CONTENTS committee is charged with the administration of the Scheme in accordance with the rules of...
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Select Group Annual Report 201128
CONTENTSDirectors’ Report 29
Statement By Directors 31
Independent Auditors’ Report 32
Consolidated Statement Of Comprehensive Income 33
Statement Of Financial Position 34
Statement Of Changes In Equity 35
Consolidated Statement Of Cash Flow 36
Notes To Financial Statements 37
Shareholding Statistics 76
Notice Of Annual General Meeting 78
Proxy Form 81
Directors’ Report and Financial Statements
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Select Group Annual Report 2011 29
Directors’ ReportThe directors of the company are pleased to present their report together with the audited financial statements of the company and of the group for the reporting year ended 31 December 2011.
1. DIRECTORSATDATEOFREPORTThe directors of the company in office at the date of this report are:
Executive directors Non-Executive director
Mr. Tan Chor Khoon Mr. Lee Chye Cheng Adrian
Mr. Tan Choh Peng
Independent directors
Mr. Kwah Thiam Hock
Mr. Lai Kai Jin Michael
Mdm. Ho Geok Choo
2. ARRANGEMENTSTOENABLEDIRECTORTOACQUIREBENEFITSBYMEANSOFTHEACQUISITIONOFSHARESANDDEBENTURES Neither at the end of the reporting year nor at any time during the reporting year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate except for the option rights mentioned in paragraph 5 below.
3. DIRECTORS’INTERESTSINSHARESANDDEBENTURES The directors of the company holding office at the end of the reporting year had no interests in the share capital of the company and related corporations as recorded in the register of directors’ shareholdings kept by the company under section 164 of the Companies Act, Chapter 50 except as follows:
Direct Interest Deemed Interest
Name of directors and company in which interest are held
At beginning of the reporting year
At end of the reporting year
At beginning of the reporting year
At end of the reporting year
The company Number of shares of no par value
Tan Chor Khoon 10,906,400 8,206,400 19,075,200 20,775,200
Tan Choh Peng 196,800 1,196,800 10,413,000 10,413,000
By virtue of section 7 of the Companies Act, Chapter 50, Tan Chor Khoon is deemed to have an interest in all the related corporations of the company.
The directors’ interests as at 21 January 2012 were the same as those at the end of the reporting year.
4. CONTRACTUALBENEFITSOFDIRECTORSince the beginning of the reporting year, no director of the company has received or become entitled to receive a benefit which is required to be disclosed under section 201(8) of the Companies Act, Chapter 50, 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. OPTIONSTOTAKEUPUNISSUEDSHARESAt an extraordinary general meeting held on 28 October 2004, the shareholders of the company approved the “Select Employee Share Option Scheme” (the “Scheme”).
The Scheme provides eligible participants with an opportunity to participate in the equity of the company as well as to motivate them to perform better through increased loyalty and dedication to the group. The Scheme, which forms an integral and important component of the group’s remuneration and compensation plan, is designed to primarily reward and retain executive directors and employees whose services are crucial to the group’s well being, development and success.
Executive, non-executive and independent directors and full-time employees of the group are eligible to participate in the Scheme. Directors who are controlling shareholders of the company and their associates are not eligible to participate in the Scheme.
The total number of shares over which options may be granted shall not exceed 15% of the issued share capital of the company on the day preceding the date of the relevant grant.
A committee is charged with the administration of the Scheme in accordance with the rules of the Scheme. The Scheme Committee consists of directors (including directors who may be participants of the Scheme) with powers to determine, inter alia, the (a) persons to be granted options; (b) number of options to be offered; and recommendations for modifications to the Scheme. The Committee comprises members of the Remuneration Committee. A member of the Committee who is also a participant of the Scheme must not be involved in its deliberation in respect of options granted or to be granted to him.
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Select Group Annual Report 201130
5. OPTIONSTOTAKEUPUNISSUEDSHARES(CONT’D)The exercise price for each share in respect of which an option is exercisable shall be determined by the Committee at its absolute discretion and fixed by the Committee at:- (a) a price equal to the average of the last dealt prices for a share on the CATALIST for the period of five consecutive market days immediately prior to the relevant date of the grant (“market price”) but not less than its par value (“market price options”); or (b) a price which is set at a discount to the market price, provided that the maximum discount shall not exceed 20% of the market price but not less than its par value. Options granted at a discount are exercisable after 2 years from the date of grant. Other options are exercisable after one year from date of grant.
Options must be exercised before the expiry of 10 years from the date of grant in the case of employees and before the expiry of 5 years in the case of non-executive directors and independent directors or such earlier date as may be determined by the Committee. There are special provisions dealing with the lapsing or permitting the earlier exercise of options under certain circumstances including termination, bankruptcy and death of the participants, take-over and winding-up of the company.
During the reporting year, no options to take up unissued shares of the company or any subsidiary were granted.
During the reporting year, there were no shares of the company or any subsidiaries in the group issued by virtue of the exercise of an option to take up unissued shares. There were no employee share options granted since the commencement of the Scheme. Therefore, the provisions defined under Rule 851(1)(b), (c) and (d) of the Listing Manual of SGX are not applicable.
At the end of the reporting year, there were no unissued shares of the company or any subsidiary under option.
6. AUDITCOMMITTEEThe members of the audit committee at the date of this report are as follows:
Mr. Kwah Thiam Hock (Chairman of audit committee and independent director)
Mr. Lai Kai Jin Michael (Independent director)
Mdm. Ho Geok Choo (Independent director)
The audit committee performs the functions specified by section 201B(5) of the Companies Act. Among others, it performed the following functions:
• Reviewed with the independent auditors their external audit plan;
• Reviewed with the independent auditors their evaluation of the company’s internal accounting control, and their report on the financial statements and the assistance given by the company’s officers to them;
• Reviewed with the internal auditors the scope and results of the internal audit procedures;
• Reviewed the financial statements of the group and the company prior to their submission to the directors of the company for adoption; and
• Reviewed the interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX).
Other functions performed by the audit committee are described in the report on corporate governance included in the annual report. It also includes an explanation of how independent auditors’ objectivity and independence are safeguarded where the independent auditors provide non-audit service.
The audit committee has recommended to the board of directors that the independent auditors, RSM Chio Lim LLP be nominated for re-appointment as independent auditors at the next annual general meeting of the company.
7. INDEPENDENTAUDITORSThe independent auditors, RSM Chio Lim LLP, have expressed their willingness to accept re-appointment.
8. SUBSEQUENTDEVELOPMENTS There are no significant developments subsequent to the release of the group’s and the company’s preliminary financial statements, as announced on 29
February 2012 and corrigendum on 1 March 2012, which would materially affect the group’s and the company’s operating and financial performance as of the date of this report.
On Behalf of the Directors
Tan Chor Khoon
Director
Tan Choh Peng
Director
5 April 2012
Directors’ Report
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Select Group Annual Report 2011 31
In the opinion of the directors,
(a) the accompanying consolidated statement of comprehensive income, statements of financial position, statements of changes in equity, consolidated statement of cash flows, and notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company and of the group as at 31 December 2011 and of the results and cash flows of the group and changes in equity of the company and of the group for the reporting year then ended; 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.
The board of directors approved and authorised these financial statements for issue.
On Behalf of the Directors
Tan Chor Khoon
Director
Tan Choh Peng
Director
5 April 2012
Statement By Directors
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Select Group Annual Report 201132
REPORTONTHECONSOLIDATEDFINANCIALSTATEMENTSWe have audited the accompanying consolidated financial statements of Select Group Limited (the “company”) and its subsidiaries (the group), which comprise the consolidated statement of financial position of the group and the statement of financial position of the company as at 31 December 2011, and the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows of the group, and statement of changes in equity of the company for the reporting year then ended, and a summary of significant accounting policies and other explanatory information.
MANAGEMENT’SRESPONSIBILITYFORTHEFINANCIALSTATEMENTSManagement is responsible for the preparation of the financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 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 true and fair statement of comprehensive income and statements of financial position and to maintain accountability of assets.
AUDITOR’SRESPONSIBILITYOur 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 consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINIONIn 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 31 December 2011 and of the results, changes in equity and cash flows of the group and the changes in equity of the company for the reporting year ended on that date.
REPORTONOTHERLEGALANDREGULATORYREQUIREMENTSIn 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.
RSM Chio Lim LLP
Public Accountants and
Certified Public Accountants
Singapore
5 April 2012
Partner-in-charge of audit: Teo Cheow Tong
Effective from financial year ended 31 December 2010
Independent Auditors’ Report To The Members Of Select Group Limited (Registration No: 199500697Z)
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Select Group Annual Report 2011 33
Consolidated Statement Of Comprehensive IncomeYear Ended 31 December 2011
Group
Note2011$’000
2010$’000
Revenue 4 101,511 75,527
Cost of Sales (31,905) (21,940)
Gross Profit 69,606 53,587
Other Items of Income
Interest Income 5 12 23
Other Credits 6 505 571
Other Items of Expense
Marketing and Distribution Costs (1,668) (1,550)
Administrative Expenses 9 (40,373) (33,149)
Finance Costs 7 (525) (457)
Other Operating Expenses 8 (23,718) (19,357)
Other Charges 6 (127) (1,543)
Share of Loss from Equity-Accounted Associate – (87)
Profit (Loss) Before Tax from Continuing Operations 3,712 (1,962)
Income Tax Expense 10 (530) (159)
Profit (Loss) from Continuing Operations, Net of Tax 3,182 (2,121)
Other Comprehensive Income / (Loss):
Exchange Differences on Translating Foreign Operations, Net of Tax 40 (28)
Other Comprehensive Income (Loss) for the Year, Net of Tax 40 (28)
Total Comprehensive Income (Loss) for the Year 3,222 (2,149)
Profit (Loss) Attributable to Owners of the Parent, Net of Tax 3,182 (1,713)
Loss Attributable to Non-Controlling Interests, Net of Tax – (408)
Profit (Loss), Net of Tax 3,182 (2,121)
Total Comprehensive Income (Loss) Attributable to Owners of the Parent 3,222 (1,741)
Total Comprehensive Loss Attributable to Non-Controlling Interests – (408)
Total Comprehensive Income (Loss) for the Year 3,222 (2,149)
Earnings (Loss) Per Share
Earnings (Loss) Per Share Currency Unit Cents Cents
Basic 11 2.23 (1.20)
Diluted 11 2.23 (1.20)
The accompanying notes form an integral part of these financial statements.
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Select Group Annual Report 201134
Statements Of Financial Position As at 31 December 2011
The accompanying notes form an integral part of these financial statements.
Group Company
Note2011$’000
2010$’000
2011$’000
2010$’000
ASSETS
Non-Current Assets
Property, Plant and Equipment 12 17,138 16,411 1,076 1,225
Intangible Assets 13 6,590 6,797 – –
Investment Properties 14 637 667 637 667
Investments in Subsidiaries 15 – – 13,287 12,807
Investment in Associate 16 – – – –
Deferred Tax Assets 10 481 511 40 100
Other Financial Assets, Non-Current 17 – – – –
Other Receivables, Non-Current 18 – – 4,844 1,896
Other Assets, Non-Current 21 1,784 1,811 – –
Total Non-Current Assets 26,630 26,197 19,884 16,695
Current Assets
Inventories 19 1,577 1,232 – –
Trade and Other Receivables 20 6,735 5,732 8,805 7,070
Other Assets 21 2,992 2,490 166 181
Assets Classified as Held for Sale 22 – 1,597 – 480
Cash and Cash Equivalents 23 6,610 6,703 949 945
Total Current Assets 17,914 17,754 9,920 8,676
Total Assets 44,544 43,951 29,804 25,371
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share Capital 24 15,284 15,284 15,284 15,284
Retained Earnings / (Accumulated Losses) (38) (3,220) 1,107 (5,070)
Foreign Currency Reserve, Total 63 23 – –
Total Equity 15,309 12,087 16,391 10,214
Non-Current Liabilities
Deferred Tax Liabilities 10 1,156 1,088 – –
Other Financial Liabilities, Non-Current 26 1,618 3,756 738 1,227
Other Liabilities, Non-Current 28 1,408 875 – –
Long-Term Provision 29 427 375 – –
Total Non-Current Liabilities 4,609 6,094 738 1,227
Current Liabilities
Income Tax Payable 1,387 836 – –
Liabilities Directly Associate with Assets Classified as Held for Sale 22 – 369 – –
Trade and Other Payables 27 17,646 16,904 11,093 12,249
Other Financial Liabilities 26 5,323 6,713 1,582 1,681
Other Liabilities 28 270 948 – –
Total Current Liabilities 24,626 25,770 12,675 13,930
Total Liabilities 29,235 31,864 13,413 15,157
Total Equity and Liabilities 44,544 43,951 29,804 25,371
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Select Group Annual Report 2011 35
Statements Of Changes In EquityYear Ended 31 December 2011
The accompanying notes form an integral part of these financial statements.
TotalEquity
Attributableto ParentSub-total
Share Capital
Accumu-lated
Losses
ForeignCurrencyReserve
Non-ControllingInterests
Group $’000 $’000 $’000 $’000 $’000 $’000
Current Year:
Opening Balance at 1 January 2011 12,087 12,087 15,284 (3,220) 23 –
Movement in Equity:
Total Comprehensive Income for the Year 3,222 3,222 – 3,182 40 –
Closing Balance at 31 December 2011 15,309 15,309 15,284 (38) 63 –
Previous Year:
Opening Balance at 1 January 2010 14,236 13,828 15,284 (1,507) 51 408
Movements in Equity:
Total Comprehensive Loss for the Year (2,149) (1,741) – (1,713) (28) (408)
Closing Balance at 31 December 2010 12,087 12,087 15,284 (3,220) 23 –
TotalEquity
ShareCapital
Retained Earnings /
AccumulatedLosses
Company $’000 $’000 $’000
Current Year:
Opening Balance at 1 January 2011 10,214 15,284 (5,070)
Movement in Equity:
Total Comprehensive Income for the Year 6,112 – 6,112
Other Payable from Subsidiary Forgiven 65 – 65
Closing Balance at 31 December 2011 16,391 15,284 1,107
Previous Year:
Opening Balance at 1 January 2010 15,003 15,284 (281)
Movements in Equity:
Total Comprehensive Loss for the Year (4,789) – (4,789)
Closing Balance at 31 December 2010 10,214 15,284 (5,070)
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Select Group Annual Report 201136
Group
2011$’000
2010$’000
Cash Flows From Operating Activities
Profit (Loss) Before Tax 3,712 (1,962)
Adjustments for:
Interest Income (12) (23)
Interest Expense 525 457
Depreciation of Property, Plant and Equipment 4,416 3,578
Depreciation of Investment Property 30 30
Amortisation of Other Intangible Assets 207 263
Share of Loss from Equity-Accounted Associate – 87
Impairment Loss on Investment in Associate – 29
Impairment Loss of Plant and Equipment – 300
Loss on Disposal of Plant and Equipment 102 429
Impairment Loss on Available for Sale Asset – 82
Other Intangible Assets Written Off – 275
Net Effect of Exchange Rate Changes in Consolidating Subsidiaries 40 (28)
Operating Cash Flows before Working Capital Changes 9,020 3,517
Trade and Other Receivables (269) 240
Other Assets, Current (502) (107)
Inventories (345) 74
Trade and Other Payables 1,551 2,761
Other Liabilities (678) 26
Cash Generated From Operations 8,777 6,511
Income Tax Paid (19) (16)
Net Cash Flows From Operating Activities 8,758 6,495
Cash Flows From Investing Activities
Disposal of Plant and Equipment 35 257
Purchase of Plant and Equipment (Note 23B) (4,423) (9,755)
Disposal of subsidiary (Note 30) (175) –
Other Assets, Non-Current 27 (1,811)
Interest Received 12 23
Net Cash Flows Used in Investing Activities (4,524) (11,286)
Cash Flows From Financing Activities
Decrease in Other Financial Liabilities (4,592) (2,892)
Increase from New Borrowings – 6,000
Cash Restricted in Use (48) (213)
Other Liabilities, Non-Currrent 533 875
Interest Paid (525) (457)
Net Cash Flows (Used in) From Financing Activities (4,632) 3,313
Net Decrease in Cash and Cash Equivalents (398) (1,478)
Cash and Cash Equivalents, Statement of Cash Flows, Beginning Balance 4,227 5,705
Cash and Cash Equivalents, Statement of Cash Flows, Ending Balance (Note 23) 3,829 4,227
Consolidated Statement Of Cash Flows Year Ended 31 December 2011
The accompanying notes form an integral part of these financial statements.
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Select Group Annual Report 2011 37
Notes To The Financial Statements 31 December 2011
1. GENERAL The company is incorporated in Singapore with limited liability. The financial statements are presented in Singapore dollars and they cover the parent and the
group’s subsidiaries.
The board of directors approved and authorised these financial statements for issue on 5 April 2012.
The principal activities of the company are those of investment holding and providing management services to the companies in the group. The company is listed on the CATALIST which is a market on Singapore Exchange Securities Trading Limited (“SGX-ST”).
The principal activities of the subsidiaries are described in Note 15 below.
The registered office is: 8 Wilkie Road, #03-01 Wilkie Edge, Singapore 228095. The company is domiciled in Singapore.
The financial statements of the group and the company have been prepared on a going concern basis which contemplates the realisation of assets and the satisfaction of liabilities in the normal course of business. As at 31 December 2011, the group’s current liabilities exceeded their current assets by $6,712,000. The group and the company are dependent on utilised credit facilities committed by banks and the availability of future cash flows from the group’s operations. The directors have taken steps to improve the group’s working capital position and cash inflow from operating activities. The directors are satisfied that with the group’s revenue settled mainly by cash and credit card sales, availability of bank’s committed lines, the group will be able to meet their obligations as and when they fall due. It is appropriate for the financial statements to be prepared on a going concern basis.
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES Accounting Convention
The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (“FRS”) and the related interpretations to FRS (“INT FRS”) as issued by the Singapore Accounting Standards Council and the Companies Act, Chapter 50. The financial statements are prepared on a going concern basis under the historical cost convention except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements.
Basis of Presentation
The consolidation accounting method is used for the consolidated financial statements that include the financial statements made up to the end of the reporting year of the company and all of its directly and indirectly controlled subsidiaries. Consolidated financial statements are the financial statements of the group presented as those of a single economic entity. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including profit or loss items and dividends are eliminated in full on consolidation. The results of the investees acquired or disposed off during the reporting year are accounted for from the respective dates of acquisition or up to the dates of disposal which is the date on which effective control is obtained of the acquired business until that control ceases. On disposal, the attributable amount of goodwill, if any, is included in the determination of the gain or loss on disposal. The equity accounting method is used for associates in the group financial statements. The proportionate consolidation accounting method is used for the joint ventures whereby the group’s share of each of the assets, liabilities, income and expense is combined on a line-by-line basis with similar items in the financial statements.
The company’s financial statements have been prepared on the same basis, and as permitted by the Companies Act, Chapter. 50, no statement of income is presented for the company.
Basis of Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.
Revenue Recognition
The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the reporting year arising from the course of the activities of the entity and it is shown net of any related sales taxes, estimated returns and rebates. Revenue from the sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from rendering of operations and services that are of short duration is recognized when the services are completed. Rental revenue is recognised on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the lease term. Interest is recognised using the effective interest method. Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established.
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Select Group Annual Report 201138
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Employee Benefits
Contributions to defined contribution retirement benefit plans are recorded as an expense as they fall due. The entity’s legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund which is the Central Provident Fund in Singapore (a government managed retirement benefit plan). For employee leave entitlement, the expected cost of short-term employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and in the case of non-accumulating compensated absences, when the absences occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive obligation based on past practice.
Share-Based Compensation
For the equity-settled share-based compensation transactions, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed on a straight-line basis over the vesting period is determined by reference to the fair value of the options granted excluding the effect of non-market 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. The fair value is measured using the Black-Scholes. The expected lives used in the model are adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. At each end of the reporting year, a revision is made of 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.
Borrowing Costs
All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Other borrowing costs are recognised as an expense in the period in which they are incurred. The interest expense is calculated using the effective interest rate method.
Income Tax
The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred income taxes are recognised as income or as an expense in profit or loss unless the tax relates to items that are recognised in the same or a different period outside profit or loss. For such items recognised outside profit or loss, the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive income and (b) directly in equity if the tax is related to an item recognised directly in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint ventures except where the reporting entity is able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference will not reverse in the foreseeable future or for deductible temporary differences, they will not reverse in the foreseeable future and they cannot be utilised against taxable profits.
Foreign Currency Transactions
The functional currency is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair value dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in profit or loss except when recognised in other comprehensive income and if applicable deferred in equity such as for qualifying cash flow hedges. The presentation is in the functional currency.
Translation of Financial Statements of Other Entities
Each entity in the group determines the appropriate functional currency as it reflects the primary economic environment in which the entity operates. In translating the financial statements of an investee for incorporation in the consolidated financial statements in the presentation currency, the assets and liabilities denominated in other currencies are translated at end of the reporting year rates of exchange and the profit or loss items are translated at average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other comprehensive income and accumulated in a separate component of equity until the disposal of that relevant entity.
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 39
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Investment Property
Investment property is property owned or held under a finance lease to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. It includes an investment property in the course of construction. After initial recognition at cost including transaction costs, the cost model is used to measure the investment property using the treatment for property, plant and equipment, that is, at cost less any accumulated depreciation and any accumulated impairment losses. An investment property that meets the criteria to be classified as held for sale is carried at the lower of carrying amount and fair value less costs to sell. For disclosure purposes, the fair values are determined periodically on a systematic basis at least once yearly by management.
Property, Plant and Equipment
Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows:
Leasehold properties - over the remaining terms of lease that are from 3.3% to 11%
Plant and equipment - 10% to 33.3%.
An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements.
Property, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in profit or loss. The residual value and the useful life of an asset is reviewed at least at each end of the reporting year and, if expectations differ significantly from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted.
Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset or component to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss when they are incurred.
Cost includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. See Note 29 on non-current provisions.
Assets Classified as Held for Sale
Identifiable assets, liabilities and contingent liabilities are classified as held for sale if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use. Assets that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell and are presented separately on the face of the statement of financial position. Once an asset is classified as held for sale or included in a group of assets held for sale, no further depreciation or amortisation is recorded. Impairment losses on initial classification of the balances as held for sale are included in profit or loss, even when there is a revaluation. The same applies to gains and losses on subsequent remeasurement. The depreciation on depreciable assets is ceased.
Intangible Assets
An identifiable non-monetary asset without physical substance is recognised as an intangible asset at acquisition cost if it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. After initial recognition, an intangible asset with finite useful life is carried at cost less any accumulated amortisation and any accumulated impairment losses. An intangible asset with an indefinite useful life is not amortised. An intangible asset is regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.
The amortisable amount of an intangible asset with finite useful life is allocated on a systematic basis over the best estimate of its useful life from the point at which the asset is ready for use. The useful lives are as follows:
Brand name - 15 years
Identifiable intangible assets acquired as part of a business combination are initially recognised separately from goodwill if the asset’s fair value can be measured reliably, irrespective of whether the asset had been recognised by the acquiree before the business combination. An intangible asset is considered identifiable only if it is separable or if it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
Leases
Whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, that is, whether (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the statement of financial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessee’s incremental
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 201140
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Leases (Cont’d)
borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each reporting year during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the reporting years in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense. Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Initial direct cost incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
Subsidiaries
A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities accompanying a shareholding of more than one half of the voting rights or the ability to appoint or remove the majority of the members of the board of directors or to cast the majority of votes at meetings of the board of directors. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity.
In the company’s own separate financial statements, an investment in a subsidiary is stated at cost adjusted for any value in the contingent consideration less any allowance for impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The net book value of a subsidiary is not necessarily indicative of the amounts that would be realised in a current market.
Associates
An associate is an entity including an unincorporated entity in which the investor has a substantial financial interest (usually not less than 20% of the voting power), significant influence and that is neither a subsidiary nor a joint venture of the investor. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The accounting for investments in an associate is on the equity method. The investment in an associate is carried in the statement of financial position at cost adjusted for any value in the contingent consideration plus post-acquisition changes in the share of net assets of the associate, less any impairment. The profit or loss reflects the investor’s share of the results of operations of the associate. Losses of an associate in excess of the group’s interest in the relevant entity are not recognised except to the extent that the group has an obligation. An investment in an associate includes goodwill on acquisition, which is accounted for in accordance with FRS 103 Business Combinations. However, the entire carrying amount of the investment is tested under FRS 36 for impairment, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, whenever application of the requirements in FRS 39 indicates that the investment may be impaired. Profits and losses resulting from transactions between the group and an associate are recognised in the financial statements only to the extent of unrelated investors’ interests in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of an associate are changed where necessary to ensure consistency with the policies adopted by the group. The net book value of an associate is not necessarily indicative of the amounts that would be realised in a current market exchange. The investor discontinues the use of the equity method from the date that it ceases to have significant influence over the associate and accounts for the investment in accordance with FRS 39 from that date. Any gain or loss is recognised in profit or loss. Any investment retained in the former associate is measured at its fair value at the date that it ceases to be an associate.
Inventories
Inventories are measured at the lower of cost (first in first out method) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. A write down on cost is made where the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Business Combinations
Business combinations are accounted for by applying the acquisition method. There were none during the reporting year.
Non-controlling Interests
The non-controlling interests in the net assets and net results of a consolidated subsidiary are shown separately in the appropriate components of the consolidated financial statements. For each business combination, any non-controlling interest in the acquiree (subsidiary) is initially measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Where the non-controlling interest is measured at fair value, the valuation techniques and key model inputs used are disclosed in the relevant note. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Goodwill
Goodwill is recognised as of the acquisition date measured as the excess of (a) over (b); (a) being the aggregate of: (i) the consideration transferred which generally requires acquisition-date fair value; (ii) the amount of any non-controlling interest in the acquiree measured in accordance with FRS 103 (measured either at fair value or as the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets); and (iii) in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree; and (b) being the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured in accordance with this FRS 103.
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 41
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Goodwill (Cont’d)
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Irrespective of whether there is any indication of impairment, goodwill (and also an intangible asset with an indefinite useful life or an intangible asset not yet available for use) are tested for impairment, at least annually. Goodwill impairment is not reversed in any circumstances.
For the purpose of impairment testing and since the acquisition date of the business combination, goodwill is allocated to each cash-generating unit, or groups of cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree were assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated represent the lowest level within the entity at which the goodwill is monitored for internal management purposes and is not larger than a segment.
Impairment of Non-Financial Assets
Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The carrying amount of other non-financial assets is reviewed at each end of the reporting year for indications of impairment and where an asset is impaired, it is written down through profit or loss to its estimated recoverable amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in profit or loss. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each end of the reporting year, non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. 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 or amortisation, if no impairment loss had been recognised.
Financial Assets
Initial recognition, measurement and derecognition: A financial asset is recognised on the statement of financial position when, and only when, the entity becomes a party to the contractual provisions of the
instrument. The initial recognition of financial assets is at fair value normally represented by the transaction price. The transaction price for financial asset not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date.
Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the “substance over form” based on the derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control.
Subsequent measurement: Subsequent measurement based on the classification of the financial assets in one of the following four categories under FRS 39 is as follows:
1. Financial assets at fair value through profit or loss: As at end of the reporting year date, there were no financial assets classified in this category.
2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classified in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The methodology ensures that an impairment loss is not recognised on the initial recognition of an asset. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. Typically, the trade and other receivables are classified in this category.
3. Held-to-maturity financial assets: As at end of the reporting year date, there were no financial assets classified in this category.
4. Available-for-sale financial assets: These are non-derivative financial assets that are designated as available-for-sale on initial recognition or are not classified in one of the previous categories. These assets are carried at fair value by reference to the transaction price or current bid prices in an active market. If such market prices are not reliably determinable, management establishes fair value by using valuation techniques. Changes in fair value of available-for-sale financial assets (other than those relating to foreign exchange translation differences on monetary investments) are recognised in other comprehensive income and accumulated in a separate component of equity under the heading revaluation reserves. Such reserves are reclassified to profit or loss when realised through disposal. Impairments below cost are recognised in profit or loss. When there is objective evidence that the asset is impaired, the cumulative loss is reclassified from equity to profit or loss as a reclassification adjustment. If, in a subsequent period, the fair value of an equity instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss, it is reversed against revaluation reserves and is not subsequently reversed through profit or loss. However, for debt instruments classified as available-for-sale impairment losses recognised in profit or loss are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. The weighted average method is used when determining the cost basis of publicly listed equities being disposed off. For non-equity instruments classified as available-for-sale, the reversal of impairment is recognised in profit or loss. They are classified as non-current assets unless management intends to dispose off the investments within 12 months of the end of the reporting year. Usually non-current
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 201142
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Financial Assets (Cont’d)
investments in equity shares and debt securities are classified in this category but it does not include subsidiaries, joint ventures, or associates. Unquoted investments are stated at cost less allowance for impairment in value where there are no market prices, and management is unable to establish fair value by using valuation techniques, except that where management can establish fair value by using valuation techniques the relevant unquoted investments are stated at fair value. For unquoted equity instruments impairment losses are not reversed.
Cash and Cash Equivalents
Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt instruments purchased with an original maturity of three months or less. For the statement of cash flows, the item includes cash and cash equivalents less cash subject to restriction and bank overdrafts payable on demand that form an integral part of cash management.
Financial Liabilities
Initial recognition, measurement and derecognition: A financial liability is recognised on the statement of financial position when, and only when, the entity becomes a party to the contractual provisions of the
instrument and it is derecognised when the obligation specified in the contract is discharged or cancelled or expired. The initial recognition of financial liability is at fair value normally represented by the transaction price. The transaction price for financial liability not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting year.
Subsequent measurement: Subsequent measurement based on the classification of the financial liabilities in one of the following two categories under FRS 39 is as follows:
1. Financial liabilities at fair value through profit or loss: As at end of the reporting year date, there were no financial liabilities classified in this category.
2. Other financial liabilities: All liabilities, which have not been classified as in the previous category fall into this residual category. These liabilities are carried at amortised cost using the effective interest method. Trade and other payables and borrowings are usually classified in this category. Items classified within current trade and other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty and settlement is short-term.
Financial Guarantees
A financial guarantee contract requires that the issuer makes specified payments to reimburse the holder for a loss when a specified debtor fails to make payment when due. Financial guarantee contracts are initially recognised at fair value and are subsequently measured at the greater of (a) the amount determined in accordance with FRS 37 and (b) the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with FRS18.
Government Grants
A government grant is recognised at fair value when there is reasonable assurance that the conditions attaching to it will be complied with and that the grant will be received. A grant in recognition of specific expenses is recognised as income over the periods necessary to match them with the related costs that they are intended to compensate, on a systematic basis. A grant related to depreciable assets is allocated to income over the period in which such assets are used in the project subsidised by the grant. A government grant related to assets, including non-monetary grants at fair value, is presented in the statement of financial position.
Fair Value of Financial Instruments
The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments. Disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of fair value. The fair values of non-current financial instruments may not be disclosed separately unless there are significant differences at the end of the reporting year and in the event the fair values are disclosed in the relevant notes. The maximum exposure to credit risk is the fair value of the financial instruments at the end of the reporting year. The fair value of a financial instrument is derived from an active market or by using an acceptable valuation technique. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal and, for an asset to be acquired or for liability held, the asking price. If there is no market, or the markets available are not active, the fair value is established by using an acceptable valuation technique. The fair value measurements are classified using a fair value hierarchy of 3 levels that reflects the significance of the inputs used in making the measurements, that is, Level 1 for the use of quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 for the use of inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 for the use of inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. Where observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 43
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Equity
Equity instruments are contracts that give a residual interest in the net assets of the company. Ordinary shares are classified as equity. Equity instruments are recognised at the amount of proceeds received net of incremental costs directly attributable to the transaction. Dividends on equity are recognised as liabilities when they are declared. Interim dividends are recognised when declared by the directors.
Provisions
A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in profit or loss in the reporting year they occur.
Segment Reporting
The group discloses financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
Critical Judgements, Assumptions and Estimation Uncertainties
The critical judgements made in the process of applying the accounting policies that have the most significant effect on the amounts recognised in the financial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. These estimates and assumptions are periodically monitored to ensure they incorporate all relevant information available at the date when financial statements are prepared. However, this does not prevent actual figures differing from estimates.
Allowance for doubtful trade accounts: An allowance is made for doubtful trade accounts for estimated losses resulting from the subsequent inability of the customers to make required payments. If
the financial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. Management generally analyses trade receivables and analyses historical bad debts, customer concentrations, customer creditworthiness, and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful trade receivables. To the extent that it is feasible, impairment and uncollectibility is determined individually for each item. In cases where that process is not feasible, a collective evaluation of impairment is performed. At the end of the reporting year, the trade receivables carrying amount approximates the fair value and the carrying amounts might change materially within the next reporting year but these changes would not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year.
Estimated impairment of goodwill: An assessment is made annually whether goodwill has suffered any impairment loss, based on the recoverable amounts of the cash generating units (“CGU”).
The recoverable amounts of the CGUs was determined based on value in use calculations and these calculations require the use of estimates in relation to future cash flows and suitable discount rates as disclosed in Note 13A. Actual outcomes could vary from these estimates as disclosed in Note 13A.
Carrying value of intangible assets: An assessment is made of the carrying value of identifiable intangible assets annually, or more frequently if events or changes in circumstances indicate that
such carrying value may not be recoverable. Factors that trigger an impairment review include underperformance relative to historical or projected future results, significant changes in the manner of the use of the acquired assets or the strategy for the overall business and significant negative industry or economic trends. The most significant variables in determining cash flows are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. Amounts estimated could differ materially from what will actually occur in the future.
Properties: The group has leasehold and investment properties stated at an aggregate carrying value of $2,168,000 (2010: $2,568,000). An assessment is made at each
reporting date whether there is any indication that the asset may be impaired. If any such indication exists, an estimate is made of the recoverable amount of the asset determined based on value-in-use calculations. These calculations require the use of estimates. If the revised estimated gross margin is less favourable than that used in the calculations there would be a need to provide for impairment. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from assumptions could require a material adjustment to the carrying amount of the balances affected.
Useful lives of plant and equipment: The estimates for the useful lives and related depreciation charges for leasehold improvements and plant and equipment are based on commercial and
production factors which could change significantly as a result of technical innovations and competitor actions in response to severe market conditions. The depreciation charge is increased where useful lives are less than previously estimated lives, or the carrying amounts written off or written down for technically obsolete or non-strategic assets that have been abandoned or sold. It is impracticable to disclose the extent of the possible effects. The carrying amount of the specific asset affected by the assumption is $15,607,000 (2010: $14,510,000).
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 201144
2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONT’D) Critical Judgements, Assumptions and Estimation Uncertainties (Cont’d)
Net realisable value of inventories: A review is made periodically on inventory for excess inventory, 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 consider the 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 year and inherently involves estimates regarding the future expected realisable value. The usual considerations for determining the amount of allowance or write-down include ageing analysis 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 year. Possible changes in these estimates could result in revisions to the stated value of the inventories. The carrying amount of inventories at the end of the reporting year is $1,577,000 (2010 : $1,232,000).
Estimated impairment of subsidiary: When a subsidiary is in net equity deficit and has suffered operating losses a test is made whether the investment in the investee has suffered any impairment,
in accordance with the stated accounting policy. This determination requires significant judgement. An estimate is made of the future profitability of the investee, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, and operational and financing cash flow. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from assumptions could require a material adjustment to the carrying amount of the asset or liability affected. The carrying amount of the relevant investment is $1,510,000 (2010: $1,030,000) at the end of the reporting year.
3. RELATEDPARTYRELATIONSHIPSANDTRANSACTIONS FRS 24 defines a related party as a person or entity that is related to the reporting entity and it includes (a) A person or a close member of that person’s
family if that person: (i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (b) An entity is related to the reporting entity if any of the following conditions apply: (i) The entity and the reporting entity are members of the same group. (ii) One entity is an associate or joint venture of the other entity. (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. (vi) The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
3.1. Related companies:
There are transactions and arrangements between the reporting entity and members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For non-current balances, if significant, an interest is imputed unless stated otherwise. For financial guarantees, a fair value is imputed and is recognised accordingly if significant where no charge is payable.
Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below.
3.2. Other related parties:
There are transactions and arrangements between the reporting entity and members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For non-current balances, if significant, an interest is imputed unless stated otherwise. For financial guarantees, a fair value is imputed and is recognised accordingly if significant where no charge is payable.
Significant related party transactions: In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following:
Related parties
2011$’000
2010$’000Group
Revenue – 923
Disposal of subsidiary 1,390 –
Management fee income 132 –
Franchise fee income – 82
Utilities – (218)
Rental expense – (746)
Purchase of plant and equipment – (362)
Property tax expense – (59)
Other expenses – (63)
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 45
Notes To The Financial Statements 31 December 2011
3. RELATEDPARTYRELATIONSHIPSANDTRANSACTIONS(CONT’D) 3.3. Key management compensation:
Group
2011$’000
2010$’000
Salaries and other short-term employee benefits 1,896 1,922
The above amounts are included under employee benefits expense. Included in the above amounts are the following items:
Group
2011$’000
2010$’000
Remuneration of directors of the company 753 517
Fees to directors of the company 103 78
Further information about the remuneration of individual directors is provided in the report on corporate governance.
Key management personnel are directors and those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly. The above amounts for key management compensation are for all the directors and other key management personnel.
3.4. Other receivables from related parties:
The trade transactions and the trade receivables and payables balances arising from sales and purchases of goods and services are disclosed elsewhere in the notes to the financial statements.
The movements in other receivables from are as follows:
Related party
2011$’000
2010$’000Group
Other receivables / (payables):
Balance at beginning of year – net (credit) / debit (733) 1,101
Disposal of subsidiary 1,390 –
Purchase of plant and equipment – (362)
Debts assigned – (733)
Amounts paid in and settlement of liabilities on behalf of the company (122) (839)
Amounts paid out and settlement of liabilities on behalf of related parties – 100
Balance at end of year – net debit / (credit) 535 (733)
4. REVENUE
Group
2011$’000
2010$’000
Sales of food and beverage 94,455 70,512
Rental income from stalls 6,479 4,528
Rental income from investment property 101 98
Other income 476 389
101,511 75,527
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Select Group Annual Report 201146
Notes To The Financial Statements 31 December 2011
5. INTERESTINCOME
Group
2011$’000
2010$’000
Interest income 12 23
6. OTHERCREDITSAND(OTHERCHARGES)
Group
2011$’000
2010$’000Group
Allowance for impairment on trade receivables – (301)
Bad debts written off - trade receivables (24) (62)
Loss on disposal of plant and equipment (103) 429
Impairment loss on investment in associate – (29)
Impairment loss on available for sale – (82)
Compensation - Insurance 2 –
Deposit received no longer payable – 82
Foreign exchange gain / (loss) 2 (22)
Inter-company loans (written off) / reversal – 318
Impairment loss of plant and equipment – (300)
Inventory written off – (43)
Intangibles assets written off – (275)
Government grant from projects / job credit scheme 495 171
Other 6 –
Net 378 (972)
Presented in the profit or loss as:
Other Credits 505 571
Other Charges (127) (1,543)
Net 378 (972)
7. FINANCECOSTS
Group
2011$’000
2010$’000
Interest expense 525 457
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Select Group Annual Report 2011 47
Notes To The Financial Statements 31 December 2011
8. OTHEROPERATINGEXPENSESThe major components include the following:
Group
2011$’000
2010$’000
Rental expenses 11,346 9,583
Utilities 5,017 4,050
Repair and maintenance 1,423 857
Upkeep of motor vehicles 349 306
The major items disclosed comprises 76% (2010: 76%) of the total other expenses.
9. ADMINISTRATIVEEXPENSEThe components include the following:
Group
2011$’000
2010$’000
Employee benefits expense:
Employee benefits expense 28,307 23,600
Contributions to defined contribution plan 2,288 2,290
Total employee benefits expense 30,595 25,890
Audit fees paid to:
- auditors of the company 238 233
- other auditors 4 4
Non-audit fees paid to:
- auditors of the company 68 72
- other auditors 13 –
10. INCOMETAX 10A. Components of tax expense (income) recognised in profit or loss include:
Group
2011$’000
2010$’000
Current tax expense:
Current tax expense 654 613
Over adjustments to tax in respect of previous period (26) (24)
Subtotal 628 589
Deferred tax income:
Deferred tax income (98) (430)
Total income tax expense 530 159
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Select Group Annual Report 201148
10. INCOMETAX(CONT’D) 10A. Components of tax expense (income) recognised in profit or loss include: (Cont’d)
The income tax in profit or loss varied from the amount of income tax amount determined by applying the Singapore income tax rate of 17% (2010: 17%) to profit or loss before income tax as a result of the following differences:
Group
2011$’000
2010$’000
Profit / (Loss) before tax 3,712 (1,962)
Less : Share of loss from equity accounted associate – 87
3,712 (1,875)
Income tax expense (benefit) at the above rate 631 (318)
Not (taxable) deductible items (147) 438
Over adjustments to tax in respect of previous period (26) (24)
Tax exemption (103) –
Effect of different tax rates in different countries (2) (3)
Deferred tax assets unrecognised 134 50
Others 43 16
Total income tax expense 530 159
There are no income tax consequences of dividends to owners of the company.
10B. Deferred tax (income) expense recognised in profit or loss include:
2011$’000
2010$’000Group
Excess of net book value of plant and equipment over tax values 246 (845)
Differences in amortisation of intangible asset 35 35
Unabsorbed capital allowance – (52)
Tax loss carryforwards (206) 1,328
Provision (6) 18
Deferred tax assets unrecognised (134) (50)
Others (33) (4)
Total deferred income tax (income) expenses recognised in profit or loss (98) 430
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 49
Notes To The Financial Statements 31 December 2011
10. INCOMETAX(CONT’D) 10C. Deferred tax balance in the statements of financial position:
2011$’000
2010$’000Group
Deferred tax liabilities:
Excess of net book value of plant and equipment over tax values (1,282) (1,528)
Differences in amortisation of intangible asset (423) (458)
Others (28) –
Total deferred tax liabilities (1,733) (1,986)
Deferred tax assets:
Tax loss carryforwards 1,419 1,625
Provision 12 18
Others – 5
Total deferred tax assets 1,431 1,648
Net total of deferred tax liabilities (302) (338)
Deferred tax assets unrecognised (373) (239)
Net total of deferred tax liabilities (675) (577)
Presented in the statements of financial position as follows:
Deferred tax liabilities (1,156) (1,088)
Deferred tax assets 481 511
Net balance (675) (577)
The deferred tax balances recognised in the statements of financial position of the company are as follows:
2011$’000
2010$’000Company
Deferred tax liabilities:
Excess of net book value of plant and equipment over tax values – (49)
Total deferred tax liabilities – (49)
Deferred tax assets:
Excess of tax values over net book value of plant and equipment 40 –
Tax losses carryforward 102 149
Total deferred tax assets 142 149
Deferred tax assets unrecognised (102) –
Net total deferred tax assets 40 100
It is impracticable to estimate the amount expected to be settled or used within one year.
The above deferred tax asset has been recognised in respect of the remaining balance as the future profit streams are not probable.
The realisation of the future income tax benefits from tax loss carryforward and temporary differences from capital allowances is available for an unlimited future period subject to the conditions imposed by law including the retention of majority shareholders as defined.
Temporary differences arising in connection with interests in subsidiaries and associate are insignificant.
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Select Group Annual Report 201150
Notes To The Financial Statements 31 December 2011
11. EARNINGS(LOSS)PERSHAREThe following table illustrates the numerators and denominators used to calculate basic and diluted profit/ (loss) per share of no par value:
Group
2011$’000
2010$’000
A. Numerator: Profit (Loss) attributable to Equity
Profit (Loss) for the year attributable to the equity holders of the company 3,182 (1,713)
B. Denominator: Weighted average number of equity shares
Weighted average number of ordinary shares for the purposes of basic profit/ (loss) per share 142,380 142,380
The weighted average number of equity shares refers to shares in circulation during the period.
The denominators used are the same as those detailed above for both basic and diluted profit/ (loss) per share.
12.PROPERTY,PLANTANDEQUIPMENT
Leasehold properties
Leasehold improvements
Plant and equipment
Total
Group $’000 $’000 $’000 $’000
Cost:
At 1 January 2010 4,776 9,655 10,461 24,892
Additions – 4,906 6,222 11,128
Disposals – (884) (986) (1,870)
Reclassified to assets held for sale (Note 22) – (414) (884) (1,298)
Reclassification – 4 (4) –
At 31 December 2010 4,776 13,267 14,809 32,852
Additions – 550 4,731 5,281
Disposals – (383) (1,222) (1,605)
At 31 December 2011 4,776 13,434 18,318 36,528
Accumulated Depreciation and Impairment:
At 1 January 2010 2,505 4,910 6,306 13,721
Depreciation for the year 370 1,454 1,754 3,578
Disposals – (196) (702) (898)
Impairment loss for the year – – 300 300
Reclassified to assets held for sale (Note 22) – (74) (186) (260)
Reclassification – (4) 4 –
At 31 December 2010 2,875 6,090 7,476 16,441
Depreciation for the year 370 1,418 2,628 4,416
Disposals – (354) (1,113) (1,467)
At 31 December 2011 3,245 7,154 8,991 19,390
Net Book Value:
At 1 January 2010 2,271 4,745 4,155 11,171
At 31 December 2010 1,901 7,177 7,333 16,411
At 31 December 2011 1,531 6,280 9,327 17,138
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Select Group Annual Report 2011 51
Notes To The Financial Statements 31 December 2011
12.PROPERTY,PLANTANDEQUIPMENT(CONT’D)
Leasehold properties
Plant and equipment
Total
Company $’000 $’000 $’000
Cost:
At 1 January 2010 2,695 1,474 4,169
Additions – 26 26
At 31 December 2010 2,695 1,500 4,195
Additions – 10 10
At 31 December 2011 2,695 1,510 4,205
Accumulated Depreciation and Impairment:
At 1 January 2010 1,405 1,396 2,801
Depreciation for the year 135 34 169
At 31 December 2010 1,540 1,430 2,970
Depreciation for the year 135 24 159
At 31 December 2011 1,675 1,454 3,129
Net Book Value:
At 1 January 2010 1,290 78 1,368
At 31 December 2010 1,155 70 1,225
At 31 December 2011 1,020 56 1,076
Certain plant and equipment are under finance lease agreements (Note 26).
The company’s leasehold property with carrying value of $1,020,000 (2010: $1,155,000) is mortgaged to the bank for bank facilities (Note 26).
The depreciation for the year for the group and company are charged to administrative expenses.
13. INTANGIBLEASSETS
Group
2011$’000
2010$’000
Goodwill (Note 13A) 4,104 4,104
Other intangible assets (Note 13B) 2,486 2,693
Total at cost 6,590 6,797
13A. Goodwill
Goodwill is allocated to cash-generating units (“CGU”) for the purpose of impairment testing. This CGU represents the group’s investment in the subsidiary, PG Holdings Pte. Ltd. in the Peach Garden (“PG”) segment.
The goodwill was tested for impairment at the end of each of the reporting year. An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit (“CGU”) exceeds its recoverable amount. The recoverable amount of an asset or a CGU is the higher of its fair value less costs to sell or its value in use. The recoverable amounts of CGU have been determined based on the value-in-use method. The value is regarded as the lowest level for fair value measurement as the valuation includes inputs for the asset that are not based on observable market data (unobservable inputs).
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Select Group Annual Report 201152
Notes To The Financial Statements 31 December 2011
13. INTANGIBLEASSETS(CONT’D) 13A. Goodwill (Cont’d)
The value in use was determined by the management. The key assumptions for the value in use calculations are as follows. The value is regarded as the lowest level for fair value measurement as the valuation includes inputs for the asset that are not based on observable market data (unobservable inputs). The key assumptions used for value in use of each cash generating unit are consistent with those used for the calculation last performed by a firm of independent financial advisers and are analysed as follows:
2011 2010
1. Estimated discount rates using pre-tax rates that reflect current market assessments at the risks specific to the CGUs.
10% 10%
2. Growth rates based on industry growth forecasts and not exceeding the average long-term growth rate for the relevant markets.
0% - 3% 0% - 3%
3. Cash flow forecasts derived from the most recent financial budgets and plans approved by management. 5 years 5 years
The impairment test has been carried out using a discounted cash flow model covering a 5-year period. Cash flow projections are based on 5 year forecast and plans approved by the management; cash flow projections beyond that 5 year forecast have been extrapolated on the basis of a 0% to 3% growth rate. Such growth rates do not exceed the long-term average growth rate of the sector. The discount rate applied (weighted average cost of capital “WACC” gross of tax effect) is 10%. Management believes that any reasonable changes in the key assumptions would not cause the carrying amount to exceed its recoverable amount. The value is regarded as the lowest level for fair value measurement as the valuation includes inputs for the asset that are not based on observable market data (unobservable inputs).
13B. Other Intangible Assets
Brand name
Technical know-how
Total
Group $’000 $’000 $’000
Cost:
At 1 January 2010 3,107 418 3,525
Written off (*) – (418) (418)
At 31 December 2010 and 2011 3,107 – 3,107
Amortisation and Impairment:
At 1 January 2010 207 87 294
Amortisation for the year 207 56 263
Written off (*) – (143) (143)
At 31 December 2010 414 – 414
Amortisation for the year 207 – 207
At 31 December 2011 621 – 621
Net Book Value:
At 1 January 2010 2,900 331 3,231
At 31 December 2010 2,693 – 2,693
At 31 December 2011 2,486 – 2,486
The amortisation for the year is charged under administrative expenses.
(*) This is in respect of a subsidiary that was placed under liquidation in 2010.
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Select Group Annual Report 2011 53
Notes To The Financial Statements 31 December 2011
14. INVESTMENTPROPERTIES
Group and Company
2011$’000
2010$’000
At cost:
At beginning and end of the year 758 758
Accumulated depreciation:
At beginning of the year 91 61
Depreciation for the year 30 30
At end of the year 121 91
Net book value:
At beginning of the year 667 697
At end of the year 637 667
Fair value at end of the year 870 780
Rental and service income from investment properties 101 98
Direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the period
22 37
The investment properties consist of 2 units in an industrial building used for rental income generation purpose.
The fair value of investment properties is stated on the existing use basis to reflect the actual market state and circumstances as of the end of the reporting year and not as of either a past or future date. The fair value is regarded as the lowest level for fair value measurement as it is from valuation techniques (value-in-use) that include inputs for the asset that are not based on observable market date (unobservable inputs).
The depreciation expense is charged under administrative expenses. The investment properties are leased out under operating lease.
The company’s investment properties are mortgaged to the bank for bank facilities (Note 26).
The details of the investment properties are disclosed below:
Location of Investment Property Gross Floor AreaTenure of land/
Last Valuation Date
3017 Bedok North Street 5 #02-33 & #02-34
Singapore 486121
342 sq m 30 year lease commencing 1 April 2002
Last Valued in 2006
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Select Group Annual Report 201154
Notes To The Financial Statements 31 December 2011
15. INVESTMENTSINSUBSIDIARIESCompany
2011$’000
2010$’000
Cost at the beginning of the year 14,654 14,654
Quasi – equity loan * 3,380 3,380
Addition - new shares issued by a subsidiary 480 –
Disposal (480) –
Allowance for impairment (4,747) (4,747)
Cost at the end of the year 13,287 13,287
Total cost comprising:
Unquoted equity shares at cost 18,034 18,034
Allowance for impairment (4,747) (4,747)
Total at cost 13,287 13,287
Presented in statements of financial position:
Non-current investments in subsidiaries 13,287 12,807
Current asset held for sale (Note 22) – 480
13,287 13,287
Net book value of subsidiaries 3,691 4,739
Analysis of above amount denominated in non-functional currency:
Chinese Renminbi 3,044 3,044
Movement in above allowance:
Balance at beginning of the year 4,747 3,992
Charge to income statement included in other charges – 755
Balance at end of the year 4,747 4,747
* These are interest free quasi-equity loans from the company to the following wholly-owned subsidiaries:
i) Select F&B (Investment) Pte Ltd which in turn holds 100% equity interest in Select F&B (Suzhou) Co., Ltd
ii) Supertree F&B Pte Ltd (formerly known as Select Offshore Services Pte Ltd)
The company does not expect repayment of the above interest free loans in the foreseeable future.
The subsidiaries held by the company and the subsidiaries are listed below:
Name of subsidiaries, country of incorporation,place of operations and principal activities
Cost of investment Percentage of equityheld by group
2011$’000
2010$’000
2011%
2010%
Held by Select Group Limited:
Stamford Catering Services Pte. Ltd. (a) 250 250 100 100
Singapore
Operator of catering services and staff cafeterias
Select Food Management Pte. Ltd. (a) 659 659 100 100
Singapore
Operator of food court stalls
Lerk Thai Restaurant Pte. Ltd. (a) 200 200 100 100
Singapore
Operator of restaurants and food outlets
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Select Group Annual Report 2011 55
Notes To The Financial Statements 31 December 2011
15. INVESTMENTSINSUBSIDIARIES(CONT’D)
Name of subsidiaries, country of incorporation,place of operations and principal activities
Cost of investment Percentage of equityheld by group
2011$’000
2010$’000
2011%
2010%
Held by Select Group Limited:
SCS Food Services Pte. Ltd. (a) 100 100 100 100
Singapore
Operator of restaurants and food court stalls
Select (F&B) Investment Pte. Ltd. (a) 3,044 3,044 100 100
Singapore
Investment holding
Supertree F&B Pte. Ltd. (a) 336 336 100 100
(formerly known as Select Offshore Services Pte. Ltd.)
Singapore
Operator of offshore catering services
Select Catering Services Pte. Ltd. (a) 150 150 100 100
Singapore
Operator of catering services
Select Institutional Catering Pte. Ltd. (a) 150 150 100 100
Singapore
Operator of food courts stalls and staff cafeterias
Hill Street Coffee Shop Pte. Ltd. (a) 400 400 100 100
(formerly known as Stamford Quickserve Pte. Ltd.)
Singapore
Operator of retail food outlets
Select Café Pte. Ltd. (a) 755 755 51 51
Singapore (under liquidation)
Operator of restaurants
Wisteria Hotel Management Pte. Ltd. (e) – 480 – 100
Singapore (Disposed on 10 January 2011)
Operator of restaurants and provision of hotel management services
Universal Dining Pte. Ltd. (a) 480 480 100 100
Singapore
Operator of restaurants and food court stalls
PG Holdings Pte. Ltd. (a) 9,138 9,138 100 100
Singapore
Investment holding
14,553 14,553
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Select Group Annual Report 201156
Notes To The Financial Statements 31 December 2011
15. INVESTMENTSINSUBSIDIARIES(CONT’D)
Name of subsidiaries, country of incorporation,place of operations and principal activities
Cost of investment Percentage of equityheld by group
2011$’000
2010$’000
2011%
2010%
Held by Select Group Limited:
Peach Garden @OCC Pte. Ltd. (a) 1,000 1,000 100 100
Singapore
Operator of restaurants
Peach Garden Restaurant Pte. Ltd. (a) 480 – 100 100
Singapore
Operator of restaurants
Sheng Kee Dessert Pte. Ltd. (a) 200 200 100 100
(formerly known as Sun Kee Dessert Pte. Ltd.)
Singapore
Operator of restaurants and food outlets
Texas Chicken (Singapore) Pte. Ltd. (a) 480 480 100 100
Singapore
Operator of fast food restaurants
Select Hospitality Services Sdn Bhd (b) 212 212 100 100
Malaysia
Operator of offshore catering services
(RSM Robert Teo, Kuan & Co)
18,034 18,034
Held by Subsidiaries of Select Group Limited:Select Food Management Sdn Bhd (c) 46 46 100 100
Malaysia
Dormant
(Howarth, Malaysia)
Select F&B (Suzhou) Co., Ltd. (c) 3,212 3,212 100 100
People’s Republic of China
Dormant (under liquidation)
(BDO China Shu Lun Pan CPAs)
Peach Garden (Novena) Pte. Ltd. (a) 400 400 100 100
Singapore
Operator of restaurants
Peach Garden Pte. Ltd. (a) 206 206 100 100
Singapore
Operator of restaurants
PG Restaurant Pte. Ltd. (a) (d) – – 100 100
Singapore
Operator of restaurants
Peach Garden @33 Pte. Ltd. (a) (d) – – 100 100
Singapore
Operator of restaurants
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Select Group Annual Report 2011 57
Notes To The Financial Statements 31 December 2011
15. INVESTMENTSINSUBSIDIARIES(CONT’D) (a) Audited by RSM Chio Lim LLP in Singapore.
(b) Audited by member firms of RSM International of which RSM Chio Lim LLP in Singapore is a member. Their names are indicated above.
(c) Other independent auditors. Audited by firms of accountants other than member firms of RSM International of which RSM Chio Lim LLP in Singapore is a member. Their names are indicated above.
(d) Cost of investment is less than $1,000.
(e) The subsidiary was disposed during the reporting year at the date shown.
As is required by Rule 716 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the audit committee and the board of directors of the company have satisfied themselves that the appointment of different auditors for certain of its overseas subsidiaries would not compromise the standard and effectiveness of the audit of the group.
16. INVESTMENTINASSOCIATE
Group
2011$’000
2010$’000
Movement in carrying value:
At 1 January – 116
Share of loss for the year – (87)
Less : allowance for impairment – (29)
At 31 December – –
Carrying Value:
Unquoted equity shares at cost 125 125
Share of post-acquisition loss, net of dividend received (96) (96)
Impairment loss (29) (29)
– –
Name of associate, country of incorporationplace of operations and principal activities
Cost of investment Percentage of equityheld by group
2011$’000
2010$’000
2011%
2010%
Lerk Thai (M) Sdn Bhd Malaysia Operator of restaurants
125 125 30 30
The associate’s unaudited management financial statements as at 31 December have been used for equity accounting purposes.
The summarised financial information of the associates, not adjusted for the percentage ownership held by the group, is as follows:
Assets$’000
Liabilities$’000
Revenues$’000
Loss$’000
2011 103 778 646 826
2010 728 652 990 293
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Select Group Annual Report 201158
Notes To The Financial Statements 31 December 2011
17.OTHERFINANCIALASSET,NON-CURRENT
Group
2011$’000
2010$’000
Available-for-sale:
Unquoted shares, at cost 82 82
Less : allowance for impairment (82) (82)
– –
A subsidiary holds 20,000 non-voting redeemable preference shares per RM10 each in an unquoted company incorporated in Malaysia.
18.OTHERRECEIVABLES,NON-CURRENT
Company
2011$’000
2010$’000
Loan receivable from subsidiaries (Note 3) 4,844 1,896
The agreement for the loan receivables provides that it is unsecured, without fixed repayment term and with interest rate of 5.0% (2010: 5.5%) per annum. The loan is not expected to be repaid in the foreseeable future. The carrying value of the loan is assumed to be a reasonable approximation of fair value (Level 2).
19. INVENTORIES
Group
2011$’000
2010$’000
Consumables and supplies 1,577 1,232
Cost of inventories charged to profit or loss 31,905 21,940
Changes in inventories (increase) (345) 74
Written back (down) of inventories charged to profit or loss included in other charges – (43)
There are no inventories pledged as security for liabilities.
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Select Group Annual Report 2011 59
Notes To The Financial Statements 31 December 2011
20. TRADEANDOTHERRECEIVABLES
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Trade receivables:
Outside parties 5,404 5,007 – –
Associate (Note 3) – 121 – –
Subsidiaries (Note 3) – – 3,110 3,024
Related parties (Note 3) 99 281 35 –
Less: allowance for impairment (24) (301) (74) (74)
Subtotal 5,479 5,108 3,071 2,950
Other receivables:
Outside parties 721 624 250 101
Related party (Note 3) 535 – 535 –
Subsidiaries (Note 3) – – 4,949 6,245
Less: allowance for impairment – – – (2,226)
Subtotal 1,256 624 5,734 4,120
Total trade and other receivables 6,735 5,732 8,805 7,070
Movements in above allowance:
Balance at beginning of year 301 241 2,300 1,495
Charge for trade and other receivables to profit or loss included in other credits/(charges) – 301 – 805
Bad debts written off (277) (241) (2,226) –
Balance at end of year 24 301 74 2,300
21.OTHERASSETS
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Deposits to secure services 3,649 3,161 113 108
Prepayments 1,121 1,134 53 73
Income tax recoverable 6 6 – –
4,776 4,301 166 181
Presented in statements of financial position:
Non-current 1,784 1,811 – –
Current 2,992 2,490 166 181
4,776 4,301 166 181
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Select Group Annual Report 201160
Notes To The Financial Statements 31 December 2011
22.ASSETSCLASSIFIEDASHELDFORSALE During the financial year, the company entered into a sale and purchase agreement dated 10 January 2011 with a related party divesting the entire issued
and paid up share capital of Wisteria Hotel Management Pte Ltd (“Wisteria”) for a cash consideration of $1,390,000. This planned divestment was as agreed between the parties in 2010.
The assets and liabilities to Wisteria have been presented as a disposal group held for sale in the last financial year. Details of the disposal group classified as held for sale were as follows:
Group
2011$’000
2010$’000
Plant and equipment – 1,038
Trade and other receivables – 363
Other assets – 132
Inventories – 64
– 1,597
Liabilities associated with assets classified as held for sale:
Trade and other payables – 369
– 369
Net assets held for sale – 1,228
The cost of investment of $480,000 (Note 15) in the subsidiary of the company was presented as assets held for sale at the end of reporting year ended 31 December 2010.
23.CASHANDCASHEQUIVALENTS
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Not restricted in use 5,020 5,161 16 18
Restricted in use (a) 1,590 1,542 933 927
6,610 6,703 949 945
Interest earning balances 1,590 1,542 933 927
(a) This is for fixed deposits held by bankers to cover the bank facilities granted to the group and the company (Note 26).
The rate of interest for the cash on interest earning balances is 0.30% to 0.95% (2010: 0.30% to 0.95%) per annum.
23A. Cash and Cash Equivalents in the Consolidated Cash Flow Statement
Group
2011$’000
2010$’000
As shown above 6,610 6,703
Restricted in use (1,590) (1,542)
Bank overdraft (Note 26) (1,191) (934)
Cash and cash equivalents at end of year 3,829 4,227
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Select Group Annual Report 2011 61
Notes To The Financial Statements 31 December 2011
23.CASHANDCASHEQUIVALENTS(CONT’D) 23B. Non-Cash Transactions
During the year, the group acquired property, plant and equipment with an aggregate cost of $5,281,000 (2010: $11,128,000) of which $806,000 (2010: $998,000) was acquired by means of finance leases.
24.SHARECAPITAL
Numberof shares
issued
Sharecapital
’000 $’000
Ordinary shares of no par value:
Balance at end of year 1 January 2010, 31 December 2010 and 31 December 2011 142,380 15,284
The ordinary shares of no par value carry no right to fixed income and are fully paid.
Capital management:
The objectives when managing capital are: to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for owners and benefits for other stakeholders, and to provide an adequate return to owners by pricing products and services commensurately with the level of risk. The management sets the amount of capital to meet its requirements and the risk taken. There were no changes in the approach to capital management during the year. The management manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the management may adjust the amount of dividends paid to owners, return capital to owners, issue new shares, or sell assets to reduce debt.
In order to maintain its listing on the Singapore Stock Exchange, it has to have share capital with at least a free float of at least 10% of the shares. The company met the capital requirement on its initial listing and the rules limiting treasury share purchases mean it will automatically continue to satisfy that requirement, as it did throughout the year. Management receives a report from the registrars frequently on substantial share interests showing the non-free float and it demonstrated continuing compliance with the 10% limit throughout the reporting year.
The management does not set a target level of gearing but uses capital opportunistically to support its business and to add value for shareholders. The key discipline adopted is to widen the margin between the return on capital employed and the cost of that capital.
The management monitors the capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt / adjusted capital (as shown below). Net debt is calculated as total borrowings less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e. share capital and retained earnings):
Group
2011$’000
2010$’000
Net debt:
All current and non-current borrowings including finance leases 6,941 10,469
Less: cash and cash equivalents (6,610) (6,703)
Net debt 331 3,766
Adjusted capital:
Total equity 15,309 12,087
Adjusted capital 15,309 12,087
Debt-to-adjusted capital ratio 2.16% 31.16%
The decrease in the debt-to-adjusted capital ratio for the reporting year resulted primarily from repayment of debt. There was a favourabe change with improved retained earnings.
25.SHAREBASEDPAYMENT Share options:
During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted. There were no employee share options granted since the commencement of the share option scheme which is more fully disclosed in the report of the directors.
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Select Group Annual Report 201162
Notes To The Financial Statements 31 December 2011
26. OTHERFINANCIALLIABILITIES
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Other Financial Liabilities, Non-Current
Bank loans (secured) (Note 26A) 367 1,220 138 –
Bank loans (unsecured) (Note 26A) 208 1,963 – 662
Finance leases (Note 26B) 1,043 573 600 565
1,618 3,756 738 1,227
Other Financial Liabilities, Current
Bank overdraft (secured) (Note 26A) 1,191 934 678 434
Bank loans (secured) (Note 26A) 3,395 3,835 520 303
Bank loans (unsecured) (Note 26A) 259 1,734 – 743
Finance leases (Note 26B) 478 210 384 201
5,323 6,713 1,582 1,681
The non-current portion is repayable as follows:
Due within 2 to 5 years 1,555 3,756 738 1,227
After 5 years 63 – – –
Total non-current portion 1,618 3,756 738 1,227
All the amounts are at floating interest rates except the following that are on fixed interest rate:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Bank loans (secured) 3,762 840 658 –
Bank loans (unsecured) 467 3,697 – 1,406
Finance leases 1,521 783 984 766
The ranges of floating interest rates paid were as follows:
Group and Company
2011 2010
Bank loans (secured) 5.00% to 6.71% 5.00% to 6.71%
Bank overdraft (secured) 5.25% to 7.35% 5.25% to 7.35%
The ranges of fixed interest rates paid were as follows:
Group and Company
2011 2010
Bank loans (secured and unsecured) 5.00% to 5.50% 5.00% to 5.50%
Finance leases 2.60% to 3.60% 2.60% to 3.60%
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Select Group Annual Report 2011 63
Notes To The Financial Statements 31 December 2011
26.OTHERFINANCIALLIABILITIES(CONT’D) 26A Bank Loan and Bank Overdraft (secured and unsecured):
Certain of the bank loans, overdraft and other credit facilities are covered by:
(a) pledge of fixed deposits (Note 23);
(b) a legal mortgage of the leasehold property (Note 12) and investment property (Note 14); and
(c) corporate guarantees from the company and certain subsidiaries.
All the bank loans are repaid monthly and repayment schedules are as follows:
Company:
1. A $1,786,000 loan facility is repayable by 120 monthly instalments commencing from January 2002;
2. A $612,000 loan facility is repayable by 120 monthly instalments commencing from December 2003;
3. A $1,000,000 loan facility is repayable by 48 monthly instalments commencing from July 2009; and
4. A $1,000,000 loan facility is repayable by 24 monthly instalments commencing from June 2010.
Subsidiaries:
1. A $1,000,000 loan facility is repayable by 48 monthly instalments commencing from August 2009;
2. A $1,000,000 loan facility is repayable by 48 monthly instalments commencing from October 2009;
3. A $2,000,000 loan facility is repayable by 48 monthly instalments commencing from December 2009;
4. A $3,000,000 loan facility is repayable by 24 monthly instalments commencing from August 2010; and
5. A $2,000,000 loan facility is repayable by 24 monthly instalments commencing from July 2010.
One of the subsidiaries has a bank loan for a period of 5 years from 2009. The balance of $1,050,000 (2010: $1,537,000) at the end of the reporting year, has however been classified as “current” because the subsidiary does not have an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting year.
26B. Finance Leases Liabilities
Minimumpayments
$’000
Financecharges
$’000
PresentValue
$’000Group
2011
Minimum lease payments payable:
Due within one year 538 (60) 478
Due within 2 to 5 years 1,111 (131) 980
Due more than 5 years 76 (13) 63
Total 1,725 (204) 1,521
Net book value of plant and equipment under finance leases 3,365
2010
Minimum lease payments payable:
Due within one year 235 (25) 210
Due within 2 to 5 years 643 (70) 573
Total 878 (95) 783
Net book value of plant and equipment under finance leases 1,007
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Select Group Annual Report 201164
Notes To The Financial Statements 31 December 2011
26.OTHERFINANCIALLIABILITIES(CONT’D) 26B. Finance Leases Liabilities (Cont’d)
Minimumpayments
$’000
Financecharges
$’000
PresentValue
$’000Company
2011
Minimum lease payments payable:
Due within one year 424 (40) 384
Due within 2 to 5 years 652 (52) 600
Total 1,076 (92) 984
Net book value of plant and equipment under finance leases – (*)
2010
Minimum lease payments payable:
Due within one year 224 (23) 201
Due within 2 to 5 years 632 (67) 565
Total 856 (90) 766
Net book value of plant and equipment under finance leases – (*)
(*) The company had entered finance lease on behalf of its subsidiaries for the purchase of plant and equipment under finance leases.
It is the group’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 3 to 7 years. For the year ended 31 December 2011, the rate of interest for finance leases is about 2.6% to 3.6% (2010: 3.1% to 3.6%) per year. There is an exposure to fair value interest risk because the interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in S$. The obligations under finance leases are secured by the lessor’s charge over the leased assets. The carrying amounts of the lease liabilities approximate the fair values.
27. TRADEANDOTHERPAYABLES
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Trade payables:
Outside parties and accrued liabilities 16,143 12,246 644 513
Director 170 – 170 –
Subtotal 16,313 12,246 814 513
Other payables:
For purchase of non-current assets 1,331 2,172 – –
Outstanding acquisition cost * – 1,753 – 1,753
Related parties (Note 3) 2 733 2 733
Subsidiaries (Note 3) – – 10,277 9,250
Subtotal 1,333 4,658 10,279 11,736
Total trade and other payables 17,646 16,904 11,093 12,249
* Related to outstanding acquisition cost arising from acquisition of PG Holdings Pte. Ltd. in 2008 which was fully settled during the year.
The loans and advances from subsidiaries are unsecured and with an interest rate of 5.0% to 5.5% (2010: 5.0% to 5.5%) per annum. The carrying amount of the loans and advances are assumed to be a reasonable approximation of fair values (level 2).
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Select Group Annual Report 2011 65
Notes To The Financial Statements 31 December 2011
28.OTHERLIABILITIES
Group
2011$’000
2010$’000
Lease incentives 416 417
Tenants deposits 1,262 1,406
1,678 1,823
Presented in the statements of financial position as:
Non-Current 1,408 875
Current 270 948
1,678 1,823
29. LONG-TERMPROVISION Provision for dismantling and removing the item and restoring the site relating to property, plant and equipment.
Movement in provision:
Group
2011$’000
2010$’000
At beginning of the year 375 –
Additions 52 375
At end of the year 427 375
The provision is based on the present value of costs to be incurred to remove leasehold improvements from leased properties. The estimate is based on quotations from external contractors. The unexpired terms range from 3 to 5 years.
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Select Group Annual Report 201166
30.DISPOSALOFSUBSIDIARYThe following table summarises the carrying value of the account balances of the subsidiary Wisteria Hotel Management Pte Ltd that was sold on 10 January 2011.
Group
Period ended10 January 2011
$’000
Plant and equipment 1,038
Inventories 64
Trade and other receivables 363
Cash and cash equivalents 175
Trade and other payables (369)
Net asset disposed 1,271
Total consideration 1,390
Satisfied by:
Cash consideration 1,390
Contra with receivables and payables (1,390)
Cash balance disposed (175)
Net cash outflow (175)
The results from the subsidiary was insignificant during the reporting year.
31.DIVIDENDSONEQUITYSHARES In respect of the current reporting year, the directors propose that a final dividend of $0.005 per share with a total of $711,900 be paid to shareholders after the
annual general meeting. There are no income tax consequences. This dividend is subject to approval by shareholders at the next annual general meeting and has not been included as a liability in these financial statements. The proposed dividend for 2011 is payable in respect of all ordinary shares in issue at the end of the reporting year and including the new qualifying shares issued up to the date the dividend becomes payable.
32. FINANCIALINSTRUMENTS:INFORMATIONONFINANCIALRISKS 32A. Classification of Financial Assets and Liabilities
The following table summarises the carrying amount of financial assets and liabilities recorded at the end of the reporting year by FRS 39 categories:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Financial assets:
Cash and cash equivalents 6,610 6,703 949 945
Loans and receivables 6,735 5,732 13,649 8,966
At end of the year 13,345 12,435 14,598 9,911
Financial liabilities:
Borrowings at amortised cost 6,941 10,469 2,320 2,908
Trade and other payables at amortised cost 17,646 16,904 11,093 12,249
At end of the year 24,587 27,373 13,413 15,157
Further quantitative disclosures are included throughout these financial statements.
There are no significant fair value measurements recognised in the statements of financial position.
Notes To The Financial Statements 31 December 2011
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Select Group Annual Report 2011 67
Notes To The Financial Statements 31 December 2011
32. FINANCIALINSTRUMENTS:INFORMATIONONFINANCIALRISKS(CONT’D) 32B. Financial Risk Management
The main purpose for holding or issuing financial instruments is to raise and manage the finances for the entity’s operating, investing and financing activities. There are exposures to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate, currency risk and price risk exposures. The management has certain practices for the management of financial risks and action to be taken in order to manage the financial risks. The guidelines include the following:
1. Minimise interest rate, currency, credit and market risks for all kinds of transactions.
2. Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and costs and payables and receivables denominated in the same currency and therefore put in place hedging strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk.
3. All financial risk management activities are carried out and monitored by senior management staff.
4. All financial risk management activities are carried out following good market practices.
The financial controller who monitors the procedures reports to the audit committee of the board. Checks by management are conducted to ensure that the policies and procedures are followed in practice.
The group is exposed to currency and interest rate risks. There is limited exposure to liquidity risk and price risk. There is no arrangement to reduce such risk exposures through derivatives and other hedging instruments.
32C. Fair Values of Financial Instruments
The financial assets and financial liabilities at amortised cost are at a carrying amount that is a reasonable approximation of fair value.
32D. Credit Risk on Financial Assets
Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash equivalents and receivables and other financial assets. The maximum exposure to credit risk is: the total of the fair value of the financial instruments; the maximum amount the entity could have to pay if the guarantee is called on; and the full amount of any loan payable commitment at the end of the reporting year. Credit risk on cash balances with banks and derivative financial instruments is limited because the counter-parties are entities with acceptable credit ratings. For credit risk on other financial assets is limited because the other parties are entities with acceptable credit ratings. For credit risk on receivables, an ongoing credit evaluation is performed of the financial condition of the debtors and a loss from impairment is recognised in profit or loss. The exposure to credit risk is controlled by setting limits on the exposure to individual customers and these are disseminated to the relevant persons concerned and compliance is monitored by management. There is no significant concentration of credit risk, as the exposure is spread over a large number of counter-parties and customers unless otherwise disclosed in the notes to the financial statements below.
Note 23 discloses the maturity of the cash and cash equivalents balances.
As part of the process of setting customer credit limits, different credit terms are used. The average credit period generally granted to trade receivable customers and credit cards is about 30 to 60 days (2010: 30 to 60 days). But some customers take a longer period to settle the amounts.
(a) Ageing analysis of the age of trade receivable amounts that are past due as at the end of reporting year but not impaired:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Trade receivables:
61-90 days 605 282 90 59
91- 180 days 852 973 1,446 2,496
At end of the year 1,457 1,255 1,536 2,555
(b) Ageing analysis as at the end of reporting year of trade receivable amounts that are impaired:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Trade receivables:
91- 180 days 24 301 74 2,300
At end of the year 24 301 74 2,300
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Select Group Annual Report 201168
Notes To The Financial Statements 31 December 2011
32. FINANCIALINSTRUMENTS:INFORMATIONONFINANCIALRISKS(CONT’D) 32D. Credit Risk on Financial Assets (Cont’d)
The allowance which is disclosed in Note 20 under trade receivables is based on individual accounts totalling $24,000 (2010: $301,000) and $74,000 (2010: $2,300,000) for group and company respectively that are determined to be impaired at the end of reporting year. These are not secured.
Other receivables are normally with no fixed terms and therefore there is no maturity.
Concentration of trade receivable customers as at the end of reporting year:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Top 1 customer 526 288 1,487 1,401
Top 2 customers 998 570 1,967 1,962
32E. Liquidity Risk
The following table analyses the non-derivative financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows):
Less than1 year
2 – 5years
Total
Group: $’000 $’000 $’000
Non-derivative financial liabilities:
2011:
Gross borrowings commitments 5,087 603 5,690
Gross finance lease obligations 538 1,187 1,725
Trade and other payables 17,646 – 17,646
At end of the year 23,271 1,790 25,061
2010:
Gross borrowings commitments 6,828 3,342 10,170
Gross finance lease obligations 235 643 878
Trade and other payables 16,904 – 16,904
At end of the year 23,967 3,985 27,952
Less than1 year
2 – 5years
Total
Company: $’000 $’000 $’000
Non-derivative financial liabilities:
2011:
Gross borrowings commitments 1,258 145 1,403
Gross finance lease obligations 424 652 1,076
Trade and other payables 11,093 – 11,093
At end of the year 12,775 797 13,572
2010:
Gross borrowings commitments 1,567 684 2,251
Gross finance lease obligations 224 632 856
Trade and other payables 12,249 – 12,249
At end of the year 14,040 1,316 15,356
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Select Group Annual Report 2011 69
Notes To The Financial Statements 31 December 2011
32. FINANCIALINSTRUMENTS:INFORMATIONONFINANCIALRISKS(CONT’D) 32E. Liquidity Risk (Cont’d)
The above amounts disclosed in the maturity analysis are the contractual undiscounted cash flows and such undiscounted cash flows differ from the amount included in the statements of financial position. When the counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on which it can be required to pay. For financial guarantee contracts, the maximum earliest period in which the guarantee could be called is used.
Financial guarantee contracts – For financial guarantee contracts, the maximum earliest period in which the guarantee could be called is used. At the end of the reporting year, no claims on the financial guarantees are expected. The following table shows the maturity analysis of the contingent liabilities:
Less than1 year
1 – 4 years
Total
Group: $’000 $’000 $’000
2011:
Banker guarantees– unsecured 206 2,644 2,850
Banker guarantees – secured 50 1,669 1,719
256 4,313 4,569
2010
Banker guarantees– unsecured 409 1,754 2,163
Banker guarantees – secured 30 710 740
439 2,464 2,903
Less than1 year
1 – 4 years
Total
Company: $’000 $’000 $’000
2011
Banker guarantees– unsecured 206 2,644 2,850
Banker guarantees – secured 50 1,669 1,719
Corporate guarantees in favour of financial institutions for facilities extended to subsidiaries 513 7,500 8,013
769 11,813 12,582
2010
Banker guarantees– unsecured 409 1,754 2,163
Banker guarantees – secured 30 710 740
Corporate guarantees in favour of financial institutions for facilities extended to subsidiaries 700 9,000 9,700
1,139 11,464 12,603
The undiscounted amounts on the bank borrowings with fixed and floating interest rates are determined by reference to the conditions existing at the reporting date.
The liquidity risk refers to the difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. It is expected that all the liabilities will be paid at their contractual maturity. The average credit period taken to settle trade payables is about 30 to 60 days (2010 : 30 to 60 days). The other payables are with short-term durations. The classification of the financial assets is shown in the statements of financial position as they may be available to meet liquidity needs and no further analysis is deemed necessary.
Bank Facilities:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Undrawn borrowing facilities 1,539 1,852 1,152 1,451
Unused bank guarantees 731 896 731 896
The undrawn borrowing facilities are available for operating activities and to settle other commitments. Borrowing facilities are maintained to ensure funds are available for the operations. A monthly schedule showing the maturity of financial liabilities and unused bank facilities is provided to management to assist them in monitoring the liquidity risk.
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Select Group Annual Report 201170
Notes To The Financial Statements 31 December 2011
32. FINANCIALINSTRUMENTS:INFORMATIONONFINANCIALRISKS(CONT’D) 32F. Interest Rate Risk
The interest rate risk exposure is mainly from changes in fixed rate and floating interest rates. The interest from financial assets including cash balances is not significant.
The following table analyses the breakdown of the significant financial instruments by type of interest rate:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Financial assets:
Fixed rate – – 4,844 4,948
Floating rate 1,590 1,542 933 927
At end of the year 1,590 1,542 5,777 5,875
Financial liabilities:
Fixed rate 5,750 5,320 1,642 2,172
Floating rate 1,191 5,149 678 736
At end of the year 6,941 10,469 2,320 2,908
The floating rate debt obligations are with interest rates that are re-set regularly at one, three or six month intervals. The interest rates are disclosed in the respective notes.
Sensitivity analysis: The effect on profit before tax is not significant.
32G. Foreign Currency Risk
There is exposure to foreign currency risk as part of its normal business. The effect on post tax loss is not significant.
33.CAPITALCOMMITMENTS Estimated amounts committed at the end of the reporting year for future capital expenditure but not recognised in the financial statements are as follows:
Group
2011$’000
2010$’000
Commitments to purchase plant and equipment – 1,227
34.OPERATINGLEASEPAYMENTSCOMMITMENTSAt the end of the reporting year, the total future minimum lease payments under non-cancellable operating leases are as follows:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Not later than one year 8,105 7,037 351 1,422
Later than one year and not later than five years 12,523 10,416 638 2,735
Later than five years 308 – 308 –
Rental expense for the year 11,346 9,583 – (*) – (*)
(*) The lease commitments of the company relate to rental of the subsidiary’s premises, canteens and food stalls entered into by the company on behalf of the subsidiaries.
The group has various operating lease agreement for a leasehold property, food courts and retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms. Most leases contain renewable options. Some of the leases contain escalation clause and provide for contingent rentals based on percentages of sales. Lease terms do not contain restrictions on the group’s activities concerning dividends, additional debt or further leasing.
In addition, certain operating lease payments for rentals payable for certain premises from the owner is on a month-to-month basis with no commitment terms.
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Select Group Annual Report 2011 71
Notes To The Financial Statements 31 December 2011
35.OPERATINGLEASEINCOMECOMMITMENTS At the end of the reporting year, the total future minimum lease receivables under non-cancellable operating leases are as follows:
Group Company
2011$’000
2010$’000
2011$’000
2010$’000
Not later than one year 3,434 2,749 54 41
Later than one year and not later than five years 2,295 3,142 18 –
Rental income for the year 6,580 4,626 101 98
Operating lease income receivable represent rental income from restaurants and food court stalls and rental income from some of the group’s properties. The leases period ranges from two to three years. Most leases contain renewable options. Some of the leases contain escalation clause and provide for contingent rentals based on percentages of sales. Lease terms do not contain restrictions on the group’s activities concerning dividends, additional debt or further leasing.
36.CONTINGENTLIABILITIES The company has undertaken to provide continued financial support to its subsidiaries with net capital deficits. The extent of the exposure is not determinable.
37. FINANCIALINFORMATIONBYOPERATINGSEGMENTS 37A. Information about Reportable Segment Profit or Loss, Assets and Liabilities
Disclosure of information about operating segments, products and services, the geographical areas, and the major customers are made as required by FRS 108 Operating Segments. This disclosure standard has no impact on the reported results or financial position of the group.
For management purposes, the group’s operating businesses are organised according to their nature of activities. These are grouped into the following market segments and form the basis on which the group reports its primary segment: -
a) Institutional Catering (“IC”) – This segment provides food management services to the corporate customers. They operate and manage staff cafeterias, on a contract basis, at the premises of its corporate customers from various industries;
b) Food Catering (“FC”) – This segment provides events catering services for corporate, community or private functions as well as daily meal delivery services to workplaces and family units;
c) Food Retail (“FR”) – This segment comprises of operation of dedicated food court stalls and public cafeterias specialising in international and local fare;
d) Offshore Catering (“OS”) – This segment provides meal services, housekeeping, kitchen and facility management services to vessels on a contract basis;
e) Peach Garden (“PG”) – This segment comprises of Peach Garden’s operations of restaurants and consultancy management services;
f) Quick Service Restaurant (“TC”) – This segment serves up freshly prepared, high quality and flavourful chicken and tenders fast food style.
g) Dessert Chain (“SK”) – This segment provides traditional hot desserts and other snacks under a wide selection of Hong Kong style cuisine; and
h) Others – This segment comprises net rental collected from Singapore Expo and Changi Terminal 2 and other income.
Inter-segment sales are measured on the basis that the entity actually uses to price the transfers. Internal transfer pricing policies of the group are as far as practicable based on market prices. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.
The management reporting system evaluates performances based on a number of factors. However the primary profitability measurement to evaluate segment’s operating results comprises two major financial indicators: (1) earnings from operations before depreciation, amortisation, interests and income taxes (called “Recurring EBITDA”) and (2) operating result before income taxes and other unallocated items (called “ORBT”).
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Select Group Annual Report 201172
Notes To The Financial Statements 31 December 2011
37. FINANCIALINFORMATIONBYOPERATINGSEGMENTS(CONT’D) 37A. Information about Reportable Segment Profit or Loss, Assets and Liabilities (Cont’d)
The following tables illustrate the information about the reportable segment profit or loss, assets and liabilities.
The information on each product and service or each group of similar products and services is as follows:
Group
2011$’000
2010$’000
Revenue from major products and services:
Institutional Catering (“IC”) 15,954 9,246
Food Catering (“FC”) 15,053 12,450
Food Retail (“FR”) 20,599 20,409
Offshore Catering (“OS”) – 564
Peach Garden (“PG”) 29,782 23,867
Quick Service Restaurant (“TC”) 8,131 1,949
Dessert Chain (“SK”) 3,708 834
Others 8,284 6,208
Total for continuing operations 101,511 75,527
37B. Profit or Loss from Continuing Operations and Reconciliations
IC FC FR OS PG TC SK Others Unallocated Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Continuing Operations 2011
Revenue by Segment
Total revenue by segment 15,954 16,917 20,599 – 30,498 8,133 3,709 13,586 – 109,396
Inter-segment sales – (1,864) – – (716) (2) (1) (5,302) – (7,885)
Total revenue 15,954 15,053 20,599 – 29,782 8,131 3,708 8,284 – 101,511
Recurring EBITDA (17) 2,231 1,114 60 3,833 1,293 600 742 – 9,856
Finance costs (5) (22) 11 – (86) (38) (5) (380) – (525)
Depreciation (62) (363) (609) – (1,216) (509) (234) (1,453) – (4,446)
Amortisation – – – – – – – – (207) (207)
ORBT (84) 1,846 516 60 2,531 746 361 (1,091) (207) 4,678
Other unallocated items (966)
Share of loss of associate –
Profit before tax from continuing operations
3,712
Income tax expense (530)
Profit from continuing operations 3,182
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Select Group Annual Report 2011 73
Notes To The Financial Statements 31 December 2011
37. FINANCIALINFORMATIONBYOPERATINGSEGMENTS(CONT’D) 37B. Profit or Loss from Continuing Operations and Reconciliations (Cont’d)
IC FC FR OS PG TC SK Others Unallocated Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Continuing Operations 2010
Revenue by Segment
Total revenue by segment 9,494 15,394 20,409 564 24,063 1,949 834 9,587 – 82,294
Inter-segment sales (248) (2,944) – – (196) – – (3,379) – (6,767)
Total revenue 9,246 12,450 20,409 564 23,867 1,949 834 6,208 – 75,527
Recurring EBITDA 273 1,028 1,232 (60) 2,155 (506) (224) (1,445) – 2,453
Finance costs (1) (9) (28) – (65) (25) (1) (328) – (457)
Depreciation (34) (304) (952) – (922) (134) (43) (1,219) – (3,608)
Amortisation – – (56) – – – – – (207) (263)
ORBT 238 715 196 (60) 1,168 (665) (268) (2,992) (207) (1,875)
Share of loss of associate (87)
Loss before tax from continuing operations
(1,962)
Income tax expense (159)
Loss from continuing operations (2,121)
37C. Assets and Reconciliations
IC FC FR OS PG TC SK Others Unallocated Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
2011
Total assets for reportable 2,379 4,067 6,577 23 15,934 5,073 2,436 8,055 – 44,544
Total group assets 2,379 4,067 6,577 23 15,934 5,073 2,436 8,055 – 44,544
2010
Total assets for reportable 2,168 4,177 6,424 305 16,252 4,189 1,607 8,829 – 43,951
Total group assets 2,168 4,177 6,424 305 16,252 4,189 1,607 8,829 – 43,951
37D. Liabilities and Reconciliations
IC FC FR OS PG TC SK Others Unallocated Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
2011
Total liabilities for reportable 2,915 3,253 4,594 78 5,322 3,209 1,378 5,943 – 26,692
Unallocated:
Deferred and current tax liabilities – – – – – – – – 2,543 2,543
Total group liabilities 2,915 3,253 4,594 78 5,322 3,209 1,378 5,943 2,543 29.235
2010
Total liabilities for reportable 2,147 3,188 4,032 169 4,858 2,939 985 11,626 – 29,944
Unallocated:
Deferred and current tax liabilities – – – – – – – – 1,920 1,920
Total group liabilities 2,147 3,188 4,032 169 4,858 2,939 985 11,626 1,920 31,864
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Select Group Annual Report 201174
Notes To The Financial Statements 31 December 2011
37. FINANCIALINFORMATIONBYOPERATINGSEGMENTS(CONT’D)37E. Other Material Items and Reconciliations
IC FC FR OS PG TC SK Others Unallocated Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Impairment of assets:
2011 – – – – – – – – – –
2010 – (23) (506) – – – – (183) – (712)
Expenditures for non-current assets:
2011 102 600 186 – 542 925 930 1,996 – 5,281
2010 137 952 2,097 – 3,139 2,737 822 1,244 – 11,128
37F. Geographical Information
The group revenue and profit / (loss) before income tax are substantially derived from Singapore. The assets and liabilities and capital expenditure of the group are substantially employed in Singapore.
37G. Information about Major Customers
Group
2011$’000
2010$’000
Top 1 customer in offshore segment – 564
38.CHANGESANDADOPTIONOFFINANCIALREPORTINGSTANDARDSFor the year ended 31 December 2011, the following new or revised Singapore Financial Reporting Standards were adopted. The new or revised standards did not require any modification of the measurement method or the presentation in the financial statements except for stated below:
FRS No. Title
FRS 1 Presentation of Financial Statements Disclosures (Amendments to)
FRS 24 Related Party Disclosures (Revised)
FRS 27 Consolidated and Separate Financial Statements (Amendments to)
FRS 32 Classification of Rights Issues (Amendments to) (*)
FRS 34 Interim Financial Reporting (Amendments to)
FRS 103 Business Combinations (Amendments to)
FRS 107 Financial Instruments: Disclosures (Amendments to)
FRS 107 Financial Instruments: Disclosures (Amendments to) - Transfers of Financial Assets
INT FRS 113 Customer Loyalty Programmes (Amendments to) (*)
INT FRS 114 Prepayments of a Minimum Funding Requirement (Revised) (*)
INT FRS 115 Agreements for the Construction of Real Estate (*)
INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments (*)
(*) Not relevant to the entity
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Select Group Annual Report 2011 75
Notes To The Financial Statements 31 December 2011
39. FUTURECHANGESINFINANCIALREPORTINGSTANDARDSThe following new or revised Singapore Financial Reporting Standards that have been issued will be effective in future. The transfer to the new or revised standards from the effective dates is not expected to result in material adjustments to the financial position, results of operations, or cash flows for the following year.
FRS No. Title Effective date for periods beginning on or after
FRS 1 Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income 1 Jul 2012
FRS 12 Deferred Tax (Amendments to) – Recovery of Underlying Assets (*) 1 Jan 2012
FRS 19 Employee Benefits 1 Jan 2013
FRS 27 Consolidated and Separate Financial Statements (Amendments to) 1 Jul 2011
FRS 27 Separate Financial Statements 1 Jan 2013
FRS 28 Investments in Associates and Joint Ventures 1 Jan 2013
FRS 107 Financial Instruments: Disclosures (Amendments to) - Transfers of Financial Assets 1 Jul 2011
FRS 110 Consolidated Financial Statements 1 Jan 2013
FRS 111 Joint Arrangements (*) 1 Jan 2013
FRS 112 Disclosure of Interests in Other Entities 1 Jan 2013
FRS 113 Fair Value Measurements 1 Jan 2013
(*) Not relevant to the entity.
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Select Group Annual Report 201176
Shareholdings StatisticsSHARECAPITALIssued and paid-up capital : $16,642,570
Number of shares : 142,380,400
Class of shares : Ordinary shares
Voting rights : One vote per share
The Company has no treasury share held as at 23 March 2012.
SHAREHOLDINGSHELDINTHEHANDSOFPUBLICBased on the information available to the Company as at 23 March 2012, approximately 45.38% 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) of the SGX-ST is complied with.
ANALYSISOFSHAREHOLDINGSASAT23MARCH2012
Size Of Shareholdings No. Of Shareholders % No. Of Shares %
1 - 999 5 1.29 845 0.00
1,000 - 10,000 163 42.12 847,390 0.59
10,001 - 1,000,000 197 50.90 23,557,965 16.55
1,000,001 AND ABOVE 22 5.69 117,974,200 82.86
Total 387 100.00 142,380,400 100.00
MAJORSHAREHOLDERSASAT23MARCH2012
No. Name No. Of Shares %
1 UNITED OVERSEAS BANK NOMINEES PTE LTD 32,634,000 22.92
2 MAYBAN NOMINEES (S) PTE LTD 12,373,000 8.69
3 TAN CHOR KHOON 8,206,400 5.76
4 HONG LEONG FINANCE NOMINEES PTE LTD 7,771,000 5.46
5 CITIBANK NOMINEES SINGAPORE PTE LTD 6,480,000 4.55
6 GO MEI LIN 6,430,000 4.52
7 SBS NOMINEES PTE LTD 5,800,000 4.07
8 PEK POH CHENG 5,415,200 3.80
9 RAFFLES NOMINEES (PTE) LTD 4,795,000 3.37
10 TAY BOCK HIANG 4,753,800 3.34
11 CHEONG GIM KHENG 4,248,000 2.98
12 TAN SOK HUANG 4,169,000 2.93
13 CHUA CHYE TECK 2,000,000 1.40
14 HOON THING LEONG 2,000,000 1.40
15 TAY SWEE NEE 2,000,000 1.40
16 WING HUAT LOONG PTE LTD 1,949,200 1.37
17 TAURUS CAPITAL PARTNERS PTE LTD 1,350,000 0.95
18 TAN CHOH PENG 1,196,800 0.84
19 LIM AI LIAN 1,187,000 0.83
20 TOH PENG SENG 1,110,800 0.78
Total 115,869,200 81.36
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Select Group Annual Report 2011 77
Shareholdings StatisticsSUBSTANTIALSHAREHOLDERSASAT23MARCH2012
No Name Of Shareholder Direct InterestIndirect /
Deemed Interest
1. Tan Chor Khoon (1)(2) 8,206,400 20,775,200
2. Tan Choh Peng (3) 1,196,800 10,413,000
3. Pek Poh Cheng (1) 5,415,200 23,566,400
4. Jit Sun Investments Pte Ltd 32,420,000 0
5. Lee Chye Tek, Lionel (4) 0 32,420,000
Notes:
1. Mr Tan Chor Khoon is the husband of Mdm Pek Poh Cheng. They are hence each deemed to be interested in the shares held by each other.
2. Of the 20,775,200 shares in which Mr Tan Chor Khoon has a deemed interest,
(a) 5,460,000 shares are held through Mayban Nominees (Singapore) Pte Ltd
(b) 3,800,000 shares are held through SBS Nominees Pte Ltd
(c) 6,100,000 shares are held through Hong Leong Finance Nominees Pte Ltd
(d) 5,415,200 shares are held by Mdm Pek Poh Cheng, spouse of Mr Tan Chor Khoon
3. Of the 10,413,000 shares in which Mr Tan Choh Peng has a deemed interest,
(a) 6,913,000 shares are held through Mayban Nominees (Singapore) Pte Ltd
(b) 2,000,000 shares are held through SBS Nominees Pte Ltd
(c) 1,500,000 shares are held through Hong Leong Finance Nominees Pte Ltd
4. Lee Chye Teck, Lionel has a deemed interest in all the 32,420,000 shares held by Jit Sun Investments Pte Ltd by virtue of his interest of 100% in Jit Sun Investments Pte Ltd.
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Select Group Annual Report 201178
Notice Of Annual General MeetingNOTICE IS HEREBY GIVEN that the 2012 Annual General Meeting of the shareholders of the Company will be held at 401 Havelock Road #04-01 Hotel Miramar Singapore 169631 on Friday, 27 April 2012 at 3.00 p.m. to transact the following businesses:
ORDINARY BUSINESS1. To receive and adopt the audited financial statements of the Company and the reports of the Directors and Auditors for the year ended
31 December 2011.Resolution 1
2. To re-elect the following Directors retiring pursuant to Article 106 of the Articles of Association of the Company:-
(a) Mr. Tan Choh Peng
(b) Mr. Lai Kai Jin, Michael
Mr. Lai Kai Jin, Michael shall, upon re-election as Director of the Company, remain as Chairman of the Remuneration Committee and as a member of the Audit Committee and the Nominating Committee and shall be considered independent for the purpose of Rule 704(7) of the Listing Manual (Section B, Rules of Catalist) of the Singapore Exchange Securities Trading Limited (“SGX-ST”)(the “Catalist Rules”).
Resolution 2
Resolution 3
3. To declare a first and final exempt (one-tier) dividend of 0.5 cents per ordinary share for the year ended 31 December 2011. Resolution 4
4. To approve the Directors’ fees of SGD 103,000 for the year ended 31 December 2011. Resolution 5
5. To re-appoint Messrs RSM Chio Lim LLP as Auditors for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 6
SPECIAL BUSINESSTo consider and, if thought fit, to pass the following Resolutions as Ordinary Resolutions, with or without amendments:
6. Authority to allot and issue shares Resolution 7
Pursuant to Section 161 of the Companies Act, Cap. 50. and subject to Rule 806 of the 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);
(ii) (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 sub-paragraph (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
(iii) 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)]
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Select Group Annual Report 2011 79
Notice Of Annual General Meeting7. Authority to offer and grant options in accordance with Select Employee Share Option Scheme Resolution 8
That approval be and is hereby given to the Directors to offer and grant options in accordance with the Rules of the Select Employee Share Option Scheme (“the Scheme”) and to issue such shares in the capital of the Company as may be issued pursuant to the exercise of options under the Scheme, provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15% of the total issued shares excluding Treasury Shares of the Company on the day preceding the date of the relevant grant.
[See Explanatory Note (ii)]
8. And to transact any other business which may be properly transacted at an Annual General Meeting.
Explanatory Notes:
(i) Resolution 7, 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.
(ii) Resolution 8, if passed, will empower the Directors of the Company to offer and grant options under the Scheme and to allot and issue shares pursuant to the exercise of options under the Scheme, subject to the terms of the resolution.
NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and Register of Members of the Company will be closed on 9 May 2012 for the purpose of determining shareholders’ entitlements to the proposed first and final exempt (one-tier) dividend of 0.5 cents per ordinary share in respect of the financial year ended 31 December 2011 (the “Proposed First and Final Dividend”).
Duly completed transfers received by the Company’s Registrars, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 up to 5.00 p.m. on 8 May 2012 will be registered before entitlements to the Proposed First and Final Dividend are determined. The Proposed First and Final Dividend, if approved by shareholders at the 2012 Annual General Meeting, will be paid on 18 May 2012.
Members whose Securities Accounts with The Central Depository (Pte) Limited (“CDP”) are credited with shares at 5.00 p.m. on 8 May 2012 will be entitled to the Proposed First and Final Dividend.
In respect of shares in Securities Accounts with CDP, the Proposed First and Final 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.
BYORDEROFTHEBOARDKwok Chi Biu Company Secretary
Dated : 11 April 2012
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Select Group Annual Report 201180
Notice Of Annual General MeetingNotes:
(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 deposited, the form must be deposited at 8 Wilkie Road #03-01 Wilkie Edge Singapore 228095 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.
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This document has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, Stamford Corporate Services Pte Ltd, for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “Exchange”). The Company’s Sponsor has not independently verified the contents of this document.
This document has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this document including the correctness of any of the statements or opinions made or reports contained in this document.
The contact person for the Sponsor is Mr. Bernard Lui Tel: 6389 3000 Email: [email protected]
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Select Group Annual Report 2011 81
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.
Proxy Form -
I/We,
of
being a member(s) of Select Group Limited (the “Company”), hereby appoint:
Name Address NRIC/Passport NumberProportion of
Shareholdings
and/or (delete as appropriate)
Name Address NRIC/Passport NumberProportion of
Shareholdings
as *my/our *proxy/proxies to vote for *me/us on *my/our behalf at the 2012 Annual General Meeting of the Company to be held on Friday, 27 April 2012 at 401 Havelock Road #04-01 Hotel Miramar Singapore 169631 at 3.00 p.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 For Against
1 To receive and adopt the audited Financial Statements for the year ended 31 December 2011 together with the reports of Directors and Auditors
2 To re-elect Mr. Tan Choh Peng as Director
3 To re-elect Mr. Lai Kai Jin, Michael as Director
4To declare a first and final exempt (one-tier) dividend of 0.5 cents per ordinary share for the year ended 31 December 2011.
5 To approve Directors’ fees of SGD 103,000 for the year ended 31 December 2011
6 To re-appoint Messrs RSM Chio Lim LLP as Auditors and authorise the Directors to fix their remuneration
7 To authorise Directors to allot and issue shares and convertible securities pursuant to Section 161 of the Companies Act, Chapter 50
8 To authorise the Directors to offer and grant options and to issue shares in accordance with the Rules of the Select Employee Share Option Scheme (“the Scheme”)
Signed this day of 2012
Total number of shares held
Signature or Common Seal of shareholder
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AffixPostageStamp
The Company Secretary
SELECTGROUPLIMITEDCompany Reg. / GST No.: 199500697Z
8 Wilkie Road#03-01 Wilkie EdgeSingapore 228095
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 8 Wilkie Road #03-01 Wilkie Edge Singapore 228095 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.
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