2009 - National University of Singapore

Transcription

Trump Dragon Distillers Holdings Limited
祥龙控股有限公司
THE TASTE
OF SUCCESS
厚积博发与共舞
A N N U A L R E P O RT
09
CONTENTS
01
Corporate Profile
02
Corporate Information
03
Financial Highlights
04
Statement from the Chairman
06
Brand Recognition
08
Operations Review
12
Board of Directors
14
Senior Management
15
Corporate Governance Report
23
Financial Contents
57
Statistics of Shareholdings
59
Notice of Annual General Meeting
CORPORATE PROFILE
Based in Zhoukou City, Henan Province, the PRC, Trump Dragon Distillers is a
producer and seller of baijiu (白酒) products. The Group’s baijiu (白酒) products
are sold and marketed under its signature brand name, 四五 (“Siwu”), which has a
strong and established brand identity in Henan Province.
The Group currently produces a wide range of baijiu (白酒) products, which are
classified into two series, namely the Premium series and the Regular series, with
varying price ranges to cater to the consumers’ different tastes, preferences and
spending powers. The Group’s products are sold through distributors mainly to
hospitality establishments, supermarkets and specialty stores selling tobacco and
alcohol products in Henan Province.
Trump Dragon Distillers Holdings Limited was listed on the SGX Mainboard on 5
September 2008.
Annual Report 2009
Over the years, the Group’s 四五 (“Siwu”) brand name has won various awards
and established a strong brand identity in Henan Province. Since March 2006, the
Group has engaged a well-known Taiwanese singer-songwriter Emil Chau (周华健)
as its products’ spokesperson.
01
CORPORATE INFORMATION
BOARD OF DIRECTORS
COMPANY SECRETARIES
AUDITORS
Gao Feng
Chan Siu Wah
Grant Thornton
(Executive Chairman)
Busarakham Kohsikaporn
Certified Public Accountants
Zhou Tao
Hazel Chia Luang Chew
6th Floor, Nexxus Building
41 Connaught Road Central
(Deputy Executive Chairman and
Hong Kong
Yang Dadong
ASSISTANT COMPANY
SECRETARY
(Joint Chief Executive Officer)
Richard James Evans
Partner-in-charge: Lo Ngai Hang
Joint Chief Executive Officer)
Ma Ke
(Commencing from the financial year
(Executive Director)
REGISTERED OFFICE
Tan Siok Sing
Clarendon House
(Independent Director)
2 Church Street
PRINCIPAL BANKERS
Chia Seng Hee, Jack
Hamilton HM 11
China CITIC Bank Co Ltd
Bermuda
Zhengzhou Huayuan Road Branch
Zhang Wenzhe
Finance Plaza, 14 Weiwu Road
HEAD OFFICE AND PRINCIPAL
PLACE OF BUSINESS
AUDIT COMMITTEE
中国河南省周口市庆丰街50号
Tan Siok Sing
50 Qingfeng Street
INVESTOR RELATIONS ADVISOR
(Chairman)
Zhoukou City, Henan Province
Citigate Dewe Rogerson, i.MAGE
Chia Seng Hee, Jack
The People’s Republic of China
1 Raffles Place
Zhang Wenzhe
Zhengzhou City, Henan Province
#26-02, OUB Centre
BERMUDA SHARE REGISTRAR
Singapore 048616
NOMINATING COMMITTEE
Codan Services Limited
Chia Seng Hee, Jack
Clarendon House
INVESTOR RELATIONS CONTACT
(Chairman)
2 Church Street
Ngo Yit Sung
Tan Siok Sing
Hamilton HM 11
Email: [email protected]
Zhang Wenzhe
Bermuda
Gao Feng
Annual Report 2009
02
ended 30 June 2008)
REMUNERATION COMMITTEE
SINGAPORE SHARE TRANSFER
AGENT
Chia Seng Hee, Jack
Boardroom Corporate & Advisory
(Chairman)
Services Pte. Ltd.
Tan Siok Sing
3 Church Street
Zhang Wenzhe
#08-01 Samsung Hub
Gao Feng
Singapore 049483
FINANCIAL HIGHLIGHTS
Gross Profit
Gross Profit Margin
Revenue
(RMB’million)
700
600
(RMB’million)
717 703
539
200
400
387
37%
32%
30%
25%
100
200
161
0
FY06 FY07 FY08 FY09
16%
120
0
0
17.17
57.45
60
40
23.78
20
6.91
6.45
0
5
0
90.24
80
17.4
15
10
Net Profit Margin
100
25
20
0
Net Asset Value Per Share** (RMB’cents)
28.2
30
5
FY06 FY07 FY08 FY09
Gross Profit Margin
Earnings Per Share* (RMB’cents)
10
35
30
15
105
9%
60
FY06 FY07 FY08 FY09
15%
86
90
10
20
20%
20
97
%
141
150
30
50
100
(RMB’million)
40
227
150
300
0
%
263
250
500
Net Profit
Net Profit Margin
FY2006
FY2007
FY2008
FY2009
FY06 FY07 FY08 FY09
* Based on:
** Based on:
a) Weighted average number of 602,397,260 a) Share capital of 625,000,000 ordinary shares in issue as at 30 June ordinary shares deemed to be in issue during
financial year ended 30 June 2009
b) Pre-Invitation share capital of 500,000,000 shares deemed to be in b) Pre-Invitation share capital of 500,000,000 shares deemed to be in issue during financial years
ended 30 June 2006, 2007 and 2008
44%
Gross Profit by Product Segment
37%
FY2009
FY2008
56%
issue as at 30 June 2006, 2007 and 2008
32%
FY2009
FY2008
63%
68%
Premium Series
Premium Series
Regular Series
Regular Series
FY: Financial Year ended 30 June
42%
58%
Annual Report 2009
Revenue by Product Segment
2009
03
STATEMENT FROM THE CHAIRMAN
Quality products are essential to
a successful brand. The Group
injected new elements into “四
五” (“Siwu”) brand profile, and
subsequently launched a new
improved and upgraded range of
baijiu (白酒) products.
Dear Shareholders,
On behalf of the Board of Trump Dragon Distillers Holdings,
I am deeply honoured to present to you our maiden annual
report for the financial year ended 30 June 2009 (“FY2009”).
Annual Report 2009
04
Trump Dragon Distillers was successfully listed on the
Mainboard of the Singapore Exchange Securities Trading
Limited on 5 September, 2008, joining the ranks of companies
from Henan Province, the People’s Republic of China (the
“PRC”), listed in Singapore. We were the first baijiu (白酒)
enterprise to list outside of the PRC. We wish to thank all the
investors and shareholders of your support for our initial public
offering (“IPO”).
Our Milestones
Our listing is a major milestone in our corporate history.
Established in 1949, our predecessor, Siwu Factory, was
a household baijiu (白酒) brand name in Henan Province.
After we assumed management and control of Siwu Factory
in 2005, we embarked on an extensive brand-building and
capacity expansion exercise to enhance the profile of our
“四五” (“Siwu”) brand name. With a longstanding history
of 60 years, the “四五” (“Siwu”) brand name is now widely
recognised in Henan Province as a symbol of quality baijiu (白
酒) products. Our distribution network also grew significantly
to cover approximately 90% of Henan Province currently.
Quality products are essential to a successful brand. The
Group injected new elements into “四五” (“Siwu”) brand profile,
and subsequently launched a new improved and upgraded
range of baijiu (白酒) products. In particular, we launched our
premium Yu Shang Jiu (豫商酒) in 2006, which was inspired
by the architectural structure of the Henan Museum. With both
historical and cultural appeal, Yu Shang Jiu’s (豫商酒) unique
design and quality brew was well-received. In November 2006,
Yu Shang Jiu (豫商酒) was named Henan Province’s Top Ten
Designated Baijiu (白酒) for Official and Commercial Functions
and Receptions. It was also the designated Baijiu (白酒) for
Henan Businessmen Convention held in December 2006.
To further entrench our “四五” (“Siwu”) brand name, we
engaged popular singer-songwriter, Emil Chau (周华健), as our
brand spokesperson in 2006. The positive image of Emil Chau
has certainly boosted consumers, in particular the younger
customers’ impression of our baijiu (白酒) products.
In a span of four years, we are pleased to have progressed
from assuming the management of Siwu Factory in 2005 to a
company listed on the Singapore Stock Exchange in 2008.
STATEMENT FROM THE CHAIRMAN
Review of FY2009 Financials
In the financial year under review, the global economic
slowdown and recession led to the weakening of the PRC’s
domestic economy and consumer market. The baijiu (白酒)
industry was also inadvertently impacted, especially the highend consumer market, which saw sales volumes and selling
prices under pressure in the second half of the financial year.
Despite the challenging macroeconomic environment and
growing competition, the Group leveraged on our strong
foundation to review and finetune our strategy. We recognised
a shift in consumption trend as consumers switched from
our top-end Premium series product, Yu Shang Jiu (豫商酒)
to the more affordably priced Premium series Siwu Old Cellar
1949 (四五老窖). As such, we introduced a new lower-priced
Premium series Laojiao Zhencang (老窖珍藏) in the fourth
quarter of FY2009 to meet market demand.
On the other hand, we introduced higher-priced products in
the Regular series segment such as Zui Zhen De Meng (最真
的梦), Nan Ren Yuan (男人缘) and Feng Yu Wu Zu (风雨无阻)
in the first quarter to replace older and lower-priced products.
In the fourth quarter, we subsequently launched Laojiao
Chenniang (老窖陈酿), Zhaodai Jiu (招待酒), Zhixin Pengyou
(知心朋友) and Zhenxin Yingxiong (真心英雄).
Our strategy to finetune our product mix and focus on midpriced products paid off as we maintained our overall sales
volume at approximately 20,000 tonnes for FY2009. Total
revenue fell by a marginal 2.0% to RMB702.9 million. In view of
a lower operating profit and higher finance costs and income
tax expenses, the Group’s net profit decreased 25.5% to
RMB104.9 million.
Outlook for FY2010
On top of seizing the opportunities arising from the industry’s
consolidation, Trump Dragon Distillers aims to strengthen our
foothold in Henan Province with our wide range of baijiu (白
酒) products catering to the varied preferences of different
consumers. We will also continue to adjust our product mix
and launch more quality baijiu (白酒) products in the market.
With the expansion of our range of mid-end quality baijiu (白酒)
products, we hope to maintain our overall sales volume and
financial performance.
Baijiu (白酒) is an indispensable part of the Chinese lifestyle,
catering to all occasions. Therefore, we are optimistic about
the mid to long term growth potential of the Group, and will
strive to develop our baijiu (白酒) brand to become one of
Henan Province’s representative baijiu (白酒) brands.
In light of the uncertain economic environment in the past year,
the Group has maintained a cautious and prudent approach
towards our expansion plans. We have obtained an in-principle
approval from the local authorities in Zhoukou City, Henan
Province, for the grant of land use rights for the parcel of land
earmarked for the construction of our new plant, which will be
available to us till the end of 2011. In the meantime, we are
monitoring industry developments and exploring merger and
acquisition opportunities, which may allow us to expand our
business.
We will continue to observe the market going forward and
seize business opportunities to bring the Group’s business to
greater heights.
Acknowledgements
Our shareholders have been a significant pillar of support since
our listing. On behalf of the directors and staff of Trump Dragon
Distillers, we thank you for your support and confidence in us
over the past year. I would also like to give my heartfelt thanks
to all our distributors, suppliers, customers as well as our
business partners.
To the Board of Directors, management team and all staff
members, I wish to express my appreciation for your dedicated
efforts, commitment and contributions to the Company.
Together, we will go forth to overcome challenges and build a
better future for Trump Dragon Distillers!
Gao Feng
Executive Chairman
Annual Report 2009
Due to the repercussions of the global economic downturn,
consumers’ demand and purchasing power for high-end and
highly priced products are expected to remain depressed. The
operating environment of the PRC’s baijiu (白酒) market will be
fraught with challenges. In addition, the baijiu (白酒) industry is
expected to undergo a period of mergers and consolidation.
Given the historic and cultural significance of baijiu (白酒), our
consumers place great importance on the intrinsic cultural
appeal and influence of our “四五” (“Siwu”) brand name. To
enhance our competitive edge, we focused our energies
to communicate “四五”’s (“Siwu”) rich history and culture
through the naming of our products, marketing campaigns
and packaging. In May 2009, we set up the “Siwu Old Cellar”
flagship store to further showcase our rich culture and history.
We also commissioned a renowned clay figurine artist in the
PRC to create clay images portraying our “四五” (“Siwu”) baijiu
(白酒) production process. This enables our consumers to
experience our cultural heritage while savouring the fineness
of our “四五” (“Siwu”) baijiu (白酒).
05
BRAND RECOGNITION
Over the years, the Group’s 四五 (“Siwu”) brand name has won various awards and established
a strong brand identity in Henan Province. Since March 2006, the Group has engaged a wellknown Taiwanese singer-songwriter Emil Chau (周华健) as its products’ spokesperson.
The Group is committed to enhancing the value of its 四五 (“Siwu”) brand name by carrying
out extensive marketing and branding activities. The appointment of Emil Chau (周华健) as the
Group’s products’ spokesperson has enabled the Group to strengthen its brand name and
increase public awareness of its products.
Annual Report 2009
06
To complement its marketing efforts, the Group has also launched innovative promotional
activities such as tagging its products with encoded serial numbers to verify product authenticity
and accumulate points to win prizes. This is in line with the Group’s strategy to market and
position products to appeal to consumers of different demographic levels.
The Group’s products are sold through distributors mainly to hospitality establishments,
supermarkets and specialty stores selling tobacco and alcohol products in Henan Province.
As at 30 June 2009, the Group has approximately 376 distributors. The Directors believe its
distribution network covers approximately 90% of Henan Province.
BREWED TO
PERFECTION
OPERATIONS REVIEW
Going forward, the Group remains
optimistic of the market demand for quality
baijiu (白酒) products in Henan Province in
the PRC, given baijiu’s (白酒) history and
Annual Report 2009
08
significance in Chinese culture.
OPERATIONS REVIEW
In FY2009, the global economic downturn has affected
Total Revenue (RMB’ million)
consumer sentiment in the PRC, especially for high-
717.3
end products. The Group has therefore reviewed its
product range and decided on a strategic focus on
315.2
mid-end products.
The efforts paid off as the Group managed to minimise
the impact of the overall weak market sentiment on its
topline. The Group’s revenue declined marginally by
(2.0%)
702.9
(17.1%)
261.2
9.8%
Premium
402.1
441.7
FY2008
FY2009
Regular
2.0% to RMB702.9 million from RMB717.3 million in
FY2008. Total sales volume of the Group’s baijiu (白
酒) products was down marginally by 0.9% to 19,915
tonnes. Overall average selling price decreased by
Total Sales Volume (tonnes)
1.1% to RMB35.3 per kg.
20,095
1,682
While the Group saw higher sales volume for its
Premium baijiu (白酒) products, the shift in the sales
mix from Yu Shang Jiu (豫商酒) to the more affordably
priced Siwu Old Cellar 1949 (四五老窖1949) led to
a decrease in the segment’s average selling price.
As a result, sales revenue for the Premium series
18,413
(0.9%)
0.8%
(1.0%)
19,915
1,695
18,220
Premium
Regular
FY2009
FY2008
decreased 17.1% to RMB261.2 million in FY2009,
which accounted for 37.2% of total revenue.
Overall ASP/kg (RMB)
35.7
187.4
Premium
Regular
21.8
FY2008
(1.1%)
(17.8%)
11.0%
35.3
154.1
24.2
FY2009
Annual Report 2009
09
OPERATIONS REVIEW
The launch of new Regular series products, including Zui Zhen
Selling and distribution expenses decreased 13.4% to
De Meng (最真的梦), Nan Ren Yuan (男人缘) and Feng Yu Wu
RMB74.2 million in FY2009 due mainly to a decrease in
Zu (风雨无阻), in the first quarter of FY2009, as well as the
advertising and promotional expenses.
shift in sales mix to higher-end products in the segment such
as Lan Zuan (蓝钻) during the year led to an increase in the
Administrative expenses increased 49.0% to RMB27.8 million
segment’s average selling price.
in FY2009 due mainly to exchange losses of RMB4.0 million,
increase in wages and salaries expenses of RMB2.7 million,
Therefore, despite a drop in sales volume, sales revenue
increase in professional fees of RMB1.2 million and accrued
for the Regular series products was lifted by 9.8% from
fees for directors of RMB0.8 million.
RMB402.1 million in FY2008 to RMB441.7 million in FY2009.
Annual Report 2009
10
This contributed to 62.8% of Group revenue.
Income tax expense increased by RMB7.5 million in FY2009
due to the exemption of income tax enjoyed by the Group’s
On an overall basis, the Group’s gross profit margin slid 4.4
major operating subsidiary Siwu Wine during the first half of
percentage points from 36.6% in FY2008 to 32.2% in FY2009.
FY2008 and reduced income tax rate of 12.5% during the
The Group’s efforts to promote its higher-end products in the
second half of FY2008 compared to reduced income tax rate
Regular series led to an improvement in its gross profit margin
of 12.5% during the whole FY2009.
from 20.8% in FY2008 to 21.4% in FY2009. However, gross
profit margin for the Premium series products decreased from
After taking into account higher finance costs and income
56.7% in FY2008 to 50.5% in FY2009, due to the change
tax expenses, profit attributable to equity holders was 25.5%
in sales mix of the Premium series products to the more
lower at RMB104.9 million.
affordably priced Siwu Old Cellar 1949 (四五老窖1949).
OPERATIONS REVIEW
Cash and cash equivalents increased by RMB256.0 million
• Zhixin Pengyou (知心朋友), a Regular series product; and
to RMB484.3 million, due mainly to net cash of RMB114.5
• Zhenxin Yingxiong (真心英雄), a Regular series product.
million generated from operating activities, net proceeds of
RMB171.9 million received from issue of new shares and net
Besides marketing its new products, the Group will continue
repayment of RMB29.5 million bank loans.
to fine-tune its product mix and launch new products to meet
the changing needs of consumers.
Outlook
Going forward, the Group remains optimistic of the market
Looking ahead, the Group expects the baijiu (白酒) business
demand for quality baijiu (白酒) products in Henan Province
to be challenging in FY2010. Despite the weaker consumer
in the PRC, given baijiu’s (白酒) history and significance in
demand and purchasing power for high-end products as
Chinese culture.
a whole in the PRC as a result of the global financial crisis,
the Group expects to maintain its overall sales volume by
The Group intends to further strengthen and promote
diversifying its product offerings.
its brand name by intensifying and developing further its
extensive brand-driven and consumer-centric activities.
Following the launch of three new Regular series products in
Given the growth potential for its baijiu (白酒) products in
1Q FY2009, the Group has introduced five more new products
Henan Province, the Group plans to leverage on its extensive
in 4Q FY2009 in order to tap the market for mid-end baijiu (白
distribution network to increase its market share in Henan
酒) products:
Province. The Group also intends to explore expansion
opportunities in new geographical areas in the neighbouring
• Laojiao Zhencang (老窖珍藏), a lower-priced Premium provinces. The Group will also explore further opportunities for
expansion through acquisitions, joint ventures and strategic
series product;
• Laojiao Chenniang (老窖陈酿), a Regular series product;
alliances.
• Zhaodai Jiu (招待酒), a Regular series product;
Annual Report 2009
11
BOARD OF DIRECTORS
Gao Feng (高峰)
Zhou Tao (周涛)
Mr Gao Feng is the Executive Chairman of the Company
Mr Zhou Tao is the Deputy Executive Chairman and Joint Chief
and was appointed to the Board on 28 February 2008. He is
Executive Officer of the Company and was appointed to the
responsible for the overall business direction and development
Board on 28 February 2008. He is responsible for assisting
of the Group. Before entering into the baijiu (白酒) business
the Executive Chairman, Mr Gao Feng, in the overall business
in 2005, Mr Gao had more than 13 years experience in
direction and development as well as supervising the overall
management of businesses in different industries. In February
sales, marketing and branding activities of the Group. Mr Zhou
1999, he founded 河南福鑫科技有限公司 (Henan Fuxin
has over 10 years of sales and marketing experience in food
Technology Co., Ltd.), which was engaged in the manufacture
and beverage companies, which included a stint as the Henan
and sale of glass products, and was its Managing Director
Branch Manager in 安徽口子窖酒业集团 (Anhui Kouzijiao
until December 2001. In January 2002, he founded 河南省
Spirit Group), a well-known baijiu (白酒) producer and seller in
新世家置业有限公司 (Henan Province Xinshijia Property
the PRC. In June 2005, Mr Zhou joined the Group’s subsidiary,
Development Co., Ltd.), which was engaged in the business
Siwu Spirits, as a Director and Deputy Managing Director and
of property development, and was its Managing Director
was responsible for its sales and marketing operations. In
until September 2006. Mr Gao graduated from 郑州大学
May 2007, Mr Zhou also became the Director of the Group’s
(Zhengzhou University) with a Bachelor’s Degree in Economics
subsidiary, Siwu Marketing. Mr Zhou graduated from 郑州大
in July 1992.
学 (Zhengzhou University) with a Bachelor’s Degree in Finance
in July 1992. In December 1998, Mr Zhou graduated from 中
国社会科学院研究生院 (The Graduate School of the Chinese
Academy of Social Science) with a Certificate in Economics.
Yang Dadong (杨大东)
Mr Yang Dadong is the Joint Chief Executive Officer of the
Company and was appointed to the Board on 28 February
2008. He is responsible for overseeing the overall daily
operations of the Group. Mr Yang joined the Group’s subsidiary,
Siwu Spirits, in June 2005 as a Deputy Managing Director
overseeing the daily production operations. Mr Yang has
over 10 years of operational and quality control experience.
Annual Report 2009
12
Prior to joining Siwu Spirits, he held the position of Deputy
Managing Director at a food and beverage company, 河南九
头崖集团 (Henan Jiutouya Group), and was responsible for
the overall management of operations and quality control. Mr
Yang graduated from 哈尔滨工程大学 (Ha’erbin Engineering
University) with a Bachelor’s Degree in Engineering in July
1998.
BOARD OF DIRECTORS
Ma Ke (马珂)
Chia Seng Hee, Jack
Ms Ma Ke is the Executive Director of the Company and
Mr Chia Seng Hee, Jack was appointed as Independent
was appointed to the Board on 28 February 2008. She is
Director of the Company on 26 June 2008. He is the
responsible for overseeing the daily finance and accounting
Chairman of the Nominating and Remuneration Committees
operations of the Group. Ms Ma has over 17 years of
and a member of the Audit Committee. Currently, he runs his
experience in the accounting and finance industry. Ms Ma
own investment advisory firm Jack Capital Services Pte Ltd,
joined the Group’s subsidiary, Siwu Spirits, in June 2005 as
which he set up in June 2005. Prior to that, he was Senior
a Director and Chief Financial Officer and is responsible for
Director, International Enterprise Singapore (the former Trade
overseeing the accounting matters. In April 2007, Ms Ma
Development Board), and was based in Shanghai from
also became the Director of the Group’s subsidiary, Siwu
June 2002. Mr Chia was also with Singapore Technologies,
Marketing, responsible for overseeing the accounting matters.
Government of Singapore Investment Corporation as well
Ms Ma graduated from 河南广播电视大学 (Henan Television
as Arthur Andersen in marketing, asset management and
Broadcasting University) with a Diploma in Accounting in
consulting capacities respectively. He graduated from the
July 1996. In June 2007, Ms Ma obtained 国际财务管理师
National University of Singapore with a Degree in Accountancy
资格证书 (International Financial Management Qualification
in 1984 and from the International University of Japan with a
Certificate) jointly issued by the 中国总会计师协会 (China
Masters of Arts Degree in International Relations in 1989. He is
Accountant General Association), 中华人民共和国劳动和社
a Certified Public Accountant and a member of the Singapore
会保障部 (Ministry of Labor and Social Security of the PRC)
Institute of Directors. He also completed the General Manager
and 国际财务管理协会 (International Financial Management
Program at Harvard Business School in 2001.
Association).
Zhang Wenzhe (张文哲)
Mr Tan Siok Sing was appointed as Independent Director
Mr Zhang Wenzhe was appointed as Independent Director
of the Company on 26 June 2008. Mr Tan is the Chairman
of the Company on 28 February 2008. He is a member of
of the Audit Committee and a member of the Nominating
the Audit, Nominating and Remuneration Committees. Mr
and the Remuneration Committees. He is currently the
Zhang has more than 40 years working experience in various
Executive Director of Ironman Minerals & Ores Pte Ltd, an
PRC government authorities as a senior officer. Mr Zhang was
energy resources and minerals trading company. He was the
the Director General of 河南省粮食厅 (Agri-food Authority
Executive Director of Ei-Nets Ltd, an information technologies
of Henan Province) from July 1993 to September 1998.
company listed on the SGX-ST (Sesdaq) for two years. Mr Tan
From October 1998 to November 2003, he was the Deputy
has more than 18 years’ experience in the financial industry
Chairman of 河南省政协经济委员会 (Economy Committee
as the Executive Director in Millennium Securities Pte Ltd. He
of Henan Province Political Consultative Conference). Mr
graduated from The University of Tennessee with a Masters in
Zhang is currently a Consultant in Economics with 周口市政
Business Administration in 1984.
府 (Zhoukou City Government) and Researcher in Economics
with 河南省社会科学院 (Henan Province Social Science
Academy). Mr Zhang holds a Diploma in Agricultural Products
from 河南省财经学院 (Henan Province Finance and Economy
University).
Annual Report 2009
Tan Siok Sing
13
SENIOR MANAGEMENT
Sun Qianju (孙前聚)
Huo Lei (霍雷)
Mr Sun Qianju is the Chief Engineer and General Manager
Mr Huo Lei is the General Manager of the Group’s
of the Group’s Product Development Department. With more
Administration Department. He is responsible for the overall
than 29 years of experience in the baijiu (白酒) industry, Mr Sun
general administration and personnel management of the
joined the Group’s subsidiary, Siwu Spirits, in March 2006 and
Group. Mr Huo has been with the Group since he joined the
is responsible for overseeing the overall product development
Group’s subsidiary, Siwu Spirits, in September 2005. From
and production activities. From January 1971 to February
March 2000 to September 2003, Mr Huo was a Manager in
2003, Mr Sun worked for 宋河酒厂 (Songhe Spirit Factory), a
河南省农业综合开发广泰科技有限公司（Henan Province
well-known producer of baijiu (白酒) in the PRC, which he held
Agriculture Development Guangtai Technology Co., Ltd.).
various positions as Vice General Manager, General Manager
From September 2003 to September 2005, he was a Manager
and Chief Engineer. From March 2003 to March 2006, Mr
in the corporate management department of 河南省新世家置
Sun was a member of 鹿邑人民代表大会 (Luyi People’s
业有限公司 (Henan Province Xinshijia Property Development
Congress). Mr Sun obtained a Diploma in Chemistry from 武
Co., Ltd.). Mr Huo graduated from 郑州工业大学 (Zhengzhou
汉大学 (Wuhan University) in July 1970. Mr Sun has also been
University of Technology) with a Diploma in Electric System
appointed as a member of 中国白酒国家评委 (China National
Automation in July 2000.
Spirit Examine Committee) by the 中国食品工业协会 (China
National Food Industry Association) in November 2006. His
term will expire in November 2011.
Annual Report 2009
14
Wan Baojian (万保建)
Chan Siu Wah (陈小华)
Mr Wan Baojian is the General Manager of our Group’s
Mr Chan Siu Wah is the Financial Controller of the Group and
Production and Quality Control Department. He is responsible
the Company’s Joint Company Secretary. Mr Chan joined the
for assisting the Group’s Chief Engineer, Mr Sun Qianju (孙前
Group in October 2007 and is responsible for assisting Ms Ma
聚), in product development and takes charge of the Group’s
Ke in managing the overall finance and accounting operations
daily production activities. Since October 1986, Mr Wan had
of the Group. In addition, he is also responsible for implementing
been working for the Group’s predecessor, Siwu Factory, and
internal controls and corporate governance and practices, as
held various positions from Senior Engineer, Departmental
well as liaising with external parties and regulatory bodies in
Manager to Deputy General Manager. After Trump Dragon
respect of the Group’s financial matters. Mr Chan has over
Investment took over the operating assets of Siwu Factory,
12 years of experience in the field of accounting and auditing.
Mr Wan was retained by the Group as a key technical expert
Prior to joining the Group, Mr Chan was the financial controller
and General Manager of Siwu Spirits since its incorporation. In
of a Singapore-listed company, Sunray Holdings Limited, a
September 1988, Mr Wan obtained a Diploma in Fermentation
position he held since February 2003. From February 2000 to
Studies from 中国食品函授大学 (China Food Open University).
January 2003, Mr Chan was with PricewaterhouseCoopers
Mr Wan holds the title of 河南省酿酒大师 (Henan Province
Hong Kong. He holds a Bachelor’s Degree in Accounting and
Brewmaster) awarded by 河南省酒业协会 (Henan Province
Finance from The University of Hong Kong. He is a fellow
Spirit Industry Association).
member of the Association of Chartered Certified Accountants
and is also an associate member of the Hong Kong Institute of
Certified Public Accountants.
The Board of Trump Dragon Distillers Holdings Limited (the “Company”) is committed to maintaining high standards
of corporate governance by adopting and complying, where possible, with the principles and guidelines of the Code of
Corporate Governance 2005 (the “Code”) issued by the Corporate Governance Committee, with the aim to preserve
and enhance shareholders’ value. The Company recognizes that good corporate governance processes are essential for
enhancing corporate sustainability. The Board confirms that it has generally adhered to the principles and guidelines of the
Code where they are applicable, relevant and practicable to the Group and has explained the areas of non-compliance.
This report describes the corporate governance framework and practices of the Company that were in place throughout the
financial year under review, with reference to the Code.
(A)
Board Matters
Principle 1: Board’s Conduct of its Affairs
The Board is primarily responsible for overseeing and supervising the management of the business affairs of the Group
and the Board members are expected to act in good faith and exercise independent judgement in the best interests of the
Group.
The function of the Board includes:
(i)
providing effective leadership, setting corporate strategy and directions to ensure that the necessary financial and
human resources are in place for the Group to achieve its objectives;
(ii)
advising Management on major policy initiatives and significant issues;
(iii)
approving the Group’s annual budgets, major investment and divestment proposals, material acquisitions and disposal
of assets, interested person transactions of a material nature and funding decisions;
(iv)
evaluating the adequacy of internal controls and risk management, financial compliance reporting;
(v)
evaluating the performance and compensation of directors and senior management;
(vi)
approving nominations and appointment of Board members and key personnel; and
(vii)
setting the Group’s values and standards through the implementation of corporate governance and best practices.
Some of these roles are carried out directly or through Board Committees.
The Board meets on a quarterly basis to review interim and annual results and accounting policies. Ad-hoc meetings will
be held as and when required to address any significant issues that may arise in between the scheduled meetings. The
Company’s Articles of Association provides for meetings to be held via telephone, electronic or other communication facilities
which permits all persons participating in the meeting to communicate with each other simultaneously. For FY2009, the
Board held 5 meetings.
To facilitate effective management and to assist the Board in discharging its responsibilities to enhance the Group’s corporate
governance framework, the Board has established a number of Board Committees which include an Audit Committee (“AC”),
a Nominating Committee (“NC”) and a Remuneration Committee (“RC”). The composition and terms of reference of each
Committee are described in this report. All Board Committees are chaired by an Independent Director and a majority of the
members other than the AC, are independent Directors. All members of the AC are Independent Directors.
Annual Report 2009
Where physical Board and Board Committee meeting is not possible, timely communication with members of the Board or
Board Committee can be achieved through electronic means and the circulation of written resolutions for approval by the
relevant Board or Board Committee members.
15
The number of meetings held by the Board and Board committees and their attendance for FY2009 are disclosed in the
table below:
Meeting of
Board
AC
RC
NC
Total Meetings Held for FY2009
5
5
2
2
Gao Feng
5
–
2
2
Zhou Tao
5
–
–
–
Yang Dadong
5
–
–
–
Ma Ke
5
–
–
–
Tan Siok Sing
5
5
2
2
Chia Seng Hee, Jack
5
5
2
2
Zhang Wenzhe
4
4
1
1
Directors, when appointed, will receive an orientation that includes briefing by Management on the Group’s structure,
businesses, operations and policies. Directors who are not familiar with the duties and obligations required of a listed
company in Singapore, will undergo the necessary training and briefing.
For Non-Executive Directors, letters of appointment setting out their terms of appointment will be issued to new appointees
to the Board. Newly appointed Executive Directors will be provided with Service Agreement setting out their term of office
and terms of appointment. As an ongoing exercise, the Directors will also be briefed by professionals during Board meetings
or at separate seminars on amendments and requirements of the Singapore Exchange Trading Securities (“SGX-ST”) and
other statutory and regulatory changes which have an important bearing on the Company and the Directors’ obligations to
the Company, from time to time.
Principle 2: Board Composition and Balance
The Board comprises seven directors, of whom three are independent. The list of directors is as follows:
Annual Report 2009
16
Gao Feng
(appointed on 28 February 2008)
(Executive Chairman)
Zhou Tao
(appointed on 28 February 2008 )
(Executive Director & Joint CEO)
Yang Dadong
(Executive Director & Joint CEO)
Ma Ke
(Executive Director & Finance Director)
Tan Siok Sing
(appointed on 26 June 2008)
Chia Seng Hee, Jack
(appointed on 26 June 2008)
Zhang Wenzhe
The size and composition of the Board will be reviewed by the NC to ensure that the Board has the appropriate mix of
expertise and experience and collectively possesses the relevant and necessary skills sets and core competencies for
effective decision making. The Board is of the opinion that its current board size of seven Directors is appropriate, taking into
account the nature and scope of the Group’s operations. As a Group, the members of the Board brings with them a broad
range of expertise in areas such as accounting, finance, management experience, understanding of industry and customers
as well as familiarity with regulatory requirements. The diversity of the Directors’ experience allows the useful exchange of
ideas and views. The profile of the Board members is set out in the section entitled “Board of Directors on page 12 of the
Annual Report.
The Independent Directors contribute to the Board process by monitoring and reviewing Management’s performance against
goals and objectives. Their views and opinions provide alternative perspectives to the Group’s business. When challenging
Management proposals or, decisions, they bring independent judgement to bear on business activities and transactions
involving conflicts of interest and other complexities.
The NC, which is responsible for reviewing the independence of each Director on an annual basis, has adopted the Code’s
definition of an independent director and guidelines as to relationships which would deem a director not to be independent.
In addition, the NC requires each independent Director to state whether he considers himself independent despite not having
any of the relationships identified in the Code. Based on this, the NC concludes that Mr Zhang Wenzhe, who is the father-inlaw of Mr Gao Yong, brother of Mr Gao Feng, the Group’s Executive Chairman and Controlling Shareholder, is independent
inspite of his relationship to Mr Gao Feng’s brother. The NC has also reviewed the independence of both Mr Tan Siok Sing
and Mr Chia Seng Hee, Jack and considered them to be independent and free of any relationships as outlined in the Code.
Principle 3: Executive Chairman and Joint Chief Executive Officers
To ensure an appropriate balance of power such that no one individual represents a considerable concentration of authority,
the roles of Executive Chairman and Joint CEOs are separate. The Executive Chairman and Joint CEOs are not related to
each other.
The Executive Chairman, Mr Gao Feng, is responsible for overseeing the overall management, strategic planning and
business development of the Group. He ensures effective and comprehensive Board discussion on these matters and
monitors the translation of the Board’s decisions into executive actions. He also ensures the quality, quantity and timeliness
of information flow between the Board and Management and that the Board has sufficient opportunities for interaction and
informal meetings with Management.
The Joint CEOs, Mr Zhou Tao and Mr Yang Dadong, execute the Board’s decisions and are responsible for implementing the
Group’s strategies and policies and the conduct of the Group’s business.
Principle 4: Board Membership
The NC comprises four members, a majority of whom, including the Chairman, are independent Directors.
Chia Seng Hee, Jack (Chairman)
Tan Siok Sing
Zhang Wenzhe
Gao Feng
The principal functions of the NC in accordance with its written terms of reference are as follows:
to review the Board and Board Committees’ structure, size and composition and make recommendations to the
Board, where appropriate;
2.
to determine the process for search, nomination, selection and appointment of new board members and assessing
nominees or candidates for appointment to the Board;
3.
to determine, on an annual basis, if a Director is independent;
4.
to recommend the nomination of Directors who are retiring by rotation to be put forward for re-election;
5.
to decide whether or not a Director is able to and has been adequately carrying out his duties as a Director of the
Company, particularly when he has multiple board representations; and
6.
to assess the effectiveness of the Board as a whole and for assessing the contribution of each of the Director to the
effectiveness of the Board.
For the year under review, the NC held two meetings. In accordance with the Company’s Articles of Association, every
Director is required to retire at least once every three years and, shall be eligible for re-election. All newly appointed Directors
will have to retire at the next Annual General Meeting (“AGM”) following their appointments. The NC has recommended the
nomination of Tan Siok Sing and Chia Seng Hee, Jack, Directors who are retiring for FY2009 and have consented to be reelected at the forthcoming AGM of the Company. The Board has accepted the NC’s recommendations.
The NC has adopted a Process for Selection and Appointment of New Directors which provides the procedure for
identification of potential candidates, evaluation of candidates’ skills, knowledge and experience, assessment of candidates’
suitability and recommendation for nomination to the Board.
Annual Report 2009
1.
17
Principle 5: Board Performance
The NC has adopted a formal system of evaluating the Board as a whole. The Board Performance Evaluation is conducted
annually. Each director is required to complete a questionnaire relating to the size and composition of the Board, information
flow to the Board, Board procedures and accountability as well as matters concerning CEO/Senior Management and
standards of conduct of Board members.
The Board has taken the view that the financial indicators as recommended under the Code to be included as part of the
performance criteria for Board evaluation might not be appropriate as these are more of a measurement of Management’s
performance and therefore less applicable to the Board.
An evaluation of the Board’s performance for FY2009 was conducted. The evaluation exercise provided feedback from
each Director, his/her views in the Board, procedures, processes and effectiveness of the Board as a whole. The results of
the Board Performance Evaluation were collated and presented to the NC for discussion. The NC is generally satisfied with
the results of the Board Performance Evaluation for FY2009, which indicated areas of strengths and weaknesses but no
significant problems were identified. The NC had discussed the results with Board members who agreed to work on those
areas for improvement. The NC would continue to evaluate the process for such review, its effectiveness and development
from time to time.
Principle 6: Access to Information
To assist the directors in discharging its duties, Management provides reports and financial statements to the Board on a
regular basis. Board and Board committee papers are sent to directors at least three working days before each meeting so
that the Directors may better understand the matters prior to the meeting and discussions may be focused on questions that
the directors have on these matters.
Financial highlights of the Group’s performance and developments are presented on a quarterly basis at Board meetings. The
Group’s Joint CEOs, Finance Director and members of Senior Management are present at these presentations to address
any queries which the Board may have.
The Company Secretaries assist the Board with the preparation of meeting agenda and administer, attend and prepare
minutes of board proceedings, ensuring good information flow within the Board and its committees. They also assist the
Board on the compliance of the Group with the Memorandum of Association and Bye-laws and statutory regulations.
Management also assists the Board to implement and strengthen good corporate governance practices and processes
across the Group.
All Directors have separate and independent access to the Group’s Chairman, CEO, Senior Management, Company
Secretary and internal and external auditors at all times. The Board exercises its discretion to seek independent professional
advice if deemed necessary to ensure that full information and advice is available before important decisions are made.
(B)
Remuneration Matters
Principle 7: Procedures for Developing Remuneration Policies
The RC comprises four members, a majority of whom, including the Chairman, are Independent Directors.
Annual Report 2009
18
Chia Seng Hee, Jack (Chairman)
Tan Siok Sing
Zhang Wenzhe
Gao Feng
Although the Code provides that the RC should comprise entirely non-executive directors, the Committee is of the view that
the Executive Chairman’s participation in the deliberation and decision-making process is necessary when reviewing the
Executive Directors and Senior Management’s compensations.
The principal functions of the RC in accordance with its written terms of reference are as follows:
1.
to review and recommend to the Board a framework of remuneration and determine the specific remuneration
packages and terms of employment of the Directors and key executives of the Group;
2.
to function as the committee referred to in the Trump Dragon Employee Share Option Scheme (“the Scheme”) and
shall have all the powers as set out in the Scheme; and
3.
to carry out its duties in the manner that it deems expedient, subject always to any regulations or restrictions that may
be imposed upon the RC by the Board of Directors from time to time.
The scope of the RC’s review covers all aspects of remuneration, including but not limited to Directors’ fees, salaries,
allowances, bonuses, and benefits-in-kind. The remuneration packages take into consideration the long-term interests of the
Group, industry standards, and ensure that the interests of the Executive Directors align with that of shareholders.
If required, the RC will seek expert advice inside and/or outside of the Company on remuneration of all Directors and key
executives.
Principle 8: Level and Mix of Remuneration
In reviewing and determining the remuneration packages of the Executive Directors and key executives, the RC takes into
consideration the prevailing economic situation, skills, expertise and contribution to the Company’s performance, the pay and
employment conditions within the industry and in comparable companies. The Executive Directors’ remuneration are set out
in their three-year service agreements which commenced from 5 September 2008.
The RC also reviews all matters concerning the remuneration of the Independent directors to ensure that the remuneration
commensurate with the contribution and responsibilities of the directors. The Company submits the quantum of Directors’
fees of each year to the shareholders for approval at each AGM.
The RC had recommended to the Board:
(i)
an amount of S$150,000 for the financial year ended 30 June 2009; and
(ii)
S$150,000 for the financial year ending 30 June 2010, payable half yearly in arrears.
These recommendations have been endorsed by the Board and will be tabled at the forthcoming AGM for shareholders’
approval.
No Director is involved in deciding his or her own remuneration.
Principle 9: Disclosure on Remuneration
The annual remuneration band of each individual Director and key executives for the financial year ended 30 June 2009 are
set out below:
Name
Below S$250,000
Executive Directors:
Gao Feng
Fees
100%
–
Zhou Tao
100%
–
Yang Dadong
Ma Ke
Independent Directors:
Tan Siok Sing
Chia Seng Hee, Jack
Zhang Wenzhe
Key Executives:
Huo Lei
Sun Qianju
Wan Baojian
Chan Siu Wah
100%
100%
–
–
–
–
–
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
Annual Report 2009
Salaries
19
There are no employees of the Group who are immediate family members of a director or the CEO and whose remuneration
exceeds S$150,000 and no options were granted under the Trump Dragon Share Option Scheme during the financial year
ended 30 June 2009.
(C)
Accountability and Audit
Principle 10: Accountability
The Board aims to provide a balanced and understandable assessment of the Group’s financial performance to shareholders.
Financial results are released on a quarterly basis to the shareholders within the timeline as stipulated in the SGX-ST Listing
Manual. All the financial information presented in the results announcement or Annual Report have been prepared in
accordance with the International Financial Reporting Standards and approved by the Board before release to the SGX-ST
and the public through SGXNET.
In line with SGX-ST listing requirements, negative assurance statements were issued by the Board to accompany its quarterly
financial results announcements, confirming to the best of its knowledge that, nothing had come to its attention which would
render the Company’s quarterly results to be false or misleading.
Management provides the Board with information on the Group’s performance position and prospects on quarterly basis.
This is supplemented by updates on matters affecting the financial performance, business of the Group, if such event,
occurs.
Principle 11: Audit Committee
The AC comprises three members, all of whom are Independent Directors:
Tan Siok Sing (Chairman)
Chia Seng Hee, Jack
Zhang Wenzhe
The AC meets at least 4 times a year and, as and when deemed appropriate to carry out its function.
The Board believes that the AC members are appropriately qualified to discharge their duties and responsibilities. The
principal functions of the AC in accordance with its written terms of reference are as follows:
Annual Report 2009
20
1.
to review with the external auditors and the internal auditors, their audit plan, evaluation of the systems of internal
controls, audit report and their letter to Management with Management’s response;
2.
to review the co-operation given by the Management to the internal and external auditors without the presence of
Management and to discuss problems and concerns, if any, arising from the interim and final audits, and any matters
which the auditors may wish to bring up;
3.
to review the annual and quarterly results announcements of the Group before submission to the Board for adoption,
focusing in particular on changes in accounting policies and practice, major risk areas, significant adjustments
resulting from the audit, compliance with accounting standards and compliance with the Listing Manual and other
relevant statutory or regulatory requirements;
4.
to review the effectiveness and adequacy of internal accounting and financial control procedures and ensure
coordination between the auditors and Management;
5.
to review and discuss with the external auditors any suspected frauds or irregularity, or suspected infringement of any
relevant laws, rules or regulations which has or is likely to have material impact on the Group’s operating results or
financial position, and Management’s response;
6.
to review annually the scope and results of the audit and its cost effectiveness as well as the independence and
objectivity of the external auditors;
7.
to review arrangements by which staff of the Group may in confidence, raise concerns about possible improprieties in
financial reporting or, other matters;
8.
to nominate and review the appointment or re-appointment of external auditors;
9.
to review interested person transactions;
10.
to review potential conflicts of interest, if any;
11.
to undertake such other reviews and projects as may be requested by the Board, and will report to the Board its
findings from time to time on matters arising and requiring the attention of the AC; and
12.
to generally undertake such other functions and duties as may be required by statutes or the Listing Manual, or by
such amendments as may be made thereto from time to time.
The AC has the authority to investigate any matter within its terms of reference. It has full access to and the cooperation
of Management. The AC met up with the internal and external auditors during the year under review without the presence
of Management. Both the internal and external auditors have confirmed that they have received full cooperation from
Management and no restrictions were placed on the scope of audits.
The AC has reviewed non-audit services provided by the auditors, Grant Thornton, Certified Public Accountants, Hong Kong,
as detailed in the financial statements and is of opinion that the provision of such services did not affect the independence
or, objectivity of the external auditors. The external auditors have affirmed their independence in this respect. The AC had
recommended to the Board the nomination of Grant Thornton, Certified Public Accountants, Hong Kong, for re-appointment
as auditors at the forthcoming AGM.
The Group has put in place a Whistle-Blowing Policy which provides well-defined and accessible channels in the Group
through which employees may raise concern about fraudulent activities, malpractices or improper conduct within the Group,
in a responsible and effective manner. There were no whistle blowing reports received for FY2009.
Principles 12: Internal Controls
Principles 13: Internal Audit
The Board ensures that Management maintains a sound system of internal controls and effective risk management policies to
safeguard the shareholders’ investment and the Company’s assets. This system is designed to provide reasonable, but not
absolute, assurance against material misstatement or loss, and to manage rather than eliminate risks of failure in the Group’s
operational system.
The AC, with the assistance of the internal and external auditors, reviews the adequacy of the Company’s internal controls
and risk management policies and systems established by Management on an annual basis. Any material non-compliance
or failures in internal controls and recommendations for improvements are reported to the AC. The AC also reviews the
effectiveness of the actions taken by Management on the recommendations made by the internal and external auditors in
this respect.
The Group has appointed a professional accounting firm in Hong Kong, Wong Lam Leung & Kwok C.P.A. Limited (“WLLK”)
in FY2009, to carry out the internal audit function. The internal auditor reports directly to the AC Chairman. The role of
the internal auditor is to support the AC in ensuring that the Group maintains a sound system of internal controls by
monitoring and assessing the effectiveness of key controls and procedures, conducting in-depth audits of high risk areas and
undertaking investigations as directed by the AC. The AC will assess the adequacy of the internal audit function on an annual
basis.
(D)
Communication with Shareholders
The Group continues to keep all stakeholders informed of its corporate activities on a timely and consistent basis. The
Company is mindful of the need for regular and proactive communication with its shareholders. The Company disseminates
all price-sensitive information to its shareholders via SGXNET on a non-selective basis. Quarterly results are published
through the SGXNET and news releases.
All shareholders of the Company receive its Annual Report and notice of AGM. The notice of AGM is also advertised in the
newspaper. The Company welcomes the views of the shareholders on matters concerning the Company and encourages
shareholders’ participation at AGMs. The Chairmen of the AC, NC and RC of the Company are normally present at the
general meetings to answer questions from the shareholders. The external auditors will also be present to assist the directors
in addressing any relevant queries by shareholders.
Annual Report 2009
Principles 14: Communication with Shareholders
Principles 15: Greater Shareholder Participation
21
Dealings in Securities
The Group had adopted a policy governing dealings in securities of the Company for Directors and its officers. The Company
and its officers are prohibited from dealing in securities of the Company for the periods commencing two weeks before the
release of the quarterly results and at least one month before the release of full year results and at all times, if in possession
of unpublished price-sensitive information.
Interested Person Transactions
The Company has adopted an internal policy governing procedures for the identification, approval and monitoring of
interested person transactions. All interested person transactions are subject to review by the AC.
Save as disclosed under Note 28 of the Notes to the Financial Statements on page 56 of the Annual Report, there were no
IPTs for the year ended 30 June 2009 pursuant to the Listing Rules of the SGX-ST.
Risk Management
The Board currently does not have in place a risk management committee. However, Management reviews the Group’s
business and operational activities on a regular basis to identify areas of significant business risks as well as appropriate
measures to control and mitigate these risks within the Group’s policies and strategies. Any significant matters detected by
Management are reported to the AC and Board.
The Group’s financial risk management is disclosed under Note 26 of the Notes to the Financial Statements on page 52 of
the Annual Report.
Material Contracts
There was no material contract entered into by the Company or any of its subsidiaries involving the interest of the Directors.
Use of IPO Proceeds
Actual IPO
Proceeds
RMB’ million
Annual Report 2009
22
1)
Expand production capacity and relocation of
production facilities
2)
Strengthen brand awareness
3)
4)
Amount utilised as
at 30 June 2009
RMB’ million
Balance as at
30 June 2009
RMB’ million
145.0
–
145.0
10.0
6.0
4.0
Enhancement of product and packaging design
development capabilities
5.0
–
5.0
Working capital
1.2
1.2
–
161.2
7.2
154.0
FINANCIAL CONTENTS
Directors’ Report
24
Statement by Directors
26
Independent Auditors’ Report
27
Consolidated Income Statement
28
Balance Sheets
29
Statements of Changes in Equity
30
Consolidated Cash Flow Statement
32
Notes to the Financial Statements
33
Directors’ Report
The Directors present their report together with the audited financial statements of the Group for the year ended 30 June
2009 and the balance sheet and statement of changes in equity of the Company for the year ended 30 June 2009.
Restructuring Exercise
The Company was incorporated in Bermuda on 12 February 2008 under the Companies Act 1981 of Bermuda as an
exempted company with limited liability. The principal activity of the Group is the production and sale of baijiu products.
On 10 July 2008, the Company completed its restructuring exercise as set out in the Company’s prospectus dated 26
August 2008 to rationalise the Group’s structure in preparation for the public listing of the Company’s shares on the main
board of the Singapore Exchange Securities Trading Limited (the “SGX-ST”).
On 5 September 2008, the shares of the Company were listed on the SGX-ST.
Directors
The Directors of the Company in office at the date of this report are:
Executive Directors:
Gao Feng
Zhou Tao
Yang Dadong
Ma Ke
Independent Directors:
Tan Siok Sing
Chia Seng Hee, Jack
Zhang Wenzhe
In accordance with Bye-law 85 of the Company’s Bye-laws, Tan Siok Sing and Chia Seng Hee, Jack will retire and, being
eligible, offer themselves for re-election at the forthcoming Annual General Meeting.
Share Option Scheme
The Company implemented the Trump Dragon Employee Share Option Scheme (the “Scheme”) on 10 July 2008. The
Scheme was administrated by the Remuneration Committee of the Company. As at the date of this report, no option to take
up unissued shares of the Company was granted under the scheme.
No option to take up the unissued shares of the Company was granted during the financial year. There were no shares
issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company during the
financial year. There were no unissued shares of the Company under option at the end of the financial year.
Arrangements to acquire Shares or Debentures
Neither at the end of the year nor at any time during the year was the Company or any of its subsidiaries a party to any
arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of
shares or debentures of the Company or any other body corporate.
Annual Report 2009
24
Directors’ Interests in Shares or Debentures
According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had
any interest in the share capital or debentures of the Company, except as follows:
Number of Ordinary Shares of HK$0.40 each of the Company
Direct Interest
Gao Feng
Deemed Interest
As at 1 July
2008
As at 30 June
2009
As at 21 July
2009
As at 1 July
2008
As at 30 June
2009
As at 21 July
2009
–
–
–
250,000
350,000,000
350,000,000
Directors’ Report
Directors’ Service Contracts
On 10 July 2008, the Company entered into separate service agreements (“Service Agreements”) with Gao Feng, Zhou Tao,
Yang Dadong and Ma Ke (collectively the “Executives”) for an initial fixed period of three years and may be renewed at the
end of such period on such terms as may be agreed between the Company and the Executives (unless otherwise terminated
by either party giving not less than three months’ notice to the other).
Directors’ Interests in Contracts
Except for the Service Agreements detailed above and transactions disclosed in note 28 to the financial statements no
Director received or become entitled to receive a benefit by reason of a contract made by the Company or a related
corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial
interest.
Audit Committee, Nominating Committee and Remuneration Committee
Details of the Company’s Audit Committee, Nominating Committee and Remuneration Committee are set out in the
Corporate Governance Report on pages 15 to 22 of this annual report.
Auditors
Grant Thornton, Certified Public Accountants, Hong Kong have expressed their willingness to accept re-appointment.
The Audit Committee has recommended to the directors the nomination of Grant Thornton, Certified Public Accountants,
Hong Kong for re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.
ON BEHALF OF THE BORAD
Gao Feng
Director
Zhou Tao
Director
21 September 2009
Annual Report 2009
25
Statement By Directors
In the opinion of the directors:
(i)
the accompanying company and consolidated balance sheets, consolidated income statement, company and
consolidated statements of changes in equity and consolidated cash flow statement together with the notes thereto,
as set out on pages 28 to 56, are drawn up so as to give a true and fair view of the state of affairs of the Company
and of the Group as at 30 June 2009 and of the results of the business of the Group, changes in equity of the
Company and of the Group and cash flows of the Group for the financial year then ended; and
ii)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they fall due.
The board of directors authorised these financial statements for issue on 21 September 2009.
ON BEHALF OF THE BOARD
Gao Feng
Director
Annual Report 2009
26
Zhou Tao
Director
Independent Auditors’ Report
Member of Grant Thornton International
To the members of Trump Dragon Distillers Holdings Limited
(incorporated in Bermuda with limited liability)
We have audited the consolidated financial statements of Trump Dragon Distillers Holdings Limited (the “Company”) and its
subsidiaries (the “Group”) set out on pages 28 to 56, which comprise the company and consolidated balance sheets as at
30 June 2009, and the consolidated income statement, the company and consolidated statements of changes in equity and
the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other
explanatory notes.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation and fair presentation of these financial statements
in accordance with International Financial Reporting Standards. Their opinion on these financial statements is set out on
page 26.
The directors’ responsibility for the financial statements includes designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit and to report our opinion solely
to you, as a body, in accordance with Section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do
not assume responsibility towards or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
Grant Thornton
6th Floor, Nexxus Building
41 Connaught Road Central
Hong Kong
21 September 2009
Annual Report 2009
In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the
Group as at 30 June 2009 and of the Group’s profit and cash flows for the year then ended in accordance with International
Financial Reporting Standards.
27
Consolidated Income Statement
For the financial year ended 30 June 2009
Notes
Revenue
702,915
717,291
(476,414)
(454,765)
Gross profit
226,501
262,526
3,052
1,514
Selling and distribution expenses
(74,224)
(85,718)
Administrative expenses
(27,842)
(18,688)
(3,374)
(7,232)
6
Other operating expenses
Operating profit
7
124,113
152,402
Finance costs
8
(2,016)
(1,823)
122,097
150,579
(17,232)
(9,766)
104,865
140,813
17.41
28.16
Profit before income tax
Income tax expense
10
Profit attributable to equity holders
Earnings per share - basic (RMB cents)
Annual Report 2009
28
2008
RMB’000
Cost of sales
Other income
6
2009
RMB’000
11
Balance Sheets
As at 30 June 2009
Group
Notes
Company
2009
2008
2009
2008
RMB’000
RMB’000
RMB’000
RMB’000
ASSETS AND LIABILITIES
Non-current assets
Investments in subsidiaries
12
–
–
296,264
–
Property, plant and equipment
13
22,260
24,581
–
–
Land use rights
14
25,384
25,286
–
–
47,644
49,867
296,264
–
15
42,426
34,262
–
–
Current assets
Inventories
Trade receivables
16
57,138
70,808
–
–
Amounts due from subsidiaries
12
–
–
159,206
–
Prepayments, deposits and other receivables
17
428
13,697
–
4,313
Cash and cash equivalents
18
484,297
228,273
–
–
584,289
347,040
159,206
4,313
32,194
30,307
–
–
Current liabilities
Trade payables
Accrued liabilities and other payables
19
23,210
35,923
1,991
744
Amount due to a subsidiary
20
–
–
–
11,135
Bank loans, secured
21
10,500
40,000
–
–
2,059
3,431
–
–
67,963
109,661
1,991
11,879
Net current assets/(liabilities)
516,326
237,379
157,215
(7,566)
Total assets less current liabilities
563,970
287,246
453,479
(7,566)
Net assets/(liabilities)
563,970
287,246
453,479
(7,566)
Provision for tax
EQUITY
Equity attributable to equity holders of the
Company
Share capital
22
220,264
–
220,264
–
Reserves
23
343,706
287,246
233,215
(7,566)
563,970
287,246
453,479
(7,566)
Total equity/(capital deficiency)
Zhou Tao
Director
Annual Report 2009
Gao Feng
Director
29
GROUP
Share
capital
RMB’000
Merger
reserve
(note 23)
RMB’000
Statutory
reserves
(note 23)
RMB’000
Translation
reserve
RMB’000
Retained
profits
RMB’000
Total equity
RMB’000
Balance as at 1 July 2007
–
–
10
17,990
774
100,107
118,881
Currency translation
–
–
–
–
1,452
–
1,452
Net income recognised directly
in equity
–
–
–
–
1,452
–
1,452
Profit for the year
–
–
–
–
–
140,813
140,813
Total recognised income and
expenses for the year
–
–
–
–
1,452
140,813
142,265
Transfer to statutory reserves
–
–
–
22,408
–
(22,408)
–
Issue of shares for loan
capitalisation
–
–
26,100
–
–
–
26,100
Issue of shares at nil-paid
–
–
–
–
–
–
–
Balance as at 30 June 2008
and 1 July 2008
–
–
26,110
40,398
2,226
218,512
287,246
–
–
–
–
(59)
–
(59)
Net expense recognised
directly in equity
–
–
–
–
(59)
–
(59)
Profit for the year
–
–
–
–
–
104,865
104,865
–
–
–
–
(59)
104,865
104,806
Transfer to statutory reserves
Group reorganisation
Proceeds from issue of new
ordinary shares
Share issue expenses
Annual Report 2009
30
Share
premium
RMB’000
–
–
–
17,769
–
(17,769)
–
176,211
–
(176,211)
–
–
–
–
44,053
141,580
–
–
–
–
185,633
–
(13,715)
–
–
–
–
(13,715)
220,264
127,865
(150,101)
58,167
2,167
305,608
563,970
COMPANY
Share capital
RMB’000
Share
premium
RMB’000
Contributed
surplus
RMB’000
As at 12 February 2008 (date of
incorporation)
–
–
–
Issue of shares at nil-paid
–
–
–
–
Total equity/
Translation Accumulated
(capital
reserve
losses
deficiency)
RMB’000
RMB’000
RMB’000
–
–
–
–
–
–
–
–
455
–
455
Net income recognised directly in
equity
–
–
–
455
–
455
Loss for the period
–
–
–
–
(8,021)
(8,021)
expenses for the period
–
–
–
455
(8,021)
(7,566)
Balance as at 30 June 2008 and
1 July 2008
–
–
–
455
(8,021)
(7,566)
–
–
–
(761)
–
(761)
Net expense recognised directly
in equity
–
–
–
(761)
–
(761)
Loss for the year
–
–
–
–
(6,846)
(6,846)
Group reorganisation
Proceeds from issue of new
ordinary shares
–
–
–
(761)
(6,846)
(7,607)
176,211
–
120,523
–
–
296,734
44,053
141,580
–
–
–
185,633
–
(13,715)
–
–
–
(13,715)
220,264
127,865
120,523
(306)
(14,867)
453,479
Annual Report 2009
31
Consolidated Cash Flow Statement
Notes
2009
RMB’000
2008
RMB’000
122,097
150,579
(2,942)
(1,142)
Cash flows from operating activities
Adjustments for :
Interest income
6
Interest expenses
8
2,016
1,823
Depreciation
7
3,335
3,282
Amortisation of land use rights
7
548
540
Net loss on disposal of property, plant and equipment
7
58
36
125,112
155,118
(8,164)
9,975
Operating profit before working capital changes
(Increase)/decrease in inventories
Decrease/(increase) in trade receivables
13,670
(13,352)
Decrease/(increase) in prepayments, deposits and other receivables
13,269
(12,606)
1,887
6,706
(Decrease)/increase in accrued liabilities and other payables
(12,713)
16,546
Cash generated from operations
133,061
162,387
Income taxes paid
(18,604)
(6,335)
Net cash generated from operating activities
114,457
156,052
(646)
–
(1,072)
(6,816)
Increase in trade payables
Cash flows from investing activities
Purchases of land use right
Purchases of property, plant and equipment
Proceeds from disposal of property, plant and equipment
–
185
Interest received
2,942
1,142
Net cash generated from/(used in) investing activities
1,224
(5,489)
Proceeds from issue of new ordinary shares
185,633
–
(13,715)
–
Drawdown of bank loans
20,500
40,000
Repayment of bank loans
(50,000)
–
Advance from an equity holder
–
164
Repayment to an equity holder
–
(1,057)
Cash flows from financing activities
Annual Report 2009
32
Interest paid
(2,016)
(1,823)
Net cash generated from financing activities
140,402
37,284
Net increase in cash and cash equivalents
256,083
187,847
Cash and cash equivalents at beginning of year
228,273
38,974
(59)
1,452
484,297
228,273
484,297
228,273
Effect of foreign exchange rate changes, net
Cash and cash equivalents at end of year
Analysis of balances of cash and cash equivalents
Cash and bank balances
18
1.
CORPORATE INFORMATION
The Company was incorporated in Bermuda on 12 February 2008 under the Bermuda Companies Act as an
exempted company with limited liability under the name of Trump Dragon Distillers Holdings Limited. The address of
its registered office is located at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda. The principal place
of business of the Company is located at 50, Qingfeng Street, Zhoukou City, Henan Province, the People’s Republic
of China (the “PRC”). The Company’s shares were listed on the mainboard of the Singapore Exchange Securities
Trading Limited (the “SGX-ST”) on 5 September 2008.
The principal activity of the Company is investment holding. The principal activities of the Company’s subsidiaries are
set out in note 2 to the financial statements.
The financial statements on pages 28 to 56 have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) which collective term includes all applicable individual International Financial Reporting Standards,
International Accounting Standards and Interpretations issued by the International Accounting Standards Board
(“IASB”) and the International Financial Reporting Interpretation Committee of the IASB.
The financial statements for the year ended 30 June 2009 were approved for issue by the board of directors on
21 September 2009.
2.
GROUP RESTRUCTURING AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
Pursuant to a group restructuring exercise (the “Reorganisation”) to rationalise the corporate structure of the Group
in preparation for the initial public offering of the Company’s shares on the SGX-ST (the “IPO”), on 10 July 2008,
the Company became the holding company of the subsidiaries comprising the Group. This was accomplished by
entering into a share swap agreement with the shareholders of Sea Will International Limited (“Sea Will”), the then
holding company of Trump Dragon Investment Limited (“Trump Dragon Investment”), to acquire the entire issued and
paid-up capital of Sea Will and the consideration was satisfied by (i) the crediting as fully paid, at par, 250,000 nil-paid
ordinary shares of HK$0.40 each in the Company held by Profit Crest International Limited (“Profit Crest”), a company
incorporated in the British Virgin Islands (“BVI”) and wholly-owned by Mr. Gao Feng (“Mr. Gao”), a director and equity
holder of the Company; and (ii) the allotment and issue of an aggregate of 499,750,000 new ordinary shares of the
Company of HK$0.40 each, credited as fully paid to Profit Crest and the pre-invitation investors.
Further details of the Reorganisation are set out in the prospectus dated 26 August 2008 (the “Prospectus”) issued by
the Company. The Company and its subsidiaries now comprising the Group as set out below are principally engaged
in manufacturing and selling of baijiu products.
Date and place
of incorporation/
establishment
Issued and
paid-up share/
registered capital
Equity
interest
held
22 January 2007, Investment holdings, BVI
BVI
US$10,000
100%
5 December 2003,
Hong Kong
Investment holdings,
Hong Kong
HK$10,000
100%
Henan Trump Dragon Siwu Wine
Co., Ltd
(“Henan Trump Dragon”)
(河南祥龙四五酒业有限公司)
31 May 2005,
the PRC
Manufacture and sale of
baijiu products, the PRC
US$35,000,000*
100%
Henan Zhongxin Haifu Ltd
(河南中新海富商貿有限公司)
(“Zhongxin Haifu “)
(Formerly known as Henan Xiang
Long Siwu Wine Industry Marketing
Co., Ltd) (“Henan Xiang Long”)
(河南祥龙四五酒业营销有限公司)
8 May 2006,
the PRC
Sale and marketing of
baijiu products, the PRC
US$500,000
100%
Name
Principal activities and
place of operation
Directly held
Sea Will
Indirectly held:
Trump Dragon Investment
Annual Report 2009
33
2.
GROUP RESTRUCTURING AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
*
Pursuant to the PRC statutory approval on 5 March 2008, the registered capital of Henan Trump Dragon was increased
from US$3,060,000 to US$35,000,000. The incremental registered capital of approximately US$14,061,000 has been paid
up during the year ended 30 June 2009.
The Reorganisation of the Group took place prior to its listing on the SGX-ST on 5 September 2008. Since the
Reorganisation was not completed until 10 July 2008, the effect of the Reorganisation was not reflected in the
Company’s financial statements for the period from 12 February 2008 (date of incorporation) to 30 June 2008.
The Group is regarded as a continuing entity resulting from the Reorganisation since all of the entities which took part
in the Reorganisation were under common control before and immediately after the Reorganisation. Consequently,
immediately after the Reorganisation, there was a continuation of the risks and benefits to the ultimate shareholders
that existed prior to the Reorganisation and therefore the Reorganisation has been accounted for as a reorganisation
under common control in a manner similar to pooling of interests. Accordingly, these consolidated financial statements
have been prepared by using the merger basis of accounting as if the Group had been in existence throughout the
periods presented.
The consolidated income statements, consolidated statements of changes in equity and consolidated cash flow
statements of the Group for the years ended 30 June 2008 and 2009 include the results of operations of the
companies now comprising the Group for the years ended 30 June 2008 and 2009 (or where the companies were
established/incorporated at a date later than 1 July 2007, for the periods from the date of establishment/incorporation
to 30 June 2009) as if the combined entities had been in existence throughout the years presented. The balance
sheet of the Group as at 30 June 2008 has been prepared to present the state of affairs of the companies now
comprising the Group as if the Group had been in existence as at 30 June 2008. All material intra-group transactions
and balances have been eliminated on consolidation.
3.
ADOPTION OF NEW OR AMENDED IFRSs
From 1 July 2008, the Company and its subsidiaries (the “Group”) have adopted all the new and amended IFRSs
which are first effective to the Group’s financial statements for the annual period beginning on 1 July 2008 and
relevant to the Group.
IAS 39 (Amended)
IAS 39 (Amended)
IFRIC - Int 12
IFRIC - Int 13
IFRIC - Int 14
Reclassification of Financial Assets
Embedded Derivatives When Reclassifying Financial Instruments
Service Concession Arrangements
Customer Loyalty Programmes
IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction
These new and amended IFRSs had no material impact on how the results and financial position for the current and
prior periods have been prepared and presented. Accordingly, no prior period adjustment is required.
New or amended IFRSs that have been issued but are not yet effective
The Group has not early adopted the following IFRSs that have been issued but are not yet effective for the year
ended 30 June 2009.
Annual Report 2009
34
IAS 1 (Revised 2007)
Presentation of Financial Statements - Comprehensive Revision Including
Requiring a Statement of Comprehensive Income 2
IAS 1 (Revised 2008)
Presentation of Financial Statements - Amendments Relating to Disclosure of
Puttable Instruments and Obligations Arising on Liquidation 2
IAS 23 (Revised)
Borrowing Costs - Comprehensive Revision to Prohibit Immediate Expensing
IAS 27 (Amended)
Consolidated and Separate Financial Statements - Consequential Amendments
Arising from Amendments to IFRS 3 3
IAS 27 (Revised)
Consolidated and Separate Financial Statements - Amendment Relating to Cost
of an Investment on First-time Adoption 2
IAS 28 (Amended)
Investments in Associates - Consequential Amendments Arising from
Amendments to IFRS 3 3
2
3.
ADOPTION OF NEW OR AMENDED IFRSs (Continued)
New or amended IFRSs that have been issued but are not yet effective (Continued)
IAS 31 (Amended)
Interests in Joint Ventures - Consequential Amendments Arising from
Amendments to IFRS 3 3
IAS 32 (Revised)
Financial Instruments : Presentation - Amendments Relating to Puttable
Instruments and Obligations Arising on Liquidation 2
IAS 39 (Revised July 2008)
Financial Instruments : Recognition and Measurement – Amendments for Eligible
Hedged Items 3
IFRS 1 (Revised May 2008)
First-time Adoption of International Financial Reporting Standards - Amendment
Relating to Cost of an Investment on First-time Adoption 2
IFRS 1 (Revised July 2009)
First-time Adoption of International Financial Reporting Standards - Amendments
Relating to Oil and Gas Assets and Determining Whether an Arrangement
Contains a Lease 5
IFRS 2 (Revised)
Share-based Payment - Amendment Relating to Vesting Conditions and
Cancellations 2
IFRS 2 (Amended)
Share-based Payment - Amendments Relating to Group Cash-settled Sharebased Payment Transactions 5
IFRS 3 (Revised)
Business Combinations - Comprehensive Revision on Applying the Acquisition
Method 3
IFRS 7 (Revised)
Financial Instruments : Disclosures – Amendments Enhancing Disclosures about
Fair Value and Liquidity Risk 2
IFRS 8
Operating Segments
IFRIC 2
Members’ Shares in Cooperative Entities and Similar Instruments – Consequential
Amendments Arising from IAS 32 (revised) 2
IFRIC 15
Agreements for the Construction of Real Estate
IFRIC 16
Hedges of a Net Investment in a Foreign Operation
IFRIC 17
Distributions of Non-cash Assets to Owners
IFRIC 18
Transfers of Assets from Customers
Various
Annual Improvement to IFRS 2008
6
Various
Annual Improvement to IFRS 2009
7
2
2
1
3
4
Notes :
Effective for annual periods beginning on or after 1 October 2008
2
Effective for annual periods beginning on or after 1 January 2009
3
Effective for annual periods beginning on or after 1 July 2009
4
Effective for transfers received on or after 1 July 2009
5
Effective for annual periods beginning on or after 1 January 2010
6
Generally effective for annual periods beginning on or after 1 January 2009 unless otherwise stated in the specific IFRS
7
Generally effective for annual periods beginning on or after 1 January 2010 unless otherwise stated in the specific IFRS
The directors of the Company anticipate that all of the pronouncements will be adopted in the Group’s accounting
policy for the first period beginning after the effective date of the pronouncement.
Among these new standards and interpretations, IAS 1(Revised) Presentation of Financial Statements is expected
to materially change the presentation of the Group’s financial statements. The amendments affect the presentation
of owner changes in equity and introduce a statement of comprehensive income. The Group will have the option
of presenting items of income and expenses and components of other comprehensive income either in a single
statement of comprehensive income with subtotals, or in two separate statements (a separate income statement
followed by a statement of comprehensive income). The amendment does not affect the financial position or results
of the Group but will give rise to additional disclosures.
Annual Report 2009
1
35
3.
ADOPTION OF NEW OR AMENDED IFRSs (Continued)
In addition, IFRS 8 Operating Segments may result in new or amended disclosures. The directors of the Company
are in the process of identifying reportable operating segments as defined in IFRS 8.
The directors of the Company are currently assessing the impact of other new and amended IFRSs upon initial
application. So far, the directors of the Company have preliminarily concluded that the initial application of these
IFRSs is unlikely to have a significant impact on the Group’s results and financial position.
4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial statements have been prepared in accordance with the significant accounting policies set out
below and these accounting policies are in accordance with the IFRSs. The financial statements have been
prepared under the historical cost convention. The preparation of these financial statements in conformity
with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group’s accounting policies. Although these estimates are based
on management’s best knowledge and judgement of current events and actions, actual results may ultimately
differ from those estimates. The areas involving higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in note 5.
(b)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries
made up to 30 June each year.
(c)
Subsidiaries
Subsidiaries are entities over which the Group has the power to control the financial and operating policies
so as to obtain benefits from their activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group. They are excluded
from combination from the date that control ceases.
Except for the Reorganisation refer to in note 2 above which has been accounted for by regarding the
Company as being the holding company of the subsidiaries from the beginning of the earliest period
presented, or since the date when the combining companies first came under the control of the controlling
shareholders, where it is a shorter period, the purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent
of any minority interests. The excess of the cost of acquisition over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of
the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Annual Report 2009
36
Intra-group transactions, balances and unrealised gains on transactions between group companies are
eliminated in preparing the financial statements. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Business combinations arising from transfers of interests in entities that are under the control of the shareholder
that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest
comparative period presented or, if later, at the date that common control was established. The assets and
liabilities acquired are recognised at the carrying amounts recognised previously in the Group’s controlling
shareholder’s consolidated financial statements.
4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c)
Subsidiaries (Continued)
In the Company’s balance sheet, subsidiaries are carried at cost less any impairment loss. The results of
the subsidiaries are accounted for by the Company on the basis of dividends received and receivable at the
balance sheet date.
(d)
Property, plant and equipment
Property, plant and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and impairment losses. The cost of an asset comprises its purchase price and any directly
attributable costs of bringing the asset to its working condition and location for its intended use. Subsequent
costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other costs, such as repairs and maintenance are charged to the income
statement during the financial year in which they are incurred.
Depreciation is calculated on the straight-line basis to write off the cost of property, plant and equipment, less
any estimated residual values, over the following estimated useful lives:
Leasehold buildings
Plant and machinery
Furniture, fixtures and office equipment
Motor vehicles
The shorter of the lease terms and 20
2-5
5
3-5
years
years
years
years
The asset’s depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at
each balance sheet date.
The gain or loss on disposal or retirement of an item of property, plant and equipment recognised in the
income statement is the difference between the sales proceeds and the carrying amount of the relevant asset.
Construction in progress, which represents leasehold buildings under construction, is stated at cost less
impairment losses. Cost comprises direct costs incurred during the years of construction, installation and
testing. No depreciation is provided on construction in progress. Construction in progress is reclassified to
the appropriate category of property, plant and equipment when completed and ready for use.
(e)
Impairment of assets
Interests in subsidiaries, property, plant and equipment and land use rights are subject to impairment testing.
They are tested for impairment whenever there are indications that the asset’s carrying amount may not be
recoverable.
For the purposes of assessing impairment, where an asset does not generate cash inflows largely independent
from those from other assets, the recoverable amount is determined for the smallest group of assets that
generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested
individually for impairment and some are tested at cash-generating unit level.
Impairment loss recognised for cash-generating unit is charged on a pro rata basis to the assets in the cashgenerating unit, except that the carrying value of an asset will not be reduced below its individual fair value less
cost to sell, or value in use, if determinable.
An impairment loss is reversed if there has been a favourable change in the estimates used to determine
the asset’s recoverable amount and only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
Annual Report 2009
An impairment loss is recognised as an expense immediately for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market
conditions less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessment of time
value of money and the risk specific to the asset.
37
4.
(f)
Land use rights
Land use rights represent up-front payments to acquire long term interests in the usage of land. They
are stated at cost less accumulated amortisation and impairment losses, if any. The up-front payments
are amortised over the lease period on a straight-line basis except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased assets.
(g)
Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined using the weighted
average basis, and in the case of work in progress and finished goods, comprise direct materials, direct labour
and an appropriate proportion of overheads. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and applicable selling expenses.
(h)
Financial assets
The Group’s financial assets include amounts due from subsidiaries and trade and other receivables.
All financial assets are recognised when, and only when, the Group becomes a party to the contractual
provisions of the instrument. The Group’s financial assets are recognised initially, and measured at fair value,
plus, directly attributable transaction costs.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire
or are transferred and substantially all of the risks and rewards of ownership have been transferred. At each
balance sheet date, financial assets are reviewed to assess whether there is objective evidence of impairment.
If any such evidence exists, impairment loss is determined and recognised.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the
effective interest method, less any impairment losses. Amortised cost is calculated taking into account any
discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and
transaction cost.
Impairment of financial assets
At each balance sheet date, financial assets are reviewed to determine whether there is any objective evidence
of impairment. If any such evidence exists, the impairment loss is measured and recognised.
Objective evidence of impairment of individual financial assets includes observable data that comes to the
attention of the Group about one or more of the following loss events:
Annual Report 2009
38
-
significant financial difficulty of the debtor;
-
a breach of contract, such as a default or delinquency in interest or principal payments;
-
it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
-
significant changes in the technological, market, economic or legal environment that have an adverse
effect on the debtor; and
-
a significant or prolonged decline in the fair value of an investment in an equity instrument below its
cost.
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has
been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial
recognition). The amount of the loss is recognised in income statement of the year in which the impairment
occurs.
4.
(h)
Financial assets (Continued)
If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed to the extent that it does not result in a carrying amount of the financial asset exceeding what
the amortised cost would have been had the impairment not been recognised at the date the impairment is
reversed. The amount of the reversal is recognised in income statement of the period in which the reversal
occurs.
(i)
Financial liabilities
The Group’s financial liabilities include trade and other payables, amount due to a subsidiary and bank loans.
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
instrument. All interest related charges are recognised as an expense in finance costs in the income statement.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amount is recognised in the income statement.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest
method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Other financial liabilities (including trade and other payables)
Other financial liabilities are recognised initially at their fair value and subsequently measured at amortised cost,
using the effective interest method.
(j)
Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a
reliable estimate of the amount of the obligation can be made. Where the time value of money is material,
provisions are stated at the present value of the expenditure expected to settle the obligation. All provisions
are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
(k)
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the
revenue can be measured reliably, on the following bases:
(i)
from the sale of goods, when the significant risks and rewards of ownership have been transferred
to the buyer, provided that the Group maintains neither managerial involvement to the degree usually
associated with ownership, nor effective control over the goods sold. This is usually taken as the time
when the goods are delivered and the buyer has accepted the goods; and
(ii)
interest income, on a time proportion basis taking into account the principal outstanding and the
effective interest rate applicable.
Annual Report 2009
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of
economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Group are also
disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
39
4.
(l)
Income tax
Income tax comprises current tax and deferred tax.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated
according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the
taxable profit for the period. All changes to current tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Deferred tax is calculated using the liability method on temporary differences at the balance sheet date
between the carrying amounts of assets and liabilities in the financial statements and their respective tax
bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets
are recognised for all deductible temporary differences, tax losses available to be carried forward as well as
other unused tax credits, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor
accounting profit or loss.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
except where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the year the liability is
settled or the asset realised, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised in the income statement or in equity if they relate to
items that are charged or credited directly to equity.
(m)
Retirement benefits scheme
Pursuant to the relevant regulations of the PRC government, the Group participates in a local municipal
government retirement benefits scheme (the “Scheme”), whereby the subsidiaries of the Company in the PRC
are required to contribute a certain percentage of the basic salaries of their employees to the Scheme to
fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits
obligations of all existing and future retired employees of the PRC subsidiaries. The only obligation of the Group
with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above.
Contributions under the Scheme are charged to the consolidated income statement as incurred. There are no
provisions under the Scheme whereby forfeited contributions may be used to reduce future contributions.
(n)
Annual Report 2009
40
Foreign currency translation
The functional currency of the Company is Hong Kong dollars (“HK$”). The financial statements have been
presented in Renminbi (“RMB”), which is the functional currency of the principal subsidiaries of the Group
whose operations are principally conducted in the PRC. Assets and liabilities of the Company have been
converted into RMB at the closing rate at the balance sheet date. Income and expenses of the Company have
been translated into RMB at the exchange rates ruling at the transaction date, or at the average rates over the
reporting period provided that the exchange rates do not fluctuate significantly. Any differences arising from
this procedure have been dealt with separately in the translation reserve in equity.
In the individual financial statements of the consolidated entities, foreign currency transactions are translated
into the functional currency of the individual entity using the exchange rates prevailing at the dates of the
transactions. At balance sheet date, monetary assets and liabilities denominated in foreign currencies are
translated at the foreign exchange rates ruling at the balance sheet date. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the balance sheet retranslation of monetary assets
and liabilities are recognised in the income statement. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
4.
(n)
Foreign currency translation (Continued)
In the consolidated financial statements, all individual financial statements of foreign operations, originally
presented in a currency different from the Group’s presentation currency, have been converted into RMB.
Assets and liabilities have been translated into RMB at the closing rate at the balance sheet date. Income
and expenses have been translated into RMB at the exchange rates ruling at the transaction date, or at the
average rates over the reporting period provided that the exchange rates do not fluctuate significantly. Any
differences arising from this procedure have been dealt with separately in the translation reserve in equity.
(o)
Share capital
Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have
been issued. Any transaction costs associated with the issuing of shares are deducted from the proceeds (net
of any related income tax benefits) to the extent that they are incidental cost directly attributable to the equity
transaction.
(p)
Cash and cash equivalents include cash and deposits with bank and other financial institutions, that are shortterm, highly liquid investments readily convertible to known amounts of cash subjected to an insignificant risk
of change in value.
(q)
Related parties
A party is considered to be related to the Group if:
(r)
(i)
directly, or indirectly through one or more intermediaries, the party (1) controls, is controlled by, or is
under common control with, the Group; (2) has an interest in the Group that gives it significant influence
over the Group; or (3) has joint control over the Group;
(ii)
the party is an associate;
(iii)
the party is a jointly-controlled entity;
(iv)
the party is a member of the key management personnel of the Group or its parent;
(v)
the party is a close member of the family of any individual referred to in (i) or (iv);
(vi)
the party is an entity that is controlled, jointly controlled or significantly influenced by or for which
significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv)
or (v); or
(vii)
the party is a post-employment benefit plan for the benefit of employees of the Group, or of any entity
that is a related party of the Group.
Operating leases
Where the Group has the use of assets held under operating leases, payments made under the leases are
charged to the income statement on a straight line basis over the lease terms except where an alternative
basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease
incentives received are recognised in the income statement as an integral part of the aggregate net lease
payments made. Contingent rental are charged to the income statement in the accounting period in which
they are incurred.
(s)
Segment reporting
No separate analysis of segment information by business or geographical segments is presented as the
Group’s major business comprises manufacture and sales of baijiu products in the PRC. The Group’s revenue,
assets and capital expenditure are principally attributable to a single geographical region, which is the PRC.
Annual Report 2009
Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as
operating leases.
41
5.
CRITICAL ACCOUNTING ESTIMATES
Estimates are continually evaluated and are based on historical experiences and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
(i)
Depreciation and amortisation
The Group depreciates the property, plant and equipment and amortises the land use rights in accordance
with the accounting policies stated in note 4(c) and note 4(e) respectively. The estimated useful lives reflect the
management’s estimate of the periods that the Group intends to derive future economic benefits from the use
of these assets.
(ii)
Net realisable value of inventories
These estimates are based on the current market condition and the historical experience of selling products
of similar nature. It could change significantly as a result of competitor actions in response to severe industry
cycles. Management will reassess the estimations at the balance sheet date.
(iii)
Impairment and write off of receivables
The Group’s management determines impairment of receivables on a regular basis. This estimate is based on
the credit history of the Group’s debtors and the current market condition. When the Group’s management
determines that there are indicators of significant financial difficulties of the debtors such as default or
delinquency in payments, allowance for impairment are estimated. The Group’s management reassesses the
impairment of receivables at the balance sheet date.
When the Group’s management determines the debtors are uncollectible, they are written off against the
allowance account for receivables. Any amount held in the allowance account in respect of that debtors are
reversed.
(iv)
Provision for taxes
The Group is mainly subject to various taxes in the PRC including corporate income tax and consumption
tax. Significant judgement is required in determining the amount of the provision for taxes and the timing of
payment of related taxes. The Group recognises liabilities for anticipated tax based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the tax provisions in the period in which such determination
is made.
(v)
Annual Report 2009
42
Impairment of assets (other than financial assets)
The Group assesses whether there are any indicators of impairment for assets at each reporting date. They
are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When
value in use calculations are undertaken, management estimates the expected future cash flows from the
asset or cash-generating unit and determines a suitable discount rate in order to calculate the present value of
those cash flows.
6.
REVENUE AND OTHER INCOME
Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts. An analysis
of the Group’s revenue and other income is as follows:
Group
2009
RMB’000
2008
RMB’000
702,915
717,291
2,942
1,142
110
372
3,052
1,514
Revenue
Sale of goods
Other income
Interest income on financial assets stated at amortised cost
Miscellaneous
7.
OPERATING PROFIT
The Group’s operating profit is arrived at after charging:
Group
Cost of sales*
Depreciation
Amortisation of land use rights
Net foreign exchange loss
Minimum lease payments under operating leases for leasehold buildings
2009
RMB’000
2008
RMB’000
476,414
454,765
3,335
3,282
548
540
3,960
–
345
437
3,584
888
24,804
22,956
2,726
1,804
58
36
Staff costs:
- Directors’ remuneration
- Salaries and wages
- Retirement scheme contributions
Net loss on disposal of property, plant and equipment
Cost of sales comprises cost of inventories recognised as expense and consumption tax. The consumption
tax included in the Group’s cost of sales amounted to RMB 160,221,000 (2008: RMB163,221,000). The
consumption tax charged to the Group is in proportion to the revenue and volume of baijiu products sold
by the Group. The Group’s cost of inventories recognised as expense included in the Group’s cost of sales
amounted to RMB316,193,000 (2008: RMB291,544,000).
#
The independent auditors received non-audit fee of approximately RMB529,000 (2008: RMB2,413,000) for
acting as the reporting accountants in respect of the preparation of the initial public offering of the Company’s
share on the SGX-ST on 5 September 2008. In addition, the independent auditors are entitled to receive nonaudit fee of approximately RMB88,000 for performing certain agreed-upon procedures during the year ended
30 June 2009. Save as disclosed above, no other non-audit fees were paid to the auditors by the Group or
the Company.
Annual Report 2009
*
43
8.
FINANCE COSTS
Group
2009
RMB’000
2008
RMB’000
2,016
1,823
Interest charges on bank loans stated at amortised cost
9.
DIRECTORS’ REMUNERATION
For the years ended 30 June 2008 and 2009, the remuneration of the directors of the Company analysed into the
following bands is disclosed in compliance with paragraph 1207(11) of Chapter 12 of the Listing Manual of SGX-ST:
2009
Below S$250,000 (equivalent to RMB1,177,000)
Executive directors
Non-executive
directors
Total
4
3
7
4
3
7
2008
Below S$250,000 (equivalent to RMB1,329,000)
10.
INCOME TAX EXPENSE
Group
Current tax:
PRC income tax
2009
RMB’000
2008
RMB’000
17,232
9,766
The provision for PRC income tax is calculated based on the statutory income tax rate as determined in accordance
with the relevant PRC income tax rules and regulations for the financial years presented.
Pursuant to the PRC enterprise income tax law passed by the Tenth National People’s Congress on 16 March 2007,
the new enterprise income tax rates for domestic and foreign enterprises were unified at 25% and were effective from
1 January 2008. Subsequent to 16 March 2007, the implementation measure on transitional policy of preferential tax
rate was announced and Henan Trump Dragon’s entitlement to the Tax Holiday is still applicable. Upon expiry of the
Tax Holiday, the new PRC corporate income tax rate of 25% is applicable to Henan Trump Dragon.
In accordance with various PRC statutory approval documents, Henan Trump Dragon was exempted from income
tax commencing 1 January 2006 for the first two profit-making calendar years and a 50% reduction in the income tax
for the next three calendar years (“Tax Holiday”). The applicable rate for Henan Trump Dragon was 12.5% during the
period from 1 January 2008 to 30 June 2008 and the financial year ended 30 June 2009.
Annual Report 2009
44
The applicable rate for Zhongxin Haifu was the statutory rate of 33% during the period from 1 July 2007 to 31
December 2007 and 25% during the period from 1 January 2008 to 30 June 2008 and the financial year ended 30
June 2009.
At the balance sheet date, deferred tax liabilities amounted to approximately RMB9,254,000 (2008: RMB3,404,000) in
respect of the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries have
not been recognised. No deferred tax liabilities have been recognised in respect of these differences because the
Group is in a position to control the dividend policies of these subsidiaries and it is probable that such differences will
not reverse in the foreseeable future.
10.
INCOME TAX EXPENSE (Continued)
Reconciliation between income tax expense and accounting profit at applicable tax rates is as follows:
Group
Tax at the applicable tax rate of 25% (2008: 33%)
2008
RMB’000
122,097
150,579
30,524
49,691
Effect of non-taxable and non-deductible items, net
3,175
2,149
Effect of tax exemption of a subsidiary of the Group
–
(26,403)
(16,452)
(15,551)
(15)
(120)
17,232
9,766
Rate differential on PRC operations
Others
Income tax expense
11.
2009
RMB’000
EARNINGS PER SHARE
The calculation of basic earnings per share is based on the profit attributable to the equity holders of the Company
of approximately RMB104,865,000 (2008: RMB140,813,000) and on the weighted average of 602,397,260 (2008:
500,000,000) ordinary shares during the year. In determining the weighted average number of shares, the Company’s
pre-invitation share capital of 500,000,000 ordinary shares was assumed to be in issue throughout the year ended 30
June 2008.
Diluted earnings per share for the years ended 30 June 2008 and 2009 were not presented as there was no potential
ordinary share in existence during the years.
12.
INVESTMENTS IN SUBSIDIARIES
Company
2009
2008
RMB’000
RMB’000
Unlisted shares, at cost
296,734
–
(470)
–
296,264
–
The amounts due from subsidiaries are unsecured, interest-free and repayable on demand.
Particulars of the subsidiaries at the balance sheet date are set out in note 2.
Annual Report 2009
45
13.
PROPERTY, PLANT AND EQUIPMENT
GROUP
Plant and
machinery
RMB’000
Furniture,
fixtures
and office
equipment
RMB’000
Motor
vehicles
RMB’000
Construction
in progress
RMB’000
Total
RMB’000
15,975
6,548
570
1,750
1,165
26,008
(2,413)
(2,129)
(44)
(154)
–
(4,740)
13,562
4,419
526
1,596
1,165
21,268
13,562
4,419
526
1,596
1,165
21,268
–
2,827
2
443
3,544
6,816
4,709
–
–
–
(4,709)
–
Leasehold
buildings
RMB’000
At 30 June 2007
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2008
Opening net carrying amount
Additions
Transfer in/(out)
Disposals
Depreciation
Closing net carrying amount
(97)
(124)
–
–
–
(221)
(1,471)
(1,339)
(111)
(361)
–
(3,282)
16,703
5,783
417
1,678
–
24,581
20,575
9,162
572
2,193
–
32,502
(3,872)
(3,379)
(155)
(515)
–
(7,921)
16,703
5,783
417
1,678
–
24,581
16,703
5,783
417
1,678
–
24,581
209
818
–
45
–
1,072
At 30 June 2008
Cost
Net carrying amount
Year ended 30 June 2009
Additions
Disposals
Depreciation
–
(58)
–
–
–
(58)
(1,435)
(1,407)
(109)
(384)
–
(3,335)
15,477
5,136
308
1,339
–
22,260
20,784
9,857
572
2,238
–
33,451
(5,307)
(4,721)
(264)
(899)
–
(11,191)
15,477
5,136
308
1,339
–
22,260
At 30 June 2009
Cost
Net carrying amount
All property, plant and equipment held by the Group are located in the PRC.
Annual Report 2009
46
As at 30 June 2009, the Group’s leasehold buildings at the net carrying amount of approximately RMB5,455,000
were pledged to secure bank loans (note 21).
As at 30 June 2008, the Group’s leasehold buildings at the net carrying amount of approximately RMB 10,604,000
were pledged to secure a bank loan facility of up to RMB 20 million (the “RMB20 Million Facility”). As at 30 June
2008, RMB10 million has been drawn down by the Group (note 21).
14.
LAND USE RIGHTS
Group
2009
2008
RMB’000
RMB’000
26,903
26,903
At beginning of the year
Cost
Accumulated amortisation
(1,617)
(1,077)
Net carrying amount
25,286
25,826
25,286
25,826
Additions
646
–
Amortisation
(548)
(540)
25,384
25,286
27,549
26,903
For the year
At end of the year
Cost
Accumulated amortisation
(2,165)
(1,617)
Net carrying amount
25,384
25,286
Land use rights represented the Group’s leasehold interests under operating leases in land located in the PRC and
are held under medium-term leases.
As at 30 June 2009, the Group’s land use right at the net carrying amount of approximately RMB8,936,000 was
pledged to secure bank loans (note 21).
As at 30 June 2008, the Group’s land use rights at the net carrying amount of approximately RMB 16,186,000 were
pledged to secure the RMB20 Million Facility (note 21). Subsequent to 30 June 2008, the Group’s remaining land use
right at the net carrying amount of approximately RMB9,100,000 as at 30 June 2008 was pledged to secure the new
bank loan of RMB8 million.
The Group was in the process of obtaining the land use right certificate for the Group’s leasehold land with an
aggregate net book value of approximately RMB637,000 as at 30 June 2009. In the opinions of the Company’s
directors and the Group’s PRC legal advisors, there will be no legal obstacle for the Group to obtain the relevant land
use right certificate.
15.
INVENTORIES
Raw materials
Work in progress
Finished goods
2008
RMB’000
5,330
7,560
31,636
22,509
5,460
4,193
42,426
34,262
Annual Report 2009
Group
2009
RMB’000
47
16.
TRADE RECEIVABLES
Group
Trade receivables
2009
RMB’000
2008
RMB’000
57,138
70,808
The Group has a policy of allowing trade customers with credit normally ranged from 30 to 90 days. Overdue
balances are reviewed regularly by the Group’s management.
As at the balance sheet dates, the Group had no significant balances of trade receivables that were past due but not
impaired. The directors of the Company are of the opinion that no allowance for impairment of trade receivables is
necessary as there was no recent history of default in respect of these trade debtors.
17.
PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
Group
18.
Company
2009
2008
RMB’000
RMB’000
2009
RMB’000
2008
RMB’000
Prepayments
210
13,313
–
4,313
Other receivables
112
258
–
–
Deposits
106
126
–
–
428
13,697
–
4,313
CASH AND CASH EQUIVALENTS
Group
2009
RMB’000
2008
RMB’000
Cash at bank and in hand
304,297
228,273
Short-term bank deposit
180,000
–
484,297
228,273
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term bank deposit is made
for three months depending on the immediate cash requirements of the Group, and earns interest at the fixed rate of
1.7% per annum as at 30 June 2009.
Annual Report 2009
48
The Group had cash and bank balances denominated in RMB amounting to approximately RMB483,866,000 (2008:
RMB228,119,000) which were deposited with banks and other financial institutions in the PRC and held in hand.
The RMB is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations
and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to
exchange RMB for foreign currencies through banks that are authorised to conduct foreign exchange business.
19.
ACCRUED LIABILITIES AND OTHER PAYABLES
Group
Accrued liabilities
Other payables
Company
2009
2008
RMB’000
RMB’000
2009
RMB’000
2008
RMB’000
7,918
9,952
15,292
25,971
377
–
23,210
35,923
1,991
744
1,614
744
As at 30 June 2009, the Group’s other payables included the amount of approximately RMB3,167,000 (2008:
RMB8,671,000) due to Mr. Gao, which mainly represented certain expenses paid on behalf of the Group by Mr. Gao.
The amount is unsecured, interest-free and repayable on demand.
20.
AMOUNT DUE TO A SUBSIDIARY
The balance represented amount due to Trump Dragon Investment, which then became the subsidiary of the
Company pursuant to the Reorganisation during the year ended 30 June 2009 (note 2). The balance is unsecured,
interest-free and repayable on demand.
21.
BANK LOANS, SECURED
Group
Within one year
2009
RMB’000
2008
RMB’000
10,500
40,000
As at 30 June 2009, the bank loans comprised the followings:
The Group’s interest bearing loans of RMB10,500,000 are secured by i) the Group’s leasehold buildings and land use
right as detailed in note 13 and note 14 respectively. The bank loans bear a fixed interest rate of 7.20% per annum
as at 30 June 2009.
As at 30 June 2008, the bank loans comprised the followings:
The Group’s interest bearing loan of RMB30,000,000 is secured by i) charge over property given by 华明(郑
州)置业有限公司 (“华明(郑州)置业”); ii) corporate guarantees given by 河南省新世家置业有限公司 (“河南省
新世家置业”) and 河南鼎盛实业有限公司 (“河南鼎盛实业”) and iii) personal guarantee by Mr. Gao. Mr. Gao
was director and equity holder of 河南省新世家置业, 华明(郑州)置业 and 河南鼎盛实业. The bank loan bears
a floating interest rate of 7.47% per annum as at 30 June 2008 (“Charge and Guarantees”). Subsequent to
30 June 2008, the loan of RMB30,000,000 has been fully repaid and the above Charge and Guarantees have
been discharged.
(b)
The Group’s interest bearing loan of RMB10,000,000 is secured by i) the Group’s leasehold buildings and land
use rights as detailed in note 13 and note 14 respectively and ii) personal guarantee by Mr. Gao. The bank
loan bears a floating interest rate of 7.47% per annum as at 30 June 2008.
The bank loans as at 30 June 2008 were fully repaid by the Group during the year ended 30 June 2009.
Annual Report 2009
(a)
49
22.
SHARE CAPITAL
Number of
ordinary shares
(in ‘000)
Notes
Par value
RMB’000
On 12 February 2008 (date of incorporation)
(a)
HK$0.10
1,000
92
Consolidation of shares
(b)
HK$0.40
(750)
–
250
92
999,750
371,147
1,000,000
371,239
Authorised:
At 30 June 2008 and 1 July 2008
Increase in authorised share capital
(c)
HK$0.40
At 30 June 2009
Issued:
Allotted and issued nil-paid on 28 February 2008
(a)
HK$0.10
1,000
–
Consolidation of shares
(b)
HK$0.40
(750)
–
250
–
At 30 June 2008 and 1 July 2008
Allotted and issued ordinary shares on 10 July 2008
(c)
HK$0.40
499,750
176,211
Issue of new ordinary shares by initial public offerings
(d)
HK$0.40
125,000
44,053
625,000
220,264
At 30 June 2009
(a)
As at the date of incorporation, the authorised share capital of the Company was HK$100,000 divided into
1,000,000 ordinary shares of HK$0.10 each. On 28 February 2008, 1,000,000 ordinary shares of HK$0.10
each in the capital of the Company were allotted and issued nil-paid to Profit Crest.
(b)
Pursuant to written resolutions dated 30 June 2008 in lieu of a special general meeting, the then sole
shareholder of the Company approved the consolidation of every four ordinary shares of HK$0.10 each into
one ordinary share of HK$0.40 each.
(c)
Subsequent to 30 June 2008, pursuant to written resolutions dated 10 July 2008 in lieu of a special general
meeting, the then sole shareholder of the Company approved, inter alia, the following:
(d)
Annual Report 2009
50
(i)
the increase in the authorised share capital of the Company from HK$100,000 divided into 250,000
ordinary shares of HK$0.40 each to HK$400,000,000 divided into 1,000,000,000 ordinary shares of
HK$0.40 each; and
(ii)
the crediting as fully paid of the 250,000 nil-paid shares held by Profit Crest and the allotment and issue
of 499,750,000 new shares to the shareholders of Sea Will, as part of the Company’s Reorganisation;
Pursuant to written resolutions dated 10 July 2008 in lieu of a special general meeting, the shareholders
approved the allotment and issue of 125,000,000 new shares, which when issued and fully paid-up, shall rank
pari passu in all respects with the existing issued and paid-up shares. On 5 September 2008, the Company
allotted and issued 125,000,000 ordinary shares of HK$0.40 each upon listing of its shares on the mainboard
of the SGX-ST at a price of S$0.31 per share.
23.
RESERVES
Group
(a)
Statutory reserves
Statutory reserves comprise statutory surplus reserve and enterprise expansion reserve of the subsidiaries
established in the PRC. In accordance with the relevant laws and regulations of the PRC, the Group may be
required to transfer 10% of its profit after tax to the statutory surplus reserve until the reserve balance reaches
50% of the respective registered capital. Such reserve may be used to reduce any losses incurred or for
capitalisation as paid-up capital. In addition, the Group may be required to make an allocation from its profit
after tax to the enterprise expansion reserve. The enterprise expansion reserve may be used for expansion of
production facilities or increase in registered capital.
(b)
Merger reserve
The merger reserve of the Group represents the difference between the nominal value of the issued capital
of the Company and the nominal value of the issued capital and share premium of the subsidiaries acquired
pursuant to the Reorganisation.
Company
The contribution surplus of the Company arose as a result of the Reorganisation and represented the excess of the
consolidated net assets of the subsidiaries then acquired over the then nominal value of the Company’s shares issued
in exchange thereof.
24.
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
In addition to those disclosed elsewhere in the consolidated financial statements, the Group had the following major
non-cash transaction:
During the year ended 30 June 2008, Sea Will issued 9,990 ordinary shares of US$1.00 each as consideration of
capitalising an outstanding amount of approximately HK$27,868,000 (equivalent to approximately RMB26,100,000)
owing to Mr. Gao pursuant to the Reorganisation.
25.
COMMITMENTS - GROUP
(i)
Capital commitments
The Group had the following outstanding capital commitments:
Group
2009
RMB’000
2008
RMB’000
1,000
2,073
–
702
1,000
2,775
Contracted, but not provided for, in respect of :
Annual Report 2009
- construction in progress
- acquisition of plant and machinery
51
25.
COMMITMENTS - GROUP (Continued)
(ii)
Operating leases commitments
The total future minimum lease payments of the Group under non-cancellable operating leases for leasehold
buildings are as follows:
Group
2009
RMB’000
Within one year
In the second to fifth years
26.
2008
RMB’000
230
232
–
200
230
432
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group does not have written risk management policies and guidelines. However, the board of directors meets
periodically to analyse and formulate measures to manage the Group’s exposure to market risk (including principally
changes in interest rates and currency exchange rates), credit risk and liquidity risk. Generally, the Group employs
conservative strategies regarding its risk management. As the Group’s exposure to market risk is kept at a minimum
level, the Group has not used any derivatives or other instruments for hedging purposes. The Group does not hold or
issue derivatives financial instruments for trading purposes.
(i)
Credit risk
The maximum credit risk exposure of the financial assets is summarised in note (vi) below.
The Group’s cash and bank balances, which are mainly deposits with the authorised PRC banks, comprised
the aggregate bank balance of approximately RMB480,505,000 (2008: RMB225,428,000) maintained with an
authorised PRC bank.
The Group has no other significant concentration of credit risk arising from its ordinary course of business due
to its relatively large customer base.
There is no requirement for collateral by the Group.
(ii)
Foreign currency risk
The Group does not have significant exposure to foreign currency risk, as transactions are predominately in
RMB. Accordingly, the Group does not use derivative financial instruments to hedge its foreign currency risk.
(iii)
Annual Report 2009
52
Fair value
The fair value of the Group’s current financial assets and liabilities are not materially different from their carrying
amounts because of the immediate or short term maturity.
26.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(iv)
Interest rate risk
During the year ended 30 June 2008, the Group’s exposure to interest rate risk mainly arises on deposits with
banks and other financial institutions and bank loans at floating rates. The Group has not used any derivative
contracts to hedge its exposure to interest rate risk. The Group has not formulated a policy to manage the
interest rate risk.
During the year ended 30 June 2009, the Group does not have significant exposure to interest rate risk
in respect of the Group’s borrowings as they are mainly at fixed rates and stated at amortised cost. The
Group’s exposure to interest rate risk mainly arises on bank deposits but the exposure is not significant. The
Group has not used any derivative contracts to hedge its exposure to interest rate risk. The Group has not
formulated a policy to manage the interest rate risk.
Interest rate sensitivity
If the interest rates had been increased/decreased by 100 basis points at the beginning of the year and all
other variables were held constant, the Group’s profit after tax and retained profits would increase/decrease by
approximately RMB2,288,000 (2008: RMB1,164,000). The assumed changes have no impact on the Group’s
other components of equity.
The 100 basis point increase or decrease represents management’s assessment of a reasonably possible
change in interest rates over the period until the next annual balance sheet date.
(v)
Liquidity risk
The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management
to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The Group relies on
internally generated funding and borrowings as significant sources of liquidity.
The maturity profile of the Group’s financial liabilities as at the balance sheet dates, based on the contracted
undiscounted payments, was as follows:
Group:
2009
3 to less than
12 months
RMB’000
On demand
RMB’000
Less than
3 months
RMB’000
Trade payables
19,021
13,173
–
32,194
Other payables
3,167
52
–
3,219
Bank loans, secured
Total
RMB’000
10,691
–
10,691
23,916
–
46,104
On demand
RMB’000
Less than 3
months
RMB’000
3 to less than
12 months
RMB’000
Total
RMB’000
2008
Trade payables
21,940
8,367
–
30,307
Other payables
8,662
2,184
–
10,846
–
30,591
10,535
41,126
30,602
41,142
10,535
82,279
Bank loans, secured
Annual Report 2009
–
22,188
53
26.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(v)
Liquidity risk (Continued)
Company:
Other payables
Amount due to a subsidiary
(vi)
On demand
RMB’000
Less than
3 months
RMB’000
377
–
On demand
RMB’000
Less than
3 months
RMB’000
11,135
–
2009
3 to less than
12 months
RMB’000
–
Total
RMB’000
377
2008
3 to less than
12 months
RMB’000
–
Total
RMB’000
11,135
Summary of financial assets and liabilities by category
The carrying amounts of the Group’s financial assets and liabilities as recognised at the balance sheet dates
are also analysed into the following categories. See notes 4(g) and 4(h) for explanations about how the
category of financial instruments affects their subsequent measurement.
Group
Company
2009
2008
RMB’000
RMB’000
2009
RMB’000
2008
RMB’000
- Trade receivables
57,138
70,808
–
–
- Other receivables
112
258
–
–
Financial assets
Loans and receivables
- Amounts due from subsidiaries
–
–
159,206
–
57,250
71,066
159,206
–
484,297
228,273
–
–
541,547
299,339
159,206
–
2009
RMB’000
2008
RMB’000
Company
2009
2008
RMB’000
RMB’000
- Trade payables
32,194
30,307
–
–
- Other payables
3,219
10,846
377
–
Group
Annual Report 2009
54
Financial liabilities
Financial liabilities measured at
amortised cost
- Amount due to a subsidiary
- Bank loans, secured
–
–
–
11,135
10,500
40,000
–
–
45,913
81,153
377
11,135
27.
CAPITAL MANAGEMENT
The Group’s objectives when managing capital include:
(i)
To safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns for
shareholders and benefits for other stakeholders;
(ii)
To support the Group’s stability and growth; and
(iii)
To provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and
shareholder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. The Group currently does not adopt any formal dividend policy.
The Group sets the amount of equity capital in proportion to its overall financing structure. The Group manages the
capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics
of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or debts, or sell assets to reduce
debt.
The capital-to-overall financing ratio at the balance sheet date was as follows:
Group
2009
2008
RMB’000
RMB’000
563,970
287,246
10,500
40,000
53.7 times
7.2 times
Capital:
Total equity
Overall financing:
Bank loans, secured
Capital-to-overall financing ratio
Annual Report 2009
55
28.
RELATED PARTY TRANSACTIONS
(a)
In addition to the transactions and balances detailed elsewhere in the consolidated financial statements, the
Group had the following transactions with related parties:
2009
2008
Notes
RMB’000
RMB’000
Sales to a related company
(i)
–
67
Rental expenses paid to a related company
(ii)
200
272
Notes:
(i)
The amount represented sales to a related company, namely 河南中通汽车销售服务有限公司, in which Mr. Gao
was an equity holder. The sales were made with reference to the terms negotiated between both parties.
(ii)
During the year ended 30 June 2008, the amount represented rental expenses paid to the related companies,
namely 河南省新世家置业 and 华明(郑州)置业. The rental expenses were made according to the terms of the
lease agreements.
During the year ended 30 June 2009, the amount represented rental expenses paid to a related company, namely
华明(郑州)置业. The rental expenses were made according to the terms of the lease agreements.
(b)
Compensation of key management personnel
Included in staff costs are key management personnel compensation and comprise the following:
- Short term employee benefits
- Retirement scheme contributions
(c)
Annual Report 2009
56
2009
2008
RMB’000
RMB’000
5,048
1,704
85
91
5,133
1,795
Pursuant to an agreement dated 1 December 2007, certain trademarks which were used as brand name of
the Group’s products were transferred from Mr. Gao to the Group at nil consideration.
As at 9 September 2009
Authorised share capital
:
HK$400,000,000
Issued and fully paid-up capital
:
HK$250,000,000
Class of shares
:
Ordinary shares of HK$0.40 each with one vote per share
DISTRIBUTION OF SHAREHOLDINGS
NO. OF
SHAREHOLDERS
SIZE OF SHAREHOLDINGS
%
NO. OF SHARES
%
1
-
999
0
0.00
0
0.00
1,000
-
10,000
129
68.25
405,000
0.07
10,001
-
1,000,000
47
24.87
5,941,000
0.95
AND ABOVE
13
6.88
618,654,000
98.98
189
100.00
625,000,000
100.00
NO. OF SHARES
%
1,000,001
TOTAL
TWENTY LARGEST SHAREHOLDERS
NO.
NAME
UOB KAY HIAN PTE LTD
379,346,000
60.70
2
PROFIT CREST INTERNATIONAL LIMITED
175,000,000
28.00
3
CITIBANK NOMINEES SINGAPORE PTE LTD
32,230,000
5.16
4
LIM & TAN SECURITIES PTE LTD
5,628,000
0.90
5
MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD
5,625,000
0.90
6
TANG KOK ONN SIMON
5,224,000
0.84
7
CIMB-GK SECURITIES PTE. LTD.
4,178,000
0.67
8
DBS VICKERS SECURITIES (S) PTE LTD
3,124,000
0.50
9
YUAN MO
2,132,000
0.34
10
HAH TIING SIU
2,000,000
0.32
11
LOW MEI LING EMILY
1,730,000
0.28
12
HENRY QUEK PENG HOCK
1,400,000
0.22
13
LEONG WOON POH TERRY
1,037,000
0.17
14
LEE SHIEH-PEEN CLEMENT
1,000,000
0.16
15
OCBC SECURITIES PRIVATE LIMITED
724,000
0.12
16
HL BANK NOMINEES (S) PTE LTD
547,000
0.09
17
TAN HONG KIAT
288,000
0.05
18
HENG TIN MENG
282,000
0.05
19
YANG NAN
250,000
0.04
20
KIM ENG SECURITIES PTE. LTD.
TOTAL
213,000
0.03
621,958,000
99.54
Annual Report 2009
1
57
As at 9 September 2009
Substantial Shareholders
(As recorded in the Register of Substantial Shareholders)
Profit Crest International Limited
(1)
Gao Feng
CIM XIII Limited
(2)
Direct Interest
%
Deemed Interest
%
175,000,000
28.0
175,000,000
28.0
–
–
350,000,000
56.0
–
–
49,500,000
7.92
Notes:
1.
Profit Crest International Limited is an investment holding company incorporated in the BVI under the BVI Business Companies
Act, and is wholly-owned by our Executive Chairman, Mr Gao Feng. Profit Crest International Limited has a beneficial interest
in 175,000,000 shares held by UOB Kay Hian Pte Ltd. Mr Gao Feng is deemed interested in all the Shares held by Profit Crest
International Limited.
2.
CIM XIII Limited has a beneficial interest in 49,500,000 shares held by UOB Kay Hian Pte Ltd.
TREASURY SHARES - RULE 1207(9)(F)
The Company does not hold any Treasury Shares.
PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS
Approximately 36.08% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied
with Rule 723 of the Listing Manual of the SGX-ST.
Annual Report 2009
58
NOTICE IS HEREBY GIVEN that the Annual General Meeting of TRUMP DRAGON DISTILLERS HOLDINGS LIMITED (the
“Company”) will be held at Ocean 7, Level 2, Pan Pacific Singapore, 7 Raffles Boulevard, Marine Square, Singapore 039595
on Friday, 23 October 2009 at 3.00pm for the following purposes:
AS ORDINARY BUSINESS
1.
To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 30 June
2009 together with the Auditors’ Report thereon.
(Resolution 1)
2.
To re-elect the following Directors retiring pursuant to Bye-law 85 of the Company’s Bye-laws:
Mr Chia Seng Hee, Jack
Mr Tan Siok Sing
(Resolution 2)
(Resolution 3)
Mr Chia Seng Hee, Jack will, upon re-election as a Director of the Company, remain Chairman of the Nominating
and Remuneration Committees and a member of the Audit Committee and will be considered independent for the
purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
Mr Tan Siok Sing will, upon re-election as a Director of the Company, remain Chairman of the Audit Committee and
a member of the Nominating and Remuneration Committees and will be considered independent for the purposes of
Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
3.
To approve the payment of Directors’ fees of S$150,000 for the year ended 30 June 2009.
(Resolution 4)
4.
To approve the payment of Directors’ fees of S$150,000 for the year ending 30 June 2010, payable half yearly in
arrears.
[See Explanatory Note (i)]
(Resolution 5)
5.
To re-appoint Grant Thornton, Certified Public Accountants, Hong Kong, as the Company’s Auditors and to authorise
the Directors to fix their remuneration.
(Resolution 6)
6.
To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
7.
Share Issue Mandate
That pursuant to Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”),
authority be given to the Directors of the Company to issue shares (“Shares”) whether by way of rights, bonus or
otherwise, and/or make or grant offers, agreements or options (collectively, “Instruments”) that might or would require
Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants,
debentures or other instruments convertible into Shares at any time and upon such terms and conditions and to such
persons as the Directors may, in their absolute discretion, deem fit provided that:
the aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or
granted pursuant to this Resolution) does not exceed fifty percent (50%) of the total number of issued shares
(excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, of which
the aggregate number of Shares and convertible securities to be issued other than on a pro rata basis to all
shareholders of the Company shall not exceed twenty percent (20%) of the total number of issued shares
(excluding treasury shares) in the capital of the Company;
Annual Report 2009
(a)
59
(b)
8.
9.
for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (a)
above, the total number of issued shares (excluding treasury shares) shall be based on the total number of
issued shares (excluding treasury shares) in the capital of the Company as at the date of the passing of this
Resolution, after adjusting for:
(i)
new shares arising from the conversion or exercise of convertible securities;
(ii)
new shares arising from exercising share options or vesting of Share awards outstanding or subsisting
at the time this Resolution is passed; and
(iii)
any subsequent bonus issue, consolidation or subdivision of shares;
(c)
And that such authority shall, unless revoked or varied by the Company in general meeting, continue in force
(i) until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual
General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares
to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this
Resolution, until the issuance of such shares in accordance with the terms of such convertible securities;
(d)
the fifty percent (50%) limit in sub-paragraph (a) above may be increased to one hundred percent (100%)
for issues of Shares and/or Instruments by way of a renounceable rights issue where shareholders of the
Company are entitled to participate in the same on a pro-rata basis.
[See Explanatory Note (ii)]
(Resolution 7)
Discount for Non Pro-rata Share Issue
(a)
That subject to and conditional upon the passing of Ordinary Resolution 7 above, approval be and is hereby
given to the directors of the Company at any time to issue, other than on a pro-rata basis to shareholders
of the Company, Shares (excluding convertible securities) at an issue price for each Share which shall be
determined by the directors of the Company in their absolute discretion provided that such price shall not
represent a discount of more than twenty percent (20%) to the weighted average price of a Share for trades
done on the SGX-ST (as determined in accordance with the requirements of SGX-ST); and
(b)
That (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution
shall continue in force until the conclusion of the next annual general meeting of the Company or the date by
which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.
[See Explanatory Note (iii)]
(Resolution 8)
Authority to allot and issue shares under the Trump Dragon Employee Share Option Scheme
That pursuant to the Companies Act 1981 of Bermuda, the Directors be authorised and empowered to allot and
issue shares in the capital of the Company to all the holders of options granted by the Company, whether granted
during the subsistence of this authority or otherwise, under the Trump Dragon Employee Share Option Scheme
(“the Scheme”) upon the exercise of such options and in accordance with the terms and conditions of the Scheme,
provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the
Scheme shall not exceed fifteen percent (15%) of the total number of issued shares (excluding treasury shares) in the
capital of the Company from time to time.
[See Explanatory Note (iv)]
(Resolution 9)
Annual Report 2009
60
By Order of the Board
Chan Siu Wah
Busarakham Kohsikaporn
Hazel Chia Luang Chew
Company Secretaries
Singapore, 8 October 2009
Explanatory Notes
(i)
Ordinary Resolution 5 proposed in item 4 above, is to approve the payment of Directors’ fees of S$150,000 for the year ending 30
June 2010 on a half yearly basis, in arrears.
(ii)
The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of the above Meeting until
the date of the next Annual General Meeting, to allot and issue Shares and convertible securities in the Company up to an amount
not exceeding fifty percent (50%) of the total number of issued shares (excluding treasury shares) of the Company, of which up to
twenty percent (20%) may be issued other than on a pro rata basis.
The increased limit of up to one hundred percent (100%) referred to in sub-paragraph (d) for renounceable pro-rata rights issue will
be effective up to 31 December 2010 pursuant to SGX-ST’s news release of 19 February 2009. The increased limit is subject to the
condition that the issuer makes periodic announcements on the use of the proceeds as and when the funds are materially disbursed
and, provides a status report on the use of proceeds in the annual report.
(iii)
Ordinary Resolution 8 proposed in item 8 above, if passed, will enable Directors to issue, on a non pro-rata basis, new Shares
(excluding convertible securities) at a discount of not more than twenty percent (20%) to the weighted average market price of the
Company’s shares, determined in accordance with the requirements of SGX-ST. The discount in issue price of non pro-rata new
Share issue is one of the interim measures announced by the SGX to accelerate and facilitate listed issuer’s fund-raising efforts in a
volatile and difficult market condition.
(iv)
The Ordinary Resolution 9 proposed in item 9 above, if passed, will empower the Directors of the Company, to allot and issue shares
in the Company of up to a number not exceeding in total fifteen percent (15%) of the total number of issued shares (excluding
treasury shares) in the capital of the Company from time to time pursuant to the exercise of the options under the Scheme.
For the purpose of this resolution, the total number of issued shares (excluding treasury shares) is based on the Company’s total
number of issued shares (excluding treasury shares) at the time this proposed Ordinary Resolution is passed after adjusting for
new shares arising from the conversion or exercise of convertible securities, the exercise of share options or the vesting of share
awards outstanding or subsisting at the time when this proposed Ordinary Resolution is passed and any subsequent bonus issue,
consolidation or subdivision of shares.
Notes
1.
A Shareholder being a Depositor whose name appears in the Depository Register (as defined in Section 130A of the Companies
Act, Cap. 50 of Singapore) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the
Company.
2.
If a Depositor wishes to appoint a proxy/proxies to attend the Meeting, then he/she must complete and deposit the Depositor Proxy
Form at the office of the Singapore Share Transfer Agent, Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street #0801 Samsung Hub Singapore 049483, at least forty-eight (48) hours before the time of the Meeting.
3.
If the Depositor is a corporation, the instrument appointing a proxy must be executed under seal or the hand of its duly authorised
officer or attorney.
Annual Report 2009
61
50 Qingfeng Street, Zhoukou City
Henan Province
Tel: 86-394-858 3702
Fax: 86-371-6595 5459

2009 - National University of Singapore

Transcription

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