statement - Loyz Energy Limited

Transcription

01
02
04
06
07
10
Our Profile
Corporate Calendar
Chairman’s Statement
Our E&P Business Model
Operations Review
Our New Growth Engine
12
14
16
18
20
Our First Oil Concessions
Financial Highlights
Board of Directors
Management Team
Financial Contents
Enterprise, fortitude and sheer hard work – these are the three ideals that form our foundation
and core values, shaping our success over the past 25 years. Indeed, we have grown from
a small plumbing and hardware store to Singapore’s largest distributor of bathroom and
kitchen fittings, with an established house brand in the market.
With this drive and passion to succeed, we have set in motion an all-new growth initiative that
will reshape our future. Over the past year, we have already laid much of the groundwork for
our push into the upstream energy sector. More recently, we have laid the final cornerstones by
welcoming leading industry veterans to our team. Their wealth of knowledge and experience
coupled with our core strengths will see us leave a lasting mark on the sector.
Exciting prospects await us as we look beyond the horizon and step into the Next Frontier.
This annual report has been reviewed by the Company’s sponsor, Stamford Corporate Services Pte Ltd (the “Sponsor”), for compliance with the relevant
rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The Sponsor has not independently verified the contents of this annual report.
This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report,
including the correctness of any of the statements or opinions made or reports contained in this annual report.
The contact person for the Sponsor is:: Mr. Ng Joo Khin, Registered Professional, Stamford Corporate Services Pte Ltd
Name
Address : 10 Collyer Quay #27-00 Ocean Financial Centre Singapore 049315
: 6389 3000
Tel
: [email protected]
Email
OUR PROFILE
LOYZ ENERGY LIMITED
(Formerly known as Sim Siang Choon Ltd)
AND ITS SUBSIDIARIES
ANNUAL REPORT 2011
Loyz Energy is a home-grown company set on
establishing itself as a unique upstream player in
the oil and gas sector across the Asia-Pacific. We
plan to conquer this new frontier in exploration
and production (E&P) by building a portfolio of
producing oil and gas concessions with strong
potential, which will generate a steady earnings
stream from the energy reserves identified with our
cutting-edge technologies.
We made our first push into the sector in 2011, when we acquired
a controlling stake in Bombay-listed Interlink Petroleum Limited,
which holds two concessions in India. We then teamed up with
Rex Oil & Gas in a crucial alliance that has given us access to
technologies designed to locate viable reserves swiftly and
accurately. This technological edge, together with the experience
of our veteran team, will enable us to identify concessions with the
strongest potential while significantly cutting exploration times and
extraction costs. This will set us apart in an industry that has seen
few independent Asian players. We are now actively seeking out
new concessions that will create value for our shareholders.
Loyz Energy, 35.2%-owned by Jit Sun Investments, has another
subsidiary, Sim Siang Choon Hardware, which retails and distributes
bathroom, kitchen and lifestyle accessories.
01
02
APR 2010
- Enters into a Sale and Purchase Agreement to acquire
a 47.9% stake in Interlink Petroleum Limited (IPL),
a Bombay-listed oil and gas company from Jit Sun
Investments Pte Ltd (Jit Sun) and Mr Kenneth Gerard
Pereira (“Mr. Pereira”), in exchange for new shares in
Sim Siang Choon Limited.
SEP 2010
- Completes purchase of 47.9% stake in IPL and concurrent
issue of new shares in Sim Siang Choon Limited to Jit
Sun and Mr Pereira.
OCT 2010
- IPL announces oil discovery in Baola oil field (well No. 8).
Holds FY2010 Annual General Meeting.
DEC 2010
- Launches Open Offer in India to acquire up to 4,984,240
equity shares (20% of issued share capital) in IPL.
JAN 2011
- Appoints Mr Adrian Lee Chye Cheng as Non-Executive &
Non-Independent Director of Sim Siang Choon Limited.
- Completes Open Offer in India for IPL; additional
971,400 shares have been obtained through the Offer.
The shares transfers are being processed.
FEB 2011
- Announces results for first half ended 31 December
2010 (1HFY11).
MAR 2011
- Group’s operating subsidiary for oil exploration, Loyz Oil
Pte. Ltd. (Loyz Oil), signs term sheet with Rex Oil & Gas
Limited (Rex Oil) to jointly explore 35 areas within Asia
Pacific region using the latter’s proprietary technologies.
- The legal title to the shares obtained from the Open Offer
is formally transferred to the Group. The Group now holds
51.8% of IPL.
MAY 2011
- Re-designation Mr Adrian Lee Chye Cheng from NonExecutive & Non-Independent Director to Executive
Director.
JUL 2011
- Finalises Co-operation Agreement with Rex Oil.
- IPL announces the following to be conducted: well test
at Modhera oil field (well No.2); well intervention at
Modhera oil field (well No. 1); and extended well test at
Baola oil field (well No. 8).
- Appoints Dr Ambrose Corray as Chief Executive Officer and
Dr Bruce Morris as Chief Technical Officer of Loyz Oil.
- Appoints Mr Chan Eng Yew as Non-Executive Director.
- Holds Extraordinary General Meeting (EGM). Obtains
shareholders’ approval for name change to Loyz Energy
Limited and the redeemable exchangeable preference
share issue.
- Change of name from Sim Siang Choon Limited to Loyz
Energy Limited w.e.f 25 July 2011.
- Raises S$12 million via sale of redeemable exchangeable
preference shares.
AUG 2011
- Announces results for full year ended 30 June 2011 (FY11).
Our inroads in the upstream
E&P segment will secure new
growth for the Group
04
Dear Shareholders,
As Sim Siang Choon Limited (SSC), we have left an indelible
mark on one industry. As Loyz Energy Limited (Loyz, or the
Group), we are ready to carve out a strong presence in an allnew sector – a move into the Next Frontier that we have spent
the past year preparing for.
To realise our ambition of becoming a successful independent
player in the exploration and production (E&P) sector, we have
forged ahead on several fronts, even as we continue to expand
our sanitary hardware business.
Our goals include building up a lucrative portfolio of producing
oil & gas (O&G) concessions for E&P in the Asia-Pacific. Our
first step was to acquire a 51.8% stake in Interlink Petroleum
Limited (IPL), a Bombay-listed E&P company that owns two
concessions in India. To continue growing our concessions
portfolio, we have tapped into the S$12 million raised in
2011 through a share issue by Loyz Oil Pte Ltd (Loyz Oil), our
operating oil and gas arm.
We later entered into a pivotal alliance with Rex Oil & Gas
Limited (Rex), gaining access to groundbreaking technologies
that will make exploration and extraction far more economically
attractive, even in smaller or marginal fields, as nations
worldwide struggle with rising energy prices and shrinking
reserves. Our cooperation agreement with this exploration
technology partner will also see us jointly scouting diverse
areas of the Asia-Pacific region, including India, Indonesia and
New Zealand.
“Having secured the key cornerstones
of talent and experience we need to
achieve our objectives through our
new management and our exploration
technology partner, we are confident of
discovering bright new horizons as we
cross that Next Frontier.”
Sharpening that competitive edge further, we then fortified the
Loyz team that will be spearheading our push into the E&P
segment, bringing in successful entrepreneurs and recognised
experts from the O&G industry, who will not only raise our
profile but also expedite our growth agenda. Here, let me take
the opportunity to welcome two distinguished industry veterans
who recently joined the team. Now taking the reins at Loyz
Oil are Dr Ambrose G Corray as Chief Executive Officer and
Dr Bruce Morris as Chief Technical Officer, whose mission to
drive the company forward will be backed by Mr Adrian Lee
Chye Cheng, Loyz’s Executive Director. We are also pleased to
welcome Mr Chan Eng Yew, who joined our Board as a NonExecutive Director in July 2011. We will most certainly benefit
from his considerable experience in finance and familiarity
with corporate governance disclosures.
We officially became Loyz Energy Limited on 25 July 2011.
We are now a whole new entity, in name as well as in drive and
direction. Infused with these fresh ambitions, but anchored by
the spirit of enterprise and fortitude that has been our mainstay
for nearly three decades, we plan to conquer the Next Frontier
with conviction, through our aptitude for recognising the right
opportunities and our capacity for sheer hard work.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Our Performance in FY2011
The recovery in the local residential property market and
the strengthening of the Singapore dollar underpinned the
Group’s improved revenue and gross profit margin in the
year ended 30 June 2011 (FY2011). More project-related
contracts – together with higher sales of bathroom, kitchen
and related products – lifted turnover by 15% to S$23.5
million. Meanwhile, the stronger Singapore dollar lowered
the cost of imported goods and boosted the Group’s gross
profit margin to 49.5% in FY2011, compared with 45.5%
a year ago.
Our move into the upstream energy sector was matched
by an expected increase in costs arising from the initial
set-up of our E&P division and the acquisition of IPL. Onetime legal and professional expenses associated with the
acquisition were largely responsible for driving the Group’s
expenses before tax to S$11.6 million, from S$9.0 million
in FY2010. Group net profit attributable to owners of the
parent thus slipped 32.7% year-on-year to S$0.9 million.
The Next Frontier
Starting a new business requires a strong spirit of enterprise
as well as acute foresight. Building a successful business
amid a competitive operating environment requires hard
work, fortitude and the courage to act when opportunity
knocks, as well as first-rate partners. Having all these
requisites enabled SSC to establish itself as a household
name for sanitary hardware in Singapore – these same
requisites will give Loyz a decisive head start in the
upstream energy sector.
The S$12 million we raised through the issue of 12 million
redeemable preference shares in wholly owned Loyz Oil
will also stand us in good stead as we continue to add to
our portfolio of O&G concessions in the region. The shares
can be either exchanged into 30 million new Loyz ordinary
shares at 40 Singapore cents each or redeemed at 25
Singapore cents each.
Finally, having secured the key cornerstones of talent and
experience we need to achieve our objectives through our
new management and our exploration technology partner,
we are confident of discovering bright new horizons as we
cross that Next Frontier.
Prospects
Sanitary hardware division. The growing housing and
upgrading market in both the private and public sectors
in Singapore will underpin demand for the wide range
of bathroom and kitchen fittings we distribute. As we
upgrade our showrooms to expand the business, we will
continue to maintain a satisfactory mix of retail and
project sales.
Oil & Gas division. We see a bright future for Loyz in
the E&P segment as escalating global energy demand,
led by China and India, is expected to drive growth over
the long term. In the months ahead, IPL will focus on
conducting well tests at its Baola and Modhera fields
in Gujarat.
Loyz, on the other hand, will be exploring and evaluating
up to 35 areas in the Asia-Pacific region jointly with Rex,
using the latter’s technologies to conduct uniquely tailored
studies that will enable us to pinpoint viable reserves.
The Group plans to add valuable new concessions to
its portfolio and also embark on oil production in the
medium term.
Dividends
The Board is pleased to propose a final one-tier tax-exempt
dividend of 0.25 Singapore cent per share. This amount,
together with the interim tax-exempt dividend of 0.5
Singapore cent paid on 15 March 2011, would bring the
total dividend for FY2011 to 0.75 Singapore cent, for a
total payout of S$2.0 million. In the previous financial year,
shareholders received a dividend of 1.0 Singapore cent per
share or a total payment of S$1.4 million.
The total cash dividend amount will be higher for FY2011
because of our enlarged capital base. The Group’s issued
ordinary shares now total 266.5 million, mainly because
130.7 million new shares were issued for the purchase of
IPL.
The proposed final dividend will be subject to shareholders’
approval at the company’s Annual General Meeting on 31
October 2011.
Acknowledgments
On behalf of the Board, I would like to express my deep
appreciation to our management and staff for their
dedication and hard work. They have contributed much to
the Group’s success.
I also wish to thank all our shareholders and business
partners for their staunch support and enduring confidence
in the Group.
Your continued support will be crucial as we enter the Next
Frontier of our growth and development, making our mark
in the upstream energy sector across the Asia-Pacific.
Sim Siang Choon
Chairman
05
06
As a young independent oil company, our business is to know and manage our risks well. In delivering returns to our
shareholders, our goal is to locate and secure good concessions in well-known oil prolific regions as well as to grow
our portfolio of producing oil & gas assets. However, the “real” value of Loyz will be driven by our ability to locate
commercial hydrocarbons. While it is easy to develop and produce oil once it is located, the processes and techniques
to identify hydrocarbons are often tedious and time consuming. Therefore, the Group is committed to building our
technical capabilities to improve our success rate in the search for oil.
5%
20%
30%
30%
15%
BUILDING A BALANCED PORTFOLIO
A balanced portfolio will ensure that we have a steady
growing recurring income stream to support our
investments and exploration in new fields. Owning
concessions over a wide geographic spread within Asia
Pacific will also help contain the political risk to our
earnings stream. We also intend to focus on onshore
and offshore shallow water fields.
Remaining Asset Light
Our resources will be utilised to locate fields with
reasonable reserves before structuring these into
concessions either on our own or with partners. We will
focus on building only ONE class of physical asset – oil
fields – in our balance sheet and will work with thirdparty services providers to provide assets such as drill
ships and rigs as well as the expertise to execute the
actual E&P work.
With the in-house experience and technical expertise of
our full operations team in India, we are also capable of
managing and operating third-party concessions, both on
and off shore.
Producing
Coming onto Production
Proven awaiting development
G&G Stage
Wildcat
Leveraging on the Best Technology
In the race to find more hydrocarbons, we believe that
besides experience, technology is another key factor
that will set Loyz apart from other junior independent oil
companies. As such technical expertise is expensive to
develop in-house from scratch, we will work with strategic
partners with superior capabilities and technology which
can locate commercial hydrocarbons more accurately
and cost-effectively. We have kick-started this with our
cooperation agreement with Rex Oil & Gas Limited.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Growing our sanitary hardware business and putting in
place the building blocks for our foray into the energy
sector kept us busy in the financial year ended 30 June
2011 (FY2011). Loyz Energy (Loyz or the Group) reported
a healthy 15% rise in revenue to S$23.5 million in FY2011
while net profit attributable to owners of the parent dipped
32.7% to S$0.9 million as the largely one-off costs of
setting up the new oil & gas division eroded profitability.
The Board has recommended a final one-tier tax exempt
dividend of 0.25 Singapore cents per share, which together
with the tax exempt interim dividend of 0.5 Singapore
cents paid on 15 March 2011, brings the total dividend to
0.75 Singapore cents, or a total payout of S$2.0 million,
for FY2011. Shareholders received a total dividend of 1.0
Singapore cent in FY2010.
Sanitary Hardware Division
Our focused marketing targeted at upcoming projects
with the recovery in the local private housing market and
the growing affluent middle class enabled Loyz to report
improved direct retail as well as project sales. In FY2011,
revenue from the retail of bathroom, kitchen and related
products grew 6.8% year-on-year (yoy) to S$18.5 million
whilst that from projects surged 60.8% to nearly S$5
million.
Backed by the strong upturn in private home sales since
2009, receipts from supply to projects contributed a larger
21.3% of Group revenue in FY2011 against the previous
year’s 15.2% and segment operating profit rose to S$2.6
million. Our retail sales, on the other hand, benefitted from
both upgrading and replacement demand and reported a
segment operating profit of about S$9 million, an increase
of 11.4% from FY2010’s S$8.1 million.
The Group’s gross profit margin also improved, from 45.5%
in FY2010 to 49.5% in FY2011, resulting in a 25% higher
gross profit of S$11.6 million for the year. The stronger
Singapore dollar, which lowered the cost of imported goods,
together with an improved product mix and higher overall
sales, lifted the performance of the division.
Oil & Gas Division
At the net attributable level, the Group’s profitability was
impacted largely by costs associated with the setting up of
the division and acquisition of Bombay Stock Exchange-
listed Interlink Petroleum Limited (IPL). The one-off legal
and professional expenses from the acquisition of IPL along
with the expenses incurred from the oil and gas division
drove the Group’s overall expenses before tax from S$9.0
million in FY2010 to S$11.6 million in FY2011.
Our first decisive step in the upstream energy sector took
place in April 2010 when the Group agreed to purchase
an initial 47.9% interest or 11,934,000 ordinary shares
in IPL, to be paid via the issuance of 108,490,910 new
Loyz ordinary shares. Upon completion in September
2010, the Group, in compliance with the listing rules
of the Bombay Stock Exchange, made an Open Offer for
another 4,984,240 issued shares in IPL at a cash price
of INR 67.65 each. 971,400 IPL shares were received
from the offer and the Group paid S$1.9 million (or INR
65.7 million) for these shares. On 25 March 2011, the
Group has obtained an aggregate 51.8% stake of IPL.
07
08
Through IPL, Loyz currently owns two concessions in
Gujarat, India – Baola and Modhera. Oil discovery was
announced for the Baola oilfield in October last year and
drilling in Modhera commenced in early 2011. Well tests
are currently under way at the wells drilled in Modhera and
Baola, and the Group expects to release the results of these
tests by the third quarter of FY2012.
To accelerate our growth in the upstream energy sector, the
Group inked a cooperation agreement with Rex Oil & Gas
Limited (Rex), a company founded by three established
scientists, Messrs Karl Helge Tore Lidgren, Hans Ove
Leonard Lidgren and Svein Kjellesvik, who pioneered
the use of satellite altimeter surveys to detect potential
hydrocarbon reservoirs more accurately and swiftly, thus
reducing costs in exploration and extraction. We also
strengthened our senior management and our Board of
Directors with entrepreneurs and professionals who have
vast experience in the sector and in finance.
Under the agreement with Rex, our exploration technology
partner, Loyz and Rex will jointly explore 35 areas across
Asia Pacific using the latter’s effective technologies which
should accelerate the search for oil. The areas include India,
Indonesia and New Zealand. Rex will carry out technical
studies to evaluate potential concessions, thus mitigating
risks before Loyz negotiates for these concessions.
The newly formed oil and gas division is spearheaded by
Mr Adrian Lee Chye Cheng, Executive Director of Loyz, and
working with him to drive Loyz’s growth in the exploration
and production (E&P) segment are Dr Ambrose G Corray
and Dr Bruce Morris. Prior to joining the Group, Dr Corray
played an instrumental role in developing IPL and improving
its market capitalisation by several folds between 2008
and 2010. Dr Bruce Morris was a seasoned geoscientist,
whose expertise has been critical in many successful E&P
projects across Asia-Pacific. Dr Corray was appointed Chief
Executive Officer of Loyz Oil Pte Ltd (Loyz Oil), the Group’s
wholly-owned operating oil and gas subsidiary, and Dr Bruce
Morris, the Chief Technical Officer, on 22 July 2011. In
addition, the wide finance & banking experience of Mr Chan
Eng Yew, who joined the Board as a Non-Executive Director,
will complement Mr Adrian Lee’s experience in the finance
sector and will be invaluable as Loyz evaluates various
financing and capital structures for future concessions and
M&A activities.
With these cornerstones in place, the Group in July
2011, raised S$12 million via the issuance of 12 million
redeemable exchangeable preference shares in Loyz Oil to
help fund its push into the upstream energy sector. The
issue was fully subscribed by two Singapore-incorporated
private equity funds managed by Venstar Capital Pte Ltd.
– Venstar Investments Ltd and Venstar Investments II
Ltd. Half of the preference shares are convertible into 15
million new Loyz ordinary shares at an exchange price of 40
Singapore cents apiece after 12 months and the remaining
half can be exchanged for another 15 million new Loyz
shares at the same price after another 12 months. The
preference shares may also be redeemed at 25 Singapore
cents each should the Venstar funds decide not to convert
them into new Loyz shares.
Going Forward
As the Group focuses to bring our Baola and Modhera
assets into production, we will also continue to tap on our
vast network in the O&G sector to expand our concessions
portfolio with new assets, including oil producing fields.
In our sanitary hardware business, we plan to upgrade the
four showrooms in Singapore and work to drive both retail
and project sales higher in FY2012.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Our partners’ specialised knowledge
will accelerate our development
into a reputable independent E&P
player in Asia-Pacific
10
Hydrocarbons, mainly oil & gas (O&G), remain the undisputed source of fuel to meet the world’s ever growing demand
for energy in the forseeable future. At the same time, energy experts also agree that the growth in demand, especially
from non-OECD countries such as China and India, will continue to outpace supply and support firm oil prices.
Share of world energy consumption in the United States, China and India, 1990-2035
(Percent of World Total)
HISTORY
30
PROJECTIONS
25
15
20
10
5
0
1990
1995
UNITED STATES
CHINA
INDIA
2000
2007
2015
2020
2025
2030
2035
According to the Reference case projection* in
International Energy Outlook 2010, the combined energy
usage of China and India will double and account for
30% of total world energy consumption in 2035.
*Reference case projection is a business-as-usual trend estimate, given
known technology and technological and demographic trends.
Source: International Energy Outlook 2010 dated July 2010 by the US
Energy Information Administration (EIA), the statistical and analytical
agency within the US Department of Energy.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Although the world’s insatiable appetite for energy has
resulted in billions of investment dollars being poured
into the exploration and production (E&P) of O&G,
the last two decades or so have seen the rise of the
independent producers in the sector.
These producers, unlike the national oil companies
and fully-integrated players or majors and supermajors
such as ExxonMobil and Royal Dutch/Shell, only
explore and/or produce O&G. The mobility and agility
offered by their business model enable independent
producers to tap into reserves in smaller fields and
areas which are not economically viable for integrated
players. As the world’s depleting reserves have
pushed E&P work further afield, it is no coincidence
that independent producers such as Devon Energy
Corporation and Tullow Oil plc now play a significant
and growing role in the world’s O&G production.
With good management, production and technical
teams in place, Loyz will march confidently into the
Next Frontier, optimistic about its prospects and to be
counted amongst the top independent O&G producers
in the Asia-Pacific region.
11
12
Loyz’s first oil concessions are held under our
India-based subsidiary, Interlink Petroleum
Limited (IPL). Listed on the Bombay Stock
Exchange in 1993, IPL is engaged in oil & gas
exploration and production (E&P) activities in
India, a key area of focus for the Group.
IPL owns 100% of two exclusive concessions
which are attached with Production Sharing
Contracts inked with the Indian government.
These two oil field concessions, one in Baola
and the other in Modhera, are in the prolific oil
producing region of Gujarat in western India.
Oil
Gas
JAISALMER
PALANPUR
DELWADA
MODHERA
LANWA
HARIZ
MEHSANA
AHMEDABAD
VIRAMGAM
ND
NA
SA
BAOLA
NAWAGAM
DHOLKA
NADIAD
BARODA
BAY
CAM
GUJARAT
JAMBUSAR
BHARUCH
ANKLESHWAR
SURAT
TOMUMBAI
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Baola
•
•
•
•
•
•
Field
Year of Discovery: 1971
Area: 4 km2
Production Sharing Contract (PSC)
signed on 5 April 1995
Duration of PSC: 25 years (till 2020)
Mining lease granted in March 2001
Discovery well: Baola (gas)& Baola 8 (oil)
Work Status:
•
Extended well test in progress at Baola 8
Modhera Field
•
Year of Discovery: 1982
•
Area: 12.7 km2
•
PSC signed on 23 Feb 2001
•
Duration of PSC: 25 years (till 2033)
•
Mining lease granted in Nov 2008
•
Oil supply agreement with Indian Oil Corp
•
Discovery well: Modhera 1
(oil shows at 964-972m while testing)
Work Status:
•
Well test currently under way at Modhera 2,
which was spudded in April 2011
•
Well intervention work in progress
at Modhera 1
13
14
Key Financial Ratios
FY2011
FY2010
FY2009
Earnings Per Share (S¢)
0.4
1.0
0.2
Net Asset Value Per Share (S¢)
18.5
7.7
7.7
Income Statement (S$ million)
FY2011
FY2010
FY2009
Revenue
23.5
20.4
17.1
Gross profit
11.6
9.3
7.9
Net profit attributable to owners of the parent
0.9
1.3
0.2
Balance Sheet (S$ million)
FY2011
FY2010
FY2009
Non-current assets
47.9
0.2
0.3
Current assets
25.1
16.4
16.5
Non-current liabilities
11.7
2.9
4.0
Current liabilities
7.2
3.3
2.4
Shareholders’ Equity
54.1
10.4
10.4
revenue by segment (S$ million)
15
14
13
Bathroom
Kitchen & Others
Project
12.8
11.9
12
11.3
11
10
9
8
7
6
5
5.6
5.0
5.4
4
4.8
3.1
3
2
1.1
1
0
2011
2010
2009
Our team’s diverse talent
will draw more new business
and partners to help to
build a strong company
16
Mr Sim Siang Choon, Chairman and Managing Director
Backed by his extensive experience in the electrical and plumbing industries,
Mr Sim started the sole proprietorship in sanitary wares in 1986. Under
his management, it was transferred to the Group in 1994. He has been
instrumental in the Group’s expansion in the bathroom, kitchen and lifestyle
accessory business and continues to be the driving force behind its growth.
He is currently responsible for setting the overall goals, business strategies
and direction for this business segment.
Mr Kwan Weng Kwong, Chief Executive Officer
Mr Kwan joined the sole proprietorship in 1990. Responsible for setting up
the Jalan Besar retail outlet, he was appointed its Branch Manager in 1995.
He was transferred to the Group’s headquarters in 1996 to take charge of
monitoring market development and recommending strategic directions for
the bathroom, kitchen and lifestyle accessory business. He now oversees
the retail sales operations, merchandising and business development of
this business segment.
Ms Kwan Lin Siew, Alternate Director to Mr Sim Siang Choon
Ms Kwan was appointed in 2003. Since 1989, she has assisted Mr Sim in the
day-to-day management of the retail outlet for bathroom, kitchen and lifestyle
accessories at Sims Avenue. In the mid-1990s, she was actively involved in setting
up the retail outlets at IMM Building, Jalan Besar and Balestier Road. Since 1994,
she has been responsible for the design and display concepts of the retail outlets.
Mr Yip Chee Meng @ Yap Chee Meng, Executive Director
Mr Yip was appointed in 1999. After joining the sole proprietorship in
1987, he assisted in the daily operations and logistics. Between 1994 and
1996, he was responsible for setting up the Group’s installation services
team. He is now in charge of retail sales administration and warehousing
operations of the bathroom, kitchen and lifestyle accessory business.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Mr Adrian Lee Chye Cheng, Executive Director
Appointed in May 2011, Mr Lee is in charge of the Group’s E&P business. His
rich multidisciplinary experience in the corporate sector has been garnered from
industries that span energy, financial services, property and hospitality. He serves
on the boards of companies in a wide range of sectors, including Interlink Petroleum
Limited, Select Group. Mr Lee holds a Bachelor’s Degree in Finance from the
University of Strathclyde, Glasgow.
Mr Chan Eng Yew, Non-Executive Director
Mr Chan joined the board in July 2011. He is currently Chief Financial Officer at EOC
Limited (EOC), a leading provider of offshore construction and production services in
Asia. With more than eight years of experience in commercial and corporate banking,
he spearheaded EOC’s public listing in Oslo. Mr Chan also assisted in the listing of
EOC’s parent company, Ezra Holdings Limited in Singapore. Previously, he had held
senior management positions at United Overseas Bank. Mr Chan has a Master’s in
Business Administration from the University of Louisville in Kentucky and a Master’s
in Applied Finance from Macquarie University in Australia.
Mr Teo Choon Kow @ William Teo, Independent Director
Mr Teo was appointed in 2008. Between 1996 and 2004, he was Vice-President
at Walden Investment International Group, a venture capital firm based in Silicon
Valley, and was responsible for its investments in Asia. Previously, he had served
with Coopers & Lybrand as Senior Manager in its corporate finance department. He
had also worked in the risk management, internal audit and loan departments of
leading local banks.
Mr Teo is an Independent Director of See Hup Seng Holdings Ltd and Wee Hur
Holdings Ltd, as well as a director of Fral Pte Ltd and Ascendant Technologies Pte
Ltd. He holds a Master’s in Management from the Asian Institute of Management in
the Philippines. He is a fellow of the Association of Chartered Certified Accountants
and a member of the Institute of Certified Public Accountants of Singapore.
Mr Chia Yong Whatt, Independent Director
Mr Chia was appointed in 2008. He has more than 17 years of experience as
an Advocate and Solicitor in Singapore, with considerable expertise in company
transactions, construction litigation and real estate. He is an Independent Director
of China Architectural Engineering Inc, a company listed on NASDAQ. He holds a
Bachelor’s in Law (Honours) from the National University of Singapore.
17
18
Sanitary Ware Business:
Ms Diana Seah Yin Hwei, Financial Controller
Ms Seah handles the division’s finance and administration functions. Before joining
the Group, she was Finance Manager of a semiconductor company. She has many
years of financial experience in sectors such as manufacturing, construction and
entertainment, and was also an external auditor at Deloitte & Touche. Ms Seah is a
fellow of the Association of Chartered Certified Accountants and a member of the
Institute of Certified Public Accountants of Singapore.
Mr Low Teng Chong, Operations Manager
Mr Low has been in charge of overall operations since 1996. He joined the
sole proprietorship in 1988 and was promoted to sales officer in 1990. He is
responsible for warehousing, logistics and customer service.
Mr Wilfred Pua Chuan Kee, Product Manager
Mr Pua, who joined the Group in 2001, is responsible for sourcing new products,
streamlining the existing range and building the distribution network. Previously,
he had been Sales Manager at a large trading group for more than 15 years.
Mr Steve Leong Kin Kheong, Project Manager
After joining the Group in 2002, Mr Leong became responsible for the development
and promotion of project business. Before then, he was Senior Manager for sales
and marketing at a subsidiary of a local property developer.
Mr Abdul Rahim Bin Abdul Kadir, Senior Sales Manager
Mr Abdul Rahim, who joined the sole proprietorship in 1988, was instrumental
in the expansion of the IMM retail outlet, where he became manager in 1993. He
was transferred to the head office as senior manager for its corporate showroom in
1998. He is now in charge of retail operations at the IMM outlet.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Oil & Gas, E&P Business:
Dr Ambrose Corray, Chief Executive Officer
Appointed in July 2011, Dr Corray has a long track record in successfully
nurturing new businesses across diverse sectors, as well as in turning around
underperforming units. In his early career Dr. Corray spent twenty years with the
Schlumberger providing all aspects of oilfield services to major clients worldwide.
He subsequently ran General Electric’s pipeline inspection business in Asia.
Before joining the Group, he was Chief Operating Officer at Loyz’s subsidiary
Interlink Petroleum Limited, where he pioneered the setup and operations of the
company, running 3D seismic API and drilling two wells significantly boosting
its market capitalisation in just a few years. His stints at General Electric and
Schlumberger in Asia in various managerial positions also saw the firms adopt
profitable new directions. Dr Corray holds a Doctorate in Business, MBA from
Southern Cross University Australia and a Bachelor of Science (Honors) in
Mechanical Engineering from King’s College, London University.
Dr Bruce Morris, Chief Technical Officer
Appointed in July 2011, Dr Morris has been an exploration consultant for the
past 10 years. Having garnered extensive hands-on experience in oil exploration &
production, he has a strong understanding of the business objectives of the oil &
gas industry.
As both a field- and office-based Geologist, Geophysicist and Exploration Manager,
he has amassed more than 20 years of professional exploration experience
across the globe, including New Zealand, Australia, Papua New Guinea, China,
Thailand, India, Cuba and the Antarctica. At Loyz, he will utilise his wide-ranging
technical expertise and network of contacts to generate prospects and evaluate
new opportunities.
Dr Morris earned his PhD in Geology and Geochemistry from Victoria University
of Wellington in New Zealand, where he later lectured in geology. He served at
NZ Oil & Gas, Indo-Pacific Energy (now Austral Pacific Energy) and Pacific Tiger
Energy as a Geologist and Geophysicist before setting up his own business as an
oil exploration consultant.
Mr Jeffrey Pang, Financial Controller
Mr Pang oversees the division’s finance, accounting, tax, compliance and reporting
matters. Before joining the Group, he was Financial Controller of a private
investment group involved in businesses in sectors such as oil & gas, property
and food & beverage. He also held a senior finance role in an automotive group
and served as an external auditor at Deloitte & Touche. Mr Pang has more than a
decade of audit and commercial experience, and is a fellow of the Association of
Chartered Certified Accountants and a Certified Public Accountant of Singapore.
19
20
21
30
36
37
39
40
41
43
45
89
91
Corporate Governance Statement
Report of the Directors
Statement by Directors
Independent Auditors’ Report to the Members of Loyz Energy Limited
Statements of Financial Position
Consolidated Statement of Comprehensive Income
Statements of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Shareholdings Statistics
Notice of Annual General Meeting
Proxy Form
CORPORATE GOVERNANCE
LOYZ ENERGY LIMITED
STATEMENT
21
ANNUAL REPORT 2011
The Company is committed to ensure high standards of corporate governance for the protection of shareholders’ interests
and to promote investors’ confidence. The Board confirms that for the financial year ended 30 June 2011, the Company
has, as far as practicable, generally adhered towards the compliance of the recommendations in the Code of Corporate
Governance.
This report outlines the corporate governance practices adopted by the Company.
BOARD MATTERS
Principle 1: Board’s Conduct of its Affairs
Apart from the statutory duties, the Board’s responsibilities include the following:
Setting overall business direction and provide guidance on corporate strategic plans.
Monitoring financial performance including review and approval of interim and annual financial report.
Ensuring adequate and sound system of internal control.
Monitoring and approving major funding, investment, acquisitions, disposals and divestment proposals.
The Board is supported by the Audit Committee (“AC”), the Nominating Committee (“NC”), the Remuneration Committee
(“RC”) and the Share Options Scheme Committee. The members are drawn from the members of the Board and each of
these Committees (Board Committees) operates under the delegated authority from the Board.
The Board meets regularly and whenever deemed necessary and appropriate. Telephonic attendance is allowed under the
Company’s Articles of Association. The attendance of each Director at every Board and Board Committees meetings held
during the financial year is set out below:
Board of
Directors
Audit
Committee
Nominating
Committee
Remuneration
Committee
2
2
1
1
Sim Siang Choon (1)
2
1
1
1
Kwan Lin Siew
–
–
–
–
Kwan Weng Kwong
2
–
–
–
Yip Chee Meng @ Yap Chee Meng
2
–
–
–
Lee Chye Cheng, Adrian (2) (3)
1
1
–
–
Teo Choon Kow @ William Teo
2
2
1
1
Chia Yong Whatt
2
2
1
1
–
–
–
–
No. of Meetings Held:
Attendance:
Chan Eng Yew (Zeng Rongyao)
(4)
(1)
Sim Siang Choon stepped down as a member of the AC, NC and RC on 11 January 2011.
(2)
Lee Chye Cheng, Adrian was appointed as a director, a member of the AC, NC and RC on 11 January 2011.
(3)
Lee Chye Cheng, Adrian stepped down as a member of AC and RC on 22 July 2011.
(4)
Chan Eng Yew (Zeng Rongyao) was appointed as a director, a member of AC and RC on 22 July 2011.
The Company does not have a formal training programme for its current directors. All Directors are updated on an on-going
basis by way of circulars or via Board Committees and Board meetings on matters relating to the changes to relevant laws,
regulations and accounting standards.
22
STATEMENT
Principle 2: Board Composition and Balance
The Board comprises the following members:
Sim Siang Choon
Kwan Lin Siew
Kwan Weng Kwong
Lee Chye Cheng, Adrian
Executive Chairman and Managing Director
Alternate Director to Sim Siang Choon
Executive Director and Chief Executive Officer
Executive Director
Executive Director
Independent Director
Non-Executive Director
The Company endeavours to maintain a strong and independent element on the Board. As at the date of this report, only
two of the Board members are independent directors. The Board is aware of the recommendation that independent directors
make up at least one-third of the Board and is looking for a suitable candidate to be appointed as the third independent
director.
The Independent Directors have confirmed that they do not have any relationship with the Company or its related companies
or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent
business judgement with a view to the best interests of the Company.
Principle 3: Chairman and Chief Executive Officer
The Group’s Chairman and Managing Director is Mr Sim Siang Choon who is responsible for setting the overall goals,
business strategies and directions for the Company. The Audit Committee reviews all major decisions made by the Chairman
and Managing Director.
The Chief Executive Officer is Mr Kwan Weng Kwong and he is responsible for the day-to-day operations of the Group as well
as the exercise of control over the quality, quantity and timeliness of information flow between the Board and management.
The Board believes that there are adequate safeguards against an uneven concentration of power and authority in a single
individual and that there is an appropriate balance of power within the Board.
Principle 4: Board Membership
The Nominating Committee comprises 2 Independent Directors and 1 Executive Director:
Teo Choon Kow @ William Teo (Chairman)
Chia Yong Whatt
The Chairman of the Nominating Committee is not directly associated with any substantial shareholders of the Company.
The Nominating Committee is established for the purpose of ensuring that there is a formal and transparent process for
all Board appointments. It has adopted written terms of reference defining its membership, administration and duties. The
Nominating Committee reviews and makes recommendations on all nominations for appointments to the Board and on all
re-nomination/re-election. The Nominating Committee met once during the financial year. All members attended the meeting
and the Company Secretary was present at the meeting to record the proceedings.
The election of a Director is held annually and in accordance with the Company’s Articles of Association. One-third of the
Directors (other than the Managing Director) are required to retire from office at each annual general meeting. In addition, all
Directors (except the Managing Director) are required to retire from office by rotation at least once every three years.
LOYZ ENERGY LIMITED
STATEMENT
23
ANNUAL REPORT 2011
The Nominating Committee has reviewed the independence of each Director for the financial year concerned. The
Nominating Committee is aware that at least one-third of the Board should be independent. With the re-designation of Lee
Chye Cheng, Adrian from a Non-Executive Director to an Executive Director, Management is looking for a suitable candidate
to be appointed as the third independent director. The Nominating Committee would review and nominate the most suitable
candidate to the Board.
When a vacancy arises under any circumstances or where it is considered that the Board would benefit from the services
of a new director with particular skills, the Nominating Committee, in consultation with the Board, determines the selection
criteria and selects candidates with the appropriate expertise and experience for the position. The Nominating Committee
then nominates the most suitable candidate to the Board.
PARTICULARS OF DIRECTORS PURSUANT TO THE CODE OF CORPORATE GOVERNANCE
Directorship/
Chairmanship in other
Listed Companies in
Singapore (present and
held over preceding 3
years)
Name of Director
Academic
Qualifications/
status
Board
Appointment
Executive/
Nonexecutive
Board
Committees
as Chairman
or Member
Sim Siang Choon
Entrepreneur
Executive
Chairman
22/09/1999
Nil
Kwan Lin Siew
Entrepreneur
Executive
Alternate to
Sim Siang
Choon
21/04/2003
Nil
Kwan Weng Kwong
Entrepreneur
Executive
Member
01/10/1999
Nil
Entrepreneur
Executive
Member
01/10/1999
Nil
Lee Chye Cheng, Adrian (1)
Bachelor’s
Degree in
Finance
Executive
Member
11/01/2011
Select Group Limited
Master in
Management.
ACCA and
Member of
ICPAS
NonExecutive
Chairman
23/07/2008
Present:
Independent Director of
See Hup Seng Holdings Ltd
and Wee Hur Holdings Ltd.
Past:
FM Holdings Ltd
Vallianz Holdings Limited
Eastern Holdings Ltd
Chia Yong Whatt
Bachelor’s
Degree in Law
(Honors)
NonExecutive
Chairman
20/08/2008
Independent Director
of China Architectural
Engineering Inc (Nasdaq
Listed)
Past:
FM Holdings Ltd
Master’s in
Business
Administration
Bachelor’s
Degree in
Commerce
(Banking &
Finance)
NonExecutive
Member
22/07/2011
Nil
(1)
Directorship
Date First
Appointed
Lee Chye Cheng, Adrian was appointed as a Non-Executive Director on 11 January 2011. He was re-designated as an Executive
Director on 18 May 2011.
24
STATEMENT
Principle 5: Performance
The Nominating Committee is responsible for assessing the effectiveness of the Board as a whole and where appropriate, for
assessing the contribution of each individual Director.
The evaluation of the Board is performed annually by having all the committee members complete a questionnaire individually.
The assessment parameters enable an all rounded evaluation, covering the various aspects of an effective Board.
Principle 6: Access to Information
In carrying out their duties as directors, all the directors have full access to and may communicate directly with the
management team, Company Secretary, the internal and external auditors on all matters whenever they deem necessary.
The Company Secretary provide corporate secretarial support to the Board and ensures adherence to Board procedures and
the relevant rules and regulations which are applicable to the Company.
The Company also seeks independent professional advice as and when necessary to enable it to discharge its
responsibilities effectively.
REMUNERATION MATTERS
Principle 7: Procedures for Developing Remuneration Policies
Remuneration Committee
The Remuneration Committee comprises 2 Independent Directors and 1 Non-Executive Director:
Chia Yong Whatt (Chairman)
The Remuneration Committee is established for the purpose of ensuring that there is a formal and transparent procedure for
fixing the remuneration packages of the directors and key executives. It has adopted written terms of reference defining its
membership, administration and duties. The Remuneration Committee meets when necessary to recommend and advise the
Board on the remuneration of Executive Directors, senior executives and employees who are related to the directors.
The Executive Chairman and Managing Director, Mr Sim has considerable experience in the manpower planning and
deployment in the Company. The Committee feels that the capitalization of his expertise will be beneficial to the Committee
and the Company.
No director is involved in deciding his own remuneration. The Remuneration Committee is chaired by an independent nonexecutive director. The Committee has access to expert advice inside and/or outside the Company.
Principle 8: Level of Mix of Remuneration
The Company’s remuneration policy is to provide compensation packages appropriate to attract, retain and motivate the
Directors and key Executives needed to run the Company successfully.
The remuneration of the Executive Directors is based on service agreements for an initial period of three years and thereafter
for such period as the Board may decide.
The Board reviews the remuneration package of the Executive Directors based on the recommendation of the Remuneration
Committee.
LOYZ ENERGY LIMITED
STATEMENT
25
ANNUAL REPORT 2011
The Independent Directors are paid a fixed Director’s fee for their efforts and time spent, responsibilities and contribution
to the Board, subject to approval by shareholders at the Annual General Meeting. The Remuneration Committee met once
during the financial year.
All members attended the meeting and the Company Secretary was present at the meeting to record the proceedings.
The Executive Directors are eligible for the Company’s Share Option Scheme. The Controlling Shareholders and NonExecutive Directors are not allowed to participate in the Scheme.
Principle 9: Disclosure on Remuneration
The remuneration of the directors of the Company for the financial year ended 30 June 2011 is shown in the following bands,
broken down into the various elements by percentages:
$250,000 to $500,000
Sim Siang Choon
Directors’
Fee
%
Base
Salary
%
Bonus
%
CPF
%
Allowance
%
Total
%
–
79
13
2
6
100
100
–
–
–
–
100
Below $250,000
Chia Yong Whatt
100
–
–
–
–
100
Lee Chye Cheng, Adrian1
100
–
–
–
–
100
Chan Eng Yew (Zeng Rongyao)2
–
–
–
–
–
–
Kwan Lin Siew
–
70
17
4
9
100
Kwan Weng Kwong
–
56
21
4
19
100
–
53
22
4
21
100
1.
Lee Chye Cheng, Adrian was re-designated from Non-Executive & Non-Independent Director to Executive Director. His total
remuneration for FY2011 amounted to S1,500.
2.
Chan Eng Yew (Zeng Rongyao) was appointed Non-Executive Director on 22 July 2011.
Top 5 Key Executives
Number of executives of the Group in remuneration bands:
$250,001 to $500,000
Below $250,000
:
:
Nil
5
The names of these executives are not disclosed due to confidentiality reasons. There was no key executive whose
remuneration exceeded $150,000 during the year.
The Company does not have any employee whose remuneration exceeds $150,000 and who is an immediate family member
of a Director or the CEO.
Share Option Scheme Committee
The Share Option Scheme Committee comprises 2 Independent Directors and 1 Executive Director:
Chia Yong Whatt (Chairman)
The Share Option Scheme Committee is responsible for the administration of the Sim Siang Choon Share Option Scheme
(“the Scheme”), in accordance with the rules of the Scheme.
26
STATEMENT
The Share Option Scheme Committee is responsible for approving the quantum of share options to be granted to eligible
employees, based on their seniority, performance and contribution to the Group.
Except for Mr Kwan Weng Kwong and Mr Yip Chee Meng @ Yap Chee Meng, none of the directors, controlling shareholders
and their associates were participants to the Share Option Scheme.
The Scheme, subject to a maximum period of 10 years commencing on 22 June 2001, has lapsed on 21 June 2011. The
lapsing of the Scheme shall not affect the options that had been granted, accepted and exercisable during the option period.
Information and details of the share option granted and allotted are disclosed in the financial statements.
ACCOUNTABILITY AND AUDIT
Principle 10: Accountability
For the financial performance reporting via the SGXNET announcement to SGX-ST and the Annual Report to the
shareholders, the Board has a responsibility to present a fair assessment of the Company’s financial position including the
prospects of the Company.
The Board ensures that the Management maintains a sound system of internal control to safeguard the shareholders’
investment and the Company’s assets.
The Management provides all members of the Board with management reports. The Board members review the management
reports and approve the Company’s half year and full year financial result. All board papers are given prior to any board
meeting to facilitate effective discussion and decision making.
Principle 11: Audit Committee
The Audit Committee comprises 2 Independent Directors and 1 Non-Executive Director:
Teo Choon Kow @ William Teo (Chairman)
Chia Yong Whatt
All members of the Audit Committee are Non-Executive Directors. The Chairman, Mr William Teo and Mr Chia Yong Whatt
are both Independent Directors. Mr Teo has many years of experience in financial services. He possesses the appropriate
accounting and related financial management experience and expertise. Mr Chia is a qualified lawyer with many years of
experience as an advocate & solicitor with substantial experience in corporate transactions, construction litigation and real
estate. Mr Chan had assisted in the listing of a company in Singapore and Norway. As such, he is familiar with corporate
governance and disclosures. Therefore, the Board is of the opinion that the members of the Audit Committee have sufficient
financial and corporate management experience and expertise in discharging their duties.
The role of the Audit Committee is to assist the Board in discharging its responsibility to safeguard the assets of the
Company, maintain adequate accounting records and to develop and maintain effective systems of internal controls.
The overall objective of the Audit Committee is to ensure that Management has created and maintained an effective system
of internal control and that the Management does not override the established system of internal controls.
The functions of the Audit Committee include:
Review with the external auditors the external audit plan;
Review with the external auditors their evaluation of the Company’s internal accounting controls, and their report on
the financial statements and the assistance given by the Company’s officers to them;
Review with the internal auditors the scope and results of the internal audit procedures;
Review the financial statements of the Group and the Company prior to their submission to the Directors of the
Company for adoption;
STATEMENT
LOYZ ENERGY LIMITED
27
ANNUAL REPORT 2011
Review the interested person transactions (as defined in Chapter 9 of the Listing Manual (Section B: Rules of Catalist)
of the SGX-ST); and
Make recommendations to the Board on the appointment, re-appointment and removal of the external auditor, and
approving the remuneration and terms of engagement of the external auditor.
In discharging the above duties, the Audit Committee has confirmed that it has full access and co-operation from the
Management and was given reasonable resources to enable it to perform its functions properly.
The Audit Committee met two times during the financial year. All members attended the meetings and the Company
Secretary was present at all meetings to record the proceedings.
The Audit Committee has undertaken a review of all non-audit services and was satisfied that they would not affect the
independence of the external auditors before recommending their re-nomination to the Board.
The Audit Committee has full authority to investigate any matter when alerted on issues of internal controls, suspected
fraud or irregularity. It has full access to and cooperation of the Management and full discretion to invite any staff to attend its
meetings.
Principle 12: Internal Control
The Board acknowledges that it is responsible for maintaining a sound system of internal controls to safeguard Shareholders’
interest and maintain accountability of its assets. While no cost-effective internal control system can provide absolute
assurance against loss or misstatement, the Company’s internal controls and systems have been designed to provide
reasonable assurance that assets are safeguarded, operational controls are in place, business risks are suitably reduced,
proper accounting records are maintained and financial information used within the business and for publication are
reasonable and accurate.
The Audit Committee, with the assistance of the internal and external auditors, has reviewed the effectiveness of the internal
control annually, and the Board is satisfied with the adequacy of the Company’s material internal controls, including financial,
operational and compliance controls and risk management systems.
Principle 13: Internal Audit
The Company has outsourced its internal audit function for the purposes of reviewing the effectiveness of its internal controls
and systems. The internal auditors report directly to the Chairman of the Audit Committee. The functions of the internal
auditors include the review of the effectiveness of the Company’s material internal controls, including financial, operational
and compliance controls and risk management. The Audit Committee reviews and ensures the adequacy of the internal audit
function on an annual basis.
Principle 14 and Principle 15: Communication with Shareholders
The Company does not practice selective disclosure. All shareholders are equally and timely informed of all major
developments that affect the Group.
Information is communicated to shareholders through:
SGXNET announcements
Annual Reports
Notice of annual general meetings (“AGM”)
The articles of association of the Company allow members of the Company to appoint any proxies to attend and vote on their
behalf.
28
STATEMENT
There are separate resolutions at general meetings on each substantially separate issue. At AGMs, shareholders are invited
to raise questions on any matters that need clarification and appropriate responses are given. The members of the Audit,
Nominating and Remuneration Committees and the external auditors are present at all general meetings to address any
queries from shareholders.
The reception after the AGM provides an opportunity for shareholders to informally communicate their views and
expectations to the Company.
DEALINGS IN SECURITIES
The Company has adopted policies in line with the requirements of Rule 1204 (18) of the Rules of Catalist on dealings in
securities of the Company.
The Directors, Management and officers of the Company who have access to price sensitive, financial or confidential
information are not permitted to deal in the Company’s shares during the periods commencing one month before the
announcement of the Company’s financial half-year or financial full year results, and ending on the date of announcement of
the relevant results, or when they are in possession of unpublished price-sensitive information on the Company.
INTERESTED PERSON TRANSACTIONS
All interested person transactions are subject to review by the Audit Committee to ensure that they are on an arm’s length
basis.
The Board confirms that there were no interested person transactions entered into during the financial year ended 30 June
2011 which exceeded the stipulated thresholds stated under Chapter 9 of the Listing Manual (Section B: Rules of Catalist) of
the SGX-ST.
NON-AUDIT FEES
Non-audit services had been rendered by the Auditors to the Company for the financial year ended 30 June 2011 for which
non-audit fees paid amounted to $4,800. The Audit Committee confirms that it has undertaken a review of all the non-audit
services during the financial year and is satisfied that such services would not, in the Audit Committee’s opinion, affect the
independence of the external auditors.
NON-SPONSOR FEE
The Company is currently under the SGX-ST Catalist sponsor-supervised regime. The continuing sponsor of the Company
is Stamford Corporate Services Pte Ltd. The non-sponsor fee paid to Stamford Law Corporation (affiliated to Stamford
Corporate Services Pte Ltd) amounted to $504,264.44.
MATERIAL CONTRACTS
The Company has obtained an interest-free loan from Mr Sim Siang Choon in current financial year, amounting to
approximately S$9.7 million. The amount is unsecured and repayable on demand.
Save for the above loan and the service agreements entered into with the Executive Directors, there were no other material
contracts of the Company, or any of its subsidiaries involving the interests of CEO or any of its Directors or controlling
shareholders, during the financial year ended 30 June 2011.
STATEMENT
LOYZ ENERGY LIMITED
29
ANNUAL REPORT 2011
USE OF PROCEEDS
The proceeds raised from the Subscription Shares issued to Kenneth Gerard Pereira in relation to the acquisition of Interlink
Petroleum Limited had been fully utilized towards the Open Offer and working capital.
As at 30 September 2011, the proceeds raised from the issuance of 12 million redeemable exchangeable preference shares
had been utilized as follows:-
Use of proceeds
Amount utilized
(S$ million)
Exploration and evaluation expenditure
2.1
Working capital
2.3
RISK MANAGEMENT POLICIES AND PROCESSES
Distributorship Risks
We have a wide portfolio of exclusive distributorships. Our house brand “SIMS” contributed 35% of FY2011 Group revenue,
remaining 65% of the sale is well spread amongst the exclusive brands to minimise the Group’s exposure on loss of any
distributorships.
Business Risks
The Group is dependent on HDB resale market. Hence, any new regulations or measures introduced by the Singapore
government that may cause a reduction in the number of transactions in the HDB resale market will have material impact
on the Group’s revenue and profitability. However, the Executive Directors will regularly review the Group’s business and
operating activities and recommend appropriate measures which will control or mitigate these risks.
Inventory Risks
Due to the nature of our business, we are facing the normal business risks of slow moving stocks. We have adopted a
prudent accounting policy of provision for these slow moving items on a consistent basis.
Foreign Exchange Risks
Currently, about 70% of our purchases are denominated in various foreign currencies, such as Euro, Australian Dollar and
US Dollar. Any significant fluctuations in the exchange rates of these currencies against the Singapore Dollar will have an
impact on the gross profit of the Group. We are cautiously monitoring the exchange rates of these currencies and enter into
hedging contracts with our banks from time to time when necessary.
30
REPORT OF THE DIRECTORS
The Directors of the Company present their report to the members together with the audited financial statements of the
Group for the financial year ended 30 June 2011, the statement of financial position of the Company as at 30 June 2011 and
the statement of changes in equity of the Company for the financial year ended 30 June 2011.
1.
Directors
The Directors of the Company in office at the date of this report are:
Sim Siang Choon
Kwan Lin Siew (Alternate to Sim Siang Choon)
Kwan Weng Kwong
Adrian Lee Chye Cheng
Chia Yong Whatt
Chan Eng Yew
2.
(Executive Director)
(Executive Director, appointed on 18 May 2011)
(Independent Director)
(Independent Director)
(Non-Executive Director, appointed on 22 July 2011)
Arrangements to enable Directors to acquire shares or debentures
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose
object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or
debentures of the Company or any other body corporate, except as disclosed in paragraph 3 of this report.
3.
Directors’ interests in shares or debentures
According to the register of Directors’ shareholdings kept by the Company for the purposes of Section 164 of the
Singapore Companies Act, Cap. 50 (the “Act”), none of the Directors of the Company holding office at the end of the
financial year had any interest in the shares or debentures of the Company and its related corporations except as
detailed below:
Shareholdings registered
in the name of Directors
Balance at
1 July 2010
Balance at
30 June 2011
Shareholdings in which
Directors are deemed
to have an interest
Balance at
1 July 2010
Balance at
30 June 2011
Number of ordinary shares
Company
Sim Siang Choon
90,000,000
90,000,000
1,305,000
1,305,000
Kwan Lin Siew (Alternate to Sim Siang Choon)
5,245,000
5,245,000
–
–
Kwan Weng Kwong *
4,117,000
4,117,000
520,000
520,000
–
–
10,000
10,000
*
Includes shares registered in the name of nominees.
LOYZ ENERGY LIMITED
31
ANNUAL REPORT 2011
3.
Directors’ interests in shares or debentures (Continued)
Share options to subscribe
for shares of no par value
Balance at
1 July 2010
Balance at
30 June 2011
Kwan Weng Kwong
175,000
175,000
175,000
175,000
Company
By virtue of Section 7 of the Act, Mr. Sim Siang Choon is deemed to have an interest in all of the ordinary shares of
the Company’s wholly-owned subsidiaries at the beginning and end of the financial year.
In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited (“SGXST”), the Directors of the Company state that, according to the register of Directors’ shareholdings, the Directors’
interests as at 21 July 2011 in the shares of the Company have not changed from those disclosed as at 30 June
2011.
4.
Directors’ contractual benefits
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit by
reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is
a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial
statements.
5.
Share options
The Sim Siang Choon Share Option Scheme (the “Scheme”) was approved by the members of the Company at
an extraordinary general meeting held on 22 June 2001 which provides for the grant of incentive share options to
employees and executive directors.
Under the Scheme, the maximum number of shares to be issued to eligible employees shall not exceed 15% of the
issued share capital of the Company from time to time. The Scheme allows the issue of options with a subscription
price at a discount of up to 20% of the market price, or its nominal value, whichever is higher.
An option may be exercised in whole or in part, after the second anniversary of the date of grant of that option but
before the tenth anniversary of the date of grant of that option in the case where options are granted at a discount, or
after the first anniversary of the date of grant of that option in the case where options are not granted at a discount.
The lapsing of options is provided for upon the occurrence of certain events, which includes:
(a)
(b)
(c)
(d)
(e)
the termination of the grantee’s employment;
the death of the grantee;
a take-over of the Company;
the winding-up of the Company (voluntary or otherwise); and
the breach by the grantee of any terms of the option.
32
5.
Share options (Continued)
Activities under the Scheme:
The outstanding number of options at the end of the financial year was:
Exercise price
Grant date
Number of shares
as at 30 June
Exercise period
2011
2010
$0.120
25 June 2001
26 June 2002 to 24 June 2011
–
70,000
$0.148
21 August 2002
22 August 2003 to 20 August 2012
30,000
110,000
$0.106
15 July 2004
16 July 2005 to 14 July 2014
30,000
30,000
$0.075
15 July 2005
16 July 2006 to 14 July 2015
30,000
30,000
$0.070
15 July 2006
16 July 2007 to 14 July 2016
30,000
30,000
$0.293
24 July 2007
25 July 2008 to 23 July 2017
1,230,000
1,435,000
1,350,000
1,705,000
The table below summarises the number of options that were outstanding, their weighted average exercise price as at
the end of the financial year as well as the movements during the financial year.
2011
2010
2011
2010
Number
Number
Cents
Cents
1,705,000
1,810,000
Weighted average exercise price
At 1 July
Cancelled
Exercised
At 30 June
(130,000)
(225,000)
1,350,000
(105,000)
0.265
0.253
(0.240)
(0.286)
0.276
0.265
–
1,705,000
During the financial year, the Board of Directors cancelled 130,000 (2010: 105,000) share options granted to
employees that had not yet vested. The fair value of the options as originally priced at the grant date was taken to
profit or loss.
During the financial year, no option was granted.
LOYZ ENERGY LIMITED
33
ANNUAL REPORT 2011
5.
Share options (Continued)
Activities under the Scheme: (Continued)
The following table summarises information about Directors’ share options outstanding as at 30 June 2011:
Grants from start Exercised from
of Scheme to start of Scheme to
end of 2011
end of 2011
Participants
Balance as at
30 June 2011
Directors of the Company
Kwan Weng Kwong
175,000
(175,000)
– (a)
175,000
(175,000)
– (b)
175,000
(175,000)
– (c)
175,000
(175,000)
– (d)
175,000
(175,000)
– (e)
175,000
(175,000)
– (f)
175,000
(a)
(b)
(c)
(d)
(e)
(f)
(g)
– (a)
175,000
(175,000)
– (b)
175,000
(175,000)
– (c)
175,000
(175,000)
– (d)
175,000
(175,000)
– (e)
175,000
(175,000)
– (f)
2,450,000
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
price
price
price
price
price
price
price
of
of
of
of
of
of
of
$0.120. Exercise
$0.148. Exercise
$0.103. Exercise
$0.106. Exercise
$0.075. Exercise
$0.070. Exercise
$0.293. Exercise
period
period
period
period
period
period
period
from
from
from
from
from
from
from
26
22
16
16
16
16
25
175,000 (g)
(175,000)
175,000
Total
–
175,000
–
(2,100,000)
175,000 (g)
350,000
June 2002 to 24 June 2011.
August 2003 to 20 August 2012.
July 2004 to 14 July 2013.
July 2005 to 14 July 2014.
July 2006 to 14 July 2015.
July 2007 to 14 July 2016.
July 2008 to 23 July 2017.
No participant has received 5% or more of the total number of the options available under the Scheme except for the
above two Directors.
There was no grant of share options during the current financial year.
Except as disclosed above, there were no options outstanding at the end of the financial year or granted during
the financial year to (a) controlling shareholders and Independent Directors of the Company, (b) associates of the
controlling shareholders and (c) Independent Directors of its subsidiaries.
There were shares issued during the financial year by virtue of the exercise of options to take up unissued shares of
the Company or its subsidiaries.
There were no unissued shares under option in the Company or its subsidiaries as at the end of the financial year
except for those disclosed above.
34
6.
Audit committee
The members of the Audit Committee during the financial year and at the date of this report are:
Chia Yong Whatt
(Chairman of Audit Committee and Independent and
Non-Executive Director)
(Independent and Non-Executive Director)
(Non-Executive Director)
The Audit Committee carries out its functions in accordance with Section 201B (5) of the Act and the Code of
Corporate Governance including the following:
(i)
reviews the audit plans and results of the external and internal audits;
(ii)
reviews the Group’s financial and operating results and accounting policies;
(iii)
reviews the financial statements of the Company and the consolidated financial statements of the Group
before their submission to the Directors of the Company and the external auditors’ report on those financial
statements;
(iv)
reviews the half-yearly and annual announcements on the results and financial position of the Company and of
the Group;
(v)
ensures the co-operation and assistance given by the management to external auditors;
(vi)
makes recommendations to the Board on the appointment of external and internal auditors; and
(vii)
reviews the Interested Person Transactions as defined in Chapter 9 of the Rules of Catalist of the Singapore
Exchange Securities Trading Limited (“SGX-ST”) as is required by SGX-ST and ensures that the transactions
were on normal commercial terms and not prejudicial to the interests of the members of the Company.
The Audit Committee confirmed that it has undertaken a review of all non-audit services provided by the external
auditors to the Group and noted that there were no non-audit services provided by the external auditors that would
affect the independence of the external auditors.
The Audit Committee has full access to and co-operation of the management and has been given the resources
required for it to discharge its function properly. It also has full discretion to invite any Director and executive officer to
attend its meetings. The external auditors have unrestricted access to the Audit Committee.
The Audit Committee has recommended to the Board of Directors the nomination of BDO LLP for re-appointment as
external auditors of the Company at the forthcoming Annual General Meeting.
7.
Auditors
The auditors, BDO LLP, have expressed their willingness to accept re-appointment.
LOYZ ENERGY LIMITED
35
ANNUAL REPORT 2011
8.
Additional disclosures requirements of the Listing Manual of the Singapore Exchange Executives Trading
Limited
The auditors of the subsidiaries of the Company are disclosed in Note 6 to the financial statements. In the opinion of
the Board of Directors and Audit Committee, Rule 716 of the Listing Manual of the Singapore Exchange Securities
Trading Limited has been complied with.
On behalf of the Board of Directors
Sim Siang Choon
Director
Singapore
23 September 2011
Kwan Weng Kwong
Director
36
STATEMENT BY DIRECTORS
In the opinion of the Board of Directors,
(a)
the accompanying financial statements comprising the statements of financial position of the Group and of the
Company as at 30 June 2011, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows, and statement of changes in equity of the Company
together with the notes thereon are properly drawn up in accordance with the provisions of the Singapore Companies
Act, Cap. 50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of
the Group and of the Company as at 30 June 2011 and of the results, changes in equity and cash flows of the Group
and changes in equity of the Company for the financial year ended on that date; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they fall due.
On behalf of the Board of Directors
Sim Siang Choon
Director
Singapore
23 September 2011
Kwan Weng Kwong
Director
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF LOYZ ENERGY LIMITED
LOYZ ENERGY LIMITED
37
ANNUAL REPORT 2011
Report on the financial statements
We have audited the accompanying financial statements of Loyz Energy Limited (formerly known as Sim Siang Choon Ltd)
(the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and
of the Company as at 30 June 2011, and the consolidated statement of comprehensive income, statements of changes in
equity of the Group and of the Company and consolidated statement of cash flows for the financial year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages 39 to 88.
Management’s responsibility for the financial statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards, and for
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets
are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they
are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to
maintain accountability of assets.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement
of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore
Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as
at 30 June 2011 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for
the financial year ended on that date.
INDEPENDENT AUDITORS’ REPORT TO
38
THE MEMBERS OF LOYZ ENERGY LIMITED
Report on other legal and regulatory requirements
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries
incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
BDO LLP
Public Accountants and
Certified Public Accountants
Singapore
23 September 2011
STATEMENTS OF
FINANCIAL POSITION
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
AS AT 30 JUNE 2011
Group
Note
Company
2011
2010
2011
2010
$’000
$’000
$’000
$’000
ASSETS
Non-Current Assets
Property, plant and equipment
4
645
176
–
–
Exploration and evaluation assets
5
13,191
–
–
–
Investments in subsidiaries
6
–
–
41,614
2,112
Goodwill
7
34,029
–
–
–
47,865
176
41,614
2,112
8
9,284
9,319
–
–
Trade and other receivables
9
3,110
2,431
4,896
2,523
Other assets
10
882
264
–
–
Total Non-Current Assets
Current Assets
Inventories
Prepayments
11
393
25
–
–
Cash and cash equivalents
12
11,465
4,401
67
43
Total Current Assets
25,134
16,440
4,963
2,566
Total Assets
72,999
16,616
46,577
4,678
42,229
2,053
42,229
2,053
EQUITY AND LIABILITIES
Equity
Share capital
13
Reserves
14
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
143
71
143
7,085
(123)
8,190
1,535
2,289
49,191
10,386
43,835
4,485
4,870
–
–
–
54,061
10,386
43,835
4,485
9,772
–
–
–
Non-Current Liabilities
Bank loan
15
Finance lease payable
16
67
–
–
–
Other liabilities
17
1,870
2,930
–
–
11,709
2,930
–
–
430
3
3
3
Total non-current liabilities
Current Liabilities
Current income tax payable
Trade and other payables
18
5,372
1,826
2,739
190
16
67
–
–
–
Other liabilities
17
1,360
1,471
–
–
Total current liabilities
7,229
3,300
2,742
193
Total liabilities
18,938
6,230
2,742
193
Total equity and liabilities
72,999
16,616
46,577
4,678
The accompanying notes form an integral part of these financial statements.
39
40
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
Note
Revenue
19
Cost of sales
Gross profit
2011
2010
$’000
$’000
23,470
20,402
(11,857)
(11,123)
11,613
9,279
Other items of income
Interest income
Other credits
20
16
19
1,208
1,035
Other items of expense
Distribution costs
Administrative expenses
Finance costs
(688)
(542)
(4,383)
(3,966)
21
Other expenses
(4)
(6,271)
Other charges
22
Profit before income tax
23
Income tax expense
24
(303)
1,188
(393)
Profit for the financial year
795
–
(4,218)
(253)
1,354
(10)
1,344
Other comprehensive income:
Exchange differences on translating foreign operations
(375)
–
Other comprehensive income for the financial year, net of tax
(375)
–
Total comprehensive income for the financial year
420
1,344
905
1,344
Profit attributable to:
Owners of the parent
(110)
–
795
1,344
711
1,344
Total comprehensive income attributable to:
Owners of the parent
(291)
–
420
1,344
- Basic
0.37 cents
0.99 cents
- Diluted
0.37 cents
0.99 cents
Earnings per share
25
Dividends paid
Balance at 30 June 2010
Dividends paid
2,053
–
143
–
–
–
–
–
–
(194)
–
–
–
–
–
–
(194)
(194)
–
–
$’000
Foreign
currency
translation
account
8,190
(1,355)
1,344
1,344
8,201
7,085
–
(2,010)
(2,010)
–
–
–
905
–
905
8,190
$’000
Retained
earnings
10,386
(1,355)
1,344
1,344
10,397
49,191
–
38,094
(2,010)
12
(35)
40,127
711
(194)
905
10,386
$’000
Equity
attributable to
owners of the
parent
–
–
–
–
–
4,870
5,161
–
–
–
–
–
(291)
(181)
(110)
–
$’000
Noncontrolling
interests
10,386
(1,355)
1,344
1,344
10,397
54,061
5,161
38,094
(2,010)
12
(35)
40,127
420
(375)
795
10,386
$’000
Total
equity
Distributions to owners of the parent
–
–
–
–
143
2,053
Balance at 1 July 2009
71
–
(72)
–
(37)
(35)
–
42,229
–
40,176
–
49
–
40,127
–
–
–
143
Acquisition of interest in subsidiary
Change in ownership interest in a subsidiary
26
26
Share options exercised
Total contributions by and distributions to owners of the parent
14
14
Share options cancelled
13
Issue of shares
Contributions by and distributions to owners of the parent
–
–
2,053
$’000
$’000
–
Note
Share
capital
Foreign currency differences on translation of foreign operations
Other comprehensive income for the financial year
Group
Share
option
reserve
STATEMENTS OF
CHANGES IN EQUITY
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
41
42
STATEMENTS OF
CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)
Share
capital
Share
option
reserve
Retained
earnings
Total
equity
$’000
$’000
$’000
$’000
2,053
143
2,289
4,485
–
–
1,256
1,256
–
–
1,256
1,256
40,127
Company
Note
Contributions by and distributions to owners of
the parent
Issue of shares
13
40,127
–
–
Share options cancelled
14
–
(35)
–
14
49
(37)
Dividends paid
26
–
–
(2,010)
(2,010)
–
(35)
12
Total contributions by and distributions to owners
of the parent
40,176
(72)
(2,010)
38,094
42,229
71
1,535
43,835
2,053
143
845
3,041
–
–
2,799
2,799
–
–
2,799
2,799
–
–
(1,355)
(1,355)
2,053
143
2,289
4,485
Distributions to owners of the parent
Dividends paid
26
CONSOLIDATED STATEMENT OF
CASH FLOWS
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
2011
$’000
2010
$’000
1,188
1,354
(1,047)
(1,015)
Operating activities
Adjustments for:
Amortisation of deferred revenue
Depreciation of plant and equipment
134
Gain on disposal of plant and equipment
(83)
Allowance for doubtful non-trade receivables
102
182
36
71
Allowance for slow-moving inventories
Plant and equipment written off
123
(5)
165
–
Interest expense
4
–
Interest income
(16)
(19)
Reversal of share option
(72)
Operating cash flows before working capital changes
411
691
1,034
1,149
–
Working capital changes:
Inventories
(781)
(127)
Other assets
(275)
(69)
Prepayments
(368)
(10)
135
733
(124)
149
Other liabilities
Cash generated from operations
32
2,516
Income tax refund
40
–
Income tax paid
(6)
Net cash from operating activities
66
2,498
(18)
116
5
(168)
–
Investing activities
Proceeds from disposal of plant and equipment
Purchase of plant and equipment
Purchase of exploration and evaluation asset
(3,786)
Interest received
16
Acquisition of subsidiary, net of cash acquired (Note 6)
Net cash (used in)/from investing activities
3,242
(580)
–
19
–
24
43
44
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)
2011
$’000
2010
$’000
Financing activities
Interest paid
(41)
–
Proceeds from bank borrowings
4,783
–
Proceeds from subscription of shares
2,448
–
Loan received from a Director
Repayment of loan received from a Director
9,757
–
(7,342)
–
(66)
–
49
–
Repayment of finance lease payable
Proceeds from exercise of share options
Increase in fixed deposit pledged
(1,093)
Dividends paid
(2,010)
(1,355)
Net cash from/(used in) financing activities
6,485
(1,355)
Net change in cash and cash equivalents
5,971
1,167
Cash and cash equivalents at beginning of financial year
2,751
1,584
Cash and cash equivalents at end of financial year (Note 12)
8,722
2,751
–
NOTES TO THE FINANCIAL
STATEMENTS
LOYZ ENERGY LIMITED
45
ANNUAL REPORT 2011
These notes form an integral part of and should be read in conjunction with the financial statements.
1.
General corporate information
Loyz Energy Limited (formerly known as Sim Siang Choon Ltd) (the “Company”) is a public limited company,
incorporated and domiciled in Singapore with its principal place of business and registered office at 21 Changi South
Avenue 2, Sim Siang Choon Building, Singapore 486630. The Company’s registration number is 199905693M.
With effect from 25 July 2011, the Company has changed its name from “Sim Siang Choon Ltd” to “Loyz Energy
Limited”.
The principal activities of the Company are those of investment holding and provision of management services to its
subsidiaries.
The principal activities of the subsidiaries are set out in Note 6 to the financial statements.
The statement of financial position and statement of changes in equity of the Company and the consolidated financial
statements of the Company and its subsidiaries (the “Group”) for the financial year ended 30 June 2011 were
authorised for issue in accordance with a Directors’ resolution dated 23 September 2011.
2.
Summary of significant accounting policies
2.1
Basis of preparation of financial statements
The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act,
Cap. 50 and Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under
the historical cost convention, except as disclosed in the accounting policies below.
The financial statements are expressed in Singapore dollar and rounded to the nearest thousand, unless otherwise
stated.
The preparation of financial statements in conformity with FRS requires the management to exercise judgement in the
process of applying the Group’s and the Company’s accounting policies and requires the use of accounting estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the end of the reporting period, and the reported amounts of revenue and expenses during the financial
year. Although these estimates are based on the management’s best knowledge of historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances, actual
results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised
if the revision affects only that financial year, or in the financial year of the revision and future financial years if the
revision affects both current and future financial years.
Critical accounting judgements and key sources of estimation uncertainty used that are significant to the financial
statements are disclosed in Note 3 to the financial statements.
During the financial year, the Group and the Company adopted the new or revised FRS and Interpretations of FRS
(“INT FRS”) that are relevant to their operations and effective for the current financial year. Changes to the Group’s
and the Company’s accounting policies have been made as required in accordance with the relevant transitional
provisions in the respective FRS and INT FRS. The adoption of the new or revised FRS and INT FRS did not result
in any substantial changes to the Group’s and the Company’s accounting policies and has no material effect on the
amounts reported for the current and prior financial years.
46
STATEMENTS
2.
Summary of significant accounting policies (Continued)
2.1
Basis of preparation of financial statements (Continued)
FRS and INT FRS issued but not yet effective
As at the date of the authorisation of these financial statements, the Group and the Company have not adopted the
following FRS and INT FRS that have been issued but not yet effective:
Effective date
(Annual periods
beginning on or
after)
FRS 1
: Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income
FRS 12
: Amendments to FRS 12 - Deferred Tax: Recovery of Underlying Assets
1 January 2012
FRS 19
: Employee Benefits (Revised)
1 January 2013
FRS 24
: Related Party Disclosures (Revised)
1 January 2011
FRS 27
: Separate Financial Statements
1 January 2013
FRS 28
: Investments in Associates and Joint Ventures
1 January 2013
FRS 101
: Amendments to FRS 101 – Severe Hyperinflation and Removal of Fixed
Dates for First-time Adopters
1 July 2011
FRS 107
: Amendments to FRS 107 – Transfers of Financial Assets
1 July 2011
FRS 110
: Consolidated Financial Statements
1 January 2013
FRS 111
: Joint Arrangements
1 January 2013
FRS 112
: Disclosure of Interests in Other Entities
1 January 2013
FRS 113
: Fair Value Measurement
INT FRS 114 : Amendments to INT FRS 114 - Prepayments of a Minimum
Funding Requirement
1 July 2012
1 January 2013
1 January 2011
INT FRS 115 : Agreements for the Construction of Real Estate
1 January 2011
Singapore Financial Reporting Standards for Small Entities
1 January 2011
Consequential amendments were also made to various standards as a result of these new or revised standards.
The Group and the Company expect that the adoption of the above FRS and INT FRS, if applicable, will have no
material impact on the financial statements in the period of initial application, except as discussed below.
FRS 24 (2010) Related Party Disclosures
FRS 24 (2010) changes certain requirements for related party disclosures for entities under control, joint control or
significant influence of a government (“government-related entities”). FRS 24 (2010) also made related party relations
symmetrical between each of the related parties and new relationships were included and clarified in the definition of
a related party. The Group and the Company will apply the amendments to FRS 24 retrospectively for annual periods
beginning on or after 1 July 2011 and is currently determining the impact of the changes to the definition of a related
party on the related disclosures. As this is a disclosure standard, it will have no impact on the financial position or
financial performance of the Group or the Company when implemented.
On 20 September 2011, the Accounting Standards Council has issued new and revised FRS namely: FRS 1
– Presentation of Items of Other Comprehensive Income, FRS 19 Employee Benefits, FRS 27 Separate Financial
Statements, FRS 28 Investments in Associates and Joint Ventures, FRS 110 Consolidated Financial Statements, FRS
111 Joint Arrangements, FRS 112 Disclosure of Interests in Other Entities and FRS 113 Fair Value Measurement.
The Group and the Company are currently determining the impact of these new and revised FRS on the financial
statements upon initial adoption.
STATEMENTS
2.
2.2
Basis of consolidation
LOYZ ENERGY LIMITED
47
ANNUAL REPORT 2011
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries made up
to end of the financial year. The financial statements of the subsidiaries are prepared for the same reporting date as
that of the parent company.
Accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by
the Group to ensure consistency.
Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on
which that control ceases. In preparing the consolidated financial statements, inter-company transactions, balances
and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment loss of the asset transferred.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Non-controlling
interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate
share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an
acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in
equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect
the changes in their relative interests in the subsidiary. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directly in
equity and attributed to owners of the parent.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling
interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted
for (i.e. reclassified to profit or loss or transferred directly to accumulated profits) in the same manner as would be
required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting
under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition
of an investment in an associate or jointly controlled entity.
2.3
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured
at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under
FRS 103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups)
that are classified as held-for-sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued
Operations, which are recognised and measured at the lower of cost and fair value less costs to sell.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity
are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or
loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such
treatment would be appropriate if that interest were disposed of.
48
STATEMENTS
2.
2.3
Business combinations (Continued)
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under
FRS 103 are recognised at their fair values at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are
recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits
respectively;
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment
awards are measured in accordance with FRS 102 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets
Held for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.
Goodwill arising on acquisition is recognised as an asset at the acquisition date and initially measured at cost, being
the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and
the fair value of the acquirer previously held equity interest (if any) in the entity over net acquisition-date fair value
amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable net assets exceeds the
sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of
the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or
loss as a bargain purchase gain.
2.4
Property, plant and equipment are initially recorded at cost. Subsequent to initial recognition, property, plant and
equipment are stated at cost less accumulated depreciation and impairment losses, if any.
The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the
items. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment
if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the
property, plant and equipment.
Subsequent expenditure relating to the property, plant and equipment that has already been recognised is added to
the carrying amount of the asset when it is probable that the future economic benefits, in excess of the standard of
performance of the asset before the expenditure was made, will flow to the Group and the Company, and the cost can
be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it
is incurred.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the financial year
the asset is derecognised.
STATEMENTS
2.
2.4
Property, plant and equipment (Continued)
LOYZ ENERGY LIMITED
49
ANNUAL REPORT 2011
Depreciation is calculated using the straight-line method to allocate the depreciable amounts of the plant and
equipment over their estimated useful lives as follows:
Leasehold building
–
61 years
Plant, machinery and equipment
–
2 - 21 years
Furniture and fittings
–
3 - 15 years
Motor vehicles
–
5 - 10 years
Depreciation relating to property, plant and equipment attributable directly to activities for exploration and evaluation of
oil and gas are capitalised as part of exploration and evaluation assets.
The residual values, useful lives and depreciation method are reviewed at each financial year-end to ensure that the
residual values, period of depreciation and depreciation method are consistent with previous estimates and expected
pattern of consumption of the future economic benefits embodied in the items of plant and equipment.
2.5
Exploration and evaluation assets (“E&E”)
Exploration and evaluation activity involves the search for oil and gas resources, the determination of technical
feasibility and the assessment of the commercial viability of an identified resource. Costs incurred before the Group
has obtained the legal rights to explore an area are recognised in profit or loss. Exploration and evaluation costs are
capitalised in respect of each area of interest for which the rights to tenure are current and where:
i.
The exploration and evaluation costs are expected to be recouped through successful development and
exploitation of the area of interest; or alternatively, by its sale; or
ii.
Exploration and evaluation activities in the area of interest have not reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to, the areas of interest are continuing.
Exploration and evaluation assets comprises costs that are directly attributable to: researching and analysing existing
exploration data, gathering exploration data through topographical, geochemical and geophysical studies, exploratory
drilling, trenching and sampling, determining and examining the volume and grade of the resource, examining
and testing extraction and treatment methods, surveying transportation and infrastructure requirements, compiling
pre-feasibility and feasibility studies and/or gaining access to areas of interest including occupancy and relocation
compensation.
General and administrative costs are allocated to, and included in, the cost of exploration and evaluation asset only
to the extent that those costs can be related directly to operational activities in the area of interest to which the
exploration and evaluation asset relates. In all other cases, these costs are expensed as incurred.
Exploration and evaluation assets are transferred to oil and gas properties, a component of property, plant and
equipment, when the technical feasibility and commercial viability of extracting the resource are demonstrable and
sanctioned by management.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Where a potential
impairment is indicated, assessment is performed for each area of interest in conjunction with the group of operating
assets (representing a cash-generating unit) to which the exploration and evaluation is attributable. To the extent that
capitalised exploration and evaluation is not expected to be recovered, it is charged to profit or loss.
50
STATEMENTS
2.
2.6
Subsidiaries
Subsidiaries is an entity over which the Group has 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.
Investments in subsidiaries are accounted for at cost less accumulated impairment losses, if any, in the Company’s
separate financial statements.
2.7
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at
the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less
any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected
to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
When goodwill relates to a cash-generating unit but has not been allocated to that unit, the unit is tested for
impairment, whenever there is an indication that the unit may be impaired, by comparing the unit’s carrying amount,
excluding any goodwill, with its recoverable amount. Impairment loss, if any, is allocated to reduce the carrying amount
of the assets of the unit: first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit; and
then, to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of gain or loss on
disposal.
2.8
Impairment of non-financial assets except E&E assets and goodwill
The carrying amounts of non-financial assets are reviewed at the end of each reporting period to determine whether
there is any indication of impairment loss and whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. If any such indication exists, or when annual impairment testing for an asset is
required, the asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are
largely independent from other assets and groups of assets. Impairment loss is recognised in profit or loss, unless
it reverses a previous revaluation credited to other comprehensive income, in which case it is recognised to other
comprehensive income up to the amount of any previous revaluation.
STATEMENTS
2.
2.8
Impairment of non-financial assets except E&E assets and goodwill (Continued)
LOYZ ENERGY LIMITED
51
ANNUAL REPORT 2011
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and value
in use. Recoverable amount is determined for individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. If this is the case, the recoverable amount
is determined for the cash-generating unit to which the asset belongs. The fair value less costs to sell is the amount
obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable,
willing parties, less costs of disposal. Value in use is the present value of estimated future cash flows expected to be
derived from the continuing use of an asset and from its disposal at the end of its useful life, discounted at pre-tax
rate that reflects current market assessment of the time value of money and the risks specific to the asset or cashgenerating unit for which the future cash flow estimates have not been adjusted.
An assessment is made at the end of each reporting period as to whether there is any indication that an impairment
loss recognised in prior periods for an asset may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. An impairment loss recognised in prior periods is reversed only if there has been a
change in the estimates used to determine the recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation, if no impairment loss has been recognised. Reversals of impairment loss are
recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal in excess of
impairment loss recognised in profit or loss in prior periods is treated as a revaluation increase. After such a reversal,
the depreciation is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.
2.9
Financial assets
The Group and the Company classify their financial assets as loans and receivables. The classification depends
on the purpose of which the assets are acquired. Management determines the classification of the financial assets
at initial recognition and re-evaluates this designation at the end of the reporting period, when allowed and where
appropriate.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables are classified within “trade and other receivables” and “cash
and cash equivalents” on the statements of financial position.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group and
the Company commit to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the Group and the Company have transferred substantially all risks and rewards of
ownership.
On derecognition of a financial asset, the difference between the carrying amount and the net consideration proceeds
is recognised in profit or loss.
52
STATEMENTS
2.
2.9
Financial assets (Continued)
Initial and subsequent measurement
Financial assets are initially recognised at fair value plus in the case of financial assets not at fair value through profit
or loss, directly attributable transaction costs.
After initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less
impairment loss, if any.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating
interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate,
a shorter period. Income and expense are recognised on an effective interest basis for debt instruments other than
those financial instruments “at fair value through profit or loss”.
Impairment
The Group and the Company assess at the end of each reporting period whether there is objective evidence that a
financial asset or a group of financial assets is impaired.
(i)
Loans and receivables
An allowance for impairment loss of loans and receivables is recognised when there is objective evidence that
the Group and the Company will not be able to collect all amounts due according to the original terms of the
receivables. The amount of allowance is the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of
the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profit
or loss.
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 loss was recognised, the previously recognised
impairment loss is reversed either directly or by adjusting an allowance account. Any subsequent reversal of
an impairment loss is recognised in profit or loss, to the extent that the carrying amount of the asset does not
exceed its amortised cost at the reversal date.
2.10
Cash and cash equivalents comprise cash on hand, cash and deposits with banks and financial institutions. Cash
and cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of change in value. For the purpose of the consolidated statement of
cash flows, cash and cash equivalents comprise cash on hand, cash at bank and fixed deposits net of fixed deposits
pledged.
2.11
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined on a “weighted average” basis and includes all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price at which the inventories can be realised in the normal course of
business, less estimated costs of completion and costs incurred in marketing and distribution. Where necessary,
allowance is made for obsolete, slow-moving and defective inventories to adjust the carrying value of those inventories
to the lower of cost and net realisable value.
STATEMENTS
2.
2.12
Financial liabilities
LOYZ ENERGY LIMITED
53
ANNUAL REPORT 2011
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial
liabilities.
Financial liabilities are classified as at fair value through profit or loss if the financial liability is either held for trading or
it is designated as such upon initial recognition.
The accounting policies adopted for other financial liabilities are set out below.
(i)
Trade and other payables are recognised initially at cost which represents the fair value of the consideration
to be paid in the future, less transaction cost, for goods received or services rendered, whether or not billed
to the Group and the Company, and are subsequently measured at amortised cost using the effective interest
method.
Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the
amortisation process.
(ii)
Bank borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Bank borrowings are
subsequently stated at amortised cost using the effective interest method. Any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of
the borrowings using the effective interest method.
Borrowings which are due to be settled within 12 months after the end of the reporting period are presented
as current borrowings even though the original term was for a period longer than 12 months and an agreement
to refinance or to reschedule payments on a long-term basis is completed after the end of the reporting period
and before the financial statements are authorised for issue. Other borrowings due to be settled more than
12 months after the end of the reporting period are presented as non-current borrowings in the statements of
financial position.
Recognition and derecognition
Financial liabilities are recognised on the statements of financial position when, and only when, the Group and the
Company become a party to the contractual provisions of the financial instruments.
Financial liabilities are derecognised when the contractual obligation has been discharged or cancelled or expired. On
derecognition of a financial liability, the difference between the carrying amount and consideration paid is recognised
in profit or loss.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.
54
STATEMENTS
2.
2.13
Sale and leaseback transaction
A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. The lease
payment and the sale price are usually interdependent because they are negotiated as a package. The accounting
treatment of a sale and leaseback transaction depends on the type of lease involved.
For a sale and leaseback transaction that results in an operating lease:
(a)
If the transaction is established at fair value, any profit or loss is recognised immediately; or
(b)
If the sale price is below fair value, any profit or loss shall be recognised immediately except that, if the loss
is compensated for by future lease payments at below market price, it shall be deferred and amortised in
proportion to the lease payments over the period for which the asset is expected to be used; or
(c)
If the sale price is above fair value, the excess of fair value shall be deferred and amortised over the period for
which the asset is expected to be used; or
(d)
If the fair value at the time of a sale and leaseback transaction is less than the carrying amount of the asset,
a loss equal to the amount of the difference between the carrying amount and fair value shall be recognised
immediately.
For a sale and leaseback transaction that results in a finance lease, whereby the lessor provides finance to the lessee,
with the asset as security, any excess of sales proceeds over the carrying amount shall be deferred and amortised
over the lease term. No adjustment is necessary unless there has been impairment loss, in which case the carrying
amount is reduced to recoverable amount in accordance with FRS 36 Impairment of Assets.
2.14
Dividends
Equity dividends are recognised when they become legally payable. Interim dividends are recorded in the financial
year in which they are declared payable. Final dividends are recognised as a liability in the financial year in which the
dividends are approved by the shareholders.
2.15
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company
after deducting all of their liabilities.
Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Group
and the Company. Incremental costs directly attributable to the issuance of new equity instruments are shown in the
equity as a deduction from the proceeds.
2.16
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods or services
rendered in the ordinary course of business. Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the entity and the revenue can be reliably measured. Revenue is presented, net of rebates,
discounts and sales related taxes.
Revenue from sale of goods is recognised upon passage of title to the customer which generally coincides with their
delivery and acceptance.
Interest income is recognised on a time-apportionment basis using the effective interest method.
STATEMENTS
2.
2.17
Grants
LOYZ ENERGY LIMITED
55
ANNUAL REPORT 2011
Grants are recognised at the fair value where there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. Where the grants relate to expenditures, which are not capitalised, the fair
value of grants are credited to profit or loss as and when the underlying expenses are included and recognised in
profit or loss to match such related expenditures.
Government grant – Job credit scheme
The Singapore government introduced a cash grant known as the Jobs Credit Scheme in its Budget for 2009 in a
bid to help businesses preserve jobs in the economic downturn. The amounts received for jobs credit are to be paid
to eligible employers in instalments and the amount an employer can receive would depend on the fulfillment of the
conditions as stated in the Scheme.
The Group and the Company recognise the amounts received for jobs credit at their fair values as a deduction from
employee benefits in the month of receipt of these grants from the government.
2.18
Employee benefits
Defined contribution plan
Contributions to defined contribution plans are recognised as expenses in profit or loss in the same financial year as
the employment that gives rise to the contributions.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for
estimated liability for unutilised annual leave as a result of services rendered by employees up to the end of the
reporting period.
2.19
Leases
When the Group and the Company are the lessees of finance leases
Leases in which the Group and the Company assume substantially the risks and rewards of ownership are classified
as finance leases.
Upon initial recognition, plant and equipment acquired through finance leases are capitalised at the lower of their fair
values and the present values of the minimum lease payments. Any initial direct costs are also added to the amount
capitalised.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to
that asset. Lease payments are apportioned between finance charge and reduction of the lease liability. The finance
charge is allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the
remaining balance of the finance lease liability. Finance charge is recognised in profit or loss.
When the Group and the Company are the lessees of operating leases
Leases of assets 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 recognised in profit or loss on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.
56
STATEMENTS
2.
2.20
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of
those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs on
general borrowings are capitalised by applying a capitalisation rate to construction or development expenditures that
are financed by general borrowings. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.21
Income tax
Income tax expense for the financial year comprises current and deferred taxes. Income tax expense is recognised in
profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in
other comprehensive income.
Current income tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted
or substantively enacted by the end of the reporting period, and any adjustment to income tax payable in respect of
previous financial years.
Deferred tax is provided, using the liability method, for temporary differences at the end of the reporting period
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred
tax is measured using the tax rates expected to be applied to the temporary differences when they are realised or
settled, based on tax rates enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised. Deferred tax assets are reviewed at end of each reporting
period and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the
extent that it has become probable that future taxable profits will be available against which the temporary differences
can be utilised.
Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly
in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same tax authority and where there is intention to settle the
current tax assets and liabilities on a net basis.
Deferred tax liabilities are recognised for all taxable temporary differences associated with investment in subsidiary,
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable future.
STATEMENTS
LOYZ ENERGY LIMITED
2.
2.22
Foreign currencies
57
ANNUAL REPORT 2011
Items included in the individual financial statements of each entity in the Group are measured using the currency of
the primary economic environment in which the entity operates (“functional currency”).
The consolidated financial statements of the Group and the statement of financial position and statement of changes
in equity of the Company are presented in Singapore dollar, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
In preparing the financial statements, transactions in currencies other than the entity’s functional currency (“foreign
currencies”) are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each
reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the
end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are
re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not re-translated.
Exchange differences arising on the settlement of monetary items and on re-translating of monetary items are
recognised in profit or loss for the financial year. Exchange differences arising on the re-translation of non-monetary
items carried at fair value are included in profit or loss for the financial year except for differences arising on the
re-translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive
income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other
comprehensive income.
2.23
Share-based payments
The Group operates an equity-settled share-based compensation plan for its employees.
Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of nonmarket based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate
of the number of equity instruments that will eventually vest and adjusted for the effect of non-market based vesting
conditions such as profitability and sales growth targets. Non-market vesting conditions are included in assumptions
about the number of options that are expected to become exercisable. At the end of each reporting period, the Group
revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised over the remaining vesting period with a corresponding adjustment to the share option
reserve.
Fair value is measured using the Trinomial option pricing model. The expected life used in the model has been
adjusted, based on the external independent valuers’ best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations. At each reporting period a revision is made to the number of options that
are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in profit or
loss, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs
are credited to share capital when the options are exercised. Cancellations of grants of equity instruments during the
vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied) are accounted
for as an acceleration of vesting, therefore any amount unrecognised that would otherwise have been charged is
recognised immediately in profit or loss.
58
STATEMENTS
2.
2.24
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the group of executive directors who make strategic
decisions.
3.
Critical accounting judgements and key sources of estimation uncertainty
3.1
Critical judgements made in applying the Group’s and the Company’s accounting policies
In the process of applying the Group’s and the Company’s accounting policies, the management is of the opinion
that there are no critical judgements involved that have a significant effect on the amounts recognised in the financial
statements except as discussed below.
(i)
Impairment of investments in subsidiaries and financial assets
The Group and the Company follow the guidance of FRS 36 and FRS 39 in determining whether the
investment in subsidiary or a financial asset is impaired. This determination requires significant judgement. The
Group and the Company evaluate, among other factors, the duration and extent to which the fair value of an
investment or a financial asset is less than its cost and the financial health of and near-term business outlook
for the financial asset, including factors such as industry and sector performance, changes in technology and
operational and financing cash flow.
(ii)
Capitalisation and impairment of exploration and evaluation assets
Exploration and evaluation costs are capitalised in the statements of financial position, in respect of areas
of interest for which the rights of tenure are current and where such costs are expected to be recouped or
exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable
assessment of the existence of economically recoverable reserves. The carrying value of assets within each
area of interest are reviewed regularly taking into consideration the available facts and circumstances, and to
the extent to which capitalised value exceeds its recoverable value, the excess is provided for or written off in
the financial year in which this is determined.
(iii)
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis and as and when there is
an indication that goodwill may be impaired. This determination requires significant judgement. As at 30 June
2011, goodwill related to Interlink has not been allocated to the cash-generating units. Whenever there is an
indication that the cash-generating units to which the goodwill will be allocated may be impaired, the cashgenerating units are tested for impairment by comparing their carrying amounts, excluding any goodwill, with
their recoverable amounts.
STATEMENTS
LOYZ ENERGY LIMITED
3.
Critical accounting judgements and key sources of estimation uncertainty (Continued)
3.2
Key sources of estimation uncertainty
59
ANNUAL REPORT 2011
The key assumptions concerning the future, and other key sources of estimation uncertainty as at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities and the reported amounts of revenue and expenses within the next financial year, are discussed below.
(i)
Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. The
management estimates the useful lives of these assets to be within 2 to 61 years. The carrying amount of
the Group’s property, plant and equipment as at 30 June 2011 was approximately $645,000 (2010: $176,000).
Changes in the expected level of usage and technological developments could impact the economic useful
lives and the residual values of these assets, therefore future depreciation charges could be revised.
(ii)
Net realisable value of inventories
A review is made periodically on inventory for excess inventory, obsolescence and declines in net realisable
value below cost and an allowance is recorded against the inventory balance for any such declines. These
reviews require management to estimate future demand for the products. In any case, the realisable value
represents the best estimate of the recoverable amount and is based on the most reliable evidence available at
the end of the reporting period and inherently involves estimates regarding the future expected realisable value.
The benchmarks for determining the amount of allowance or write-down include aging analysis, technical
assessment and subsequent events. In general, such an evaluation process requires significant judgment and
materially affects the carrying amount of inventories at the end of the reporting period. Possible changes in
these estimates could result in revisions to the valuation of the inventory. The carrying amount of the Group’s
inventories as at 30 June 2011 was approximately $9,284,000 (2010: $9,319,000).
(iii)
Allowance for doubtful receivables
The Group and the Company establish allowance for doubtful trade and other receivables on a case-bycase basis when it is believed that the payment of amounts owed is unlikely to occur. In establishing these
allowances, the Group and the Company consider their historical experience and changes to their customers’
financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their
ability to make the required payments, allowances may be required. The carrying amounts of the Group’s
and the Company’s trade and other receivables as at 30 June 2011 were approximately $3,110,000 (2010:
$2,431,000) and $4,896,000 (2010: $2,523,000) respectively.
(iv)
Income taxes
The Group and the Company recognise expected liabilities for income tax based on an estimation of the likely
taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where
the actual liability arising from these issues differs from these estimates, such differences will have an impact
on income tax and deferred tax provisions in the financial year when such determination is made. The carrying
amounts of the Group’s and the Company’s current income tax payable as at 30 June 2011 were approximately
$430,000 (2010: $3,000) and $3,000 (2010: $3,000) respectively.
60
STATEMENTS
4.
Group
Leasehold
building
Plant,
machinery and
equipment
Furniture
and fittings
Motor
vehicles
Total
$’000
$’000
$’000
$’000
$’000
–
1,093
991
1,425
3,509
Cost
Acquisition from business combination
108
282
23
59
472
Additions
–
43
–
325
368
Disposal
–
–
(248)
Write-off
–
Currency translation adjustment
(4)
–
(505)
(17)
–
–
–
(5)
(248)
(505)
(26)
104
896
1,014
1,556
3,570
–
1,089
990
1,254
3,333
Depreciation for the financial year
1
16
–
128
145
Disposal
–
–
(215)
Write-off
–
–
2
–
–
2
1
767
990
1,167
2,925
103
129
24
389
645
Accumulated depreciation
–
(340)
–
–
(215)
(340)
Carrying amount
Plant,
machinery and
equipment
Furniture
and fittings
Motor
vehicles
Total
$’000
$’000
$’000
$’000
1,093
991
1,467
3,551
Cost
Disposal
–
–
1,093
991
1,425
(42)
3,509
(42)
1,085
987
1,180
3,252
4
3
116
123
Accumulated depreciation
Depreciation for the financial year
Disposal
–
–
1,089
990
1,254
(42)
3,333
(42)
4
1
171
176
Carrying amount
STATEMENTS
4.
LOYZ ENERGY LIMITED
61
ANNUAL REPORT 2011
Property, plant and equipment (Continued)
As at 30 June 2011, the Group’s motor vehicle with carrying amount of approximately $260,000 (2010: $Nil) was
purchased under finance lease agreement.
During the financial year, the Group’s additions to property, plant and equipment were financed as follows:
Group
5.
2011
2010
$’000
$’000
Cash payments to acquire property, plant and equipment
168
–
Acquired under finance lease agreements
200
–
Total additions to property, plant and equipment
368
–
Group
2011
$’000
2010
$’000
Classified as:
Plant and equipment
Intangible exploration assets
729
–
12,462
–
13,191
–
Movements of exploration and evaluation assets are as follows:
Group
2011
$’000
2010
$’000
–
–
Acquisition through business combination
9,715
–
Additions
3,812
(336)
13,191
–
–
–
Additions to E&E assets include borrowing costs amounting to approximately $69,000 (2010: $Nil) and depreciation of
plant and equipment amounting to approximately $11,000 (2010: $Nil).
62
STATEMENTS
6.
Investments in subsidiaries
Company
2011
2010
$’000
$’000
Unquoted equity shares, at cost
41,564
Share options: Employee share option scheme
2,000
50
112
41,614
2,112
Particulars of subsidiaries:
Name of subsidiary
(Country of incorporation)
Effective equity
held by the Group
2011
2010
%
%
Principal activities
Held by the Company
Sim Siang Choon Hardware (S)
Pte Ltd (1)
(Singapore)
100
100
Dealers of all kinds of sanitary hardware,
appliances, accessories and fixtures for use
in bathroom, toilets and kitchens
Loyz Oil Pte. Ltd. (1)
(Singapore)
100
–
Exploration and production of oil and gas
and investment holding
(2)
10.4
–
and investment holding
Interlink Petroleum Limited (2)
(India)
41.4
–
51.8
–
Dormant
Interlink Petroleum Limited
(Singapore)
Held by Loyz Oil Pte. Ltd.
Held by Interlink Petroleum Limited
Interlink Petroleum Pte Ltd (3)
(Singapore)
(1)
Audited by BDO LLP, Singapore.
(2)
Audited by Haribhakti & Co., Chartered Accountants, India, a member of BDO International Limited, for consolidation
purposes.
(3)
Not required to be audited as the subsidiary is dormant.
STATEMENTS
LOYZ ENERGY LIMITED
6.
63
ANNUAL REPORT 2011
Investments in subsidiaries (Continued)
Acquisition of subsidiaries
On 28 April 2010, the Company entered into a Share Purchase Agreement (“Agreement”) with Jit Sun Investments
Pte Ltd (“Jit Sun”), a private limited company incorporated in Singapore, and Mr. Kenneth Perreira to acquire a 47.9%
equity interest in Interlink Petroleum Limited (“Interlink”) for a purchase consideration of $11,934,000 which was
satisfied by way of allotment and issuance of an aggregate of 108,490,910 new ordinary shares in the share capital of
the Company subject to the satisfaction of certain conditions as stipulated in the Agreement.
As at the date of the Agreement, Jit Sun is the beneficial owner of 10,310,000 ordinary shares of Interlink,
representing approximately 41.4% of the issued share capital of Interlink which are held through Jit Sun’s whollyowned subsidiary, Loyz Oil Pte. Ltd. (“Loyz Oil”), a private limited company incorporated in Singapore. Mr. Pereira is
the legal and beneficial owner of 1,624,000 ordinary shares of Interlink (“KP Sale Shares”), representing approximately
6.5% of the issued share capital of Interlink.
On 28 July 2010, the Company completed acquiring 47.9% equity interest in Interlink through:
(a)
the transfer by Jit Sun of the entire issued and paid up share capital of Loyz Oil to the Company; and
(b)
the transfer by Mr. Pereira of the KP Sale Shares to the Company.
As a result of the above acquisition, the Company has acquired 100% equity interest in Loyz Oil and 47.9% equity
interest in Interlink.
Through an Open Offer in India in January 2011, the Company acquired an additional 971,400 ordinary shares of
Interlink, representing 3.9% equity interest, for a cash consideration of approximately $1,885,000 (Rs. 65,715,210).
The legal title to the shares was obtained on 25 March 2011 and accordingly, from this date, Interlink became a
subsidiary of the Company.
The carrying amounts of the identifiable assets and liabilities of the subsidiaries as at the date of acquisition were:
At the date of
acquisition
Carrying
amount
2011
$’000
472
9,715
Inventories
1,035
Other assets
332
5,128
16,682
Less:
Bank loan
996
4,989
5,985
Net identifiable assets
10,697
64
STATEMENTS
6.
Investments in subsidiaries (Continued)
Acquisition of subsidiaries (Continued)
The independent valuation of Interlink for the purpose of accounting for the business combination is in progress and
expected to be completed subsequent to the authorisation of these financial statements. In view that the fair values as
at acquisition date are not available pending the completion of the valuation, the carrying amounts as at acquisition
date have been used as provisional amounts in the measurement of identifiable assets acquired and liabilities
assumed.
From the date of acquisition, Interlink incurred a net loss after income tax of approximately $229,000, which has been
included in the Group’s profit or loss for the current financial year. Had the business combination taken place at the
beginning of the financial year, the Group’s net profit would have been approximately $355,000. There is no impact on
the Group’s revenue as Interlink has not generated revenue during the financial year.
The effects of the acquisition on the cash flows are as follows:
2011
$’000
472
9,715
Inventories
1,035
Other assets
332
5,128
(996)
Bank loan
(4,989)
(5,161)
Goodwill
34,029
Purchase consideration
39,565
Less:
Purchase consideration paid through issuance of shares
37,679
5,128
Cash flows on acquisition, net of cash acquired
7.
(3,242)
Goodwill
Group
2011
$’000
2010
$’000
–
–
Acquisition of subsidiaries during the financial year
34,029
–
Balance at end of financial year
34,029
–
Balance at beginning of financial year
Goodwill acquired through business combination is related to Interlink. Interlink has two cash-generating units as
at acquisition date to which the goodwill shall be allocated: Baola field and Modhera field. Goodwill has not been
allocated as at the reporting date pending the completion of Interlink’s independent valuation as discussed in Note 6
to the financial statements.
STATEMENTS
LOYZ ENERGY LIMITED
8.
65
ANNUAL REPORT 2011
Inventories
Group
Goods for resale
Stores and consumables
2011
$’000
2010
$’000
8,919
9,319
365
–
9,284
9,319
The cost of inventories recognised as an expense and included in “cost of sales” line item in the consolidated
statement of comprehensive income amounted to approximately $11,591,000 (2010: $10,854,000).
During the financial year, the Group carried out a review of the realisable values of its inventories and the review led to
the recognition of an allowance for slow-moving inventories of approximately $36,000 (2010: $71,000) as an expense
and included in “other charges” line item in the consolidated statement of comprehensive income.
9.
Group
2011
$’000
2010
$’000
1,360
592
- third parties
2,034
- subsidiaries
–
3,394
Company
2011
2010
$’000
$’000
Trade receivables
- third parties
12
2
2,021
2,000
2,000
–
3,168
703
2,613
5,180
2,705
Other receivables
(284)
3,110
(182)
2,431
(284)
4,896
(182)
2,523
The Group’s trade receivables comprised mainly of retention sums from projects.
The trade amounts due from third parties are unsecured, interest-free and repayable within the normal credit terms of
30 to 60 days (2010: 30 to 60 days).
The non-trade receivables from third parties are unsecured, interest-free and repayable on demand, except for an
amount of $2,000,000 (2010: $2,000,000) which is secured as discussed below.
Amount due from subsidiaries represents loans to subsidiaries which are unsecured and repayable on demand. The
loans bear an average interest rate of 2.8% (2010: 2.8%) per annum.
66
STATEMENTS
9.
Trade and other receivables (Continued)
Movement in allowance for non-trade receivables is as follows:
Group and Company
2011
2010
$’000
$’000
182
–
Allowance made during the financial year
102
182
284
182
On 24 July 2008, the Company entered into a Memorandum of Agreement (“MOU”) with Empire Holdings Ltd
(“Empire Holdings”), a company incorporated in Seychelles, in relation to the proposed acquisition by the Company of
up to 100% of the entire issued and paid-up share capital of Chase Perdana Berhad (“Chase Perdana”), a company
incorporated in Malaysia, of which Empire Holdings is the controlling shareholder, and the resulting control of the
Company by Empire Holdings. Pursuant to the terms of the MOU, the Company paid an initial refundable deposit of
$5,000,000, being part of the consideration payable for the proposed acquisition of Chase Perdana. As the MOU has
lapsed, the deposit was to be refunded by Empire Holdings.
As at 30 June 2011, the Company has been refunded $3,000,000 and there remains an outstanding balance of
$2,000,000 which is included in “other receivables”. The outstanding balance is secured by an executed blank share
transfer form for 8,640,000 shares of Turiya Berhad (formerly known as Sitt Tatt Berhad), a company listed in Bursa
Malaysia Securities Berhad and of which Empire Holdings is the controlling shareholder. An allowance for doubtful
non-trade receivable amounting to approximately $102,000 (2010: $182,000) was recognised in profit or loss under
“other charges” line item subsequent to a debt recovery assessment performed during the financial year.
Trade and other receivables are denominated in Singapore dollar.
10.
Other assets
Group
2011
$’000
2010
$’000
Deposits to secure purchase of goods
226
137
Deposits to secure services
656
127
882
264
Other assets are denominated in the following currencies:
Group
Singapore dollar
Euro
United States dollar
Indian rupee
2011
$’000
2010
$’000
303
136
80
–
91
128
408
–
882
264
STATEMENTS
LOYZ ENERGY LIMITED
11.
67
ANNUAL REPORT 2011
Prepayments
Included in the Group’s prepayments as at 30 June 2011 was a non-refundable deposit amounting to approximately
$315,000 (US$250,000) (2010: $Nil) in relation to the proposed co-operation between Loyz Oil and a third party to
utilise certain proprietary technologies of the latter to obtain information on the possible presence of hydrocarbon
reserves in selected areas.
12.
Group
Restricted in use (*)
Not restricted in use
Interest earning balances
Company
2011
2010
$’000
$’000
2011
$’000
2010
$’000
2,743
1,650
–
–
8,722
2,751
67
43
11,465
4,401
67
43
9,734
2,750
–
–
(*) This is for bank balance held by bankers to secure certain credit facilities granted to the subsidiaries.
The rate of interest for the cash on interest earning balances ranges from 0.1% to 9.8% (2010: 0.1% to 1%) per
annum. These approximate the effective interest rates.
Cash and cash equivalents are denominated in the following currencies:
Group
2011
$’000
Singapore dollar
Indian rupee
2010
$’000
Company
2011
2010
$’000
$’000
4,900
4,354
67
43
38
47
–
–
6,527
–
–
–
11,465
4,401
67
43
Cash and cash equivalents per consolidated statement of cash flows comprise the following:
Group
2011
$’000
2010
$’000
Cash and cash equivalents at end of financial year
11,465
4,401
Cash restricted in use
(2,743)
(1,650)
8,722
2,751
Not restricted in use
68
STATEMENTS
13.
Share capital
Group and Company
2011
Number of
shares
2010
Number of
shares
$’000
$’000
Issued and fully paid:
At beginning of financial year
Issue of shares
(1)
Issue of subscription shares
(2)
At end of financial year
135,555,000
2,053
135,555,000
2,053
108,490,910
37,679
–
–
22,250,000
2,448
–
–
225,000
49
–
–
266,520,910
42,229
135,555,000
2,053
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares have no par value and carry one vote per share without restriction.
(1)
Issue of 108,490,910 ordinary shares upon acquisition of interest in Interlink (Note 6).
(2)
In relation to the Company’s acquisition of interest in Interlink, the Company entered into a Subscription
Agreement with Mr. Pereira, pursuant to which Mr. Pereira subscribed for 22,250,000 ordinary shares of the
Company for a cash consideration of approximately $2,448,000.
These newly issued shares rank pari passu in all respects with the existing ordinary shares.
14.
Reserves
Group
2011
$’000
Share option reserve
Foreign currency translation account
71
2010
$’000
Company
2011
2010
$’000
$’000
143
71
143
(194)
–
–
–
(123)
143
71
143
Share option reserve
The Sim Siang Choon Share Option Scheme (the “Scheme”) was approved by the members of the Company at
an extraordinary general meeting held on 22 June 2001 which provides for the grant of incentive share options to
employees and executive directors.
Under the Scheme, the maximum number of shares to be issued to eligible employees shall not exceed 15% of the
issued share capital of the Company from time to time. The Scheme allows the issue of options with a subscription
price at a discount of up to 20% of the market price, or its nominal value, whichever is higher.
STATEMENTS
LOYZ ENERGY LIMITED
14.
69
ANNUAL REPORT 2011
Reserves (Continued)
Share option reserve (Continued)
An option may be exercised in whole or in part, after the second anniversary of the date of grant of that option but
before the tenth anniversary of the date of grant of that option in the case where options are granted at a discount, or
after the first anniversary of the date of grant of that option in the case where options are not granted at a discount.
The lapsing of options is provided for upon the occurrence of certain events, which includes:
(a)
the termination of the grantee’s employment;
(b)
the death of the grantee;
(c)
a take-over of the Company;
(d)
the winding-up of the Company (voluntary or otherwise); and
(e)
the breach by the grantee of any terms of the option.
Activities under the Scheme:
The outstanding number of options at the end of the financial year was:
Number of shares as at
30 June
2011
2010
Exercise price
Grant date
Exercise period
$0.120
25 June 2001
26 June 2002 to 24 June 2011
–
70,000
$0.148
21 August 2002
22 August 2003 to 20 August 2012
30,000
110,000
$0.106
15 July 2004
16 July 2005 to 14 July 2014
30,000
30,000
$0.075
15 July 2005
16 July 2006 to 14 July 2015
30,000
30,000
$0.070
15 July 2006
16 July 2007 to 14 July 2016
30,000
30,000
$0.293
24 July 2007
25 July 2008 to 23 July 2017
1,230,000
1,435,000
1,350,000
1,705,000
The table below summarises the number of options that were outstanding, their weighted average exercise price as at
the end of the financial year as well as the movements during the financial year.
2011
Number
2010
Number
1,705,000
1,810,000
2011
Cents
2010
Cents
Weighted average exercise price
At 1 July
Cancelled
(130,000)
Exercised
(225,000)
At 30 June
1,350,000
(105,000)
0.265
0.253
(0.240)
(0.286)
0.276
0.265
–
1,705,000
During the financial year, the Board of Directors cancelled 130,000 (2010: 105,000) share options granted to
employees that had not yet vested. The fair value of the options as originally priced at the grant date was taken to
profit or loss.
During the financial year, no option was granted.
70
STATEMENTS
14.
Share option reserve (Continued)
The following table summarises information about Directors’ share options outstanding as at 30 June 2011:
Grants
from start
of Scheme to
end of 2011
Participants
Exercised
from start of
Scheme to end
of 2011
Balance as at
30 June 2011
Directors of the Company
Kwan Weng Kwong
175,000
(175,000)
– (a)
175,000
(175,000)
– (b)
175,000
(175,000)
– (c)
175,000
(175,000)
– (d)
175,000
(175,000)
– (e)
175,000
(175,000)
175,000
–
175,000
(175,000)
– (a)
175,000
(175,000)
– (b)
175,000
(175,000)
– (c)
175,000
(175,000)
– (d)
175,000
(175,000)
– (e)
175,000
(175,000)
175,000
Total
(a)
(b)
(c)
(d)
(e)
(f)
(g)
2,450,000
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
price
price
price
price
price
price
price
of
of
of
of
of
of
of
$0.120. Exercise
$0.148. Exercise
$0.103. Exercise
$0.106. Exercise
$0.075. Exercise
$0.070. Exercise
$0.293. Exercise
period
period
period
period
period
period
period
from
from
from
from
from
from
from
26
22
16
16
16
16
25
– (f)
175,000 (g)
–
(2,100,000)
– (f)
175,000 (g)
350,000
June 2002 to 24 June 2011.
August 2003 to 20 August 2012.
July 2004 to 14 July 2013.
July 2005 to 14 July 2014.
July 2006 to 14 July 2015.
July 2007 to 14 July 2016.
July 2008 to 23 July 2017.
No participant has received 5% or more of the total number of the options available under the Scheme except for the
above two Directors.
There was no grant of share options during the current financial year.
Except as disclosed above, there were no options outstanding at the end of the financial year or granted during
the financial year to (a) controlling shareholders and Independent Directors of the Company, (b) associates of the
controlling shareholders and (c) Independent Directors of its subsidiaries.
Except as disclosed above, there were no shares issued during the financial year by virtue of the exercise of options
to take up unissued shares of the Company or its subsidiaries.
Except as disclosed above, there were no unissued shares under option in the Company or its subsidiaries as at the
end of the financial year.
STATEMENTS
LOYZ ENERGY LIMITED
14.
71
ANNUAL REPORT 2011
Foreign currency translation account
The foreign currency translation account comprises foreign exchange differences arising from the translation of the
financial statements of a foreign operation whose functional currency is different from that of the Group’s presentation
currency and is not distributable.
15.
Bank loan
Group
Secured
- After one financial year but within five financial years
2011
$’000
2010
$’000
9,772
–
The bank loan was obtained by Interlink for working capital purposes. It is repayable in 8 equal quarterly instalments
starting from the beginning of the 39th month from the date of first disbursal with final maturity of 5 years from each
disbursement tranche. Interest is charged at the USD Inter-bank Offered Rate for the applicable interest period plus
the applicable margin.
The bank loan is secured by fixed deposit of US$4 million pledged by and corporate guarantee for the remaining
exposure from Jit Sun Investments Pte Ltd, a corporate shareholder of the Company. The loan facility requires Interlink
to adhere to the agreed financial covenants and undertakings.
The bank loan is denominated in United States dollar.
16.
Minimum
lease payments
$’000
Group
2011
Within one financial year
After one financial year but within five
financial years
2010
Future
finance charges
$’000
Present value of
minimum lease
payments
$’000
71
(4)
70
(3)
67
141
(7)
134
–
–
67
–
The finance lease term is 3 years (2010: Nil). The weighted average effective interest rate was 3.8% (2010: Nil) per
annum.
Interest rate is fixed at the contract date, and thus exposes the Group to fair value interest rate risk. The lease is on a
fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The finance lease payable is secured on the motor vehicle purchased under finance lease arrangement (Note 4).
The finance lease payable is denominated in Singapore dollar.
72
STATEMENTS
17.
Other liabilities
Group
2011
$’000
2010
$’000
Current:
Customers’ deposits received
Deferred revenue
299
423
1,061
1,048
1,360
1,471
1,870
2,930
Non-current:
Deferred revenue
The deferred revenue represents the excess profits (the excess of the sale price over the fair value) arising from the
sale and leaseback of a property located at 21 Changi South Avenue 2, Singapore 486630 previously owned by a
subsidiary. The excess profits are deferred and amortised in proportion to the stepped rental of six years upon the
completion of the sale of property in March 2008.
The non-current portion of deferred revenue is payable as follows:
Group
After one financial year but within five financial years
18.
2011
$’000
2010
$’000
1,870
2,930
Group
2011
$’000
2010
$’000
1,847
1,097
4
2,415
Company
2011
2010
$’000
$’000
Trade payables
- third parties
–
–
7
–
–
–
2,415
–
Non-trade payables
- third parties
- a Director of the Company
Accrued operating expenses
1,106
722
324
190
5,372
1,826
2,739
190
The trade amounts due to third parties are unsecured, non-interest bearing and are on 30 to 60 days (2010: 30 to 60
days) credit term.
The non-trade amount due to a Director pertains to the interest-free loan obtained from Mr. Sim Siang Choon which
was used to satisfy the requirements of the Open Offer (Note 6). The amount is unsecured and repayable on demand.
STATEMENTS
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
18.
Trade and other payables (Continued)
Trade and other payables are denominated in the following currencies:
2011
$’000
Group
2010
$’000
Company
2011
2010
$’000
$’000
Singapore dollar
3,786
1,287
2,739
190
Australian dollar
228
125
–
–
Euro
395
400
–
–
Indian rupee
940
–
–
–
19.
23
14
–
–
5,372
1,826
2,739
190
Revenue
Group
Sales of goods
Other income
20.
2011
$’000
2010
$’000
23,455
20,396
15
6
23,470
20,402
Other credits
Group
2011
$’000
2010
$’000
1,047
1,015
–
15
Gain on disposal of plant and equipment
83
5
Other income
78
–
1,208
1,035
Foreign exchange gain, net
21.
Finance costs
Group
2011
$’000
2010
$’000
4
–
Interest expense on:
- Finance lease payable
73
74
STATEMENTS
22.
Other charges
Group
2011
$’000
2010
$’000
36
71
102
182
Plant and equipment written off
165
–
303
253
Allowance for slow-moving inventories
23.
In addition to the charges and credits disclosed elsewhere in the notes to the financial statements, the above includes
the following charges or credits:
Group
2011
$’000
2010
$’000
248
247
Distribution costs
Sales commission
Administrative expenses
Non-audit fees
- Auditors of the Company
Directors’ fees
Depreciation of plant and equipment
5
12
62
70
134
123
3,528
3,267
Staff costs
- Salaries, bonuses and other short-term benefits
- Employer’s contributions to defined contribution plan
- Grant from jobs credit scheme
298
–
296
(139)
Other expenses
Operating leases - rental of premises
Foreign exchange loss, net
3,068
2,942
882
–
The above staff costs include Directors’ remuneration as shown in Note 27 to the financial statements.
STATEMENTS
24.
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
Income tax expense
Group
2011
$’000
2010
$’000
Current income tax
- current financial year
433
–
- (over)/underprovision in prior financial year
(40)
10
Total income tax expense recognised in profit or loss
393
10
Reconciliation of effective income tax rate
Group
2011
$’000
2010
$’000
1,188
1,354
Income tax expense at Singapore statutory tax rate of 17%
202
230
Effects of different income tax rates in other countries
(30)
–
Tax effect of expenses not deductible for income tax purposes
359
44
69
–
Deferred tax asset not recognised
Utilisation of deferred tax asset previously not recognised
Tax effect of income not subject to income tax
Singapore’s statutory stepped income exemption
(23)
(73)
(180)
(173)
(26)
(28)
(40)
10
(Over)/underprovision of current income tax in prior
financial year
Other items
62
–
393
10
Unrecognised deferred tax assets
The movements of unrecognised deferred tax assets are as follows:
Group
2011
$’000
2010
$’000
15
88
Amount not recognised during financial year
69
–
(23)
(73)
61
15
Utilisation of deferred tax asset not previously recognised
75
76
STATEMENTS
24.
Income tax expense (Continued)
The unrecognised deferred tax assets arise from the following temporary differences:
Group
2011
$’000
Unutilised tax losses
Others
2010
$’000
69
36
–
(31)
(8)
10
61
15
The above deferred tax assets have not been recognised as it is uncertain that there will be sufficient future taxable
profits to realise these future benefits. Accordingly, these deferred tax assets have not been recognised in the
consolidated financial statements of the Group in accordance with the accounting policy in Note 2.21 to the financial
statements.
25.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the financial year attributable to owners of the parent
by the weighted average number of ordinary shares during the financial year.
Group
2011
2010
Profit for the financial year attributable to owners of the parent ($’000)
905
1,344
Weighted average number of ordinary shares during the financial year
applicable to basic earnings per share (’000)
245,588
135,555
0.37
0.99
Basic earnings per share (in cents)
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the financial year attributable to owners of the parent
by the weighted average number of ordinary shares and adjusted for the effects of all dilutive potential ordinary shares
during the financial year.
Group
2011
2010
Profit for the financial year attributable to owners of the parent ($’000)
905
1,344
applicable to basic earnings per share (’000)
245,588
135,555
1,350
1,705
246,938
137,260
0.37
0.99
Dilutive share options effect (’000)
applicable to diluted earnings per share (’000)
Diluted earnings per share (in cents)
STATEMENTS
26.
LOYZ ENERGY LIMITED
77
ANNUAL REPORT 2011
Dividends
Group and Company
2011
2010
$’000
$’000
Interim tax exempt dividend paid of 0.5 cents per share in respect of the current
financial year
Final tax exempt dividend of 0.5 cents (2010: 0.5 cents) per ordinary share
paid in respect of the previous financial year
1,332
677
678
678
2,010
1,355
The Directors are proposing that a final tax exempt dividend of 0.25 cents per share or a total of approximately
$666,000 for the current financial year be paid to shareholders after the annual general meeting. This dividend is
subject to approval by shareholders at the next annual general meeting and has not been included as a liability in
these financial statements. The proposed dividend for 2011 is payable in respect of all ordinary shares in issue at the
end of the reporting period.
27.
Significant related party transactions
For the purposes of these financial statements, parties are considered to be related to the Group and the Company if
the Group and the Company have the ability, directly or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice versa, or where the Group and the Company and
the party are subject to common control or common significant influence. Related parties may be individuals or other
entities.
In addition to the information disclosed elsewhere in the financial statements, the following were significant related
party transactions during the financial year:
Company
2011
$’000
2010
$’000
1,089
1,035
700
–
With subsidiaries
Management fee income
Loan
Interest income
60
17
Interest expense
–
(13)
With a Director
Loan
9,757
–
Group
2011
$’000
2010
$’000
16
–
With a corporate shareholder
Payments made on behalf of a subsidiary
78
STATEMENTS
27.
Significant related party transactions (Continued)
Key management personnel remuneration
The remuneration of Directors during the financial year is as follows:
Group
Directors’ fees
Short-term benefits
Post-employment benefits
2011
$’000
2010
$’000
62
70
821
783
29
27
912
880
850
810
Analysed into:
- Compensation of Directors of the Company
- Fees to Directors of the Company
62
70
912
880
The remuneration of Directors is determined by the remuneration committee having regard to the performance of
individuals and market trends.
28.
Operating lease commitments
The Group as a lessee
Group
2011
$’000
2010
$’000
Operating leases included in profit or loss:
- minimum lease payments
- contingent rents
3,026
2,914
42
28
3,068
2,942
The Group leases various retail outlets under non-cancellable operating leases. The leases have variable lease charge
of 0.5% to 7% (2010: 0.5% to 7%) of targeted gross profit as stipulated on the lease agreement and are negotiated for
an average term of 2 years.
As at the end of the reporting period, there were operating lease commitments for rental payable for office premises
and outlets in subsequent accounting periods as follows:
Group
2011
$’000
2010
$’000
Within one year
3,251
3,189
After one year but within five years
4,567
7,787
7,818
10,976
The above operating lease commitments are based on existing rates. The lease agreements provide a periodic
revision of such rates in the future.
STATEMENTS
LOYZ ENERGY LIMITED
29.
79
ANNUAL REPORT 2011
Contingent liability
Group
Pursuant to the Production Sharing Contracts with the Government of India, Interlink is required to restore the
sites after dismantling and abandoning producing well sites and facilities. In view of the recent exploration activities
undertaken by Interlink, the management is of the view that a reliable estimate of the restoration costs cannot be
made as at the end of the reporting period. Accordingly, provision for restoration costs has not been recognised and
the management has deemed the liability as a contingent liability.
30.
Capital commitment
Group
As at the end of the reporting period, the Group has a capital commitment amounting to approximately $5,930,000
(US$4,750,000) (2010: $Nil) in relation to the proposed co-operation between Loyz Oil and a third party as disclosed
in Note 11 to the financial statements.
31.
Segment information
Management has determined the operating segments based on the reports reviewed by the chief operating decision
maker. A segment is a distinguishable component of the Group that is engaged either in providing products or services
(business segment), or in providing products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those of other segments.
Management monitors the operating results of the segments separately for the purposes of making decisions about
resources to be allocated and of assessing performance. Segment performance is evaluated based on operation profit
or loss which is similar to the accounting profit or loss.
Income taxes are managed by the management of the Group.
The accounting policies of the operating segments are the same of those described in the summary of significant
accounting policies. There is no asymmetrical allocation to reportable segments. Management evaluates performance
on the basis of profit or loss from operation before tax expense not including non-recurring gains and losses and
foreign exchange gains or losses.
There is no change from prior periods in the measurement methods used to determine reported segment profit or
loss.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items mainly comprise corporate assets, liabilities and expenses.
Segment assets consist primarily of property, plant and equipment, inventories, receivables and cash and cash
equivalents. Segment liabilities comprise operating liabilities and exclude tax liabilities.
The Group is primarily engaged in four business segments, namely:
(i)
Bathroom – Sanitary ware, shower screens, taps and hand showers, baths and spas, vanity tops, bathroom
cabinets and bathroom accessories.
(ii)
Kitchen and others – Kitchen cabinet systems, kitchen sinks and appliances product.
80
STATEMENTS
31.
Segment information (Continued)
(iii)
Project – Supply of sanitary wares to construction contracts.
(iv)
Oil and gas – Exploration activities.
The Group adopts these four business segments for segment reporting.
31.1
Analysis by business segments
Bathroom
$’000
Kitchen and
others
$’000
Projects
$’000
12,834
5,627
4,994
–
15
23,470
6,861
2,121
2,616
–
15
11,613
Interest income
–
–
–
–
16
16
Other credits
–
–
–
–
1,208
1,208
2011
Oil and
gas
$’000
Unallocated Consolidated
$’000
$’000
Revenue
External revenue
Results
Segment results
Interest expense
–
–
–
(4)
(4)
Unallocated expenses
–
–
–
(574)
–
(11,071)
(11,645)
Operating profit/(loss)
6,861
2,121
2,616
(574)
(9,836)
1,188
Income tax expense
(393)
795
Significant non-cash
items
Allowance for doubtful
non-trade receivables
–
–
–
–
102
102
Allowance for slow-moving
inventories
–
–
–
–
36
36
Amortisation of deferred
revenue
–
–
–
–
1,047
1,047
Depreciation expense
–
–
–
–
134
134
Plant and equipment
written off
–
–
–
165
–
165
7,190
1,499
230
21,166
42,914
72,999
–
–
–
10,717
7,791
18,508
Assets and liabilities
Segment assets
Liabilities
Unallocated liabilities
- Current income tax
payable
430
18,938
STATEMENTS
LOYZ ENERGY LIMITED
31.
Segment information (Continued)
31.1
Analysis by business segments (Continued)
2010
Bathroom
$’000
Kitchen and
others
$’000
Projects
$’000
11,851
5,439
3,106
6,075
1,985
1,213
6
9,279
–
–
–
1,035
1,035
Unallocated Consolidated
$’000
$’000
Revenue
External revenue
6
20,402
Results
Segment results
Other credits
Unallocated expenses
–
–
–
(8,960)
(8,960)
Operating profit/(loss)
6,075
1,985
1,213
(7,919)
1,354
Income tax expense
(10)
1,344
Significant non-cash items
Allowance for doubtful non-trade
receivables
–
–
–
Allowance for slowmoving inventories
–
–
–
71
71
–
–
–
1,015
1,015
Depreciation expenses
–
–
–
123
123
6,178
1,907
1,234
7,297
16,616
–
–
–
6,227
6,227
182
182
Assets and liabilities
Segment Assets
Liabilities
Unallocated liabilities
- Current income tax payable
3
6,230
31.2
Analysis by geographical segments
Non-current assets
2011
2010
$‘000
$‘000
Singapore
India
81
ANNUAL REPORT 2011
Capital expenditure
2011
2010
$‘000
$‘000
373
176
364
–
47,492
–
3,805
–
47,865
176
4,169
–
82
STATEMENTS
32.
Financial instruments, financial risks and capital management
The Group’s activities expose it to credit risks, market risks (including foreign currency risks and interest rates risks)
and liquidity risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the volatility of
financial markets on the Group’s financial performance.
The Board of Directors of the Company is responsible for setting the objectives and underlying principles of
financial risk management for the Group. The Group’s management then establishes the detailed policies such as
risk identification and measurement, exposure limits and hedging strategies, in accordance with the objectives and
underlying principles approved by the Board of Directors.
There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and
measures the risk. If necessary, market risk exposures are measured using sensitivity analysis indicated below.
32.1
Credit risks
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group performs ongoing
credit evaluation of its counterparties’ financial condition and generally does not require collateral.
The Group and the Company do not have any significant credit exposure to any single counterparty or any group of
counterparties having similar characteristics.
The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses,
represents the Group’s maximum exposure to credit risk. The Group and the Company do not hold any collateral,
except as disclosed in Note 9 to the financial statements.
The Group’s and the Company’s major classes of financial assets are cash and cash equivalents and trade and other
receivables.
Trade receivables that are neither past due nor impaired are substantially companies with good collection track record
with the Group.
As at the end of the reporting period, the Group’s trade receivables which comprised mainly retention sums are not
past due nor impaired.
32.2
Market risks
Foreign currency risks
The Group incurs foreign currency risk on transactions and balances that are denominated in currencies other than
its functional currency. The currencies giving rise to this risk are primarily United States dollar, Australian dollar, and
Euro. Exposure to foreign currency risk is monitored on an on-going basis to ensure that the net exposure is at an
acceptable level.
STATEMENTS
LOYZ ENERGY LIMITED
83
ANNUAL REPORT 2011
32.
Financial instruments, financial risks and capital management (Continued)
32.2
Market risks (Continued)
Foreign currency risks (Continued)
The Group monitors its foreign currency exchange risks closely and maintains funds in various currencies to minimise
currency exposure due to timing differences between sales and purchases. Currency translation risk arises when
commercial transactions, recognised assets and liabilities and net investment in foreign operations are denominated in
the currency that is not the entity’s functional currency.
The Company carries out its transactions mainly in Singapore dollar. Accordingly, it is not exposed to significant
foreign currency risks.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
end of the reporting period are as follows:
Group
Assets
Australian dollar
Euro
Liabilities
2011
$’000
2010
$’000
2011
$’000
2010
$’000
129
175
9,795
14
–
–
228
125
80
–
395
400
209
175
10,418
539
Foreign currency sensitivity analysis
The Group’s exposure to foreign currency risks are mainly United States dollar, Australian dollar and Euro.
The following table details the sensitivity to a 5% increase and decrease in United States dollar, Australian dollar and
Euro against Singapore dollar. The sensitivity analysis assumes an instantaneous 5% change in the foreign currency
exchange rates from the end of the reporting period, with all other variables held constant.
Group
Profit or loss
2011
2010
$’000
$’000
Strengthened against Singapore dollar
Weakened against Singapore dollar
(483)
8
483
(8)
84
STATEMENTS
32.
32.2
Market risks (Continued)
Foreign currency sensitivity analysis (Continued)
Group
Profit or loss
2011
2010
$’000
$’000
Australian dollar
(11)
(6)
11
6
(16)
(20)
16
20
Euro
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to fixed deposits, bank loan and
finance lease payable as shown in Notes 12, 15 and 16 to the financial statements respectively.
The Group’s results are affected by changes in interest rates due to the impact of such changes on interest income
and expenses from bank deposits and bank loans which are at floating interest rates. It is the Group’s policy to obtain
quotes from banks to ensure that the most favourable rates are made available to the Group.
If the interest rate increases or decreases by 0.5% (2010: 0.5%), the Group’s equity will decrease or increase by
approximately $15,000 (2010: $Nil), arising mainly as a result of higher or lower interest on floating rates for bank loan
which will be capitalised as part of exploration and evaluation assets.
32.3
Liquidity risk
Liquidity risk refers to the risk in which the Group encounters difficulties in meeting its short-term obligations. Liquidity
risks are managed by matching the payment and receipt cycle.
The Group actively manages its operating cash flows so as to finance the Group’s operations. As part of its overall
prudent liquidity management, the Group minimises liquidity risk by ensuring availability of funding through an
adequate amount of committed credit facilities from financial institutions and maintains sufficient level of cash to meet
its working capital requirements.
The following table details the Group’s and the Company’s remaining contractual maturity for their non-derivative
financial instruments. The table has been drawn up based on undiscounted cash flows of financial instruments based
on the earlier of the contractual date or when the Group and the Company are expected to receive or pay.
STATEMENTS
LOYZ ENERGY LIMITED
ANNUAL REPORT 2011
32.
32.3
Liquidity risk (Continued)
Contractual maturity analysis
Group
Within one
financial year
After one
financial year
but within
five financial
years
Total
$’000
$’000
$’000
2011
Financial assets
Non-interest bearing
5,723
–
5,723
Variable interest bearing
9,734
–
9,734
15,457
–
15,457
5,372
–
5,372
391
10,728
11,119
5,763
10,728
16,491
Fixed interest bearing
2010
Financial assets
4,346
–
4,346
2,750
–
2,750
7,096
–
7,096
1,826
–
1,826
85
86
STATEMENTS
32.
32.3
Liquidity risk (Continued)
Contractual maturity analysis (Continued)
Within one
financial year
$’000
After one
financial year
but within
five financial
years
$’000
Total
$’000
Company
2011
Financial assets
1,795
–
1,795
3,168
–
3,168
4,963
–
4,963
2,739
–
2,739
1,863
–
1,863
703
–
703
2,566
–
2,566
190
–
190
2010
Financial assets
The Group’s operations are financed mainly through equity, retained earnings, finance lease and bank loan. Adequate
lines of credits are maintained to ensure the necessary liquidity is available when required.
The repayment terms and the interest rates, where applicable, have been disclosed in the respective notes to the
financial statements.
STATEMENTS
32.
32.4
Capital management policies and objectives
LOYZ ENERGY LIMITED
87
ANNUAL REPORT 2011
The Group manages its capital to ensure that the Group is able to continue as going concern and to maintain an
optimal capital structure so as to maximise shareholders’ value.
The management constantly reviews the capital structure to ensure the Group is able to service any debt obligations
based on its operating cash flows. The Group’s and the Company’s overall strategy remains unchanged from 2010.
The management monitors capital based on gearing ratio. The gearing ratio is calculated as net debt divided
by equity attributable to owners of the parent plus net debt. The Group includes within net debt, trade and other
payables, finance lease payables, other liabilities and bank loans less cash and cash equivalents. Equity attributable
to owners of the parent consists of share capital, reserves and retained earnings.
Group
2011
$’000
Bank loan
Less: Cash and cash equivalents
Net debt
5,372
134
9,772
(11,465)
3,813
Equity attributable to owners of the parent
49,191
Total capital
53,004
Gearing ratio (%)
7.19%
The gearing ratio of the Group as at 30 June 2010 is not disclosed as it is not meaningful because the cash and cash
equivalents is higher than all the Group’s liabilities.
The Group is in compliance with all externally-imposed capital requirements for the financial year ended 30 June
2011. There were no externally-imposed capital requirements in the prior financial year.
32.5
Fair value of financial assets and financial liabilities
The carrying amounts of the Group’s and the Company’s cash and cash equivalents, trade and other current
receivables and payables approximate their respective fair values due to the relatively short term maturity of these
financial instruments. The fair value of non-current liabilities in relation to finance lease payables is disclosed in Note
16 to the financial statements. The fair values of financial assets and liabilities are determined in accordance with
generally accepted pricing models based on discounted cash flow analysis.
The management considers that the carrying amounts of the financial assets and financial liabilities recorded at
amortised cost in the financial statements approximate their fair values.
88
STATEMENTS
33.
Events after the reporting period
On 20 May 2011, the Company and one of its subsidiaries, Loyz Oil, entered into a subscription agreement with
Venstar Investments Ltd and Venstar Investments II Ltd (the “Subscribers”) in relation to the proposed issue by Loyz
Oil of 12 million redeemable exchangeable preference shares to the Subscribers at an issue price of $1.00 per
preference share (the “Proposed Issuance”). The proceeds will be used to finance the capital expenditure and working
capital requirements of Loyz Oil.
The preference shares are convertible into new shares of the Company in two tranches. The preference shares may
also be redeemed at the redemption price should the Subscribers decide not to convert the shares.
Subsequent to the reporting period, the shareholders of the Company approved the Proposed Issuance and Loyz Oil
has received the proceeds of $12 million from the Subscribers.
LOYZ ENERGY LIMITED
SHAREHOLDINGS STATISTICS
89
ANNUAL REPORT 2011
AS AT 20 SEPTEMBER 2011
Share Capital
Issued and fully paid
Number of shares
Class of shares
Voting rights
:
:
:
:
SGD 16,483,746.21
266,520,910
ordinary shares
one vote per share
Distribution of Shareholdings
Size of Shareholdings
No. of
Shareholders
%
No. of Shares
%
5
1,237
334
20
1,596
0.31
77.51
20.93
1.25
100
1,600
2,830,400
25,557,000
238,131,910
266,520,910
0.00
1.06
9.59
89.35
100.00
1 - 999
1,000 – 10,000
10,001 – 1,000,000
1,000,001 and above
Shareholding held by the public
Based on the information available to the Company as at 20 September 2011, approximately 21.96% of the issued ordinary
shares of the Company is held by the public and, therefore, Rule 723 of the Listing Manual Section B: Rules of Catalist
issued by the Singapore Exchange Securities Trading Limited is complied with.
Twenty Largest Shareholders
No.
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sim Siang Choon
HSBC (Singapore) Nominees Pte Ltd
Jit Sun Investments Pte Ltd
Hong Leong Finance Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
Seah Ting Ping
Kwan Lin Siew
DBS Nominees Pte Ltd
Kwan Weng Kwong
Goh Lip Ming
Adarash Kumar Chranji Lal Amarnath
Kenneth Gerard Pereira
Teo Ah Moy
Gay Soon Watt
Mark Kwok Yun Liang
UOB Kay Hian Pte Ltd
Dominic Koay Seng Keong
Sim Poh Kip
Pua Chuan Kee
Citibank Nominees Singapore Pte Ltd
Total
No. of Shares
%
86,500,000
60,060,000
20,727,273
16,269,000
14,113,000
6,796,546
5,245,000
4,467,454
4,117,000
3,114,000
2,727,000
2,581,637
1,746,000
1,650,000
1,638,000
1,385,000
1,363,000
1,305,000
1,168,000
1,159,000
238,131,910
32.46
22.53
7.78
6.10
5.30
2.55
1.97
1.68
1.54
1.17
1.02
0.97
0.66
0.62
0.61
0.52
0.51
0.49
0.44
0.43
89.35
90
SHAREHOLDINGS STATISTICS
AS AT 20 SEPTEMBER 2011
Substantial shareholders
No.
Name of Shareholders
1.
Sim Siang Choon
2.
Kwan Lin Siew
3.
Kwan Weng Kwong
4.
Jit Sun Investments Pte Ltd
5.
Lionel Lee Chye Teck
6.
Kenneth Gerard Pereira
Direct Interest
No. of Shares
% of
Shares
Deemed Interest
No. of Shares
% of
Shares
86,500,000
32.46
6,550,000
2.46
5,245,000
1.97
90,617,000
34.00
4,117,000
1.54
5,765,000
2.16
20,727,273
7.78
73,000,000
27.39
0
0
93,727,273
35.17
2,581,637
0.97
14,000,000
5.25
Note:
a)
Mr Sim Siang Choon is the husband of Mdm Kwan Lin Siew. They are hence each deemed to be interested in the shares held by
each other.
b)
Mr Sim Siang Choon is the father of Mr Sim Poh Kip. Mr Sim Siang Choon is therefore deemed interested in the 1,305,000 shares
held by Mr Sim Poh Kip.
c)
Mdm Kwan Lin Siew is the sister of Mr Kwan Weng Kwong. She is therefore deemed interested in the 4,117,000 shares held by Mr
Kwan Weng Kwong and vice versa.
d)
Mr Kwan Weng Kwong is deemed interested in the 520,000 shares held by his wife.
e)
Mr Lionel Lee Chye Teck is the sole shareholder of Jit Sun Investments Pte Ltd. He is therefore deemed interested in the shares held
by Jit Sun Investments Pte Ltd.
f)
Jit Sun Investments Pte Ltd’s deemed interest of 73,000,000 shares are held in the following manner :(i)
(ii)
g)
60,000,000 shares under HSBC (Singapore) Nominees Pte Ltd; and
13,000,000 shares under United Overseas Bank Nominees (Private) Limited.
Kenneth Gerard Pereira’s deemed interest of 14,000,000 shares are held under Hong Leong Finance Nominees Pte Ltd.
NOTICE OF ANNUAL GENERAL
MEETING
LOYZ ENERGY LIMITED
91
ANNUAL REPORT 2011
NOTICE IS HEREBY GIVEN that the 2011 Annual General Meeting of the shareholders of the Company will be held on
Monday, 31 October 2011 at 21 Changi South Avenue 2 Sim Siang Choon Building Singapore 486630 at 11.00 a.m. to
transact the following businesses:
AGENDA
ORDINARY BUSINESS
1.
To receive and consider the audited financial statements of the Company and the reports of the
Directors and Auditors for the year ended 30 June 2011.
Resolution 1
2.
To declare a final exempt (one-tier) dividend of 0.25 cents per ordinary share for the year ended 30
June 2011.
Resolution 2
3.
To re-elect the following Directors retiring pursuant to the Company’s Articles of Association:a)
Mr Teo Choon Kow @ William Teo (Article 107)
Resolution 3
b)
Mr Chia Yong Whatt (Article 107)
Resolution 4
c)
Mr Lee Chye Cheng, Adrian (Article 117)
Resolution 5
d)
Mr Chan Eng Yew (Zeng Rongyao) (Article 117)
Resolution 6
4.
To approve the Directors’ fees of SGD61,500 for the year ended 30 June 2011.
Resolution 7
5.
To re-appoint Messrs BDO LLP as Auditors for the ensuing year and to authorise the Directors to fix
their remuneration.
Resolution 8
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following Resolutions as Ordinary Resolutions, with or without
amendments:
6.
Authority to allot and issue shares
Pursuant to Section 161 of the Companies Act, Cap. 50. and subject to Rule 806 of the Singapore
Exchange Securities Trading Limited (“SGX-ST”) Listing Manual Section B, Rules of Catalist
(“Catalist Rules”), authority be and is hereby given to the Directors of the Company to allot and issue
shares and convertible securities in the capital of the Company (whether by way of rights, bonus
or otherwise) at any time and upon such terms and conditions and for such purposes and to such
persons as the Directors may in their absolute discretion deem fit provided that:(i)
the aggregate number of shares and convertible securities to be issued pursuant to this
Resolution does not exceed 100 per cent (100%) of the total number of issued shares
excluding treasury shares of the Company (as calculated in accordance with sub-paragraph
(ii) below), of which the aggregate number of shares and convertible securities to be issued
other than on a pro rata basis to existing shareholders of the Company does not exceed
fifty per cent (50%) of the total number of issued shares excluding treasury shares of the
Company (as calculated in accordance with sub-paragraph (ii) below);
Resolution 9
92
MEETING
(ii)
(iii)
(subject to such manner of calculations as may be prescribed by the SGX-ST), for the
purpose of determining the aggregate number of shares that may be issued under subparagraph (i) above, the total number of issued shares excluding treasury shares shall be
based on the total number of issued shares excluding treasury shares of the Company at the
time this Resolution is passed after adjusting for:(a)
new shares arising from the conversion or exercise of any convertible securities;
(b)
new shares arising from exercising share options or vesting of share awards
outstanding or subsisting at the time of the passing of the resolution approving the
mandate, provided the options or awards were granted in compliance with Part VIII of
Chapter 8 of the Catalist Rules; and
(c)
any subsequent bonus issue, consolidation or sub-division of shares
unless revoked or varied by the Company in general meeting, the authority conferred by this
Resolution shall continue in force until the conclusion of the next Annual General Meeting or
the date by which the next Annual General Meeting of the Company is required by law to be
held, whichever is the earlier.
[See Explanatory Note (i)]
7.
And to transact any other business which may be properly transacted at an Annual General Meeting.
NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and Register of Members of the Company will be closed on 15
November 2011 for the purpose of determining shareholders’ entitlements to the proposed final exempt (one-tier) dividend of
0.25 cents per ordinary share in respect of the financial year ended 30 June 2011 (“the Proposed Dividend”).
Duly completed transfers received by the Company’s Registrar, M & C Services Private Limited at 138 Robinson Road #1700 The Corporate Office Singapore 068906 up to 5.00 p.m. on 14 November 2011 will be registered before entitlements to
the Proposed Dividend is determined. The Proposed Dividend, if approved by shareholders at the Annual General Meeting
will be paid on 29 November 2011.
Members whose Securities Accounts with The Central Depository (Pte) Limited (“CDP”) are credited with shares at 5.00 p.m.
on 14 November 2011 will be entitled to the Proposed Dividend.
In respect of shares in Securities Accounts with CDP, the said dividend will be paid by the Company to CDP which will in turn
distribute the dividend entitlements to such holders of shares in accordance with its practice.
BY ORDER OF THE BOARD
Yap Peck Khim
Company Secretary
Date : 13 October 2011
MEETING
LOYZ ENERGY LIMITED
93
ANNUAL REPORT 2011
Explanatory Notes :
(i)
The Ordinary Resolution proposed in item 6, 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. The number of shares
and convertible securities, which the Directors may allot and issue under this Resolution shall not exceed 100% of the Company’s
total number of issued shares excluding treasury shares at the time of passing this Resolution. For allotment and issue of shares
and convertible securities other than on a pro-rata basis to all shareholders of the Company, the aggregate number of shares and
convertible securities to be allotted and issued shall not exceed 50% of the Company’s total number of issued shares excluding
treasury shares. This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual General
Meeting.
Notes:
(a)
A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be
a member of the Company.
(b)
If a proxy is to be appointed, the form must be deposited at the registered office of the Company at 21 Changi South Avenue 2 Sim
Siang Choon Building Singapore 486630 not less than 48 hours before the meeting.
(c)
The form of proxy must be signed by the appointor or his attorney duly authorised in writing.
(d)
In the case of joint shareholders, all holders must sign the form of proxy.
This page has been intentionally left blank.
PROXY FORM
IMPORTANT
1.
For investors who have used their CPF monies to buy the Company’s
shares, this Annual Report is forwarded to them at the request of their CPF
Approved Nominees and is sent solely FOR INFORMATION ONLY.
2.
This Proxy Form is not valid for use by CPF investors and shall be ineffective
for all intents and purposes if used or purported to be used by them.
I/We
of
being a member(s) of Loyz Energy Limited (the “Company”), hereby appoint:
Name
Address
NRIC/Passport
Number
Proportion of
Shareholdings
as *my/our *proxy/proxies to vote for *me/us on *my/our behalf at the 2011 Annual General Meeting of the Company to be
held on Monday, 31 October 2011 at 21 Changi South Avenue 2 Sim Siang Choon Building Singapore 486630 at 11.00
a.m. and at any adjournment thereof.
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions
as set out in the notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or
abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)
No.
Resolutions
1
Directors’ Report and Audited Financial Statements
2
To approve the payment of a final exempt (one-tier) dividend for the year ended 30
June 2011
3
To re-elect Mr Teo Choon Kow @ William Teo as Director
4
To re-elect Mr Chia Yong Whatt as Director
5
To re-elect Mr Lee Chye Cheng, Adrian as Director
6
To re-elect Mr Chan Eng Yew (Zeng Rongyao) as Director
7
To approve Directors’ fees for the year ended 30 June 2011
8
To re-appoint Messrs BDO LLP as Auditors and authorise the Directors to fix their
remuneration
9
To authorise the Directors to allot and issue shares
Signed this
For
day of
2011
Total number of shares held
Signature or Common Seal of shareholder
Against
NOTES :
1.
Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as
defined in Section 130A of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in
your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in
the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of
shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.
2.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies
to attend and vote on his behalf. A proxy need not be a member of the Company.
3.
Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each
proxy.
4.
The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing.
Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal
or under the hand of its attorney or duly authorised officer.
5.
A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such person
as it thinks fit to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section
179 of the Companies Act, Cap. 50.
6.
The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed,
or notarially certified copy thereof, must be deposited at the registered office of the Company at 21 Changi South Avenue 2 Sim
Siang Choon Building Singapore 486630 not later than 48 hours before the time set for the Annual General Meeting.
7.
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed
or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in
the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered
against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if
such members are not shown to have shares entered against their names in the Depository Register at 48 hours before the time
appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.
LOYZ ENERGY LIMITED
CORPORATE INFORMATION
Board of Directors : Sim Siang Choon
Kwan Lin Siew (Alternate Director to Sim Siang Choon)
Kwan Weng Kwong
Adrian Lee Chye Cheng
Chia Yong Whatt
Secretary
: Yap Peck Khim
Registered office
: 21 Changi South Avenue 2
Sim Siang Choon Building
Singapore 486630
Tel: (65) 6266 6632
Fax: (65) 6542 2877
Website: www.simsiangchoon.com
Share registrar
: M & C Services Private Limited
138 Robinson Road #17-00
The Corporate Office
Singapore 068906
Tel: (65) 6228 0505
Fax: (65) 6225 1452
Auditors
: BDO LLP
Public Accountants and
Certified Public Accountants
21 Merchant Road
#05-01 Royal Merukh S.E.A. Building
Singapore 058267
Principal bankerS
: Malayan Banking Berhad
RHB Bank Berhad
Oversea-Chinese Banking Corporation Limited
United Overseas Bank Limited
Partner-in-charge : Leong Hon Mun Peter
(Appointed since the financial year ended 30 June 2010)
Tel: 63278398
(Company registration number: 199905693M)

statement - Loyz Energy Limited

Transcription

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