Plastoform Holdings Limited - PlastoForm Industries Limited

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Plastoform Holdings Limited - PlastoForm Industries Limited
PLASTOFORM HOLDINGS LIMITED
ANNUAL REPORT 2011
Room 902-904,
Seapower Centre,
73 Lei Muk Road, Kwai Chung,
New Territories,
Hong Kong
Tel: (852) 2422-7106
Fax: (852) 2480-5476
EXPERIENCE
COLORFUL SOUND
Annual Report 2011
CORPORATE PROFILE
Plastoform specialises in the design, development and manufacture of world-class audio products on an Original Equipment
Manufacturing (“OEM”) and Original Design Manufacturing (“ODM”) basis. We offer a wide range of trendy lifestyle audio and
multimedia accessories ranging from MP3, PC, iPods, iPhones compatible multimedia speakers, Hi-Fi home theatre sound
systems, Bluetooth and wireless portable products. Our dedication to innovation and excellence has earned us the repeated
accolades and premier customers such as Dell, Logitech, Gear4 and Razar,
Founded in 1982, Plastoform have emerged as the partner of choice for clients seeking top-rated ODM services in Asia due
to our strong design and engineering capabilities as well as project management skills.
CONTENTS
EDITORIAL
01
02
04
06
07
08
09
74
76
Corporate Information
Chairman’s Statement
Board of Directors
Key Management
Financial Highlights
Operations Review
Corporate Governance
Shareholding’s Statistics
Annual General Meeting
FINANCIAL
17
19
20
21
22
23
24
25
26
27
Directors’ Report
Statement by Directors
Independent Auditors’ Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Statement of Financial Position
Consolidated Statement of Changes in Equity
Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Annual Report 2010 | Plastoform Holdings Limited | 5
CORPORATE INFORMATION
BOARD OF DIRECTORS
PRINCIPAL OFFICE
Tse Kin Man (Executive Chairman)
Chiu Kwong Fai (Chief Executive Officer and Executive Director)
Chiu Kwong Lung (Non-Executive Director)
Winston Tan Tien Hin (Non-Executive Director)
Fong Hean Chuan (Non-Executive Director)
Room 902-904, Seapower Centre,
73 Lei Muk Road, Kwai Chung,
New Territories,
Hong Kong
[Appointed wef 12 August 2011]
BERMUDA SHARE REGISTRAR
Khor Peng Soon (Independent Director)
Ho Kang Peng (Independent Director)
AUDIT COMMITTEE
Khor Peng Soon (Chairman)
Ho Kang Peng
Chiu Kwong Lung
REMUNERATION COMMITTEE
Ho Kang Peng (Chairman)
Khor Peng Soon
Chiu Kwong Lung
NOMINATING COMMITTEE
Ho Kang Peng (Chairman)
Khor Peng Soon
Chiu Kwong Lung
JOINT COMPANY SECRETARIES
Yvonne Choo, FCIS
Shirley Lim Keng San, FCIS
Wong Kwo Chung, Jacky
Ira Stuart Outerbridge III, FCIS
(Asst. Company Secretary)
REGISTERED OFFICE
Clarendon House
2 Church Street,
Hamilton HM 11,
Bermuda
Codan Service Limited
Clarendon House,
2 Church Street,
Hamilton HM11,
Bermuda
SINGAPORE SHARE TRANSFER AGENT
B.A.C.S. Private Limited
63 Cantonment Road,
Singapore 089758
AUDITORS
HLB Hodgson Impey Cheng
Chartered Accountants
Certified Public Accountants
31/F, Gloucester Tower, The Landmark,
11 Pedder Street,
Central, Hong Kong
(Partner-in-charge: Jonathan Lai, FCPA)
(wef financial year 31 December 2011)
PRINCIPAL BANKER
DBS Bank (Hong Kong) Limited,
16/F., The Centre,
99 Queen’s Road Central,
Central,
Hong Kong
BERMUDA COMPANY REGISTRATION
NUMBER
34171
Annual Report 2011
Plastoform Holdings Limited
1
CHAIRMAN’S STATEMENT
DEAR VALUED SHAREHOLDERS,
INTRODUCTION
FY 2011 has been a momentous year for Plastoform.
I am pleased to report that we have succeeded in strengthening the statement of
financial position of the Company thereby placing it on a stronger financial platform
for its future growth and profitability. We have also received customer and market
validation of our new range of portable audio products predicated on wireless Bluetooth
technology. We are hopeful that these new products will help to take the Company
back on the road of sustained profitability in the coming years.
MAJOR EVENTS
The Company received new funding in July and August 2011 through a cash loan
from our majority shareholder and cash advances from a group of new investors of
the Company. This funding enabled us to complete and ship orders to key customers
for our new range of products. The contribution from these sales helped us to achieve
a net profit of HK$17.7 million for the three months ended 31 Dec 2011 (4QFY2011).
This was our first profitable Quarter since 4QFY2007.
We also successfully completed a 3-for-1 Rights Issue raising gross proceeds on
S$15.2 million. I am especially grateful to all shareholders for strongly supporting the
Rights Issue which was oversubscribed to a level of 112%. At the same time, we further
strengthened our statement of financial position through a Capital Reorganisation Plan
to reduce the par value of our shares to HK$0.01 from HK$0.20.
2
Plastoform Holdings Limited
Annual Report 2011
SGX Watch List
I am pleased to inform shareholders that the SGX has granted the Company an extension of 12 months to 4 March 2013
to submit an application to be taken off the Watch List. We will work vigorously in the coming year to ensure that we can
meet the SGX’s criteria for removal from its Watch List.
FINANCIAL PERFORMANCE IN FY 2011
Our cash flow situation was tight throughout the year because the proceeds of the 3-for-1 Rights Issue were received only
in February 2012. That notwithstanding, Plastoform managed to achieve revenues of HK$327 million in FY 2011 and we
pared our full year net loss from HK$48.6 million in the previous year to HK$14.3 million.
The improved performance in FY 2011 was due to the successful launch of our new integrated Bluetooth wireless audio
speakers and a new line of audio speakers modeled after the popular “Angry Birds” gaming characters. The Company’s
new products were correctly positioned as consumers moved away from docking stations to wireless audio speakers.
PROSPECTS AND FUTURE PLANS
We are confident that with our growing order book, strong client relationships and decisive move towards more Original
Design Manufacturing projects, Plastoform will have a good year in 2012.
We are looking to expand into other Bluetooth products for instance data exchange and communication across Bluetooth
devices, security systems for remote locations as well as remote activation of facilities and appliances in smart homes.
We plan to leverage our strong experience in developing state-of-the-art wireless audio products to help us to secure new
customers in the broad wireless market.
We will also continue to rationalise our production facilities to further improve productivity and efficiency. We will continue
to invest in automation of our assembly lines. In addition, we will also look to strengthen relationships with companies that
we can outsource non critical processes to.
We hope to achieve a more sustainable profit track record going forward for our shareholders and stakeholders.
APPRECIATION
I would like to take this opportunity to extend my greatest appreciation and gratitude to our directors, management team,
staff, customers, suppliers, business associates for their continuous support through the years. I also want to warmly
welcome Mr Winston Tan Tien Hien, Managing Director of Winmark Investments Pte Ltd, and Mr Fong Hean Chuan, CEO
of Astralink technology Pte Ltd who were appointed to the Board of Directors as Non-Executive Directors in April and
August respectively.
Michael Tse Kin Man
Executive Chairman
Annual Report 2011
Plastoform Holdings Limited
3
BOARD OF DIRECTORS
1
2
3
TSE KIN MAN
CHIU KWONG FAI
CHIU KWONG LUNG
EXECUTIVE CHAIRMAN
CHIEF EXECUTIVE OFFICER
NON-EXECUTIVE DIRECTOR
and EXECUTIVE DIRECTOR
Mr Tse Kin Man is the Executive Chairman
Mr Chiu Kwong Fai is the Chief Executive
Mr Chiu Kwong Lung is our Non-Executive
of our Group. He was appointed to our
Officer of our Group. He was appointed
Director of our Group and was appointed to
Board on 23 September 2003 and is
to our Board on 23 September 2003 and
our Board on 21 August 2006. Mr Chiu has
responsible for the development of overall
has been with PIL since 1987. Mr Chiu
been appointed District Chief Auditor with the
corporate strategies as well as marketing
is responsible for the development of
Palm Beach County School District, Florida,
and product development of the Group.
overall corporate strategies as well as
USA since 1994. Prior to that, he served as
Mr Tse has over 30 years of experience
manufacturing
the
Internal Auditor with Port Everglades Authority,
in the product design and manufacturing
Group. Mr Chiu has over 30 years of
Fort Lauderdale, Florida, from 1990 to 1994,
industry. Mr Tse started his career in 1977
experience in the product design and
Director of Internal Audit with the State of
as a Senior Product Designer at Lambda
manufacturing industry. Prior to joining PIL
Tennessee Department of Finance and
Electronics Limited. In 1979, he joined
in 1987, Mr Chiu worked at International
Administration from 1988 to 1990, and State
Bondwell Holding Limited as Chief Designer
Quartz Limited (a subsidiary of Chiap Hua
Auditor with the Tennessee Department of
and rose to become the General Manager
Industries Limited) where he headed the
Audit from 1980 to 1988. Mr Chiu is a Certified
of Bondwell Engineering Limited (a wholly
industrial design and mechanical/industrial
Public Accountant, Certified Management
owned subsidiary of Bondwell Holding
engineering department for 5 years before
Accountant, and Certified Internal Auditor
Limited) when he left in 1987. Thereafter,
joining PIL. He joined PIL in 1987 as a
in the USA. He graduated with a Master of
Mr Tse joined STD Holding Limited as the
Product Manager and was promoted to
Science Degree in 1979 and a Master of
Director of the research and development
General Manager and was eventually
Business Administration in 1978 from Middle
department where he headed its research
appointed Director in 1992. Mr Chiu
Tennessee State University. Mr Chiu is the
and development team until 1991. From
obtained a Higher Diploma in Design from
brother of our Chief Executive Officer, Mr Chiu
1992 to 1993, Mr Tse was employed as an
Hong Kong Polytechnic in 1977. He was
Kwong Fai.
industrial designer at Sparks Innovations
also subsequently awarded a Certificate in
Inc. Between 1991 and 1996, he was
Industrial Management in 1982 from Hong
also a freelance designer for Electronics
Kong Polytechnic, a Certificate in Industrial
Tomorrow Limited and also a design
Management
consultant for PIL from 1992 until 1995,
Industrial Managers in 1982, and a Higher
when he joined PIL on a full-time basis as a
Certificate in Communication, Advertising
product development director. He was later
and Marketing in 1988 from Hong Kong
appointed Director in 2001 in charge of
Polytechnic. Mr Chiu has been admitted as
overseeing the Company’s operations. Mr
an associate of the Institution of Industrial
Tse obtained a Higher Diploma in Design
Managers since 1983. Mr Chiu is the
from Hong Kong Polytechnic in 1977. He
brother of our Non-Executive Director, Mr
was also admitted as a full member of
Chiu Kwong Lung.
and
from
the Hong Kong Designers Association in
January 2006.
4
Plastoform Holdings Limited
Annual Report 2011
operations
the
of
Institution
of
4
5
6
KHOR PENG SOON
HO KANG PENG
TAN TIEN HIN, WINSTON
INDEPENDENT DIRECTOR
INDEPENDENT DIRECTOR
NON-EXECUTIVE DIRECTOR
Mr Khor Peng Soon is the Non-Executive
Mr Ho Kang Peng is our Non-Executive
Mr Tan Tien Hin, Winston is the Non-Executive
Independent Director of our Group and was
Independent Director and was appointed
Director of our Group since 4 April 2011. Mr Tan
appointed to our Board on 21 August 2006.
to the Board on 21 August 2006. Mr Ho
serves on the Board of other listed companies,
He is the Chairman of the Audit Committee
has since April 2008 been the Executive
including Singapore Technologies Kinetics
and a member of the Nominating and
Director and Chief Executive Officer of Fu
Limited and Roxy-Pacific Holdings Limited.
Remuneration
Khor
Yu Corporation Limited, a company listed
He is also the Managing Director for Winmark
is currently the Executive Director of
Committees.
on the SGX-ST, and is responsible for the
Investments Private Limited and Corporate
Reborne Pte Ltd. Prior to that, he held
leadership and strategic vision, long term
Brokers International Private Limited, which
senior management positions at various
growth and development of the Group. Prior
are involved in Angel and Private Equity
corporations
including
the
Mr
Singapore
to this, Mr Ho was appointed the Executive
investments with high growth needs. Mr Tan
Economic Development Board, Ernst &
Director of Fu Yu Manufacturing Limited
has over 24 years of corporate and investment
Young (Singapore), Sembawang Holdings
(Former name of Fu Yu Corporation Ltd) in
banking experience, he previous appointments
Pte Ltd and Temasek Holdings (Pte)
1995. Since then, he assisted the company
as General Manager of Deutsche Bank AG
Ltd. Mr Khor also sits on the boards of a
in setting up several overseas subsidiaries
(Singapore Branch), Vice-President in Citibank
number of other publicly listed and private
and joint venture covering Malaysia, China
N.A. and as director of Singapore Technologies
corporations.
and Mexico. He left the company in 2004.
Engineering Ltd. Mr Tan graduated from the
. Mr Ho was appointed Executive Director
University of Singapore with a Bachelor of
of Watson Plastics Industries in June 2005
Science (Physics) degree and completed an
and later of the year being appointed as
Executive Development Program at Columbia
CEO of Scintronix Corporation Ltd (formerly
University in New York.
7
FONG HEAN CHUAN
NON-EXECUTIVE DIRECTOR
known as TTL Holding Limited. He was
responsible for the corporate restructuring,
strengthening management by introducing
Mr Fong Hean Chuan is the Non-Executive
cost
Director of our group and was nominated
measurement for the two companies. Mr
to the board on 12 August 2011 by Astralink
Ho is currently the Independent Director
Technology Pte Ltd, a substantial shareholder
of Fuxing China Group Limited. On 15
of the Group , he is currently the CEO of
September 2010, Mr Ho is appointed
Astralink Technology Pte Ltd. Prior to that, he
as the Non-Independent Non-Executive
worked in Defense Materials Organisation
Director of LCTH Corporation Berhad, a Fu
(DMO), Minsistry of Defense in Singapore, as
Yu’s subsidiary listed on the Main Market
a Program Manager where he spent 5 years
of Bursa Malaysia. Mr Ho graduated from
there. Then he move on to work in Goldron
Nanyang University of Singapore in 1980
Technology as a Program Manager and joined
with a Bachelor of Business and Commerce
AT&T consumer product division in Singapore
degree.
analysis
and
performance
as Engineering Manager which he specializes
in product development and quality control. Mr
Fong graduated from National University of
Singapore with a B.E. (Electrical) Degree and
post-graduated in Master of Science (Industrial
Engineering) in the same university.
Annual Report 2011
Plastoform Holdings Limited
5
KEY MANAGEMENT
1
TSUI CHI SHING, STEVEN DEPUTY CHIEF EXECUTIVE OFFICER
Mr. Tsui Chi Shing, Steven is our Deputy Chief Executive Officer and is responsible for overseeing the sales and marketing, research and development,
product development and purchasing of Plastoform Industries Limited. Mr. Tsui has over 25 years of engineering and management experience serving
multinational technology companies such as Kulicke & Soffa, Motorola, Radica and Philips MDS. Mr. Tsui was the co-founder of TT Tech Limited which
was later acquired by Plastoform Industries Limited where he was appointed as Product Development Director in 2002. He then left Plastoform Industries
Limited in October 2004 and re-joined us in October 2007. He graduated from Hong Kong Polytechnic University with Associateship and Higher Diploma
in Electronic Engineering. He also holds a MBA degree from University of Hull, UK and a Postgraduate Diploma in Marketing from Chartered Institute of
Marketing, UK.
2
WONG KWO CHUNG, JACKY FINANCIAL CONTROLLER
Mr. Wong Kwo Chung, Jacky is the Financial Controller of our Group and the Joint Company Secretary of our Company. He is responsible for overall
planning and management of our Group’s financial, accounting, taxation and corporate finance matters. Mr. Wong joined our Group in 2010 as a costing
manager and has over 10 years of experience in management accounting in manufacturing section. He was concurrently acting as finance and accounts
manager in August 2010, he has shown the proficiency on management and financial aspects that granted him the promotion as Financial Controller in
June 2011.
In 2000, Mr. Wong started his career at Seiko Instrument (HK) Co Ltd which is a world class manufacturer of timepieces and electronic components where
he was involved in strategic finance, management accounting and financial reports. Later he joined Ewig Group an electronic manufacturing company which
he was overseeing cost accounting department and in charge of ERP implementation. Mr. Wong holds a Bachelor of Business in the field of Accountancy
from the RMIT University, Melbourne Australia in 1997. He was admitted as a member of CPA Australia and CIMA (Chartered Institute of Management
Accountants).
3
MR. SUEN SO YAN, TERRY MANUFACTURING DIRECTOR
Mr. Suen So Yan, Terry is our Manufacturing Director. He is responsible for China Factory management of the Group. Mr Suen has been involved in Industrial
management in Hong Kong and China for more than 20 years, he first joined the Group in May 1996, left in Feb 2010 and re-joined us in Jul 2010. Mr. Suen
started his career at Vita Electronics Co. Ltd as a Production Supervisor in 1980. In 1982, he joined Nam Tai Group as a Senior Production Coordinator. In
1992, he was appointed as a Production Manager at Shiba Electronics Ltd where he oversaw the production department. From 1993 to 1996, he joined
Coby Electronics Ltd as a China Factory Manager. Mr. Suen graduated from Hong Kong Polytechnic with Higher Diploma in Industrial Management in 1980.
4
CHEN JUNG HUEI SALES AND MARKETING DIRECTOR
Mr. Chen Jung Huei is our Sales and Marketing Director who is responsible for developing and formulating sales strategy to meet company business
objectives. He joined us in October 2007 and has been involved in managing existing customers and exploring new business opportunities in overseas
market. Mr. Chen has over 10 years of sales and marketing solid experience in the USA and China. He started the career in the Silicon Valley, USA as a
sales executive to a computer mainboard manufacture from 1997 to 1999. In 2000, he joined Lite-On Group as a customer service assistant manager who
handled OEM customers such as Packard Bell, HP, Compaq, IBM and Viewsonic for their monitor / LCD division. From 2001 to 2004, he was part of Acer
Group’s brand where he marketed one of Acer’s brand – “AOpen” in San Jose, California in IT industries for IT components and other peripheral products
where his final position was Senior Sales and Marketing Manager before relocating to China to work for RockridgeSound Technology whose core business
is OEM / ODM speaker and radio manufacture in late 2004. Before coming to Hong Kong, he stationed at RockridgeSound’s China factory for 3 years and
was promoted from Sales Manager to Director of Sales and Marketing. Mr. Chen was educated in San Francisco, California from high school and later in San
Francisco State University concentrating on International Business.
6
Plastoform Holdings Limited
Annual Report 2011
FINANCIAL HIGHLIGHTS
Revenue
400
Net Profit / (Loss)
360.7
300
312.1 327.0
264.6 261.3
0
FY07 FY08 FY09 FY10 FY11
-10
-12.5
-20
-30
200
-14.3
-28.3
-40
100
-50
-48.6
-60
0
FY07 FY08 FY09 FY10 FY11
Revenue Breakdown
2011
22%
78%
2010
-61
-70
HK$’ mil
FY2011
FY2010
FY2009
ODM
254.5
237.4
166.5
OEM
72.5
74.7
94.8
HK$’ mil
FY2011
FY2010
Growth (%)
Revenue
327.0
312.1
4.8
Gross Profit
24.5
6.3
288.9
Loss before Income Tax
(14.3)
(48.6)
(70.6)
Net Loss
(14.3)
(48.6)
(70.6)
FY2011
FY2010
FY2009
7.5%
2.01%
11.30%
2009
36%
24%
Gross Margin
Net Margin
76%
ODM
OEM
64%
NA
NA
NA
Gearing
Net Cash
Net Cash
Net Cash
ROE (%)
NA
NA
NA
ROA (%)
NA
NA
NA
(4.23)
(14.39)
(3.7)
10.6
14.7
28.9
EPS (HK cents)
NAV per share (HK cents)
Annual Report 2011
Plastoform Holdings Limited
7
OPERATIONS REVIEW
For the financial year ended 31 December 2011, the Group’s turnover increased 4.8% yoy from HK$312.1 million in FY10 to
HK$327.0 million in FY11.
OEM (“Original Equipment Manufacturing”) revenue decreased 2.9% yoy from HK$74.7 million in FY10 to HK$72.5 million
in FY11 due to poor retail sentiment in US market and continuous ineffective marketing plan adopted by our major OEM
customer.
ODM (“Original Design Manufacturing”) revenue increased 7.2% yoy from HK$237.4 million in FY10 to HK$254.5 million in
FY11. The increase was mainly due to the successful launch of integrated Bluetooth wireless speakers which generated higher
sales from September 2011 and increased orders secured from a well-known global PC accessory brand and distributor.
Gross profit surged 288.9% yoy to HK$24.5 million in FY11. The increase in gross profit was attributed to significantly higher
sales and better products mix in the 4QFY11.
Selling and distribution costs decreased 1.4% yoy to HK$7.2 million for FY11 as we have adopted favorable sources of
delivery. Operating expenses decreased 14.8% yoy to HK$41.4 million due to the lower salaries expenses by reducing the
number of Hong Kong staff based in Shenzhen as well as lower office rental cost by relocating the Hong Kong headquarter
office from Mita Centre to Seapower Centre.
Our loss before income tax decreased 70.6% yoy to HK$14.3 million due to cost cutting exercises in operating expenses and
higher profit margin in newly developed products.
FINANCIAL POSITION
Inventories for the Group increased from HK$44.3 million as at 31 December 2010 to HK$61.9 million as at 31 December
2011 due to the Group’s healthy order book and increased finished goods scheduled for delivery in the next few months.
Trade receivables increased from HK$56.0 million as at 31 December 2010 to HK$99.6 million as at 31 December 2011.
Trade payables increased from HK$64.7 million as at 31 December 2010 to HK$109.1 million as at 31 December 2011 due
to higher revenue in 4QFY11.
CASH FLOW
The Group had a net cash outflow from operating activities of HK$25.9 million in FY11 as compared to a net cash outflow of
HK$29.4 million in FY10.
The Group had a net cash inflow from investing activities of HK$2.9 million in FY11, due to disposal of the Group’s fixed
assets.
8
Plastoform Holdings Limited
Annual Report 2011
CORPORATE GOVERNANCE
The Board of Directors (the “Board”) is committed to setting and maintaining high standards of corporate governance within the
Company and its subsidiaries (the “Group”).
The Company has adopted the recommendations of the Code of Corporate Governance 2005 (the “Code”). This report describes
the Company’s corporate governance practices with specific reference to each of the principles set out in the Code. The Company
confirms that it has adhered to the principles and guidelines as set out in the Code, where applicable, and has explained areas of
non-compliance on deviation.
BOARD MATTERS
Principle 1:
Effective Board to Lead and Control of the Group.
The Board oversees the management of the business and affairs of the Group and is responsible for the overall performance of the
Group. The functions of the Board are to:
●
Review and approve Board policies and corporate and strategic directions for the Group;
●
Review and approve annual budgets, strategic plans, major investments, divestments and funding decisions;
●Oversee processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance
requirements;
●
Approve quarterly and full year results announcements;
●
Recommend the declaration of dividends;
●
Approve the nomination of directors and the company secretary; and
●Establish value and standards for the Group, and ensuring that obligations to shareholders and others are understood and
met.
The Group has in place internal guidelines and approval limits for operational, financial and capital expenditure requirements. Under
these guidelines, Board approval is required for transactions that exceed certain financial thresholds.
The Board is supported by the Board Committees including, the Audit Committee (“AC”), Remuneration Committee (“RC”) and
Nominating Committee (“NC”), which have been delegated with specific authority. Each Board committee functions within its own
defined terms of reference and procedures.
The Board has scheduled to meet at least four times a year and, as and when warranted by particular circumstances between the
scheduled meetings. The Company’s Bye-Laws provide 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.
Annual Report 2011
Plastoform Holdings Limited
9
CORPORATE GOVERNANCE
(CONTINUED)
Details of Directors’ attendance at the Board and Board committee meetings held in FY2011, are summarised in the table below:
Meeting of
Total held in FY2011
Board
4
Tse Kin Man
Chiu Kwong Fai
Khor Peng Soon
Ho Kang Peng
Chiu Kwong Lung
Tan Tien Hin, Winston [1]
Fong Hean Chuan [2]
4
4
4
4
3
3
2
AC
4
NC
1
RC
1
4*
4*
4
4
3
3*
2*
1*
1*
1
1
1
N/A
N/A
1*
1*
1
1
1
N/A
N/A
* By invitation
[1]
Tan Tien Hin, Winston was appointed a Director of the Company on 4 April 2011.
[2]
Fong Hean Chuan was appointed a Director of the Company on 12 August 2011.
Directors, when appointed, will receive an orientation that includes briefing by Management on the Group’s structure, businesses,
operations and policies.
The Board is updated on amendments/requirements of the Singapore Exchange Securities Trading Limited (“SGX-ST”), and other
statutory and regulatory requirements from time to time.
New Directors, to be appointed, will be provided with a letter of appointment setting out their duties, obligations and terms of
appointment. Appropriate training/briefing will be provided for new Directors who have no prior experience as Directors of a listed
company in Singapore.
Board Composition and Balance
Principle 2: Strong and independent element on the Board.
The Board comprises seven Directors, two of whom are independent Non-Executive Directors.
Executive Directors:
Tse Kin Man Chiu Kwong Fai Chairman
Chief Executive Officer
Non-Executive Directors:
Chiu Kwong Lung
Tan Tien Hin, Winston
Fong Hean Chuan
Independent Directors:
Khor Peng Soon
Ho Kang Peng
10 Plastoform Holdings Limited
Annual Report 2011
CORPORATE GOVERNANCE
(CONTINUED)
The Board reviewed the Board size and balance of Independent Directors on the Board, and is of the view that its current size is
appropriate, taking into account the scope and nature of the operations of the Group. The Directors bring with them a wide spectrum
of industry skills, experience, management expertise and objective perspective to effectively lead and direct the Group.
The NC, which has the responsibility of reviewing the independence of Directors on an annual basis, had adopted the Code’s
definition of “independent” director.
Non-Executive 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 judgment to bear on business activities and transactions involving conflicts of interest
and other complexities.
The profile of Board members is set out on pages 4 and 5 of the Annual Report.
Chairman and Chief Executive Officer
Principle 3: Division of responsibilities and balance of power
Tse Kin Man, the Executive Chairman is responsible for the development of overall corporate strategies as well as marketing and
product development of the Group. He schedules meetings and sets the Board agenda in consultation with Management and the
Company Secretary. The Executive Chairman, who possesses in-depth knowledge of the Group’s business, guides discussions and
ensures that the Board is briefed on developments and issues in a timely manner.
The Chief Executive Officer (“CEO”), Chiu Kwong Fai, is responsible for the development of overall corporate strategies as well as
manufacturing and operations of the Group.
As the Executive Chairman and CEO are not related to each other and each performs separate functions, there is an appropriate
balance of power and authority for independent decision-making to permeate within the Board.
Board Membership
Principle 4: Formal and transparent process for the appointment of new Directors to the Board.
The NC regulated by a set of written terms of reference, comprises a majority of Independent Directors, including Ho Kang Peng
(Chairman) and Khor Peng Soon. Chiu Kwong Lung, who is the brother of Chiu Kwong Fai, is a Non-Executive Director.
The NC Chairman is not associated with a substantial shareholder of the Company.
The NC principally:
●
reviews and makes recommendations to the Board on all new appointments;
●
reviews the Board structure, size, balance and composition;
●
determines the independence of the Directors;
●
recommends the nomination of directors who are retiring by rotation to be put forward for re-election;
●assesses the effectiveness of the Board as a whole and for assessing the contribution of each of the Directors to the
effectiveness of the Board; and
●
assesses the commitment of each Director to the Company, in relation to multiple directorships held by Directors.
A process for selection and appointment of new Directors, provides the procedure for identification of potential candidates’ skills,
knowledge and experience, assessment of candidates’ suitability and recommendation for nomination to the Board.
In accordance with the Company’s Bye-Laws, every Director is required to retire by rotation at least once in every three years and,
may offer themselves for re-election. Newly appointed directors will have to retire at the next Annual General Meeting (“AGM”)
following their appointments.
Annual Report 2011
Plastoform Holdings Limited
11
CORPORATE GOVERNANCE
(CONTINUED)
The NC has recommended the nominations of Ho Kang Peng and Fong Hean Chuan, for re-appointment at the forthcoming AGM of
the Company. The Board has accepted the NC’s recommendation.
The NC had also reviewed the independence of the Board members with reference to the guidelines set out in the Code and, has
determined both Khor Peng Soon and Ho Kang Peng to be independent.
Notwithstanding the multiple board representations of some Directors, the NC is satisfied that sufficient time and attention have been
accorded by the Directors to the affairs of the Company.
The Directors and the last date of their re-election are as follows:
Directors
Tse Kin Man
Chiu Kwong Fai
Khor Peng Soon
Ho Kang Peng
Chiu Kwong Lung
Tan Tien Hin Winston
Fong Hean Chuan
Date of last re-election
28 April 2011
30 April 2010
30 April 2010
30 April 2009
28 April 2011
28 April 2011
N/A
Board Performance
Principle 5: Formal assessment of the effectiveness of the Board and the contribution by each director to the effectiveness
of the Board.
An evaluation of the Board’s performance for FY2011 had been conducted. The evaluation exercise provided feedback from each
Director, his views on Board, procedures, processes and effectiveness of the Board, as a whole.
Access to Information
Principle 6: Board members should be provided with complete, adequate and timely information
All Directors have independent access to the Group’s senior management and the Company Secretary.
To ensure that the Board is equipped to discharge its responsibilities, Management provides the Board with complete, adequate and
timely information prior to Board meetings and on an ongoing basis. To keep the Board apprised of the Group’s performance and
developments, Management provides Directors with management accounts on a regular basis.
The Company Secretary provides secretarial support to the Board, ensures adherence to Board procedures and relevant rules and
regulations which are applicable to the Company. The Company Secretary attends Board and Board committee meetings.
Subject to the Board’s approval, Directors, whether as a group or individually, may seek and obtain independent professional advice,
at the Company’s expense, to assist them with their duties.
Remuneration Committee (“RC”)
Principle 7: Formal and transparent procedure for determining Directors’ remuneration packages.
The RC comprises all Non-Executive Directors. A majority of the RC, including the Chairman are independent.
Ho Kang Peng Khor Peng Soon
Chiu Kwong Lung
(Chairman)
12 Plastoform Holdings Limited
Annual Report 2011
CORPORATE GOVERNANCE
(CONTINUED)
The RC reviews and recommends to the Board (i) the remuneration packages of all Executive Directors, senior management of the
Group and employees related to Directors or controlling shareholders of the Group, (ii) Directors’ fees for Non-Executive Directors,
which are subject to shareholders’ approval at the AGM, and (iii) reviews and recommends to the Board the terms of renewal of
service contracts of the Executive Directors.
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
practices, and ensure that the interests of the Executive Directors are aligned with that of shareholders.
Level and Mix of Remuneration
Principle 8: Appropriate level and mix of remuneration.
The Group offers a comprehensive and competitive remuneration and benefits package to all its employees, which is linked to
individual performance of the employee and performance of the Group.
Independent and Non-Executive Directors are paid Directors’ fees based on their contribution and responsibilities on the Board and
Board Committees. Directors’ fees are subject to shareholders’ approval at the AGM.
The RC has recommended to the Board an amount of SGD 212,000 as Directors’ fees for the year ended 31 December 2011. This
recommendation will tabled for shareholders’ approval at the forthcoming AGM.
DISCLOSURE ON REMUNERATION
Principle 9: Level and mix of remuneration Directors and Key Executives.
A breakdown of level and mix of remuneration paid to each Director and key Executives of the Company for FY2011, is set out within
remuneration bands below:
Directors
S$250,001 to S$500,000 per annum
Tse Kin Man
Chiu Kwong Fai
Below S$250,000 per annum
Chiu Kwong Lung
Khor Peng Soon
Ho Kang Peng
Tan Tien Hin, Winston
Fong Hean Chuan
Key Executives
S$250,001 to S$500,000 per annum
Tsui Chi Shing, Steven
Below S$250,000 per annum
Suen So Yan, Terry
Chen Jung Huei
Wong Kwo Chung, Jacky
Salary
%
Bonus
%
96
90
Benefits in
Kind
%
Fees
%
Total %
–
–
4
10
–
–
100
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
–
–
–
100
100
100
100
–
–
–
–
–
–
–
–
–
100
100
100
Annual Report 2011
Plastoform Holdings Limited
13
CORPORATE GOVERNANCE
(CONTINUED)
Executive Directors’ service agreements were renewed in October 2010 for 3 years.
An employee, Tse Kin Sang is the brother of Tse Kin Man, which Tse Kin Man is the Executive Chairman and substantial shareholder
of the Company.
For FY2011, the aggregate remuneration (salary, bonus and benefits-in-kind) of Tse Kin Sang did not exceed S$150,000. The same
basis was applied to determine the remuneration of these related employees and the remuneration of other unrelated employees.
The Plastoform Employee Share Option Scheme (“ESOS”) was established in 2006. The ESOS serves to attract, motivate and retain
employees and to align the interests of participants with the interests of shareholders.
The ESOS is administered by the RC. Details of ESOS grants are disclosed in the Report of Directors on pages 17 and 18 of Annual
Report.
Accountability
Principle 10: The Board is accountable to shareholders while Management is accountable to the Board.
The Board provides shareholders with detailed analysis, explanation and assessment of the Group’s financial performance, position
and prospects on a quarterly basis.
Management currently provides the Board with management accounts of the Group’s performance, position and prospects on a
regular basis. This is supplemented by updates on matters affecting the financial performance, business or prospects of the Group,
as and when such event occurs.
Audit Committee (“AC”)
Principle 11: The Board should establish an AC with written terms of reference which clearly set out its authority and duties.
The AC comprises three Non-Executive Directors, the majority of whom are Independent Directors. The members of the AC are:
Khor Peng Soon
Ho Kang Peng
Chiu Kwong Lung
Chairman
The AC meets at least four times a year and, as and when deemed appropriate to review:
●the audit plan of the Company’s external auditors and the internal auditor, including the results of auditors’ review and
evaluation of the Group’s system of internal controls;
●
the external auditors’ reports;
●
the co-operation given by the Company’s officers to the external auditors;
●
the financial statements of the Company before submission to the Board and shareholders;
●
the effectiveness and adequacy of internal accounting and financial control procedures;
●
review the adequacy of business risk management process;
●review arrangements by which staff of the Group may in confidence, raise concerns about possible improprieties in financial
reporting or, other matters;
●
evaluate the independence and performance of the external auditors and to consider their appointment and re-appointment; and
●
approve interested person transactions, if any.
The AC has explicit authority to investigate any matters within its terms of reference, full access to and the co-operation of
Management, full discretion to invite any director or Executive Officer to attend its meetings and has been given adequate resources
to enable it to discharge its functions.
14 Plastoform Holdings Limited
Annual Report 2011
CORPORATE GOVERNANCE
(CONTINUED)
The Company has in place a Whistle-Blowing Policy whereby employees and persons who have dealings with the Group may, in
confidence, report improprieties which may cause financial and non-financial loss or, damage to the Group.
The AC had met with the external auditors without the presence of Management and had established that the external auditors have
had the full co-operation of Management in carrying out the audit for FY2011.
Audit fees paid to HLB Hodgson Impey Cheng (“HLB”) for the audit of the Company and its subsidiaries in FY2011 amounted to HK$
650,000. There was no non-audit fees paid to the auditors in FY2011.
The accounts for the year were audited by HLB whose term of office will expire upon the forthcoming AGM.
To comply with the revised Rule 712 of the Listing Manual of SGX-ST which came effective on 29 September 2011, the AC
recommended the appointment of Foo Kon Tan Grant Thornton LLP in place of HLB as auditors of the Company for the financial year
ending 31 December 2012. The proposed change of auditors will be tabled at the forthcoming AGM.
Internal Controls
Principle 12: Sound system of internal controls to safeguard the shareholders’ investments and the Group’s assets.
The Board is responsible for ensuring that a sound internal control system is maintained. The Board recognises the need to put in
place a system of internal controls within the Group to manage risks and safeguard the Group’s assets and shareholders’ interests.
It is acknowledged that no cost effective internal control system will preclude any errors and irregularities. The system is designed
to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute
assurance against material misstatement or loss.
Review of the Group’s internal controls were carried out by the internal auditor in accordance with the internal audit plan, agreed with
the AC. The findings of these reviews are tabled at the AC meetings.
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.
The AC and Board are of the view that the internal controls in place are adequate to address significant risks of financial, operational
and compliance nature to which the Company is exposed in its current business environment based on :
i)
ii)
iii)
internal controls established by the Group
requests of the internal and external auditors
reviews performed by Management, the AC and the Board
Management regularly review the Group’s business and operational activities to identify significant risks and to take appropriate
measures to control and mitigate these risks within the Group’s policies and strategies.
Internal Audit
Principle 13: Internal Audit function
The Group’s internal audit function is headed by an internal auditor who reports directly to the Chairman of the AC on internal audit
matters and, administratively to the Executive 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 reviews and approves, on an annual basis, the internal audit plans and the resources required to adequately perform this function.
Annual Report 2011
Plastoform Holdings Limited
15
CORPORATE GOVERNANCE
(CONTINUED)
Communication with Shareholders
Principle 14: Regular, effective and fair communication with shareholders.
The Company endeavours to maintain regular and effective communication with shareholders through timely and comprehensive
announcements. The Company does not practice selective disclosure. It has adopted a policy of making all necessary disclosures
in public announcements via SGXNET.
The annual report is sent to all shareholders on a timely basis and notices of all general meetings are advertised in the newspaper
and announced via SGXNET.
Greater Shareholder Participation
Principle 15: Encourage greater shareholder participation at AGMs
At general meetings, shareholders are given opportunity to air their views and direct questions to the Board on any matter relating
the Group’s business and operations.
The Company’s Bye-Laws allow shareholders to appoint proxies to attend and vote on their behalf at general meetings. There is
however no provision to allow shareholders to vote in absentia. The Company is not considering the implementation of voting in
absentia for the time being.
The Chairmen of the AC, RC and NC and the auditors will be available at the AGM to attend to shareholders’ queries.
Securities Transactions
The Group has adopted a Code of Best Practices for Securities Transactions (the “Securities Code”) which sets out the Group’s
policy on dealings in securities of the Company and implications of Insider Trading. In line with our Securities Code, Directors, key
officers and other employees of the Group, who have access to price-sensitive and confidential information are not permitted to deal
in securities of the Company during the periods commencing at least 2 weeks before the announcement of the Group’s quarterly
results and one month before the announcement of the Group’s full-year results and, ending on the date of the announcement of such
results, or when they are in possession of unpublished price-sensitive information on the Group.
Interested Person Transactions (IPTs)
Other than the lease of office space from Jetform International Limited which amounted to less than 3% of the Group’s NTA, there
were no transactions with other Interested Persons for the financial year ended 31 December 2011.
Material Contracts
Other than as disclosed above, the Group did not enter into any material contracts involving the interest of the CEO, Directors or
controlling shareholders and no such material contracts subsisted between the end of the previous financial year and the end of the
financial year.
Risk Management Policies and Processes
The Board regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as
appropriate measures to control and mitigate these risks.
The Group’s financial risk and management is discussed under Note 3 of the Notes to Consolidated Financial Statements on pages
46 to 49 of the Annual Report.
16 Plastoform Holdings Limited
Annual Report 2011
DIRECTORS' REPORT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011
The Directors present their report and the audited financial statements of the Company and of the Group for the year ended
31 December 2011.
Directors
The Directors of the Company in office during the year and up to the date of this report are:
Executive Directors:
Tse Kin Man Chiu Kwong Fai (Chairman)
(Chief Executive Officer)
Non-Executive Directors:
Chiu Kwong Lung
Tan Tien Hin, Winston
Fong Hean Chuan
Khor Peng Soon Ho Kang Peng
(Independent Director)
(Independent Director)
In accordance with the Company’s Bye-laws, Ho Kang Peng and Fong Hean Chuan, are subject to retirement and re-election at the
forthcoming Annual General Meeting (“AGM”).
Arrangements to enable Directors to acquire shares and debentures
Neither at the end, nor at any time during the financial year, was the Company a party to any arrangement whose object was 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.
Directors’ interests in shares and debentures
According to the Register of Director’s Shareholdings, the following Directors holding office at the end of the financial year had any
interest in the shares of the Company as stated below:
Held in Name of Director
Name of Director
Tse Kin Man (i)
Chiu Kwong Fai (i)
Chiu Kwong Lung
Tan Tien Hin, Winston (ii)
Fong Hean Chuan
Khor Peng Soon
Ho Kang Peng
1/1/2011
31/12/2011
Holdings at
21/1/2012
1/1/2011
25,000,000
25,000,000
-
25,000,000
25,000,000
-
25,000,000
25,000,000
-
Deemed Interest
200,000,000
200,000,000
17,508,400
-
31/12/2011
21/1/2012
110,000,000
110,000,000
37,517,000
-
110,000,000
110,000,000
37,517,000
-
i)Tse Kin Man and Chiu Kwong Fai are deemed interested in the shares held by Konkin Limited (“Konkin”) by virtue of their interest
in Konkin.
ii)The shareholders of Winmark Investments Pte. Ltd. (“Winmark”) are Tan Tien Hin, Winston (50%) and his wife, Lim Sioh Tin Amy (50%). Tan
Tien Hin Winston and Lim Sioh Tin Amy are deemed to be interested in all the shares held by Winmark.
Tan Tien Hin Winston is deemed to be interested in all the issued and fully paid-up ordinary shares in the share capital of Astralink Technology
Pte. Ltd. (“Astralink”) held by virtue of Section 7 of the Companies Act. Winmark holds 2,567,146 issued and fully-paid ordinary shares in
Astralink, representing 11.41% of the equity interest in Astralink.
By virtue of their interests in the Company, Tse Kin Man and Chiu Kwong Fai are deemed to have an interest in shares of subsidiaries
of the Company at the beginning and at the end of the year.
Annual Report 2011
Plastoform Holdings Limited
17
DIRECTORS' REPORT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011
Share Options
As disclosed in the Prospectus dated 2 October 2006, the Company has adopted a Share Option Scheme, known as Plastoform
Employee Share Option Scheme (“ESOS”). The ESOS provides eligible participants with an opportunity to participate in the equity
of the Company and serves to motivate and retain employees. The ESOS, which forms an integral and important component of a
compensation plan is designed to primarily reward and retain confirmed employees of the Group including Executive Directors. The
ESOS is administered by the Remuneration Committee.
There was no options granted and exercised in FY2011.
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 9 to 16 of the Annual Report.
Directors’ interests in contracts
Except as disclosed in the financial statements, no Director of the Company received or, entitled to receive a benefit by reason of a
contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member or with a
company in which the director has a substantial financial interest.
Auditors
The accounts for the year were audited by HLB Hodgson Impey Cheng whose term of office will expire upon the forthcoming annual
general meeting.
To comply with revised Rule 712 of the Listing Manual of SGX-ST which came effective on 29 September 2011, the Audit Committee
has recommended and the Board has agreed that subject to shareholders’ approval at the forthcoming AGM, Foo Kon Tan Grant
Thornton LLP be appointed as auditors of the Company in place of HLB Hodgson Impey Cheng for the financial year ending
31 December 2012.
ON BEHALF OF THE BOARD
Tse Kin Man
Chairman
Chiu Kwong Fai
Director
30 March 2012
18 Plastoform Holdings Limited
Annual Report 2011
STATEMENT BY DIRECTORS
We, Tse Kin Man and Chiu Kwong Fai, being two of the Directors of Plastoform Holdings Limited, do hereby state that, in the opinion
of the directors,
(i) the accompanying consolidated statement of financial position, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows of the Group and the statement of financial position
of the Company, together with the notes thereto, as set out on pages 21 to 73, 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 31 December 2011 and of the loss of the business, changes in
equity and cash flows of the Group for the 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.
.............................................
Tse Kin Man
Chairman
.............................................
Chiu Kwong Fai
Director
30 March 2012
Annual Report 2011
Plastoform Holdings Limited
19
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF PLASTOFORM HOLDINGS LIMITED (INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)
We have audited the consolidated financial statements of Plastoform Holdings Limited (the “Company”) and its subsidiaries (collectively
referred to as the “Group”) set out on pages 21 to 73, which comprise the consolidated and company statements of financial position
as at 31 December 2011, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory information.
Directors’ Responsibility for the Consolidated Financial Statements
The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards, and for such internal control as the directors determine is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit, and to report our opinion
solely to you, as a body, in accordance with Section 90 of the Companies Act of Bermuda, 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 about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December
2011, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting
Standards.
HLB Hodgson Impey Cheng
Chartered Accountants
Certified Public Accountants
Hong Kong, 30 March 2012
Partner-in-charge: Jonathan Lai
20 Plastoform Holdings Limited
Annual Report 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
2011
2010
HK$’000
HK$’000
327,010
312,066
Cost of sales
(302,498)
(305,797)
Gross profit
24,512
6,269
9,794
1,036
(7,178)
(7,303)
(41,435)
(48,626)
(14,307)
(48,624)
Notes
Revenue
5
Other income and net gains
5
Selling and distribution costs
Other operating expenses
Loss before income tax
6
Income tax expense
7
Loss for the year attributable to owners of the Company
(14,307)
Other comprehensive income
-
(48,624)
-
Total comprehensive expense attributable to owners of the Company
(14,307)
(48,624)
Loss per share attributable to owners of the Company during the year
Basic loss per share (HK cents)
8
(4.23)
(14.39)
Diluted loss per share (HK cents)
8
(4.23)
(14.39)
Annual Report 2011
Plastoform Holdings Limited
21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2011
Notes
2011
2010
HK$’000
HK$’000
Assets
Non-current assets
Property, plant and equipment
9
12,925
18,141
Current assets
Inventories
12
61,912
44,268
Trade receivables
13
99,571
56,021
Deposits, prepayments and other receivables
14
2,815
3,695
Cash and cash equivalents
15
14,404
12,161
178,702
116,145
191,627
134,286
Total assets
Liabilities
Current liabilities
Trade payables
16
109,111
64,676
Other payables and accruals
17
21,443
19,806
Advances from shareholders
18
25,229
-
155,783
84,482
35,844
49,804
Net assets
Equity attributable to owners of the Company
Share capital
Reserves
Total equity
20
67,600
67,600
(31,756)
(17,796)
35,844
49,804
22 Plastoform Holdings Limited
Annual Report 2011
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2011
Notes
Assets
Non-current assets
Investments in subsidiaries
10
Current assets
Cash and cash equivalents
Total assets
2011
2010
HK$’000
HK$’000
52,768
52,421
1,541
-
54,309
52,421
Liabilities
Current liabilities
Amount due to a subsidiary
10
2,846
2,846
Advances from shareholders
18
25,229
-
28,075
2,846
26,234
49,575
67,600
(41,366)
67,600
(18,025)
26,234
49,575
Net assets
Equity attributable to owners of the Company
Share capital
Reserves
20
Total equity
The financial statements were approved and authorised for issue by the Board of Directors on 30 March 2012 and signed on its
behalf by:
Tse Kin Man
Director
Chiu Kwong Fai
Director
Annual Report 2011
Plastoform Holdings Limited
23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011
Reserves
Share
capital
Share
premium
Share
options
reserve
Accumulated
losses
Total
Total
equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
67,600
90,056
138
(59,920)
30,274
97,874
Total comprehensive expense
−
−
−
(48,624)
(48,624)
(48,624)
Recognition of equity-settled sharebased payments
−
−
554
67,600
90,056
692
(108,544)
(17,796)
49,804
Total comprehensive expense
−
−
−
(14,307)
(14,307)
(14,307)
Recognition of equity-settled sharebased payments
−
−
347
−
347
347
Transfer to accumulated losses
arising from lapse of share options
−
−
(203)
203
−
−
67,600
90,056
836
Group
At 1 January 2010
At 31 December 2010
and 1 January 2011
At 31 December 2011
24 Plastoform Holdings Limited
Annual Report 2011
−
(122,648)
554
(31,756)
554
35,844
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011
Reserves
Share
capital
Share
premium
Share
options
reserve
Accumulated
losses
Total
Total
equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
67,600
90,056
138
(60,042)
30,152
97,752
Total comprehensive expense
−
−
−
(48,731)
(48,731)
(48,731)
Recognition of equity-settled sharebased payments
−
−
554
67,600
90,056
692
(108,773)
(18,025)
49,575
Total comprehensive expense
−
−
−
(23,688)
(23,688)
(23,688)
Recognition of equity-settled sharebased payments
−
−
347
Transfer to accumulated losses
arising from lapse of share options
−
−
(203)
67,600
90,056
Company
At 1 January 2010
At 31 December 2010
and 1 January 2011
At 31 December 2011
836
−
554
−
347
347
203
−
−
(132,258)
Annual Report 2011
554
(41,366)
26,234
Plastoform Holdings Limited
25
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011
Note
2011
2010
HK$’000
HK$’000
Cash flows from operating activities
Loss before income tax
Adjustments for:
Depreciation of property, plant and equipment
Equity settled share-based payment expenses
Provision for impairment of trade receivables
(14,307)
(48,624)
5,795
6,959
347
554
3,577
5,218
(933)
Reversal of provision for impairment of trade receivables
−
Provision for impairment of inventories
Gain on disposal of property, plant and equipment
Interest income from bank deposits
Operating cash flows before changes in working capital
(184)
9,326
(3,524)
(24)
(2)
(174)
(9,047)
(26,949)
(17,644)
(34,981)
Changes in working capital:
Inventories
−
Financial assets at fair value through profit or loss
(46,194)
Trade receivables
880
Deposits, prepayments and other receivables
Trade payables
Other payables and accruals
Cash used in operations
Net cash used in operating activities
(20,820)
(1,356)
44,435
42,911
1,637
3,613
(25,933)
(29,571)
2
Interest received
8,011
174
(25,931)
(29,397)
(2,560)
(3,591)
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
5,505
Net cash generated from / (used in) investing activities
2,945
24
(3,567)
Cash flows from financing activities
Advances from shareholders
25,229
−
Net cash generated from financing activities
25,229
−
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
26 Plastoform Holdings Limited
Annual Report 2011
15
2,243
(32,964)
12,161
45,125
14,404
12,161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
1.
GENERAL INFORMATION
Plastoform Holdings Limited (the “Company”) was incorporated in Bermuda on 19 September 2003 as an exempted
company with limited liability under the Companies Act 1981 of Bermuda.
The Company’s shares are listed on the Singapore Exchange Securities Trading Limited.
The Company’s principal office is located at Room 902-4, Seapower Centre, 73 Lei Muk Road, Kwai Chung, New Territories,
Hong Kong. The Company’s registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
The principal activity of the Company is investment holding. The principal activities and other particulars of the Company’s
subsidiaries are set out in Note 10 to these consolidated financial statements.
As at 31 December 2011, the ultimate parent of the Company is Konkin Limited (“Konkin”), a company incorporated in the
British Virgin Islands and controlled by Mr. Chiu Kwong Fai and Mr. Tse Kin Man, directors of the Company.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) and IFRIC interpretations. The consolidated financial statements have been prepared under
the historical cost convention.
The financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand (HK$’000)
except otherwise indicated.
The preparation of financial statements in conformity with IFRS 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. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 4.
Annual Report 2011
Plastoform Holdings Limited
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
2.1.1
Changes in accounting policy and disclosures
(CONTINUED)
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial year
beginning 1 January 2011.
●Amendments to IFRS 1, ‘Limited exemption from comparative IFRS 7 disclosures for first-time adopters’. The
amendment is to provide first-time adopters with the same transition provisions as included in the March 2009
amendments to IFRS 7 in relation to relief from presenting comparative information that ended before 31 December
2009 for new fair value disclosures requirements.
●IFRS 1, ‘First time Adoption of International Financial Reporting Standards’.
Accounting policy changes in the year adoption
Clarifies that, if a first-time adopter changes its accounting policies or its use of the exemptions in IFRS 1 after it
has published an interim financial report in accordance with IAS 34, ‘Interim financial reporting’, it should explain
those changes and update the reconciliations between previous GAAP and IFRSs.
Revaluation basis as deemed cost
Allows first-time adopters to use an event-driven fair value as deemed cost, even if the event occurs after the date
of transition but before the first IFRS financial statements are issued. When such remeasurement occurs after the
date of transition to IFRSs but during the period covered by its first IFRS financial statements, any subsequent
adjustment to that even-driven fair value is recognised in equity.
Use of deemed cost for operations subject to rate regulation
Entities subject to rate regulation are allowed to use previous GAAP carrying amounts of property, plant and
equipment or intangible assets as deemed cost on an item-by-item basis. Entities that use this exemption are
required to test each item for impairment under IAS 36 at the date of transition.
28 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
2.1.1 Changes in accounting policy and disclosures (continued)
(a) New and amended standards adopted by the Group (continued)
●IFRS 3, ‘Business combinations’.
Transition requirements for contingent consideration from a business combination that occurred before the effective
date of the revised IFRS
Clarifies that entities should apply the rules in IFRS 3 (not IFRS 7, IAS 32 or IAS 39) to contingent consideration
that arose from business combinations with acquisition dates that precede the application of IFRS 3.
Measurement of non-controlling interests
Clarifies that only entities with present ownership instruments that entitle their holders to a pro rata share of the
entity’s assets in the event of liquidation can choose to measure the non-controlling interest at fair value or the noncontrolling interest’s proportionate share of the acquiree’s identifiable net assets.
Un-replaced and voluntarily replaced share-based payment awards
The application guidance in IFRS 3 applies to all share based payment transactions that are part of a business
combination, including un-replaced and voluntarily replaced share-based payment awards.
●IFRIC Int – 19, ‘Extinguishing financial liabilities with equity instruments’, effective 1 July 2010. The interpretation
clarifies the accounting by the debtor when the debtor renegotiates the terms of its debt with the result that the
liability is extinguished through issuing its own equity instruments to the creditor (i.e. a “debt for equity swap”). A
gain or loss recognised in profit or loss is the difference between the fair value of the equity instruments issued are
the carrying amount of the liability.
If the fair value of the equity instruments cannot be reliably measured then the fair value of the existing financial
liability is used to measure the gain or loss.
The amount of the gain or loss should be separately disclosed on the face of the statement of comprehensive
income or in the notes.
This interpretation applies to all debtors that enter into debt for equity swap transactions in full or partial settlement
of a financial liability.
Annual Report 2011
Plastoform Holdings Limited
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
2.1.1 Changes in accounting policy and disclosures (continued)
(CONTINUED)
(a) New and amended standards adopted by the Group (continued)
●IAS 24 (Revised), ‘Related party disclosures’. The amendment introduces an exemption from all of the disclosure
requirements of IAS 24 for transactions among government-related entities and the government. Those disclosures
are replaced with a requirement to disclose:
− the name of the government and the nature of their relationship; and
− the nature and amount of any individually-significant transactions; and
− the extent of any collectively-significant transactions qualitatively or quantitatively.
It also clarifies and simplifies the definition of a related party.
●IAS 32 (Amendment), ‘Classification of rights issues’. Rights issues are now required to be classified as equity if
they are issued for a fixed amount of cash regardless of the currency in which the exercise price is denominated,
provided they are offered on a pro rata basis to all owners of the same class of non-derivative equity. Entities will
no longer classify rights issues, for which non-derivative the exercise price is denominated in a foreign currency, as
derivative liabilities with fair value changes being recorded in profit or loss. Rather, entities will be able to classify
these rights in equity with no re-measurement.
The scope of the amendment is narrow and does not extend to foreign-currency-denominated convertible bonds.
For these instruments, the embedded option to acquire the issuer’s equity will continue to be accounted for as a
derivative liability with fair value changes recorded in profit or loss.
30 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
2.1.1 Changes in accounting policy and disclosures (continued)
(b) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January
2011 but not currently relevant to the Group
●Amendment to IFRIC Int – 14, ‘Prepayments of a minimum funding requirement’, some entities that are subject to
a minimum funding requirement have elected to prepay their pension contributions. The prepaid contributions are
recovered through lower minimum funding requirements in future years. The previous version of IFRIC Int – 14 did
not permit the recognition of an asset for any surplus arising from the voluntary prepayment of minimum funding
contributions in respect of future service. This was an unintended consequence of the interpretation, which has
been amended to require that an asset is recognised in these circumstances.
(c) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January
2011 and not early adopted
●IFRS 1 (Amendment), ‘Severe hyperinflation and removal of fixed dates for first-time adopters’, effective 1 July 2011.
These amendments include two changes to IFRS 1, ‘First-time adoption of IFRS’. The first replaces references to
a fixed date of 1 January 2004 with ‘the date of transition to IFRSs’, thus eliminating the need for entities adopting
IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs.
The second amendment provides guidance on how an entity should resume presenting financial statements in
accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional
currency was subject to sever hyperinflation.
●IFRS 7 (Amendment), ‘Disclosures – Transfers of financial assets’, effective 1 July 2011. This amendment will
promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk
exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position,
particularly those involving securitisation of financial assets.
●IFRS 9, ‘Financial Instruments’, effective 1 January 2015. IFRS 9 is the first standard issued as part of a wider
project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary
measurement categories for financial assets: amortised cost and fair value. The basis of classification depends on
the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS
39 on impairment of financial assets and hedge accounting continues to apply.
Annual Report 2011
Plastoform Holdings Limited
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
(CONTINUED)
2.1.1 Changes in accounting policy and disclosures (continued)
(c) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January
2011 and not early adopted (continued)
●IFRS 7 and IFRS 9 (Amendments), ‘Mandatory effective date and transition disclosure’. IFRS 7 and IFRS 9
(Amendments) delay the effective date to annual periods beginning on or after 1 January 2015, and also modify
the relief from restating prior periods. As part of this relief, additional disclosures on transition from IAS 39 to IFRS
9 are required.
●IFRS 10, ‘Consolidated financial statements’, effective 1 January 2013. The objective of IFRS 10 is to establish
principles for the presentation and preparation of consolidated financial statements when an entity controls one or
more other entity (an entity that controls one or more other entities) to present consolidated financial statements.
Defines the principle of control, and establishes control as the basis for consolidation. Set out how to apply the
principle of control to identify whether an investor controls an investee and therefore must consolidate the investee.
It also sets out the accounting requirements for the preparation of consolidated financial statements.
●IFRS 11, ‘Joint arrangements’, effective 1 January 2013, IFRS 11 is a more realistic reflection of joint arrangements
by focusing on the rights and obligations of the arrangements by focusing on the rights and obligations of the
arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures.
Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement
and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint
operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional
consolidation of joint ventures is no longer allowed.
●IFRS 12, ‘Disclosure of interests in other entities’, IFRS 12 includes the disclosure requirements for all forms of
interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance
sheet vehicles.
●IFRS 13, ‘Fair value measurements’. IFRS 13 aims to improve consistency and reduce complexity by providing
a precise definition of fair value and a single source of fair value measurement and disclosure requirements for
use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the
use of fair value accounting but provide guidance on how it should be applied where its use is already required or
permitted by other standards within IFRSs or US GAAP.
32 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1
Basis of preparation (continued)
2.1.1
Changes in accounting policy and disclosures (continued)
(c) New standards, amendments and Interpretations issued but not effective for the financial year beginning 1 January
2011 and not early adopted (continued)
●IAS 1 (Amendment), ‘Presentation of financial statements’, effective 1 July 2012, the main change resulting from
these amendments is a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on
the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments).
The amendments do not address which items are presented in OCI.
●IAS 12 (Amendment), ‘Deferred tax: Recovery of underlying assets’, effective 1 January 2012. Income taxes
currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity
expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess
whether recovery will be through use or through sale when the asset is measured using the fair value model in
IAS 40, ‘Investment property’. This amendment therefore introduces an exception to the existing principle for the
measurement of deferred tax assets or liabilities arising on investment property measured at fair value. As a result
of the amendments, SIC 21, ‘Income taxes – recovery of revalued non-depreciable assets’, will no longer apply to
investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance
previously contained in SIC 21, which is withdrawn.
●IAS 19 (Amendment), ‘Employee benefits’. These amendments eliminate the corridor approach and calculate
finance costs as on a net funding basis.
●IAS 27 (revised 2011), ‘Separate financial statements’, effective 1 January 2013. IAS 27 (revised 2011) includes the
provisions on separate financial statements that are left after the control provisions of IAS 27 have been included
in the new IFRS 10.
●IAS 28 (revised 2011), ‘Associates and joint ventures’, effective 1 January 2013. IAS 28 (revised) includes the
requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11.
Annual Report 2011
Plastoform Holdings Limited
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
(CONTINUED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.2Consolidation
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies generally accompanying a shareholding of more than one half of the voting rights. 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 fully consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the recognised amount
of acquiree’s identifiable net assets. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted
to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable
costs of investment.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill. If this consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the statement of comprehensive income.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
2.3
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the
operating segments and making strategic decisions.
34 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the Company operates (the “functional currency”). The consolidated financial
statements are presented in Hong Kong dollars (HK$), which is the Company’s functional currency and the Group’s
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the consolidated statement of comprehensive income. Foreign exchange gains and losses that
relate to cash and cash equivalents are presented in the consolidated statement of comprehensive income. All other
foreign exchange gains and losses are presented in the consolidated statement of comprehensive income.
2.5
Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged
to the consolidated statement of comprehensive income during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, as follows:
Plant and machinery
: 15% - 20% per annum
Furniture, fixtures and equipment
: 15% - 20% per annum
Motor vehicles
: 25% per annum
Yacht
: 25% per annum
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (Note 2.6).
Annual Report 2011
Plastoform Holdings Limited
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.5
Property, plant and equipment (continued)
(CONTINUED)
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised
within “other income and net gains” in the consolidated statement of comprehensive income.
2.6
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cashgenerating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at the end of each reporting period.
2.7
Financial assets
2.7.1 Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also
categorised as held for trading unless they are designated as hedges. Assets in this category are classified as
current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the end of the reporting period. These are classified as non-current assets. The Group’s loans and
receivables comprise trade receivables, deposits, prepayment and other receivable, and cash and cash
equivalents in the consolidated statement of financial position.
36 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.7
Financial assets (continued)
2.7.1 Classification (continued)
(c)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose of it within 12 months of the end of the reporting period.
2.7.2 Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date – the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit
or loss are initially recognised at fair value, and transaction costs are expensed in the consolidated statement of
comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments
have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried
at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are presented in the consolidated statement of comprehensive income within “other gains – net”, in the
period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised
in the consolidated statement of comprehensive income as part of other income when the Group’s right to receive
payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in
other comprehensive income.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments
recognised in equity are included in the consolidated statement of comprehensive income.
Annual Report 2011
Plastoform Holdings Limited
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.7
Financial assets (continued)
(CONTINUED)
2.7.2 Recognition and measurement (continued)
Interest on available-for-sale securities calculated using the effective interest method is recognised in the consolidated
statement of comprehensive income as part of other income. Dividends on available-for-sale equity instruments are
recognised in the consolidated statement of comprehensive income as part of other income when the Group’s right
to receive payments is established.
2.8
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously.
2.9 Impairment of financial assets
(a)
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
● significant financial difficulty of the issuer or obligor;
● a breach of contract, such as a default or delinquency in interest or principal payments;
●the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
38 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9 Impairment of financial assets (continued)
(a)
Assets carried at amortised cost (continued)
● it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
● the disappearance of an active market for that financial asset because of financial difficulties; or
● observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists.
For loans and receivables category, 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. The carrying amount of the asset is
reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the
reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive
income.
Annual Report 2011
Plastoform Holdings Limited
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9 Impairment of financial assets (continued)
(b)
(CONTINUED)
Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or
a group of financial assets is impaired. For debt securities, the Group uses the criteria referred to (a) above. In the
case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the
security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity
and recognised in the separate consolidated statement of comprehensive income. Impairment losses recognised
in the separate consolidated statement of comprehensive income on equity instruments are not reversed through
the separate consolidated statement of comprehensive income. If, in a subsequent period, the fair value of a debt
instrument classified as available for sale increases and the increase can be objectively related to an event occurring
after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the separate
consolidated statement of comprehensive income.
Impairment testing of trade receivables is described in Note 2.11.
2.10Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. The
cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production
overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
price in the ordinary course of business, less applicable variable selling expenses.
40 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.11
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of
business. If collection of trade receivables is expected in one year or less (or in the normal operating cycle of the business
if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
2.12
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of three months or less.
2.13
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
2.14
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Annual Report 2011
Plastoform Holdings Limited
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.15
Current and deferred income tax
(CONTINUED)
The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statement of
comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
(a)
Current income tax
he current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
T
of the reporting period in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulations is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
(b)
Deferred income tax
Inside basis difference
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax
liabilities is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Outside basis difference Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred
income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.
(c)
Offsetting Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes
levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
42 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.16
Employee benefits
(i)
Salaries, annual bonuses, paid annual leave, leave passage and the cost to the Group of non-monetary benefits are
accrued in the year in which employees of the Group render the associated services. Where payment or settlement
is deferred and the effect would be material, these amounts are stated at their present values.
(ii)
The Group participates in the mandatory provident fund for its employees in Hong Kong. Contributions to the funds
by the Group and the employees are calculated as a percentage of the employees’ basic salaries. The pension costs
charged to the consolidated statement of comprehensive income represent contributions payable by the Group to
the fund. The Group’s contributions to the fund are expensed as incurred and the Group’s voluntary contributions are
reduced by contributions forfeited by those employees who leave the fund prior to vesting fully in the contributions.
The assets of the fund are held separately from those of the Group in an independently administered fund.
(iii)
Termination benefits are payable when employment is terminated by the Group before the normal retirement date,
or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan
to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made
to encourage voluntary redundancy, the termination benefits are measured based on the number of employees
expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are
discounted to their present value.
(iv)
Certain of the Group’s employees have completed the required number of years of service to the Group in order to
be eligible for long service payments under the Hong Kong Employment Ordinance (the “Employment Ordinance”)
in the event of the termination of their employment. The Group is eligible to make such payments in the event that
such a termination of employment meets the circumstances specified in the Employment Ordinance. A provision is
recognised in respect of probable future long service payments based on the best estimate of the probable future
outflow of resources which has been earned by the eligible employees from their service to the Group at the end of
the reporting period in the event of the termination of their employment.
Annual Report 2011
Plastoform Holdings Limited
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.17
Share-based payments
(CONTINUED)
The Group operates an equity-settled, share-based compensation plan, under which the Company receives services from
employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received
in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total
expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the Company revises its estimates of the number of options that are expected
to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any,
in the consolidated statement of comprehensive income, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is
treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair
value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding
credit to equity in the parent equity account.
2.18Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as interest expense.
44 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.19
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the
ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after
eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic
benefits will flow to the Company, as follows:
(i)
Sales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted
the products and collectibility of the related receivables is reasonably assured.
(ii)
Interest income is recognised on a time-proportion basis using the effective interest method.
2.20Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to
the consolidated statement of comprehensive income on a straight-line basis over the period of the lease.
Annual Report 2011
Plastoform Holdings Limited
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
3.
FINANCIAL RISK MANAGEMENT
3.1
Financial risk factors
(CONTINUED)
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk,
cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance.
(a)
Market risk
(i)
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the
United States dollars in which substantially all of the Group’s sales are denominated. Foreign exchange risk arises
when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the
Group’s functional currency.
As the Hong Kong dollars are pegged to the United States dollars, the directors of the Company consider that any
reasonably possible changes in the United States dollars exchange rate would not have a material effect on the
Group’s results and equity, and a sensitivity analysis for foreign exchange risk has not been presented. The directors
of the Company consider that the Group does not have significant foreign exchange risk and thus does not have any
active policies to manage its foreign exchange risk.
(ii)
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets and liabilities, the Group’s income and operating cash flows
are substantially independent of changes in market interest rates.
(iii)
Price risk
The Group is exposed to price fluctuations of raw materials used in the production of the Group’s products, which are
influenced by regional supply and demand conditions. Price fluctuations of raw materials could adversely affect the
Group’s financial performance. The Group historically has not entered into any derivative instruments to hedge the
potential price change.
46 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
3.
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.1
Financial risk factors (continued)
(b)
Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as
credit exposures to customers, including outstanding receivables. The Group has policies in place to ensure that
sales of products are made to customers with an appropriate credit history and the Group performs periodic credit
evaluations of its customers. The Group’s historical experience in collection of trade and other receivables falls within
the recorded allowances and the directors of the Company consider that adequate provision for uncollectible trade
and other receivables has been made in the consolidated financial statements.
As at 31 December 2011, the Group had certain concentrations of credit risk as approximately 5% (2010: 14%) and
76% (2010: 58%) of the Group’s trade receivables were due from the Group’s largest customer and the five largest
customers, respectively.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and short-term bank deposits. The Group
regularly reviews its major funding positions to ensure that it has adequate financial resources in meeting its financial
obligations.
The Group’s financial liabilities principally comprise trade payables, other financial liabilities included in other payables
and accruals and advances from shareholders, all of which are expected to be settled within 1 year and are included
in current liabilities.
Annual Report 2011
Plastoform Holdings Limited
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
3.
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.2
Capital management
(CONTINUED)
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
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 sell assets to reduce debt. The Group is not subject to any externally imposed
capital requirements. No changes were made in the objectives, policies or processes during the years ended 31 December
2011 and 2010.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as
net debt divided by total capital. Net debt is calculated as total borrowings (including advances from shareholders) less cash
and cash equivalents. Total capital is calculated as equity plus net debt.
The gearing ratio at 31 December 2011 was as follows:
2011
HK$’000
Advances from shareholders
Less: Cash and cash equivalents
25,229
(14,404)
Net debt
10,825
Total equity
35,844
Total capital
46,669
23%
Gearing ratio
As at 31 December 2010, the Group did not have any net debt and therefore its gearing ratio was nil.
48 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
3.
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.3
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
−
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
−Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level 2).
−
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
As at 31 December 2011 and 2010, the Group did not hold any financial instruments measured at fair value in the above
hierarchy.
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
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 addressed below.
(a) Estimated impairment of non-financial assets
The Group evaluates whether its non-financial assets (principally comprising property, plant and equipment) have
suffered any impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be recoverable, in accordance with the stated accounting policy. The recoverable amounts of cash-generating
units have been determined based on value-in-use calculations. These calculations require the use of estimates.
Annual Report 2011
Plastoform Holdings Limited
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
4.
(CONTINUED)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
4.1 Critical accounting estimates and assumptions (continued)
(b) Estimated useful lives of property, plant and equipment
Management determines the estimated useful lives and related depreciation charges for its property, plant and
equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment
of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions.
Management will increase the depreciation charge where useful lives are less than previously estimated, or it will writeoff or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(c)
Net realisable value of inventories
Net realisable value of inventories is the estimated selling price in the ordinary course of business, less variable selling
expenses. 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 changes in customer demand and competitor actions.
Management reassesses these estimates at the end of the reporting period.
4.2
Critical judgements in applying the Company’s accounting policies
(a) Impairment loss of trade receivables
The Group’s policy for doubtful receivables is based on the on-going evaluation of the collectibility and aging analysis of
the trade and other receivables and on management’s judgements. Considerable judgement is required in assessing
the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of
each debtor, and the present values of the estimated future cash flows discounted at the effective interest rates. If
the financial conditions of the Group’s debtors were to deteriorate, resulting in an impairment of their ability to make
payments, additional impairment loss of trade and other receivables may be required.
(b) Impairment loss of inventories
The management of the Group reviews the inventory ageing analysis at the end of each reporting period, and identifies
the slow-moving inventory items that are no longer suitable for use in production. In addition, the Group carries out an
inventory review on a product-by-product basis at the end of each reporting period and makes allowance for obsolete
items. For the year ended 31 December 2011, the Group did not make any significant provision for impairment loss in
respect of inventories, whereas the Group made provision for impairment losses of approximately HK$9,326,000 for
the year ended 31 December 2010.
50 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
5. REVENUE AND OTHER INCOME AND NET GAINS
The directors of the Company review the Group’s internal financial reporting and other information and also obtain other
relevant external information in order to assess performance and allocate resources. Operating segment is identified with
reference to these.
The directors of the Company consider that the business of the Group is organised in one operating segment as the design
and production of audio products. Additional disclosure in relation to segment information is not presented as the directors
of the Company assess the performance of the sole operating segment identified based on the consistent information as
disclosed in the consolidated financial statements.
The total net segment income is equivalent to total comprehensive income for the year as shown in the consolidated
statement of comprehensive income and the total segment assets and total segment liabilities are equivalent to total assets
and total liabilities as shown in the consolidated statement of financial position. Details of interest income, depreciation and
amortisation in relation to the sole operating segment are disclosed below and in Note 6 below respectively.
Annual Report 2011
Plastoform Holdings Limited
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
5.
REVENUE AND OTHER INCOME AND NET GAINS (CONTINUED)
2011
2010
HK$’000
HK$’000
327,010
312,066
Bad debts recovered
2,198
−
Gain on disposal of property, plant and equipment
3,524
24
2
174
1,314
−
636
512
2,120
326
9,794
1,036
94,419
153,506
147,533
102,495
79,815
42,180
5,243
13,885
327,010
312,066
Revenue
Sales of audio products
Other income and net gains
Interest income from bank deposits
Net exchange gains
Product development income
Sundry income
Revenue by geographical area of principal markets determined on the basis of
destination of delivery of products:
United States of America
Europe
Asia
Others
Total revenue
52 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
5.
REVENUE AND OTHER INCOME AND NET GAINS (CONTINUED)
The Company is domiciled in Bermuda with the Group’s major operations in Hong Kong and Mainland China. Save for plant
and equipment and inventories of the Group which are located in Mainland China, most of the Group’s assets and liabilities
are located in Hong Kong.
Revenues from customers contributing over 10% of total sales of the Group are as follows:
2011
2010
HK$’000
HK$’000
Customer A
69,040
64,754
Customer B
65,209
48,537
Customer C
47,392
40,983
2011
2010
HK$’000
HK$’000
17,474
23,197
− Share options granted to employees
347
554
− Termination benefits
839
839
3
102
472
755
19,135
25,447
2011
2010
HK$’000
HK$’000
695
642
3,600
3,600
24
24
4,319
4,266
6.
LOSS BEFORE INCOME TAX
Loss before income tax is arrived at after charging / (crediting):
Employee benefits expense (including directors’ remuneration)
− Salaries and allowances
− Provision for long service payments
− Pension costs - defined contribution plans
Directors’ remuneration
− Fees paid to non-executive directors
− Salaries and allowances
− Pension costs - defined contribution plans
Annual Report 2011
Plastoform Holdings Limited
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
6.
(CONTINUED)
LOSS BEFORE INCOME TAX (CONTINUED)
Loss before income tax is arrived at after charging / (crediting):
2011
2010
HK$’000
HK$’000
Audit fees paid to auditors of the Company for audit services
− provision for current year
650
550
− under-provision in prior year
100
−
750
550
Depreciation of property, plant and equipment
5,795
6,959
Provision for impairment of trade receivables
3,577
5,218
Reversal of provision for impairment of trade receivables
(184)
2,239
2,181
302,498
305,797
Provision for impairment of inventories (included in cost of sales)
−
9,326
Net exchange losses
−
267
349
304
Minimum lease payments under operating leases in respect of rented office premises
Cost of inventories expensed
Development expenses
Gain on disposal of property, plant and equipment
7.
(933)
(3,524)
(24)
INCOME TAX EXPENSE
The Company was incorporated in Bermuda as an exempted company with limited liability under the Companies Act of
Bermuda and accordingly is exempted from income tax in Bermuda until 2016.
Hong Kong profits tax is calculated at a rate of 16.5% (2010: 16.5%) on the estimated assessable profits arising in or derived
from Hong Kong for the year.
54 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
7.
INCOME TAX EXPENSE (CONTINUED)
During the year ended 31 December 2011, Plastoform Industries Limited (“PIL”), a wholly-owned subsidiary of the Company,
was subject to inquiries from the Inland Revenue Department of Hong Kong (“IRD”) concerning its Hong Kong tax affairs
for the years of assessment 2005/2006 to 2009/2010 (that is, for the financial years ended 31 December 2005 to 2009).
Subsequent to the end of the reporting period, in January 2012, the IRD issued an additional assessment against PIL for
additional profits tax of approximately HK$3.8 million for the year of assessment 2005/2006 (that is, for the financial year
ended 31 December 2005). The directors of the Company consider that the additional assessment is a protective assessment
and the inquiries from the IRD are still at a fact-finding stage. PIL has in February 2012 lodged with the IRD its notice to
object against additional assessment, and has in March 2012 applied for an unconditional holdover of tax in dispute of
approximately HK$3.2 million and a conditional holdover of tax of approximately HK$0.6 million by way of purchase of a tax
reserve certificate. PIL has also submitted information to the IRD in support of its tax position. Accordingly, the directors of the
Company believe that no provision for Hong Kong profits tax is necessary in respect of the aforesaid additional assessment
as of 31 December 2011.
The tax on the Group’s loss before income tax differs from the theoretical amount that would arise using the Hong Kong profits
tax rate of 16.5% (2010: 16.5%) as follows:
Loss before income tax
Tax calculated at the Hong Kong profits tax rate of 16.5% (2010: 16.5%)
Expenses not deductible for tax purposes
Income not subject to tax
2011
2010
HK$’000
HK$’000
(14,307)
(48,624)
(2,360)
(8,022)
3,333
912
(1,985)
(76)
1
Tax losses for which no deferred tax assets were recognised
(191)
Utilisation of previously unrecognised tax losses
1,392
Tax effect of temporary difference not recognised
(190)
50% offshore manufacturing (profits) / loss claim
Income tax expense
−
Annual Report 2011
3,398
−
741
3,047
−
Plastoform Holdings Limited
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
8.
LOSS PER SHARE
(a)Basic
The basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the year ended 31 December 2011 of 338,000,000 (2010: 338,000,000) ordinary
shares.
(b) Diluted
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company’s dilutive potential ordinary shares represent share
options. For share options, a calculation is done to determine the number of shares that could have been acquired at fair
value (determined as the average annual market share price of the Company’s shares) based on the monetary value of
the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the exercise of the share options.
Number of shares
Weight average number of ordinary shares
for the purpose of calculating diluted loss per share
2011
2010
(in‘000)
(in‘000)
338,000
338,000
Diluted loss per share for the year ended 31 December 2011 has not been disclosed as no diluting event existed during
the year ended 31 December 2011.
The computation of diluted loss per share for the year ended 31 December 2010 did not assume the exercise of the
Company’s share options outstanding during the year ended 31 December 2010 since their exercise would result in a
decrease in loss per share.
56 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
9.
PROPERTY, PLANT AND EQUIPMENT
Group
At cost:
At 1 January 2010
Additions
Disposals
At 31 December 2010
and 1 January 2011
Additions
Plant and
machinery
Furniture,
fixtures and
equipment
Motor
vehicles
Yacht
Total
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
54,203
28,550
4,364
3,716
90,833
1,535
2,056
−
−
3,591
−
−
−
55,113
30,606
4,364
3,716
93,799
518
2,042
−
−
2,560
−
−
(11,917)
(625)
Disposals
(11,297)
At 31 December 2011
44,334
32,028
4,364
3,716
84,442
Accumulated depreciation:
At 1 January 2010
41,465
20,018
4,125
3,716
69,324
4,401
2,408
150
−
6,959
−
−
−
45,241
22,426
4,275
3,716
75,658
3,123
2,583
89
−
5,795
−
−
(9,936)
Charge for the year
On disposals written back
At 31 December 2010
and 1 January 2011
Charge for the year
(625)
(620)
(625)
(528)
(625)
On disposals written back
(9,408)
At 31 December 2011
38,956
24,481
4,364
3,716
71,517
Net book value:
At 31 December 2011
5,378
7,547
−
−
12,925
At 31 December 2010
9,872
8,180
89
−
18,141
Depreciation of property, plant and equipment of approximately HK$3,359,000 (2010: HK$4,437,000) and approximately
HK$2,436,000 (2010: HK$2,522,000) has been charged in “Cost of sales” and “Other operating expenses” respectively.
Annual Report 2011
Plastoform Holdings Limited
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
10. INVESTMENTS IN AND AMOUNTS DUE FROM / (TO) SUBSIDIARIES
Company
Unlisted shares, at cost
Capital contribution relating to share-based payment
2011
2010
HK$’000
HK$’000
52,421
75,022
347
554
52,768
75,576
−
(23,155)
52,768
52,421
2011
2010
HK$’000
HK$’000
Amounts due from subsidiaries
107,607
85,576
Less: Provision for impairment
(107,607)
(85,576)
Less: Provision for impairment
−
−
The amounts due from / (to) subsidiaries are unsecured, interest-free, denominated in Hong Kong dollars and repayable on
demand.
58 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
10. INVESTMENTS IN AND AMOUNT DUE FROM / (TO) SUBSIDIARIES (CONTINUED)
Details of the Company’s subsidiaries as at 31 December 2011 are as follows:
Issued and paidup share
capital/registered
capital
Equity
interest
held by the
Company
Principal activities
British Virgin
Islands
US$100
100%
Investment holding
Plastoform Industries Limited
Hong Kong
Ordinary shares
HK$500,000
100%
Manufacture and sales of
audio products
Wave9 Systems Limited
Hong Kong
Ordinary shares
HK$4,000,000
100%
Manufacture of audio
products
Gekko Industries Limited
Hong Kong
Ordinary shares
HK$1
100%
Investment holding
iUi Design Limited
Hong Kong
Ordinary shares
HK$1
100%
Sales of audio products
The PRC
Registered capital 100%
US$1,000,000 (of
which US$257,080
has been paid up
to 31 December
2011) (Note)
Manufacture and sales of
audio products
Inactive
Name of subsidiary
Place of
incorporation
and operations
Held by the Company
PFM International Limited
Held by PFM International Limited
Held by Gekko Industries Limited
Heyuan Gekko Electronics
Company Limited (“河源捷高電子有
限公司”)
Held by Plastoform Industries Limited
TT Tech Limited
Hong Kong
Ordinary shares
HK$2,000,000
100%
捷永創科電子(深圳)有限公司
The PRC
Registered capital 100%
RMB100,000
Manufacture and sales of
audio products
Note: Heyuan Gekko Electronics Company Limited is a wholly owned foreign enterprise established in the PRC. As of
31 December 2011, Gekko Industries Limited is committed to contribute to the registered capital of Heyuan Gekko
Electronics Company Limited in the amount of US$742,920 (equivalent to HK$5,783,000) which is payable on or before
15 November 2012.
Annual Report 2011
Plastoform Holdings Limited
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
11.
FINANCIAL INSTRUMENTS BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
(CONTINUED)
Loans and
receivables
31 December 2011 − Group
HK$’000
Financial assets
Trade receivables (Note 13)
99,571
Financial assets included in
deposits, prepayments and other receivables (Note 14)
Cash and cash equivalents (Note 15)
Total (maximum exposure to credit risk)
1,879
14,404
115,854
Financial liabilities
at amortised cost
31 December 2011 − Group
HK$’000
Financial liabilities
109,111
Trade payables (Note 16)
Financial liabilities included in other payables and accruals (Note 17)
19,619
Advances from shareholders (Note 18)
25,229
Total
153,959
Loans and
receivables
31 December 2010 − Group
HK$’000
Financial assets
Trade receivables (Note 13)
Financial assets included in
deposits, prepayments and other receivables (Note 14)
56,021
2,490
Cash and cash equivalents (Note 15)
12,161
Total (maximum exposure to credit risk)
70,672
60 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
11.
FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)
The accounting policies for financial instruments have been applied to the line items below: (continued)
Financial liabilities
at amortised cost
31 December 2010 – Group
HK$’000
Financial liabilities
Trade payables (Note 16)
64,676
Financial liabilities included in other payables and accruals (Note 17)
18,325
Total
83,001
Annual Report 2011
Plastoform Holdings Limited
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
12.INVENTORIES
Group
13.
2011
HK$’000
2010
HK$’000
Raw materials
28,555
21,779
Work-in-progress
19,387
14,249
Finished goods
13,970
8,240
61,912
44,268
TRADE RECEIVABLES
Group
Trade receivables
Less: Provision for impairment of trade receivables
2011
HK$’000
2010
HK$’000
107,649
61,455
(8,078)
(5,434)
99,571
Trade receivables – net
56,021
The aging analysis of the trade receivables that are not considered to be impaired is as follows:
Group
2011
HK$’000
2010
HK$’000
75,091
33,883
22,900
20,574
More than 3 months and not more than 6 months
921
1,288
More than 6 months and not more than 1 year
659
276
99,571
56,021
Neither past due nor impaired
Past due:
Not more than 3 months
62 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
13.
TRADE RECEIVABLES (CONTINUED)
Included in trade receivables are bills receivables of approximately HK$2,584,000 (2010: HK$1,845,000) which were neither
past due nor impaired.
Receivables that were neither past due nor impaired relate to a number of independent customers for whom there was no
recent history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good track record
with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment
is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are
still considered fully recoverable. The Group does not hold any collateral or other credit enhancements over these balances.
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
2011
HK$’000
2010
HK$’000
99,571
50,697
Hong Kong dollars
−
4,656
Euros
−
668
99,571
56,021
United States dollars
Movements on the Group’s provision for impairment of trade receivables are as follows:
Group
2011
HK$’000
2010
HK$’000
At 1 January
5,434
400
Provision for receivables impairment
3,577
5,218
(933)
Unused amounts reversed
8,078
At 31 December
(184)
5,434
The creation and release of provision for impaired receivables have been included in “Other operating expenses” in the
consolidated statement of comprehensive income. Amounts charged to the allowance account are generally written off, when
there is no expectation of recovering additional cash.
Annual Report 2011
Plastoform Holdings Limited
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
13.
TRADE RECEIVABLES (CONTINUED)
The other classes within trade receivables do not contain impaired assets.
The individually impaired trade receivables relate to customers that were in financial difficulties, in default or invoices in
dispute and only a portion of the receivables is expected to be recovered. The Group does not hold any collateral or other
credit enhancements over these balances.
None of the financial assets that are fully performing has been renegotiated in the last year.
The maximum exposure to credit risk at the end of the reporting period is the fair value of the trade receivables mentioned
above.
14.
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Group
Deposits
Prepayments
Temporary payments
Other receivables (Note)
2011
HK$’000
2010
HK$’000
1,831
2,457
936
1,205
7
33
41
−
2,815
3,695
Note:
Included in other receivables as at 31 December 2011 is an amount of approximately HK$41,000 (2010: Nil) due from Jetform
International Limited, a company controlled by Mr. Chiu Kwong Fai and Mr. Tse Kin Man, directors of the Company. The
amount is unsecured, interest free and repayable on demand.
64 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
15.
CASH AND CASH EQUIVALENTS
Group
2011
HK$’000
2010
HK$’000
14,404
12,161
1,403
1,642
10,427
9,390
1,043
1,128
−
1
1,531
−
14,404
12,161
Cash at bank and on hand
Denominated in:
− Hong Kong dollars
− United States dollars
− Chinese Renminbi
− Euros
− Singapore dollars
The bank balances are deposited with creditworthy banks with no recent history of default.
The directors of the Company consider that the carrying amounts of cash and cash equivalents approximate their fair values.
Annual Report 2011
Plastoform Holdings Limited
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
16.
TRADE PAYABLES
The carrying amounts of the Group’s trade payables are denominated in the following currencies:
17.
2011
HK$’000
2010
HK$’000
Hong Kong dollars
51,373
43,560
United States dollars
15,939
6,040
Chinese Renminbi
41,799
15,076
109,111
64,676
OTHER PAYABLES AND ACCRUALS
Group
Other payables and accruals
Amounts due to directors
Sundry creditors
Trade deposits received
Temporary receipts
The amounts due to directors are unsecured, interest free and repayable on demand.
66 Plastoform Holdings Limited
Annual Report 2011
2011
HK$’000
2010
HK$’000
16,880
17,697
2,000
-
739
628
1,329
967
495
514
21,443
19,806
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
18.
ADVANCES FROM SHAREHOLDERS
Group and Company
2011
2010
HK$’000
HK$’000
Advances from Konkin under a loan agreement
11,603
−
Advances from shareholders under advance agreements
13,626
−
25,229
−
Pursuant to a loan agreement dated 30 June 2011 entered into between the Company and Konkin, Konkin (the ultimate
parent of the Company) advanced an aggregate sum of S$1,800,000 (equivalent to approximately HK$11,603,000) to the
Company.
On 1 November 2011, the Company entered into an advance agreement (“Advance Agreement”) with each of Mr. Ang Kong
Hua (“AKH”), Konkin, Winmark Investments Pte Ltd (“Winmark”), Mr. Tan Yong Hui, Brian (“BT”) and Mr. Goh Geok Ling
(“GGL”) (each a shareholder of the Company), pursuant to which:
(i)AKH agreed to advance to the Company a sum of S$1,125,000 (equivalent to approximately HK$6,821,000)
(“Advance Sum/AKH”) for his intended subscription of Rights Shares pursuant to the Rights Issue (see below and
Note 25(b)), and in consideration of AKH advancing the Advance Sum/AKH to the Company to provide funding for
the Company’s immediate working capital needs, the Company agreed to pay AKH a fee of S$33,750 (equivalent
to approximately HK$204,000) (“Fee/AKH”), being 3% of the Advance Sum/AKH, upon the terms and subject to the
conditions of the Advance Agreement entered into with AKH;
(ii)Konkin agreed to advance to the Company a sum of S$450,000 (equivalent to approximately HK$2,814,000)
(“Advance Sum/Konkin”) (in addition to the aggregate sum of S$1,800,000 (equivalent to approximately
HK$11,603,000) advanced by Konkin to the Company pursuant to a loan agreement dated 30 June 2011 entered
into between the Company and Konkin) for its intended subscription of Rights Shares pursuant to the Rights Issue,
and in consideration of Konkin advancing the Advance Sum/Konkin to the Company to provide funding for the
Company’s immediate working capital needs, the Company agreed to pay Konkin a fee of S$13,500 (equivalent to
approximately HK$84,000) (“Fee/Konkin”), being 3% of the Advance Sum/Konkin, upon the terms and subject to the
conditions of the Advance Agreement entered into with Konkin;
Annual Report 2011
Plastoform Holdings Limited
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
(CONTINUED)
18. ADVANCES FROM SHAREHOLDERS (CONTINUED)
(iii)BT agreed to advance to the Company a sum of S$225,000 (equivalent to approximately HK$1,364,000) (“Advance
Sum/BT”) for his intended subscription of Rights Shares pursuant to the Rights Issue and in consideration of BT
advancing the Advance Sum/BT to the Company to provide funding for the Company’s immediate working capital
needs, the Company agreed to pay BT a fee of S$6,750 (equivalent to approximately HK$41,000) (“Fee/BT”), being
3% of the Advance Sum/BT, upon the terms and subject to the conditions of the Advance Agreement entered into
with BT;
(iv)GGL agreed to advance to the Company a sum of S$225,000 (equivalent to approximately HK$1,364,000) (“Advance
Sum/GGL”) for his intended subscription of Rights Shares pursuant to the Rights Issue and in consideration of GGL
advancing the Advance Sum/GGL to the Company to provide funding for the Company’s immediate working capital
needs, the Company agreed to pay GGL a fee of S$6,750 (equivalent to approximately HK$41,000) (“Fee/GGL”),
being 3% of the Advance Sum/GGL, upon the terms and subject to the conditions of the Advance Agreement
entered into with GGL; and
(v)Winmark agreed to advance to the Company a sum of S$210,000 (equivalent to approximately HK$1,263,000)
(“Advance Sum/Winmark”) for its intended subscription of Rights Shares pursuant to the Rights Issue and
in consideration of Winmark advancing the Advance Sum/Winmark to the Company to provide funding for the
Company’s immediate working capital needs, the Company agreed to pay Winmark a fee of S$6,300 (equivalent to
approximately HK$39,000) (“Fee/Winmark”), being 3% of the Advance Sum/Winmark, upon the terms and subject
to the conditions of the Advance Agreement entered into with Winmark.
Subsequent to the end of the reporting period, on 29 February 2012, the Company issued 1,014,000,000 new ordinary
shares in the capital of the Company at an issue price of S$0.015 each, pursuant to a rights issue on the basis of three (3)
rights shares (“Rights Shares”) for every one (1) existing ordinary share held by the entitled shareholders (the “Rights Issue”).
The gross proceeds from the Rights Issue would include: (i) the loan from Konkin to the Company under the aforesaid loan
agreement of S$1,800,000 (equivalent to approximately HK$11,603,000), which would be set-off against the amount payable
by Konkin for its subscription of Rights Shares pursuant to the Rights Issue; and (ii) the advances from shareholders (namely,
AKH, Konkin, BT, GGL and Winmark) to the Company under the aforesaid Advance Agreements in an aggregate amount of
S$2,235,000 (equivalent to approximately HK$13,626,000), which would be set-off against the respective amounts payable
by the aforesaid shareholders for their respective subscription of Rights Shares pursuant to the Rights Issue.
68 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
19.
DEFERRED INCOME TAX
The Group has unused tax losses of approximately HK$74,804,000 (2010: HK$73,518,000) for which no deferred tax asset
is recognised due to uncertainty of its recoverability. Tax losses may be carried forward indefinitely.
20.
SHARE CAPITAL
Number of
ordinary shares of
HK$0.20 each
Amount
(HK$’000)
1,000,000,000
200,000
338,000,000
67,600
Authorised share capital:
At 31 December 2011 and 2010
Issued share capital:
At 31 December 2011 and 2010
Annual Report 2011
Plastoform Holdings Limited
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
21. SHARE-BASED PAYMENT
The Company’s Employee Share Option Scheme (the “ESOS”) was adopted pursuant to written resolution passed on
21 August 2006.
In 2009, 4,500,000 share options are granted to selected employees under the ESOS. The exercise price of the granted
options is equal to the market price of the shares less 18% on the date of the grant. Options are conditional on the employee
completing two years’ service (the vesting period). The options are exercisable starting two years from the grant date; the
options have a contractual option term of 8 years. The Group has no legal or constructive obligation to repurchase or settle
the options in cash.
The weighted average fair value of options granted during the period determined using the Black-Scholes option pricing
model was S$0.045 per option, the significant input into the model were weighted average share price of S$0.045 at the grant
date, exercise price as shown above, volatility of 284.5%, dividend yield of 0%, and on annual risk-free interest rate of 1%.
The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis
of daily share prices over the last three years. See Note 6 for the total expense recognised in the consolidated statement of
comprehensive income for share options granted to employees.
Movements in the number of share options outstanding and their exercise price are as follows:
2011
At 1 January
Exercise price
per share S$
Options
(in’000)
Exercise price
per share S$
Options
(in’000)
0.037
4,500
0.037
4,500
−
Granted
0.037
Forfeited
2010
−
(1,100)
−
−
−
−
Exercised
−
−
−
−
Expired
−
−
−
−
0.037
3,400
0.037
4,500
At 31 December
70 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
22.
RETIREMENT BENEFIT SCHEME
The Group’s employees are required to join Mandatory Provident Fund Scheme (the “MPF Scheme”). Under the MPF
Scheme, both the Group and the employee contribute 5% of the employee’s monthly remunerations or HK$1,000 per month
whichever is the smaller to the scheme. The Group’s total contribution to the scheme for the year ended 31 December 2011
was approximately HK$472,000 (2010: HK$755,000). There is no forfeiture of employer’s contribution from leaving scheme
members under the MPF Scheme.
23.COMMITMENTS
(a)
Capital commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
Group
Property, plant and equipment
(b)
2011
2010
HK$’000
HK$’000
−
417
Operating lease commitments – group company as lessee
The Group leases various premises under non-cancelable operating lease arrangements. The lease terms are
between one to five years.
The future aggregate minimum lease payments under non-cancelable operating leases are as follows:
Group
2011
2010
HK$’000
HK$’000
No later than 1 year
2,109
2,584
Later than 1 year and no later than 5 years
3,222
1,936
Total
5,331
4,520
Annual Report 2011
Plastoform Holdings Limited
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
24.
SIGNIFICANT RELATED PARTY TRANSACTIONS
Save as disclosed elsewhere in these consolidated financial statements, the Group had the following significant related
party transactions during the year:
Office rental expenses paid to Jetform International Limited (Note)
Fees paid to certain shareholders pursuant to the Advance Agreements
entered into between the Company and certain shareholders (Note 18)
Compensation of key management personnel
− Salaries and other short-term employee benefits
− Post-employment benefits
− Share-based payments
2011
2010
HK$’000
HK$’000
1,320
1,864
409
−
8,141
8,682
59
74
160
74
8,360
8,830
Note:
Jetform International Limited is a company controlled by Mr. Chiu Kwong Fai and Mr. Tse Kin Man, directors of the Company.
Office rental expenses were based on the lease agreement entered into between the Group and Jetform International
Limited.
72 Plastoform Holdings Limited
Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
25.
EVENTS AFTER THE REPORTING PERIOD
(a) Capital reorganisation
On 28 December 2011, the Company proposed that with effect from 25 January 2012 (“Capital Reorganisation Effective
Date”):
(i)the issued and paid-up share capital of the Company be reduced by cancelling the paid-up share capital of the
Company to the extent of HK$0.19 on each of the shares with a par value of HK$0.20 each in the share capital of
the Company in issue on the Capital Reorganisation Effective Date (“Proposed Capital Reduction”) so that each
issued share with a par value of HK$0.20 shall be treated as one (1) fully paid-up share with a par value of HK$0.01
as at the Capital Reorganisation Effective Date and any liability of the holder of such shares to make any further
contribution to the share capital of the Company on each share shall be treated as satisfied.
(ii)subject to and forthwith upon the Proposed Capital Reduction taking effect, all the authorised but unissued shares
with a par value of HK$0.20 each (which shall include the authorised but unissued shares resulting from the
Proposed Capital Reduction) be cancelled and the authorised share capital of the Company of HK$200,000,000 be
diminished by such amount representing the amount of shares so cancelled and, forthwith upon such cancellation,
the authorised share capital of the Company be increased to HK$200,000,000 by the creation of such number of
shares with a par value of HK$0.01 each as shall represent the difference between 20,000,000,000 shares with a
par value of HK$0.01 each and the number of shares with a par value of HK$0.01 each in the Company in issue
after the Proposed Capital Reduction.
(iii)subject to and forthwith upon the Proposed Capital Reduction taking effect, the credit arising from the Proposed
Capital Reduction be credited to the contributed surplus account of the Company, and such sum in the contributed
surplus account be, thereafter, utilised in its entirety to partially set-off against the accumulated losses of the
Company.
The special resolution approving the capital reorganisation was duly passed by the shareholders of the Company at the
special general meeting held on 20 January 2012 and the capital reorganisation became effective on 25 January 2012.
(b) Rights issue
On 29 February 2012, the Company issued 1,014,000,000 new ordinary shares in the capital of the Company at an
issue price of S$0.015 each , pursuant to a rights issue on the basis of three (3) Rights Shares for every one (1) existing
ordinary share held by the entitled shareholders.
Annual Report 2011
Plastoform Holdings Limited
73
SHAREHOLDING'S STATISTICS
AS AT 19 MARCH 2012
Authorised share capital
Issued and fully paid-up capital
Class of shares
Voting rights
:
:
:
:
HK$200,000,000
HK$13,520,000
1,352,000,000 Ordinary shares of HK$0.01 each
One vote per share
The Company does not hold any Treasury shares.
STATISTICS OF SHAREHOLDINGS
Size of Shareholdings
1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 and above
Total
No of
Shareholders
2
221
583
43
849
%
0.24
26.03
68.67
5.06
100.00
No of Shares
62
1,390,000
75,903,000
1,274,706,938
1,352,000,000
%
0.00
0.10
5.62
94.28
100.00
No. of Shares
408,000,000
148,924,938
138,000,000
100,000,000
100,000,000
82,400,000
44,000,000
40,000,000
20,003,000
20,000,000
16,209,000
15,767,000
15,307,000
14,200,000
13,569,000
11,473,000
10,700,000
8,460,000
6,589,000
5,290,000
1,218,891,938
%
30.18
11.01
10.21
7.40
7.40
6.09
3.25
2.96
1.48
1.48
1.20
1.17
1.13
1.05
1.00
0.85
0.79
0.62
0.49
0.39
90.15
TWENTY LARGEST SHAREHOLDERS
AS AT 19 MARCH 2012
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
KONKIN LIMITED
ANG KONG HUA
WINMARK INVESTMENTS PTE LTD
CHIU KWONG FAI
TSE KIN MAN
ASTRALINK TECHNOLOGY PTE LTD
BNP PARIBAS NOMINEES SINGAPORE PTE LTD
CHUA KENG LOY
GOH GEOK LING
TAN YONG HUI,BRIAN (CHEN YONGHUI BRIAN)
OCBC SECURITIES PRIVATE LTD
DBS VICKERS SECURITIES (S) PTE LTD
KISO ENGINEERING (S) PTE LTD
HSBC (SINGAPORE) NOMINEES PTE LTD
MAYBANK KIM ENG SECURITIES PTE LTD
P'NG CHIN GUAN
CITIBANK NOMINEES SINGAPORE PTE LTD
IPC CORPORATION LTD
TAY TECK HUAT
UOB KAY HIAN PTE LTD
74 Plastoform Holdings Limited
Annual Report 2011
SHAREHOLDING'S STATISTICS
(CONTINUED)
AS AT 19 MARCH 2012
Name
Konkin Limited
Tse Kin Man (i)
Chiu Kwong Fai (i)
Winmark Investments Pte. Ltd.
Tan Tien Hin, Winston (ii)
Amy Lim Sioh Tin (ii)
Astralink Technology Pte Ltd.
Ang Kong Hua
Direct
Interest
408,000,000
100,000,000
100,000,000
138,000,000
–
–
82,400,000
148,924,938
%
30.18
7.40
7.40
10.20
–
–
6.09
11.02
Deemed
Interest
–
408,000,000
408,000,000
–
138,000,000
138,000,000
–
–
%
–
30.18
30.18
–
10.20
10.20
–
–
Note:
(i)
Tse Kin Man and Chiu Kwong Fai are deemed interested in the shares held by Konkin Limited (“Konkin”) by virtue of their
interest in Konkin.
(ii)
The shareholders of Winmark Investments Pte. Ltd. (“Winmark”) are Tan Tien Hin, Winston (50%) and his wife, Lim Sioh Tin
Amy (50%). Tan Tien Hin Winston and Lim Sioh Tin Amy are deemed to be interested in all the shares held by Winmark.
Tan Tien Hin Winston is deemed to be interested in all the issued and fully paid-up ordinary shares in the share capital of
Astralink Technology Pte. Ltd. (“Astralink”) held by virtue of Section 7 of the Companies Act. Winmark holds 2,567,146 issued
and fully-paid ordinary shares in Astralink, representing 11.41% of the equity interest in Astralink.
PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS
20.85% 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 2011
Plastoform Holdings Limited
75
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of PLASTOFORM HOLDINGS LIMITED (“the Company”) will be held
at Grand Mercure Roxy Hotel, 50 East Coast Road, Roxy Square, Siglap Room, Level 3, Singapore 428769 on Monday, 30 April 2012
at 3.00 pm 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 31 December 2011
together with the Auditors’ Report thereon.
(Resolution 1)
2.
To re-elect the following Directors retiring pursuant to the Company’s Bye-law:
Ho Kang Peng retiring under Bye-law 86(1)
Fong Hean Chuan retiring under Bye-law 85(6)
(Resolution 2)
(Resolution 3)
Mr Ho Kang Peng will, upon re-election as a Director of the Company, remain as 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.
3.
To approve the payment of Directors’ fees of S$212,000 for the year ended 31 December 2011 (2010: S$112,000).
(Resolution 4)
4.
To appoint Foo Kon Tan Grant Thornton LLP as auditors of the Company in place of HLB Hodgson Impey Cheng.
[See Explanatory Note (i)]
(Resolution 5)
5.
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:
6.
Authority to allot and issue shares up to 50 percent (50%) of issued shares
That pursuant to the Companies Act of Bermuda and Rule 806 of the Listing Manual of the Singapore Exchange Securities
Trading Limited, 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:
(a)
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 Company;
(b)
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
of the Company (excluding treasury shares) as at the date of the passing of this Resolution, after adjusting for:
(i)
(ii)
(iii)
new shares arising from the conversion or exercise of convertible securities;
new shares arising from exercising share options or vesting of Share awards outstanding or subsisting at
the time this Resolution is passed; and
any subsequent bonus issue, consolidation or subdivision of shares;
76 Plastoform Holdings Limited
Annual Report 2011
ANNUAL GENERAL MEETING
(c)
7.
(CONTINUED)
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.
[See Explanatory Note (ii)]
(Resolution 6)
Authority to allot and issue shares under the Plastoform Employees’ Share Option Scheme
That pursuant to the Companies Act of Bermuda and Rule 845 of the Listing Manual of the Singapore Exchange Securities
Trading Limited, 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
Plastoform Employees’ 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 (iii)]
(Resolution 7)
8.
Renewal of Share Buy-Back Mandate
That for the purposes of the Companies Act of Bermuda and otherwise in accordance with the rules and regulations of The
Singapore Exchange Securities Trading Limited, the Directors of the Company be and are hereby authorised –
(a)
to make purchases or otherwise acquire issued shares in the capital of the Company from time to time (whether by
way of market purchases or off-market purchases on an equal access scheme) of up to ten percent (10%) of the
total number of issued shares (excluding treasury shares) in the capital of the Company (as ascertained as at the
date of this Annual General Meeting of the Company) at the price of up to but not exceeding the Maximum Price
as defined in the Letter to Shareholders dated 13 April 2012, and that this mandate shall, unless revoked or varied
by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of
the Company or the date by which the next Annual General Meeting of the Company is required by law to be held,
whichever is earlier; and
(b)
to complete and do all such acts and things (including executing such documents as may be required) as they may
consider expedient or necessary to give effect to the transactions contemplated by this Resolution.
[See Explanatory Note (iv)]
(Resolution 8)
By Order of the Board
Jacky Wong
Yvonne Choo
Shirley Lim
Company Secretaries
Singapore, 13 April 2012
Annual Report 2011
Plastoform Holdings Limited
77
ANNUAL GENERAL MEETING
(CONTINUED)
Explanatory Notes:
(i)
Information relating to the proposed change of auditors are set out in Letter to Shareholders enclosed.
(ii)
The Ordinary Resolution 6 proposed in item 6 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) in the capital of the Company, of which up to twenty percent (20%) may be issued other than on a pro rata basis.
(iii)
The Ordinary Resolution 7 proposed in item 7 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.
(iv)
The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors from the date of the above
Meeting until the next Annual General Meeting to repurchase ordinary shares of the Company by way of market purchases
or off-market purchases of up to ten percent (10%) of the total number of issued shares (excluding treasury shares) in
the capital of the Company at the Maximum Price. Information relating to this proposed Resolution are set out in Letter to
Shareholders enclosed.
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, B.A.C.S. Private Limited 63 Cantonment Road, Singapore
089758, at least forty-eight (48) hours before the time of the Meeting.
3.
If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or the hand of its duly
authorised officer or attorney.
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Annual Report 2011
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