(1,638)
Interest accrued on convertible
bonds due 2019
(486)
–
60
–
Net deferred tax liabilities
(33,121)
(37,076)
Deferred tax assets
Excess of tax written down value
over net carrying value of fixed
assets
Provisions
Unutilised tax losses
Unrealised profits on sale of
inventories to related companies
Net deferred tax assets
1,142
1,037
–
1,550
1,128
–
(408)
(91)
–
2,477
4,656
2,339
5,017
138
Deferred income tax income/
(expense)
d)
4,140
832
381
(1,055)
441
Company
Balance sheet
2014
2013
$’000
$’000
(122)
(38)
–
–
–
–
(486)
(608)
–
(38)
–
–
–
–
–
–
–
–
–
–
(846)
Unrecognised tax losses and unabsorbed capital allowance
The Group has tax losses of approximately $78,055,000 (2013: $74,448,000) that are available for offset
against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is
recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the
tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which
the companies operate.
The reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
144
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
33.
Taxation (cont’d)
34.
e)
Global Trader Programme
Number of shares
‘000
‘000
The Company was awarded the Global Trader Programme (“GTP”) Incentive status by the Economic
Development Board (“EDB”) on 3 January 2014. The commencement date was 1 January 2014 and was for a
period of 5 years. The qualifying income from GTP activities during the period enjoyed a concessionary tax rate,
as stipulated in the EDB’s offer letter.
Weighted average number of ordinary shares for basic earnings per share computation* 761,968
Effects of dilution:
- share options
2
- convertible bonds
34,271
Weighted average number of ordinary shares adjusted for the effect of dilution
796,241
As at 31 December 2014, the Company did not fulfil one of the criteria under the EDB’s offer letter. Accordingly,
the Company has accounted for its provision for tax at the statutory tax rate.
Tax consequences of proposed dividends
There are no income tax consequences (2013: $Nil) attached to the dividends to the shareholders proposed by
the Company but not recognised as a liability in the financial statements (Note 35).
35.Dividends
f)
145
Earnings per share (cont’d)
34.
Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to ordinary equity
holders of the Company by the weighted average number of ordinary shares (excluding treasury shares) outstanding
during the year.
*
Group and Company
2014
2013
$’000
$’000
Declared and paid during the year
Dividends on ordinary shares:
- Final exempt (one-tier) dividend for 2013: 2.00 cents (2012: 1.00 cent) per share
- Special dividend for 2013: Nil cent (2012: 1.00 cent) per share
- Interim exempt (one-tier) dividend for 2014: 3.00 cents (2013: 3.00 cents) per share
Diluted earnings per share amounts are calculated by dividing profit for the year, net of tax and adding back the
interest expense on convertible bonds, attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares (excluding treasury shares) outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares.
The following table reflects the profit and share data used in the computation of basic and diluted earnings per share
for the years ended 31 December:
Group
2014
2013
$’000
$’000
Total dividends declared during the year
Profit for the year attributable to ordinary equity holders of the Company used in the
computation of basic earnings per share
Add back: Interest expense on convertible bonds
Profit for the year attributable to ordinary equity holders of the Company used in the
computation of diluted earnings per share
Proposed but not recognised as liability as at 31 December
Dividends on ordinary shares, subject to shareholders’ approval at Annual General
Meeting:
- Final exempt (one-tier) dividend for 2014: 2.00 cents (2013: 2.00 cents) per share
101,575
5,163
105,079
106,738
239
61,856
786,103
The weighted average number of shares takes into account the weighted average effect of changes in treasury
shares transactions during the year.
102,193
2,886
724,008
Declared and payable as at 31 December
Dividends on ordinary shares:
- Interim exempt (one-tier) dividend for 2014: 1.00 cent (2013: 1.00 cent) per share
14,878
–
23,374
38,252
7,246
7,245
21,694
36,185
7,744
7,744
45,996
7,227
7,227
43,412
15,488
15,488
14,454
14,454
146
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
36.
Related party disclosures
36.
Related party disclosures (cont’d)
a)
Sale and purchase of goods and services
b)
In addition to those related party information disclosed elsewhere in the financial statements, the following
significant transactions between the Group and related parties took place during the year on terms agreed
between the parties:
Director’s interests in an employee share option plan
Group
Sales of finished goods to:
-Associates
- Joint venture
- Related parties
Purchases of finished goods from an associate
b)
2014
$’000
2013
$’000
2,439
–
1,014
81,239
1,574
17,517
1,034
117,481
At 1 January 2014 and 31 December 2014, the following director held options to purchase ordinary shares of
the Company under the OSIM Share Option Scheme as follows:
At 1
At 31
January
December
Exercise
2014
2014
Price
Expiry Date
$
Options to subscribe for ordinary shares
Richard Leow
40
–
0.917
15.02.2014
No share options were granted to the directors during the financial year. The OSIM Share Option Scheme
expired on 15 February 2014 and the share options lapsed on this date.
37.
Compensation of key management personnel
Compensation of key management personnel (cont’d)
Audit and non-audit fees
Group
Group
Short-term employee benefits
Central Provident Fund contributions
Directors’ fees
Total compensation paid to key management personnel
Comprise amounts paid to:
- Directors of the Company
- Other key management personnel
2014
$’000
2013
$’000
7,521
80
170
7,771
12,072
98
170
12,340
6,947
824
7,771
11,087
1,253
12,340
The remuneration of key management personnel are determined by the remuneration committee having
regard to the performance of individuals and market trends.
Audit fees paid to:
- Auditors of the Company
- Other auditors
Non-audit fees paid to:
- Auditors of the Company
- Other auditors
38.
2014
$’000
2013
$’000
314
166
302
162
208
25
87
29
Operating lease commitments
The Group and the Company have lease commitments with respect to the rental of shops and office premises. The
leases have varying terms, escalation clauses and renewal rights. The lease commitments include commitments for
basic operating lease payments, as well as commitments for additional contingent rental payable when turnover of
certain retail outlets exceeds pre-determined levels. Lease terms do not contain restrictions on the Group’s activities
concerning dividends, additional debt or further leasing.
Future minimum lease payments payable under non-cancellable operating leases as at 31 December are as follows:
Group
Company
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Not later than 1 year
45,520
36,568
8,211
9,519
Later than 1 year but not later than 5 years
52,354
49,509
16,224
20,433
Later than 5 years
11,383
10,458
7,786
7,786
109,257
96,535
32,221
37,738
147
148
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
39.
Segment information
39.
For management purposes, the Group is organised into business units based on their sales channels, and has two
reportable operating segments as follows:
i) Retail:
ii)Distribution:
Outlets and counters operated by the Group in selected shopping centres and departmental stores
where the products are sold directly to end user customers.
Products distributed by the Group in overseas markets.
The operating segments are formed by aggregating across the Group’s three product brands, namely, OSIM, ONI and
TWG Tea.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating
segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss
which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements.
Group financing and income taxes are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments took place at terms agreed between the parties during the financial year.
Segment information (cont’d)
Retail
2014
2013
$’000
$’000
Revenue:
Sales to external
customers
Inter-segment sales
Total revenue
Results:
Interest income
Dividend income
Depreciation and
amortisation
Fair value (gain)/
loss on short-term
investments, net
Share of profits of
associates
Impairment of nonfinancial assets
Other non-cash
expenses
Segment profit
Adjustments
2014
2013
$’000
$’000
Per consolidated
financial statements
2014
2013
$’000
$’000
622,711
–
622,711
590,489
–
590,489
68,419
158,112
226,531
57,127
156,275
213,402
–
–
–
–
4,997
91,600
5,344
14,119
14,298
11,663
7,781
2,079
–
–
–
–
–
–
977
2,919
–
–
977
2,919
208
17
–
–
–
–
208
17
1,993
91,003
7,949
100,758
5
41,945
2,353
28,091
32,507
304
B 2,652
C 132,305
42,809
129,153
–
18,411
18,454
–
–
18,411
18,454
67,596
364,892
71,182
1,249
409,349
58,637
116,478
295,514
76,363
–
19,920
236,166
–
19,544
188,481
D 24,216
E 854,029
F 362,089
184,074
679,950
336,026
Assets:
Investments in
associates and a joint
venture
–
Additions to non-current
assets
22,967
Segment assets
424,760
Segment liabilities:
67,286
149
Distribution
2014
2013
$’000
$’000
–
–
691,130
(158,112) (156,275) A
–
(158,112) (156,275)
691,130
–
(91,220)
17
(1,187)
654
(643)
–
(13,859)
–
116
647,616
–
647,616
4,997
380
5,344
260
22,096
13,742
(1,187)
116
150
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
39.
Segment information (cont’d)
39.
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
A
Inter-segment revenues are eliminated on consolidation.
B
Other non-cash expenses consist of write-off of fixed assets and intangible assets, provisions, and impairment
of financial assets as presented in the respective notes to the financial statements.
C
The following items are (deducted from)/added to segment profit to arrive at “profit before taxation” presented
in the consolidated statement of comprehensive income:
Group
2014
2013
$’000
$’000
Share of profits of associates
977
2,919
Profit from inter-segment sales
(1,620)
(2,615)
(643)
304
D
F
Revenue and non-current assets information based on the geographical location of customers and assets respectively
are as follows:
America/Africa/
Europe/Middle
North Asia
South Asia
East/Oceania
Total
2014
2013
2014
2013
2014
2013
2014
2013
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Turnover
46,022
44,416 691,130 647,616
Sales to external customers 365,801 353,114 279,307 250,0861
8
– 212,017 215,067
Non-current assets
24,465
14,416 187,544 200,6512
Group
Fixed assets
Investment properties
Intangible assets
E
151
2013
$’000
11,580
–
172,494
184,074
The following items are added to segment assets to arrive at total assets reported in the consolidated
balance sheet:
Group
2014
2013
$’000
$’000
Long-term investments
15,264
14,527
Deferred tax assets
4,656
5,017
19,920
19,544
The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated
balance sheet:
Group
2014
2013
$’000
$’000
Deferred tax liabilities
33,121
37,076
Provision for income tax
24,416
17,017
Loans and borrowings
168,317
125,143
Dividend payable
7,744
7,227
Provision for pension benefits
2,568
2,018
236,166
188,481
Geographical information
Additions to non-current assets consist of additions to:
2014
$’000
18,680
4,940
596
24,416
Segment information (cont’d)
Non-current assets information presented above consist of fixed assets and intangible assets.
Included are revenues from external customers in Singapore of $201,996,000 (2013: $190,820,000).
Included are non-current assets located in Singapore of $182,957,000 (2013: $197,113,000).
1
2
152
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
40.
Financial risk management objectives and policies
40.
The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments.
The key financial risks include interest rate risk, liquidity risk, foreign currency risk, credit risk and market price risk. The
board of directors reviews and agrees policies and procedures for management of these risks.
b)
Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities
It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial
instruments shall be undertaken.
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the
end of the reporting period based on contractual undiscounted payments.
The following sections provide details regarding the Group’s and Company’s exposure to the above mentioned
financial risks and the objectives, policies and processes for the management of these risks.
There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and
measures the risks.
1 year
or less
2014
$’000
1 to
5 years
Total
–
–
42,637
7,218
2,793
28,838
276,332
151,234
509,052
15,264
10,172
–
–
–
–
–
–
25,436
76,948
21,085
7,744
21
17,152
–
–
122,950
386,102
–
–
–
44
–
180,458
–
180,502
(155,066)
a)
b)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s financial
instruments such as bills payable to banks (unsecured), convertible bonds and finance lease arrangement are
not subject to interest rate risk as they bear fixed interest rate. As such, the Group’s interest rate risk is deemed
not significant by management.
Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations
due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk may arise due to mismatches
of financial assets and liabilities.
In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash
and cash equivalents and banking facilities deemed adequate by management to finance the Group’s
operations and mitigate the effect of fluctuations in cash flows.
The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
Financial risk management objectives and policies (cont’d)
Group
Financial assets
Long-term investments
Long-term receivables
Trade debtors
Other debtors and deposits
Due from associates
Short-term investments
Fixed deposits
Cash and bank balances
Financial liabilities
Trade and other creditors
Due to associates
Dividend payable
Finance leases
Bills payable to banks (unsecured)
Liability portion of convertible bonds
Bank loan
Net financial assets/(liabilities)
153
1 year
or less
2013
$’000
1 to
5 years
Total
15,264
10,172
42,637
7,218
2,793
28,838
276,332
151,234
534,488
–
–
42,276
7,834
861
23,537
149,740
117,607
341,855
14,527
7,480
–
–
–
–
–
–
22,007
14,527
7,480
42,276
7,834
861
23,537
149,740
117,607
363,862
76,948
21,085
7,744
65
17,152
180,458
–
303,452
231,036
90,359
16,406
7,227
17
29,493
123,300
6,030
272,832
69,023
–
–
–
70
–
–
–
70
21,937
90,359
16,406
7,227
87
29,493
123,300
6,030
272,902
90,960
154
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
40.
Financial risk management objectives and policies (cont’d)
40.
Financial risk management objectives and policies (cont’d)
b)
c)
Liquidity risk (cont’d)
1 year
or less
Company
Financial assets
Long-term investments
Long-term receivables
Trade debtors
Other debtors and deposits
Due from associates
Due from subsidiaries
Short-term investments
Fixed deposits
Cash and bank balances
Financial liabilities
Trade and other creditors
Due to associates
Due to subsidiaries
Dividend payable
Bills payable to banks (unsecured)
Liability portion of convertible bonds
Net financial assets/(liabilities)
155
–
–
4,276
2,037
2,793
10,112
28,838
171,729
58,977
278,762
22,069
16,686
6,559
7,744
17,152
–
70,210
208,552
2014
$’000
1 to
5 years
15,264
944
–
–
–
–
–
–
–
16,208
–
–
–
–
–
180,458
180,458
(164,250)
Total
15,264
944
4,276
2,037
2,793
10,112
28,838
171,729
58,977
294,970
22,069
16,686
6,559
7,744
17,152
180,458
250,668
44,302
1 year
or less
–
–
5,791
1,120
861
9,570
23,537
10,544
49,881
101,304
31,905
11,954
2,551
7,227
29,493
123,300
206,430
(105,126)
2013
$’000
1 to
5 years
14,527
1,184
–
–
–
–
–
–
–
15,711
–
–
–
–
–
–
–
15,711
Total
14,527
1,184
5,791
1,120
861
9,570
23,537
10,544
49,881
117,015
31,905
11,954
2,551
7,227
29,493
123,300
206,430
(89,415)
Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in a
currency other than the respective functional currencies of Group entities, primarily SGD, Renminbi (“RMB”),
Ringgit Malaysia (“RM”), New Taiwan dollars (“NTD”) and Hong Kong dollars (“HKD”). The foreign currency in
which these transactions are denominated is mainly United States dollar (“USD”).
Approximately 7% (2013: 7%) of the Group’s sales is denominated in foreign currencies while 84% (2013:
83%) of costs is denominated in the respective currencies of the Group entities. The Group’s trade receivables
and trade payable balances at the end of the reporting period have similar exposures.
The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working
capital purposes. At the end of the reporting period, such foreign currency balances are mainly in USD and RMB.
The Group uses foreign exchange contracts in managing its foreign currency risk resulting from cash flows from
anticipated transactions denominated in foreign currencies, primarily the USD. Transaction risk is calculated in
each foreign currency and includes foreign currency denominated assets and liabilities and firm and probable
purchase and sale commitments.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change
in the Group’s foreign currencies against the respective functional currencies of the Group’s entities, with all
other variables held constant.
Group
USD/SGD - strengthened 3% (2013: 3%)
- weakened 3% (2013: 3%)
RMB/SGD - strengthened 3% (2013: 3%)
- weakened 3% (2013: 3%)
RM/SGD - strengthened 3% (2013: 3%)
- weakened 3% (2013: 3%)
NTD/SGD - strengthened 3% (2013: 3%)
- weakened 3% (2013: 3%)
2014
$’000
Profit net
of tax
–394
+394
+1
–1
–
–
+3
–3
2013
$’000
Profit net
of tax
–459
+459
+254
–254
+39
–39
+69
–69
156
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
40.
Financial risk management objectives and policies (cont’d)
40.
Financial risk management objectives and policies (cont’d)
d)
d)
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. The Group’s and Company’s exposure to credit risk arises primarily from trade and other
debtors. As the nature of the Group’s and the Company’s business is in retail, the majority of outstanding trade
debtors are due from department stores and financial institutions. The risk of default is managed through the
application of credit approvals, credit limits and monitoring procedures.
Financial assets that are neither past due nor impaired
Trade and other debtors that are neither past due nor impaired are creditworthy debtors with good payment
record with the Group. Cash and cash equivalents, investment securities and derivatives that are neither past
due nor impaired are placed with or entered into with reputable financial institutions or companies with high
credit ratings and no history of default.
For other financial assets (including investment securities and cash and cash equivalents), the Group and the
Company minimise credit risk by dealing exclusively with high credit rating counterparties.
Financial assets that are either past due or impaired
There are no significant concentrations of credit risk within the Group or the Company.
Exposure to credit risk
At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is
represented by the carrying amount of each class of financial assets recognised in the balance sheets.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its
trade debtors on an ongoing basis. The credit risk concentration profile of the Group’s trade debtors at the end
of the reporting period is as follows:
Group
2014
2013
$’000
% of total
$’000
% of total
By region:
North Asia
30,380
71.3%
28,026
66.3%
South Asia
11,222
26.3%
11,838
28.0%
Others
1,035
2.4%
2,412
5.7%
42,637
100.0%
42,276
100.0%
By business segment:
Retail
37,994
89.1%
36,144
85.5%
Distribution
4,643
10.9%
6,132
14.5%
42,637
100.0%
42,276
100.0%
157
Credit risk (cont’d)
Information regarding financial assets that are either past due or impaired is disclosed in Note 11 (Trade
debtors).
e)
Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed
to equity price risk and debt price arising from its investments in quoted equity and debt instruments. These
instruments are quoted on the SGX-ST in Singapore and are classified as held for trading investments and
available-for-sale financial assets. The Group does not have exposure to commodity price risk.
The Group’s objective is to manage investment returns and equity price risk using a mix of investment grade
shares with steady dividend yield and non-investment grade shares with higher volatility.
Sensitivity analysis for equity price risk
At the end of the reporting period, if the Straits Times index (“STI”) had been 10% (2013: 10%) higher/lower
with all other variables held constant, the Group’s profit before taxation would have been $866,000 (2013:
$581,000) higher/lower, arising as a result of higher/lower fair value gains on short-term quoted investment
securities classified as held for trading, and the Group’s fair value adjustment reserve would have been $301,000
(2013: $228,000) higher/lower, arising as a result of an increase/decrease in the fair value of long-term quoted
investment securities classified as available-for-sale.
158
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
41.
41.
Fair value of assets and liabilities (cont’d)
b)
Fair value of assets and liabilities
a)
Fair value hierarchy
The Group categorises fair value measurement using a fair value hierarchy that is dependent on the valuation
inputs used as follows:
-
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can
access at the measurement date;
-
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and -
Group and Company
2013
$’000
Quoted prices Significant
in active
observable
markets for inputs other Significant
identical
than quoted unobservable
instruments
prices
inputs
(Level 1)
(Level 2)
(Level 3)
Level 3 – Unobservable inputs for the asset or liability.
Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same
level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
b)
Assets and liabilities measured at fair value
The following table shows an analysis of each class of assets and liabilities measured at fair value at the end of
the reporting period:
Group and Company
2014
$’000
Quoted prices Significant
in active
observable
markets for inputs other Significant
identical
than quoted unobservable
instruments
prices
inputs
Total
(Level 1)
(Level 2)
(Level 3)
Assets measured at fair value
Financial assets:
Held for trading investments
- Quoted equity shares
8,663
–
–
8,663
- Quoted debt securities
20,175
–
–
20,175
Available-for-sale financial assets
- Quoted equity shares
- Quoted debt securities
Financial assets as at 31 December 2014
159
3,014
12,250
44,102
–
–
–
–
–
–
Assets and liabilities measured at fair value (cont’d)
Total
Assets measured at fair value
Financial assets:
Held for trading investments
- Quoted equity shares
- Quoted debt securities
5,814
17,723
–
–
–
–
5,814
17,723
Available-for-sale financial assets
- Quoted equity shares
- Quoted debt securities
Financial assets as at 31 December 2013
2,277
12,250
38,064
–
–
–
–
–
–
2,277
12,250
38,064
Determination of fair value
Quoted equity and debt instruments: Fair value is determined by direct reference to their bid price quotations in
an active market at the end of the reporting period.
3,014
12,250
44,102
160
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
41.
Fair value of assets and liabilities (cont’d)
41.
Fair value of assets and liabilities (cont’d)
c)
c)
Assets and liabilities not carried at fair value but for which fair value is disclosed
The following table shows an analysis of the Group’s assets and liabilities not measured at fair value but for
which fair value is disclosed:
Group
2014
$’000
Quoted prices Significant
in active
observable
markets for inputs other Significant
identical
than quoted unobservable
Carrying
instruments
prices
inputs
Total
amount
(Level 1)
(Level 2)
(Level 3)
Assets:
Investment properties
–
5,054
–
5,054
5,054
Long-term receivables
–
–
9,377
9,377
10,172
Liabilities:
Liability portion of convertible
bonds
–
Quoted prices
in active
markets for
identical
instruments
(Level 1)
Liabilities:
Liability portion of convertible
bonds
161
Determination of fair value
Investment properties
The valuation of investment properties are based on comparable market transactions that consider sales of
similar properties that have been transacted in the open market.
Long-term receivables and liability portion of convertible bonds
The fair values as disclosed in the table above is estimated by discounting expected future cash flows at market
incremental lending rate for similar type of lending and borrowing arrangements at the end of the reporting
period.
d)
Fair value of financial instruments by classes that are not carried out at fair value and whose carrying
amounts are not reasonable approximation of fair value
The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value are as follows:
–
169,383
169,383
168,259
Group
2013
$’000
Assets:
Long-term receivables
Assets and liabilities not carried at fair value but for which fair value is disclosed (cont’d)
–
–
Significant
observable
inputs other Significant
than quoted unobservable
prices
inputs
(Level 2)
(Level 3)
–
–
7,106
119,637
Group
Financial assets:
Long-term receivables
Total
7,106
119,637
Carrying
amount
Financial liabilities:
Liability portion of convertible bonds
7,480
119,038
Company
Financial assets:
Long-term receivables
Financial liability:
Liability portion of convertible bonds
2014
Carrying
Estimated
amount
fair value
$’000
$’000
2013
Carrying
Estimated
amount
fair value
$’000
$’000
10,172
9,377
7,480
7,106
168,259
169,383
119,038
119,637
2014
Carrying
Estimated
amount
fair value
$’000
$’000
2013
Carrying
Estimated
amount
fair value
$’000
$’000
944
870
1,184
1,125
168,259
169,383
119,038
119,637
162
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
42.
42.
Financial instruments by category
The carrying amounts of the categories of financial instruments as at the end of the reporting period are as follows:
Group
2014
Assets
Long-term investments
Short-term investments
Long-term receivables
Trade debtors
Other debtors and deposits
Due from associates
Fixed deposits
Cash and bank balances
Total
Loans and
receivables
$’000
–
–
10,172
42,637
7,218
2,793
276,332
151,234
490,386
Availablefor-sale
$’000
Held for
trading
$’000
15,264
–
–
–
–
–
–
–
15,264
–
28,838
–
–
–
–
–
–
28,838
Liabilities at
amortised
cost
$’000
Liabilities
Obligations under finance leases
Trade and other creditors
Due to associates
Dividend payable
Liability component of convertible bonds
Bills payable to banks (unsecured)
Total
163
58
76,948
21,085
7,744
168,259
17,152
291,246
Financial instruments by category (cont’d)
Group (cont’d)
2013
Assets
Long-term investments
Short-term investments
Long-term receivables
Trade debtors
Other debtors and deposits
Due from associates
Fixed deposits
Cash and bank balances
Total
Loans and
receivables
$’000
–
–
7,480
42,276
7,834
861
149,740
117,607
325,798
Availablefor-sale
$’000
Held for
trading
$’000
14,527
–
–
–
–
–
–
–
14,527
–
23,537
–
–
–
–
–
–
23,537
Liabilities at
amortised
cost
$’000
Liabilities
Obligations under finance leases
Trade and other creditors
Due to associates
Dividend payable
Liability component of convertible bonds
Bills payable to banks (unsecured)
Bank loan
Total
75
90,359
16,406
7,227
119,038
29,493
6,030
268,628
164
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
42.
42.
Financial instruments by category (cont’d)
Company
2014
Assets
Long-term investments
Short-term investments
Long-term receivables
Trade debtors
Other debtors and deposits
Due from associates
Due from subsidiaries
Fixed deposits
Cash and bank balances
Total
Loans and
receivables
$’000
–
–
944
4,276
2,037
2,793
10,112
171,729
58,977
250,868
Availablefor-sale
$’000
Held for
trading
$’000
15,264
–
–
–
–
–
–
–
–
15,264
–
28,838
–
–
–
–
–
–
–
28,838
Financial instruments by category (cont’d)
Company (cont’d)
2013
Assets
Long-term investments
Short-term investments
Long-term receivables
Trade debtors
Other debtors and deposits (excluding income tax recoverable)
Due from associates
Due from subsidiaries
Fixed deposits
Cash and bank balances
Total
Liabilities at
amortised
cost
$’000
Liabilities
Trade and other creditors
Due to associates
Due to subsidiaries
Dividend payable
Liability component of convertible bonds
Bills payable to banks (unsecured)
Total
165
22,069
16,686
6,559
7,744
168,259
17,152
238,469
Loans and
receivables
$’000
Availablefor-sale
$’000
Held for
trading
$’000
–
–
1,184
5,791
1,120
861
9,570
10,544
49,881
78,951
14,527
–
–
–
–
–
–
–
–
14,527
–
23,537
–
–
–
–
–
–
–
23,537
Liabilities at
amortised
cost
$’000
Liabilities
Trade and other creditors
Due to associates
Due to subsidiaries
Dividend payable
Liability component of convertible bonds
Bills payable to banks (unsecured)
Total
31,905
11,954
2,551
7,227
119,038
29,493
202,168
166
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
NOTES TO THE FINANCIAL STATEMENTS – 31 December 2014 (cont’d)
43.
Capital management
44.
Contingent liabilities (cont’d)
The objective of the Group’s capital management is to ensure that it maintains healthy ratios in order to support its
business operation and maximise shareholders value.
b)
The Group manages its capital structure and makes adjustment to it, as deemed appropriate by management. In order
to maintain or adjust the capital structure, the Group may issue new shares, declared dividend or any other means as
deemed appropriate by management. No changes were made in the objectives, policies or processes during the years
ended 31 December 2014 and 2013.
As disclosed in Note 23(a), the subsidiaries of the Group in the PRC are required by the Foreign Enterprise Law of the
PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by
the relevant PRC authorities. This externally imposed capital requirement has been complied with by the subsidiaries
for the financial years ended 31 December 2014 and 2013.
The First Action
On 17 February 2014, the Company, Paris Investment, TWG Tea, and certain directors of TWG Tea were served
with a Writ of Summons issued by The Wellness Group Pte. Ltd. (“The Wellness Group”) and Mr. Manoj Mohan
Murjani (“Mr. Manoj”) (“The First Action”).
The claim in the Writ of Summons relates to the subscription of the rights shares by the Company and Paris
Investment of the shares in TWG Tea and other disputes. The Wellness Group and Mr. Manoj have claimed
that the issuance of shares was an act of minority oppression and is in breach of the terms of the Shareholders
Agreement dated 18 March 2011 entered into among the Company, Paris Investment, The Wellness Group,
and TWG Tea. The Wellness Group and Mr. Manoj seek, among other things, Orders that the rights issue be
set aside, that the Company transfer shares in TWG Tea back to The Wellness Group in order for it to regain its
shareholding in TWG Tea, an Order that the Company and Paris sell their shares in TWG Tea to The Wellness
Group at a fair value to be determined by a valuer, and also for damages to be assessed.
The Group regards net debt to include all loans and borrowings less cash and bank balances (including fixed deposits)
and capital to include all equities attributable to the equity holders of the Company, less the above-mentioned
statutory reserve fund.
The Second Action
Group
Liability component of convertible bonds
Obligations under finance leases
Bills payable to banks (unsecured)
Bank loan
Less: - Cash and bank balances
Net cash
Equity attributable to the equity holders of the Company
Less: - China statutory reserve fund (Note 23a)
Total capital
2014
$’000
2013
$’000
(168,259)
(58)
(17,152)
–
(185,469)
427,566
242,097
438,373
(5,348)
433,025
(119,038)
(75)
(29,493)
(6,030)
(154,636)
267,347
112,711
271,227
(5,348)
265,879
The Group is currently in a net cash position. The Group will continue to be guided by prudent financial policies
of which gearing is an important aspect.
44.
Contingent liabilities
a)
167
Claim from the non-controlling interest of TWG Tea
Claim from a company incorporated in Hong Kong
On 23 May 2014, The Wellness Group and Mr. Manoj issued a Writ of Summons against the Company and all of
its directors (“the Second Action”). It is claimed in the Second Action that by the announcement on the SGX-ST
dated 17 February 2014, the Company and all of its directors had defamed The Wellness Group and Mr. Manoj.
The Wellness Group and Mr. Manoj seek damages and also an injunction to restrain the publication or other
dissemination of the words that they say are defamatory of them.
The claims that have been made are denied. Defences have been filed. The Board believes that the First and
Second Actions are unmeritorious and groundless. Accordingly, no provision for any liability has been made in
these financial statements.
The Company and the other Defendants in the First Action have also filed a Counterclaim in the First Action for
defamation against The Wellness Group and Mr. Manoj. The Company seeks, among other things, damages and
also an injunction to restrain The Wellness Group and Mr. Manoj from publishing or otherwise disseminating the
words which the Company and the other Defendants have said are defamatory of them.
The two actions have been fixed for trial in the High Court in August 2015.
45.
Authorisation of financial statements for issue
The financial statements for the year ended 31 December 2014 were authorised for issue in accordance with a
resolution of the directors on 4 March 2015.
On 23 December 2011, members of a company incorporated in Hong Kong (“Tsit Wing”) had brought a claim
against a subsidiary of the Group for infringement of its registered trademarks and alleged passing off in Hong
Kong. Tsit Wing claimed for an injunction and damages to be assessed or an account of profits, in respect
of the alleged trademark infringement and alleged passing off claim. The management had filed its appeal
against the injunction and damages to be assessed or an account of profits, on the grounds that there was no
confusion between the marks of TWG Tea and the trademarks of Tsit Wing. During the year, this appeal was not
successful. Damages or an account of profits has not been assessed and the management is also applying for a
final appeal to the Hong Kong Court of Final Appeal. Accordingly, no provision for any liability has been made
in these financial statements.
168
MAJOR PROPERTIES
Description
Location
Residential condominium
Unit 8C, 1523-2
Dong Fang Road, Pudong
New Area, Shanghai, PRC
Strata units in commercial
building
USE OF PROCEEDS
Area (sq m)
Unexpired term
Tenure (years) of lease (years)
165
63
48
11F, 11F-1, 11F-2 and 11F-3
No.176, Jian Yi Road,
Zhonghe Dist, New Taipei City 235,
Taiwan
1,572
Freehold
NA
Strata units in commercial
building
7F-1, No. 268, Liancheng Road,
Zhonghe Dist, New Taipei City 235,
Taiwan
187.69
Freehold
NA
Strata units in commercial
building
2F-1, 2F-2 and 2F-3
No.268, Liancheng Road,
Zhonghe Dist, New Taipei City 235,
Taiwan
758.29
Freehold
NA
Strata units in commercial
building
4F, 4F-3
No.176, Jian Yi Road,
Zhonghe Dist, New Taipei City 235,
Taiwan
811.58
Freehold
NA
Land (1)
Zhong He District,
New Taipei City 235, Taiwan
779/100,000
share of
30,072.47
Freehold
NA
Land (2)
Zhong He District,
New Taipei City 235, Taiwan
93/100,000
share of
30,072.47
Freehold
NA
Land (3)
Zhong He District,
New Taipei City 235, Taiwan
376/100,000
share of
30,072.47
Freehold
NA
Land (4)
Zhong He District,
New Taipei City 235, Taiwan
402/100,000
share of
30,072.47
Freehold
NA
The proceeds of S$167,970,000 (net) from the issue of Convertible Bonds due 2019 have been utilised as follows:
Net proceeds of the Convertible Bonds
General Working Capital:
Operating expenditure
Enhancement of well-being and lifestyle business
Balance of proceed as at 31 December 2014
$’000
167,970
(50,391)
(2,423)
115,156
Note:(1) This is the land on which the building at 11F, 11F-1, 11F-2 and 11F-3, No. 176, Jian Yi Road, was constructed on.
(2) This is the land on which the building at 7F-1, No. 268, Liancheng Road, was constructed on.
(3) This is the land on which the building at 2F-1, 2F-2 and 2F-3, No. 268, Liancheng Road, was constructed on.
(4) This is the land on which the building at 4F and 4F-3, No. 176, Jian Yi Road, was constructed on.
169
170
SHAREHOLDINGS STATISTICS
SHAREHOLDINGS STATISTICS (cont’d)
as at 3 March 2015
as at 3 March 2015
Issued and Fully Paid-Up Capital (including Treasury Shares):
Issued and Fully Paid-Up Capital (excluding Treasury Shares):
Number of Issued Shares (excluding Treasury Shares):
Number/Percentage of Treasury Shares:
Class Of Shares:
Voting Rights (excluding Treasury Shares):
SIZE OF
SHAREHOLDINGS
NO. OF
SHAREHOLDERS
779,151,529
772,682,956
772,682,956
6,468,573 (0.87%)
Ordinary shares
One Vote Per Share
%
NO. OF SHARES
%
1
–
999
71
1.65
2,755
0.00
100
–
1,000
626
14.58
454,396
0.06
1,001
–
10,000
2,626
61.14
12,827,235
1.66
10,001
–
1,000,000
945
22.00
41,117,800
5.32
27
0.63
718,280,770
92.96
4,295
100.00
772,682,956
100.00
1,000,001 & ABOVE
TOTAL
TOP TWENTY SHAREHOLDERS
RAFFLES NOMINEES (PTE) LTD
HSBC (SINGAPORE) NOMINEES PTE LTD
CITIBANK NOMINEES SINGAPORE PTE LTD
DBS NOMINEES PTE LTD
HONG LEONG FINANCE NOMINEES PTE LTD
RON SIM CHYE HOCK
DBSN SERVICES PTE LTD
DB NOMINEES (S) PTE LTD
UNITED OVERSEAS BANK NOMINEES PTE LTD
MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD
TEO SWAY HEONG
CIMB SECURITIES (SINGAPORE) PTE LTD
HSIEH WEN-HSU OR YANG PAO-FENG
YANG CHYAN YEOW AYLWIN
TEO CHAY LEE
CHOU JEN CHUNG
LEOW LIAN SOON
PHILLIP SECURITIES PTE LTD
UOB KAY HIAN PTE LTD
DE ROZA ANGELINE PAMELA
TOTAL
SUBSTANTIAL SHAREHOLDERS
RON SIM
171
DIRECT INTEREST
335,557,335
NO. OF SHARES
180,253,368
180,195,829
160,800,655
52,988,612
26,260,000
23,968,904
22,457,668
11,816,865
9,610,654
6,754,406
6,492,020
4,581,270
3,663,560
2,997,000
2,863,162
2,819,000
2,804,614
2,596,252
2,408,300
2,180,000
%
23.33
23.32
20.81
6.86
3.40
3.10
2.91
1.53
1.25
0.87
0.84
0.59
0.47
0.39
0.37
0.36
0.36
0.34
0.31
0.28
708,512,139
91.69
DEEMED INTEREST
154,411,199
%
63.41
172
NOTICE OF ANNUAL GENERAL MEETING
Notice of Annual General Meeting 174
Appendix l
179
NOTICE IS HEREBY GIVEN that the Annual General Meeting of OSIM International Ltd (“the Company”) will be held at 65
Ubi Avenue 1, OSIM Headquarters, Singapore 408939 on Tuesday, 31 March 2015 at 2.30 p.m. for the following purposes:
Appendix ll
189
AS ORDINARY BUSINESS
Proxy Form
207
1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December
2014 together with the Auditors’ Report thereon. (Resolution 1)
2. To declare a final dividend of 2.00 cents per ordinary share for the year ended 31 December 2014.
(Resolution 2)
3. To re-elect the following Directors who retire pursuant to Article 92 of the Company’s Articles of Association and being
eligible, offer themselves for re-election:
Mr Charlie Teo (Executive Director)
(Resolution 3)
Mr Peter Lee (Executive Director)
(Resolution 4)
4. To approve the payment of Directors’ fees of S$170,000 for the year ended 31 December 2014 (2013: S$170,000).
(Resolution 5)
5. To re-appoint Messrs Ernst & Young as the Company’s Auditors and to authorise the Directors to fix their remuneration.
(Resolution 6)
6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
7. Authority to issue shares up to 50 per centum (50%) of the issued shares in the capital of the Company
173
That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange
Securities Trading Limited, the Directors of the Company be authorised and empowered to:
(a)
(i)
issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
(ii)
make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares
to be issued, including but not limited to the creation and issue of (as well as adjustments to) options,
warrants, debentures or other instruments convertible into shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the
Company may in their absolute discretion deem fit; and
(b)
(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in
pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force,
174
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
provided that:
(1)
the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted
pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed fifty per
centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as
calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments
to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed twenty per
centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as
calculated in accordance with sub-paragraph (2) below);
(c)
authority be given to the Directors of the Company to complete and do all such acts and things (including
executing all such documents as may be required) as they may consider necessary, desirable or expedient to give
effect to the Shareholders’ Mandate as they may think fit. [See Explanatory Note (ii)]
(Resolution 8)
9. Renewal of Share Buy-back Mandate
That:
(1) for the purposes of Sections 76C and 76E of the Companies Act, Cap 50 of Singapore (the “Companies Act”), the
exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued
ordinary shares in the capital of the Company (the “Shares”) not exceeding in aggregate the Maximum Limit
(as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the
Maximum Price (as hereafter defined), whether by way of:
(a) market purchase(s) on the SGX-ST; and/or
(b) and otherwise in accordance with all other laws and regulations and rules of the SGX-ST as may for the time being be
applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);
(2)
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the
Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from
time to time during the period commencing from the date of the passing of this Resolution and expiring on
the earlier of:
(a) the date on which the next Annual General Meeting of the Company is held; and
(b) 8. Renewal of Shareholders’ Mandate for Interested Person Transactions
(3) In this Resolution:
“Average Closing Price” means the average of the last dealt prices of a Share for the five consecutive trading days
on which the Shares are transacted on the SGX-ST immediately preceding the date of market purchase by the
Company or, as the case may be, the date of the making of the offer pursuant to the off-market purchase, and
deemed to be adjusted in accordance with the listing rules of the SGX-ST for any corporate action which occurs
after the relevant five days period;
“date of the making of the offer” means the date on which the Company announces its intention to make
an offer for the purchase or acquisition of Shares from holders of Shares, stating therein the purchase price
(which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the
relevant terms of the equal access scheme for effecting the off-market purchase;
“Maximum Limit” means that number of issued Shares representing 10% of the total number of issued Shares
as at the date of the passing of this Resolution (excluding any Shares which are held as treasury shares as at that
date); and
(2)
(subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the
purpose of determining the aggregate number of shares and Instruments that may be issued under sub-paragraph
(1) above, the percentage of issued shares and Instruments shall be based on the total number of issued shares
(excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after
adjusting for:
(a)
(b)
(3)
new shares arising from the conversion or exercise of the Instruments or any convertible securities that have
been issued pursuant to any previous shareholder approval and which are outstanding as at the date of the
passing of this Resolution;
any subsequent bonus issue, consolidation or subdivision of shares;
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing
Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance
has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the
Company; and
unless revoked or varied by the Company in a general meeting, such authority shall continue in force (i) until the
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued
in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance of such shares in
accordance with the terms of the Instruments. [See Explanatory Note (i)]
(Resolution 7)
(4)
That for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited:
(a)
(b)
175
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
approval be given for the renewal of the mandate for the Company, its subsidiaries and target associated
companies or any of them to enter into any of the transactions falling within the types of Interested Person
Transactions as set out in Appendix I to the Annual Report dated 4 March 2015 ( “Appendix I”) with any
party who is of the class of Interested Persons described in Appendix I, provided that such transactions are
carried out in the normal course of business, at arm’s length and on commercial terms and in accordance
with the guidelines of the Company for Interested Person Transactions as set out in Appendix I (the
“Shareholders’ Mandate”);
the Shareholders’ Mandate shall, unless revoked or varied by the Company in a general meeting, continue in
force until the conclusion of the next Annual General Meeting of the Company or the date by which the next
Annual General Meeting of the Company is required by law to be held, whichever is earlier; and
off-market purchase(s) (if effected otherwise than on the SGX-ST) in accordance with any equal access
scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall
satisfy all the conditions prescribed by the Companies Act, the date by which the next Annual General Meeting of the Company is required by law to be held;
176
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
“Maximum Price”, in relation to a Share to be purchased or acquired, means the purchase price (excluding
brokerage, commission, applicable goods and services tax and other related expenses) which shall not exceed:
(a) in the case of a market purchase of a Share, 105% of the Average Closing Price of the Shares; and
(b) in the case of an off-market purchase of a Share pursuant to an equal access scheme, 110% of the Average
Closing Price of the Shares; and
(4) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts
and things (including executing such documents as may be required) as they and/or he may consider expedient or
necessary to give effect to the transactions contemplated and/or authorised by this Resolution. [See Explanatory
Note (iii)]
(Resolution 9)
By Order of the Board
Peter Lee
Company Secretary
Singapore, 16 March 2015
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
Explanatory Notes:
(i) The Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company from the date of this
Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General
Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general
meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares
pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding
treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to
existing shareholders of the Company.
For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of
the Company will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of
the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or
exercise of the Instruments or any convertible securities, subsisting at the time when this Ordinary Resolution is passed
and any subsequent bonus issue, consolidation or subdivision of shares.
(ii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will authorise the Interested Person Transactions as
described in Appendix I and recurring in the year and will empower the Directors of the Company to do all acts necessary
to give effect to the Shareholders’ Mandate. This authority will, unless previously revoked or varied by the Company in a
general meeting, expire at the conclusion of the next Annual General Meeting of the Company or the date by which the
next Annual General Meeting of the Company is required by law to be held whichever is the earlier.
(iii)The Ordinary Resolution 9 proposed in item 9 above, if passed, will authorise the Directors of the Company from the date
of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General
Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general
meeting, whichever is the earlier, to purchase up to 10% of the total number of issued ordinary shares in the capital of the
Company.
Notes:
1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to
attend and vote in his/her stead. A proxy need not be a Member of the Company.
2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 65 Ubi Avenue 1, OSIM
Headquarters, Singapore 408939 not less than forty-eight (48) hours before the time appointed for holding the Meeting.
177
178
APPENDIX I (cont’d)
APPENDIX I
DEFINITIONS
In this appendix (“Appendix I”), the following definitions apply throughout unless otherwise stated:
OSIM INTERNATIONAL LTD
(Incorporated in the Republic of Singapore with Limited Liability)
(Company Registration No. 198304191N)
APPENDIX I IN RELATION TO DETAILS OF THE
PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE FOR
INTERESTED PERSON TRANSACTIONS
4 March 2015
This Appendix is circulated to Shareholders of OSIM International Ltd (the “Company”) together with the Company’s Annual
Report. Its purpose is to provide Shareholders with the relevant information relating to, and to seek Shareholders’ approval
for the renewal of the Shareholders’ mandate to be tabled at the Annual General meeting to be held on 31 March 2015 at
2.30 p.m. at 65 Ubi Avenue 1 OSIM Headquarters Singapore 408939.
The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. The Singapore Exchange
Securities Trading Limited takes no responsibility for the correctness of any of the statements made, reports contained/
referred to, or opinions expressed in this Appendix.
179
“AGM”
: the annual general meeting of the Company to be convened on 31 March 2015,
notice of which is set out in the Annual Report 2014 despatched together with this
Appendix I.
“Audit Committee”
: the audit committee of the Company as at the date of this Appendix, comprising
of Mr Tan Soo Nan (Chairman), Mr Colin Low and Mr Sin Boon Ann.
“CDP”
: the Central Depository (Pte) Limited
“Companies Act”
: the Companies Act, Chapter 50, of Singapore as amended by the Companies
(Amendment) Act
“Company” or “OSIM”
: OSIM International Ltd
“Directors”
: the Directors of the Company for the time being.
“Group”
: the Group refers to the Company, its subsidiaries, joint ventures and associated
companies
“Interested Persons Transactions”
: defined in paragraph 3.2 of this Appendix
“Latest Practicable Date”
: the latest practicable date prior to the printing of this Appendix, being
3 March 2015
“Listing Manual”
: the listing manual of the SGX-ST, which became effective on July 1, 2002, including
amendments made thereto up to the date of this Appendix.
“Notice of AGM”
: the notice of AGM as set out on page 174 of this Annual Report
“NTA”
: net tangible assets
“SGX-ST” : the Singapore Exchange Securities Trading Limited
“Shares”
: ordinary shares in the capital of the Company.
“Shareholders”
: registered holders of Shares, except that where the registered holder is CDP, the
term “Shareholders” shall, where the context admits, mean the Depositors whose
Securities Account are credited with Shares.
“Shareholders’ Mandate”
: defined in paragraph 2.4 of this Appendix
“$” and “cents”
: Singapore dollars and cents, respectively.
“%” or “per cent”
: per centum or percentage
180
APPENDIX I (cont’d)
APPENDIX I (cont’d)
The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to them respectively in Section 130A of
the Companies Act.
PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE
FOR INTERESTED PERSON TRANSACTIONS
Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine
gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations.
1.INTRODUCTION
Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or reenacted. Any word defined under the Companies Act or any statutory modification thereof and not otherwise defined in
this Appendix shall have the same meaning assigned to it under the Companies Act or any statutory modification thereof,
as the case may be.
1.1
The purpose of this Appendix is to provide the Shareholders of the Company with information relating to, and to seek
Shareholders’ approval at the AGM to renew the Shareholders’ Mandate that will enable the Company to enter into
transactions with the Interested Persons in compliance with Chapter 9 of the Listing Manual.
1.2
Pursuant to Chapter 9 of the Listing Manual, the Shareholders’ Mandate was renewed at an annual general meeting
held on 28 March 2014, will continue in force until the forthcoming annual general meeting. Accordingly, the Directors
propose that the Shareholders’ Mandate be renewed at the AGM to Shareholders’ Mandate to be held on 31 March
2015. The Shareholders’ Mandate will take effect from the date of the passing of the Ordinary Resolution approving
the Shareholders’ Mandate until the next Annual General Meeting of the Company.
1.3
There are no modifications to the existing Shareholders’ Mandate in relation to the nature of Interested Person
Transactions which covers the following categories of transactions:
1.3.1 franchising, distribution and licensing agreements
1.3.2 the sale of healthy lifestyle products
1.4
There are no modifications to the review procedures for such transactions (as described in paragraph 3.4)
2.
Chapter 9 of the Listing Manual
2.1
Chapter 9 (“Chapter 9”) of the Listing Manual of the SGX-ST deals with transactions in which a listed company or
any of its subsidiaries or associated companies (that are not listed on the SGX-ST or an approved exchange, provided
that the listed group, or the listed group and its interested person(s) (as defined in paragraph 2.5.1) has control over)
proposes to enter with a party who is an Interested Person (as defined below) of the listed company.
2.2
Save for transactions which are not considered to put the listed company at risk and which are therefore excluded from
the ambit of Chapter 9, shareholder approval and/or an immediate announcement would be required in respect of
transactions with Interested Persons if certain financial thresholds are reached or exceeded. Specifically, an immediate
announcement is required for the following transactions of a certain threshold where:-
2.2.1 the value of a proposed transaction is equal to or exceeds 3% of the Group’s latest audited NTA; or
2.2.2 the aggregate value of all transactions entered into with the same Interested Person during the same financial
year, is equal to or more than 3% of the Group’s latest audited NTA. An announcement will have to be made
immediately of the latest transaction and all future transactions entered into with that same interested person
during the financial year,
and shareholder approval (in addition to an immediate announcement) is required where:-
2.2.3 the value of a proposed transaction is equal to or exceeds 5% of the latest Group’s audited NTA; or
2.2.4 the aggregate value of all transactions (including the subject transaction) entered into with the same Interested
Person during the same financial year, is equal to or more than 5% of the Group’s latest audited NTA. The
aggregation will exclude any transaction that has been approved by shareholders previously, or is the subject of
aggregation with another transaction that has been approved by shareholders.
Should you as a Shareholder have any doubt as to any action you should take, you should consult an independent financial
or legal advisor for assistance.
Any reference to a time of day in this Appendix is made by reference to Singapore time unless otherwise stated.
181
182
APPENDIX I (cont’d)
APPENDIX I (cont’d)
2.3
For the purposes of aggregation, Interested Persons Transactions below $100,000 each are to be excluded.
3.2
Nature and Scope of the Interested Person Transactions Contemplated under the Shareholders’ Mandate
2.4
Part VIII of Chapter 9 allows for a listed company to seek a mandate (the “Shareholders’ Mandate”) from its shareholders
for recurrent transactions with Interested Person of a revenue or trading nature necessary for its day-to-­day operations
such as sales of supplies and materials, but not in respect to the purchase or sale of assets, undertakings or businesses.
3.2.1 Franchising, distribution and licensing agreements
2.5
For the purposes of Chapter 9:-
2.5.1 an “interested person” means a director, chief executive officer or controlling shareholder of the listed company,
or an associate of such director, chief executive officer or controlling shareholder;
2.5.2 a “controlling shareholder” is a person who holds directly or indirectly 15% or more of the nominal amount of
all voting shares in the listed company (unless otherwise excepted by SGX-ST) or in fact exercises control over a
company; and
.
3.
SHAREHOLDERS’ MANDATE
3.1
Background
3.1.1 The principal activities of OSIM are marketing, distributing and franchising of a comprehensive range of healthy
lifestyle products. Other than DT-OSIM group of companies, all the Group’s production needs are outsourced, for
example, to contract manufacturers in US, Japan and Taiwan as the Group focuses on its strengths in marketing
and brand management. As at the Latest Practicable Date, the Group has 842 point-of-sales outlets over 23
countries worldwide.
183
2.5.3 an “associate” in relation to any director, chief executive officer or controlling shareholder (being an individual)
means his immediate family (i.e., spouse, children, adopted children, step-children, siblings and parents), the
trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust,
is a discretionary object, and any company in which he and his immediate family together (directly or indirectly)
have an interest of 30% or more. An “associate” in relation to a controlling shareholder (being a company)
means any other company which is its subsidiary or holding company or is a subsidiary of such holding company
or one in the equity of which it and/or such other company or companies taken together (directly or indirectly)
have an interest of 30% or more.
3.1.2 It is envisaged that in the normal course of business of the Group, transactions involving the sale, purchase,
provision or supply of services and/or products between the Group and Interested Persons will likely occur from
time to time. Such transactions include, but are not limited to, licensing and distribution agreements, franchise
agreements, transactions of a revenue and trading nature.
3.1.3 The Directors are seeking the approval from Shareholders for the proposed renewal of the Shareholders’
Mandate for the Group to enter, in their normal course of business, with the class of Interested Persons
described in paragraph 3.3, into the Interested Person Transactions described in paragraph 3.2, provided that
such transactions are made at arm’s length and on the Group’s normal commercial terms and not prejudicial
to the interests of the Company and its minority Shareholders.
3.1.4 The Shareholders’ Mandate will take effect from the date of the passing of Ordinary Resolution 8 to be proposed
at the AGM until the next annual general meeting of the Company. Thereafter, approval from Shareholders
for a subsequent renewal of the Shareholders’ Mandate will be sought at each subsequent Annual General
Meeting of the Company.
Within the ambit of this category are franchising arrangements with FK Marketing Ltd (as defined in paragraph
3.3.1).
3.2.2 Sales of healthy lifestyle products
This category covers the sale of healthy lifestyle products such as, but not limited to, massage chairs, foot
reflexology rollers, handheld massagers and fitness equipments to Interested Persons, including, without
limitation, agreements for the sale, supply and distribution of such products.
3.3
Class of Interested Persons
3.3.1 Interested Person refers to a director, chief executive officer or controlling shareholder of OSIM, or an associate
(as defined in paragraph 2.5.3 of the Appendix) of such director, chief executive officer or controlling shareholder.
The Shareholders’ Mandate, if renewed, will apply to the following class of Interested Persons only:
-
FK Marketing Ltd
Note: Mr Francis Leow Lian Teck who is the brother of Mr Leow Lian Soon owns 50 percent interest in the shares
of FK Marketing Ltd. Accordingly, Mr Richard Leow is deemed to have a 50 percent interest in the shares
of the aforementioned four companies.
3.3.2 Any person or company who, at the point in time when the transaction is proposed to be entered into, is an
associate of any one or more of the persons named above. The term “associate” has the meaning set out in
paragraph 2.5.3 of the Appendix.
3.3.3 Transactions with Interested Persons which do not fall within the ambit of the Shareholders’ Mandate shall be
subject to the relevant provisions of Chapter 9 of the Listing Manual.
3.4
Review Procedures for Interested Person Transactions
3.4.1 To ensure that the Interested Person Transactions arising in the normal course of business of the Group are
undertaken at arm’s length and on the Group’s normal commercial terms, and will not be prejudicial to the
interests of the Company and its minority Shareholders, the following guidelines will be implemented for
the review and approval of Interested Person Transactions under the proposed renewal of the Shareholders’
Mandate:(a)
Franchising, distribution and licensing agreements
Franchising, distribution and licensing fees are payable by FK Marketing Ltd.
(b)
Sales of healthy lifestyle products
The sale of healthy lifestyle products by the Group shall not be approved unless the pricing policy and
the terms are no more favourable to the Interested Person than the usual commercial terms extended
to unrelated third parties taking into consideration factors such as, but not limited to, market conditions,
brand awareness and tax structures, in the relevant markets.
The selling price of products is reviewed by the Chief Executive Officer, the Chief Operating Officer and
the Chief Financial Officer on a regular basis.
184
APPENDIX I (cont’d)
185
APPENDIX I (cont’d)
The following transactions are subject to review by the Audit Committee and approval by the Board of
Directors:-
(i) (ii) transactions of value above $1 million; or
transactions with the same Interested Person with aggregated value of above 3% of the
Company’s NTA. The Audit Committee will review the transactions which are subject to the
aggregation.
3.4.2 Each Interested Person Transaction will be properly documented and submitted to Audit Committee which will
review such transactions on a quarterly basis to ensure that they are carried out on normal arm’s length and
commercial terms.
3.4.3 In addition to the guidelines set out above, the Audit Committee of the Company will also undertake the
following periodic reviews:
(a)
the Audit Committee will carry out an annual review to ascertain that the established guidelines and
procedures for the Interested Person Transactions have been complied with; and
(b)
the Audit Committee will consider from time to time whether the established guidelines and procedures
for the Interested Person Transactions have become inappropriate or are unable to ensure that the
transactions will be on the Group’s normal commercial terms and will not be prejudicial to the interests
of the Company and its minority Shareholders.
(c)
If a member of the Audit Committee has an interest in an Interested Person Transaction to be reviewed
by the Audit Committee, he will abstain from any decision-making in respect of that transaction and
the review and approval of that transaction will be undertaken by the remaining members of the Audit
Committee.
6. Disclosure of Interested Person Transactions pursuant to Shareholders Mandate
6.1
The Company will announce the aggregate value of transactions conducted with Interested Persons pursuant to the
Shareholders Mandate for the quarterly financial periods which the Company is required to report on pursuant to the
Listing Manual and within the time required for the announcement of such report.
6.2 Disclosure will also be made in the Company’s Annual Report of the aggregate value of transactions conducted with
Interested Persons pursuant to the Shareholders’ Mandate during the financial year, and in the Annual Reports for
subsequent financial years that the Shareholders’ Mandate continues in force, in accordance with the requirements of
Chapter 9 of the Listing Manual.
7.
INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
7.1 Directors
As at the Latest Practicable Date, the direct and indirect interests of each of the Directors in the Shares and Share
Options of the Company are as follows:Number of Shares
Direct Interest
Indirect Interest
Number
%(1)
Number
%(1)
Ron Sim
Teo Sway Heong
Charlie Teo
Richard Leow
Peter Lee
Tan Soo Nan
Sin Boon Ann
Colin Low
335,557,335
6,692,020
2,863,162
2,804,614
–
25,000
–
–
43.428
0.866
0.371
0.363
–
0.003
–
–
154,411,199
483,276,514
300,000
–
2,195,000
–
–
–
19.984
62.545
0.039
–
0.284
–
–
–
Number of shares
comprised in
outstanding Share
Options
–
–
–
–
–
–
–
–
4.
Rationale and Benefit
The Shareholders’ Mandate will enhance the ability of companies in the Group to pursue business opportunities which
are time-sensitive in nature, and will eliminate the need for OSIM to announce, or to announce and convene separate
general meetings on each occasion to seek Shareholder prior approval for the entry by the relevant company in the
Group into such transactions. This will substantially reduce the expenses associated with the convening of general
meetings on an ad hoc basis, improve administrative efficacy considerably, and allow manpower resources and time to
be channeled towards attaining other corporate objectives.
Note:
(1) Based on the total issued and fully paid-up ordinary share capital of 779,151,529 shares excluding 6,468,573
treasury shares as at the Latest Practicable Date.
5. Validity Period of the Shareholders’ Mandate
7.2
Substantial Shareholders
The renewal of the Shareholders’ Mandate will take effect from the passing of the ordinary resolution relating thereto,
and will (unless revoked or varied by the Company in general meeting) continue in force until the next Annual General
Meeting of the Company following thereafter. Approval from Shareholders will be sought for the renewal of the
Shareholders’ Mandate at the subsequent Annual General Meeting of the Company and each Annual General Meeting
thereafter, subject to satisfactory review by the Audit Committee of its continued application to the transactions with
Interested Persons.
As at the Latest Practicable Date, the only substantial Shareholder of the Company is Mr Ron Sim who has a direct
interest in 335,557,335 shares and a deemed interest in 154,411,199 shares, together comprising 63.41 per cent of
the total issued and fully paid-up ordinary share capital of the Company.
7.3
Mr Ron Sim and Mr Richard Leow will abstain, and have undertaken to ensure that their associates will abstain, from
voting at the AGM in respect of the Shares held by them respectively on Resolution 8 in the Notice of AGM on page
175 of the Annual Report relating to the proposed renewal of, the Shareholders’ Mandate.
186
187
APPENDIX I (cont’d)
APPENDIX I (cont’d)
8.
Statement of the Audit Committee
12.
DOCUMENTS FOR INSPECTION
The Audit Committee of the Company has reviewed the terms of the proposed Shareholders’ Mandate subject to
renewal. Having considered, inter alia, the scope, the guidelines on review procedures, the rationale and the benefits of
the Shareholders’ Mandate, the Audit Committee confirms that
The following documents may be inspected at the registered office of the Company during normal business hours from
the date hereof up to and including the date of the AGM:-
(i) the Memorandum and Articles of Association of the Company; and
(ii) the Annual Report of the Company and of the Group for the financial year ended 31 December 2014.
13.
DIRECTORS’ RESPONSIBILITY STATEMENT
(i)
the review procedures for determining the prices of Interested Person Transactions have not changed since
approval for the Shareholders’ Mandate was last given; and
the review procedures referred to in the above paragraph are sufficient to ensure that the Interested Person
Transactions will be transacted on normal commercial terms and will not be prejudicial to the Shareholders
nor disadvantageous to the Group. However, should the Audit Committee subsequently no longer be of this
opinion, the Company will revert to the Shareholders for a fresh mandate based on new review procedures for
transactions with Interested Persons.
(ii)
An independent financial adviser’s opinion is not required for renewal of this general mandate as the Audit Committee
has confirmed that the methods and procedures for determining the transaction prices have not changed since the last
Shareholders’ approval and the foregoing said methods and procedures are sufficient to ensure that the transactions
will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its
minority shareholders.
9.
DIRECTORS’ RECOMMENDATION
The Directors who are considered independent for the purpose of the proposed renewal of the Shareholders’ Mandate
are Mr Colin Low , Mr Tan Soo Nan and Mr Sin Boon Ann (the “Independent Directors”). The Independent Directors
are of the opinion that it is in the interests of the Group to be permitted to enter into the transactions in their normal
course of business with the class of Interested Persons described in paragraph 3.3 of this Appendix provided that such
transactions are made at arm’s length and on normal commercial terms and will not be prejudicial to the interest of
the Company and its minority Shareholders, and in accordance with the guidelines set out in paragraph 3.4 of this
Appendix. They accordingly recommend that Shareholders vote in favour of Resolution 8 set out in the Notice of AGM
on page 175 of this Annual Report.
10.
APPROVALS AND RESOLUTIONS
Your approval for the proposed renewal of the Shareholders’ Mandate is sought at the Company’s AGM to be held at
65 Ubi Avenue 1, OSIM Headquarters, Singapore 408939 on 31 March 2015 at 2.30 p.m.
11.
ACTION TO BE TAKEN BY SHAREHOLDERS
If a Shareholder is unable to attend the AGM and wishes to appoint a proxy to attend and vote on his behalf, he
should complete, sign and return the enclosed Proxy Form in accordance with the instructions printed thereon as
soon as possible and, in any event, so as to arrive at the registered office of the Company at 65 Ubi Avenue 1, OSIM
Headquarters, Singapore 408939 not later than 48 hours before the time fixed for the AGM. Completion and return of
the Proxy Form by a Shareholder does not preclude him from attending and voting at the AGM if he so wishes.
The Directors collectively and individually accept full responsibility for the accuracy of the information given in this
Appendix I and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this
Appendix I constitutes full and true disclosure of all material facts about the proposed renewal of the shareholders’
mandate for interested person transactions , The Company and its subsidiaries, and the Directors are not aware of
any facts the omission of which would make any statement in this Appendix I misleading. Where information in this
Appendix I has been extracted from published or otherwise publicly available source or obtained from a named source,
the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly
extracted from those sources and/or reproduced in this Appendix I in its proper form and context.
Yours faithfully
OSIM INTERNATIONAL LTD
Ron Sim
Chairman
for and on behalf of the Board
188
APPENDIX II
APPENDIX II (cont’d)
1.INTRODUCTION
On 28 March 2014, the Company obtained shareholders’ approval at the Annual General Meeting (“2014 AGM”)
of the Company to authorise the Directors to exercise all powers of the Company to purchase or acquire its issued
ordinary shares in the capital of the Company (the “Shares”) (“Share Buy-back Mandate”) on the terms of the
Share Buy-back Mandate which has taken effect from the date of 2014 AGM until the date on which the next annual
general meeting (“AGM”) of the Company is held or is required by applicable law to be held, whereupon it will lapse
unless renewed at such meeting. Accordingly, approval for the renewal of the Share Buy-back Mandate will be sought
again at the AGM to be held on 31 March 2015.
2.DEFINITIONS
OSIM INTERNATIONAL LTD
(Incorporated in the Republic of Singapore with Limited Liability)
(Company Registration No. 198304191N)
APPENDIX II IN RELATION TO DETAILS OF THE
PROPOSED RENEWAL OF THE SHARE
BUY-BACK MANDATE
In this Appendix II, the following definitions apply throughout unless otherwise stated:
General
“Articles”
“Audit Committee”
“CDP”
“CLOB trading system”
“Code”
“Companies Act”
: the Articles of Association of the Company, as amended from time to time
:
: the Central Depository (Pte) Limited
: the Central Limit Order Book trading system
:
Singapore Code on Take-overs and Mergers, as amended, supplemented or modified
from time to time
:
the Companies Act, Chapter 50, of Singapore as amended or modified from time to
time
“Companies (Amendment) Act”
“Company” or “OSIM”
:
“Directors”
:
“Group”
:
“Latest Practicable Date”
4 March 2015
This Appendix II is circulated to Shareholders of OSIM International Ltd (the “Company”) together with the Company’s Annual Report.
Its purpose is to provide Shareholders with the relevant information relating to, and to seek Shareholders’ approval for the renewal of
the Share Buy-back Mandate to be tabled at the Annual General meeting to be held on 31 March 2015 at 2.30 p.m. at 65 Ubi Avenue
1 OSIM Headquarters Singapore 408939.
The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. The Singapore Exchange Securities
Trading Limited takes no responsibility for the correctness of any of the statements made, reports contained/referred to, or opinions
expressed in this Appendix.
189
“Listing Manual”
“Maximum Price”
the audit committee of the Company as at the date of this Appendix II, comprising
of Mr Tan Soo Nan (Chairman), Mr Colin Low Tock Cheong and Mr Sin Boon Ann
: the Companies (Amendment) Act 2005 of Singapore
OSIM International Ltd
the Directors of the Company for the time being
the Group refers to the Company, its subsidiaries, joint ventures and associated
companies
: the latest practicable date prior to the printing of this Appendix, being 3th March
2015
: the listing manual of the SGX-ST, which became effective on July 1, 2002, including
amendments made thereto up to the date of this Appendix II.
: the maximum price to be paid for the Shares as determined by the Directors under
paragraph 2.3.4 of the Letter to Shareholders contained in this Appendix II.
190
APPENDIX II (cont’d)
“NTA”
“SGX-ST” “Securities Account”
“Shares”
“Share Buy-back Mandate”
“Share Options”
“Shareholders”
“$” and “cents”
“%” or “per cent”
191
APPENDIX II (cont’d)
and above its ordinary capital requirements in an expedient and cost-efficient manner. The Directors also expect
that Share Buy-backs may also help mitigate against short term volatility of share price and offset the effects of
short term speculation. Share Buy-backs will allow the Directors greater flexibility over the Company’s share capital
structure with a view to enhancing the earnings and/or net asset value per share.
: net tangible assets
: the Singapore Exchange Securities Trading Limited
:
securities accounts maintained by Depositors with CDP, but not including securities
accounts maintained with a Depository Agent
Shareholders can be assured that Share Buy-backs by the Company would be made in circumstances where it is
considered to be in the best interests of the Company, after taking into account the amount of surplus cash available
and the prevailing market conditions. Further, the Directors do not propose to carry out Buy-backs to such an extent
that would, or in circumstances that might, result in a material adverse effect on the liquidity, the orderly trading of
the Shares, the working capital requirements of the Company or its gearing positions which are, in the opinion of
the Directors, appropriate from time to time, or result in the Company being de-listed from the SGX-ST. For example,
the Directors will ensure that the Share Buy-back will not be carried out to such an extent that the free float of the
Company’s Shares held by the public falls to below ten per cent (10%).
: options to subscribe for new Shares granted pursuant to share option schemes/
plans implemented by the Company
The Company confirms that the terms of this Share Buy-back Mandate does not contravene any laws and regulations
governing the Company and the articles of association of the Company.
: registered holders of Shares, except that where the registered holder is CDP, the
term “Shareholders” shall, where the context admits, mean the Depositors whose
Securities Account are credited with Shares
3.2
Share Buy-back Mandate
Approval is being sought from Shareholders at the AGM for the renewal of the Share Buy-back Mandate for the
purchase by the Company of its issued Shares. If approved, the Share Buy-back Mandate will take effect from the
date of the AGM and continue in force until the date of the next annual general meeting of the Company or such
date as the next annual general meeting is required by law to be held, unless prior thereto, Share buy-backs are
carried out to the full extent mandated or the Share Buy-back Mandate is revoked or varied by the Company in a
general meeting. The Share Buy-back Mandate will be put to Shareholders for renewal at each subsequent annual
general meeting of the Company.
Any purchase of its Shares by the Company has to be made in accordance with, and in the manner prescribed by, the
Companies Act, the Listing Rules and such other laws and regulations as may for the time being be applicable.
3.3
Terms of the Proposed Share Buy-back Mandate
The authority and limitations placed on the Share Buy-back Mandate, if renewed at the AGM, are substantially
the same as previously approved by the Shareholders at the AGM. The authority and limits on the Share Buy-back
Mandate are summarised below:
: ordinary shares in the capital of the Company
: a general unconditional mandate given by Shareholders to authorise the Directors
to purchase or acquire, on behalf of the Company, Shares, in accordance with the
terms set out in this Appendix II as well as the rules and regulations set forth in the
Companies Act and the Listing Manual
: Singapore dollars and cents, respectively
: per centum or percentage
The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to them respectively in Section
130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine
gender shall, where applicable, include the feminine and neuter genders. References to persons shall include
corporations.
Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended
or re-enacted. Any word defined under the Companies Act or any statutory modification thereof and not otherwise
defined in this Appendix II shall have the same meaning assigned to it under the Companies Act or any statutory
modification thereof, as the case may be.
Should you as a Shareholder have any doubt as to any action you should take, you should consult an independent
financial or legal advisor for assistance.
Any reference to a time of day in this Appendix II is made by reference to Singapore time unless otherwise stated.
3
RENEWAL OF THE SHARE BUY-BACK MANDATE
3.1
Rationale of Share Buy-back Mandate
The renewal of the Share Buy-back Mandate would give the Company the flexibility to undertake Buy-backs of
the Shares at any time, subject to market conditions, during the period when the Share Buy-back Mandate is in
force. Further, Share purchases provide the Company with a mechanism to facilitate the return of surplus cash over
3.3.1
Maximum number of Shares
Only Shares which are issued and fully paid-up may be purchased or acquired by the Company.
The total number of Shares that may be purchased or acquired by the Company is limited to that number of
Shares representing not more than ten per cent (10%) of the issued ordinary share capital of the Company as
at the date of the AGM at which the Share Buy-back Mandate is approved (“Approval Date”). For the purposes
of calculating the percentage of issued Shares, any Shares which are held by the Company as treasury shares
will be disregarded for the purposes of computing the ten per cent (10%) limit.
For illustrative purposes, on the basis of 779,151,529 Shares in issue as at the Latest Practicable Date,
not more than 77,915,153 Shares (representing ten per cent (10%) of the Shares in issue as at that date,
excluding treasury shares) may be purchased or acquired by the Company pursuant to the proposed Share
Buy-back Mandate.
192
APPENDIX II (cont’d)
APPENDIX II (cont’d)
3.3.2
Duration of authority
The purchase price (excluding brokerage, stamp duties, applicable goods and services tax and other related
expenses) to be paid for the Shares will be determined by the Directors.
However, the purchase price to be paid for a Share as determined by the Directors must not exceed:
(i) in the case of a Market Purchase, one hundred and five per cent (105%) of the Average Closing Price (as
defined hereinafter); and
(ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, one hundred and ten per
cent (110%) of the Average Closing Price,
Purchases or acquisitions of Shares may be made, at any time and from time to time, from the Approval Date
up to the earlier of:
(i) the date on which the next annual general meeting of the Company is held or required by law to be held;
(ii) the date on which the authority contained in the Share Buy-back Mandate is varied or revoked by the
Company in a general meeting; or
(iii) the date on which the Share Buy-backs are carried out to the full extent mandated.
3.3.3
Manner of purchases or acquisitions of Shares
(the “Maximum Price”) in either case, excluding related expenses of the purchase or acquisition.
For the above purposes:
“Average Closing Price” means the average of the closing market prices of the Shares over the last five (5)
market days, on which transactions in the Shares were recorded, immediately preceding the day of the Market
Purchase, and deemed to be adjusted for any corporate action that occurs after such five-market day period;
Purchases or acquisitions of Shares may be made by way of:
(i) on-market purchases (“Market Purchases”), transacted on the SGX-ST through the SGX-ST’s CLOB trading
system or, as the case may be, any other stock exchange on which the Shares may for the time being be
listed and quoted, through one or more duly licensed stockbrokers appointed by the Company for the
purpose; and/or
(ii)
The Directors may impose such terms and conditions, which are consistent with the Share Buy-back Mandate,
the Listing Rules and the Companies Act, as they consider fit in the interests of the Company in connection
with or in relation to an equal access scheme or schemes. Under the Companies Act, an equal access scheme
must satisfy all the following conditions:
(i)
(ii)
(iii)
offers for the purchase of issued Shares shall be made to every person who holds issued Shares to
purchase or acquire the same percentage of their issued Shares;
all of those persons shall be given a reasonable opportunity to accept the offers made; and
the terms of all the offers are the same, except that there shall be disregarded:
(a) differences in consideration attributable to the fact that the offers may relate to Shares with
different accrued dividend entitlements;
(b) (if applicable) differences in consideration attributable to the fact that the offers relate to Shares
with different amounts remaining unpaid; and
(c)
differences in the offers introduced solely to ensure that each member is left with a whole number
of Shares.
In addition, the Listing Rules provides that, in making an Off-Market Purchase, the Company must issue an
offer document to all Shareholders which must contain at least the following information:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
193
off-market purchases (“Off-Market Purchases”) effected pursuant to an equal access scheme (as defined
in section 76C of the Companies Act).
the terms and conditions of the offer;
the period and procedures for acceptances;
the reasons for the proposed Share Buy-back;
the consequences, if any, of Share Buy-backs by the Company that will arise under the Code or other
applicable takeover rules;
whether the Share Buy-back, if made, would have any effect on the listing of the Shares on the SGX-ST;
and
details of any Share Buy-backs (whether Market Purchases or Off-Market Purchases) made by the
Company in the previous twelve (12) months, giving the total number of Shares purchased, the purchase
price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total
consideration paid for the purchases.
“day of the making of the offer” means the day on which the Company announces its intention to make an
offer for the purchase of Shares from Shareholders, stating the purchase price (which shall not be more than
the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal
access scheme for effecting the Off-Market Purchase; and
“market day” means a day on which the SGX-ST is open for trading in securities.
3.4
Status of purchased or acquired Shares
Under the Companies Act, any Shares purchased or acquired by the Company are deemed cancelled immediately
on purchase or acquisition, and all rights and privileges attached to those Shares expire on cancellation, unless such
Shares are held by the Company as treasury shares. Accordingly, the total number of issued Shares will be diminished
by the number of Shares purchased or acquired by the Company and which are not held as treasury shares.
3.5
Treasury Shares
Under the Companies Act, Shares purchased or acquired by the Company may be held or dealt with as treasury
shares. Some of the provisions relating to treasury shares under the Companies Act, are summarised below:-
3.5.1
Maximum Holdings
The number of Shares held as treasury shares cannot at any time exceed ten per cent (10%) of the total
number of issued Shares.
3.5.2
Voting and Other Rights
The Company cannot exercise any right in respect of treasury shares. In particular, the Company cannot
exercise any right to attend or vote at meetings and for the purposes of the Companies Act, the Company shall
be treated as having no right to vote and the treasury shares shall be treated as having no voting rights.
In addition, no dividend may be paid, and no other distribution (whether in cash or otherwise) of the Company’s
assets (including any distribution of assets to members on a winding up) may be made, to the Company in
respect of the treasury shares. However, the allotment of Shares as fully paid bonus shares in respect of the
194
APPENDIX II (cont’d)
treasury shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a
smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation
is the same as before such subdivision or consolidation, as the case may be.
APPENDIX II (cont’d)
3.7.1 Number of Shares Acquired or Purchased
3.5.3
Disposal and Cancellation
Where Shares are held as treasury shares, the Company may at any time:(a) sell the treasury shares (or any of them) for cash;
(b) transfer the treasury shares (or any of them) for the purposes of or pursuant to an employees’ share
scheme;
(c)
transfer the treasury shares (or any of them) as consideration for the acquisition of shares in or assets of
another company or assets of a person;
(d) cancel the treasury shares (or any of them); or
(e) sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the
Minister for Finance.
195
3.6 Source of funds
Previously, any payment made by a company in consideration of the purchase or acquisition of its own Shares could
only be made out of the Company’s distributable profits. The Companies Act now permits the Company to pay
for the consideration for the purchase or acquisition of its Shares out of capital or profits provided the Company is
solvent.
The Directors do not propose to exercise the Share Buy-back Mandate in a manner and to such an extent that the
liquidity and capital adequacy position of the Group would be materially adversely affected.
3.7 Financial Effects
The financial effects on the Company and the Group arising from purchases or acquisitions of Shares which may
be made pursuant to the Share Buy-back Mandate will depend on, inter alia, whether the Shares are purchased or
acquired out of profits and/or capital of the Company, the number of Shares purchased or acquired, the price paid for
such Shares and whether the Shares purchased or acquired are held in treasury or cancelled.
Under the Companies Act, purchases or acquisitions of Shares by the Company may be made out of the Company’s
profits and/or capital so long as the Company is solvent.
Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of profits,
such consideration (excluding brokerage, commission, goods and services tax and other related expenses) will
correspondingly reduce the amount available for the distribution of cash dividends by the Company.
Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of capital, the
amount available for the distribution of cash dividends by the Company will not be reduced.
The financial effects on the Company and the Group, based on the financial statements of the Company and
the Group for the financial year period 1 January 2014 to 31 December 2014, are based on the assumptions set
out below.
Although the Share Buy-back Mandate (if approved by Shareholders) will permit the Company to purchase
or acquire up to 10% of its issued Shares (excluding treasury shares), based on the financial statements of
the Company and the Group for the financial period 1 January 2014 to 31 December 2014, the purchase or
acquisition of up to 10% of its issued Shares would not result in negative Shareholders’ funds. The illustrative
financial effects shown below are based on a purchase or acquisition of Shares by the Company of up to 10%
of its issued Shares which, based on the number of issued and paid-up Shares as at the Latest Practicable Date
and assuming no further Shares are issued and no Shares are held by the Company as treasury shares on or prior
to the AGM, is 779,151,529 Shares.
Shareholders should note that the financial effects set out below are for illustrative purposes only. It
should be noted that the above analyses are based on the audited financial statement for the financial
year ending 31 December 2014 and is not necessarily representative of future financial performance.
A 10% buy-back (and not any other percentage) was assumed so that a positive Shareholders’ funds could
be maintained solely for the purposes of these illustrative financial effects. Although the Share Buy-back
Mandate would authorise the Company to purchase or acquire up to ten per cent (10%) of the issued
Shares, the Company may not necessarily purchase or acquire or be able to purchase or acquire the entire
ten per cent (10%) of the total issued ordinary share capital of the Company. In additional, the Company
may cancel all or part or the Shares repurchased or hold all or part of the Shares repurchased in treasury.
3.7.2 Maximum Price Paid for Shares Acquired or Purchased
In the case of Market Purchases by the Company and assuming that the Company purchases or acquires
77,915,153 Shares at the maximum price of S$2.11 for one Share (being the price equivalent to 5% above the
Average Closing Price of the Shares immediately preceding the Latest Practicable Date), the maximum amount
of funds required for the purchase or acquisition of 77,915,153 Shares is S$164,400,972.83.
In the case of Off-Market Purchases by the Company and assuming that the Company purchases or acquires
77,915,153 Shares at the maximum price of S$2.21 for one Share (being the price equivalent to 10% above the
Average Closing Price of the Shares immediately preceding the Latest Practicable Date), the maximum amount
of funds required for the purchase or acquisition of 77,915,153 Shares is S$172,192,488.13.
3.7.3 Illustrative Financial Effects
As at Latest Practicable Date, the Company holds 6,468,573 treasury shares, representing 0.87%. For illustrative
purposes only and on the basis of the assumptions set out in paragraphs 3.7.1 and 3.7.2 above, the financial
effects of the purchase or acquisition of Shares by the Company pursuant to the Share Buy-back Mandate
are projected on the basis that the Company has first cancelled the said treasury shares and the Company’s
financial statements for the financial year period from 1 January 2014 to 31 December 2014 are set out below
and assuming the following:
(a)
the purchase or acquisition of 77,915,153 Shares by the Company pursuant to the Share Buy-back
Mandate by way of Market Purchases made entirely out of capital and cancelled;
(b)
the purchase or acquisition of 77,915,153 Shares by the Company pursuant to the Share Buy-back
Mandate by way of Off-Market Purchases made entirely out of capital and cancelled;
196
APPENDIX II (cont’d)
(c)
the purchase or acquisition of 77,915,153 Shares by the Company pursuant to the Share Buy-back
Mandate by way of Market Purchases made entirely out of borrowings and cancelled;
(d)
the purchase or acquisition of 77,915,153 Shares by the Company pursuant to the Share Buy-back
Mandate by way of Off-Market Purchases made entirely out of borrowings and cancelled.
APPENDIX II (cont’d)
Scenario 1
Group
As at 31 Dec 2014
(In S$’000)
Company
Before Share
Purchase &
Cancellation
After Share
Purchase &
Cancellation
Before Share
Purchase &
Cancellation
After Share
Purchase &
Cancellation
Share Capital
114,459
102,426
114,459
102,426
Treasury Shares
(12,033)
(164,440)
(12,033)
(164,440)
Although the Share Buy-back Mandate would authorise the Company to purchase or acquire up to 10% of
the issued Shares, the Company may not necessarily purchase or acquire part of or the entire 10% of the
issued Shares. In addition, the Company may cancel all or part of the Shares repurchased or hold all or part
of the Shares repurchased in treasury.
Revenue Reserves
307,048
307,048
104,065
104,065
Capital Reserves
28,460
28,460
23,112
23,112
–
–
–
–
Although the Share Buy-back Mandate would authorise the Company to purchase or acquire up to 10%
of the issued Shares, the Directors will not exercise the Share Buy-back Mandate if the Group’s working
capital requirements, current dividend policy for the financial year ending 31 December 2014 and ability
to service its debts would be adversely affected.
439
439
975
975
Shareholders’ Funds
438,373
273,933
230,578
66,138
NTA (Net Tangible Assets)
311,293
146,853
230,578
66,138.07
Current Assets
588,455
424,015
285,216
120,776
Current Liabilities
158,101
158,101
79,867
79,867
Total Borrowings
185,469
185,469
185,411
185,411
Cash & Cash Equivalents
427,566
263,126
230,706
66,266
Number of Shares (‘000)
779,152
701,236
779,152
701,236
Basic EPS (cents)
13.12
14.57
15.16
16.85
NTA per share (cents)
39.95
20.94
29.59
9.43
–
–
–
–
3.72
2.68
3.57
1.51
Market Purchases
The financial effects set out below are for illustrative purposes only. However, the illustrations are based on
historical numbers for the financial period 1 January 2014 to 31 December 2014 and are not necessarily
representative of future financial performance.
Market Purchases of up to 10% out of capital after cancellation of 6,468,573 treasury shares
Warrant Reserves
Other Reserves
Financial Ratios
Gearing (%)
Current Ratio (times)
197
(Assumption: Company purchases or acquires at the price of S$2.11 for one share, refer to section 3.7.2)
198
APPENDIX II (cont’d)
APPENDIX II (cont’d)
Scenario 2
Scenario 3
Off-Market Purchases of up to 10% out of capital after cancellation of 6,468,573 treasury shares
Group
As at 31 Dec 2014
(In S$’000)
Share Capital
Treasury Shares
Revenue Reserves
Capital Reserves
Warrant Reserves
Other Reserves
Shareholders’ Funds
NTA (Net Tangible Assets)
Current Assets
Current Liabilities
Total Borrowings
Cash & Cash Equivalents
Number of Shares(‘000)
Financial Ratios
Basic EPS (cents)
NTA per share (cents)
Gearing (%)
Current Ratio (times)
Before Share
Purchase &
Cancellation
114,459
(12,033)
307,048
28,460
439
438,373
311,293
588,455
158,101
185,469
427,566
779,152
13.12
39.95
–
3.72
After Share
Purchase &
Cancellation
102,426
(172,270)
307,048
28,460
439
266,103
139,022.60
416,184.60
158,101
185,469
255,296
701,236
14.57
19.83
–
2.63
Company
Before Share
After Share
Purchase &
Purchase &
Cancellation
Cancellation
114,459
102,426
(12,033)
(172,270)
104,065
104,065
23,112
23,112
975
975
230,578
58,308
230,578
58,308
285,216
112,946
79,867
79,867
185,411
185,411
230,706
58,436
779,152
701,236
15.16
29.59
–
3.57
Group
As at 31 Dec 2014
(In S$’000)
Company
Before Share
Purchase &
Cancellation
After Share
Purchase &
Cancellation
Before Share
Purchase &
Cancellation
After Share
Purchase &
Cancellation
114,459
102,426
114,459
102,426
Treasury Shares
(12,033)
(164,440)
(12,033)
(164,440)
Revenue Reserves
307,048
307,048
104,065
104,065
Capital Reserves
28,460
28,460
23,112
23,112
–
–
–
–
439
439
975
975
Shareholders’ Funds
438,373
273,933
230,578
66,138
NTA (Net Tangible Assets)
311,293
146,853
230,578
66,138
Current Assets
588,455
588,455
285,216
285,216
Current Liabilities
158,101
322,541
79,867
244,306.93
Total Borrowings
185,469
349,909
185,411
349,851
Cash & Cash Equivalents
427,566
427,566
230,706
230,706
Number of Shares(‘000)
779,152
701,236
779,152
701,236
Basic EPS (cents)
13.12
14.57
15.16
16.85
NTA per share (cents)
39.95
20.94
29.59
9.43
–
–
–
–
3.72
1.82
3.57
1.17
Share Capital
Warrant Reserves
Other Reserves
16.85
8.31
–
1.41
Financial Ratios
Gearing (%)
(Assumption: Company purchases or acquires at the price of S$2.21 for one share, refer to section 3.7.2)
Note:
(1) The figures for the Group and the Company are based on the financial statements as at 31 December 2014.
Market Purchases of up to 10% out of borrowings after cancellation of 6,468,573 treasury shares
Current Ratio (times)
(Assumption: Company purchases or acquires at the price of S$2.11 for one share, refer to section 3.7.1)
Off-Market Purchases
The financial effects set out below are for illustrative purposes only. However, the illustrations are based on
historical numbers for the financial period 1 January 2014 to 31 December 2014 and are not necessarily
representative of future financial performance.
Although the Share Buy-back Mandate would authorise the Company to purchase or acquire up to 10%
of the issued Shares, the Company may not necessarily purchase or acquire part of or the entire 10% of
the issued Shares. In addition, the Company may cancel all or part of the Shares repurchased or hold all
or part of the Shares repurchased in treasury.
Although the Share Buy-back Mandate would authorise the Company to purchase or acquire up to 10%
of the issued Shares, the Directors will not exercise the Share Buy-back Mandate if the Group’s working
capital requirements, current dividend policy for the financial year ending 31 December 2014 and ability
to service its debts would be adversely affected.
199
200
APPENDIX II (cont’d)
APPENDIX II (cont’d)
Scenario 4
Off-Market Purchases of up to 10% out of borrowings after cancellation of 6,468,573 treasury shares
3.8
Group
As at 31 Dec 2014
(In S$’000)
Company
Buy Price Per Share
2.3260
Volume Purchased
Total Consideration Paid
(S$)
After Share
Purchase &
Cancellation
Before Share
Purchase &
Cancellation
After Share
Purchase &
Cancellation
08-10-14
Share Capital
114,459
102,426
114,459
102,426
10-10-14
2.3900
100,000
239,613.75
Treasury Shares
(12,033)
(172,270)
(12,033)
(172,270)
04-11-14
1.6900
226,000
384,204.12
Revenue Reserves
307,048
307,048
104,065
104,065
05-11-14
1.7150
300,000
515,821.23
Capital Reserves
28,460
28,460
23,112
23,112
10-11-14
1.7970
1,210,000
2,174,370.00
–
–
–
–
11-11-14
1.7920
1,265,000
2,266,880.00
439
439
975
975
12-11-14
1.7950
200,000
359,921.92
Shareholders’ Funds
438,373
266,103
230,578
58,308
17-11-14
1.9540
5,000
9,816.98
NTA (Net Tangible Assets)
311,293
139,023
230,578
58,308
21-11-14
1.9800
278,000
551,462.71
Current Assets
588,455
588,455
285,216
285,216
08-12-14
2.0350
400,000
816,090.35
Current Liabilities
158,101
330,371
79,867
252,137
18-12-14
2.0100
101,000
203,521.21
Total Borrowings
185,469
357,739
185,411
357,681
19-12-14
1.9850
11,000
21,835.00
Cash & Cash Equivalents
427,566
427,566
230,706
230,706
29-12-14
1.9670
1,488,000
2,926,043.20
Number of Shares(‘000)
779,152
701,236
779,152
701,236
05-01-15
1.9000
209,000
207,100.00
6,443,000
12,188,632.47
Basic EPS (cents)
13.12
14.57
15.16
16.85
NTA per share (cents)
39.95
19.83
29.59
8.31
–
–
–
–
3.72
1.78
3.57
1.13
Other Reserves
Total
Financial Ratios
Gearing (%)
Current Ratio (times)
(Assumption: Company purchases or acquires at the price of S$2.21 for one share, refer to section 3.7.1)
Note:
(1) The figures for the Group and the Company are based on the financial statements as at 31 December 2014.
201
Date
Before Share
Purchase &
Cancellation
Warrant Reserves
Share Buy-backs made by the Company in the past 12 months pursuant to the Share Buy-back Mandate
The Company held 10,795,341 treasury shares as at the 2013 AGM. The following market purchases were made :-
650,000
1,511,952.00
No off-market purchases were made.
As of the Latest Practicable Date, the Company now holds 6,468,573 treasury shares.
3.9Taxation
Shareholders who are in doubt as to their respective tax positions or the tax implications of Share purchases or
acquisitions by the Company, or, who may be subject to tax whether in or outside Singapore, should consult their own
professional advisers.
202
APPENDIX II (cont’d)
APPENDIX II (cont’d)
3.10 Listing Status of the Shares
Unless the contrary is established, the following persons will, inter alia, be presumed to be acting in concert:
(a) A company with any of its directors (together with their close relatives, related trusts as well as companies
controlled by any of the directors, their close relatives and related trusts);
(b) A company with its parent company, subsidiaries, its fellow subsidiaries, any associated companies of the
above companies, and any company whose associated companies include any of the above companies.
For this purpose, a company is an associated company of another company if the second company owns
or control at least 20% but not more than 50% of the voting rights of the first-mentioned company;
(c) A company with any of its pension funds and employee share schemes;
(d) A person with any investment company, unit trust or other fund in respect of the investment account
which such person manages on a discretionary basis;
(e) A financial or other professional adviser, with its client in respect of the shareholdings of the adviser and
the persons controlling, controlled by or under the same control as the adviser and all the funds which the
adviser manages on a discretionary basis, where the shareholding of the adviser and any of those funds
in the client total 10% or more of the client’s equity share capital;
(f) Directors of a company, together with their close relatives, related trusts and companies controlled by
any of them, which is subject to an offer or where the directors have reason to believe a bona fide offer
for their company may be imminent;
(g) Partners; and
(h) An individual, his close relatives, his related trusts, and any person who is accustomed to act according to
his instructions and companies controlled by any of the above.
The circumstances under which Shareholders of the Company (including Directors) and persons acting in
concert with them respectively will incur an obligation to make a take-over offer under Rule 14 after a purchase
or acquisition of Shares by the Company are set out in Appendix 2 of the Take-over Code.
The Listing Manual specifies that a listed company shall report all purchases or acquisitions of its shares to the SGXST not later than 9.00 a.m.: (a) in the case of a Market Purchase, on the market day following the day of purchase or
acquisition of any of its shares; and (b) in the case of an Off-Market Purchase under an equal access scheme, on the
second market day after the close of acceptances of the offer. Such announcement currently requires the inclusion of
details of the total number of shares purchased, the purchase price per share or the highest and lowest prices paid for
such shares, as applicable.
While the Listing Manual does not expressly prohibit any purchase of shares by a listed company during any particular
time or times, because the listed company would be regarded as an “insider” in relation to any proposed purchase or
acquisition of its issued shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the
proposed Share Buy-back Mandate at any time after a price sensitive development has occurred or has been the subject
of a decision until the price sensitive information has been publicly announced. In particular, the Company would not
purchase or acquire any Shares through Market Purchases during the period of one month immediately preceding
the announcement of the Company’s full-year results and the period of two weeks before the announcement of the
Company’s financial statements for each of the first three quarters of its financial year.
The Listing Manual requires a listed company to ensure that at least full ten per cent (10%) of any class of its listed
securities must be held by public shareholders. As at the Latest Practicable Date, approximately 36.59 per cent
(36.59%) of the issued Shares are held by public Shareholders. Accordingly, the Company is of the view that there is
a sufficient number of the Shares in issue held by public Shareholders which would permit the Company to undertake
purchases or acquisitions of its Shares through Market Purchases up to the full ten per cent (10%) limit pursuant to the
Share Buy-back Mandate without affecting the listing status of the Shares on the SGX-ST, and that the number of the
Shares remaining in the hands of the public will not fall to such a level as to cause market illiquidity or to affect orderly
trading.
3.11 Take-over Obligations
In general terms, the effect of Rule 14 and Appendix 2 is that, unless exempted (or if exempted, if such exemption is
subsequently revoked), the Directors of the Company and persons acting in concert with them will incur an obligation
to make a take-over offer for the Company under Rule 14 if, as a result of the Company purchasing or acquiring Shares,
the voting rights of such Directors and their concert parties would increase to 30% or more, or if the voting rights of
such Directors and their concert parties fall between 30% and 50% of the Company’s voting rights, the voting rights
of such Directors and their concert parties would increase by 1% in any period of six months.
Under Appendix 2, a Shareholder not acting in concert with the Directors of the Company will not be required to make
a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of
such Shareholder in the Company would increase to 30% or more, or, if such Shareholder holds between 30% and
50% of the Company’s voting rights, the voting rights of such Shareholder would increase by more than 1% in any
period of six months. Such Shareholder need not abstain from voting in respect of the resolution authorising the Share
Buy-back Mandate, unless so required under the Companies Act.
Based on substantial Shareholders’ notifications received by the Company as at the Latest Practicable Date which
is set out in paragraph 3 of this Appendix II, none of the Substantial shareholders would become obliged to make a
take-over offer for the Company under Rule 14 of the Take-over Code as a result of the purchase by the Company of
the maximum limit of ten per cent (10%) of its issued Shares.
Shareholders are advised to consult their professional advisers and/or the Securities Industry Council at the
earliest opportunity as to whether an obligation to make a takeover offer would arise by reason of any share
purchase by the Company.
Appendix 2 of the Take-over Code contains the Share Buy-Back Guidance Note. The take-over implications arising from
any purchase or acquisition by the Company of its Shares are set out below.
3.11.1
Obligation to make a Take-over Offer
If, as a result of any purchase or acquisition by the Company of its Shares, the proportionate interest in the
voting capital of the Company of a Shareholder and persons acting in concert with him increases, such increase
will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code. Consequently, a Shareholder
or a group of Shareholders acting in concert with a Director could obtain or consolidate effective control of the
Company and become obliged to make an offer under Rule 14 of the Take-over Code.
3.11.2
Persons Acting in Concert
Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an
agreement or understanding (whether formal or informal) co-operate, through the acquisition by any of them
of shares in a company, to obtain or consolidate effective control of that company.
203
3.12 Effect of Rule 14 and Appendix 2 of the Take-over Code
204
APPENDIX II (cont’d)
APPENDIX II (cont’d)
4
7.
ACTION TO BE TAKEN BY SHAREHOLDERS
If a Shareholder is unable to attend the AGM and wishes to appoint a proxy to attend and vote on his behalf, he
should complete, sign and return the enclosed Proxy Form in accordance with the instructions printed thereon as
soon as possible and, in any event, so as to arrive at the registered office of the Company at 65 Ubi Avenue 1, OSIM
Headquarters, Singapore 408939 not later than 48 hours before the time fixed for the AGM. Completion and return of
the Proxy Form by a Shareholder does not preclude him from attending and voting at the AGM if he so wishes.
8.
DOCUMENTS FOR INSPECTION
INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
4.1Directors
As at the Latest Practicable Date, the direct and indirect interests of each of the Directors in the Shares and Share
Options of the Company are as follows:Number of Shares
Direct Interest
Indirect Interest
(1)
Number
%(1)
Number
%
Ron Sim
Teo Sway Heong
Charlie Teo
Richard Leow
Peter Lee
Tan Soo Nan
Sin Boon Ann
Colin Low
335,557,335
6,692,020
2,863,162
2,804,614
–
25,000
–
–
43.428
0.866
0.371
0.363
–
0.003
–
–
154,411,199
483,276,514
300,000
–
2,195,000
–
–
–
19.984
62.545
0.039
–
0.284
–
–
–
Number of shares
comprised in
outstanding Share
Options
–
–
–
–
–
–
–
–
Note:
1)
Based on the total issued and fully paid-up ordinary share capital of 779,151,529 shares as at the Latest
Practicable Date.
205
4.2
Substantial Shareholders
As at the Latest Practicable Date, the only substantial Shareholder of the Company is Mr Ron Sim who has a direct
interest in 335,557,335 shares and a deemed interest in 154,411,199 shares, together comprising 63.41 per cent of
the total issued and fully paid-up ordinary share capital of the Company.
5.
DIRECTORS’ RECOMMENDATION
Proposed Renewal of the Share Buy-back Mandate
The Directors are of the opinion that the proposed renewal of the Share Buy-back Mandate is in the best interest of the
Company. Accordingly, they recommend that Shareholders vote in favour of resolution 9 in the notice of AGM, being
the ordinary resolution relating to the proposed renewal of the Share Buy-back Mandate.
6.
APPROVALS AND RESOLUTIONS
Your approval for the proposed renewal of the Share Buy-back Mandate is sought at the Company’s AGM to be
held at 65 Ubi Avenue 1, OSIM Headquarters, Singapore 408939 on 31 March 2015 at 2.30 p.m. or immediately
after the AGM.
The following documents may be inspected at the registered office of the Company during normal business hours from
the date hereof up to and including the date of the AGM:(i)
the Memorandum and Articles of Association of the Company; and
(ii) the Annual Report of the Company and of the Group for the financial year ended 31 December 2014.
9.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors collectively and individually accept full responsibility for the accuracy of the information given in this
Appendix II and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this
Appendix II constitutes full and true disclosure of all material facts about the proposed renewal of the Share Buyback Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which
would make any statement in this Appendix II misleading. Where information in this Appendix II has been extracted
from published or otherwise publicly available source or obtained from a named source, the sole responsibility of the
Directors has been to ensure that such information has been accurately and correctly extracted from those sources
and/or reproduced in this Appendix II in its proper form and context.
Yours faithfully
OSIM INTERNATIONAL LTD
Ron Sim
Chairman
for and on behalf of the Board
206
OSIM INTERNATIONAL LTD
[Company Registration No. 198304191N]
(Incorporated In The Republic of Singapore)
IMPORTANT:
1. For investors who have used their CPF monies to buy OSIM International Ltd’s shares,
this Report is forwarded to them at the request of the CPF Approved Nominees and
is sent solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all
intents and purposes if used or purported to be used by them.
PROXY FORM
(Please see notes overleaf before completing this Form)
3. CPF investors who wish to attend the Meeting as an observer must submit their
requests through their CPF Approved Nominees within the time frame specified. If
they also wish to vote, they must submit their voting instructions to the CPF Approved
Nominees within the time frame specified to enable them to vote on their behalf.
I/We, of
being a member/members of OSIM International Ltd (the “Company”), hereby appoint:
Name
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
Address
Notes :
1.
Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository
Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number
of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of
Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name
in the Register of Members, you should insert the aggregate number of Shares entered against your name in the
Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument
appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.
2.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two
proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.
3.
Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/
her shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4.
Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting
at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting
in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under
the instrument of proxy to the Meeting.
5.
The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 65 Ubi
Avenue 1, OSIM Headquarters, Singapore 408939 not less than 48 hours before the time appointed for the Meeting.
6.
The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised
in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either
under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or
proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy
thereof must be lodged with the instrument.
7.
A corporation which is a member may authorise by resolution of its directors or other governing body such person as
it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter
50 of Singapore.
and/or (delete as appropriate)
Name
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
Address
or failing the person, or either or both of the persons, referred to above , the Chairman of the Meeting as my/our proxy/
proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on
31 March 2015 at 2.30 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the
Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of
any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting
at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
(Please indicate your vote “For” or “Against” with a tick [ ] within the box provided.)
No. Resolutions relating to:
1 Directors’ Report and Audited Accounts for the year ended 31 December 2014.
2 Declare a final dividend of 2.00 cents per ordinary share for the year ended 31
December 2014.
3 Re-election of Mr Charlie Teo as an Executive Director.
4 Re-election of Mr Peter Lee as an Executive Director.
5 Approval of Directors’ fees amounting to S$170,000
6 Re-appointment of Messrs Ernst & Young as Auditors and authorise the Directors to fix
their remuneration.
7 Authority to allot and issue new shares.
8 Renewal of Shareholders’ Mandate for Interested Person Transactions.
9 Renewal of Share Buy-back Mandate.
Dated this
day of
2015
Total number of Shares in:
For
Against
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed
or illegible, or where the true intentions of the appointer are not ascertainable from the instructions of the appointer specified
in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the
Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointer, is not shown
to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the
Meeting, as certified by The Central Depository (Pte) Limited to the Company.
No. of Shares
(a) CDP Register
(b) Register of Members
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
207
208
COURAGE
CALCULATE
COMMITMENT