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01CORPORATE PROFILE &MISSION STATEMENT
02CHAIRMAN’S MESSAGE
04OPERATIONS REVIEW
06AWARDS AND
CERTIFICATIONS
07GROUP STRUCTURE
08BOARD OF DIRECTORS
11KEY EXECUTIVES
12OUR NETWORK
13CORPORATE MILESTONE
15CORPORATE
GOVERNANCE REPORT
28FINANCIAL STATEMENTS
92ADDITIONAL INFORMATION
94STATISTICS OF
SHAREHOLDINGS
96NOTICE OF ANNUAL GENERAL
MEETING
PROXY FORM
CONTENTS
BOARD OF DIRECTORSDr John Chen Seow Phun, ChairmanChing Heng Yang, Vice ChairmanTam WaiHo Nee KitHew Lien LeeTan Yew BengFoo Say Tun
EXECUTIVE DIRECTORSChing Heng YangTam WaiHo Nee KitHew Lien Lee
NON-EXECUTIVE DIRECTORSDr John Chen Seow PhunTan Yew BengFoo Say Tun
AUDIT COMMITTEEDr John Chen Seow Phun, ChairmanTan Yew BengFoo Say Tun
NOMINATING COMMITTEEFoo Say Tun, ChairmanDr John Chen Seow PhunTan Yew Beng
REMUNERATION COMMITTEETan Yew Beng, ChairmanDr John Chen Seow PhunFoo Say Tun
COMPANY SECRETARYTeo Meng KeongChan Lai Yin
REGISTERED OFFICE8 Tuas Drive 1Singapore 638675Tel : (65) 6578 7338Fax: (65) 6578 7347Website: www.fuyucorp.com
SHARE REGISTRARBoardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623
EXTERNAL AUDITORSKPMG LLP16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581
Audit Partner: Kum Chew FoongSince financial year 2015
BANKERSDBS Bank LtdMalayan Banking Berhad
CORPORATE INFORMATION
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FU YU CORPO
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Established in 1978 as a partnership fabricating injection moulds and manufacturing plastic injection parts, Fu Yu has since grown to become a listed corporation with global presence. We are now one of the largest manufacturers and suppliers of high-precision injection moulds and plastic parts in Asia. Currently, we have 10 manufacturing plants in Singapore, Malaysia and China.
Taking a vertically integrated approach towards greater profitability, our operations make a complete range from design to fabrication to assembly, and include secondary processes such as silk screening, pad printing, ultrasonic welding, heatstaking and spray painting. The markets we serve include the information technology, telecommunications, automotive, medical, electronic and electrical appliance and water filtration in home appliance sectors.
MISSION STATEMENTFu Yu aims to be the preferred global partner in engineering plastic products, from design to full assembly. We will deliver our vision through: embracing technology and creativity; providing satisfaction to our customers; continuous learning for our people; and maximising returns to our shareholders.
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DEAR SHAREHOLDERS,
FY2015 proved to be a challenging but fulfilling year for Fu Yu. Just like many others in the industry, the Group was affected by continuing downward price pressure and rising operation costs. Nevertheless, amidst these obstacles, the Group built on the momentum generated in 2014, and managed to perform well, with a 48.4% increase in net profit to S$16.7 million, in spite of a 12.6% dip in revenue to S$222.5 million.
The positive performance was the result of strategic moves initiated by the Group since 2013. Through firm cost management, a strong focus to drive productivity, and ongoing efforts to right-size and consolidate the operations at our various plants, our gross profit was pushed up by 14.2% to S$35.5 million. Gross profit margin improved 3.7 percentage points to 15.9%.
OPERATIONAL HIGHLIGHTS These results clearly validated the strategic measures that the Group undertook. In 2015, we continued to improve efficiency and lower product rejection levels, thus minimising machinery down-time and materials wastage. As always, this was achieved by carefully getting to the root of the rejection issues and addressing them.
Overall productivity and efficiency of our plants was improved, by uncovering their potential profitability, with an emphasis on lean manufacturing. The Group’s investments in new and more advanced machinery to either semi-automate or fully-automate various processes also paid off. Headcount has also been managed tightly by simplifying the production processes. This left us DR JOHN CHEN SEOW PHUN
CHAIRMAN’SMESSAGE
FY2015 PROVED TO BE A CHALLENGING BUT FULFILLING YEAR FOR FU YU.
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with a lean roster of staff, but kept at an optimal level to support our operations.
The Group continues to maintain tight control over inventory by actively monitoring inventory levels to ensure they are kept in line with customers’ orders. The implementation of just-in-time inventory management and tighter production planning control further reduced inventory holding.
Operations in Malaysia remain focused on our core businesses after the assets disposal by our major subsidiary in Malaysia, Classic Advantage Sdn Bhd (“Classic Advantage”), in 2013. Despite the fact that the Malaysia segment saw a decrease in revenue as a result of the right-sizing exercise, both of the Malaysia subsidiaries achieved higher profits and better profitability in FY2015.
In China, the Group’s performance for FY2015 was not as positive as expected. This was largely due to decrease in sales in two of the China subsidiaries. We will continue to look at ways to increase revenue, raise efficiency and tighten costs in all our China plants in order to yield a better result.
Fu Yu Corporation Ltd, our headquarters in Singapore, recorded significantly higher revenues, boosted by sales of green and medical products – strong drivers that we will continue to build on. Like our operations in Malaysia and China, we will strive to source for projects that deliver higher profit margins, and continue to improve the productivity and efficiency of our Singapore plants.
OUTLOOK Looking ahead, we expect industry competition to intensify amidst growing uncertainty in the world’s economy. The challenge is for us to continuously cement our foundation to support sustainable growth.
With our successful efforts to consolidate and streamline operations, we are now in a stronger position to build on our core business – manufacturing and sub-assembly of precision plastic parts and components, as well as fabrication of precision moulds and dies. We will focus on new products that will provide the sustainable growth for the next 5 to 10 years. This includes automobile, medical, and green products such as air, water and solar products.
It is important that we continue to stay close to our customers, keep our eyes open, ears to the ground and step up our sales and marketing efforts to attract more orders. Our improved profitability in 2015 shows the Group is moving in the right direction and we will continue to upgrade our machinery for higher productivity and invest in talented and skilled staff to further improve the Group’s performance.
FY2015 DIVIDENDSI am glad to report that the Group has declared and paid dividends in 2015, comprising 0.25 cent per share paid on 16 September 2015 and another 0.25 cent per share paid on 8 December 2015. The Group has also proposed a final dividend for FY2015 of 1.0 cent per share, subject to shareholders’ approval at the AGM.
WORDS OF APPRECIATION To our board of directors, management team, staff and business associates, thank you for your continued support. I look forward to forging stronger camaraderie with all of you as we propel the Group forward together. To our shareholders, thank you for placing your trust in Fu Yu.
DR JOHN CHEN SEOW PHUNChairman
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REVENUEFor the year ended 31 December 2015 (FY2015), the Group recorded a 12.6% decline in revenue from S$254.4 million to S$222.5 million. While a majority of the decrease in revenue came from the China segment, the Malaysia segment also recorded a drop in revenue for the year 2015 as a result of decrease in orders and depreciation of the Malaysia Ringgit against the Singapore Dollar. The decrease in revenue in China and Malaysia segments was partially offset by the increase in revenue in Singapore segment.
GROSS PROFIT AND GROSS MARGIN Cost of sales decreased by S$36.4 million or 16.3% from S$223.4 million in FY2014 to S$187.0 million in FY2015. Other than decrease in revenue, right-sizing exercises that were carried out in some of the Group’s operations drove the cost of production down. In addition, fixed costs such as depreciation decreased as certain property, plant and equipment were fully depreciated during the year.
Gross profit for FY2015 increased by S$4.4 million or 14.2% from S$31.1 million in FY2014 to S$35.5 million in FY2015. Gross profit margin was 15.9% for FY2015 as compared to 12.2% in the last corresponding year.
The Group’s gross profit margin improvement in FY2015, despite the decrease in revenue, was partly attributed to better cost management and better utilisation of facilities by right-sizing some of its operations and carrying out lean manufacturing activities. Also contributing to the improved margin was the appreciation of US Dollar against Singapore Dollar, Malaysia Ringgit and Chinese Renminbi, which are the local currencies where the Group operates in. In addition, fixed costs such as depreciation has decreased, as certain property, plant and equipment were fully depreciated in FY2015.
OTHER INCOME The Group’s other income decreased by S$1.0 million from S$10.6 million in the last corresponding year to S$9.6 million in FY2015. The decrease was mainly due to decrease in government grants by S$1.6 million. This was mainly due to decrease in government grants received by a China subsidiary as most of the amounts granted has been received in the previous years. The
decrease in government grants was partially offset by a one-time gain on liquidation of a subsidiary in China of S$0.4 million recorded during the year.
For the year ended 31 December 2015, other operating income increased by S$0.9 million from S$1.5 million in the last corresponding year to S$2.4 million in current year under review. The increase was mainly attributed to no impairment loss on property, plant and equipment was recorded in current year under review, compared to a net impairment of property, plant and equipment of S$0.5 million in FY2014. In addition, the increase was partly contributed by the increase in foreign exchange gain by S$0.2 million from S$2.5 million in last corresponding year to S$2.7 million in current year under review.
The Group’s foreign exchange gain in the current year under review was resulted from the translation of receivables, cash, payables and borrowings denominated in foreign currencies to the functional currencies of the respective companies in the Group. The strengthening of the US Dollar against the Singapore Dollar, Malaysia Ringgit and Chinese Renminbi had contributed to the foreign exchange gain as the Group is at net US Dollar assets position.
FINANCE COSTS Finance costs decreased in the current year under review as compared to last year. This was due to full repayment of bank borrowings in Q1 2015.
PROFITABILITYThe Group’s share of profit of joint venture in FY2015 amounted to S$0.4 million as compared to share of loss of S$0.4 million in the last corresponding year. The improvement in profitability of the joint venture company was due to increase in its business activities and increase in foreign exchange gain recorded during the year.
Profit before income tax for the Group was recorded at S$18.4 million for FY2015 as compared to S$13.4 million for FY2014, an increase of S$5.0 million or 37.4%. The increase in profit before income tax was mainly attributed to (i) improvement in gross profit by S$4.4 million, (ii) nil impairment on property, plant and equipment in current year as compared to net impairment on property, plant and equipment of S$0.5 million and (iii) increase in foreign exchange gain by S$0.2 million in the current year.
Income tax expense was S$1.8 million and effective tax rate was 9.5% in the current year under review. The low
OPERATIONSREVIEW
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effective tax rate for the current year under review was mainly due to the recognition and utilisation of deferred tax assets not recognised in prior years. The impact of the recognition and utilisation of deferred tax assets was offset by the income tax expenses from the profit-making China subsidiaries, reclassification of withholding taxes from selling and administrative expenses to income tax expense of S$0.5 million and recognition of deferred tax liabilities by the holding company.
CASH POSITIONThe Group’s cash and cash equivalents (excluding cash deposits pledged) stood at S$99.9 million as at 31 December 2015, which is an increase of S$23.3 million (including effects of exchange rate fluctuations on cash held) from cash and cash equivalents as at 31 December 2014.
The increase in cash and cash equivalents was mainly attributed to net cash generated from operating activities of S$34.2 million, offset by payments for purchase of property, plant and equipment of S$6.3 million, cash distribution to shareholders through capital reduction of S$3.8 million, dividends payment to shareholders of the Company of S$3.8 million, and net repayment of short term borrowings and financial lease liabilities of S$1.4 million.
GEOGRAPHICAL SEGMENT REVIEWSINGAPORERevenue from the Group’s Singapore operations increased by S$2.2 million or 5.0% from S$42.8 million in FY2014 to S$45.0 million in FY2015. The increase was mainly due to an increase in demand for the moulding business, medical and green products in this segment. Singapore contributed 20.2% to the Group’s FY2015 revenue.
Excluding the dividend income of S$7.3 million from profitable Malaysia and China subsidiaries and interest income of S$0.2 million from China subsidiaries, FY2015 segment profit for Singapore segment would be S$9.0 million.
Profit recorded by this segment increased by S$6.4 million from S$2.6 million in the last corresponding year to S$9.0 million in the current year under review. This was attributed to increase in sale of better margin products, improvement in operational efficiency, better cost management and a decrease in depreciation charges as certain property, plant and equipment
were fully depreciated in the year under review. There was no impairment loss made for property, plant and equipment in FY2015 as compared to S$0.7 million impairment loss recorded in the last corresponding year. Appreciation of the US Dollar against Singapore Dollar had also contributed to the better profitability of the Singapore segment.
CHINAThe Group’s China segment recorded a significant revenue decrease of S$28.0 million or 17.0% from S$164.7 million in FY2014 to S$136.7 million in FY2015 due to decrease in sales order. China segment contributed 61.4% to the Group’s FY2015 revenue.
Segment profit decreased by S$2.5 million from S$6.3 million in the last corresponding year to S$3.8 million in the current year under review. The decrease in China segment profit was due mainly to decrease in its revenue, as certain China subsidiaries are yet to operate at their optimal efficiency. The decrease in profit was moderated by the decrease in depreciation as certain property, plant and equipment were fully depreciated in current year under review.
MALAYSIAThe Malaysian operations saw a revenue decrease of S$6.1 million or 13.0% from S$46.9 million in FY2014 to S$40.8 million in FY2015 due mainly to a reduction in orders as well as the depreciative impact of Malaysia Ringgit against Singapore Dollar. Malaysia contributed 18.4% to the Group’s FY2015 revenue.
Segment profit increased by S$2.9 million or 55.2% from S$5.2 million in FY2014 to S$8.1 million in FY2015. The improvement in profitability of the Malaysia segment, despite a decrease in revenue, was attributed to an improvement in production efficiency, better costs management by right-sizing its operations, and a reduction of low margin projects. The appreciation of US Dollar against Malaysia Ringgit further contributed to the profit increase, with foreign exchange gains increase by S$1.0 million.
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AWARDS ANDCERTIFICATIONS
2016 Corporate Certification Plan
Company Plan
Fu Hao Manufacturing (M) Sdn Bhd ISO 13485:2012
AWARDS RECEIVED BY FU YU GROUP IN YEAR 2015
Company Awards
Fu Yu Corporation Limited May Day Model Partnership Awards 2015Singapore International 100 Company 2015Singapore 1000 Company 2015
Fu Hao Manufacturing (M) Sdn Bhd Preferred Supplier Award 2015 from Bosch Germany
CORPORATE ISO AND QS CERTIFICATION FOR FU YU GROUP AS AT END OF YEAR 2015
Company ISO 9001:2008
ISO 13485:2012
ISO 14001:2004
TS 16949:2009
Fu Yu Corporation Limited ^ ^
Classic Advantage Sdn Bhd ^ ^ ^
Fu Hao Manufacturing (M) Sdn Bhd ^ ^ ^
SolidMicron Technologies Pte Ltd ^ ^
NanoTechnology Manufacturing Pte Ltd ^ ^ ^
Fu Yu Moulding & Tooling (Dongguan) Co., Ltd.
^ ^ ^
Fu Yu Moulding & Tooling (Shanghai) Co., Ltd.
^ ^ ^
Fu Yu Moulding & Tooling (Suzhou) Co., Ltd.
^ ^ ^ ^
Fu Yu Moulding & Tooling (Zhuhai) Co., Ltd.
^ ^ ^
Fu Yu Moulding & Tooling (Chongqing) Co., Ltd.
^ ^ ^
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FU YU CORPORATION LIMITED
NANOTECHNOLOGY MANUFACTURING
PTE LTD
80%
SOLIDMICRON TECHNOLOGIES
PTE LTD
100%
CHANG FU RESOURCES PTE LTD
100%
FU YU MOULDING & TOOLING (SUZHOU)
CO., LTD
100%
FU YU MOULDING & TOOLING (DONGGUAN)
CO., LTD
100%
FU YU MOULDING & TOOLING (ZHUHAI)
CO., LTD
100%
FU YU MOULDING & TOOLING (WUJIANG)
CO., LTD.∆100%
FU YU ELECTRONICS (DONGGUAN)
CO., LTD.#
100%
FU YU TRADING LIMITED
100%
FU YU INTERNATIONAL ENTERPRISE LIMITED
100%
FU YU INVESTMENT PTE LTD
100%
LCTH CORPORATION BERHAD
70.64%
CLASSIC ADVANTAGE SDN BHD
100%
FU HAO MANUFACTURING
(M) SDN BHD
100%
BERRY PLASTICS MALAYSIA SDN BHD
(FORMERLY KNOWN AS REXAM MALAYSIA SDN BHD)
40%
FU YU MOULDING & TOOLING
(SHANGHAI) CO., LTD.
100%
FU YU MOULDING & TOOLING (CHONGQING)
CO., LTD.
100%
∆ Ceased production# Dormant
GROUPSTRUCTURE
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BOARD OFDIRECTORS
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1 DR JOHN CHEN SEOW PHUN
Non-Executive Chairman, Independent Director
Dr John Chen Seow Phun, 62, was appointed as Non-Executive Chairman and Independent Director of the Company on 27 November 2007 and was last re-elected on 30 April 2013. He will stand for re-election as a Director in the forthcoming Annual General Meeting.
Dr Chen was a Member of Parliament from 1998 to 2006. He was the Assistant Secretary General of the NTUC from 1991 to 1997 and served as the Deputy Chairman and Managing Director of NTUC Healthcare Co-op from 1992 to 1997. From March 1997 to June 1999, he was the Minister of State, Ministry of Communications. And from June 1999 to November 2001, he was the Minister of State, Ministry of Communications & Information Technology as well as Ministry of National Development. Prior to joining the Government in 1997, Dr Chen has served as a Board Member of the Economic Development Board, the Housing and Development Board, the Port of Singapore Authority and Singapore Power Ltd.
Dr Chen is presently the Executive Chairman of Pavillon Holdings Ltd (formerly known as Thai Village Holdings Ltd) and the Chairman of SAC Capital Pte Ltd. He also sits on the board of a number of publicly listed companies.
Dr Chen holds a PhD in Electrical Engineering from the University of Waterloo, Canada. He taught at the National University of Singapore from 1983 to 1991.
At 31 December 2015, Dr Chen holds 0.13% direct interest in the Company.
2 CHING HENG YANG
Vice Chairman, Executive Director
Mr Ching, 65, one of the co-founders of Fu Yu, is the Vice Chairman and Executive Director of the Group. Mr Ching was appointed as the Executive Director on 10 December 1980 and was last re-elected on 30 April 2015. Mr Ching oversees the plastic injection moulding, finishing and sub-assembly operations of the Group. He is also responsible for the investment in factory buildings and machinery of the Group. Mr Ching has over 41 years of experience in the mould fabrication and plastic injection moulding industry.
Mr Ching is a member of the Singapore Institute of Directors.
At 31 December 2015, Mr Ching holds 11.81% direct interest in the Company.
3 HO NEE KIT
Executive Director
Mr Ho, 62, one of the co-founders of Fu Yu, is the Executive Director of the Group. He was appointed as the Executive Director on 10 December 1980 and was last re-elected on 29 April 2014. He will stand for re-election as a Director in the forthcoming Annual General Meeting.
Mr Ho jointly oversees the mould fabrication, plastic injection moulding, finishing and sub-assembly operations of the Group. Prior to joining Fu Yu, Mr Ho worked for a plastic injection company as a tool maker. Realising the potential of the precision mould making industry in the 1970s, together with the other 3 partners who also shared the same vision of the industry, they founded Fu Yu in 1978.
Mr Ho is a member of the Singapore Institute of Directors.
At 31 December 2015, Mr Ho holds 12.88% direct interest in the Company.
4 TAM WAI
Executive Director
Mr Tam, 65, one of the co-founders of Fu Yu, is the Executive Director of the Group. He was appointed as the Executive Director on 10 December 1980 and was last re-elected on 30 April 2013. He will stand for re-election as a Director in the forthcoming Annual General Meeting.
Mr Tam oversees the mould design and fabrication operations of the Group. Prior to joining Fu Yu, he involved in mould design and fabrication for 10 years in Hong Kong specializing in high precision moulds for the electronics and electrical industries. Mr Tam has over 46 years of experience in the mould fabrication and plastic injection moulding industry.
Mr Tam is a member of the Singapore Institute of Directors.
At 31 December 2015, Mr Tam holds 12.84% direct and 0.04% deemed interests in the Company.
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BOARD OFDIRECTORS
5 HEW LIEN LEE
Executive Director, Chief Executive Officer and Chief Operating Officer
Mr Hew, 59, was appointed as Executive Director and Chief Operating Officer of the Company on 22 March 2007. Mr Hew was appointed acting Chief Executive Officer on 21 May 2014 and was promoted to Chief Executive Officer of the Group on 26 February 2016. He was last re-elected on 30 April 2015. Mr Hew is also the Managing Director of LCTH Corporation Berhad (“LCTH”), the Malaysia subsidiary of Fu Yu Group, listed on the Main Market of Bursa Malaysia Securities Berhad, Malaysia on 8 November 2004.
Mr Hew joined Fu Yu in 1984 and holds a Diploma in Electrical Engineering. With 36 years of experience in the plastic injection moulding industry, he has played an instrumental role in the successful listing of LCTH. He is responsible for the overall strategic direction and management of the Group.
Mr Hew is a member of the Singapore Institute of Directors.
As at 31 December 2015, Mr Hew holds 1.08% direct interest in the Company.
6 TAN YEW BENG
Non-Executive Director, Independent Director
Mr Tan, 59, is a Non-Executive and Independent Director of Fu Yu. He was appointed as Director on 22 May 1995 and was last re-elected on 30 April 2015. Mr Tan is the Chairman of the Remuneration Committee and member of the Audit and Nominating Committees. He is also a director of several Singapore and Malaysia companies.
Mr Tan holds a Bachelor of Commerce Degree from Nanyang University, Graduate Diploma in Marketing Management from the Singapore Institute of Management and Diploma in Marketing from the Institute of Marketing, United Kingdom.
Mr Tan is serving actively in several social, education and community organisations. In recognition of his contribution to the community, Mr Tan was awarded the Public Service Medal (Pingkat Bakti Masyarakat - PBM) in 2008 and subsequently the Public Service Star (Bintang Bakti Masyarakat – BBM) in 2013. He is also a member of the Singapore Institute of Directors.
At 31 December 2015, Mr Tan holds 0.34% direct interest in the Company.
7 FOO SAY TUN
Non-Executive Director, Independent Director
Mr Foo, 50, is a Non-Executive and Independent Director of Fu Yu. He was appointed as Director on 27 November 2007 and was last re-elected on 29 April 2014. He is presently the Chairman of the Nominating Committee and a member of the Audit and Remuneration Committees.
Mr Foo is qualified to practise law in Singapore and Malaysia, and he used to practise civil and commercial litigation.
As at 31 December 2015, Mr Foo does not hold any direct or indirect interest in the Company.
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YEO SEE JOOGroup Business Development Director
Mr. Yeo, 52, joined Fu Yu Corporation Ltd as Group Business Development Director. He is responsible for formulating the Group’s business development strategy, developing new business/market opportunities, growing existing business and proposing direction for product development. He has over 30 years of business development experience in the plastics industry holding middle to senior management positions. He joined Philips Machine Factory in 1983 as a mold maker and later joined Tritech Manufacturing Pte Ltd as mold designer and project engineer in 1986, and in 1994 joined Thomson Multi Media as a Tooling Engineer. In 1995 he joined TTL Holding Ltd (also known as Scintronix Corporation Ltd) and in-charge of the Sales and Marketing and Programs Management in the company till 2005. He later joined Watson Plastics Manufacturing Pte Ltd as the Corporate Business Development Director. He holds an Advance Diploma in Business Management from University of Bradford.
TAN LAY KHENGGroup Human Resource Director
Madam Tan, 62, was the Group Human Resource Manager before she is promoted to Group Human Resource Director in October 2008. She oversees the management and development of the human resources across the Group. She is also responsible for the administrative function of the Group. Madam Tan has 40 years of experience in Industrial Relations Management. She holds a Bachelor of Art Degree from Nanyang University of Singapore.
CHEAH NGOOK WAHSenior Group Financial Controller
Ms Cheah, 42, is the Senior Group Financial Controller of Fu Yu Group. She joined Fu Yu in August 2002 and was promoted to Group Financial Controller in June 2006. In July 2015, Ms Cheah was promoted to Senior Group Financial Controller. She is responsible for the Group’s accounting and finance functions. Prior to joining Fu Yu, she was an auditor with two of the international accounting firms for five years. Ms Cheah is a member of Certified Public Accountant Australia and graduated from the University of Western Australia. She holds a Bachelor of Commerce Degree.
KEYEXECUTIVES
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FU YU MOULDING & TOOLING (DONGGUAN) CO., LTDJing Fu Rd, Xin Cheng Industry AreaHeng Li Town, DongguanGuangdong, China 523477Tel: (86769) 8982 1818Fax: (86769) 8982 1815
LCTH CORPORATION BERHAD21 Jalan Teknologi 4Taman Teknologi Johor81400 Senai, Johor, MalaysiaTel: (607) 599 9980Fax: (607) 599 9982www.lcthcorp.com
FU YU CORPORATION LIMITED (HEADQUARTERS)8 Tuas Drive 1, Singapore 638675Tel: (65) 6578 7338Fax: (65) 6578 7347www.fuyucorp.com
NANOTECHNOLOGY MANUFACTURING PTE LTD8 Tuas Drive 1, Singapore 638675Tel: (65) 6755 2280Fax: (65) 6755 7326www.nanotechnology.com.sg
SOLIDMICRON TECHNOLOGIES PTE LTD7 Tuas Drive 1, Singapore 638674Tel: (65) 6933 8700Fax: (65) 6933 8720www.solidmicrontech.com
SINGAPORE
MALAYSIAFU HAO MANUFACTURING (M) SDN BHDPlot 562 Mukim 1Lorong Perusahaan Baru 1 Perai IIIPerai Industrian Estate, 13600 PeraiPenang, MalaysiaTel: (604) 398 0500Fax: (604) 398 3221
CLASSIC ADVANTAGE SDN BHD21 Jalan Teknologi 4Taman Teknologi Johor81400 SenaiJohor, MalaysiaTel: (607) 599 9980Fax: (607) 599 9982
CHINAFU YU MOULDING & TOOLING (ZHUHAI) CO., LTD477Jinhaian Road, Sanzao TownJin Wan District, Zhuhai, Guangdong China 519040Tel: (86756) 7761 862Fax: (86756) 7761 851
FU YU MOULDING & TOOLING (SHANGHAI) CO., LTD888 Xin Ling RoadWaiGaoQiao Free Trade ZoneShanghai, China 200131Tel: (8621) 5046 1225Fax: (8621) 5046 0229
FU YU MOULDING & TOOLING (SUZHOU) CO., LTD89 Xing Nan RoadWuzhong Economic Skill Development ZoneSuzhou, China 215128Tel: (86512) 6562 1838Fax: (86512) 6563 9463
FU YU MOULDING & TOOLING (CHONGQING) CO., LTDBlk 2 & 3, 18 Shi Gui Ave, Jie Shi Town Banan District, Chongqing China 401346Tel: (8623) 6121 9988Fax: (8623) 6121 9988-690
OURNETWORK
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CORPORATEMILESTONE
200920102012
• GrantofOptionspursuanttoFuYuEmployeesShareOptionScheme
• Completionofsaleandleasebackofpropertylocatedat11JalanPersiaranTeknologi,TamanTeknologiJohor,Senai,Johor,Malaysia
• CompletionofCapitalRepaymentandSharesConsolidationofLCTHCorporationBerhad
• ObtainedISO9001:2000,ISO14001andTS16949certificationforourplantinShanghai
• IncorporationofFuYingMoulding&Tooling(Shenzhen)Co.,LtdinShenzhen,China
• ObtainedISO14001:2004certificationforourplantinPenang,Malaysia
• ObtainedTS16949certificationforourplantinJohor,Malaysia
• ConversionofISO9001:2000toISO9001:2008certificationfortheCompanyandourplantinPenang,Malaysia
• EnteredintosaleandpurchaseagreementtodisposepropertiesinTianjinplant,China
• Disposalof100%interestinQingDaoFuQiangElectronicsCo.,Ltd
• SaleandleasebackofFuYuMoulding&Tooling(Shanghai)Co.,Ltd’sproperties
• Completionofmember’svoluntaryliquidationofFuYuGuadalajaraS.A.DeC.V.
• ObtainedISO14001:2004andOHSAS18001:2007certificationforourplantinJohor,Malaysia
• ObtainedTS16949:2009certificationforourplantsinDongguan,ZhuhaiandSuzhouinChina
• ConversionofISO9001:2000toISO9001:2008certificationforourplantsinJohor,MalaysiaandDongguan,Zhuhai,Shanghai,Suzhou,WujianginChinaandSolidMicroninSingapore
• SetupFuYuMoulding&Tooling(Chongqing)Co.,LtdbyFuYuMoulding&Tooling(Shanghai)Co.,LtdinChina
• ObtainedISO13485:2003certificationforourplantsinJohor,MalaysiaandSuzhouinChina
• ObtainedTS16949:2009certificationforourplantinPenang,Malaysia
• Completionofmember’svoluntaryliquidationofFuYuMoulding&Tooling(Tianjin)Co.,Ltd
• Completionofmember’svoluntaryliquidationofFuYuMoulding&Tooling(Wuxi)Co.,Ltd
20082011
• SetupSenawangplantbyClassicAdvantage
SdnBhd• Completionof
disposalofpropertiesinTianjinplant,
China
• ObtainedISO9001:2008certificationforourplantinChongqing,China
• ExpiryofFuYuEmployeesShareOptionSchemeon31December2014
• Obtainedshareholders’approvalforsharepurchasemandate
• Completionofcapitalreductionandcashdistributiontoshareholders
• ObtainedISO14001:2004andTS16949:2009certificationforourplantinChongqing,China
• Completionofmember’svoluntaryliquidationofFuYingMoulding&Tooling(Shenzhen)Co.,Ltd
2014
20152007
• Placementof117millionnewordinarysharesatS$0.18eachinthecapitaloftheCompany
• SignedSaleandPurchaseAgreementforsaleandleasebackofpropertylocatedat11JalanPersiaranTeknologi,TamanTeknologiJohor,Senai,Johor,Malaysia
• SetupFuYuMoulding&Tooling(Wuxi)Co.,Ltd,China
• DisposalofKodon(Tianjin)Electronics&ElectricalApparatusCo.,Ltd,China
• ImplementedSAPEnterpriseResourcePlanningSystematFuYuMoulding&Tooling(Suzhou)Co.,Ltd,China
• ObtainedISO9001:2000certificationforSolidMicronTechnologiesPteLtd
• ObtainedISO13485:2003certificationforNanoTechnologyManufacturing
PteLtd
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CORPORATEMILESTONE
• ImplementedSAPEnterpriseResourcePlanningSysteminSingapore
• AchievedISO14001certificationforourplantinSingapore
• AchievedISO9001:2000certificationforourplantinSenai,Malaysia
• AdditionalwarehousebuiltforourplantinTianjin,China
2001
• ChangeofCompany’snamefromFuYuManufacturingLimitedtoFuYuCorporationLimited
• Placementof23millionnewOrdinarySharesofS$0.10eachinthecapitaloftheCompany
• ListingofLCTHCorporationBerhadontheMainBoardofBursaMalaysiaSecuritiesBerhad(formerlyknownasMalaysiaSecuritiesExchangeBerhad)inMalaysia
• PurchaseoflandandconstructionofbuildingsinJohorTechnologyParktoincreasemanufacturingcapacityinJohor,Malaysia
• JointventurewithEDBVenturesPte.Ltd.onthesetupofanewcompany,NanoTechnologyManufacturingPte.Ltd.inSingapore
• WindupofMexicoplant• SetupplantinWujiang,China• SetupplantinQingdao,China• SetupanotherplantinShanghai,China• ConversionofISO9002toISO
9001:2000forourplantinSuzhou,China
• AchievedISO9001:2000certificationforourplantatWujiang,China
• AchievedISO9001:2000certificationforourplantatZhuhai,China
200420052006
• Completionofsaleandleasebackofpropertyat2SerangoonNorthAvenue5,Singapore
• JointventurebyLCTHCorporationBhd(Malaysia)withOwens-lllinoisPlasticsPteLtdonthesetupofanewcompany,O-IPlasticsMalaysiaSdnBhdinMalaysia
• SetupSolidMicronTechnologiesPte.Ltd.,Singapore
• AchievedISO14001certificationforourplantsatSuzhouandQingdao,China
2003
• SubmittedtheapplicationtotherelevantauthoritiesforthelistingofitsproposedMalaysiasubsidiarycompanyonthemainboardoftheMalaysiaSecuritiesExchangeBerhad
• SetupplantinZhuhai,China• Setupamanagement
company,FuYuInternationalEnterpriseLimitedinHongKong
• ImplementedSAPEnterpriseResourcePlanningSystemforourplantsinJohor,Malaysia
• ConversionofISO9002toISO9001:2000forourplantinSingapore
• ExtensionofISO14001toourTuasplantinSingapore
• ConversionofISO9002toISO9001:2000andachievedQS9000certificationforourplantinPenang,SenaiandKluang,Malaysia
• ConversionofISO9002toISO9001:2000andachievedQS9000certificationforourplantinDongguan
• EnteredintoaPutandCallOptionAgreementforsaleandleasebackofPropertyat2SerangoonNorthAvenue5,Singapore
• EnteredintoaMemorandumofUnderstandingbyLCTHCorporationBhd(Malaysia),withKnobsSdnBhd(Malaysia)toco-operateandworktogetherasastrategicalliance
• ImplementedSAPEnterpriseResourcePlanningSystematFuYuMoulding&Tooling(Dongguan)Co.,Ltd,China
• SetupFuYuElectronics(Dongguan)Co.,Ltd,China
• AchievedISO9001:2000&ISO14001forNanoTechnologyManufacturingPteLtd,Singapore
• AchievedISO14001certificationforourplantatDongguan,China
• AchievedTS16949certificationforourplantatTianjin,China
• AchievedISO9001:2000certificationforourplantatQingdao,China
• WindupofUSAplant
2002
• CommencedimplementationofSAPEnterpriseResourcePlanningSystemforourplantsinJohor,Malaysia
• AchievedISO9002:1994forourplantinMexico
• AdditionalfactorybuiltforourplantinSuzhou,China
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Introduction
TheBoardofDirectors(the“Board”)andManagementofFuYuCorporationLimited(the“Company”or“FuYu”)recognise the importance of having in place a set of well-defined corporate governance processes to enhancecorporateperformanceandaccountability.
This reportdescribesFuYu’smaincorporategovernancepracticesandactivitieswith reference to theSingaporeCodeofCorporateGovernance2012(the“Code”)andanydeviationsfromtheCodeareexplained.Unlessotherwisestated,thecorporategovernanceprocesseswereinplaceduringthefinancialyearunderreview.
BOARD MATTERS
Principle 1: The Board’s Conduct of Affairs
TheprincipalfunctionoftheBoardistoprotectandenhancelong-termvalueandreturnsforitsshareholders.Besidescarryingoutitsstatutoryresponsibilities,theBoard’srolesareto:
1. overseethemanagementoftheGroup;
2. approvecorporateandstrategicdirectionandpolicies;
3. approveannualbudgets,financialreporting,majorfundingandinvestmentproposals;
4. monitormanagementperformance;
5. ensure the Company’s compliance with prescribed legislations and regulations that are relevant to thebusiness;and
6. assumeresponsibilityforcorporategovernance.
AlltheDirectorsexerciseduediligence,independentjudgmentandconsidertheinterestoftheGroupatalltimesinmakingthedecisionsfortheGroup’saffairs.
Toassistinthedischargeofitsresponsibilities,theBoardhasestablishedanumberofBoardCommitteescomprisingtheAuditCommittee,RemunerationCommitteeandNominatingCommittee.Termsofreferencehasbeenputinplaceforeachoftherespectivecommittees.
TheBoardmeets regularlyonaquarterlybasisandad-hocBoardmeetingsare convenedwhencircumstancesrequire.TofacilitateBoard’sdecision-makingprocess, theCompany’sConstitutionallowsDirectors toparticipatein Board meetings by means of telephone, electronic or other communication facilities that permit all personsparticipatinginthemeetingtocommunicatewithoneanothersimultaneouslyandinstantaneously,andparticipationinsuchmeetingshallconstitutepresenceinpersonatsuchmeeting.InbetweenBoardmeetings,importantmattersconcerning theGrouparealsoput to theBoard for itsdecisionbywayofdirectors’ resolutions inwriting for theDirectors’approval.
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DetailsoftheDirectors’attendanceatBoardandCommitteesmeetingsduringtheyearunderreviewareasfollows:
Name of DirectorBoard
Audit Committee
Remuneration Committee
Nominating Committee
No. of Meetings
Held
No. of Meetings Attended
No. of Meetings
Held
No. of Meetings Attended
No. of Meetings
Held
No. of Meetings Attended
No. of Meetings
Held
No. of Meetings Attended
ChingHengYang 4 4 – – – – – –
TamWai 4 4 – – – – – –
HoNeeKit 4 4 – – – – – –
HewLienLee 4 4 – – – – – –
DrJohnChenSeowPhun
4 4 4 4 1 1 1 1
FooSayTun 4 4 4 4 1 1 1 1
TanYewBeng 4 4 4 4 1 1 1 1
TheCompanyhasestablishedinternalguidelinesformattersandtypesofmaterialtransactionsthatrequireBoard’sapproval.Theseinclude:
(a) allotmentandissueofnewsharesandadditionallistingapplication;
(b) bankingmatterssuchasopeningofbankaccountsandacceptanceofbankfacilities;
(c) materialacquisitionanddisposalofsubsidiariesandotherassets;
(d) announcementsforpublicrelease,quarterlyandfullyearresultsannouncement;
(e) anymajoragreementstobeenteredintowhetherintheordinaryoroutsideofordinarybusinessoftheGroup;
(f) dividendrecommendationsandpayment;and
(g) appointmentsandresignationsofdirectors. NewlyappointedDirectorswouldbebriefedbyManagementonthebusinessoperationsof theGroupandwherenecessaryplantvisitswouldbeorganisedasdeemednecessary.Routineupdatesondevelopmentsandchangesinoperatingenvironment,includingrevisionstoaccountingstandards,lawsandregulationsaffectingtheCompanyand/ortheGroupareregularlybroughttotheattentionoftheBoard.
Principle 2: Board Composition and Guidance
TheBoardcomprisesseven(7)Directorsofwhomfour(4)areexecutiveandthree(3)areindependentandnon-executive.TheBoardhasexamineditssize,takingintoaccountthescopeandnatureoftheoperationsoftheGroup,andissatisfiedthatthepresentsizeisappropriateinfacilitatingeffectivedecision-making.Boardmemberscompriseofprofessionalswithfinancial,accounting,legalandindustrybackgroundswhoareabletocontributetheirareaofexpertiseinleadingtheGroup.WhiletheBoarddoesnotcompriseanyfemaledirectoratthemoment,itscurrent
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compositionwithappropriatemixofexpertiseandexperienceenablestheManagementtobenefitfromadiverseandobjectiveperspectiveonanyissuesraisedbeforetheBoard.Noindividualorgroupof individualsdominatestheBoard’sdecisionmaking.
MrTanYewBeng(“MrTan”)hasbeenanindependentandnon-executivedirectoroftheCompanyformorethannine(9)years.TheNChasassessedMrTan’sindependenceandhasrecommendedtotheBoardofDirectorsthatMrTanremainsindependent.Inarrivingatthatconclusion,theNCtookintoaccountthatMrTanhasnever,andisnot,involvedinthedaytodaymanagementoftheCompany.ThereisnothingtosuggestthatMrTanhasanyrelationshipwiththeManagementwhichwouldimpairhisfairjudgment.TheNCalsonotedthatMrTanhasalwaysexercisedhisjudgmentintheinterestoftheCompanyandtheminorityshareholders,andhasexpressedhisviewsindependentlyatalltimes.TheBoardofDirectorsalsobenefitsfromMrTan’sbusinessexperienceandacumenwhichhebringstoBoardmeetings.
TheprofileofeachDirectorandotherrelevantinformationaresetoutundertheheading‘BoardofDirectors’onpages8to10.
Principle 3: Chairman and Chief Executive Officer
TheBoardrecognisedtheimportanceof therolesofChairmanandChiefExecutiveOfficer(“CEO”)tobeheldbyseparatepersons.
DrJohnChenSeowPhunistheNon-ExecutiveChairmanoftheCompanyandMrHewLienLeeistheCEOoftheCompany.
The Non-Executive Chairman schedules board meetings when necessary and set the board meeting agenda inconsultationwiththeCEOandSeniorGroupFinancialController.HeensuresthattheBoardmembersareprovidedwithcomplete,adequateandtimelyinformation.TheNon-ExecutiveChairmanalsoassistsinensuringcompliancewiththeGroup’sguidelinesoncorporategovernance.
Principle 4: Board Membership
TheNominatingCommittee (“NC”) currently comprisesMr FooSay Tun,Mr TanYewBengandDr JohnChenSeowPhun.TheNCischairedbyMrFooSayTunwhoisnotassociatedwithanysubstantialshareholdersoftheCompany.
TheNChaswrittenTermsofReferencethatdescribetheoperatingproceduresandresponsibilitiesofitsmembers.
ThedutiesoftheNCareasfollows:
1. Reviews the structure, size and composition of the Board and makes recommendations to the Board with regards to any adjustments in the structure, size and composition of the Board that are deemednecessary;
2. Reviewsallnominationsfortheappointmentsandre-electionsofDirectorforthepurposeofproposingsuchnominationstotheBoardforapproval;
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3. ConductsareviewtodeterminetheindependenceofeachDirector;
4. DecideswhetherornotaDirectorisabletoandhasbeenadequatelycarryingouthisdutiesasaDirectoroftheGroup,particularlywhenhehasmultipleboardrepresentations;
5. DecideshowtheBoard’sperformancemaybeevaluatedandproposesobjectiveperformancecriteria;
6. Conductsa formalassessmentof theeffectivenessof theBoardasawholeandthecontributionbyeachDirectortotheeffectivenessoftheBoard;and
7. RecommendtotheBoardthemaximumnumberoflistedcompanyrepresentationswhichanyDirectormayhold.
Initsannualreview,theNChavingconsideredtheguidelinessetoutintheCode,hasconfirmedindependencestatusoftheIndependentDirectors.DespitesomeoftheDirectorshavingotherboardrepresentations,theNCissatisfiedthattheseDirectorsareabletodevotesufficienttimeandattentiontoattendtotheaffairsoftheCompanyandadequatelycarryouttheirdutiesasDirectorsoftheCompany.
Basedon thecurrentandpastworkingexperiencewith theBoardmembersof theCompanyofwhomsomearesittingandhavebeensittingonmultipleboards,theNCdeterminesthattheappropriatemaximumnumberofthelistedcompanyboardrepresentationswhichanExecutiveDirectormayholdisthree(3)andforIndependentNon-ExecutiveDirectorisnine(9).TheNCwillcontinuetoassesswhetherthesenumbersneedtoberevisedtoensuretheDirectorsdevotesufficienttimeandattentiontotheaffairsoftheCompany.
InaccordancewiththeCompany’sConstitution,allDirectorssubmitthemselvesforre-electiononceeverythree(3)years.Inaddition,aDirectorappointedbytheBoardtofillacasualvacancy,orappointedasanadditionalDirector,mayonlyholdofficeuntilthenextAnnualGeneralMeeting(“AGM”),atwhichtimehewillbeeligibleforre-electionbyshareholders.
Inrecommendingacandidateforappointmentorre-appointmenttotheBoard,theNCconsidershiscontributionstotheBoardandhisindependence.TheNChasrecommendedthere-electionofDrJohnChenSeowPhun,MrHoNeeKitandMrTamWaiasDirectorsoftheCompanyattheforthcomingAGM.Inmakingitsrecommendation,theNCevaluatessuchDirectors’contributionandperformance,suchastheirattendanceatthemeetingsoftheBoardandBoardCommittees,whereapplicable,participation,candourandanyspecialcontribution.SaveforMrHoNeeKitandMrTamWaiwhoarealsosubstantialshareholdersholding12.88%and12.84%oftheCompany’ssharecapitalrespectively,therearenorelationshipsincludingimmediatefamilyrelationshipsbetweentheseDirectorssubmittedforre-electionandtheotherDirectors(exceptforMrChingHengYang,MrHoNeeKitandMrTamWaiwheretheyareconcertparties), theCompanyor its10%shareholders.TheBoardaccepted theNC’s recommendationandaccordingly,thethree(3)Directorswillstandforre-electionattheforthcomingAGM.
TheNC takes the lead in identifying, evaluatingand selecting candidate for newdirectorship. In its searchandselectionprocess,theNCconsidersfactorssuchascommitmentandabilityofprospectivecandidatetocontributetodiscussion,deliberationsandactivitiesoftheBoardandBoardCommittees.
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Table for Appointment and Re-election
Name of Directors Date offirst
appointment
Date of lastre-election
Nature of Appointment
Membership of Board
Committee
Directorship/ Chairmanship
both present and those held over the preceding three years
in other listed company
Other Principal Commitments
DrJohnChenSeowPhun
27/11/2007 30/04/2013 Non-executiveChairman
1.ChairmanofAuditCommittee
2.MemberofNominatingandRemunerationCommittees
Present:-1.Pavillon
HoldingsLtd2.OKPHoldings
Limited3.HiapSeng
EngineeringLtd4.Hanwell
HoldingsLtd5.Matex
InternationalLimited
6.TatSengPackagingGroupLtd
7.HLHGroupLimited
Precedingthreeyears:-NIL
Directorin:1.JCLBusiness
DevelopmentPteLtd
2.SACCapitalPrivateLimited
3.NationalUniversityHealthSystemPteLtd
4.DATAESPPteLtd
5.PatternDiscoveryTechnologiesPteLtd
6.JLMFoundationLtd
MrChingHengYang 10/12/1980 30/04/2015 ExecutiveDirector
– – –
MrTamWai 10/12/1980 30/04/2013 ExecutiveDirector
– – –
MrHoNeeKit 10/12/1980 29/04/2014 ExecutiveDirector
– – Presidentof:1.SingaporeLoh
KangHoClanAssociation
2.ChaYongHoClanAssociationSingapore
MrHewLienLee 22/03/2007 30/04/2015 ChiefExecutiveOfficerandExecutiveDirector
– 1.LCTHCorporationBerhad
–
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Name of Directors Date offirst
appointment
Date of lastre-election
Nature of Appointment
Membership of Board
Committee
Directorship/ Chairmanship
both present and those held over the preceding three years
in other listed company
Other Principal Commitments
MrTanYewBeng 22/05/1995 30/04/2015 IndependentNon-ExecutiveDirector
1.ChairmanofRemunerationCommittee
2.MemberofAuditandNominatingCommittees
– Directorin:1.Accord
CorporationPteLtd
2.Locker&LockPteLtd
3.SA-KoyoPteLtd
4.AccordCorporationSdnBhd
5.Locker&LockSdnBhd
MrFooSayTun 27/11/2007 29/04/2014 IndependentNon-ExecutiveDirector
1.ChairmanofNominatingCommittee
2.MemberofAuditandRemunerationCommittees
Present:1.Jubilee
IndustriesHoldingsLimited
2.QingmeiGroupHoldingsLimited
3.SinoTechfibreLimited
4.MoneymaxFinancialServicesLimited
Precedingthreeyears:-NIL
Directorin:1.Aquagreen
TechnologyPteLtd
2.AquaproSolutionsPteLtd
3.DynaGenPowerSystemsPteLtd
4.IoniWaterPteLtd
Principle 5: Board Performance
Fortheyearunderreview,aformalassessmentoftheeffectivenessoftheBoardasawholewasundertakenbytheNC.TheNCwasoftheviewthattheperformanceoftheBoardasawholewassatisfactory.
TheNC,inassessingthecontributionofeachDirector,hadconsideredhisattendanceandparticipationatBoardandBoardCommitteesmeetings,hisqualification,experienceandexpertiseandthetimeandeffortdedicatedtotheGroup’sbusinessandaffairsincludingmanagement’saccesstotheDirectorsforguidanceorexchangeofviewsasandwhennecessary.InassessingtheeffectivenessoftheBoardasawhole,bothquantitativeandqualitativecriteriaareconsidered.Suchcriteriaincludeprofitabilityandnetassetspershareandtheachievementofstrategicobjectives.
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TheNCviewsthattheBoard’sperformancewouldbebetterreflectedandevidencedthroughproperguidancetotheManagementandableleadershipoftheBoardandthesupportthatitlendstoManagementinsteeringtheGroupintheappropriatedirection.
Principle 6: Access to InformationPrinciple 10: Accountability
TheBoardreceivesmonthlyGroup’sfinancialreportsandquarterlymanagementreportoftheGroup’sactivitiesandresults.Management provides complete, adequateand timely information to theBoardmembersprior toBoardmeetings.TheannualbudgetsaresubmittedtotheBoardforreviewandapprovalandactualperformanceiscompared againstbudgetsperiodicallytomonitortheGroup’sperformance.
TheDirectorshaveseparateandindependentaccesstotheExecutiveDirectors,theManagementandtheCompanySecretaryatall times,andviceversa.TheCompanySecretaryor itsnomineeattendsto thecorporatesecretarialadministrationmatters,attendsmeetingsoftheBoardandBoardCommitteesandassiststheBoardinensuringthattheBoardproceduresarefollowedandthatapplicablerulesandregulationsarecompliedwith.
TheBoardalsohasaccessto independentprofessionaladvice,wherenecessary,at theCompany’sexpensestoenablethemtodischargetheirduties.TheSeniorGroupFinancialControlleralsoassiststheBoardinobtainingsuchadvice.
REMUNERATION MATTERS
Principle 7: Procedures for Developing Remuneration Policies
TheRemunerationCommittee(“RC”)currentlycomprisesMrTanYewBeng,DrJohnChenSeowPhunandMrFooSayTunwhoareNon-ExecutiveIndependentDirectors.TheRCischairedbyMrTanYewBeng.
TheRChaswrittenTermsofReferencethatdescribetheresponsibilitiesofitsmembers.
TheprimaryfunctionsoftheRCaretoreviewandrecommendageneralframeworkofremunerationfortheBoardandkeymanagementpersonnel(CEOandotherpersonshavingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheCompanyandwhoarenotalsodirectorsandCEOoftheCompany);toreviewandrecommendspecific remunerationpackagesand termsofemployment foreachExecutiveDirectorandkeymanagement personnel; to recommend any long-term incentive schemes which are generally encouraged forExecutive Directors and key management personnel; to ensure that a formal and transparent procedure is inplaceforfixingtheremunerationpackagesoftheExecutiveDirectorsaswellaskeymanagementpersonneloftheGroup;toreviewtheCompany’sobligationsarisingintheeventofterminationoftheExecutiveDirectorsandkeymanagementpersonnel’scontractsofservice.TheRC’srecommendationsaresubmittedforendorsementbytheentireBoard.
TheRChasunrestrictedaccesstoexpertadvicewithinand/oroutsideoftheCompany,whenrequired.
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Principle 8: Level and Mix of Remuneration
InsettingtheremunerationpackagefortheExecutiveDirectorsandkeymanagementpersonnel,theRCtakesintoconsiderationthepayandemploymentconditionswithintheindustryandcomparablecompanies, theindividualperformanceand thatof theCompanyandsubsidiarycompanies.Aspartof its review, theRCensures that theperformance-relatedelementsof remunerationwould formacertainproportionof the total remunerationpackageof Executive Directors and key management personnel. The remuneration for the three (3) founding ExecutiveDirectorscomprisesabase fee,abasesalary,anannualwagesupplement(AWS)andaprofitsharingbonus.The remuneration for theotherExecutiveDirectorcomprisesabase fee,abasesalary,allowances,annualandprofitsharingbonuses.Theremunerationforthekeymanagementpersonnelcomprisesabasicsalary,allowancesand variable components which are the annual bonus and profit sharing bonus based on the performance oftheCompanyandsubsidiarycompaniesaswellasindividualcontributionandperformancewhichareassessedthroughperformanceappraisalthatsetoutvariousassessmentcriteriasuchaslevelofachievementoftargetsandresponsibilities,leadershipability,initiativeetc.
FortheremunerationoftheNon-ExecutiveDirectors,theRChasadoptedaframeworkwhichconsistsofabasefeeaswellasfeesforchairingBoardCommittees.TheCompanywillsubmitthequantumofDirectors’feestoshareholdersforapprovalattheAGM.
Allthefour(4)ExecutiveDirectorshaveservicecontractsforafixedperiodofoneyearwhicharesubjecttorenewalannually.TheRChadreviewedandrecommendedtotheBoardtherenewalofthecontractsofthefour(4)ExecutiveDirectorsforafurthertermofoneyear,from1January2016to31December2016.TheservicecontractforoneoftheExecutiveDirectorshasbeenrevisedfollowinghispromotiontoCEOon26February2016.TheBoardapprovedalltheaboverenewal.
NoDirector is involved in deciding in his own remuneration, except in providing information and documents ifrequiredbyRCtoassistinitsdeliberations.
TherearecurrentlynocontractualprovisionstoallowtheCompanytoreclaimincentivecomponentofremunerationfrom the Executive Directors and key management personnel in exceptional circumstances of misstatement offinancialresults,orofmisconductresultinginfinanciallosstotheCompany.However,theCompanybelievesthatitshouldbeabletoseekremediesagainsttheExecutiveDirectorsandkeymanagementpersonnelviaothermeansifsuchexceptionalcircumstancesoccur.
There is currently no long-term incentive scheme for the Directors of the Group and there is currently no otherunexpiredshareoptions.
SaveforthecontributionstodefinedcontributionplansasdisclosedinNote30oftheAuditedFinancialStatementsforFY2015,theCompanydoesnotprovideanyothertermination,retirementandpost-employmentbenefitstotheDirectors,theCEOandkeyexecutivespersonnel.
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Principle 9: Disclosure on Remuneration
RemunerationofBoardofDirectors
Inviewofthesensitivityandconfidentialitynatureofremunerationpackages,theBoardhasdecidednottodisclosetheremunerationoftheCompany’sindividualDirectorsindollarterms.TheaggregateremunerationpercentagepaidtooraccruedfortheDirectorsforservicesinallcapacitiesfortheyearunderreviewistabulatedbelow:
Name of DirectorFees %
Salary %
Bonus %
Other Benefits %
Total %
ExecutiveDirectors S$750,000toS$999,999ChingHengYang 3.6 71.8 22.4 2.2 100.0TamWai 3.6 71.8 22.4 2.2 100.0HoNeeKit 3.9 71.5 22.4 2.2 100.0
S$500,000toS$749,999HewLienLee 5.6 62.8 20.2 11.4 100.0
Non-ExecutiveDirectors BelowS$250,000DrJohnChenSeowPhun 100.0 – – – 100.0TanYewBeng 100.0 – – – 100.0FooSayTun 100.0 – – – 100.0
TheaggregateamountofremunerationpaidorpayabletotheCompany’sDirectorsisS$3,292,000.
RemunerationofKeyExecutives
Detailsoftotalremunerationpercentagepaidorpayabletothetopfour(4)keyexecutivesoftheGroupfortheyearunderreviewistabulatedasbelow:
Name of Key ExecutiveSalary
%Bonus
%Other Benefits
%Total %
S$250,000toS$499,999CheahNgookWah SeniorGroupFinancialController 71.6 22.1 6.3 100.0
BelowS$250,000YeoSeeJoo GroupBusinessDevelopmentDirector 70.6 12.2 17.2 100.0
TanLayKheng GroupHumanResourceDirector 79.0 17.3 3.7 100.0
TanCheeKian* ActingCFO,GeneralManagerofFuYuDongguan 80.6 8.6 10.8 100.0
*Resignedon30September2015.
Theaggregateamountofremunerationpaidtothetopfour(4)KeyExecutivesisS$857,000.
Noemployeeof theGroupwasan immediate familymember(asdefined in theListingManualofSGX-ST)ofaDirectororChiefExecutiveOfficerandwhoseremunerationexceededS$50,000duringthefinancialyearended31December2015.
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ACCOUNTABILITY AND AUDIT & COMMUNICATION WITH SHAREHOLDERS
Principle 12: Audit Committee
TheAuditCommittee(“AC”)comprisesDrJohnChenSeowPhun,MrTanYewBengandMrFooSayTun,whoareIndependentNon-ExecutiveDirectors.TheChairmanoftheACisDrJohnChenSeowPhun.
Two(2) ofthemembersofAChaverelevantaccountingandfinancialmanagementexperience.
TheACcarriesoutitsfunctionsinaccordancewiththeCompaniesActanditswrittentermsofreference.Inperformingthosefunctions,theAC:
1. ReviewstheauditplansandthefindingsoftheinternalandexternalauditorsoftheCompanyandensurestheadequacyof theCompany’ssystemof internalcontrolsandtheco-operationgivenbytheCompany’sManagementtotheexternalandinternalauditors;
2. Reviewsthequarterlyandannualfinancialstatementsandtheauditors’reportoftheCompanybeforetheirsubmissiontotheBoard;
3. ReviewswiththeManagementontheadequacyandeffectivenessoftheCompany’sinternalcontrols,includingfinancial,operational,complianceandinformationtechnology;
4. Reviewslegalandregulatorymattersthatmayhaveamaterialimpactonthefinancialstatements,relatedcompliancepoliciesandprogrammesandanyreportsreceivedfromregulators;
5. ReviewsarrangementsbywhichemployeesoftheGroupmayinconfidence,raiseconcernsaboutpossibleimproprietiesinmattersoffinancialreportingorothermattersandensuresthatarrangementsareinplacefortheindependentinvestigationofsuchmattersandforappropriatefollow-upactions;
6. Reviewsthecosteffectiveness,independenceandobjectivityoftheexternalauditors;
7. Reviewsthenatureandextentofnon-auditservicesprovidedbytheexternalauditors;
8. ReviewstheassistancegivenbytheCompany’sofficerstotheinternalandexternalauditors;
9. Nominatestheexternalauditors;
10. Toapprovethehiring,removal,evaluationandcompensationoftheinternalauditfunction,ortheprofessionalfirmtowhichtheinternalauditfunctionisoutsourced;and
11. ReviewsinterestedpersontransactionsandimproperactivitiesoftheCompany,ifany.
TheAChasthepowertoconductorauthoriseinvestigationsintoanymatterswithintheAuditCommittee’sscopeofresponsibility.Ithasfullaccessto,andco-operationof,ManagementandfulldiscretiontoinviteanyDirectorormembersofManagementtoattenditsmeetings.TheACmeetswiththeinternalandexternalauditorswithoutthepresenceoftheCompany’sManagementatleastonceannually,whichallowsforamoreopendiscussiononanyissueofconcern.TheAChasbeengiventhereasonableresourcesforittodischargeitsfunctionsproperly.
TheACmeetsatleastfour(4)timesayearwithManagementandtheexternalauditorsandiskeptabreastbytheManagementandCompanySecretaryofchangestoaccountingstandards,theListingManualoftheSGX-STandotherregulationswhichcouldhaveimpacttotheGroup’sbusinessandfinancialstatements.
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TheCompanyhas inplaceawhistle-blowing frameworkwhere employeesof theGrouphaveaccess to theACChairmantoraiseconcernsaboutimproprieties.DetailsofthispolicyhavebeendisseminatedandcontactdetailsoftheACChairmanaremadeavailabletoallemployeesoftheGroup.ACwillcarryoutindependentinvestigationsonthecomplaintsreceivedandwillreporttheoutcometotheBoardforappropriateactionstobetaken. TheCompany’sexternalauditors,KPMGLLP,aspartof theirannualstatutoryaudit,carriesout testofoperatingeffectivenessovercertaininternalcontrolsrelatingtofinancialreportingprocessbasedonthescopeofauditaslaidoutintheirauditplan.Internalcontrolweaknessesnotedduringtheaudit,andauditors’recommendationstoaddresssuchnon-complianceandweaknesses,ifany,arediscussedwithManagementandreportedtotheAC.
Theauditfeespaid/payabletotheexternalauditorsoftheCompany,overseasaffiliatesoftheexternalauditorsoftheCompanyandotherauditorsfortheauditofFY2015amountedtoS$148,000,S$173,000andS$128,000respectively.Thenon-auditfeepaidtotheexternalauditorsoftheCompanyduringtheyearamountedtoS$26,000.Non-auditfeespaidtootherauditorsamountedtoS$14,000.TheACissatisfiedwiththeindependenceofKPMGLLP.
OthermemberfirmsofKPMG Internationalareauditorsofsignificant foreign-incorporatedsubsidiariesexcept forLCTHCorporationBerhadanditssubsidiaries,whichareauditedbyErnst&Young,Malaysia.
TheBoardandACaresatisfiedthattheappointmentwouldnotcompromisethestandardandeffectivenessoftheauditoftheGroup.TheCompanyconfirmsthatitisincompliancewithRules712and715oftheSGXListingManual.
Pleaserefertopages9and10undertheheading‘BoardofDirectors’forthequalificationsoftheACmembers.
Principle 11: Risk Management and Internal Controls
TheManagementmaintainsasoundsystemofinternalcontroltosafeguardtheshareholders’investmentandtheCompany’sassets.TheadequacyofthesecontrolsandsystemsissubjecttoreviewbytheAC.
The internal auditors conduct annual review of the effectiveness of the Group’s key internal controls, includingfinancial,operationalandcompliancecontrols.Onayearlybasis,theinternalauditorsprepareaninternalauditplanwhichisapprovedbytheAC.TheinternalauditorsupdatetheAContheprogressoftheapprovedinternalauditplaneveryquarterly.TheGroup’sexternalauditors,KPMGLLP,contributeanindependentperspectiveoncertainaspectsoftheinternalcontrolsoverfinancialreportingthroughtheirauditandreporttheirfindingstotheAC.
AnymaterialfindingsfromboththeinternalandexternalauditorstogetherwiththeimprovementrecommendationsarereportedtotheACandmadeknowntotherespectivesubsidiariesforcorrectiveactionstobetaken.TheinternalauditorswillmonitoriftherequiredcorrectivemeasuresareproperlyimplementedbytheManagement.
Inyear2012,theBoardappointedKPMGServicesPteLtdtoconductareviewtofurtherenhancetheGroup’sriskmanagement frameworkoverfinancial,operationalandcompliancerisks.KPMGServicesPteLtdhadalsobeenengaged to assist the Company in formulating and formalising its fraud riskmanagement framework to furtherenhanceitsexistingframeworktopreventimproprieties.TheManagementcontinuedtoadopttheriskmanagementframeworkestablishedinyear2015.Basedontheframeworkestablishedandreportssubmittedbytheexternalandinternalauditors,theBoardopines,withtheconcurrenceoftheAC,thatthereareadequateinternalcontrolsinplacewithintheGroupaddressingmaterialfinancial,operational,complianceandinformationtechnologyrisksandthattheinternalcontrolsandriskmanagementsystemsareeffective.
26
FU YU CORPO
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UAL REPORT 2015
CORPORATEGOVERNANCE REPORT
TheBoardhasreceivedassurancefromtheCEOandtheSeniorGroupFinancialControllerthatthefinancialrecordshavebeenproperlymaintainedandthefinancialstatementsgivetrueandfairviewof theCompany’soperationsandfinances,andthattheCompany’sriskmanagementandinternalcontrolsystemsareeffective.TheBoardnotes,however, thatnosystemof internalcontrolcouldprovideabsoluteassuranceagainst theoccurrenceofmaterialerrors,poorjudgmentindecision-making,humanerrors,losses,fraudorotherirregularities.
Principle 13: Internal Audit
TheCompanysetsupitsinternalauditdepartmentsinceJanuary2009afteroutsourcingthefullspectrumofinternalauditworkforthree(3)years.Duringtheyearandsinceyear2011,theCompanyoutsourcedpartofitsinternalauditfunctiontoaprofessionalfirm,NexiaTSRiskAdvisoryPteLtd,tofurtherstrengthenandenhancetheinternalauditfunctionoftheGroup.Theoutsourcedandin-houseinternalauditdepartmentcarriedouttheinternalauditofallthesubsidiariesinChinaandSingapore.InternalauditreportswerepreparedtoupdatetheAContheprogressofallauditscarriedout,therecommendationsacceptedbyManagement,andtotrackthestatusofoutstandingmattersandremedialactionstakentodate.
Principle 10: AccountabilityPrinciple 15: Communication with Shareholders
The Company engages in regular, effective and fair communication with shareholders through announcementsreleasedtoSGXviaSGXNET.Suchannouncementsincludethequarterly,halfyearlyandfullyearresults,materialtransactionsandotherdevelopmentsrelatingtotheGroupwhichrequiredisclosureunderthecorporatedisclosurepolicyofSGX.TheCompanyalsomaintainsawebsiteatwww.fuyucorp.comwherethepubliccanaccessinformationontheGroup.
Whenopportunitiesarise, theDirectorswillsolicitand try tounderstand theviewsofshareholdersbeforeand/oraftergeneralmeetingof theCompany.TheCompany’sCEOandSeniorGroupFinancialControllerwillattend toanalystsandfundmanagerswhowishtoseekabetterunderstandingoftheGroup’soperationswhennecessaryandappropriate.
Two(2)interimdividendshavebeendeclaredandpaidduringtheyear.TheCompanyhasproposedafinaldividendof1.0centperordinaryshareforFY2015subjecttotheshareholders’approvalinthecomingAGM.
TheCompanyhasdecidedonadividendpolicyofdeclaringandproposingatleast50%ofitsprofitafterincometaxattributabletotheownersoftheCompanyasdividends,unless:
(i) anyreinvestmentoftheprofitforcapitalexpenditure,expansionordiversificationpurposesismorethan50%oftheprofit;or
(ii) thereisinsufficientprofitattheCompanylevel;or
(iii) thereisinsufficientfundsattheCompanyleveltopayforthedividends,
under which conditions, any proposed dividends will be decided by the Board taking into account the aboveconditions. Shareholdersareinformedofgeneralmeetingsthroughnoticespublishedinthenewspapersandannualreportsorcircularssenttothem.
27
FU YU CORPO
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UAL REPORT 2015
CORPORATEGOVERNANCE REPORT
Principle 14: Shareholder RightsPrinciple 16: Conduct of Shareholder Meetings
TheCompanyencouragesshareholders’participationatgeneralmeetings,andwelcomesshareholderstogivetheirconstructiveviewsonvariousmattersconcerningtheGroup.
Eachitemofspecialbusinessincludedinthenoticeofthemeetingisaccompaniedbyanexplanationfortheproposedresolution.Separateresolutionsareproposedforsubstantiallyseparateissuesatthemeeting.TheChairmenoftheAudit,RemunerationandNominatingCommitteesarenormallyavailableatthemeetingtoanswerthosequestionsrelatingtotheworkofthesecommittees.TheexternalauditorsarealsopresenttoassisttheDirectorsinaddressinganyrelevantqueriesbyshareholders.
TheCompanywillprepare thedetailedAGMminutes,which includecommentsand thequestions received fromshareholders, if any. TheCompanywill bepleased tomake theseminutesavailable toshareholdersupon theirrequest.
TheCompanycommencedthevotingofallitsresolutionsbypollattheExtraordinaryGeneralMeeting(“EGM”)heldon16October2014andwillconductthevotingofallitsresolutionsbypollinallitscomingAGMsandEGMs.TheCompanymayconsideremployingelectronicpollinginfuture.TheCompany’sConstitutionallowashareholdertoappointone(1)ortwo(2)proxiestoattendandvoteatgeneralmeetingsinhis/herstead.Nonetheless,undertherevisedCompaniesAct,arelevantintermediarymayappointmorethantwo(2)proxies,buteachproxymustbeappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbyhim/her(whichnumberandclassofsharesshallbespecified).
TheCompanywillreviewitsConstitutionfromtimetotimeandmakesuchamendmentstotheConstitutiontobeinlinewiththeapplicablerequirementsorrulesandregulationsgoverningthecontinuinglistingobligationintheListingManualofSGX-ST.
CORPORATEGOVERNANCE REPORT
28
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
28
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
FINANCIAL STATEMENTSDIRECTORS’STATEMENT 29
INDEPENDENTAUDITORS’REPORT 34
STATEMENTSOFFINANCIALPOSITION 36
CONSOLIDATEDINCOMESTATEMENT 37
CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME 38
CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY 39
CONSOLIDATEDSTATEMENTOFCASHFLOWS 41
NOTESTOTHEFINANCIALSTATEMENTS 43
29
FU YU CORPO
RATION
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ANN
UAL REPORT 2015
Wearepleasedtosubmitthisannualstatementtothememberstogetherwiththeauditedfinancialstatementsof FuYuCorporationLimited(theCompany)anditssubsidiaries(collectively,theGroup)forthefinancialyearended31December2015.
Inouropinion:
(a) thefinancialstatementssetoutonpages36to91aredrawnupsoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2015andthefinancialperformance,changes in equity and cash flows of the Group for the year ended on that date in accordance with theprovisionsoftheSingaporeCompaniesAct,Chapter50andSingaporeFinancialReportingStandards;and
(b) atthedateofthisstatement,therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheyfalldue.
TheBoardofDirectorshas,onthedateofthisstatement,authorisedthesefinancialstatementsforissue.
DIRECTORS
Thedirectorsinofficeatthedateofthisstatementareasfollows:
ChingHengYangTamWaiHoNeeKitHewLienLeeJohnChenSeowPhunTanYewBengFooSayTun
DIRECTORS’ INTERESTS
AccordingtotheregisterkeptbytheCompanyforthepurposesofSection164oftheCompaniesAct,Chapter50(theAct),particularsofinterestsofdirectorswhoheldofficeattheendofthefinancialyear(includingthoseheldbytheirspousesandinfantchildren)inshares,debentures,warrantsandshareoptionsintheCompanyandinrelatedcorporations(otherthanwholly-ownedsubsidiaries)areasfollows:
Name of director and corporation in which interests are held
Holdings at beginning of the year
Holdings at end
of the year
Ching Heng YangFuYuCorporationLimited– ordinaryshares – interestheld 88,965,475 88,965,475
LCTHCorporationBerhad– ordinarysharesofRM0.20each – interestheld – deemedinterests
300,000254,295,643
300,000254,295,643
DIRECTORS’STATEMENT
30
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
DIRECTORS’STATEMENT
Name of director and corporation in which interests are held
Holdings at beginning of the year
Holdings at end
of the year
Ching Heng Yang (cont’d)NanoTechnologyManufacturingPteLtd– ordinaryshares – deemedinterests 14,400,000 14,400,000
Tam WaiFuYuCorporationLimited– ordinaryshares – interestheld – deemedinterests
96,715,475300,000
96,715,475300,000
LCTHCorporationBerhad– ordinarysharesofRM0.20each – interestheld – deemedinterests
366,000254,295,643
366,000254,295,643
NanoTechnologyManufacturingPteLtd– ordinaryshares – deemedinterests 14,400,000 14,400,000
Ho Nee KitFuYuCorporationLimited– ordinaryshares – interestheld 96,999,225 96,999,225
LCTHCorporationBerhad– ordinarysharesofRM0.20each – interestheld – deemedinterests
369,120254,295,643
369,120254,295,643
NanoTechnologyManufacturingPteLtd– ordinaryshares – deemedinterests 14,400,000 14,400,000
Tan Yew BengFuYuCorporationLimited– ordinaryshares – interestheld 2,562,500 2,562,500
LCTHCorporationBerhad– ordinarysharesofRM0.20each – interestheld 300,000 300,000
31
FU YU CORPO
RATION
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ANN
UAL REPORT 2015
DIRECTORS’STATEMENT
Name of director and corporation in which interests are held
Holdings at beginning of the year
Holdings at end
of the year
Hew Lien LeeFuYuCorporationLimited– ordinaryshares – interestheld 8,100,000 8,100,000
LCTHCorporationBerhad– ordinarysharesofRM0.20each – interestheld 3,031,524 3,031,524
John Chen Seow PhunFuYuCorporationLimited– ordinaryshares – interestheld 1,000,000 1,000,000
Foo Say TunFuYuCorporationLimited– ordinaryshares – interestheld 1,000,000 –
ByvirtueofSection7oftheAct,ChingHengYang,TamWaiandHoNeeKitaredeemedtohaveinterestsinsharesofthesubsidiariesoftheCompany,atthebeginningandattheendofthefinancialyear.
Exceptasdisclosedinthisstatement,nodirectorwhoheldofficeattheendofthefinancialyearhadinterestsinshares,debentures,warrantsorshareoptionsoftheCompany,orofrelatedcorporations,eitheratthebeginningorattheendofthefinancialyear.
Therewerenochangesinanyoftheabove-mentionedinterestsintheCompanybetweentheendofthefinancialyearand21January2016.
Neitherattheendof,noratanytimeduringthefinancialyear,wastheCompanyapartytoanyarrangementwhoseobjectsare,oroneofwhoseobjectsis,toenablethedirectorsoftheCompanytoacquirebenefitsbymeansoftheacquisitionofsharesinordebenturesoftheCompanyoranyotherbodycorporate.
SHARE OPTIONS
Duringthefinancialyear,therewere:
(i) nooptionsgrantedbytheCompanytoanypersontotakeupunissuedsharesintheCompany;and
(ii) nosharesissuedbyvirtueofanyexerciseofoptiontotakeupunissuedsharesoftheCompany.
Asattheendofthefinancialyear,therewerenounissuedsharesoftheCompanyunderoption.
32
FU YU CORPO
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UAL REPORT 2015
DIRECTORS’STATEMENT
AUDIT COMMITTEE
ThemembersoftheAuditCommitteeduringtheyearandatthedateofthisstatementare:
JohnChenSeowPhun(Chairman),IndependentNon-ExecutiveDirectorTanYewBeng,IndependentNon-ExecutiveDirectorFooSayTun,IndependentNon-ExecutiveDirector
TheAuditCommitteeperformsthefunctionsspecifiedinSection201B(5)oftheAct,theSGXListingManualandtheCodeofCorporateGovernance.
TheAuditCommitteehasheld four (4)meetingsduring thefinancial year. Inperforming its functions, theAuditCommitteemetwiththeCompany’sexternalandinternalauditorstodiscussthescopeoftheirwork,theresultsoftheirexaminationandevaluationoftheCompany’sinternalaccountingcontrolsystem.
TheAuditCommitteealsoreviewedthefollowing:
• assistanceprovidedbytheCompany’sofficerstotheexternalandinternalauditors;
• quarterlyfinancialinformationandannualfinancialstatementsoftheGroupandtheCompanypriortotheirsubmissiontothedirectorsoftheCompanyforadoption;
• interestedpersontransactions(asdefinedinChapter9oftheSGXListingManual);and
• theauditplanoftheGroup’sexternalauditoranditsfindingsarisingfromthestatutoryaudit.
The Audit Committee has full access tomanagement and is given the resources required for it to discharge itsfunctions.Ithasfullauthorityandthediscretiontoinviteanydirectororexecutiveofficertoattenditsmeetings.TheAuditCommitteealsorecommendstheappointmentoftheexternalauditorsandreviewsthelevelofauditandnon-auditfees.
TheAuditCommitteeissatisfiedwiththeindependenceandobjectivityoftheexternalauditorsandhasrecommendedtotheBoardofDirectorsthattheauditors,KPMGLLP,benominatedforre-appointmentasauditorsattheforthcomingAnnualGeneralMeetingoftheCompany.
InappointingourauditorsfortheCompany,subsidiariesandajointventure,wehavecompliedwithRules712and715oftheSGXListingManual.
33
FU YU CORPO
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DIRECTORS’STATEMENT
AUDITORS
Theauditors,KPMGLLP,haveindicatedtheirwillingnesstoacceptre-appointment.
OnbehalfoftheBoardofDirectors
Ho Nee KitDirector
Hew Lien LeeDirector
31March2016
34
FU YU CORPO
RATION
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ANN
UAL REPORT 2015
INDEPENDENTAUDITORS’ REPORT
Members of the CompanyFu Yu Corporation Limited
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Fu Yu Corporation Limited (the Company) and itssubsidiaries(theGroup),whichcomprisethestatementsoffinancialpositionoftheGroupandoftheCompanyasat31December2015,theincomestatement,statementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsoftheGroupfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,assetoutonpages36to91.
Management’s responsibility for the financial statements
ManagementisresponsibleforthepreparationoffinancialstatementsthatgiveatrueandfairviewinaccordancewiththeprovisionsoftheSingaporeCompaniesAct,Chapter50(theAct)andSingaporeFinancialReportingStandards,and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonableassurance that assets are safeguardedagainst loss fromunauthoriseduse or disposition; and transactionsareproperly authorised and that they are recorded as necessary to permit the preparation of true and fair financialstatementsandtomaintainaccountabilityofassets.
Auditors’ responsibility
Our responsibility is toexpressanopinionon thesefinancialstatementsbasedonouraudit.Weconductedouraudit inaccordancewithSingaporeStandardsonAuditing.Thosestandards require thatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationofthefinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
Inouropinion, theconsolidatedfinancial statementsof theGroupand thestatementof financialpositionof theCompanyareproperlydrawnupinaccordancewith theprovisionsof theActandSingaporeFinancialReportingStandardssoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2015andthefinancialperformance,changesinequityandcashflowsoftheGroupfortheyearendedonthatdate.
35
FU YU CORPO
RATION
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ANN
UAL REPORT 2015
INDEPENDENTAUDITORS’ REPORT
REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS
Inouropinion,theaccountingandotherrecordsrequiredbytheActtobekeptbytheCompanyandbythosesubsidiarycorporationsincorporatedinSingaporeofwhichwearetheauditorshavebeenproperlykeptinaccordancewiththeprovisionsoftheAct.
KPMG LLPPublicAccountantsandCharteredAccountants
Singapore31March2016
36
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
Group Company
Note 2015
$’0002014 $’000
2015 $’000
2014 $’000
Non-current assets
Property,plantandequipment 4 52,399 61,394 12,069 12,684
Investmentproperty 5 8,585 10,085 – –
Subsidiaries 6 – – 65,593 69,402
Jointventure 7 2,484 3,106 – –
Deferredtaxassets 8 2,464 1,280 – –
65,932 75,865 77,662 82,086
Current assets
Inventories 9 15,017 17,120 2,517 2,242
Tradeandotherreceivables 10 61,291 79,704 14,011 16,861
Taxrecoverable 70 5 – –
Shortterminvestments 14 3,637 6,052 – –
Cashandcashequivalents 13 102,940 83,329 29,962 18,051
182,955 186,210 46,490 37,154
Total assets 248,887 262,075 124,152 119,240
Equity attributable to equity holders of the Company
Sharecapital 15 102,158 121,176 102,158 121,176
Reserves 16 75,909 53,740 10,817 (13,311)
178,067 174,916 112,975 107,865
Non-controllinginterests 19,677 20,244 – –
Total equity 197,744 195,160 112,975 107,865
Non-current liabilities
Tradeandotherpayables 19 112 787 112 787
Financialliabilities 18 – 12 – –
Deferredtaxliabilities 8 909 370 647 82
1,021 1,169 759 869
Current liabilities
Tradeandotherpayables 19 47,316 62,385 10,418 10,506
Financialliabilities 18 – 1,365 – –
Taxpayable 2,806 1,996 – –
50,122 65,746 10,418 10,506
Total liabilities 51,143 66,915 11,177 11,375
Total equity and liabilities 248,887 262,075 124,152 119,240
STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2015
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
37
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
CONSOLIDATEDINCOME STATEMENTYEAR ENDED 31 DECEMBER 2015
Note 2015 $’000
2014 $’000
Revenue 20 222,465 254,434
Costofsales (186,992) (223,360)
Gross profit 35,473 31,074
Otherincome 21 9,628 10,604
Sellingandadministrativeexpenses (29,488) (29,193)
Otheroperatingincome,net 22 2,403 1,490
Resultsfromoperatingactivities 18,016 13,975
Financecosts 23 (11) (153)
Shareofprofit/(loss)ofjointventure(netoftax) 7 432 (405)
Profit before income tax 24 18,437 13,417
Taxexpense 25 (1,755) (2,179)
Profit for the year 16,682 11,238
Profit for the year attributable to:
OwnersoftheCompany 14,070 9,951
Non-controllinginterests 2,612 1,287
Profit for the year 16,682 11,238
Earnings per share
Basicanddilutedearningspershare 26 1.87cents 1.35cents
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
38
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYEAR ENDED 31 DECEMBER 2015
2015 $’000
2014 $’000
Profit for the year 16,682 11,238
Other comprehensive incomeItems that are or may be reclassified subsequently to profit or
loss:
Foreigncurrencytranslationdifferencesforforeignoperations (6,220) (393)
Other comprehensive income for the year (net of tax) (6,220) (393)
Total comprehensive income for the year 10,462 10,845
Total comprehensive income attributable to:
OwnersoftheCompany 10,681 9,969
Non-controllinginterests (219) 876
Total comprehensive income for the year 10,462 10,845
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
39
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYEAR ENDED 31 DECEMBER 2015
The
acco
mpa
nyin
gno
tes
form
an
inte
gral
par
toft
hese
fina
ncia
lsta
tem
ents
.
Shar
e ca
pita
l $’
000
Cap
ital
rese
rve
$’00
0
Stat
utor
y re
serv
e $’
000
Reva
luat
ion
rese
rve
$’00
0
Shar
e op
tion
rese
rve
$’00
0
Fore
ign
curre
ncy
trans
latio
n re
serv
e $’
000
Reta
ined
ea
rnin
gs
$’00
0
Tota
l at
tribu
tabl
e to
equ
ity
hold
ers
of
the
Com
pany
$’
000
Non
-co
ntro
lling
in
tere
sts
$’00
0
Tota
l eq
uity
$’
000
At1
Jan
uary
201
411
9,36
214
09,
891
789
1,62
7(6
,534
)37
,858
163,
133
19,3
6818
2,50
1
Tota
l com
preh
ensi
ve
inco
me
for t
he y
ear
Profi
tfor
the
year
––
––
––
9,95
19,
951
1,28
711
,238
Oth
er c
ompr
ehen
sive
in
com
e
Fore
ign
curre
ncy
trans
latio
ndi
ffere
nces
––
––
–18
–18
(411
)(3
93)
Tota
lcom
preh
ensi
ve
inco
me
fort
hey
ear
––
––
–18
9,95
19,
969
876
10,8
45
Tran
sact
ion
with
ow
ners
, re
cogn
ised
dire
ctly
in
equi
ty
Con
tribu
tions
by
and
dist
ribut
ions
to o
wne
rs
Shar
eop
tions
exe
rcis
ed1,
814
––
––
––
1,81
4–
1,81
4
Tota
ltra
nsac
tions
with
ow
ners
1,81
4–
––
––
–1,
814
–1,
814
Tran
sfer
s be
twee
n re
serv
es
Tran
sfer
from
sta
tuto
ry
rese
rve
––
(3,8
18)
––
–3,
818
––
–
At3
1D
ecem
ber2
014
121,
176
140
6,07
378
91,
627
(6,5
16)
51,6
2717
4,91
620
,244
195,
160
40
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYEAR ENDED 31 DECEMBER 2015
Note
Shar
e ca
pita
l $’
000
Capi
tal
rese
rve
$’00
0
Stat
utor
y re
serv
e $’
000
Reva
luat
ion
rese
rve
$’00
0
Shar
e op
tion
rese
rve
$’00
0
Fore
ign
curre
ncy
trans
latio
n re
serv
e $’
000
Reta
ined
ea
rnin
gs
$’00
0
Tota
l at
tribu
tabl
e to
equ
ity
hold
ers
of
the
Com
pany
$’
000
Non-
cont
rollin
g in
tere
sts
$’00
0
Tota
l eq
uity
$’
000
At1
Jan
uary
201
512
1,17
614
06,
073
789
1,62
7(6
,516
)51
,627
174,
916
20,2
4419
5,16
0
Tota
l com
preh
ensi
ve
inco
me
for t
he y
ear
Profi
tfor
the
year
––
––
––
14,0
7014
,070
2,61
216
,682
Othe
r com
preh
ensi
ve
inco
me
Fore
ign
curre
ncy
trans
latio
ndi
ffere
nces
––
––
–(3
,389
)–
(3,3
89)
(2,8
31)
(6,2
20)
Tota
lcom
preh
ensi
ve
inco
me
fort
hey
ear
––
––
–(3
,389
)14
,070
10,6
81(2
19)
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41
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
CONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED 31 DECEMBER 2015
Note 2015 $’000
2014 $’000
Cash flows from operating activities
Profitbeforeincometax 18,437 13,417
Adjustmentsfor:
Depreciationofproperty,plantandequipmentandinvestmentproperty 4,5 13,769 17,930
Gainonliquidationofsubsidiary 21 (393) –
Financecosts 23 11 153
Interestincome 21 (1,805) (1,352)
Gainondisposalofproperty,plantandequipment 21 (483) (821)
Impairmentlossonproperty,plantandequipment 22 – 500
Property,plantandequipmentwrittenoff 22 157 279
Shareof(profit)/lossofjointventure(netoftax) 7 (432) 405
Unrealisedforeignexchangeloss/(gain) 1,702 (748)
30,963 29,763
Changesinworkingcapital:
Inventories 1,815 1,510
Tradeandotherreceivables 18,412 (664)
Tradeandotherpayables (14,009) (6,171)
Cashfromoperatingactivities 37,181 24,438
Taxpaid (3,002) (1,057)
Net cash from operating activities 34,179 23,381
Cash flows from investing activities
Dividendsfromjointventure 7 667 496
Interestincomereceived 1,805 1,352
Proceedsfromdisposalofproperty,plantandequipment 545 1,833
Purchaseofproperty,plantandequipment (6,327) (14,499)
Withdrawal/(Placement)ofshortterminvestments 1,743 (2,299)
Net cash used in investing activities (1,567) (13,117)
Balancecarriedforward 32,612 10,264
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
42
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
Note 2015 $’000
2014 $’000
Balancebroughtforward 32,612 10,264
Cash flows from financing activities
Financecostspaid (11) (153)
Proceedsfromissueofsharecapital – 1,814
Proceedsfromshorttermborrowings 1,106 12,270
Repaymentofshorttermborrowingsandfinanceleaseliabilities (2,520) (14,305)
Dividendspaidtonon-controllinginterestsofasubsidiary 31 (348) –
DividendspaidtoownersoftheCompany 31 (3,765) –
Capitalreduction 15 (3,765) –
Deposits(pledged)/discharged (27) 586
Net cash (used in)/from financing activities (9,330) 212
Net increase in cash and cash equivalents 23,282 10,476
Cashandcashequivalentsat1January 79,921 69,115
Effectofexchangeratefluctuationsoncashheld (3,264) 330
Cash and cash equivalents at 31 December 13 99,939 79,921
CONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED 31 DECEMBER 2015
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
43
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
Thesenotesformanintegralpartofthefinancialstatements.
ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorson31March2016.
1 DOMICILE AND ACTIvITIES
FuYuCorporationLimited(theCompany)isincorporatedintheRepublicofSingaporeandhasitsregisteredofficeat8TuasDrive1,Singapore638675.TheCompanyislistedonSingaporeExchange.
Theprincipalactivitiesof theCompanyare thoseofmanufacturingandsub-assemblyofprecisionplasticparts and components, fabrication of precision moulds and dies and investment holding. The principalactivitiesoftheCompany’ssubsidiariesconsistofmanufacturingandsub-assemblyofprecisionplasticpartsandcomponents,fabricationofprecisionmouldsanddies,trading,provisionofmanagementservicesandinvestmentholding.
TheconsolidatedfinancialstatementsrelatetotheCompanyanditssubsidiariesandtheGroup’sinterestsinajointventure.
2 BASIS OF PREPARATION
2.1 Statement of compliance
ThefinancialstatementshavebeenpreparedinaccordancewiththeSingaporeFinancialReportingStandards(FRS).
2.2 Basis of measurement
Thefinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptforcertainfinancialassetsandliabilitieswhicharemeasuredatfairvalueoramortisedcost.
2.3 Functional and presentation currency
The financial statementsarepresented inSingaporedollarswhich is theCompany’s functional currency.AllfinancialinformationpresentedinSingaporedollarshavebeenroundedtothenearestthousand,unlessotherwisestated.
2.4 Use of estimates and judgements
ThepreparationoffinancialstatementsinconformitywithFRSrequiresmanagementtomakejudgements,estimatesandassumptions thataffect theapplicationofaccountingpoliciesand thereportedamountsofassets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.
Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimates
arerecognisedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.
44
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
2 BASIS OF PREPARATION(cont’d)
2.4 Use of estimates and judgements(cont’d)
Informationaboutsignificantareasofestimationuncertainties thathaveasignificantriskof resulting inamaterialadjustmentwithinthenextfinancialyearareincludedinthefollowingnotes:
• Notes3.7and28– allowanceforimpairmentofdoubtfulreceivables
• Notes3.7and4 – measurementofrecoverableamountsofproperty,plantandequipment
• Notes6and11 – recoverabilityofinvestmentsinandamountsduefromsubsidiaries
• Notes8and25 – provisionforincometaxandrecoverabilityofdeferredtaxassets
Informationaboutcriticaljudgementsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatementsisincludedinthefollowingnote:
• Note5 – classificationofinvestmentproperty
Measurement of fair values
AnumberoftheGroup’saccountingpoliciesanddisclosuresrequirethemeasurementoffairvalues,forbothfinancialandnon-financialassetsandliabilities.
Whenmeasuringthefairvalueofanassetoraliability,theGroupusesmarketobservabledataasfaraspossible.Fairvaluesarecategorisedintodifferentlevelsinafairvaluehierarchybasedontheinputsusedinthevaluationtechniquesasfollows:
• Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.
• Level2:inputsotherthanquotedpricesincludedinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).
• Level3:inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).
Furtherinformationabouttheassumptionsmadeinmeasuringfairvaluesisincludedinthefollowingnotes:
• Note4 – property,plantandequipment
• Note5 – investmentproperty
• Note28 – financialriskmanagement
Iftheinputsusedtomeasurethefairvalueofanassetoraliabilitymightbecategorisedindifferentlevelsofthefairvaluehierarchy,thenthefairvaluemeasurementiscategorisedinitsentiretyinthesamelevelofthefairvaluehierarchyasthelowestlevelinputthatissignificanttotheentiremeasurement(withLevel3beingthelowest).
45
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES
Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedinthesefinancialstatements,andhavebeenappliedconsistentlybyGroupentities.
3.1 Foreign currency
(i) Foreigncurrencytransactions
TransactionsinforeigncurrenciesaretranslatedtotherespectivefunctionalcurrenciesofGroupentitiesat theexchangeratesat thedatesof thetransactions.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesattheendofthereportingperiodareretranslatedtothefunctionalcurrencyattheexchangerateatthatdate.Theforeigncurrencygainorlossonmonetaryitemsisthedifferencebetweenamortisedcostinthefunctionalcurrencyatthebeginningoftheyear,adjustedforeffectiveinterestandpaymentsduringtheyear,andtheamortisedcost inforeigncurrencytranslatedat theexchangerateattheendoftheyear.
Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesthataremeasuredatfairvaluearetranslatedtothefunctionalcurrencyattheexchangerateatthedateonwhichthefairvaluewasdetermined.Non-monetaryitemsinaforeigncurrencythataremeasuredintermsofhistoricalcostaretranslatedusingtheexchangerateatthedateofthetransaction.Foreigncurrencydifferencesarisingontranslationarerecognisedinprofitorloss.
(ii) Foreignoperations
Theassetsand liabilitiesof foreignoperations,excludinggoodwilland fairvalueadjustments,aretranslatedtoSingaporedollarsatexchangeratesat theendof thereportingdate.TheincomeandexpensesofforeignoperationsaretranslatedtoSingaporedollarsataverageexchangeratesfortheyear,whichapproximatestheexchangeratesatthedatesofthetransactions.Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignoperationonorafter1January2005aretreatedasassetsandliabilitiesoftheforeignoperationandtranslatedattheclosingrate.Foracquisitionspriorto1January2005,theexchangeratesatthedateofacquisitionwereused.
Foreign currencydifferencesare recognised in other comprehensive income, andpresented in theforeigncurrencytranslationreserveinequity.However,iftheforeignoperationisanonwholly-ownedsubsidiary,thentherelevantproportionateshareofthetranslationdifferenceisallocatedtothenon-controllinginterests.Whenaforeignoperationisdisposedofsuchthatcontrolorsignificantinfluenceislost,thecumulativeamountintheforeigncurrencytranslationreserverelatedtothatforeignoperationisreclassifiedtoprofitorlossaspartofgainorlossondisposal.
WhentheGroupdisposesofonlypartofitsinterestinasubsidiarythatincludesaforeignoperationwhileretainingcontrol,therelevantproportionofthecumulativeamountisreattributedtonon-controllinginterests.WhentheGroupdisposesofonlypartofitsinvestmentinanassociateorjointventurethatincludesaforeignoperationwhileretainingsignificantinfluenceorjointcontrol,therelevantproportionofthecumulativeamountisreclassifiedtoprofitorloss.
46
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.1 Foreign currency(cont’d)
(ii) Foreignoperations(cont’d)
Whenthesettlementofamonetaryitemreceivablefromorpayabletoaforeignoperationisneitherplannednor likely in the foreseeable future, foreignexchangegainsand lossesarising fromsuchamonetary itemareconsidered to formpartofanet investment ina foreignoperation.Thesearerecognised in other comprehensive income, and are presented in the foreign currency translationreserve.
3.2 Basis of consolidation
(i) Businesscombinations
BusinesscombinationsareaccountedforusingtheacquisitionmethodinaccordancewithFRS103BusinessCombinationsasattheacquisitiondate,whichisthedateonwhichcontrolistransferredtotheGroup.Controlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol, theGrouptakesintoconsiderationpotentialvotingrightsthatarecurrentlyexercisable.
The consideration transferred does not include amounts related to the settlement of pre-existingrelationships.Suchamountsaregenerallyrecognisedinprofitorloss.
Costsrelatedtotheacquisition,otherthanthoseassociatedwiththeissueofdebtorequitysecurities,thattheGroupincursinconnectionwithabusinesscombinationareexpensedasincurred.
Anycontingentconsiderationpayableisrecognisedatfairvalueattheacquisitiondate.Ifthecontingentconsiderationisclassifiedasequity,itisnotremeasuredandsettlementisaccountedforwithinequity.Otherwise,subsequentchangestothefairvalueofthecontingentconsiderationarerecognisedinprofitorloss.
For non-controlling interests that are present ownership interests and entitle their holders to aproportionate share of the acquiree’s net assets in the event of liquidation, theGroup elects onatransaction-by-transaction basis whether to measure them at fair value, or at the non-controllinginterests’proportionateshareoftherecognisedamountsoftheacquiree’sidentifiablenetassets,attheacquisitiondate.Allothernon-controllinginterestsaremeasuredatacquisition-datefairvalueor,whenapplicable,onthemeasurementbasisspecifiedinanotherFRS.
Whenshare-basedpaymentawards(replacementawards)arerequiredtobeexchangedforawardsheldbytheacquiree’semployees(acquiree’sawards)andrelatetopastservices,thenalloraportionof the amount of the acquirer’s replacement awards is included in measuring the considerationtransferredinthebusinesscombination.Thisdeterminationisbasedonthemarket-basedvalueofthereplacementawardscomparedwiththemarket-basedvalueoftheacquiree’sawardsandtheextenttowhichthereplacementawardsrelatetopastand/orfutureservice.
47
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.2 Basis of consolidation(cont’d)
(ii) Subsidiaries
SubsidiariesareentitiescontrolledbytheGroup.TheGroupcontrolsanentitywhenitisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowerovertheentity.Thefinancialstatementsofsubsidiariesareincludedintheconsolidatedfinancialstatements from thedate thatcontrolcommencesuntil thedate thatcontrolceases.
TheaccountingpoliciesofsubsidiarieshavebeenchangedwhennecessarytoalignthemwiththepoliciesadoptedbytheGroup.Lossesapplicabletothenon-controllinginterestsinasubsidiaryareallocatedtothenon-controllinginterestsevenifdoingsocausesthenon-controllingintereststohaveadeficitbalance.
(iii) Lossofcontrol
Upon the loss of control, theGroup derecognises the assets and liabilities of the subsidiary, anynon-controllinginterestsandtheothercomponentsofequityrelatedtothesubsidiary.Anysurplusordeficitarisingonthelossofcontrolisrecognisedinprofitorloss.IftheGroupretainsanyinterestintheprevioussubsidiary,thensuchinterestismeasuredatfairvalueatthedatethatcontrolislost.Subsequently,itisaccountedforasanequity-accountedinvesteeorasanavailable-for-salefinancialassetdependingonthelevelofinfluenceretained.
(iv) Investmentinjointventures
AjointventureisanarrangementinwhichtheGrouphasjointcontrol,wherebytheGrouphasrightstothenetassetsofthearrangement,ratherthanrightstoitsassetsandobligationsforitsliabilities.
Investmentsinjointventuresisaccountedforusingtheequitymethodandisrecognisedinitiallyatcost.Thecostoftheinvestmentsincludestransactioncosts.
TheconsolidatedfinancialstatementsincludetheGroup’sshareofprofitorlossandothercomprehensiveincomeofthejointventure,afteradjustmentstoaligntheaccountingpoliciesofthejointventurewiththoseoftheGroup,fromthedatethatjointcontrolcommencesuntilthedatethatjointcontrolceases.
WhentheGroup’sshareoflossesexceedsitsinterestintheequity-accountedjointventure,thecarryingamountofthatinterest,includinganylong-terminvestments,isreducedtozero,andtherecognitionof further losses isdiscontinuedexcept to the extent that theGrouphasanobligation to fund theinvestee’soperationsorhasmadepaymentsonbehalfoftheinvestee.
48
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.2 Basis of consolidation(cont’d)
(v) Transactionseliminatedonconsolidation
Intra-groupbalancesandtransactions,andanyunrealisedincomeandexpensesarisingfromintra-group transactions, are eliminated in preparing the consolidated financial statements. UnrealisedgainsarisingfromtransactionswithajointventureareeliminatedagainsttheinvestmenttotheextentoftheGroup’sinterestintheinvestee.Unrealisedlossesareeliminatedinthesamewayasunrealisedgains,butonlytotheextentthatthereisnoevidenceofimpairment.
(vi) Accountingforsubsidiariesandjointventuresintheseparatefinancialstatements
Investments in subsidiaries and joint ventures are stated in the Company’s statement of financialpositionatcostlessaccumulatedimpairmentlosses.
3.3 Property, plant and equipment
Itemsofproperty,plantandequipmentaremeasuredatcostlessaccumulateddepreciationandaccumulatedimpairmentlossesexceptthatcertainitemsofleaseholdpropertyweresubjecttoone-offrevaluationconductedin1994.Anyrelatedrevaluationreserveistransferredtoaccumulatedprofitsuponthedisposalofanitemoftheproperty,plantandequipment.
Whenpartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitems(majorcomponents)ofproperty,plantandequipment.
Thegainorlossondisposalofanitemofproperty,plantandequipmentisdeterminedbycomparingtheproceedsfromdisposalwiththecarryingamountofproperty,plantandequipment,andisrecognisednetwithinotherincome/otheroperatingexpensesinprofitorloss.
Thecostofreplacingacomponentofanitemofproperty,plantandequipmentisrecognisedinthecarryingamountof the itemif it isprobable that the futureeconomicbenefitsembodiedwithin thecomponentwillflowtotheGroupanditscostcanbemeasuredreliably.Thecarryingamountofthereplacedcomponentisderecognised.Thecostsoftheday-to-dayservicingofproperty,plantandequipmentarerecognisedinprofitorlossasincurred.
Depreciationisbasedonthecostofanassetlessitsresidualvalue.Significantcomponentsofindividualassetsareassessedandifacomponenthasausefullifethatisdifferentfromtheremainderofthatasset,thatcomponentisdepreciatedseparately.
Depreciationisrecognisedinprofitor lossonastraight-linebasisovertheestimateduseful livesofeachcomponentofanitemofproperty,plantandequipment.LeasedassetsaredepreciatedovertheshorteroftheleasetermandtheirusefullivesunlessitisreasonablycertainthattheGroupwillobtainownershipbytheendoftheleaseterm.Freeholdlandisnotdepreciated.
49
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.3 Property, plant and equipment(cont’d)
Theestimatedusefullivesforthecurrentandcomparativeperiodsareasfollows:
Leaseholdproperties Overthetermoftherespectiveleasesrangingfrom20to60years
Factoryequipment,plantandmachinery 3to10years
Motorvehicles 5years
Officeequipmentandfurnitureandfittings 3to5years
Otherassets 2to10years
No depreciation is recognised on construction-in-progress. Other assets comprise electrical installations,erectablestores,renovationsandleaseholdimprovements.
Depreciationmethods,usefullivesandresidualvaluesarereviewedattheendofeachreportingperiodandadjustedifappropriate.
3.4 Investment property
Investmentpropertyispropertyheldeithertoearnrentalincomeorcapitalappreciationorforboth,butnotfor sale in theordinarycourseofbusiness,used in theproductionor supplyofgoodsor servicesor foradministrativepurposes. Investmentproperty ismeasuredat coston initial recognitionandsubsequentlycarriedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheinvestmentproperty.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of theinvestmentproperty.Theestimatedusefullifeis60years.Thedepreciationmethod,theusefullifeandtheresidualvalueofinvestmentpropertyarereassessedatthereportingdate.
Whentheuseofapropertychangessuchthatitisreclassifiedasproperty,plantandequipment,itscost,accumulateddepreciationandaccumulatedimpairmentlossesatthedateofreclassificationwillbetransferredtoproperty,plantandequipmentforsubsequentaccounting.
3.5 Financial instruments
(i) Non-derivativefinancialassets
TheGroupinitiallyrecognisesloansandreceivablesanddepositsonthedatethattheyareoriginated.Allotherfinancialassets(includingassetsdesignatedatfairvaluethroughprofitorloss)arerecognisedinitiallyonthetradedate,whichisthedatethattheGroupbecomesapartytothecontractualprovisionsoftheinstrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from theassetexpire,orit transferstherightstoreceivethecontractualcashflowsonthefinancialassetina transaction inwhich substantially all the risks and rewards of ownership of the financial assetaretransferred.AnyinterestintransferredfinancialassetsthatiscreatedorretainedbytheGroupisrecognisedasaseparateassetorliability.
50
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.5 Financial instruments(cont’d)
(i) Non-derivativefinancialassets(cont’d)
TheGroupclassifiesnon-derivativefinancialassetsintothefollowingcategories:financialassetsatfairvaluethroughprofitorlossandloansandreceivables.
Financial assets at fair value through profit or loss
Afinancialassetisclassifiedatfairvaluethroughprofitorlossifitisclassifiedasheldfortradingorisdesignatedassuchuponinitialrecognition.FinancialassetsaredesignatedatfairvaluethroughprofitorlossiftheGroupmanagessuchinvestmentsandmakespurchaseandsaledecisionsbasedontheirfairvalueinaccordancewiththeGroup’sinvestmentstrategy.Attributabletransactioncostsarerecognisedinprofitor lossasincurred.Financialassetsat fairvaluethroughprofitor lossaremeasuredat fair value, and changes therein,which takes intoaccount anydividend income,arerecognisedinprofitorloss.
Financialassetsdesignatedatfairvaluethroughprofitorlosscomprisesshortterminvestmentsinmoneymarketfundandtrustfunds.
Loans and receivables
Loansandreceivablesarefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Suchassetsare recognised initiallyat fairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairmentlosses.
Loansandreceivablescomprisecashandcashequivalents,andtradeandotherreceivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of thestatementofcashflows,pledgeddepositsareexcludedwhilstbankoverdraftsthatarerepayableondemandandthatformanintegralpartoftheGroup’scashmanagementareincludedincashandcashequivalents.
(ii) Non-derivativefinancialliabilities
TheGroupinitiallyrecognisesfinancialliabilities(includingliabilitiesdesignatedatfairvaluethroughprofitorloss)onthetradedatewhichisthedatethattheGroupbecomesapartytothecontractualprovisionsoftheinstrument.
The Group derecognises a financial liability when its contractual obligations are discharged orcancelledorexpire.
Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,theGrouphasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisortorealisetheassetandsettletheliabilitysimultaneously.
51
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.5 Financial instruments(cont’d)
(ii) Non-derivativefinancialliabilities(cont’d)
TheGrouphasthefollowingnon-derivativefinancialliabilities:financialliabilitiesandtradeandotherpayables.
Suchfinancialliabilitiesarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,thesefinancialliabilitiesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
(iii) Intra-groupfinancialguaranteesintheseparatefinancialstatements
FinancialguaranteesarefinancialinstrumentsissuedbytheGroupthatrequirestheissuertomakespecifiedpaymentstoreimbursetheholderforthelossitincursbecauseaspecifieddebtorfailstomeetpaymentwhendueinaccordancewiththeoriginalormodifiedtermsofadebtinstrument.
Financialguaranteesare recognised initiallyat fair valueandareclassifiedasfinancial liabilities.Subsequenttoinitialmeasurement,thefinancialguaranteesarestatedatthehigheroftheinitialfairvaluelesscumulativeamortisationandtheamountthatwouldberecognisediftheywereaccountedforascontingentliabilities.Whenfinancialguaranteesareterminatedbeforetheiroriginalexpirydate,thecarryingamountofthefinancialguaranteesistransferredtoprofitorloss.
(iv) Sharecapital
Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofordinarysharesandshareoptionsarerecognisedasadeductionfromequity,netofanytaxeffects.
3.6 Leases
When entities within the Group are lessees of a finance lease
LeasedassetsinwhichtheGroupassumessubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.Uponinitialrecognition,theleasedassetismeasuredatanamountequaltothelowerofitsfairvalueandthepresentvalueoftheminimumleasepayments.Subsequenttoinitialrecognition,theassetisaccountedforinaccordancewiththeaccountingpolicyapplicabletothatasset.
When entities within the Group are lessees of an operating lease
OtherleasesareoperatingleasesandarenotrecognisedintheGroup’sstatementoffinancialposition.WheretheGrouphastheuseofassetsunderoperatingleases,paymentsmadeundertheleasesarerecognisedinprofitorlossonastraight-linebasisoverthetermofthelease.Leaseincentivesreceivedarerecognisedinprofitorlossasanintegralpartofthetotalleasepaymentsmade.Contingentrentalsarechargedtoprofitorlossintheaccountingperiodinwhichtheyareincurred.
52
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.7 Impairment
Financial assets
A financial asset not carried at fair value through profit or loss, including an interest in a joint venture,isassessedat theendofeach reportingperiod todeterminewhether there isobjectiveevidence that it isimpaired.Afinancialassetisimpairedifobjectiveevidenceindicatesthatalosseventhasoccurredaftertheinitialrecognitionoftheasset,andthatthelosseventhasanegativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor,restructuringofanamountduetotheGroupontermsthattheGroupwouldnotconsiderotherwise,indicationsthatadebtororissuerwillenterbankruptcy,adversechangesinthepaymentstatusofborrowersorissuersintheGroup,economicconditionsthatcorrelatewithdefaultsorthedisappearanceofanactivemarketforasecurity.
TheGroupconsidersevidenceofimpairmentforreceivablesonaspecificassetlevel.
Animpairmentlossinrespectofafinancialassetmeasuredatamortisedcostiscalculatedasthedifferencebetweenitscarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.Lossesarerecognisedinprofitorlossandreflectedinanallowanceaccountagainstloansandreceivables.Interestontheimpairedassetcontinuestoberecognised.WhentheGroupconsidersthattherearenorealisticprospectsofrecoveryoftheasset,therelevantamountsarewrittenoff.Iftheamountofimpairmentlosssubsequentlydecreasesandthedecreasecanberelatedobjectivelytoanevent occurring after the impairment was recognised, then the previously recognised impairment loss isreversedthroughprofitorloss.
Non-financial assets
Thecarryingamountsof theGroup’snon-financialassets,other than inventoriesanddeferred taxassets,arereviewedateachreportingdatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,thentheasset’srecoverableamountisestimated.Animpairmentlossisrecognisedifthecarryingamount of anasset or its related cash-generatingunit (CGU) exceeds its estimated recoverableamount.
TherecoverableamountofanassetorCGUisthegreaterofitsvalue-in-useanditsfairvaluelesscoststosell.Inassessingvalue-in-use,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetorCGU.Forthepurposeofimpairmenttesting,assetsthatcannotbetestedindividuallyaregroupedtogetherintothesmallestgroupofassetsthatgeneratescashinflowsfromcontinuingusethatarelargelyindependentofthecashinflowsofotherassetsorCGU.
TheGroup’scorporateassetsdonotgenerateseparatecashinflowsandareutilisedbymorethanoneCGU.Ifthereisanindicationthatacorporateassetmaybeimpaired,thentherecoverableamountisdeterminedfortheCGUtowhichthecorporateassetbelongs.
53
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.7 Impairment(cont’d)
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimatedrecoverableamount. Impairment lossesare recognised inprofitor loss. Impairment losses recognised inrespectofCGUsareallocatedtoreducethecarryingamountsoftheassetsintheCGU(groupofCGUs)onaproratabasis.
Impairmentlossesrecognisedinpriorperiodsareassessedateachreportingdateforanyindicationsthatthelosshasdecreasedornolongerexists.Animpairmentlossisreversediftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised.
3.8 Inventories
Inventoriesaremeasuredatthelowerofcostandnetrealisablevalue.Thecostofinventoriesisbasedontheweightedaveragecostformulaandincludesexpenditureincurredinacquiringtheinventories,productionorconversioncostsandothercostsincurredinbringingthemtotheirexistinglocationandcondition.Inthecaseofmanufactured inventoriesandwork-in-progress,cost includesanappropriateshareofproductionoverheadsbasedonnormaloperatingcapacity.
Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostsofcompletionandsellingexpenses.
3.9 Employee benefits
Defined contribution plans
Adefinedcontributionplanisapost-employmentbenefitplanunderwhichanentitypaysfixedcontributionsintoaseparateentityandwillhavenolegalorconstructiveobligationtopayfurtheramounts.
Obligationsforcontributionstodefinedcontributionpensionplansarerecognisedasanexpenseinprofitorlossintheperiodsduringwhichservicesarerenderedbyemployees.
Short-term benefits
Short-termemployeebenefitobligationsaremeasuredonanundiscountedbasisandareexpensedastherelatedserviceisprovided.
Aliabilityisrecognisedfortheamountexpectedtobepaidundershort-termcashbonusiftheGrouphasapresent legal or constructiveobligation topay this amount asa result of past serviceprovidedby theemployeeandtheobligationcanbeestimatedreliably.
54
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.9 Employee benefits(cont’d)
Share-based payment transactions
TheshareoptionprogrammeallowsGroupemployeestoacquiresharesoftheCompany.Thefairvalueofoptionsgranted is recognisedasanemployeeexpensewithacorresponding increase inequity. The fairvalue ismeasuredatgrantdateandspreadover thevestingperiodduringwhich theemployeesbecomeunconditionallyentitledtotheoptions.Ateachreportingdate,theGrouprevisesitsestimatesofthenumberofoptionsthatareexpectedtobecomeexercisable.Itrecognisestheimpactoftherevisionoforiginalestimatesinemployeeexpenseandinacorrespondingadjustmenttoequityovertheremainingvestingperiod.
Theproceedsreceivednetofanydirectlyattributabletransactionscostsarecreditedtosharecapitalwhentheoptionsareexercised.
3.10 Provisions
Aprovisionisrecognisedif,asaresultofapastevent,theGrouphasapresentlegalorconstructiveobligationthatcanbeestimatedreliablyanditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscounting theexpected future cashflowsatapre-tax ratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.Theunwindingofthediscountisrecognisedasfinancecost.
3.11 Revenue recognition
Sale of goods
Revenuefromthesaleofgoodsismeasuredatthefairvalueoftheconsiderationreceivedorreceivable,netofreturns,tradediscountsandvolumerebates.Revenueisrecognisedwhenthesignificantrisksandrewardsofownershiphavebeentransferredtothecustomer,recoveryoftheconsiderationisprobable,theassociatedcostsandpossiblereturnofgoodscanbeestimatedreliably,thereisnocontinuingmanagementinvolvementwiththegoods,andtheamountofrevenuecanbemeasuredreliably.
Transfersofrisksandrewardsvarydependingontheindividualtermsofthesalesagreement.Forsalesofproducts, transferusuallyoccurswhentheproduct isreceivedat thecustomer’swarehouse.However, forsomeinternationalshipments,transferoccursuponloadingofthegoodsontotherelevantcarrier.
Tooling contracts
Toolingrevenueandcostsarerecognisedasrevenueandexpenses,respectively,byreferencetothestageof completionof thecontractactivityat the reportingdate. Thepercentageof completion ismeasuredbyreferencetothestageandprogressofworkperformed,basedonrecordsmaintainedbythedivisions.Anexpectedlossontheconstructioncontractisrecognisedasanexpensewhenitisprobablethattotalcostswillexceedtotalcontractrevenue.
Toolingcontractsinprogressrepresentthegrossunbilledamountexpectedtobecollectedfromcustomersforcontractworkperformedtodate.Itismeasuredatcostplusprofitrecognisedtodatelessprogressbillingsandrecognisedlosses.CostincludesallexpenditurerelateddirectlytospecificprojectsandanallocationoffixedandvariableoverheadsincurredintheGroup’scontractactivitiesbasedonnormaloperatingcapacity.
55
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.11 Revenue recognition(cont’d)
Tooling contracts(cont’d)
Whenthetotalcostsincurredontoolingcontractsplusrecognisedprofits(lessrecognisedlosses)exceedprogressbillings,thebalanceisclassifiedasamountduefromcustomersforcontractwork.Whenprogressbillingsexceedcostsincurredplusrecognisedprofits(lessrecognisedlosses),thebalanceisclassifiedasamountduetocustomersforcontractwork.
Rental income
Rentalincomereceivableunderoperatingleasesisrecognisedinprofitorlossonastraight-linebasisoverthetermofthelease.Leaseincentivesgrantedarerecognisedasanintegralpartofthetotalrentalincomeoverthetermofthelease.Rentalincomefromsubleasedpropertyisrecognisedasotherincome.
3.12 Finance costs
Financecostscompriseinterestexpenseonborrowingsandfinanceleases.Allborrowingcostsarerecognisedinprofitor lossusing theeffective interestmethod,except to theextent that theyarecapitalisedasbeingdirectly attributable to the acquisition, construction or production of an asset which necessarily takes asubstantialperiodoftimetobepreparedforitsintendeduseorsale.
3.13 Other operating income/expense
Otheroperatingexpenseincludesimpairmentlossforproperty,plantandequipment,plantandequipmentwrittenoffandallowancefordoubtfulreceivables.Foreigncurrencygainsandlossesonfinancialassetsandfinancialliabilitiesarereportedonanetbasisaseitherotheroperatingincomeorotheroperatingexpensedependingonwhetherforeigncurrencymovementsareinanetgainornetlossposition.
3.14 Government grants
Governmentgrantsare recognisedwhen there is reasonableassurance that theywillbe receivedand theGroupwillcomplywiththeconditionsassociatedwiththegrant.Asset-relatedgrantsareinitiallyrecognisedasdeferredincomeandsubsequentlyrecognisedinprofitorlossasotherincomeonasystematicbasisovertheusefullifeoftheasset.GrantsthatcompensatetheGroupforexpensesincurredarerecognisedinprofitorlossasotherincomeonasystematicbasisinthesameperiodsinwhichtheexpensesarerecognised.
3.15 Tax
Taxexpensecomprisescurrentanddeferredtax.Currentanddeferredtaxisrecognisedinprofitorlossexcepttotheextentthatitrelatestoitemsrecogniseddirectlyinequityorinothercomprehensiveincome.
Currenttaxistheexpectedtaxpayableorrecoverableonthetaxableincomeorlossfortheyear,usingtaxratesenactedorsubstantivelyenactedatthereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.
56
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.15 Tax(cont’d)
Deferredtaxisrecognisedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfor taxationpurposes.Deferredtaxisnotrecognisedforthefollowing:
• temporarydifferenceson the initial recognitionofassetsor liabilities ina transaction that isnotabusinesscombinationandthataffectsneitheraccountingnortaxableprofitorloss;
• temporarydifferencesrelatedtoinvestmentsinsubsidiariestotheextentthatitisprobablethattheywillnotreverseintheforeseeablefuture;and
• taxabletemporarydifferencesarisingontheinitialrecognitionofgoodwill.
Deferredtaxismeasuredatthetaxratesthatareexpectedtobeappliedtotemporarydifferenceswhentheyreverse,basedonthelawsthathavebeenenactedorsubstantivelyenactedbythereportingdate.
Deferredtaxassetsandliabilitiesareoffsetifthereisalegallyenforceablerighttooffsetcurrenttaxliabilitiesandassets,andtheyrelatetoincometaxesleviedbythesametaxauthorityonthesametaxableentity,orondifferenttaxentities,buttheyintendtosettlecurrenttaxliabilitiesandassetsonanetbasisortheirtaxassetsandliabilitieswillberealisedsimultaneously.
Adeferredtaxassetisrecognisedforunusedtaxlosses,taxcreditsanddeductibletemporarydifferences,totheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheycanbeutilised.Deferred taxassetsare reviewedateach reportingdateandare reduced to theextent that it isno longerprobablethattherelatedtaxbenefitwillberealised.
In the ordinary course of business, there are many transactions and calculations for which the ultimatetax treatment is uncertain. Therefore, the Group recognises tax liabilities based on estimates of whetheradditionaltaxesandinterestwillbedue.ThesetaxliabilitiesarerecognisedwhentheGroupbelievesthatcertainpositionsmaynotbefullysustaineduponreviewbytaxauthorities,despitetheGroup’sbeliefthatitstaxreturnpositionsaresupportable.TheGroupbelievesthatitsaccrualsfortaxliabilitiesareadequateforallopentaxyearsbasedonitsassessmentofmanyfactorsincludinginterpretationsoftaxlawandpriorexperience.Thisassessmentreliesonestimatesandassumptionsandmayinvolveaseriesofmultifaceted
judgmentsabout futureevents.New informationmaybecomeavailable thatcauses theGroup tochangeitsjudgmentregardingtheadequacyofexistingtaxliabilities,suchchangestotaxliabilitieswillimpacttaxexpenseintheperiodthatsuchadeterminationismade.
3.16 Earnings per share
TheGrouppresentsbasicanddilutedearningspershare(EPS)dataforitsordinaryshares.BasicEPSiscalculatedbydividingtheprofitorlossattributabletoordinaryshareholdersoftheCompanybytheweightedaveragenumberofordinarysharesoutstandingduringtheyear,adjustedforownsharesheld.DilutedEPSisdeterminedbyadjustingtheprofitor lossattributable toordinaryshareholdersof theCompanyandtheweightedaveragenumberofordinarysharesoutstanding,adjustedforownsharesheld,fortheeffectsofalldilutivepotentialordinaryshares,whichcompriseshareoptionsgrantedtodirectorsandemployees.
57
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
3 SIGNIFICANT ACCOUNTING POLICIES(cont’d)
3.17 Segment reporting
AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearnrevenueandincurexpenses,includingrevenueandexpensesthatrelatetotransactionswithanyoftheGroup’sothercomponents.Alloperatingsegment’soperatingresultsarereviewedregularlybytheGroup’sBoard of Directors to make decisions about resources to be allocated to the segment and to assess itsperformance,andforwhichdiscretefinancialinformationisavailable.
SegmentresultsthatarereportedtotheBoardofDirectorsincludeitemsdirectlyattributabletoasegmentaswellasthosethatcanbeallocatedonareasonablebasis.Unallocateditemscomprisemainlyincometaxassetsandliabilities.
3.18 New standards and interpretations not adopted
Anumberofnewstandards,amendmentstostandardsandinterpretationsareeffectiveforannualperiodsbeginningafter1January2015,andhavenotbeenapplied inpreparing thesefinancialstatements.TheGroupiscurrentlyassessingthepotentialimpactofadoptingthesenewstandardsandinterpretations,onthefinancialstatementsoftheGroupandtheCompany.
Thesenewstandardsinclude,amongothers,FRS115RevenuefromContractswithCustomersandFRS109FinancialInstrumentswhicharemandatoryforadoptionbytheGroupon1January2018.
• FRS115RevenuefromContractswithCustomers FRS 115 establishes a comprehensive framework for determining whether, how much and when
revenueisrecognised.Italsointroducesnewcostguidancewhichrequirescertaincostsofobtainingand fulfillingcontracts tobe recognisedasseparateassetswhenspecifiedcriteriaaremet.Wheneffective,FRS115replacesexistingrevenuerecognitionguidance,includingFRS18Revenue,FRS11ConstructionContracts,INTFRS113CustomerLoyaltyProgrammes,INTFRS115AgreementsfortheConstructionofRealEstate,INTFRS118TransfersofAssetsfromCustomersandINTFRS31Revenue–BarterTransactionsInvolvingAdvertisingServices.
• FRS109FinancialInstruments FRS109replacesmostoftheexistingguidanceinFRS39FinancialInstruments:Recognitionand
Measurement.Itincludesrevisedguidanceonclassificationandmeasurementoffinancialinstruments,anewexpectedcredit lossmodel forcalculating impairmentonfinancialassetsandnewgeneralhedgeaccountingrequirements.
As FRS115 and FRS109, when effective,will change the existing accounting standards and guidanceappliedbytheGroupandtheCompanyinaccountingforrevenueandfinancialinstruments.ThesestandardsareexpectedtoberelevanttotheGroupandtheCompany.TheGrouphassetupprojectteamstoassessthepotentialimpactonitsfinancialstatementsandtoimplementthestandards.TheGroupdoesnotplantoadoptthesestandardsearly.
The Accounting Standards Council (ASC) announced on 29 May 2014 that Singapore-incorporatedcompanieslistedontheSingaporeExchange(SGX)willapplynewfinancialreportingframeworkidenticaltotheInternationalFinancialReportingStandards(IFRS)forfinancialyearending31December2018onwards.Singapore-incorporatedcompanieslistedonSGXwillhavetoassesstheimpactofIFRS1:First-timeadoptionofIFRSwhentransitioningtothenewreportingframework.TheGroupiscurrentlyassessingtheimpactoftransitioningtothenewreportingframeworkonitsfinancialstatements.
58
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
4 PR
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59
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
4 PR
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112
,069
60
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
4 PROPERTY, PLANT AND EqUIPMENT(cont’d)
Assets held under finance leases
ThecarryingamountofmotorvehiclesheldunderfinanceleasesfortheGroupwasnil(2014:$16,000).Assetsheldunderfinanceleasearepledgedassecurityfortherelatedfinanceleaseliabilities.
Impairment loss
CertainCGUsinChina,SingaporeandMalaysiacontinuedtoincuroperatinglosseswhereasotherCGUs,whose financial performance had improved, had shown indication that impairment losses which wererecognisedinpriorperiodsmaynolongerexistormayhavedecreased.ThisresultedintheGroupreassessingtherecoverableamountoftheproperty,plantandequipment.
TherecoverableamountsoftheCGUswereestimatedbasedonthehigheroffairvaluelesscosttosellandtheir value-in-use. As the operations of the CGUs located within the same country are similar in nature,therefore theassumptionsused in projecting the value-in-useare disclosedbelowby suchgeographicallocations.
TheapproachtodeterminetherecoverableamountsoftheCGUsiscategorisedasfollows:
• CGUsthatareloss-makingandarenotexpectedtogenerateanyeconomicbenefitsintheperiodofforecast.TherecoverableamountsofsuchCGUshavebeendeterminedbasedonthefairvalueofitsmonetaryassetsandliabilities.
• CGUs that are loss-making but are expected to be able to generate economic benefits throughliquidationof its leaseholdpropertiesandplantandmachineries. The recoverableamountsof theCGUshavebeendeterminedbasedonthefairvaluelesscosttoselloftheassets.Thefairvaluelesscost tosell isbasedonmarketvaluationperformedby independentvaluerswithexperience in thelocationandcategoryofthepropertiesandmachineriesbeingvalued.
• The recoverableamountofallotherCGUshavebeendeterminedbasedon thecalculationof theirvalue-in-usederivedfrommanagement’scashflowsprojectionsfortheseCGUs.
Keyassumptionsusedinthecalculationofthevalue-in-useareasfollows:
China CGU Malaysia CGU
2015 2014 2015#
Value-in-useassumptions:
Averagegrowthrateinrevenue -9%to53% -21%to9% 0%to2%
Numberofyearsprojectedinthediscountedcashflow 5years 5years 5years
Grossprofitmargin 12%to25% 8%to21% 17%
Terminalvalueofproperty,plantandequipment (asa%ofcost) 2% 2% –
Terminalvalueofleaseholdpropertyandplantandmachinery($’000) – – 8,733
Pre-taxdiscountrate 20%to22% 18%to21% 13%
# Fairvaluelesscosttosellapproachwasutilisedin2014.
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NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
4 PROPERTY, PLANT AND EqUIPMENT(cont’d)
Impairment loss(cont’d)
ThegrowthrateintheChinasegmentcanbeexplainedbyforecastedfluctuationsinmarketdemandfromendcustomers.IfanyoftheCGUsisnotabletomeettheforecastedresults,theGroupmayberequiredtorecordadditionalimpairmentloss.Basedontheassessment,additionalimpairmentlossofnil(2014:$500,000)wasrecognised.
In prior year, the recoverable amount of the CGUs based on fair value less cost to sell approach was$1,374,000.Accordingly,impairmentlossof$500,000wasrecorded.
Thefairvaluemeasurementiscategorisedaslevel3underthefairvaluehierarchy(seenote2.4).Detailsofvaluationtechniquesandkeyinputsusedareasfollows:
Type valuation technique Significant unobservable inputs
Longtermleaseholdland ComparisonMethodofValuation
Comparing the property with comparable propertieswhichhavebeensoldorarebeingofferedforsaleandmakingadjustmentsforfactorswhichaffectvaluesuchas locationandaccessibility,marketconditions,size,shapeandterrainofland.
Buildings DepreciatedReplacementCostMethod
Aggregated amount of gross replacement cost of thebuildingsandothersiteworksfromwhichappropriatedeductionsmay thenbemade for theage,condition,economicorfunctionalobsolescenceandenvironmentalfactors.
Plantandmachinery DepreciatedReplacementCostMethod
Aggregated amount of gross replacement cost ofthe plant and machinery, from which appropriatedeductionsmay thenbemade for theage,condition,functionalandtechnologicalobsolescencefactors.
5 INvESTMENT PROPERTYGroup $’000
Cost
At1January2014 11,918
Currencyrealignment (229)
At31December2014 11,689
At1January2015 11,689
Currencyrealignment (1,511)
At31December2015 10,178
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UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
5 INvESTMENT PROPERTY(cont’d)Group $’000
Accumulated depreciation
At1January2014 1,405
Depreciationfortheyear 230
Currencyrealignment (31)
At31December2014 1,604
At1January2015 1,604
Depreciationfortheyear 210
Currencyrealignment (221)
At31December2015 1,593
Carrying amounts
At1January2014 10,513
At31December2014 10,085
At31December2015 8,585
ThebuildingsareleasedtoBerryPlasticsMalaysiaSdnBhd,ajointventureoftheGroup,andathirdparty.
Thefairvalueoftheinvestmentproperty(fairvaluehierarchyoflevel3)asat31December2015amountstoapproximately$9,069,000(2014:$9,878,000)andhasbeendeterminedbasedonvaluationsperformedbyaccreditedindependentvaluerswithrecentexperienceinthelocationandcategoryofinvestmentpropertiesbeingvalued.Thevaluationsarebasedoncomparisonmethodofvaluationandthedepreciatedreplacementcostmethod.Thedepreciatedreplacementcostmethodmakesreferencetothecostofreplacingthebuildingsas newand allowing for depreciation. Key unobservable inputs correspond to replacement costs havingregardtoassetlife,physicaldeterioration,functionalandeconomicobsolescence.Thecomparisonmethodinvolves comparing and adopting recent transactions as a yardstick and sale evidences involving othersimilarpropertiesinthevicinity.TheGrouphasassessedthatthebestuseofitspropertiesdonotdifferfromtheircurrentuse.
TheGrouphascertainleaseholdlandheldtoearnrentalincomeandalsoforownproductionorsupplyofgoodsandadministrativepurposes.Ifaportionofthepropertycannotbesoldorleasedoutseparatelyunderafinancelease,theentirepropertyisclassifiedasinvestmentpropertyonlyiftheportionofthepropertyheldforownuseisinsignificant.Judgementisinvolvedindeterminingtheallocationofinvestmentpropertyandproperty,plantandequipment.
63
FU YU CORPO
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LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
6 SUBSIDIARIESCompany
2015 $’000
2014 $’000
Equityinvestments,atcost 118,820 123,027
Forgivenessofamountsduefromasubsidiary 9,331 9,331
128,151 132,358
Impairmentlosses (98,843) (96,650)
29,308 35,708
Amountsduefromsubsidiaries 48,160 46,406
Impairmentlosses (11,875) (12,712)
36,285 33,694
65,593 69,402
Certainamountsduefromsubsidiarieswere insubstancepartof theshareholders’net investments in theentitiesasthesettlementoftheseamountsareneitherplannednorlikelytooccurintheforeseeablefuture.Accordingly,thesebalancesareclassifiedasquasi-equityinvestmentinsubsidiariesandarestatedatcost.
Impairment loss
CertainsubsidiariesinChinaandSingaporecontinuedtoincuroperatinglosseswhereasothersubsidiaries,whose financial performance had improved, had shown indication that impairment losses which wererecognisedinpriorperiodsmaynolongerexistormayhavedecreased.Accordingly,theCompanyperformedanassessmentoftherecoverableamountofitsinvestmentsinsubsidiariesanditsreceivablesfromthesesubsidiaries.Therecoverableamountsofinvestmentsandreceivablesfromthesesubsidiarieswereestimatedbasedonthehigheroffairvaluelesscosttosellandvalue-in-use.
The approach to determine the recoverable amounts of investments and receivables fromsubsidiaries iscategorisedasfollows:
• Investmentsandreceivablesfromsubsidiariesthatareloss-makingandarenotexpectedtogenerateanyeconomicbenefitsintheperiodofforecast,includinginvestmentsandreceivablesfromsubsidiariesthatareconsideredfor theirpotential liquidation.Therecoverableamountofsuchinvestmentsandreceivables fromsubsidiarieshasbeendetermined tobe the fairvalueof itsmonetaryassetsandliabilities.Forsubsidiariesthatareloss-makingbutexpectedtogenerateeconomicbenefitsthroughliquidationofitsleaseholdpropertiesandplantandmachineries,therecoverableamountshavebeendeterminedbasedonthefairvaluelesscosttoselloftheassets.Detailsonfairvaluemeasurementforproperty,plantandequipmentisdisclosedinnote4.
• Therecoverableamountofinvestmentsandreceivablesfromtheremainingsubsidiarieshavebeendeterminedbasedon the calculationof their value-in-usederived frommanagement’s cash flowsprojections.
Basedonmanagement’sassessment,additionalnetimpairmentlossof$1,356,000(2014:$5,383,000)wasrecognisedinprofitorloss.TherecoverableamountoftheCGUsbasedonfairvaluelesscosttosellapproachwas$37,057,000 (2014:$6,885,000). If any of the subsidiaries is not able to achieve theforecastedresultsandrealisethefairvaluesoftheassetsandliabilities,theCompanywouldberequiredtorecordadditionalimpairmentloss.
64
FU YU CORPO
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ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
6 SUBSIDIARIES(cont’d)
Themovementsintheallowanceforimpairmentinrespectofinvestmentsinsubsidiariesandamountsduefromsubsidiariesduringtheyearareasfollows:
Company
Note 2015 $’000
2014 $’000
At1January 109,362 96,076
Impairmentlossduringtheyear 1,356 5,383
Transferredfromamountsduefromsubsidiaries 11 – 7,903
At31December 110,718 109,362
Allowanceforimpairmentinrespectofotheramountsduefromsubsidiariesisdisclosedinnote11.
Detailsofthesubsidiariesareasfollows:
Name of companyCountry of incorporation/ Place of business
Effective equity interest held by the Group
2015 %
2014 %
Held by the Company: ChangFuResourcesPteLtd Singapore 100 100FuYuInvestmentPteLtd Singapore 100 100NanoTechnologyManufacturingPteLtd Singapore 80 80SolidMicronTechnologiesPteLtd Singapore 100 100FuYuElectronics(Dongguan)Co.,Ltd. People’sRepublicofChina 100 100FuYuMoulding&Tooling(Dongguan)Co.,Ltd. People’sRepublicofChina 100 100FuYingMoulding&Tooling(Shenzhen)Co.,Ltd.* People’sRepublicofChina – 100FuYuMoulding&Tooling(Suzhou)Co.,Ltd. People’sRepublicofChina 100 100FuYuMoulding&Tooling(Wujiang)Co.,Ltd. People’sRepublicofChina 100 100FuYuMoulding&Tooling(Zhuhai)Co.,Ltd. People’sRepublicofChina 100 100FuYuMoulding&Tooling(Shanghai)Co.,Ltd. People’sRepublicofChina 100 100FuYuInternationalEnterpriseLimited HongKong 100 100FuYuTradingLimited HongKong 100 100
Held through Fu Yu Moulding & Tooling (Shanghai) Co., Ltd.:
FuYuMoulding&Tooling(Chongqing)Co.,Ltd. People’sRepublicofChina 100 100
Held through Fu Yu Investment Pte Ltd:LCTHCorporationBerhad Malaysia 70.64 70.64
Held through LCTH Corporation Berhad:FuHaoManufacturing(M)Sdn.Bhd. Malaysia 70.64 70.64
ClassicAdvantageSdn.Bhd. Malaysia 70.64 70.64
* FuYingMoulding&Tooling(Shenzhen)Co.,Ltdwasliquidatedin2015.
65
FU YU CORPO
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ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
6 SUBSIDIARIES(cont’d)
KPMGSingaporeistheauditorofallSingapore-incorporatedsubsidiariesotherthanChangFuResourcesPteLtd.OthermemberfirmsofKPMGInternationalareauditorsofsignificantforeign-incorporatedsubsidiariesexceptforLCTHCorporationBerhadanditssubsidiaries,whichareauditedbyErnst&Young,Malaysia.
For thispurpose,asubsidiary isconsideredsignificantasdefinedunder theSingaporeExchangeLimitedListingManual if itsnet tangibleassets represent20%ormoreof theGroup’s consolidatednet tangibleassets,orifitspre-taxprofitsaccountfor20%ormoreoftheGroup’sconsolidatedpre-taxprofits.
ThefollowingsummarisesthefinancialinformationoftheGroup’ssubsidiarieswithmaterialnon-controllinginterest(NCI),basedontheirconsolidatedfinancialstatementspreparedinaccordancewithFRS,modifiedforfairvalueadjustmentsonacquisitionanddifferencesintheGroup’saccountingpolicies.
LCTH Corporation Berhad and its subsidiaries
2015 $’000
Revenue 42,233
Profitfortheyear 8,805
Othercomprehensiveincome –
Total comprehensive income 8,805
AttributabletoNCI:
- Profitfortheyear 2,585
- Othercomprehensiveincome –
- Total comprehensive income 2,585
Non-currentassets 28,096
Currentassets 50,024
Non-currentliabilities (262)
Currentliabilities (9,636)
Net assets 68,222
Net assets attributable to NCI 20,030
Cashflowsfromoperatingactivities 8,212
Cashflowsusedininvestingactivities (287)
Cashflowsusedinfinancingactivities(dividendstoNCI:$348,000) (1,280)
Net increase in cash and cash equivalents 6,645
66
FU YU CORPO
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UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
6 SUBSIDIARIES(cont’d)
LCTH Corporation Berhad and its subsidiaries
2014 $’000
Revenue 48,811
Profitfortheyear 5,028
Othercomprehensiveincome –
Total comprehensive income 5,028
AttributabletoNCI:
- Profitfortheyear 1,476
- Othercomprehensiveincome –
- Total comprehensive income 1,476
Non-currentassets 29,319
Currentassets 53,341
Non-currentliabilities (300)
Currentliabilities (12,112)
Net assets 70,248
Net assets attributable to NCI 20,625
Cashflowsfromoperatingactivities 4,716
Cashflowsusedininvestingactivities (10,940)
Cashflowsusedinfinancingactivities(dividendstoNCI:nil) (14)
Net decrease in cash and cash equivalents (6,238)
7 JOINT vENTURE
ThejointventurecompanyBerryPlasticsMalaysiaSdnBhd’sprincipalactivitiesarethoseofmanufacturingandassemblyofprecisionplasticmouldedproductsforelectrical,electronics,healthcare,foodandpetroleumindustries.Theaccountingmodelappliedisequitymodel.Detailsofthejointventureareasfollows:
Name of companyCountry of incorporation/
Place of business
Effective equity interest held by
the Group
2015 %
2014 %
BerryPlasticsMalaysiaSdnBhd* Malaysia 28.26 28.26
* AuditedbyPricewaterhouseCoopers,Malaysia.
Thejointventureisheldthroughitssubsidiary,LCTHCorporationBerhadwhichhasa40%equityownershipinterestsintheentity.
67
FU YU CORPO
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UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
7 JOINT vENTURE(cont’d)
Thefollowingtablesummarisesthefinancialinformationofthejointventure,basedonitsfinancialstatementspreparedinaccordancewithFRS,modifiedforfairvalueadjustmentsonacquisitionanddifferencesintheGroup’saccountingpolicies:
2015 $’000
2014 $’000
Revenue 6,625 5,433Profit/(Loss)afterincometax# 1,081 (1,013)Othercomprehensiveincome – –Total comprehensive income 1,081 (1,013)
Assets and liabilitiesNon-currentassets 853 2,807Currentassets^ 6,408 5,986Non-currentliabilities – (441)Currentliabilities (1,051) (587)Net assets 6,210 7,765
Group’s interest in net assets of investee at beginning of the year 3,106 4,064Shareoftotalcomprehensiveincome 432 (405)Dividendsfromjointventure (667) (496)Currencyrealignment (387) (57)Carrying amount of interest in investee at end of the year 2,484 3,106
# Includes:– depreciationof$930,000(2014:$1,275,000)– interestincomeof$34,000(2014:$24,000)– incometaxexpenseof$36,000(2014:creditof$40,000)
^ Includescashandcashequivalentsof$4,969,000(2014:$4,251,000).
8 DEFERRED TAx ASSETS AND LIABILITIES
MovementsindeferredtaxassetsandliabilitiesoftheGroup(priortooffsettingofbalances)duringtheyearareasfollows:
At 1/1/2014
$’000
Recognised in profit or loss
(Note 25) $’000
Exchange differences
$’000
At 31/12/2014
$’000
Recognised in profit or loss
(Note 25) $’000
Exchange differences
$’000
At 31/12/2015
$’000
GroupDeferred tax assetsProperty,plantand
equipment (746) 603 – (143) 143 – –Employeebenefits (29) – – (29) 4 – (25)Others (14) (157) (5) (176) (357) (1) (534)Taxlosscarry-forward (1,469) (794) 71 (2,192) (1,133) 348 (2,977)
(2,258) (348) 66 (2,540) (1,343) 347 (3,536)
Deferred tax liabilitiesProperty,plantand
equipment 1,157 508 (35) 1,630 547 (196) 1,981
68
FU YU CORPO
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ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
8 DEFERRED TAx ASSETS AND LIABILITIES(cont’d)
2015 $’000
2014 $’000
CompanyDeferred tax assets
Employeebenefits (25) (29)
Deferred tax liabilities
Property,plantandequipment 672 111
Deferred taxassetsand liabilitiesareoffsetwhen there isa legallyenforceable right tosetoffcurrent taxassetsagainstcurrenttaxliabilitiesandwhenthedeferredtaxesrelatetothesametaxauthority.Theamountsdeterminedafterappropriateoffsettingareincludedinthestatementoffinancialpositionasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Deferredtaxassets 2,464 1,280 – –
Deferredtaxliabilities 909 370 647 82
Basedonthecashflowsforecastpreparedasdescribedinnote4,deferredtaxassetswererecognisedbycertainsubsidiariestotheextentthatmanagementconsidereditprobablethatfuturetaxableprofitswouldbeavailableagainstwhichtheunutilisedtaxlossescarriedforwardcanbeutilisedbytheGroup.
Asat31December,deferredtaxassetshavenotbeenrecognisedinrespectofthefollowingitemsbecauseitisnotprobablethatfuturetaxableprofitswouldbeavailableagainstwhichtheGroupcanutilisethebenefitstherefrom:
Group
2015 $’000
2014 $’000
Unutilisedcapitalallowances 464 1,615
Unutilisedtaxlosses 27,432 42,073
Unutilisedexportandreinvestmentallowances 2,978 3,658
Temporarydifferences 2,903 3,705
33,777 51,051
Other than tax lossesarising fromChinasubsidiariesof$18,817,000(2014:$23,477,000)whichwillexpirebetween2016and2020(2014:2015and2019), theremainingtax losses,capitalallowances,exportandreinvestmentallowancesandtemporarydifferencesdonotexpireundercurrent tax legislation.Unutilisedtaxlossesof$8million(2014:$11million)expiredduringthefinancialyear.
Unrecognised temporary differences relating to investments in subsidiaries
Asat31December2015,adeferredtaxliabilityof$232,000(2014:$205,000)fortemporarydifferencesof$4,644,000(2014:$4,096,000)relatedtoundistributedearningsofcertainsubsidiariesoftheGroupwerenotrecognisedastheGrouphasdeterminedthattheundistributedprofitsofitsoverseassubsidiarieswillnotberemittedtoSingaporeinthenext12months,butberetainedforworkingcapitalpurposes.
69
FU YU CORPO
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ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
9 INvENTORIESGroup Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Rawmaterials 7,009 8,065 1,218 1,315Work-in-progress 527 963 35 55Finishedgoods 7,481 8,092 1,264 872
15,017 17,120 2,517 2,242
Movementsintheallowanceforstockobsolescenceareasfollows:Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
At1January 899 1,900 61 66Allowancemade 432 188 150 –Allowancewritten-back (74) (480) – (5)Allowanceutilised (19) (715) – –Currencyrealignment (53) 6 – –At31December 1,185 899 211 61
Duringtheyear,theamountofinventoriesrecognisedasanexpensefortheGroupandCompanyamountedto$186,992,000(2014:$223,360,000)and$28,738,000(2014:$29,082,000)respectively.
10 TRADE AND OTHER RECEIvABLESGroup Company
Note2015 $’000
2014 $’000
2015 $’000
2014 $’000
Tradereceivables 62,275 76,479 8,831 9,239Allowanceforimpairmentof
doubtfulreceivables (8,025) (7,893) (6) (5)Nettradereceivables 54,250 68,586 8,825 9,234
Otherreceivables 1,030 1,126 198 143Allowanceforimpairmentof
doubtfulotherreceivables (71) (16) (63) (8)Netotherreceivables 959 1,110 135 135
Amountsduefromsubsidiaries 11 – – 3,977 5,351
Deposits 1,445 1,472 458 475Loansandreceivables 56,654 71,168 13,395 15,195Prepayments 670 1,306 81 88Advancestosuppliers 1,083 971 36 108Amountsduefrom
customersforcontractwork 12 2,884 6,259 499 1,470
61,291 79,704 14,011 16,861
70
FU YU CORPO
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UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
10 TRADE AND OTHER RECEIvABLES(cont’d)
Inprioryear,tradereceivablesofasubsidiarywerepledgedassecurityforbankfacilities(seenote18).Theamountthatissubjecttothepledgeis$1,701,000asat31December2014.
TheGroup’sandtheCompany’sexposuretocreditandcurrencyrisks,andimpairmentlossesrelatedtotradeandotherreceivablesisdisclosedinnote28.
11 AMOUNTS DUE FROM SUBSIDIARIESCompany
Note2015 $’000
2014 $’000
Amountsduefromsubsidiaries–trade 74 70–non-trade 3,903 5,281
10 3,977 5,351
Thenon-tradeamountsduefromsubsidiariesareunsecured,non-interestbearingandrepayableondemand.TheCompany’sexposuretocreditriskisdisclosedinnote28.
Themovements in the allowance for impairment of doubtful receivables in respect of amounts due fromsubsidiariesduringtheyearareasfollows:
Company
Note2015 $’000
2014 $’000
At1January – 7,903Transferredtoquasi-equityinvestments 6 – (7,903)At31December – –
12 AMOUNTS DUE FROM CUSTOMERS FOR CONTRACT WORKGroup Company
Note2015 $’000
2014 $’000
2015 $’000
2014 $’000
Contractcostsincurredtodate 12,089 22,452 3,338 7,602Recognisedprofitsless
recognisedlossestodate 3,416 4,471 153 22815,505 26,923 3,491 7,830
Progressbillings (13,540) (21,294) (3,068) (6,455)Amountsduefromcustomers,
net 1,965 5,629 423 1,375
Grossamountsduefromcustomersforcontractwork 10 2,884 6,259 499 1,470
Grossamountsduetocustomersforcontractwork 19 (919) (630) (76) (95)
1,965 5,629 423 1,375
71
FU YU CORPO
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NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
13 CASH AND CASH EqUIvALENTS
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Cashatbankandinhand 45,729 43,441 6,418 5,201
Depositswithbanks 57,211 39,888 23,544 12,850
Cashandcashequivalents 102,940 83,329 29,962 18,051
Depositspledged (3,001) (3,408)
Cashandcashequivalentsintheconsolidatedstatementofcashflows 99,939 79,921
Fixeddepositsof$3,001,000(2014:$3,408,000)ispledgedforbankguaranteepurposesinthenormalcourseofbusiness.
Fixeddepositswithfinancialinstitutionsmatureonvaryingperiodswithin12months(2014:12months)fromthefinancialyearend.Effectiveinterestratesrangefrom0.3%to4.16%(2014:0.23%to4.05%)perannum.
Cash and bank balances totalling the equivalent of $37,121,000 (2014: $32,113,000) are held in acountrywhichoperatesforeignexchangecontrols.
14 SHORT TERM INvESTMENTS
Theshort term investments refer to fundsdepositedwithquoted trust fundandmoneymarket funds.Theinvestmentsaredesignatedatfairvalueandiscategorisedaslevel1underthefairvaluehierarchy.
15 SHARE CAPITAL2015 2014
No. of shares
Fully paid ordinary shares, with no par value:
Onissueat1January 752,994,775 732,834,775
Exerciseofshareoptions – 20,160,000
Onissueat31December 752,994,775 752,994,775
Duringtheyearended31December2014,ordinarysharesof20,160,000wereissuedasaresultoftheexerciseofvestedshareoptionsarisingfromtheFuYuEmployeesShareOptionSchemegrantedon5October2008.Optionswereexercisedatanexercisepriceof$0.09pershare.Allissuedsharesarefullypaid.
Theholdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetotimeandareentitledtoonevotepershareatmeetingsof theCompany.Allsharesrankequallywithregard to theCompany’sresidualassets.
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NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
15 SHARE CAPITAL(cont’d)
Capital reduction
Duringtheyear,theCompanyundertookacapitalreductionexerciseinvolving:
(i) awriteoffofaccumulatedlossesoftheCompanyamountingto$15,253,773asat31December2014;and
(ii) acashdistributionamountingto$3,764,973toreturnsurpluscapitaltoshareholders.
ThereisnochangeinthenumberofsharesissuedbytheCompanyimmediatelyafterthecapitalreductionexercise.
Capital management
TheGroup’spolicyistomaintainadequatecapitalbasetomaintaininvestor,creditorandmarketconfidenceandtosustainfuturedevelopmentofthebusiness.CapitalconsistsofsharecapitalandreservesoftheGroup.
Managementmonitorscapitalandexternallyimposedcapitalrequirementsbasedonthefollowingbases(fortheGroupandtheCompany)andwillreporttotheBoardonanyexceptionsnoted:
– TotalequityattributabletoequityholdersoftheCompany,excludingrevaluationreserveandforeigncurrencytranslationreserve(“netequity”);and
– Gearingratio
Netequityiscalculatedasthesumofsharecapital,capitalreserve,statutoryreserve,shareoptionreserveandretainedearnings.Gearingratioiscalculatedastotalliabilities(includingcontingentliabilities)dividedbynetequity.
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Netequity 187,183 180,643 112,186 107,076
Gearingratio 27.3% 37.0% 10.0% 10.6%
TheGroupandtheCompanyhavecompliedwiththeexternallyimposedcapitalrequirementsforthefinancialyearsended31December2015and2014.
Inaddition,asdisclosedinnote16,subsidiariesinPeople’sRepublicofChina(PRC)arerequiredbythelawsandregulationsofthePRCtocontributetoandtomaintainanon-distributablestatutoryreservefundwhoseutilisationissubjecttoapprovalbyrelevantPRCauthorities.ThisexternallyimposedcapitalrequirementhasbeencompliedwithbythePRCsubsidiariesforthefinancialyearsended31December2015and2014.
TheBoardofDirectorsmonitorsthelevelofdividendstoordinaryshareholders.TherewerenochangesintheGroup’sapproachtocapitalmanagementduringtheyear.
73
FU YU CORPO
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ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
16 RESERvESGroup Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Capitalreserve 140 140 – –
Statutoryreserve 6,561 6,073 – –
Revaluationreserve 789 789 789 789
Shareoptionreserve – 1,627 – 1,153
Foreigncurrencytranslationreserve (9,905) (6,516) – –
Retainedearnings/(accumulatedlosses) 78,324 51,627 10,028 (15,253)
75,909 53,740 10,817 (13,311)
Thecapitalreservecomprisesnegativegoodwillarisingfromacquisitionofremaininginterestinasubsidiaryfromnon-controllinginterestswrittenoffagainstshareholder’sequity.
In accordance with the Foreign Enterprise Law applicable to the subsidiaries in the PRC, wholly-ownedsubsidiariesarerequiredtomakeappropriationtostatutoryreservefund(SRF).Atleast10%ofthestatutoryaftertaxprofitsasdeterminedinaccordancewiththeapplicablePRCaccountingstandardsandregulationsmustbeallocatedtotheSRFuntilthecumulativetotaloftheSRFreaches50%ofthesubsidiaries’registeredcapital.SubjecttoapprovalfromtherelevantPRCauthorities,theSRFmaybeusedtooffsetanyaccumulatedlossesorincreasetheregisteredcapitalofthesubsidiaries.TheSRFisnotavailablefordividenddistributiontoshareholders.
Therevaluationreserverepresentsincreaseinthefairvalueofcertainpropertiesthatweresubjecttoone-offrevaluationexerciseconducted in1994.Whentheproperty issold, therelatedamount in therevaluationreserveistransferredtoretainedearnings.
Theshareoptionreservecomprisesthecumulativevalueofservicesreceivedfromdirectorsandemployeesfortheissueoftheshareoptions.Theamountistransferredtoretainedearningsuponexpiryoftheshareoptionscheme.
TheforeigncurrencytranslationreservecomprisesforeignexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeignoperationswhosefunctionalcurrenciesaredifferentfromtheGroup’spresentationcurrency.
17 SHARE-BASED PAYMENT ARRANGEMENT
TheFuYuEmployeesShareOptionScheme(theScheme)oftheCompanywasapprovedandadoptedbyitsmembersatanExtraordinaryGeneralMeetingon29April2008.TheSchemeisadministeredbyacommitteecomprisingallexecutivedirectors.
The Scheme was further ratified at an Extraordinary General Meeting on 16 October 2014 whereby theexerciseperiodoftheemployeeoptionswasextendedto31December2014.Inrespectof3,000,000shareoptionspreviouslygrantedtoNon-ExecutiveDirectors,newshareoptionswereissuedasreplacementoptionsduetolegalrestrictionspertainingtoextensionofexerciseperiod.Thenewshareoptionsweregrantedonthesametermsastheoptionswithnovestingperiod.
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FU YU CORPO
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NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
17 SHARE-BASED PAYMENT ARRANGEMENT(cont’d)
InformationregardingtheSchemeisasfollows:
• TheexercisepriceoftheoptionsisdeterminedastheaverageoftheclosingpricesoftheCompany’sordinary shares as quoted on Singapore Exchange for five consecutive market days immediatelyprecedingthedateofthegrant.
• Theoptionscanbeexercised1yearafterthedateofgrant.
• Theoptionsgrantedexpireon31December2014.
• Alloptionsaresettledbydeliveryofshares.
• Nooptionsaregrantedatadiscounttotheprevailingmarketpriceofshare.
Movements in the number of share options and their related weighted average exercise prices are asfollows:
2015 2014
Weighted average exercise
price $
No. of options
Weighted average exercise
price $
No. of options
At1January – – 0.09 34,060,000
Forfeitedduringtheyear – – 0.09 (13,900,000)
Exercisedduringtheyear – – 0.09 (20,160,000)
At31December – – 0.09 –
Theweightedaveragesharepriceatthedateofexerciseforshareoptionsexercisedin2014was$0.09.
The fairvalueofservices received in return forshareoptionsgrantedaremeasuredby reference to thefair value of share options. The estimate of the fair value of the services received is measured basedon theBlack-Scholes-Mertonmodel.Theexpected lifeused in themodelhasbeenadjusted,basedonmanagement’s best estimate, for the effects of non-transferability, exercise restrictionsandbehaviouralconsiderations.
Fairvalueofshareoptionsandassumptionsaresetoutbelow:
Date of grant of options 5 October 2008 16 October 2014
Fairvalueatmeasurementdate/modificationdate $0.020 $0.003
Shareprice $0.09 $0.09
Exerciseprice $0.09 $0.09
Expectedvolatility 19% 5%
Expectedoptionlife 5years 3months
Expecteddividendrate Nil Nil
Risk-freeinterestrate 2.25% 0.4%
75
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
17 SHARE-BASED PAYMENT ARRANGEMENT(cont’d)
Theexpectedvolatilityisbasedonthehistoricvolatility(calculatedbasedontheweightedaverageexpectedlifeof the shareoptions),adjusted foranyexpectedchanges to future volatilitydue topubliclyavailableinformation.
There are nomarket andnon-market performance conditions associatedwith the share options granted.Serviceconditionisnottakenintoaccountinthemeasurementofthefairvalueoftheservicestobereceivedatthegrantdate.
18 FINANCIAL LIABILITIES
Group
2015 $’000
2014 $’000
Non-current liabilities
Financeleaseliabilities – 12
Current liabilities
Securedbankloans – 1,361
Financeleaseliabilities – 4
– 1,365
– 1,377
Terms and debt repayment schedule
Termsandconditionsofoutstandingloansandborrowingsareasfollows:
Group
Nominalinterest
rate
2015 2014
Year of maturity
Face value
Carrying amount
Face value
Carrying amount
$’000 $’000 $’000 $’000
Securedbankloans 4.7% 2015 – – 1,361 1,361
Financeleaseliabilities 2.30%to2.55% 2014to2019 – – 16 16
– – 1,377 1,377
In2014,thesecuredbankloansaresecuredbypledgesovertheCompany’ssubsidiary,FuYuMoulding&Tooling(Chongqing)Co.,Ltd’stradereceivables.
76
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
18 FINANCIAL LIABILITIES(cont’d)
Finance lease liabilities
At31December,theGrouphasobligationsunderfinanceleasesasfollows:2015 2014
Principal $’000
Interest $’000
Payments $’000
Principal $’000
Interest $’000
Payments $’000
GroupPayable:Within1year – – – 4 * 4After1yearbutwithin5years – – – 12 1 13
– – – 16 1 17
Thefinanceleaseliabilitiesaresecuredbytheleasedassets.
* lessthan$1,000
19 TRADE AND OTHER PAYABLESGroup Company
Note 2015 $’000
2014 $’000
2015 $’000
2014 $’000
Tradepayables 22,530 33,853 3,219 3,299Accruedexpenses 8,131 10,192 2,911 1,876Amountspayablefor
purchaseofproperty,plantandequipment 760 894 82 225
Otherpayables 11,527 13,510 1,220 2,328Amountsdueto
subsidiaries:–trade – – 1,585 1,796–non-trade – – 1,063 1,117Deposits 1,653 2,277 314 399Financialliabilities
measuredatamortisedcost 44,601 60,726 10,394 11,040
Advancebillings 1,908 1,816 60 158Amountsduetocustomers
forcontractwork 12 919 630 76 9547,428 63,172 10,530 11,293
Non-current 112 787 112 787Current 47,316 62,385 10,418 10,506
47,428 63,172 10,530 11,293
Thenon-tradeamountsduetosubsidiariesareunsecured,interest-freeandrepayableondemand.
Includedinotherpayablesarepayablesarisingfromnon-inventorisedpurchases.
77
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
20 REvENUEGroup
2015 $’000
2014 $’000
Saleofgoods 197,991 228,151Revenuefromtoolingcontracts 24,474 26,283
222,465 254,434
21 OTHER INCOMEGroup
2015 $’000
2014 $’000
Interestincome 1,805 1,352Rentalincome 4,970 4,897Gainondisposalofproperty,plantandequipment 483 821Saleofscrapandrawmaterials 980 1,286Gainonliquidationofasubsidiary 393 –Governmentgrants 135 1,762Others 862 486
9,628 10,604
Includedinrentalincomeissubleasepaymentsof$2,926,000(2014:$2,871,000).
ThegovernmentgrantcompensatesasubsidiaryoftheGroupforexpensesincurredandisrecogniseddirectlyinprofitorloss.Thegrantwasconditionalthatthesubsidiaryoperatesinspecificindustriesdesignatedbylocalgovernment.
22 OTHER OPERATING INCOME, NETGroup
2015 $’000
2014 $’000
Foreignexchangegain,net 2,710 2,536Otheroperatingincome 2,710 2,536
Property,plantandequipmentwrittenoff (157) (279)Allowancemadefordoubtfulreceivables (64) (267)Baddebtswrittenoff (86) –Impairmentlossonproperty,plantandequipment – (500)Otheroperatingexpense (307) (1,046)
Otheroperatingincome,net 2,403 1,490
78
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
23 FINANCE COSTSGroup
2015 $’000
2014 $’000
Interestexpense
–bankloans 11 152
–financeleases * 1
11 153
* lessthan$1,000
24 PROFIT BEFORE INCOME TAx
Thefollowingitemshavebeenincludedinarrivingatprofitbeforeincometax:
Group
Note 2015 $’000
2014 $’000
DirectorsoftheCompany
–fees 334 343
–salaries,bonusesandothercosts 3,073 3,135
–contributionstodefinedcontributionplans 53 74
Directorsofsubsidiaries
–fees 83 93
–salaries,bonusesandothercosts 14 11
Auditfeespaidorpayableto
–auditorsoftheCompany 148 154
–overseasaffiliatesoftheauditorsoftheCompany 173 238
–otherauditors 128 167
Non-auditfeespaidorpayableto
–auditorsoftheCompany 26 –
–otherauditors 14 18
Depreciationofproperty,plantandequipmentandinvestmentproperty 4,5 13,769 17,930
Staffcosts,excludingdirectorsoftheCompanyandsubsidiaries
–salaries,bonusesandothercosts 49,178 48,783
–contributionstodefinedcontributionplans 5,917 4,978
Operatingleaseexpenses 5,460 5,055
Operatingexpensesincurredinrelationtoinvestmentproperty 239 277
79
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
25 TAx ExPENSEGroup
2015 $’000
2014 $’000
Current tax expense
Currentyear 2,474 2,234
Grouptaxrelief (395) _
Withholdingtaxes 496 –
Over-provisionofprioryears (24) (215)
2,551 2,019
Deferred tax (credit)/expense
Movementsintemporarydifferences 1,699 572
Reductionintaxrate 16 –
Recognitionoftaxeffectofpreviouslyunrecognisedtaxlosses (2,471) –
Over-provisioninprioryears (40) (412)
(796) 160
Tax expense 1,755 2,179
Reconciliation of effective tax rate
Profitbeforeincometax 18,437 13,417
TaxcalculatedusingSingaporetaxrateof17%(2014:17%) 3,134 2,281
Effectofdifferenttaxratesinforeignjurisdictions 93 (204)
Reductionintaxrate 16 –
Incomenotsubjecttotax (666) (1,386)
Expensesnotdeductiblefortaxpurposes 1,337 724
Taxincentive (387) –
Taxeffectofdebtforgivenesstreatedasincomefortaxpurposes – 2,263
Recognitionoftaxeffectofpreviouslyunrecognisedtaxlosses (2,471) –
Utilisationofcapitalallowances,reinvestmentallowancesandtaxlossespreviouslynotrecognised (333) (2,847)
Overprovisioninprioryears (64) (522)
Deferredtaxassetsnotrecognised 1,092 2,002
Withholdingtaxes 496 –
Grouptaxrelief (395) –
Others (97) (132)
1,755 2,179
80
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
25 TAx ExPENSE(cont’d)
TheGrouphasexposure to income taxes innumerous jurisdictions.Significant judgement is involved indetermining the group-wide provision for income taxes. There are certain transactions and computationsfor which the ultimate tax determination is uncertain during the ordinary course of business. The Grouprecognises liabilities for expected tax issuesbasedonestimatesofwhetheradditional taxeswill bedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecognised,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.
IncometaxforthesubsidiariesinMalaysiaiscalculatedatthestatutoryrateof25%duringtheyear.Thestatutorytaxratewouldbereducedto24%effectiveforyear2016.
OneofthesubsidiariesinChinawasaccreditedasa“HighandNewTechnologyEnterprise”in2013andwasentitledtoapreferentialtaxrateof15%foraperiodofthreeyearsfrom2013to2015whichissubjecttothesubsidiary’scompliancewiththeconditionsimposedbythetaxauthority.AnothersubsidiaryoperatesinwesternChinaofwhichtheindustryitoperatesinenjoyspreferentialtaxrateof15%.
26 EARNINGS PER SHAREGroup
2015 $’000
2014 $’000
Basicanddilutedearningspershareisbasedon:
Netearningsattributabletoordinaryshareholders 14,070 9,951
Number of shares 2015
Number of shares 2014
Issuedordinarysharesat1January 752,994,775 732,834,775
Effectofsharesissuedduringtheyear – 1,782,055
Weightedaveragenumberofordinaryshares(basicanddiluted) 752,994,775 734,616,830
Basicanddilutedearningspershare(cents) 1.87 1.35
DilutedearningspershareisthesameasbasicearningspershareastherearenodilutiveinstrumentswiththeexpiryoftheEmployeesShareOptionsSchemeon31December2014.
81
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
27 OPERATING SEGMENTS
TheGrouphasthreereportablesegmentswhicharegeographicalsegmentsandarebasedonthelocationofassets,namelySingapore,MalaysiaandChina.Thesegeographicalsegmentsaremanagedseparatelybecausetheyrequiredifferentmarketingstrategiesandbeardifferentfinancialandbusinessrisks.ThelocationoftheGroup’scustomersisnotsignificantlydifferentfromthelocationoftheGroup’sassets.Inpresentinginformationonthebasisofgeographicalsegments,segmentrevenueandsegmentassetsarebasedonthegeographicallocationoftheassets.
Segment resultsandassets include itemsdirectlyattributable toasegmentaswellas those thatcanbeallocatedonareasonablebasis.
Performanceismeasuredbasedonprofitbeforeincometax,depreciationofproperty,plantandequipmentandinvestmentproperty,(impairmentloss)/reversalofimpairmentlossonproperty,plantandequipment,financecostandnetforeignexchangegainasincludedininternalmanagementreportsthatarereviewedbytheGroup’schiefoperatingdecisionmaker.SuchinformationisthemostrelevantinevaluatingtheresultsofcertainsegmentsrelativetootherentitiesthatoperatewithintheGroup’sindustry.Inter-segmentpricingisbasedontermsagreedbythecounterparties.
Concentration of revenue
Revenue of approximately $53,169,000 (2014: $93,811,000) relates to two (2014: three) externalcustomerswithrevenueinexcessof10%ofGrouprevenue.ThisrevenuerelatestoSingapore,MalaysiaandChinasegments.
82
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
27
OPE
RATI
NG
SEG
MEN
TS(
cont
’d)
Ge
ogra
phic
al s
egm
ents
Sing
apor
eCh
ina
Mal
aysi
aTo
tal o
pera
tions
be
fore
adj
ustm
ent
Grou
p ad
just
men
t an
d el
imin
atio
nsCo
nsol
idat
ed20
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
0Re
venu
e an
d ex
pens
esTo
tale
xter
nal.
reve
nue
44,9
9942
,841
136,
686
164,
713
40,7
8046
,880
222,
465
254,
434
––
222,
465
254,
434
Inte
r-seg
men
trev
enue
100
113
3–
1,45
41,
931
1,55
72,
044
(1,5
57)
(2,0
44)
––
Segm
entp
rofit
bef
ore
inco
me
tax*
15,4
434,
893
12,8
0618
,555
8,48
76,
388
36,7
3629
,836
(7,6
61)
3329
,075
29,8
69De
prec
iatio
nof
pro
perty
,pl
anta
nde
quip
men
tand
in
vest
men
tpro
perty
(2,2
82)
(3,4
22)
(9,7
67)
(12,
750)
(1,8
38)
(1,6
65)
(13,
887)
(17,
837)
118
(93)
(13,
769)
(17,
930)
Net(
impa
irmen
tlos
s)/
reve
rsal
ofi
mpa
irmen
tlo
sso
npr
oper
ty,p
lant
and
eq
uipm
ent
–(7
21)
–20
4–
17–
(500
)–
––
(500
)Fi
nanc
eco
st–
(8)
(11)
(144
)–
(1)
(11)
(153
)–
–(1
1)(1
53)
Fore
ign
exch
ange
gai
n(n
et)
3,30
41,
875
810
410
1,43
847
35,
552
2,75
8(2
,842
)(2
22)
2,71
02,
536
16,4
652,
617
3,83
86,
275
8,08
75,
212
28,3
9014
,104
(10,
385)
(282
)18
,005
13,8
22Sh
are
ofp
rofit
/(lo
ss)
ofjo
int
vent
ure
(net
oft
ax)
––
––
432
(405
)43
2(4
05)
––
432
(405
)Pr
ofitb
efor
ein
com
eta
x18
,437
13,4
17Ta
xex
pens
e(1
,755
)(2
,179
)Ne
tpro
fitfo
rthe
yea
r16
,682
11,2
38
Othe
r seg
men
t inf
orm
atio
nNo
n-cu
rrent
ass
ets
75,1
6679
,341
23,5
9430
,954
26,0
6328
,368
124,
832
138,
663
(61,
355)
(64,
078)
63,4
6874
,585
Unal
loca
ted
asse
ts2,
464
1,28
0To
taln
on-c
urre
nta
sset
s65
,932
75,8
65
Capi
tale
xpen
ditu
re82
81,
846
1,68
82,
638
3,69
010
,277
6,20
614
,761
––
6,20
614
,761
Inte
rest
inco
me
353
5952
527
91,
130
1,01
42,
008
1,35
2(2
03)
–1,
805
1,35
2
Segm
entr
epor
ting
asse
ts13
1,94
312
1,98
911
1,94
212
9,32
676
,017
81,7
0931
9,90
233
3,02
4(7
3,54
9)(7
2,22
9)24
6,35
326
0,79
5Un
allo
cate
das
sets
2,53
41,
280
Tota
lass
ets
248,
887
262,
075
Segm
entr
epor
ting
liabi
litie
s9,
411
10,1
2140
,165
51,0
129,
249
11,7
6858
,825
72,9
01(1
1,39
7)(8
,352
)47
,428
64,5
49Un
allo
cate
dlia
bilit
ies
3,71
52,
366
Tota
llia
bilit
ies
51,1
4366
,915
*
Afte
rexc
ludi
ngs
hare
ofr
esul
tso
fjoi
ntv
entu
re,fi
nanc
eco
st,f
orei
gne
xcha
nge
gain
(ne
t),d
epre
ciat
ion
and
(im
pairm
entl
oss)
/rev
ersa
lofi
mpa
irmen
tlos
son
pro
perty
,pla
nta
nd
equi
pmen
t.
83
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT
TheGrouphasasystemofcontrolsinplacetocreateanacceptablebalancebetweenthecostofrisksoccurringandthecostofmanagingtherisks.ManagementcontinuallymonitorstheGroup’sriskmanagementprocesstoensurethatanappropriatebalancebetweenriskandcontrolisachieved.
Credit risk
The Group has a credit policy in place which establishes credit limits for customers and monitors theirbalancesonanongoingbasis.Cashandfixeddepositsareplacedwithbanksandfinancial institutionswhichareregulated.
Atthereportingdate,thereisaconcentrationofcreditriskinthefollowinggeographicalareas:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Singapore 8,426 9,506 7,910 8,583
China 30,572 43,163 1,178 1,576
Malaysia 10,228 9,835 795 637
UnitedStates 2,497 1,435 128 297
HongKong 292 740 1,625 1,525
Others 4,639 6,489 1,759 2,577
56,654 71,168 13,395 15,195
At thereportingdate, there isaconcentrationofcredit riskrelatingto two(2014: three)majorcustomerswithoutstandingreceivablebalanceofapproximately$9,821,000(2014:$29,242,000).ThesecustomersrelatetoSingapore,MalaysiaandChinasegments.
Themaximumexposuretocreditriskisrepresentedbythecarryingamountofeachfinancialassetsinthestatementoffinancialposition.
Theageinganalysisofloansandreceivablesisasfollows:
2015 2014
Gross $’000
Impairment loss
$’000Gross $’000
Impairment loss
$’000
Group
Notpastdue 39,317 – 54,285 –
Pastdue1to30days 12,202 – 13,127 –
Pastdue31to90days 3,119 – 1,266 9
Pastduemorethan90days 8,667 8,096 8,927 7,900
Nocreditterms 1,445 – 1,472 –
64,750 8,096 79,077 7,90927
OPE
RATI
NG
SEG
MEN
TS(
cont
’d)
Ge
ogra
phic
al s
egm
ents
Sing
apor
eCh
ina
Mal
aysi
aTo
tal o
pera
tions
be
fore
adj
ustm
ent
Grou
p ad
just
men
t an
d el
imin
atio
nsCo
nsol
idat
ed20
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
020
15
$’00
020
14
$’00
0Re
venu
e an
d ex
pens
esTo
tale
xter
nal.
reve
nue
44,9
9942
,841
136,
686
164,
713
40,7
8046
,880
222,
465
254,
434
––
222,
465
254,
434
Inte
r-seg
men
trev
enue
100
113
3–
1,45
41,
931
1,55
72,
044
(1,5
57)
(2,0
44)
––
Segm
entp
rofit
bef
ore
inco
me
tax*
15,4
434,
893
12,8
0618
,555
8,48
76,
388
36,7
3629
,836
(7,6
61)
3329
,075
29,8
69De
prec
iatio
nof
pro
perty
,pl
anta
nde
quip
men
tand
in
vest
men
tpro
perty
(2,2
82)
(3,4
22)
(9,7
67)
(12,
750)
(1,8
38)
(1,6
65)
(13,
887)
(17,
837)
118
(93)
(13,
769)
(17,
930)
Net(
impa
irmen
tlos
s)/
reve
rsal
ofi
mpa
irmen
tlo
sso
npr
oper
ty,p
lant
and
eq
uipm
ent
–(7
21)
–20
4–
17–
(500
)–
––
(500
)Fi
nanc
eco
st–
(8)
(11)
(144
)–
(1)
(11)
(153
)–
–(1
1)(1
53)
Fore
ign
exch
ange
gai
n(n
et)
3,30
41,
875
810
410
1,43
847
35,
552
2,75
8(2
,842
)(2
22)
2,71
02,
536
16,4
652,
617
3,83
86,
275
8,08
75,
212
28,3
9014
,104
(10,
385)
(282
)18
,005
13,8
22Sh
are
ofp
rofit
/(lo
ss)
ofjo
int
vent
ure
(net
oft
ax)
––
––
432
(405
)43
2(4
05)
––
432
(405
)Pr
ofitb
efor
ein
com
eta
x18
,437
13,4
17Ta
xex
pens
e(1
,755
)(2
,179
)Ne
tpro
fitfo
rthe
yea
r16
,682
11,2
38
Othe
r seg
men
t inf
orm
atio
nNo
n-cu
rrent
ass
ets
75,1
6679
,341
23,5
9430
,954
26,0
6328
,368
124,
832
138,
663
(61,
355)
(64,
078)
63,4
6874
,585
Unal
loca
ted
asse
ts2,
464
1,28
0To
taln
on-c
urre
nta
sset
s65
,932
75,8
65
Capi
tale
xpen
ditu
re82
81,
846
1,68
82,
638
3,69
010
,277
6,20
614
,761
––
6,20
614
,761
Inte
rest
inco
me
353
5952
527
91,
130
1,01
42,
008
1,35
2(2
03)
–1,
805
1,35
2
Segm
entr
epor
ting
asse
ts13
1,94
312
1,98
911
1,94
212
9,32
676
,017
81,7
0931
9,90
233
3,02
4(7
3,54
9)(7
2,22
9)24
6,35
326
0,79
5Un
allo
cate
das
sets
2,53
41,
280
Tota
lass
ets
248,
887
262,
075
Segm
entr
epor
ting
liabi
litie
s9,
411
10,1
2140
,165
51,0
129,
249
11,7
6858
,825
72,9
01(1
1,39
7)(8
,352
)47
,428
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84
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT(cont’d)2015 2014
Gross $’000
Impairment loss
$’000Gross $’000
Impairment loss
$’000
Company
Notpastdue 5,838 – 6,841 –
Pastdue1to30days 3,071 – 2,159 –
Pastdue31to90days 882 – 841 –
Pastduemorethan90days 3,215 69 4,892 13
Nocreditterms 458 – 475 –
13,464 69 15,208 13
Movementsintheallowanceforimpairmentlossinrespectoftradereceivablesduringtheyearareasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
At1January 7,893 7,633 5 10
Allowancemade/(writtenback) 9 259 1 (5)
Allowanceutilised (30) (148) – –
Currencyrealignment 153 149 – –
At31December 8,025 7,893 6 5
Movementsintheallowanceforimpairmentlossinrespectofotherreceivablesduringtheyearareasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
At1January 16 8 8 –
Allowancemade 55 8 55 8
At31December 71 16 63 8
The Group follows the guidance of FRS 39 Financial Instruments: Recognition and Measurement indeterminingwhenafinancialassetisimpaired.Thisdeterminationrequiressignificantjudgment.TheGroupevaluatesamongother factors, thefinancialhealth, repaymenthistoryandnear-termbusinessoutlookofthefinancialassets,includingfactorssuchasindustryandsectorperformance.TheGroupbelievesthatnoadditionalimpairmentallowance,otherthanthosespeciallyidentified,isnecessaryinrespectoftradeandotherreceivables.ThesereceivablesaremainlyarisingfromcustomersthathaveagoodpaymentrecordwiththeGroup.
85
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT(cont’d)
Liquidity risk
TheGroupmonitorsitsliquidityriskandmaintainsalevelofcashandcashequivalentsdeemedadequatebymanagementtofinancetheGroup’soperationsandtomitigatetheeffectsoffluctuationsincashflows.
Thefollowingarethecontractualmaturitiesoffinancialliabilities,includingestimatedinterestpaymentsandexcludingtheimpactofnettingagreements.
Group
Carrying amount $’000
Contractual cash flows
$’000
Less than 1 year $’000
Between 1 and 5 years $’000
More than 5 years $’000
2015
Non-derivative financial liabilities
Tradeandotherpayables(1) 44,601 44,601 44,489 112 –
2014
Non-derivative financial liabilities
Tradeandotherpayables(1) 60,726 60,726 59,939 787 –
Financialliabilities
- Financeleaseliabilities 16 17 4 13 –
- Securedbankloans 1,361 1,367 1,367 – –
62,103 62,110 61,310 800 –
Company
2015
Non-derivative financial liabilities
Tradeandotherpayables(1) 10,394 10,394 10,282 112 –
2014
Non-derivative financial liabilities
Tradeandotherpayables(1) 11,040 11,040 10,253 787 –
(1) Excludesadvancebillingsandamountsduetocustomersforcontractwork
Itisnotexpectedthatthecashflowsincludedinthematurityanalysiswouldoccursignificantlyearlier,oratsignificantlydifferentamounts.
86
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT(cont’d)
Market risk
Marketriskistheriskthatchangesinmarketprices,suchasinterestratesandforeignexchangerateswillaffecttheGroup’sincomeorthevalueoffinancialinstruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturnonrisk.
Interest rate risk
At thereportingdate, theinterestrateprofilesof theGroup’sinterest-bearingfinancial instrumentswereasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Fixed rate instruments
Financialassets 57,211 39,888 23,544 12,850
Financialliabilities – (16) – –
57,211 39,872 23,544 12,850
variable rate instrument
Financialliabilities – (1,361) – –
TheGroup’sinterest-bearingfinancialassetscomprisefixeddepositsplacedwithbanks.Thedepositswererolledoverduringthefinancialyearatmarketinterestratesuponmaturity.
Financialliabilitiescomprisevariable-rateborrowingsandfixed-ratefinanceleases.
Sensitivityanalysis
Anincreaseof100basispointsininterestratesatthereportingdatewouldhaveincreasedprofitfortheyearby$572,000(2014:$385,000)and$235,000(2014:$129,000)forGroupandCompanyrespectively.Thisanalysisassumesthatallothervariables,inparticularforeigncurrencyrates,remainconstant.
Adecreaseof100basispointsininterestratesatthereportingdatewouldhavehadtheequalbutoppositeeffectontheamountsshownabove,onthebasisthatallothervariablesremainconstant.Theanalysisisperformedonthesamebasisfor2014.
Foreign currency risk
TheGroupisexposedtoforeigncurrencyriskonsales,purchasesandcashandcashequivalentsthataredenominatedincurrenciesotherthantherespectivefunctionalcurrenciesoftheGroupentities.ThecurrencygivingrisetothisriskisprimarilytheUnitedStates(US)dollar.
87
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT(cont’d)
TheGroup’sandCompany’sexposurestoforeigncurrencyrisk(beforeeliminationofinter-companybalances)areasfollows:
Group Company
2015 US dollar
$’000
2014 US dollar
$’000
2015 US dollar
$’000
2014 US dollar
$’000
Tradeandotherreceivables 128,335 137,221 9,327 10,280
Cashandcashequivalents 42,319 19,015 27,002 7,474
Tradeandotherpayables (95,273) (96,222) (4,591) (4,593)
Financialliabilities – (1,361) – –
75,381 58,653 31,738 13,161
Sensitivityanalysis
AonepercentagepointstrengtheningoftheSingaporedollaragainsttheUSdollaratthereportingdatewoulddecreasetheGroup’sprofitbeforeincometaxbyapproximately$754,000(2014:$587,000)anddecreasethe Company’s profit before income tax by approximately $317,000 (2014: $132,000). This analysisassumesthatallothervariablesinparticularinterestrates,remainconstant.
AonepercentagepointweakeningoftheSingaporedollaragainsttheUSdollaratthereportingdatewouldhavehadtheequalbutoppositeeffectontheamountsshownabove,onthebasisthatallothervariablesremainconstant.Theanalysisisperformedonthesamebasisfor2014.
Accounting classification and fair values
Thecarryingamountsoffinancialassetsandliabilities(includingtradeandotherreceivables,cashandcashequivalents,financialliabilitiesandtradeandotherpayables)carriedatcostoramortisedcostareassumedtoapproximatetheirfairvaluesasat31December2015and2014giventheshortperiodtomaturityorre-pricing.
Financialliabilitiesaremainlyclassifiedascurrentliabilitiesandtheimpactofdiscountingarisingfromthenon-currentliabilitiesisnotexpectedtobematerial.
Group
Designated at fair value $’000
Loans and receivables
$’000
Other financial liabilities $’000
Total carrying amount $’000
31 December 2015
Tradeandotherreceivables+ – 56,654 – 56,654
Cashandcashequivalents – 102,940 – 102,940
Shortterminvestments 3,637 – – 3,637
Tradeandotherpayables# – – (44,601) (44,601)
3,637 159,594 (44,601) 118,630
+ Excludeprepayment,advancestosuppliersandamountsduefromcustomersforcontractwork# Excludesadvancebillingsandamountsduetocustomersforcntractwork
88
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
28 FINANCIAL RISK MANAGEMENT(cont’d)
Group
Designated at fair value $’000
Loans and receivables
$’000
Other financial liabilities $’000
Total carrying amount $’000
31 December 2014
Tradeandotherreceivables+ – 71,168 – 71,168
Cashandcashequivalents – 83,329 – 83,329
Shortterminvestments 6,052 – – 6,052
Tradeandotherpayables# – – (60,726) (60,726)
Financialliabilities – – (1,377) (1,377)
6,052 154,497 (62,103) 98,446
+ Excludesprepayments,advancestosuppliersandamountsduefromcustomersforcontractwork# Excludesadvancebillingsandamountsduetocustomersforcontractwork
Company
Loans and receivables
$’000
Other financial liabilities $’000
Total carrying amount $’000
31 December 2015
Tradeandotherreceivables+ 13,395 – 13,395
Cashandcashequivalents 29,962 – 29,962
Tradeandotherpayables# – (10,394) (10,394)
43,357 (10,394) 32,963
31 December 2014
Tradeandotherreceivables+ 15,195 – 15,195
Cashandcashequivalents 18,051 – 18,051
Tradeandotherpayables# – (11,040) (11,040)
33,246 (11,040) 22,206
+ Excludesprepayments,advancestosuppliersandamountsduefromcustomersforcontractwork# Excludesadvancebillingsandamountsduetocustomersforcontractwork
89
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
29 COMMITMENTS
Capital expenditure commitments
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Capitalexpenditurecontractedforasatthereportingdatebutnotrecognisedinthefinancialstatements 1,467 2,449 726 711
Operating lease commitments
Leasesaslessee
The Group and the Company lease certain properties and land under lease arrangements that are non-cancellablewithinoneyear.Otherleases,whichincludetherenewaloptions,expireatvariousdatestill2044andcontainprovisions for rentaladjustmentsand restrictions to further sub-leasecertainproperties.OneoftheleasedpropertieshasbeensubletbytheGrouptoathirdparty.Subleasepaymentsof$2,830,000(2014:$2,660,000)areexpectedtobereceivedwithin1year.Thesubsequentpaymentsof$9,581,000(2014: $13,154,000) and nil (2014: $1,100,000) will be received within 5 years and after 5 yearsrespectively.
At31December,theGroupandtheCompanyhavecommitmentsforfutureminimumleasepaymentsundernon-cancellableoperatingleasesasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Payable:
Within1year 5,805 4,937 1,646 782
After1yearbutwithin5years 15,339 15,613 3,166 2,412
After5years 5,446 6,815 5,446 5,715
26,590 27,365 10,258 8,909
Leases as lessor
At31December2015,theGroupenteredintocancellableandnon-cancellablecommercialpropertyleasestoleaseoutitssurplusspace.ThecancellablecommercialpropertyleasescanbecancelledbywayofthelesseesgivingnoticeinadvancetotheGroupandviceversa.Thenon-cancellableleaseshaveremainingnon-cancellableleasetermsasfollows:
Group Company
2015 $’000
2014 $’000
2015 $’000
2014 $’000
Receivable:
Within1year 1,417 1,633 941 1,391
After1yearbutwithin5years 299 595 – 941
1,716 2,228 941 2,332
90
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
30 RELATED PARTIES
Key management personnel compensation
Key management personnel of the Group are those persons having the authority and responsibility forplanning,directingandcontrollingtheactivitiesoftheentity.ThedirectorsandkeyexecutivesareconsideredaskeymanagementpersonneloftheGroupandCompany.
Keymanagementpersonnelcompensationcomprises:
Group
2015 $’000
2014 $’000
Directors’fees 334 343
Shorttermemployeebenefits 3,904 3,943
Contributionstodefinedcontributionplans 85 104
4,323 4,390
Compriseamountspaid/payableto:
- directorsoftheCompany 3,460 3,552
- keyexecutives 863 838
4,323 4,390
Other related party transactions
Otherthandisclosedelsewhereinthefinancialstatements,transactionswithrelatedpartiesareasfollows:
Group
2015 $’000
2014 $’000
Rentalincomefromajointventure 453 497
Dividendfromajointventure 667 496
31 DIvIDENDS
Thefollowingexempt(one-tier)dividendsweredeclaredandpaidbytheGroupandCompany:
Group and Company
2015 $’000
Paid by the Company to owners of the Company
Aninterimdividendof$0.25centsperqualifyingordinaryshare 1,883
Secondinterimdividendof$0.25centsperqualifyingordinaryshare 1,882
3,765
91
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2015
31 DIvIDENDS(cont’d)
Group
2015 $’000
Paid by a subsidiary to NCI
AninterimdividendofRM0.5centsperqualifyingordinaryshare 174
SecondinterimdividendofRM0.5centsperqualifyingordinaryshare 174
348
After the reporting date, the following exempt (one-tier) dividendswere proposed by the directors. Theseexempt(one-tier)dividendshavenotbeenprovidedfor.
Group and Company
2015 $’000
Proposed by the Company to owners of the Company
Afinaldividendof$1.0centsperqualifyingordinaryshare 7,530
Group
2015 $’000
Proposed by a subsidiary to NCI
AfinaldividendofRM3.0centsperqualifyingordinaryshare 1,044
32 COMPARATIvE INFORMATION
Certainchangeshavebeenmadetothecomparativeinformationintheconsolidatedincomestatementasfollows:
Group
2014 $’000
2014 $’000
As previously stated Restated
Otherincome 10,269 10,604
Sellingandadministrativeexpenses (26,322) (29,193)
Otheroperatingincome,net (1,046) 1,490
Rental income of $2,871,000 which was netted off against operating lease expenses in selling andadministrativeexpenseshasbeenreclassifiedtootherincometobeconsistentwithcurrentyear’sclassification.
Inaddition, foreignexchangegainof$2,536,000was reclassified fromother income tootheroperatingincome,nettobealignedwiththeGroup’saccountingpolicy.
92
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
RISK MANAGEMENT (LISTING RULE 1207(4) (B)(Iv))
TheGroupfacesinternalandexternalrisksthatarecategorisedasenvironmentalandoperationalrisks.
Operationalriskistheriskoflossarisingfromexternalevents,orfrominadequateorfailedinternalprocesses,peopleorsystems.
Themain risksarising from theGroup’sfinancialassetsand liabilitiesarecredit risk, liquidity risk,market risk,interestrateriskandforeignexchangerisk.TheBoardreviewsandagreesonpoliciestomanageitsexposuretofinancialrisks.Detailsof thevariousfinancialriskfactorsareoutlinedinNote28totheFinancialStatementsonpages83to88.
MATERIAL CONTRACTS (LISTING RULE 1207(8)) Therewerenomaterial contractsentered intoby theCompanyand/or itssubsidiarieswith thedirectorsorchiefexecutiveofficerorcontrollingshareholdersoftheCompanywhichwerestillsubsistingattheendofthefinancialyearunderreview,orifnotsubsisting,enteredintosincetheendofthepreviousfinancialyear.
INTERESTED PERSON TRANSACTIONS (LISTING RULE 1207(17))
TheSingaporeExchangeSecuritiesTradingLimited(“SGX-ST”)requireslistedcompanytocomplywithChapter9oftheListingManualofSGX-SToninterestedpersontransactions.
Therewerenointerestedpersontransactionsfortheyearended31December2015.
DEALINGS WITH COMPANY’S SECURITIES (LISTING RULE 1207(19))
TheCompanyhasadoptedaninternalcodetoprovideguidancetoitsofficerswithregardtodealingsintheCompany’ssecuritiesbydirectorsandemployees.ThecodestatesofficersoftheCompanyshouldnotdealintheCompany’ssecuritiesduringtheperiodcommencingtwoweeksbeforetheannouncementoftheCompany’sfinancialstatementsforeachofthefirstthreequartersofitsfinancialyearandonemonthbeforetheannouncementoftheCompany’sfullyearfinancialstatements.TheCompanyalsoprovidesguidancetoitsofficerswithregardstonodealingintheCompany’ssecuritiesonshort-termconsiderations.
ADDITIONAL INFORMATIONREqUIRED BY THE LISTING MANUAL
93
FU YU CORPO
RATION
LIMITED
ANN
UAL REPORT 2015
ADDITIONAL INFORMATIONREqUIRED BY THE LISTING MANUAL
LAND AND BUILDINGS (LISTING RULE 1207 (11))No Company
NameLocation of the properties
Existing Use Year of acquisition
Land Area/ Built-up Area
Percentage interest in property
Tenure
1 FuYuCorporationLimited
5TuasDrive1 Singapore638672
Warehouse,factoryandoffice
1981 Land: 4,756sqmBuilding:5,179sqm
100% Leaseholdfor60yearsexpiringon15Nov2041
7TuasDrive1 Singapore638674
Warehouse,factoryandoffice
1981 Land: 4,756sqmBuilding:2,646sqm
100% Leaseholdfor40yearsexpiringon15Nov2021
8TuasDrive1 Singapore638675
Warehouse,factoryandoffice
1988 Land: 5,000sqmBuilding:3,606sqm
100% Leaseholdfor56yearsexpiringon31Oct2044
9TuasDrive1 Singapore638676
Warehouse,factoryandoffice
1981 Land: 4,755sqmBuilding:2,572sqm
100% Leaseholdfor40yearsexpiringon15Nov2021
10TuasDrive1 Singapore638677
Warehouse,factoryandoffice
1988 Land: 3,366sqmBuilding:3,334sqm
100% Leaseholdfor56yearsexpiringon31Oct2044
43SenokoDrive Singapore758227
Warehouse,factoryandoffice
1982 Land: 6,445sqmBuilding:6,961sqm
100% Leaseholdfor38yearsexpiringon15Sep2020
2 ClassicAdvantageSdnBhd
21,JalanTecknologi4 TamanTeknologi Johor,81400 Senai,JohorDarulTa’zim,Malaysia
Warehouse,factoryandoffice
2004 Land: 54,054sqmBuilding:12,728sqmInvestmentproperties:15,700sqm
100% Leaseholdfor60yearsexpiringon31Mar2066
3 FuHaoManufacturing(M)SdnBhd
Plot562Mukim1 JalanPerusahaan Baru1,PeraiIII PeraiIndustrialEstate 13600Perai,Penang, Malaysia
Warehouse,factoryandoffice
1995 Land: 5,807sqmBuilding:4,865sqm
100% Leaseholdfor60yearsexpiringon11Dec2050
4 FuYuMoulding&Tooling(Suzhou)Co.,Ltd
89XingNanRoad WuzhongEconomicSkillDevelopmentZone Suzhou,China215128
Warehouse,factoryandoffice
2006 Land:58,847sqmBuilding:47,800sqm
100% Leaseholdfor50yearsexpiringon18Mar2054
5 FuYuMoulding&Tooling(Dongguan)Co.,Ltd
JingFuRoad, XinChengIndustryArea HengLiTown, Dongguan,Guangdong, China523477
Warehouse,factoryandoffice
1997 Land:15,000sqmBuilding:21,110sqm
100% Leaseholdfor50yearsexpiringon14Dec2047
2001 Land:10,000sqmBuilding:18,890sqm
100% Leaseholdfor50yearsexpiringon17May2051
94
FU YU CORPO
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ANN
UAL REPORT 2015
STATISTICS OF SHAREHOLDINGS AS AT 23 MARCH 2016
Classofequitysecurities : OrdinaryShares
Numberofequitysecurites : 752,994,775ordinaryshares
Votingrights : onevotepershare
TheCompanydoesnotholdanytreasuryshares.
DISTRIBUTION OF SHAREHOLDINGS
SIZEOFSHAREHOLDINGS NO.OFSHAREHOLDERS % NO.OFSHARES %
1-99 37 0.65 1,144 0.00
100-1,000 323 5.63 160,443 0.02
1,001-10,000 3,036 52.97 14,653,825 1.95
10,001-1,000,000 2,302 40.16 128,510,511 17.07
1,000,001ANDABOVE 34 0.59 609,668,852 80.96
TOTAL 5,732 100.00 752,994,775 100.00
SUBSTANTIAL SHAREHOLDERS AS AT 23 MARCH 2016(AsrecordedintheRegisterofSubstantialShareholders)
DirectInterest % DeemedInterest %
NgHockChing(1) 829,000 0.11 106,993,475 14.21
HoNeeKit 96,999,225 12.88 – –
TamWai(2) 96,715,475 12.84 300,000 0.04
ChingHengYang 88,965,475 11.81 – –
Note:1 MrNgHockChingisdeemedtobeinterestedinthe106,993,475sharesheldinthenamesof(a)CitibankNomineesSingaporePteLtd:
24,036,000;(b)DBSNomineesPteLtd:28,958,000;and(c)PhilipSecuritiesPteLtd:53,999,475.
2 MrTamWaiisdeemedtobeinterestedinthe300,000sharesheldinthenameofhisspouse.
95
FU YU CORPO
RATION
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ANN
UAL REPORT 2015
TWENTY LARGEST SHAREHOLDERS
NO. NAME NO.OFSHARES %
1 HONEEKIT 96,999,225 12.88
2 TAMWAI 96,715,475 12.84
3 CHINGHENGYANG 88,965,475 11.81
4 PHILLIPSECURITIESPTELTD 82,995,675 11.02
5 DBSNOMINEES(PRIVATE)LIMITED 56,804,100 7.54
6 RAFFLESNOMINEES(PTE)LIMITED 39,202,400 5.21
7 CITIBANKNOMINEESSINGAPOREPTELTD 36,181,700 4.81
8 UNITEDOVERSEASBANKNOMINEES(PRIVATE)LIMITED 15,474,731 2.06
9 UOBKAYHIANPRIVATELIMITED 12,344,500 1.64
10 OCBCSECURITIESPRIVATELIMITED 9,170,239 1.22
11 MAYBANKKIMENGSECURITIESPTE.LTD. 8,315,272 1.10
12 HEWLIENLEE 8,100,000 1.08
13 HONGLEONGFINANCENOMINEESPTELTD 7,257,000 0.96
14 DBNOMINEES(SINGAPORE)PTELTD 6,807,150 0.90
15 CIMBSECURITIES(SINGAPORE)PTE.LTD. 4,326,550 0.57
16 NGCHUNGMING 4,014,300 0.53
17 HOKANGPENG 3,630,000 0.48
18 OCBCNOMINEESSINGAPOREPRIVATELIMITED 3,242,010 0.43
19 CITIBANKCONSUMERNOMINEESPTELTD 3,173,000 0.42
20 DBSVICKERSSECURITIES(SINGAPORE)PTELTD 2,890,250 0.38
TOTAL 586,609,052 77.88
Asat23March2016,46.55%oftheissuedsharecapitaloftheCompanywereheldinthehandsofthepublic(basedontheinformationavailabletotheCompany).Accordingly,theCompanyhascompliedwithRule723oftheListingManualofSingaporeExchangeSecuritiesTradingLimited.
STATISTICS OF SHAREHOLDINGS AS AT 23 MARCH 2016
96
FU YU CORPO
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NOTICE OF ANNUAL GENERAL MEETING
NOTICEISHEREBYGIVENthattheAnnualGeneralMeeting(the“AGM”)ofFuYuCorporationLimited(“theCompany”)willbeheldatBridgeRooms,Level2,RafflesMarina,10TuasWestDrive,Singapore638404onTuesday,26April2016at2.30p.m.forthepurposesoftransactingthefollowingbusinesses:
AS ORDINARY BUSINESS
1. To receiveandadopt theDirectors’Statementand theAuditedFinancialStatements for thefinancial yearended31December2015togetherwiththeAuditors’Reportthereon.
(Resolution 1)
2. Toapproveataxexempt(one-tier)finaldividendof1.0centperordinaryshareforthefinancialyearended31December2015asrecommendedbytheDirectors.
(Resolution 2)
3. Tore-electthefollowingDirectorsretiringpursuanttoArticle91oftheConstitutionoftheCompany:
(a) DrJohnChenSeowPhun[seeexplanatorynote(i)]
(Resolution 3)
(DrJohnChenSeowPhun,uponre-electionasaDirectoroftheCompany,remainsasChairmanoftheAuditCommittee;andamemberoftheNominatingandRemunerationCommittees.HeisconsideredindependentforthepurposeofRule704(8)oftheListingManualoftheSingaporeExchangeSecuritiesTradingLimited.)
(b) MrTamWai[seeexplanatorynote(i)]
(Resolution 4)
(c) MrHoNeeKit[seeexplanatorynote(i)]
(Resolution 5)
4. ToapprovethepaymentofDirectors’feesofS$258,000forthefinancialyearending31December2016,payablequarterlyinarrears(2015:S$258,000).
(Resolution 6)
5. Tore-appointMessrsKPMGLLPastheAuditorsoftheCompanyandtoauthorisetheDirectorsoftheCompanytofixtheirremuneration.
(Resolution 7)
6. TotransactanyotherordinarybusinesswhichmayproperlybetransactedatanAGM.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolution, with or without anymodifications:
7. Ordinary Resolution: Authority to allot and issue shares
“That,pursuanttoSection161oftheCompaniesAct,Cap.50andRule806(2)oftheListingManualoftheSingaporeExchangeSecuritiesTradingLimited(“SGX-ST”),authoritybeandisherebygiventotheDirectorsoftheCompanyto:-
(a) (i) issueshares in thecapitalof theCompany(“Shares”)whetherbywayof rights,bonusorotherwise;and/or
(ii) makeorgrantoffers,agreementsoroptions(collectively,“Instruments”)thatmightorwouldrequiresharestobeissued,includingbutnotlimitedtothecreationandissueof(aswellasadjustmentsto)securities,warrants,debenturesorotherinstrumentsconvertibleintoShares,
atanytimeanduponsuchtermsandconditionsandforsuchpurposesandtosuchpersonsastheDirectorsmayintheirabsolutediscretiondeemfit;and
97
FU YU CORPO
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE OF ANNUAL GENERAL MEETING
(b) (notwithstanding theauthorityconferredby thisResolutionmayhaveceased tobe in force) issuesharesinpursuanceofanyInstrumentmadeorgrantedbytheDirectorswhilethisResolutionwasinforce,
providedthat:
(1) theaggregatenumberofSharestobeissuedpursuanttothisResolution(includingsharestobeissuedinpursuanceofInstrumentsmadeorgrantedpursuanttothisResolution)doesnotexceedfiftypercent.(50%)oftheCompany’stotalnumberofissuedSharesexcludingtreasuryshares(ascalculatedinaccordancewithsub-paragraph(2)below),ofwhichtheaggregatenumber of Shares to be issued other than on a pro-rata basis to existing shareholders oftheCompany(includingShares tobe issued inpursuanceof InstrumentsmadeorgrantedpursuanttothisResolution)doesnotexceedtwentypercent(20%)oftheCompany’stotalnumberof issuedSharesexcludingtreasuryshares(ascalculated inaccordancewithsub-paragraph(2)below).UnlesspriorshareholderapprovalisrequiredundertheListingManualoftheSGX-ST,anissueoftreasuryshareswillnotrequirefurthershareholderapproval,andwillnotbeincludedintheaforementionedlimits.
(2) (subjecttosuchmannerofcalculationasmaybeprescribedbytheSGX-ST)forthepurposeofdeterminingtheaggregatenumberofsharesthatmaybeissuedundersub-paragraph(1)above,thetotalnumberofissuedSharesexcludingtreasurysharesisbasedontheCompany’stotalnumberofissuedSharesexcludingtreasurysharesatthetimethisResolutionispassed,afteradjustingfor:
(i) new Shares arising from the conversion or exercise of any convertible securities orshareoptionsorvestingofshareawardswhichareoutstandingorsubsistingat thetimethisResolutionispassed;and
(ii) anysubsequentbonusissue,consolidationorsubdivisionofShares;
(3) in exercising the authority conferred by this Resolution, the Company shall comply withtheprovisionsof theListingManualof theSGX-ST for the timebeing in force(unlesssuchcompliancehasbeenwaivedby theSGX-ST)and theConstitution for the timebeingof theCompany;and
(4) (unlessrevokedorvariedbytheCompanyingeneralmeeting)theauthorityconferredbythisResolutionshallcontinueinforceuntiltheconclusionofthenextAGMoftheCompanyorthedatebywhichthenextAGMoftheCompanyisrequiredbylawtobeheld,whicheveristheearlier.”[seeexplanatorynote(ii)]
(Resolution 8)
8. Ordinary Resolution: The Proposed Renewal of Share Purchase Mandate
That:
(1) forthepurposesofSections76Cand76EoftheCompaniesAct,Chapter50ofSingapore(“Companies Act”),theexercisebythedirectorsoftheCompany(“Directors”)ofallthepowersoftheCompany:
(a) to purchase or otherwise acquire issued ordinary shares in the capital of the Company(“Shares”)notexceedinginaggregatetheMaximumLimit(ashereinafterdefined),atsuchpriceorpricesasmaybedeterminedbytheDirectorsfromtimetotimeuptotheMaximumPrice(ashereinafterdefined),whetherbywayof:
(i) anon-marketpurchase(“On-Market Purchase”)transactedontheSingaporeExchangeSecuritiesTradingLimited(“SGx-ST”);and/or
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(ii) anoff-marketpurchase(“Off-Market Purchase”)effectedinaccordancewithanequalaccessscheme(asdefinedinSection76CoftheCompaniesAct)asmaybedeterminedorformulatedbytheDirectorsastheyconsiderfit,whichschemeshallsatisfyalltheconditionsprescribedbytheCompaniesAct,
andotherwiseinaccordancewithallapplicablelawsandregulations(collectively,the“Share Purchase Mandate”);and
(b) todealwith theSharespurchasedoracquiredby theCompanyunder theSharePurchaseMandateinaccordancewiththeConstitutionoftheCompany,whetherto(i)deemsuchSharesascancelleduponpurchaseoracquisition;(ii)holdsuchSharesastreasuryshares;and/or(iii)otherwisedealwithsuchSharesinthemannerprovidedandtothefullestextentpermittedundertheCompaniesAct,
beandisherebyauthorisedandapprovedgenerallyandunconditionally;
(2) unlessvariedorrevokedbyanordinaryresolutionofShareholdersoftheCompanyingeneralmeeting,theauthorityconferredontheDirectorspursuanttotheSharePurchaseMandatemaybeexercisedbytheDirectorsatanytimeandfromtimetotimeduringtheperiodcommencingfromthedateofthepassingofthisResolutionandexpiringontheearliestof:
(a) thedateonwhichthenextannualgeneralmeetingoftheCompanyisheldorrequiredbylawtobeheld;
(b) thedateonwhichpurchasesofSharespursuanttotheSharePurchaseMandatearecarriedouttothefullextentmandated;and
(c) the date on which the authority conferred by the Share Purchase Mandate, if renewed, isrevokedorvariedbytheCompanyingeneralmeeting;
(3) inthisResolution:
“Maximum Limit”means10%oftheissuedShares(excludingtreasuryshares)asatthedateofthepassingofthisResolution;
“Maximum Price”inrelationtoaSharetobepurchasedoracquired,meansanamount(excludingancillaryexpensessuchasbrokerage,commission,stampduties,applicablegoodsandservicestax,clearancefeesandotherrelatedexpenses)notexceeding:
(a) inthecaseofanOn-MarketPurchase,105%oftheaverageoftheclosingmarketpricesoftheSharesoverthelastfive(5)consecutiveMarketDaysonwhichtheSharesaretransactedontheSGX-ST,immediatelyprecedingthedateoftheOn-MarketPurchasebytheCompanyanddeemedtobeadjustedforanycorporateactionthatoccursaftertherelevantfive(5)MarketDayperiod;and
(b) inthecaseofanOff-MarketPurchase,120%oftheaverageoftheclosingmarketpricesoftheSharesoverthelastfive(5)consecutiveMarketDaysonwhichtheSharesaretransactedontheSGX-ST,immediatelyprecedingthedayonwhichtheCompanymakesanannouncementofitsintentiontomakeanofferforthepurchaseoracquisitionofSharesfromShareholders,statingthepurchaseprice(whichshallnotbemorethantheMaximumPricecalculatedontheforegoingbasis)foreachShareandtherelevanttermsoftheequalaccessschemeforeffectingtheOff-MarketPurchase;and
“Market Day”meansadayonwhichtheSGX-STisopenfortradinginsecurities;and
(4) theDirectorsand/oranyofthembeandareherebyauthorisedtocompleteanddoallsuchactsandthings(includingexecutingsuchdocumentsasmayberequired)astheyand/orhemayconsiderdesirable,expedientornecessarytogiveeffecttothetransactionscontemplatedand/orauthorisedbythisResolution.[seeexplanatorynote(iii)]
(Resolution 9)
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ByOrderoftheBoard
TeoMengKeongChanLaiYinJointCompanySecretaries
Singapore
Dated:11April2016
Explanatory Notes:
(i) ThedetailedinformationofDrJohnChenSeowPhun,MrTamWaiandMrHoNeeKitcanbefoundunderthesectionentitled‘BoardofDirectors’onpage9oftheAnnualReport.SaveforMrHoNeeKitandMrTamWaiwhoarealsosubstantialshareholdersholding12.88%and12.84%oftheCompany’ssharecapitalrespectively, therearenorelationships(includingimmediate familyrelationships)betweentheseDirectorsand theotherDirectors(except forMrChingHengYang,MrHoNeeKitandMrTamWaiwhere theyareconcertparties),theCompanyorits10%shareholders.
(ii) Ordinary Resolution 8proposedinitem7above,ifpassed,willauthoriseandempowertheDirectorsoftheCompanyfromthedateoftheaboveMeetinguntilthenextAGMtoissuesharesand/orconvertiblesecuritiesin theCompanyup toanamountnotexceeding inaggregate50%of the totalnumberof issuedsharesexcludingtreasurysharesofwhichthetotalnumberofsharesandconvertiblesecuritiesissuedotherthanonapro-ratabasistoexistingshareholdersshallnotexceed20%ofthetotalnumberofissuedsharesexcludingtreasurysharesoftheCompanyatthetimetheresolutionispassed,forsuchpurposesastheyconsiderwouldbeintheinterestsoftheCompany.Thisauthoritywill,unlessrevokedorvariedatageneralmeeting,expireatthenextAGMoftheCompany.
(iii) Ordinary Resolution 9 proposedinitem8,ifpassed,willempowertheDirectorsoftheCompanyfromthedateofAGMuntilthenextofAGMoftheCompanyorthedatebywhichthenextAGMoftheCompanyisrequiredbylawtobeheld,orthedateonwhichtheauthoritycontainedintheSharePurchaseMandateisvariedorrevokedbytheCompanyinageneralmeetingorthedateonwhichSharePurchasearecarriedouttothefullextentmandated,whicheverisearlier,topurchaseorotherwiseacquireordinarysharesinthecapitaloftheCompanybywayofmarketpurchasesoroff-marketpurchasespursuanttoanequalaccessschemeofuptotenpercentum(10%)ofthetotalnumberofissuedshares(excludingtreasuryshares)inthecapitaloftheCompanyatthepriceofuptobutnotexceedingtheMaximumPriceasdefinedintheAppendixdated11April2016.The rationale for, theauthorityand limitationon, thesourcesof funds tobeused for thepurchaseoracquisitionincludingtheamountoffinancingandtheillustrativefinancialeffectsofthepurchaseoracquisitionofordinarysharesbytheCompanypursuanttotheSharePurchaseMandateontheauditedconsolidatedfinancialstatementsoftheCompanyforthefinancialyearended31December2015aresetoutingreaterdetailintheAppendixdated11April2016.
Notes:
1. AMemberentitledtoattendandvoteattheAnnualGeneralMeeting(the“AGM”)isentitledtoappointnotmorethantwo(2)proxiestoattendandvoteinhis/herstead.AproxyneednotbeaMemberoftheCompany.
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2. Whereamember(other thanaRelevant Intermediary)appoints two(2)proxies,he/sheshallspecify theproportionofhis/hershareholdingtoberepresentedbyeachproxyintheinstrumentappointingtheproxies.
3. A Relevant Intermediary may appoint more than two (2) proxies, but each proxy must be appointed toexercisetherightsattachedtodifferentshareorsharesheldbyhim(whichnumberandclassofsharesshallbespecified).
“RelevantIntermediary”means:
a) abankingcorporationlicensedundertheBankingAct(Cap.19)orawholly-ownedsubsidiaryofsuchabankingcorporation,whosebusinessincludestheprovisionofnomineeservicesandwhoholdssharesinthatcapacity;or
b) apersonholdingacapitalmarketsserviceslicensetoprovidecustodialservicesforsecuritiesundertheSecuritiesFuturesAct(Cap.289)andwhoholdssharesinthatcapacity;or
c) theCentralProvidentFundBoardestablishedbytheCentralProvidentFundAct(Cap.36),inrespectofsharespurchasedunderthesubsidiarylegislationmadeunderthatActprovidingforthemakingof investments from thecontributionsand intereststanding to thecreditofmembersof theCentralProvidentFund,iftheBoardholdsthosesharesinthecapacityofanintermediarypursuanttotheorinaccordancewiththatsubsidiarylegislation.
4. CompletionandreturnofhisinstrumentappointingaproxyshallnotprecludeamemberfromattendingandvotingattheMeeting.Anyappointmentofaproxyorproxiesshallbedeemedtoberevokedifamemberattends themeeting inperson,and insuchevent, theCompany reserves the right to refuse toadmitanypersonorpersonsappointedundertheinstrumentofproxytotheAGM.
5. TheinstrumentappointingaproxymustbedepositedattheregisteredofficeoftheCompanyat8TuasDrive1,Singapore638675notlessthanforty-eight(48)hoursbeforethetimeappointedforholdingtheAGM.
6. Theinstrumentappointingaproxyorproxiesmustbeunderthehandoftheappointororofhisattorneydulyauthorisedinwriting.Where the instrumentappointingaproxyorproxies isexecutedbyacorporation, itmustbeexecutedeitherunderitssealorunderthehandofanofficerorattorneydulyauthorised.Wheretheinstrumentappointingaproxyorproxiesisexecutedbyanattorneyonbehalfoftheappointor,theletterorpowerofattorneyoradulycertifiedcopythereofmustbelodgedwiththeinstrument.
7. AcorporationwhichisamembermayauthorisebyresolutionofitsdirectorsorothergoverningbodysuchpersonasitthinksfittoactasitsrepresentativeattheAGM,inaccordancewithSection179oftheCompaniesAct,Chapter50ofSingapore.
8. InvestorswhohaveusedtheirCPFmonies(“CPFInvestors”)tobuysharesintheCompanymayattendandcasttheirvoteatthemeetinginperson.CPFInvestorswhoareunabletoattendthemeetingbutwouldliketovote,mayinformCPFApprovedNomineestoappointChairmanoftheMeetingtoactastheirproxy,inwhichcase,theCPFInvestorshallbeprecludedfromattendingthemeeting.
General:
TheCompanyshallbeentitledtorejecttheinstrumentappointingaproxyorproxiesifitisincomplete,improperlycompletedorillegibleorwherethetrueintentionsoftheappointorarenotascertainablefromtheinstructionsoftheappointorspecifiedintheinstrumentappointingaproxyorproxies.Inaddition,inthecaseofSharesenteredintheDepositoryRegister,theCompanymayrejectanyinstrumentappointingaproxyorproxieslodgedifthemember,beingtheappointor,isnotshowntohaveSharesenteredagainsthisnameintheDepositoryRegisterasatseventytwo(72)hoursbeforethetimeappointedforholdingtheAGM,ascertifiedbyTheCentralDepository(Pte)LimitedtotheCompany.
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NOTICE IS HEREBY GIvEN,subjecttotheshareholders’approvaltotheproposedfinaldividendattheforthcomingAnnualGeneralMeeting,theShareTransferBooksandRegisterofMembersoftheCompanywillbeclosedon5May2016at5.00p.m.forthepurposeofdeterminingtheentitlementofshareholdersoftheCompany.DulycompletedtransfersinrespectofSharesreceivedbytheCompany’sShareRegistrar,BoardroomCorporate&AdvisoryServicesPteLtd,at50RafflesPlace,#32-01SingaporeLandTower,Singapore048623,upto5.00p.m.on5May2016willberegisteredtodetermineShareholders’entitlementstotheproposedtaxexempt(one-tier)finaldividend.Thetaxexempt(one-tier)finaldividendof1.0centperordinaryshare,ifapprovedattheAnnualGeneralMeeting,willbepaidon13May2016.
Personal data privacy
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting (“AGM”) and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
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FU YU CORPORATION LIMITED CompanyRegistrationNo.198004601C(IncorporatedInTheRepublicofSingapore)
Personal data privacy
By submitting an instrument appointing a proxy and/or representative, the Member accepts and agrees to the personal data privacy terms set out in the Notice of AGM dated 11 April 2016.
PROxY FORM(PleaseseenotesoverleafbeforecompletingthisForm)
I/We, of beingamember/membersofFuYuCorporationLimited(the“Company”),herebyappoint: Name NRIC/Passport No. Proportion of Shareholdings
No. of Shares %Address
and/or(deleteasappropriate)
Name NRIC/Passport No. Proportion of ShareholdingsNo. of Shares %
Address
orfailingtheperson,oreitherorbothofthepersons,referredtoabove,theChairmanoftheMeetingasmy/ourproxy/proxiestovoteforme/usonmy/ourbehalfattheAGMoftheCompanytobeheldatBridgeRooms,Level2,RafflesMarina,10TuasWestDrive,Singapore638404onTuesday,26April2016at2.30p.m.andatanyadjournmentthereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the AGM as indicatedhereunder.IfnospecificdirectionastovotingisgivenorintheeventofanyothermatterarisingattheAGMandatanyadjournmentthereof,theproxy/proxieswillvoteorabstainfromvotingathis/herdiscretion.Theauthorityhereinincludestherighttodemandortojoinindemandingapollandtovoteonapoll.
(Please indicate your number of votes “For” or “Against” within the box provided.)
No. Resolutions relating to: No. of votes For*
No. of votes Against*
Ordinary Business1 ApprovalofDirectors’StatementandAuditedFinancialStatementsfortheyearended
31December20152 Approvaloftaxexempt(one-tier)finaldividendof1.0centperordinaryshareforthe
financialyearended31December20153 Re-electionofDrJohnChenSeowPhunasaDirector4 Re-electionofMrTamWaiasaDirector5 Re-electionofMrHoNeeKitasaDirector6 ApprovalofDirectors’feesofS$258,000forthefinancialyearending31December
2016,payablequarterlyinarrears7 Re-appointmentofMessrsKPMGLLPasAuditors
Special Business8 Authoritytoissuenewshares9 ProposedRenewalofSharePurchaseMandate
*Ifyouwishtouseallyourvotes“For”or“Against”,pleaseindicatewithan“X”withintheboxprovided.Otherwisepleaseindicatethenumberofvotes.
Datedthis dayof 2016TotalnumberofSharesin: No.ofShares
(a)CDPRegisterSignatureofShareholder(s) (b)RegisterofMembersor,CommonSealofCorporateShareholder Deletewhereinapplicable
IMPORTANT
1. Pursuant to Section 181(1C) of the Companies Act,Cap. 50 of Singapore (the “Companies Act”), RelevantIntermediariesmayappointmorethantwo(2)proxiestoattend,speakandvoteattheMeeting.
2. ThisProxyFormisnotvalidforusebyCPFinvestorsandshallbeineffectiveforall intentsandpurposesifusedorpurportedtobeusedbythem.
3. CPF investors who wish to attend the Meeting as anobserver must submit their requests through their CPFApprovedNomineeswithinthetimeframespecified.Iftheyalsowishtovote,theymustsubmittheirvotinginstructionsto the CPF Approved Nominees within the time framespecifiedtoenablethemtovoteontheirbehalf.
"
Notes :
1. PleaseinsertthetotalnumberofSharesheldbyyou.IfyouhaveSharesenteredagainstyournameintheDepositoryRegister(asdefinedinsection81SFoftheSecuritiesandFuturesAct(Chapter289)ofSingapore),you should insert that number of Shares. If you have Shares registered in your name in the Register ofMembers,youshould insert thatnumberofShares. IfyouhaveSharesenteredagainstyournamein theDepositoryRegisterandSharesregisteredinyournameintheRegisterofMembers,youshouldinserttheaggregatenumberofSharesenteredagainstyourname in theDepositoryRegisterand registered inyournameintheRegisterofMembers.Ifnonumberisinserted,theinstrumentappointingaproxyorproxiesshallbedeemedtorelatetoalltheSharesheldbyyou.
2. AmemberoftheCompany(otherthanaRelevantIntermediary*),entitledtoattendandvoteatameetingoftheCompanyisentitledtoappointone(1)ortwo(2)proxiestoattendandvoteinhis/herstead.AproxyneednotbeamemberoftheCompany.
3. Whereamember(other thanaRelevant Intermediary*)appoints two(2)proxies, theappointmentsshallbeinvalidunlesshe/shespecifiestheproportionofhis/hershareholding(expressedasapercentageofthewhole)toberepresentedbyeachproxy.
4. A Relevant Intermediary may appoint more than two (2) proxies, but each proxy must be appointed toexercisetherightsattachedtoadifferentshareorsharesheldbyhim(whichnumberandclassofsharesshallbespecified).
“RelevantIntermediary”means:
a) abankingcorporationlicensedundertheBankingAct(Cap.19)orawholly-ownedsubsidiaryofsuchabankingcorporation,whosebusinessincludestheprovisionofnomineeservicesandwhoholdssharesinthatcapacity;or
b) apersonholdingacapitalmarketsserviceslicencetoprovidecustodialservicesforsecuritiesundertheSecuritiesFuturesAct(Cap.289)andwhoholdssharesinthatcapacity;or
c) theCentralProvidentFundBoardestablishedbytheCentralProvidentFundAct(Cap.36),inrespectofsharespurchasedunderthesubsidiarylegislationmadeunderthatActprovidingforthemakingof investments from thecontributionsand intereststanding to thecreditofmembersof theCentralProvidentFund,iftheBoardholdsthosesharesinthecapacityofanintermediarypursuanttoorinaccordancewiththatsubsidiarylegislation.
5. Completionand returnof this instrumentappointingaproxyshallnotprecludeamember fromattendingandvotingattheAGM.AnyappointmentofaproxyorproxiesshallbedeemedtoberevokedifamemberattendstheAGMinperson,andinsuchevent,theCompanyreservestherighttorefusetoadmitanypersonorpersonsappointedundertheinstrumentofproxytotheAGM.
6. TheinstrumentappointingaproxyorproxiesmustbedepositedattheregisteredofficeoftheCompanyat8TuasDrive1,Singapore638675notlessthanforty-eight(48)hoursbeforethetimeappointedfortheAGM.
7. Theinstrumentappointingaproxyorproxiesmustbeunderthehandoftheappointororofhisattorneydulyauthorisedinwriting.Where the instrumentappointingaproxyorproxies isexecutedbyacorporation, itmustbeexecutedeitherunderitssealorunderthehandofanofficerorattorneydulyauthorised.Wheretheinstrumentappointingaproxyorproxiesisexecutedbyanattorneyonbehalfoftheappointor,theletterorpowerofattorneyoradulycertifiedcopythereofmustbelodgedwiththeinstrument.
8. Acorporationwhichisamembermayauthorisebyresolutionofitsdirectorsorothergoverningbodysuchperson as it thinks fit to act as its representative at theMeeting, in accordancewith Section179 of theCompaniesAct,Chapter50ofSingapore.
9. InvestorswhohaveusedtheirCPFmonies(“CPFInvestors”)tobuysharesintheCompanymayattendandcasttheirvoteatthemeetinginperson.CPFInvestorswhoareunabletoattendthemeetingbutwouldliketovote,mayinformCPFApprovedNomineestoappointChairmanoftheMeetingtoactastheirproxy,inwhichcase,theCPFInvestorshallbeprecludedfromattendingthemeeting.
General:
TheCompanyshallbeentitledtorejecttheinstrumentappointingaproxyorproxiesifitisincomplete,improperlycompletedorillegible,orwherethetrueintentionsoftheappointorarenotascertainablefromtheinstructionsoftheappointorspecifiedintheinstrumentappointingaproxyorproxies.Inaddition,inthecaseofSharesenteredintheDepositoryRegister,theCompanymayrejectanyinstrumentappointingaproxyorproxieslodgedifthemember,beingtheappointor,isnotshowntohaveSharesenteredagainsthisnameintheDepositoryRegisterasatseventytwo(72)hoursbeforethetimeappointedforholdingtheAGM,ascertifiedbyTheCentralDepository(Pte)LimitedtotheCompany.