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New Trend Lifestyle (NTLG)

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Thursday 04 June, 2015

New Trend Lifestyle

Annual Financial Report

RNS Number : 2650P
New Trend Lifestyle Group plc
04 June 2015
 

 

 

 

New Trend Lifestyle Group Plc

("NTLG" or the "Company")

 

 

 

 

New Trend lifestyle Group Plc (AIM: NTLG), the Singapore - based Feng Shui products and services group, announces its final results for the year ended 31 December 2014.

 

The annual report and accounts and notice of Annual General Meeting will be sent to shareholders later today. Copies of each will be available on the Company's website: www.newtrendlifestylegroup.com

 

The Company's Annual General Meeting is to be held in Singapore on 30 June 2015.

 

For further information:-

 

New Trend Lifestyle Group Plc                                                  0207 653 9850

Robert Goddard, Chairman

Ajay Rajpal, Director & Interim CFO

 

Zeus Capital (Nomad and Broker)                                     

Ross Andrews, Andrew Jones                                                      0161 831 1512

 

 

 


CHAIRMAN'S & CEO'S STATEMENT, INCLUDING FINANCIAL REVIEW

 

Background and summary of trading performance

 

Adverse conditions generally in the Singapore retail environment, including ever increasing rental costs, together with the cancellation and delay of business development projects in mainland China resulted in a very disappointing 2014 for NTLG.  Sales overall declined by 16.6% (SGD1,839k) to SGD9,228k from SGD11,067k in 2013. The reduction was almost entirely attributable to Singapore trading. Sales in China in 2014 at SGD455k were little changed from 2013.

The consequent reduction in group gross profit was SGD1,527k to SGD6,715k (2013: SGD8,242k). In response, management took action to reduce direct expenses by SGD504k to SGD8,741k (2013: SGD9,245k) so that the loss before other income and impairment loss (the 'operating' loss) was contained at SGD2,026k compared with SGD1,003k in 2013.

After taking account of other income of SGD626k (2013: SGD914k) and the impairment loss of SGD84k on the investment in MNC Strategic Investments Plc (2013: SGD951k), the loss before tax was SGD1,484k (2013: SGD1,040k loss).

 

Corrective action

The delay in completing the Company's projects in China, together with the adverse trading results in Singapore, led in early April 2015 to the decision to cease all existing retail operations in China with immediate effect, and concentrate instead on restoring profitability in Singapore, as announced on 1 April 2015.  Some of the China projects that can be managed from Singapore will continue to be developed in the coming year but significant amounts of cash will not be invested in them.

Trading

 

Profit and loss (Singapore)

Sales in Singapore fell back by 17.2% from SGD10,600k in 2013 to SGD8,776 in 2014. This was accompanied by a slight reduction in gross margin from 74.1% to 72.9%.  The resulting gross profit in 2014 was SGD6,401k compared with SGD7,853k the previous year - a fall of SGD 1,452k or 18.5%.

This sharp decline was offset to some extent by the reduction of SGD676k (mostly employment expenses) in operating costs net of depreciation so that the operating loss was SGD 860k, which compares with an operating profit in 2013 of SGD288k.

Other income (mostly rent) of SGD553k (2013: SGD421k) and interest of SGD88k (2013: SGD111k) led to a pre-tax loss of SGD395k.  This compares with a pre-tax profit in 2013 of SGD598k before a gain in that year of SGD482k from disposal of a property.

 

Profit and loss (China and other)

Sales in China remained consistent with the prior year at SGD455k (2013: SGD467k). Direct and operating costs at SGD935k were slightly improved on the prior year. UK costs (including director fees) amounted to SGD531k (2013: SGD432k), mainly as a result of increased travel costs for the UK based directors.

 

Balance sheet

The decrease of SGD325k in fixed assets to SGD4,092k was due almost entirely to a decrease of SGD269k in property plant and equipment.  This was mostly as a result of SGD366k of additions offset by SGD643k of depreciation.

The increase in receivables of SGD452k to SGD1,549k was made up largely of an increase of SGD125k in trade receivables, a SGD247k advance payment mainly for marketing event costs and professional fees and SGD 244k of 'other receivables', resulting mainly from a loan to the Temple partner.

An SGD1,241k increase in short-term borrowings to SGD1,486k and an increase of SGD1,415k in long-term borrowings to SGD3,501k accounted for most of the increase in current and non-current  liabilities respectively. This was mainly as a result of the refinancing of the investment property which raised an additional SGD2,500k, and the convertible loan notes issued in the year of SGD1,110k.

 

Cash flow

Cash on hand remained at healthy levels at the year end, at SGD3,260k. Cash outflow from operations was SGD1,176k compared with an inflow of SGD127k in 2013. This was offset mainly by the increase in net cash from financing activities of SGD2,758k, comprising of the refinancing of the investment property and issue of convertible loan notes.

CURRENT TRADING AND OUTLOOK

The Group's performance in 2014 was poor.  There were continuing difficulties in bringing important China projects to completion and very poor trading conditions in Singapore. Therefore, as explained earlier, the Company decided to abandon the pursuit of projects in China; except to the extent that they can be managed from Singapore at modest cost.  At the same time, resources will be concentrated on restoring profitability in Singapore.  There will be greater use of seminars to promote feng shui services and leases on retail outlets will not be renewed if the increases sought by landlords cannot be justified by the expected level of trade. Central costs are already being reduced.

Trading in the first four months of the year has been in line with management's expectations and the Company has traded at a modest loss before tax. The Board believes that the Company is on track to be trading profitably on a month by month basis by Q4 of 2015.

POST BALANCE SHEET EVENTS

Matthew Pau resigned from the board with effect from 28 February 2015.

 

Robert John Goddard

Chairman

 

 

 

 

4 June 2015


Phang Song Hua

Chief Executive

 


DIRECTORS AND OFFICERS

 

Robert John Goddard (aged 64) - Non-Executive Chairman

Robert is a chartered engineer and was on the board of Burmah Castrol Plc and had previously managed its worldwide fuels business, as well as a substantial portion of its chemicals business. Subsequently he was appointed as Chief Executive of Amberley Group plc in November 2000 where he turned around and sold on its four speciality chemical subsidiaries, before leaving in 2003.  Since then, he has had a variety of advisory and turn around assignments. Currently he is chairman of AIM‑quoted Hardide plc and Universe Group plc. Over the last ten years, and on his own account, Robert has been building a portfolio of investments in early-stage technology companies. During his career he has lived overseas for many years, mainly in the Asia Pacific region.

Phang Song Hua (aged 47) - Chief Executive Officer

Master Phang is a recognised expert in Emperor Star Astrology and Feng Shui and has become a prominent figure in these fields. For over 20 years, he has helped families, corporate leaders, bankers, high-ranking government officers, lawyers, doctors and others in Singapore who have sought his advice.

After working in his family trading business and providing Geomancy services from 1993 to 2005, Master Phang established NTL in 2005 where he is Chief Executive Officer.

Ajay Kumar Rajpal (aged 45) - Non-Executive Director and Interim Finance Director

Ajay is a Chartered Accountant and a member of the Institute of Chartered Accountants in England & Wales. Ajay has a background in cross-border mergers and acquisitions, financial management and corporate recovery. He qualified with Arthur Andersen and worked for an FTSE 100 company, Smith Industries plc, and a number of other international firms.

Matthew Pau (aged 50) - Non-Executive Director

Matthew, who is resident in Hong Kong, is a Fellow of the Institute of Chartered accountants of England & Wales and a Certified Public Accountant in Hong Kong.  He obtained an MA in Engineering, Economics and Management at the University of Oxford in the UK. Matthew practised as an Auditor until 1994 when he left Coopers and Lybrand to become an Investment Manager with ING Baring Private Equity (China).  He is currently Chief Financial Officer in Hong Kong of The Incorporation of Financial Technicians Limited, which provides securities and advisory services in Hong Kong.  He also serves as a Non-executive Director of the Chinese Food and Beverage Group, a company listed on the Hong Kong Stock Exchange.

 

Robert Goddard and Ajay Rajpal both reside in the UK, Master Phang in Singapore and Matthew Pau in Hong Kong.



 

STRATEGIC REPORT

 

Review of the business

A review of the business of the Group, together with comments on future developments is given in the Chairman's and CEO's Statement on pages 2 to 3.

 

Principal Risks and Uncertainties

These are disclosed in Note 28.

 

Key Performance Indicators

The directors believe that the key performance indicators (KPIs) for the business are, like-for-like sales, gross margins, gross profit, cash balances and net profit.

 

Employees

The Group has continued to give full and fair consideration to applications made by disabled persons, having regard to their respective aptitudes and abilities, and to ensure that they benefit from training and career development programmes in common with all employees. The Group has continued its policy of employee involvement by making information available to employees through the medium of frequent staff meetings, together with personal appraisals and feedback sessions.

 

 

 

 

 

The Strategic Report was approved by the Board on 4 June 2015 and signed on its behalf by:

 

 

 

 

 

Director

4 June 2015



 

DIRECTORS' REPORT

 

The Directors have pleasure in submitting this report together with the accounts of New Trend Lifestyle Group Plc ('the Company') and its subsidiary undertakings (together 'the Group') for the year ended 31 December 2014.

 

The company was formed on 21 March 2012 as New Trend Lifestyle Group Limited ("the Company") and changed to its current style on 11 June 2012. On 28 June 2012 the company gained admission to the Alternative Investment Market (AIM).

 

Principal Activities

The principal activities of the Group are those of providing products and services based on Feng Shui and the associated Emperor Star Astrology.

 

Results and dividend

The results for the year are set out in the Consolidated Statement of Comprehensive Income on page 16.  The Directors do not recommend a dividend.

 

Directors and their interests

The directors who held office during the year are as follows:

 

Phang Song Hua 


Robert John Goddard


Lawrence, Cheung Chor Kiu

(Resigned 20 May 2014)

Ajay Kumar Rajpal


Tan Meng Dong

(Resigned 31 January 2014)

Matthew Pau

(Resigned 28 February 2015)



 

The interests of those directors serving at the year ended 31 December 2014, all of which are beneficial, in the share capital of the Company, were as follows:

 


At 31 December 2014


Shares of 0.1p each

%

Phang Song Hua

68,933,333

68.93%

Tan Meng Dong

8,800,000

8.80%

Robert John Goddard

250,000

0.25%




 

None of the Directors or their immediate families had at 31 December 2014 or 31 December 2013, acquired or disposed of since that date, any interest in any shares in the Company or any of its subsidiaries, any interest in any debentures of the Company or any of its subsidiaries or any rights to subscribe for shares in or debentures of the Company or any of its Subsidiaries.

 

Share Capital

Details of the Company's share capital are disclosed in Note 23 of the financial statements.

 

Financial Instruments

Details of the use of financial instruments by the Company and its subsidiary undertakings are disclosed in Note 28 to the financial statements.

 



 

DIRECTORS' REPORT (continued)

 

Statement to Auditors

So far as the Directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Company's auditors are unaware, and each Director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

 

Substantial Shareholdings

As at 12 May 2015, the following interests in 3% or more of the issued ordinary share capital appear in the register:

 

Shareholder

Number of shares

Percentage of issued share capital

Phang Song Hua

68,933,333

68.93%

Beaufort Nominees Limited

12,003,167

12.00%

Tan Meng Dong

8,800,000

8.80%

Lynchwood Nominees Limited

4,692,415

4.69%

CGWL Nominees Limited

3,591,362

3.59%

 

Post Balance Sheet Events

Details of post-balance sheet events are disclosed in Note 31 to the financial statements.

 

Directors' Responsibilities

The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that year.  In preparing these financial statements, the directors are required to:

 

-

select suitable accounting policies and then apply them consistently;

-

make judgements and estimates that are reasonable and prudent;

-

prepare the Financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

-

state whether applicable IFRS' as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements.

 

The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

DIRECTORS' REPORT (continued)

 

Listing

The Company's ordinary shares have been traded on London's AIM Market, since 28 June 2012. Zeus Capital Limited are the Company's Nominated Advisor and Joint Broker. The closing mid market share price at 31st December 2014 was 4.75p.

 

Publication of Financial Statements

The Company's financial statements will be made available on the Company's web-site www.newtrendlifestylegroup.com. The maintenance and integrity of the website is the responsibility of the directors. The directors' responsibility also extends to the financial statements contained therein.

 

Going Concern

After making appropriate enquiries, the directors consider that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. This is reflected in the section 'Going Concern' in Note 2 to the financial statements.

 

Auditors

In accordance with Section 485 of the Companies Act 2006, a resolution proposing that Jeffreys Henry LLP be re-appointed as auditors will be put to the Annual General Meeting.

 

The Report of the Directors was approved by the Board on 4 June 2015 and signed on its behalf by:

 

 

 

Director

4 June 2015

 

 

 

 

 

 



 

CORPORATE GOVERNANCE STATEMENT

 

The Corporate Governance Code (the 'Code')

Though full compliance with the Code is not mandatory for the Group, it is the policy of the board to have regard its guidelines when it is reasonably practicable to do so.  The small size of the Company and its current stage of development mean that it is not sensible or even possible to adhere to some of the guidelines in the Code. 

In addition to summarising its Corporate Governance procedures, the following statement also sets out some aspects of the Code with which the Company does not comply and explains why it does not or, in some cases, complies with the spirit of the Code by some other means.

The Role of the Board

At formal meetings, the board receives reports by the CEO, Master Phang on the overall performance since the previous board meeting.  He is supported by the Interim Finance Director on financial detail.  They are followed by reports on other matters, particularly progress with development projects. Minutes of board Committee meetings held since the preceding formal board meeting are received and decisions made by those committees are submitted for ratification where such is needed.

There is a formal schedule of matters reserved for the board.  This includes the setting of high‑level targets, approval of budgets, strategy, funding, capital expenditure, license agreements and incentive schemes.  Specific authority levels for expenditure are delegated to individual executives or management committees according to a schedule agreed by the board. 

Whilst the bulk of the formulation of budgets and strategy is undertaken by senior management, this is done against a framework set by the whole board, challenged by it in detail and finally approved by it. 

Financial information submitted regularly to the board includes monthly balance sheets and profit & loss accounts; together with analyses of movements in cash, trade debtors and creditors, and fixed assets. 

There are three board Committees; each with terms of reference set by the board.  These are the combined Remuneration and Nomination Committee (RNC), the Audit & Risk Committee (ARC) and the AIM Compliance Committee (ACC).  The Company's Nomad is present at meetings of the ACC and provides advice that is passed on to the main board as necessary. 

In the normal course, board Committees make recommendations to the board but also have certain limited powers delegated to them.  Minutes of Committee meetings are made available to the board as a whole but may be redacted at the discretion of the Chairman of the Committee, if appropriate in consultation with the Company Chairman.  Where it is urgent that a recommendation of a Committee needs to be accepted by the board, this is done by a directors' resolution in writing. 

Certain other high level decisions that cannot await the convening of a formal board meeting may be agreed by way of written resolutions.  In such cases supporting papers are submitted to the directors and they are given the opportunity to discuss the matter with other directors and executive management.  Written resolutions are deemed passed only if all directors vote in favour.

Overcoming geographic and time differences

The board is conscious of the need to overcome the difficulties that can arise from the time differences and geographic separations that face directors; both between and within regions. 

It is not practical or cost-justified for the whole board to meet face-to-face at every board meeting. So where one or more director is unable to be physically present, use is made of telephone conference calls. 

During the course of 2014, there were six meeting of the board.  All directors were present at all meetings, mostly in person but sometimes by telephone.  The Company's chairman attended all of the six meetings and in person at three.

 

 

 

 

CORPORATE GOVERNANCE STATEMENT (continued)

In addition to the board meeting, there are also frequent but less-formal telephone and email exchanges among directors.  On these occasions there may be discussion of monthly management accounts or any other topic a director may wish to raise. 

In addition to using their influence at board and board Committee meetings, non‑executive directors have direct access to the secretary of the board Committees.  This individual reports directly to the chairman of the Audit & Risk Committee, is also the internal auditor for the group and has delegated to him all of the routine company secretarial work.

By these means, the non-executive directors believe that their roles are being discharged effectively.

 

Non-executive directors

It is not thought that the Company is large enough to warrant the formal appointment of a senior non‑executive director.  Instead, other non-executive directors are actively and regularly consulted by the Chairman and encouraged to provide feedback. Master Phang has maintained a dialogue with major shareholders and these directors have kept the Chairman and the board up to date with shareholders' views.

No formal mechanism exists for appraising the effectiveness of the board as a whole or of the Chairman alone.  The Remuneration and Nomination Committee has not recommended that such a process is implemented.

Composition and effectiveness of the Board

Each of the non-executive directors is considered to be 'independent'.

The service agreements for Robert Goddard and Ajay Rajpal were agreed by the board before the Admission to AIM, and these have not been changed since.  Matthew Pau has slightly different terms in order to reflect the fact that he was appointed after Admission.  Copies of the service contracts of all current directors' are available for inspection at the Company's registered office and at the location of the AGM for a period before that meeting begins.

All directors may have access to independent professional advice at Company expense if this is felt by them in their own judgement that it is needed to enable them to discharge their duties and that the cost of such advice is reasonable in the circumstances.

Emphasis is placed by the Chairman on the importance of familiarity with the board pack and the contributions made by directors.  However, given its size, a formal evaluation of board performance by an outside agency is not believed to be appropriate.  Instead, the Chairman's frequent contact with other directors provides sufficient opportunity for frequent and effective two-way 'calibration'.

Incentive schemes for staff and directors

All Singapore-based staff enjoy a bonus of one-month, payable after the end of the calendar year if they remain in the employment of the Company.  In addition, selected staff will be paid a discretionary bonus that depends upon personal and company performance.  The broad guidelines for this are set by the Remuneration and Nomination Committee.  The discretionary bonuses for a few of the most senior staff are also set by that Committee.   

Selected senior members of staff participate in the Company's share option scheme and the overall award of grants to such staff is approved by the RNC according to the rules of that committee.

As previously-announced and recorded elsewhere in this Annual Report, during the course of the year all directors participated in the Company's share options scheme.  All options granted, and their terms, are approved by the board as a whole, with the relevant member being conflicted out of voting when considering the grant that they are to receive.

 

 

 

CORPORATE GOVERNANCE STATEMENT (continued)

Board Committees

There are three standing Committees of the board.  At the end of 2014, membership of these Committees was:

1.     AIM Compliance Committee: Robert Goddard, Matthew Pau & Ajay Rajpal

2.     Audit and Risk Committee: Robert Goddard, Ajay Rajpal, Matthew Pau

3.     Remuneration and Nomination Committee:  Robert Goddard, Ajay Rajpal & Matthew Pau

In each case, the director whose name appears first above after the Committee name above is the Chairman of that Committee.

Each committee has written terms of reference approved by the board.  These are kept under review and updated as needed.

During the year, each of the AIM Compliance Committee, Remuneration and Nomination Committee and the Audit and Risk Committee sat twice. All members were present on each occasion.

The membership and the chairmen of board Committees is determined by the board but, given the small number of directors, refreshing membership on a regular or frequent basis is not viable.

The main purposes and general terms of reference of each board Committee are set out below.

 

AIM Compliance Committee ("ACC")

The AIM Compliance Committee meets at least annually with the Company's Nominated Adviser at appropriate times during the reporting and audit cycle, and otherwise as required.  The duties of the ACC are to:

i     promote integrity, patterns of behaviour and accountability among the directors and executives of the Company to help ensure ethical and responsible decision making;

ii     make recommendations to the Board or the Chairman on procedures, resources and controls that will enable the Company's compliance with the AIM Rules;

iii    provide the Company's nominated adviser with information it requests in order for it to carry out its responsibilities under the AIM Rules;

iv    ensure that each of the directors accepts full responsibility, both collectively and individually, for compliance with the AIM Rules and

v     ensure that each director discloses without delay all information that the Company needs in order to comply with the AIM Rules for Companies; particularly with regard to Rules 17 and 26.

 

Remuneration and Nomination Committee ("RNC")

i     Determine and agree with the board the framework or broad policy for the remuneration and contractual terms of the Company's Chief Executive, Chairman, the executive directors and such other members of the executive management as it is designated to consider.

ii     Design, or approve the design of, and determine targets for, any performance-related pay schemes operated by the Company and approve the total annual payments made under such schemes

iii    Review the design of all share incentive plans for approval by the board and shareholders. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to directors and other senior executives and the performance targets to be used.

 

 

 

CORPORATE GOVERNANCE STATEMENT (continued)

iv    Ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised.

v     Within the terms of the agreed policy and in consultation with the Chairman and/or Chief Executive as appropriate, determine the total individual remuneration package of each executive director and other senior executives who report to the Chief Executive, including bonuses, incentive payments and share options, other share awards or other benefits.

vi    Oversee any major changes in employee benefit structures throughout the Company or Group.

 

Audit & Risk Committee ("ARC")

The Audit & Risk Committee is expected to meet formally at least once a year with the Company's auditor at an appropriate time during the reporting and audit cycle, and otherwise as required.  The duties of the ARC are to:

i     Monitor the integrity of the financial statements, including the annual and interim reports; review the consistency of accounting policies; review whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements; review the methods used to account for significant or unusual transactions; review the clarity of disclosure in the Company's financial reports; and review all material information presented with the financial statements.

ii     Review the effectiveness of the Company's internal controls and risk management systems, and to review and approve the statements included in the annual report concerning these.

iii    Review the Company's arrangements for its employees to raise concerns about possible wrongdoing and ensure that these arrangements allow proportionate and independent investigation; and to review the Company's procedures for detecting and preventing bribery and fraud.

iv    Consider and make recommendations in relation to the appointment, re-appointment and removal of the Company's external auditor; oversee the relationship with the external auditor; maintain contact with the external auditor; review and approve the annual audit plan; review the findings of the audit with the external auditor; and review the effectiveness of the audit.

v     Identify the risks that the Company may be exposed to and recommend to the board how these may be avoided, mitigated or insured against, or some combination of these. 

 

Bribery Act, 2010 (the 'Act')

The Group has in place a full "Anti-bribery Policy" and this is augmented by a "Whistleblower's Policy".  Both have been translated into the Chinese language and all members of staff are required to read and understand the policies and confirm in writing that they have done so. 

Under guidelines set by the board, a designated 'Group Compliance Officer' manages the processes and procedures that flow from the policies, in particular the areas perceived to represent most risk.  The Group Compliance Officer reports to the board or a board committee as needed.

Since its inception, the board has reviewed the practical implementation of the Anti-bribery Policy and will continue do so at least once a year. The basic requirements include ensuring familiarity and acceptance of the policies, risk analysis and maintenance of an 'incident' book. 

 

 

 

 

 

CORPORATE GOVERNANCE STATEMENT (continued)

Business Reviews

The board reviews regularly both the financial position of the Group and information about non‑financial performance.  It does this at each board meeting.  Financial information includes monthly management accounts, including balance sheets and profit and loss accounts for the Group and its subsidiaries, together with analysis of movements in cash, trade debtors and creditors, and fixed assets.  Close attention is also paid to the development of sales by sector and by customer as well as progress with initiatives to develop major new sectors and customers.

Non-financial information reviewed regularly by the board includes reports and key performance indicators, including plant performance, delivery performance, research and development activity, sales activity and health, safety and environmental performance.

Business Model and Strategy

NTL's early successes with its Singaporean operations led it to begin development in mainland China and until recently this was the main focus of the Company's growth strategy and involved a number of trial outlets in China and a regional office in Shenzhen. In addition, several other China-based projects were pursued, including the provision of temple management services and working with lottery companies to provide fengshui-based advice to lottery users. These projects have taken much longer to come to fruition than at first envisaged.  At the same time, deteriorating retail market conditions in Singapore over the last year or so have meant that the cash drain of the China operations can no longer be sustained.  Accordingly the strategy in the short to medium term is now to concentrate resources on revitalising the Singapore operations so as achieve positive profitability by the end of 2015, as announced on 1 April 2015.  To the extent that they can be managed at modest cost out of Singapore, certain of the China projects will still be developed.  These include the identification and appointment of suitable franchise partners in major cities.    

 

The strategy in Singapore is to consolidate and refresh the existing portfolio and promote different services related to existing ones.

 

On behalf of the board,

Robert Goddard

Chairman

4 June 2015

 

 

 

 

 

INDEPENDENT AUDITORS' REPORT

 

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NEW TREND LIFESTYLE GROUP PLC

 

We have audited the financial statements of New Trend Lifestyle Group Plc for the year ended 31 December 2014, which comprise the Consolidated Statement of Comprehensive Income, Company Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Cash Flows, Company Statement of Cash Flows and the related notes on pages 28 to 67. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

 

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Chairman's & CEO's Statement, Strategic Report and Directors' Report to identify material inconsistencies with the audited financial statements, and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any material misstatement or inconsistencies we consider the implications for our report.

 

Opinion on financial statements

 

In our opinion:

 

-   the financial statements give a true and fair view, of the state of the Group's and Parent Company's affairs as at 31 December 2014 and of the Group's and Parent Company's loss and Group's and Parent Company's cash flows for the year then ended;

 

-   the financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and

 

-  the financial statements have been properly prepared in accordance with the Companies Act 2006.

 

Opinion on other matters prescribed by the Companies Act 2006

 

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

INDEPENDENT AUDITORS' REPORT (continued…)

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

-     adequate accounting records have not been kept by the Parent Company, or returns adequate for audit have not been received from branches not visited by us; or

 

-     the Company financial statements are not in agreement with the accounting records and returns; or

 

-     certain disclosures of Directors' remuneration specified by law are not made; or

 

-     we have not received all the information and explanations we require for our audit.

 

 

 

Sanjay Parmar

SENIOR STATUTORY AUDITOR

 

For and on behalf of Jeffreys Henry LLP, statutory auditor

 

 

Finsgate

5-7 Cranwood Street

London

EC1V 9EE

United Kingdom

Date:    4 June 2015



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


Notes

Year ended

Year ended

 Continuing operations


31 December

2014

31 December

2013



SGD'000

SGD'000





Revenue

5

       9,228

       11,067





Direct purchases and costs


       (2,513)

       (2,825)

Personnel expenses

7

       (4,305)

       (4,638)

Depreciation and amortisation expenses


           (689)

           (609)

Finance expenses

8

           (156)

           (129)

Commission expenses


(4)

(125)

Advertising and promotional expenses


           (343)

           (402)

Bank charges


           (285)

(347)

Operating lease expenses


       (1,804)

       (1,595)

Other operating expenses

9

       (1,239)

       (2,351)

Other income

6

             626

             914

Loss before tax


          (1,484)

          (1,040)

Income tax charges

10

             (64)

             (84)

Loss for the year


          (1,548)

          (1,124)

Other comprehensive loss


(77)  

(19)

Total comprehensive loss for

the year


(1,625)

(1,143)

Attributable to:




 - Owners of the parent


(1,625)

(1,143)







SGD

                  SGD

Basic and diluted loss per share

11

          (0.02)

                     (0.01)

 

The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

Included in direct costs is an amount of SGD1,363k (2013: SGD1,644k) related to staff commission costs.



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

Notes

31 December

2014

31 December 2013


SGD'000

SGD'000

ASSETS




Non-current assets




Property, plant and equipment 

14

          1,967

          2,236

Investment property

13

          2,125

          2,181



          4,092

          4,417

Current assets




Inventories

15

          1,155

          1,138

Trade and other receivables 

18

         1,549 

         1,097 

Financial assets at fair value through

profit or loss

17

                15

                99

Cash and cash equivalents 

19

          3,260

          2,160



          5,979

          4,494

Total assets


          10,071

          8,911





EQUITY and LIABILITIES




Capital and reserves attributable to

equity shareholders




Share capital

23

           199

           199

Share premium


       1,731

       1,731

Other reserves


           360

           162

Group reorganisation reserve


       2,845

       2,845

Currency translation reserve


(137)

                  (60)

Accumulated deficit


       (1,425)

       123

Total equity


       3,573

       5,000





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

Current liabilities




Trade and other payables 

20

          1,253

          1,276

Current income tax liabilities


             6

             114

Borrowings

21

              1,486

              245

Restoration costs

22

                 15 

                10



          2,760

          1,645

Non-current liabilities




Restoration costs

22

             172

             180

Deferred tax liability


65

-

Borrowings

21

          3,501

          2,086



          3,738

          2,266

Total equity and liabilities


       10,071

       8,911

 

The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

The financial statements were approved by the Board of directors and authorised for issue on 4 June 2015. They were signed on its behalf by:

 

 

Director

 

4 June 2015

 

Company Number: 8000104



 

CONSOLIDATED STATEMENT OF CASH FLOWS


Notes

 

Year ended

31 December

2014

Year ended 31 December 2013


SGD'000

SGD'000

Cash flows from operating activities




Loss before income tax


(1,484)

(1,040)

Adjustments for:




Depreciation and amortisation expense


689

714

Fixed assets written off


-

16

Interest expense


93

113

Interest income


-

(2)

Impairment loss on trading securities

-

988

 (Gain)/Loss on disposal of plant and equipment

-

(477)

Reversal of provision for restoration costs


(2)

-

Share based payment charge


-

8



(704)

320

Changes in working capital:-




Decrease in inventories


(17)

84

Decrease/(increase) in receivables


(453)

65

Increase/(decrease) in payables


(49)

(197)

Deferred revenue


31

131

Cash generated from operations


(1,192)

403

Interest received


-

2

Income tax paid


15

(278)

Net cash(outflow)/ inflow from operating activities


(1,177)

127





Cash flows from investing activities




Acquisition of property, plant and equipment

14

(366)

(1,070)

Proceeds from disposal of PPE

14

-

3,350

Subscription to unsecured convertible loan notes


-

209

Net cash (outflow) from investing activities


(366)

2,489





Cash flows from financing activities




Proceeds from bank borrowings (net)


2,500

-

Proceeds from convertible loan notes


1,110

-

Repayment of bank loans


(759)

(2,584)

Repayment of finance lease liabilities

22

-

(187)

Interest paid


(93)

(113)

Repayment/(Placement) of fixed deposit


-

(1)

Advance to/from directors


-

(2)

Net cash from financing activities


2,758

(2,887)





 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)


Notes

 

Year ended

31 December

2014

Year ended 31 December 2013


SGD'000

SGD'000




Net increase/(decrease) in cash and cash equivalents

1,215

(271)

Effects of changes in exchange rates


87

-

 

Cash and cash equivalents at start of year - cash


1,958

2,229

Cash and cash equivalents at end of year

19

3,260

1,958





Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.

 

The notes on pages 26 to 63 are an integral part of these consolidated financial statements.



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 




Attributable to equity shareholders of the Company

 


Share capital

Share premium

Accumulated deficit

Other reserves

Group reorganisation reserve

Currency translation reserve

Total

 



SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

At 1 January 2013


199

1,731

1,247

154

2,845

(41)

6,135










Comprehensive income









Loss for the period


-

-

(1,124)

-

-

-

(1,124)

Other comprehensive income









Currency translation

 reserve


-

-

-

 

-

 

-

(19)

(19)

Total comprehensive income for the year


-

-

(1,124)

-

-

(19)

(1,143)

Shares based payments


-

-

-

8

-

-

8

Group reorganisation reserve


-

-

-

 

-

 

-

-

-

At 31 December 2013


199

1,731

123

162

2,845

(60)

5,000










At 1 January 2014


199

1,731

123

162

2,845

(60)

5,000










Comprehensive income









Loss for the period


-

-

(1,548)

-

-

-

(1,548)

Other comprehensive income









Currency translation

 reserve


-

-

-

 

-

 

-

(77)

(77)

Total comprehensive income for the year


-

-

(1,548)

-

-

(77)

(1,625)

Issue of convertible loan notes


-

-

-

198

-

-

198

 

At 31 December 2014


199

1,731

(1,425)

360

2,845

(137)

3,573

 










 

 

Share capital

Amount subscribed for shares at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value.

Other reserves

Cumulative amounts charged in respect of share based payments for unsettled warrants issued and the equity portion of convertible loans issued.

Group reorganisation reserve

Effect on equity of the group reorganisation. See Note 2.

Accumulated surplus

Cumulative surplus of the Group attributable to equity shareholders.



The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

 

 



COMPANY STATEMENT OF COMPREHENSIVE INCOME

 


Notes

Year ended

Year ended

Continuing operations


31 December 2014

31 December 2013



SGD'000

SGD'000

Revenue


-

-





Personnel expenses


(247)

(145)

Finance expense


(68)

(18)

Other operating expenses


(284)

(287)





Profit/(Loss) before tax


(599)

(450)

Income tax charges


-

-

Profit/(Loss) for the year


(599)

(450)

Other comprehensive loss


(1)

-

Total comprehensive loss for the year


(600)

(450)









The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

 



COMPANY STATEMENT OF FINANCIAL POSITION

                                                                                                                                                                                                                         Notes

31 December 2014

31 December 2013


SGD'000

SGD'000

ASSETS




Non-current assets




Investments in subsidiaries 

12

5,225

5,225



5,225

5,225

Current assets




Trade and other receivables 

18

914

705

Cash and cash equivalents 


17

162



931

867

Total assets


6,156

6,092





EQUITY and LIABILITIES




Capital and reserves attributable

to equity shareholders




Share capital

23

199

199

Share premium


1,731

1,731

Other reserves


360

162

Merger relief reserve


5,069

5,069

Currency translation reserve


(28)

(27)

Accumulated deficit


(2,461)

(1,862)

Total equity


4,870

5,272





Current liabilities




Trade and other payables 

20

164

611

Borrowings

21

1,122

209



1,286

820

Total equity and liabilities


6,156

6,092

 

The notes on pages 27 to 64 are an integral part of these consolidated financial statements.

The financial statements were approved by the Board of directors and authorised for issue on 4 June 2015. They were signed on its behalf by:

 

 

 

Director

 

4 June 2015

 

Company Number: 8000104



COMPANY STATEMENT OF CASH FLOWS

 

                                                                       Notes

 

Period ended

31 December 2014

Period ended

31 December 2013


SGD'000

SGD'000

Cash flows from operating activities




Profit/(loss) before income tax


(599)

(450)





Changes in working capital:-




Decrease/(increase) in receivables


(209)

(68)

Increase/(decrease) in payables


(447)

463

Share based payments


-

8

Cash absorbed by operations


(1,255)

(47)





Net cash inflow/(outflow) from operating activities


(1,255)

(47)





Cash flows from financing activities




Proceeds from issues of convertible loans

21

1,110

209

Net cash from financing activities


1,110

209




Net increase/(decrease) in cash and cash equivalents

(145)

 162

Cash and cash equivalents at start of year

162

-

Cash and cash equivalents at end of year

                           17

162




Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.

 

The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

 




Attributable to equity shareholders of the Company

 

 


Share capital

Share premium

Accumulated deficit

Other reserves

Group reorganisation reserve

Currency translation reserve

Total

 



SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

At 1 January 2013


199

1,731

(1,412)

154

5,069

(27)

5,714










Comprehensive income









Loss for the period


-

-

(450)

-

-

-

(450)

Share based payments


-

-

-

 

8

 

-

-

8

 

At 31 December 2013


199

1,731

(1,862)

162

5,069

(27)

5,272

 










 

At 1 January 2014


199

1,731

(1,862)

162

5,069

(27)

5,272

 

Loss for the period


-

-

(599)

-

-

-

(599)

 

Currency translation

 reserve


-

-

-

-

-

(1)

(1)

 

Issue of convertible loan notes


-

-

-

198

-

-

198

 

At 31 December 2014


199

1,731

(2,461)

360

5,069

(28)

4,870

 










 

 

Share capital

Amount subscribed for shares at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value.

Other reserves

Cumulative amounts charged in respect of share based payments for unsettled warrants issued and the equity portion of convertible loans issued.

Merger relief reserve

Arises from the 100% acquisition of NTL on June 2013 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with section 612 of the Companies Act 2006.

Accumulated deficit

Cumulative deficit of the Group attributable to equity shareholders.



The notes on pages 26 to 63 are an integral part of these consolidated financial statements.

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.   General information

      New Trend Lifestyle Group Plc ("the Company") is a company incorporated in England on 21 March 2012 under the Companies Act 2006 but domiciled in Singapore. It was listed on the AIM market on 28 June 2012. The address of the registered office is given at the start of the annual report. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement on pages 2 to 3.

 

2.   Basis of preparation and significant accounting policies

      The consolidated financial statements of New Trend Lifestyle Group Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS's as adopted by the EU), IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

 

      The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

 

      Going concern

      These financial statements have been prepared on the assumption that the Group is a going concern.

 

      When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the Group to generate future sales.

 

      After making enquiries, the directors firmly believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

     

      New and amended standards adopted by the company

      There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2014 that would be expected to have a material impact on the group.

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Standards, interpretations and amendments to published standards that are not yet effective.

 

      The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2014 and have not been early adopted:

 

Reference

Title

Summary

Application date of standard

Application date of Group

Amendments to IFRS 2, IFRS 3

Amendments resulting from Annual Improvements 2010-12 Cycle

IFRS 2: clarifies definition of vesting conditions

IFRS 3: clarifies contingent consideration in a business combination

1 July 2014

1 July 2014

Amendments to IAS 19

Defined Benefit Plans: Employee Contributions

Clarifies that the treatment of contributions when they are independent of the number of years of service

Periods commencing on or after 1 July 2014

1 January 2015

IFRS 9

Financial Instruments

Revised standard for accounting for financial instruments

Periods commencing on or after 1 January 2015

1 January 2015

IFRS 14

Regulatory deferral accounts

Aims to enhance the comparability of financial reporting by entities subject to rate-regulations

Periods commencing on or after 1 January 2016

1 January 2016

 

The Directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.

 

      Basis of consolidation

      The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31st December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

      On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the year of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the Parent Company. See also accounting policy on group reorganisation for acquisitions categorised as group reorganisation.

 

-All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

      Group reorganisation accounting

The Company acquired its 100% interest in New Trend Lifestyle Pte Ltd ("NTL") in 2012 by way of a share for share exchange.  This is a business combination involving entities under common control and the consolidated financial statements are issued in the name of the Group but they are a continuance of those of NTL.  Therefore the assets and liabilities of NTL have been recognised and measured in these consolidated financial statements at their pre combination carrying values.  The retained earnings and other equity balances recognised in these consolidated financial statements are the retained earnings and other equity balances of the Company and NTL.  The equity structure appearing in these consolidated financial statements (the number and the type of equity instruments issued) reflect the equity structure of the Company including equity instruments issued by the Company to effect the consolidation.

 

The difference between consideration given and net assets of NTL at the date of acquisition is included in a group reorganisation reserve. 

 

Functional and presentation currency  

The individual financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates ("functional currency").

 

The consolidated financial statements are presented in Singapore dollars (SGD), which is the functional currency of the Group. 







2014

2013


Year End

Average

Year End

Average

GBP to RMB

9.56

10.12

10.08

9.69

GBP to SGD

2.06

2.09

2.09

1.96

GBP to HKD

12.05

12.77

12.79

12.14

 

Transactions and balances  

Transactions in a currency other than the functional currency ("foreign currency") are measured in the respective functional currencies and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. 

 

Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Company's net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity in the consolidated financial statements. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

 

Translation of the Group's financial statements  

The assets and liabilities of foreign operations are translated into Singapore dollars at the rate of exchange ruling at the balance sheet date and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the profit or loss. 

 

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss.    

 

      Revenue recognition

      Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: 

Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed.

Revenue from services is recognised upon the delivery and acceptance of the service to the customer. 

Revenue from trademarks is derived from fees receivable from franchisees in China.

Rental income arising from operating leases is recognised on a straight-line basis over the lease   terms.

 

      Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the effective interest rates applicable. 

     

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all terms and conditions relating to the grants have been complied with.  When the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments. 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Government grants (continued)

Where the grant relates to income, the government grant shall be recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.  Grants related to income may be presented as a credit in profit or loss, either separately or under a general heading such as "Other income".  Alternatively, they are deducted in reporting the related expenses.

 

      Employees' benefits

      i)    Retirement benefits 

            The Group participates in the national schemes as defined by the laws of the countries in which it has operations. 

 

                  Singapore

      The Group makes contributions to the Central Provident Fund (CPF) Scheme in Singapore, a defined contribution pension schemes. 

 

                  Foreign subsidiaries

      The subsidiaries, incorporated and operating in the HK and PRC are required to provide certain retirement plan contribution to their employees under existing HK and PRC regulations. Contributions are provided at rates stipulated by the HK and PRC regulations and are managed by government agencies, which are responsible for administering these amounts for the subsidiaries' employees. 

 

      Obligations for contributions to defined contribution retirement plans are recognised as an expense in the period in which the related service is performed. 

 

           (ii) Employee leave entitlement 

            Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance sheet date. 

     

      Borrowing costs

      Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.  

     

      Property, plant and equipment

      All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of an item of property, plant and equipment including subsequent expenditure is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

 

      When significant parts of property, plant and equipment is required to be replaced in intervals, the Group recognises such parts as individual assets with specific lives and depreciation, respectively.  Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance expenses are recognised in profit or loss when incurred. 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Property, plant and equipment (continued)

After initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment loss. 

 

All items of property, plant and equipment are depreciated or amortised using the straight-line method to write-off the cost of the assets over their estimated useful lives as            follows: -

 


Useful lives (Years)

Computers

3

Electrical equipment

5

Furniture and fittings

3

Motor vehicles

6

Office equipment

3

Leasehold property

41

Leasehold improvements

2 to 5

 

      The estimated useful life and depreciation method are reviewed, and adjusted as appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Fully depreciated assets are retained in the financial statements until they are no longer in use. 

 

      An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.  The gain or loss on retirement or disposal is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss within "Other income (expenses)" and the asset revaluation reserve related to those asset, if any, is transferred directly to retained earnings.

 

Investment properties

Investment properties are properties that are either owned by the Group or leased under a finance lease in order 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 in the ordinary course of business. Investment properties comprise completed investment properties and properties that are being constructed or developed for future use as investment properties. Properties held under operating leases are classified as investment properties when the definition of investment properties is met and they are accounted for as finance leases.

 

Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair value of investment properties are included in the profit or loss in the year in which they arise.

 

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The gain or loss on the retirement or disposal of an investment property is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in profit or loss in the year of retirement or disposal within "Other income (expenses)".

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

      Financial instruments

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

 

Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the balance sheet date approximated their fair values, due to the relatively short term nature of these financial instruments.

 

The Company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary company. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.

      Financial assets

Initial recognition and measurement

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are initially recognised at fair value plus, in the case of financial assets classified as held-to-maturity, directly attributable transaction costs.

 

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the nature of the assets and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and for held-to-maturity investments, re-evaluates this designation at every balance sheet date. As at the balance sheet date, the Group has no financial assets in the category of held-to-maturity investments and available-for-sale financial assets.

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)         

     

 Subsequent measurement  

(i)   Financial assets at fair value through profit or loss

      This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the short term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.  Financial assets designated at fair value through profit or losses are those that are managed and their performance is evaluated on a fair value basis, in accordance with the Group's investment policy.  Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.

  

      Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains and losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.

 

      Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

 

(ii) Loans and receivables 

      Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are classified as non-current assets.  Loans and receivables comprise cash and cash equivalents, trade and other receivables.  Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

 

Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

 

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset.  Regular way purchases or sales are purchases or sales of financial assets that require delivery of the assets within the period generally established by regulation or convention in the marketplace concerned.

 

Derivative financial instruments

A derivative financial instrument is initially recognized at its fair value on the date the contract is entered into and is subsequently carried at its fair value.  The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Derivative financial instruments (continued)

Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in profit or loss when the changes arise.

 

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settle within 12 months.  Other derivatives are presented as current assets or current liabilities.

 

Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. 

 

 (i) Financial assets carried at amortised cost

      For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

 

      An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss.

 

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

 

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

 

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.   

 

(ii) Financial assets carried at cost 

            If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

     

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

     

      Financial liabilities

      Initial recognition and measurement  

      Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.  The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. As at the balance sheet date, the Group did not have any financial liabilities in the category of financial liabilities at fair value through profit or loss. 

      Subsequent measurement

      Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when liabilities are derecognised, and through the amortisation process.

     

      Derecognition 

      A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.  

 

Provisions

      A provision is recognised when the Group has a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of 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 reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.    

     

      Borrowings

   Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities. 

 

Borrowings are initially recorded at fair value, net of transaction costs and subsequently carried for at amortised costs using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.  Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue.

     

     

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

      Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. 

 

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been substantively enacted by the balance sheet date in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

 

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. 

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow deferred tax assets to be recovered. 

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. 

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

 

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset's recoverable amount. 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Impairment of non-financial assets (continued)

An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely dependent on those from other assets.  Where the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

 

Impairment losses are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. 

 

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. This increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit and loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.  

     

      Inventories

      Inventories comprise finished goods held for resale and are stated at the lower of cost and net realisable value.  Cost is determined using the weighted average method and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. 

      Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to be incurred for selling and distribution.

 

Assets classified as held for sale

Non-current assets (or disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

     

      Share Capital

Ordinary shares are classified as equity. Proceeds from issuance of ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital.

      Investments in subsidiaries

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. 

      Leases

i                 As lessor

      Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in this Note. Contingent rents are recognised as revenue in the period in which they are earned.

 

ii.               As lessee

      Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are treated as reduction of the lease obligation on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

 

      Rental leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement.

 

Related parties

A related party is defined as follows:

 

            (a) A person or a close member of that person's family is related to the Group and the Company if that person:

 

      (i)   Has control or joint control over the Company;

            (ii)   Has significant influence over the Company; or

            (iii) Is a member of the key management personnel of the Group or the Company or of a parent of the Company.

 

            (b)  An entity is related to the Group and the Company if any of the following conditions applies:

 

               (i)            The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

               (ii)            One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

               (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.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

Related parties (continued)

               (v)            The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company;

                    (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.   Critical accounting estimates and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 

 

i.    Critical accounting estimates and assumptions.

      The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

      (a) Useful lives of freehold building 

            The cost of freehold building is depreciated on a straight-line basis over the estimated economic useful lives. Management estimates the useful lives of the freehold building to be 50 years. This is a common life expectancy applied in the industry. Changes in the physical conditions of the freehold building and/or expected level of usage and technological developments could impact the economic useful life of the asset. Therefore, future depreciation charges could be revised. As at 31 December 2014, there are no indications that the remaining economic useful life of the asset is significantly lower than the remaining useful life. The carrying amount of the Group's freehold building at the balance sheet date is disclosed in Note 14 to the financial information. 

 

                  (b)  Impairment of inventories 

            An impairment review is made periodically on inventory for excess inventory, obsolescence and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. These reviews require management to estimate future demand for the products. Possible changes in these estimates could result in revisions to the valuation of inventory.  The carrying amount of inventories as at 31 December 2014 is disclosed in Note 15 to the financial information.  

 

            (c)  Fair value measurement of the derivative financial instrument and convertible loan    

            Where the fair values of financial instruments recorded on the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flow model.  The inputs to these models are derived from observable market data where possible, but where this is not feasible, a degree of judgement is required in establishing fair values.  The determination of the fair value is based on a probability - weighted expected outcome for the conversion right and taking into consideration of certain parameters such as the issuer's probability of listing on AIM from inception until the maturity of the convertible loan note and the expected return based on the issuer's estimated credit rating.  Changes in assumptions about these factors could affect the reported fair value of the derivative financial instrument and convertible loan.

 

            The basis of estimates and the carrying amounts of the derivative financial instrument and convertible loan as at 31 December 2014 are disclosed in Note 16 to the financial information.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

3.   Critical accounting estimates and judgements (continued)

 

ii.    Critical judgement in applying the entity's accounting policies

            In the opinion of the management, there are no critical judgements made in applying the Group's accounting policies, apart from those involving estimations, which has a significant effect on the amounts recognised in the financial statements.

 

4.   Segmental reporting

In the opinion of the Directors the Group has one class of business, being the provider of Feng Shui services in Singapore, Hong Kong and People's Republic of China.

The Group's primary reporting format is determined by the geographical segment according to the location of its establishments. There are currently two geographic reporting segments: Singapore and, China.


2014

2013


Singapore

China and HK

Other

Total

Singapore

China and HK

Other

Total


SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

Income Statement








Revenues from external customers

8,776

455

-

9,231

10,600

467

-

11,067

Other income

553

31

-

584

421

13

-

434

Interest expense

(88)

-

(68)

(156)

(111)

-

(18)

(129)

Depreciation and amortisation

(648)

(41)

-

(689)

(558)

(51)

-

(609)

Impairment of assets





-

(951)

-

(951)

Gain on disposal of property, plant and equipment





482

-

-

482

Direct and operating costs

(8,988)

(935)

(531)

(10,454)

(9,754)

(1,148)

(432)

(11,334)

Group profit / (loss) before tax

(395)

(490)

(599)

(1,484)

1,080

(1,670)

(450)

  (1,040)

Assets and Liabilities








Segment Assets

9,396

652

25

10,073

      7,938

804

    169

  8,911

Segment Liabilities

(4,969)

(245)

(1,285)

(6,499)

(3,363)

(221)

(327)

(3,911)


4,427

407

(1,260)

3,574

      4,575

583

(158)

    5,000

 

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2013: nil).

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

5.   Revenue



2014

2013



SGD'000

SGD'000





Sale of products


5,586

6,486

Services rendered


3,642

4,425

Trademark income


-

156



───────

───────



9,228

11,067



_________

_________

 

6.   Other income



2014

2013



SGD'000

SGD'000





Forfeiture of customers' deposits


2

11

Gain on disposal of property, plant and equipment


-

482

Government grants


62

5

Rental income


396

396

Others


166

20



───────

───────

Total other income


626

914



_________

_________





7.   Personnel expenses and staff numbers (including Directors)



Group

            Company



2014

2013

2014

2013



Number

Number

Number

Number

The average number of employees in the year were:






-       Directors


5

5

5

5

-       Operations


78

91

-

-



─────

─────

──────

──────



83

96

5

5



______

______

________

________









SGD'000

SGD'000

SGD'000

SGD'000

The aggregate payroll costs for these persons were:






-       Salaries, wages and bonuses


3,701

 

3,864

247

145

-       Pension contribution


421

432

-

-

-       Employee benefits


183

342

-

-



──────

──────

───────

───────

Total personnel expense


4,305

4,638

247

145



_______

________

_________

_________

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

7.   Personnel expenses and staff numbers (including Directors) (continued)

Directors' remuneration

Year ended 31 December 2014

Year ended 31 December 2013


Salaries and fees

Pension contri-butions

Total

Salaries and fees

Pension contri-butions

Total


SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

Robert Goddard

82

-

82

78

-

78

Hillary Phang Song Hua

698

14

712

681

14

695

Lawrence Cheung

54

2

56

107

2

109

James Tan

5

-

5

60

-

60

Ajay Kumar Rajpal     

104

-

104

59

-

59

Matthew Pau

62

-

62

-

-

-


───────

───────

───────

───────

───────

───────


1,005

16

1,021

985

16

1,001


_________

_________

_________

_________

_________

_________

 

8.   Finance expenses, net




2014

2013




SGD'000

SGD'000

Finance income: Fixed deposits



5

2




───────

───────




5

2

Less Finance costs





-     Lease obligations



2

9

-     Term loans



91

104

-     Convertible loan



68

18




───────

───────




161

131




───────

───────

Finance costs/(income), net



156

129




_________

_________

 

9.   Other operating expenses




2014

2013




SGD'000

SGD'000

Foreign exchange (gain) / loss, net



(72)

(25)

Impairment loss on trading securities (Note 17)



84

951

Auditors' fees: - Audit



75

106

Non-audit fees paid



6

-

Professional fees



333

234

Printing and stationery



30

39

Repairs and maintenance



40

58

Stamp duties



-

87

Telephone and insurance



92

131

Travelling and transportation



165

145

Utilities



136

139

Other



350

486




──────

──────

Total other expenses



1,239

2,351




________

_________


 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

10.   Taxation

The reconciliation of the tax expense and the product of accounting profit multiplied by the effective rate is as follows:




2014

2013




SGD'000

SGD'000






Accounting profit/(loss)



(1,484)

978




───────

───────

Tax at the effective tax rate of 17% (2013: 17%)



(259)

166






Tax effect on non-deductible expenses



198

462

Tax effect on non-taxable income



(28)

(82)

Utilisation of capital allowances

34

(40)

Tax effect of (under)/over-provision in prior years

-

55

Partial tax exemption



-

(26)

Effect of deferred tax assets not recognised

102

77

Corporate tax rebate



-

(12)

Other adjustments



17

(516)




───────

───────

Income tax expenses



64

84




_________

_________

 

The Company is incorporated in the UK but is treated as a Singapore resident for tax purposes.

 

11.  Loss per share

      Loss per share data is based on the Group profit for the year and the weighted average number of shares in issue.


Year ended

Year ended


31 December 2014

31 December 2013

Basic and diluted profit per share

SGD

 

(0.02)

SGD

 

(0.01)

Profit/(loss) for the purposes of basic and diluted profit per share

(1,547,000)

(1,124,000)

Number of shares

No.

No.

Weighted average number of ordinary shares for the purposes of basic earnings per share

100,000,000

100,000,000




In order to calculate diluted earnings per share, the weighted average number of ordinary shares in issue would be adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. In each of the years ended 31 December 2014 and 2013 the Group has made a loss after taxation and the effect of the potential ordinary shares is anti-dilutive and therefore the diluted earnings per share is the same as basic earnings per share. The weighted average number of potentially dilutive shares for the year ended 31 December 2014 was 101,734,000 (2013: 100,250,000).

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

12.     Investment in subsidiary undertakings

Company


2014

2013



SGD'000

SGD'000





Cost and carrying amount at 1 January and 31 December


5,225

5,225



_________

_________

      

       The company held the following subsidiaries as at 31 December 2014:

Name of companies

Principal

activities

Country of incorporation

and place of business

Proportion (%) of

equity interest




2014 and 2013




%

Held by the Company




New Trend Lifestyle Pte

 Limited

Trading

Singapore

100

 





Held by New Trend

Lifestyle Pte Limited




New Trend Lifestyle (HK)

 Limited

Investment holding and provision of management services

Hong Kong

100

 





Le Queenze Pte. Limited

Beauty salons and spas and retail sale of costume jewellery

Singapore

100





Held by New Trend Lifestyle

(HK) Limited



New Trend Lifestyle

 (Shenzhen) Limited

Trading

People's Republic of

China

100

 

















On 17 April 2014 New Trend Lifestyle Pte Limited subscribed for 1 ordinary share of SGD 1 upon the incorporation of Le Queenze Pte. Limited. During the year the group subscribed for an additional 299,999 ordinary shares for cash of SGD 299,999 to provide its subsidiary with additional working capital. The group did not obtain any other assets or liabilities on acquisition.

 

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

13.     Investment property

Group

2014

2013


SGD'000

SGD'000

Balance Sheet:



Cost



As at the beginning of the year

2,273

2,273

Transfer from property, plant and equipment (Note 14)

-

-


───────

───────

As at the end of the year

2,273

2,273


───────

───────

Amortisation



As at the beginning of the year

92

37

Charge for the year

56

55


───────

───────

As at the end of the year

148

92


───────

───────




Net carrying amount

2,125

2,181


───────

───────




Income statement:

2014

2013


SGD'000

SGD'000

Rental income from investment property:



-     Minimum lease payments

396

396


───────

───────

Direct operating expenses (including repairs and  maintenance) arising from:



-     Rental generating property

139

139

-    

───────

───────

Transfer from property, plant and equipment

On 21 May 2013, the Group transferred a leasehold building that was held as owner-occupied property to investment property.

 

The investment property held by the Group as at 31 December 2014 is as follows;

 

Description

Existing use

Tenure

Floor area

Fair Value

No. 22 Kaki Bukit Crescent,

Kaki Bukit Techpark I,

Singapore 416253

 

 

Offices

 

 

Leasehold

 

 

1,011.5 square meter

 

 

SGD 4,617,100

(2013: SGD 4,581,583)

 

 

Property pledge as security

Group borrowings are secured against Investment property (Note 21).

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

14.     Property, plant and equipment




Leasehold building

Computer equipment

Electrical equipment




SGD'000

SGD'000

SGD'000

Cost

 






At 1 January  2013



927

402

156

Additions



-

28

14

Disposals/written off



-

(1)

(8)




───────

───────

──────

As at 31 December  2013



927

429

162







As at 1 January 2014



927

429

162

Additions



-

54

188

Currency translation differences



-

2

-










───────

───────

──────

As at 31 December  2014



927

485

350




───────

───────

──────







Accumulated Depreciation

 






At 1 January  2013



15

293

103

Charge for the year



23

75

24

Disposals/written off



-

-

(6)




───────

───────

──────

As at 31 December 2013



38

368

121







As at 1 January 2014



38

368

121

Charge for the year



23

42

36




───────

───────

──────

As at 31 December  2014



61

410

157




───────

───────

──────







Net book values

 






At 31 December  2014



866

75

193




───────

───────

──────

At 31 December  2013



889

61

41




───────

───────

──────

 

 

 

 

 

 

 

 

 

 

 

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

14.     Property, plant and equipment (continued)

 


Furniture and fittings

 

Motor vehicles

 

Office equipment

Software development costs

 

Leasehold improvements

 

 

Total


SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

Cost

 







At 1 January  2013

43

282

12

94

1,022

2,938

Additions

148

37

2

13

867

1,109

Disposals/written off

-

(38)

-

-

(288)

(335)

Currency translation differences

-

-

5

-

8

13


───────

───────

───────

───────

───────

──────

As at 31 December  2013

191

281

19

107

1,609

3,725








As at 1 January 2014

191

281

19

107

1,609

3,725

Additions

23

-

-

12

89

366

Disposals/written off

-

-

-

-

(53)

(53)

Currency translation differences

1

-

-

-

7

10


───────

───────

───────

───────

───────

──────

As at 31 December  2014

215

281

19

119

1,652

4,048


───────

───────

───────

───────

───────

──────








Accumulated Depreciation and Amortisation

 







At 1 January  2013

10

121

2

-

603

1,147

Charge for the year

53

44

6

35

296

556

Disposals/written off

-

(38)

-

-

(171)

(215)

Currency translation differences





1

1


───────

───────

───────

───────

───────

──────

As at 31 December 2013

63

127

8

35

729

1,489








As at 1 January 2014

63

127

8

35

729

1,489

Charge for the year

66

41

7

37

391

643

Disposals/ written off

-

-

-

-

(48)

(48)

Currency translation differences

-

-

-

-

(3)

(3)


───────

───────

───────

───────

───────

──────

As at 31 December  2014

129

168

15

72

1,069

2,081


───────

───────

───────

───────

───────

──────








Net book values







At 31 December  2014

86

113

4

47

583

1,967


───────

───────

───────

───────

───────

──────

At 31 December  2013

128

154

11

72

880

2,236


───────

──────

───────

───────

───────

──────

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

14.     Property, plant and equipment (continued)

            

             Assets held under finance leases 

 

      The carrying amount of office equipment, motor vehicles and renovation held under finance leases at the balance sheet date was SGD 32,083 (2013: SGD 183,499). 

 

          Leased assets are pledged as security for the lease obligations (Note 21).

         

          Assets pledged as security 

 

In addition to assets held under finance leases, the group's leasehold building with a carrying amount of SGD 866,000 (2013: SGD 889,000) is mortgaged to secure the Group's bank loans (Note 21).

 

 

15.     Inventories




2014

2013




SGD'000

SGD'000






Finished goods



1,841

1,834

Less: Allowance for inventories obsolescence

(686)

(696)




───────

───────




1,155

1,138




_________

_________

The cost of inventories recognised as expense and included in 'direct purchase and costs' amounted to SGD 1,051,151 (2013: SGD 1,056,635). 

 

16.     Derivative financial asset

On 22 September 2012, NTL, through its subsidiary, New Trend Lifestyle (HK) Limited ("NTL HK"), entered into a convertible loan agreement ("Agreement") with a third party (the "Issuer") to subscribe for unsecured convertible loan notes ("Convertible Loan Notes") amounting to HKD 2,500,000 (equivalent to SGD 417,875), satisfied in full by cash payment. Under the terms of the Agreement, upon the Issuer's admission to the London's Alternative Investment Market, the Group had the right, but not the obligation, to convert the principal amount into ordinary shares at 50 percent of the subscription price.

 

Pursuant to the terms of the Agreement, the principal amount was repayable in full, with 6% interest charged per annum, if the conversion did not take place by 31 March 2012. On 30 March 2012, NTL HK and the Issuer agreed to extend the conversion date to 30 September 2012. 

In accordance with IAS 39 Financial Instruments: Recognition and Measurement, the Group has assessed and classified the Convertible Loan Notes as an embedded derivative. Accordingly the Group has engaged an independent professional valuer to determine the fair value of the convertible loan and the derivative financial instrument, taking into consideration certain parameters such as the issuer's probability of listing on AIM from inception until the maturity of the convertible loan note and the expected return based on the issuer's estimated credit rating. 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

16.     Derivative financial asset (continued)

 

 

The total subscribed amount for the unsecured convertible loan notes of HKD 2,500,000 (equivalent to SGD 417,875), were segregated into derivative financial instrument component and other receivables (Note 18) of HKD1,219,359 (equivalent to SGD 203,816) and HKD1,280,641 (equivalent to SGD 214,059) respectively.

 

      On 2 August 2012, the Issuer, another third party ("Investee") and NTL HK entered into another agreement ("Second Agreement") and agreed that, subject to the admission of the issued ordinary shares of the Investee on the AIM, NTL HK would subscribe for the Investee's shares and the Investee would allot and issue the Investee's shares to NTL HK at a fully issued and paid up price of £0.04 per share. Accordingly, the principal amount of the Convertible Loan Notes payable by the Issuer under the First Agreement would be applied in satisfaction of the amount to be subscribed by NTL HK for the Investee's shares.

 

      On 17 August 2012 ("Conversion Date"), all the terms and conditions of the Second Agreement were fulfilled and the Convertible Loan Notes were converted into 5,000,000 ordinary shares of the Investee ("Quoted Investments").  Accordingly, the carrying amounts of the derivative financial instrument and other receivable were derecognised and the fair value of the Quoted Investments was recognised at the Conversion Date. The directors assessed, based on the nature and purpose of the Quoted Investments, and concluded to classify as financial assets held at fair value through profit and loss (Note 17). The difference between the carrying amounts of Convertible Loan Notes and the fair value of the Quoted Investments, amounting to HKD 3,907,625 (equivalent to SGD 629,518) was recognised in the consolidated income statement as a gain on conversion during the financial year ended 31 December 2012.

 

On 7 July 2014, the ordinary shares of the Investee were restructured from 1,000 existing ordinary shares of 1p each consolidated into one new ordinary share of £10.  Following this, every ordinary share of £10 was subdivided into one new ordinary share of £0.001 each and one deferred share of £9,999. Accordingly, the Group has recognised an impairment loss (Note 17). The impairment loss is due to a fall in the market value of the shares.

 

17.     Financial assets at fair value through profit or loss




2014

2013




SGD'000

SGD'000

Quoted investments:





Equity securities (Note 16)

15

99




──────

───────

Market value of quoted investments





Equity securities



                  15

99




________

_________

        

         Movements of financial assets, at fair value through profit or loss are as follows:

1 January 2014



99

1,050

Less: impairment loss



     (84)

(951)




──────

───────

At 31 December 2014



      15

         99




________

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

18.     Trade and other receivables



     Group

Company



2014

2013

2014

2013



SGD'000

SGD'000

SGD'000

SGD'000













-     Trade receivables


398

273

-

-

-     Advance payment


301

54

-

-

-     Due from a subsidiary (non-trade)*


-

-

906

698

-     Due from a director (non-trade)**


45

1

-

-







Deposits***


425

459

-

-

Prepayments


46

167

8

7

Tax Recoverable


-

53



Other receivables (non-trade)****


334

90

-

-



───────

───────

───────

───────



1,549

1,097

914

705

 

 


_________

_________

_________

_________

 

         *        This amount is unsecured, interest-free and repayable on demand.

         **       This amount is unsecured, repayable on demand and earns interest at Nil% (2013: 5.38%) per annum.

         ***     Included in deposits are refundable rental deposits, amounting to SGD 412,884 (2013: SGD 465,994) paid in respect of office premises and retail outlets.

         ****    This amount is as a result of a loan to the Temple partner

 

 

19.      Cash and cash equivalents




2014

2013




SGD'000

SGD'000






Cash and bank balances



3,260

1,958

Fixed deposits (Note A)



101

202




───────

───────

Cash and bank balances as presented in balance sheets



3,361

2,160

 

Less: Pledged fixed deposits (Note A)



(101)

(202)




───────

───────

Cash and cash equivalents as presented in consolidated statement of cash flows 



3,260

1,958




 _________

 _________






 

Note A:

Fixed deposits bear interest rates at 0.25% (2013: ranged from 0.25% to 0.35%) per annum with an average maturity period of 3 months (2013: 8 months). 

 

Fixed deposits are pledged in connection with lease obligations (Note 21).

   

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

 

20.     Trade and other payables



   Group

  Company



2014

2013

2014

2013



SGD'000

SGD'000

SGD'000

SGD'000







Trade payables


268

261

-

-

Other payables:






-     Due to a director (non-trade)*


6

2

-

-

-     Due to a subsidiary (non-trade)*


-

-

-

492

-     Accrued expenses **


769

899

147

110

-     Deferred revenue


31

-

-

-

-     Customers' deposits


106

79

-

-

-     Rental deposits


-

-

-

-

-     Others


73

35

17

9









985

1,015

164

611



───────

───────

───────

───────



1,253

1,276

164

 611

 

 


_________

_________

_________

_________

         *     These amounts are unsecured, interest-free and repayable on demand.

**   Included in the accrued expenses of the Group as at 31 December 2014 mainly is an amount of SGD 457,235 (2013: SGD 536,553) which relates to commission and bonuses that  are payable to its Group's personnel subsequent to the year end.

 

21.     Financial liabilities

Group



2014

2013




SGD'000

SGD'000

Current liabilities





Finance lease liabilities



22

36

Bank loan



342

-

Convertible loan (Group and Company)



1,122

209




───────

───────




1,486

245




_________

_________

Non-current liabilities





Finance lease liabilities



-

22

Bank loan



3,501

2,064




───────

───────




3,501

2,086




_________

_________

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

21.     Financial liabilities (continued)



Minimum lease payments

Interest

Present value of payments



SGD'000

SGD'000

SGD'000

2014





Not later than one year


17

1

16

Later than one year and not later than five years


6

-

6



───────

───────

───────



23

1

22



_________

_________

_________

 



 

Minimum lease payments

 

Interest

 

Present value of payments



SGD'000

SGD'000

SGD'000

2013





Not later than one year


38

2

36

Later than one year and not later than five years


23

1

22



───────

───────

───────



61

3

58



_________

_________

_________

 

Lease obligations are secured by the following: 

 

(a)           Motor vehicles of the Group (Note 14);

(b)           Fixed deposits (Note 19); and

(c)           Personal guarantee by Master Phang.  

 

The weighted average effective interest rate for finance leases is 5.48% (2013: 5.48%) per annum. The carrying amounts of the Group's finance lease liabilities are approximate their fair value.

 

      Bank loan




2014

2013




SGD'000

SGD'000






Term loan 1 (Kaki Bukit)



-

2,064

Term loan 2



1,841

-

Term loan 3



2,002

-




───────

───────




3,843

2,064




_________

_________

 

Terms loans of the Group are secured by the following: 

(a)   a personal guarantee by Master Phang; and

(b)   a mortgage on the Group's investment property (Note 13)

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

21.     Financial liabilities (continued)

          Bank loan

          The repayment terms of the term loans are as follows:

      

(a)  Term loan 1 was fully settled via refinancing in November 2014.

(b)  Term loan 2 is repayable over 96 monthly instalments commencing in December 2014 and bears interest at the rate of 1.35% (2013: Nil%) per annum at the end of the reporting period.

(c)  Term loan 3 is repayable over 180 monthly instalments commencing in January 2015 and bears interest at the rate of 1.35% (2013: Nil%) per annum at the end of the reporting period.

 

The borrowings are denominated in Singapore Dollar. As at 31 December 2014, the weighted effective interest rate for borrowings was 1.35% (2013: ranged from 1.68% to 2.53%) per annum.

 

Convertible loan

Group and company



2014

2013




SGD'000

SGD'000






Liability portion of convertible loan notes



1,121

209

Equity portion of convertible loan notes



198

-




───────

───────

Total convertible loan notes



1,319

209




_________

_________

 

In May 2013 the Company created a convertible loan note ("Loan Note") to raise up to £250,000 and issued Loan Notes amounting to £100,000.

 

The Loan Notes will pay interest at 12 per cent per annum and will be convertible by the Note Holders into new Ordinary Shares in the Company at a price of 10p per Ordinary Share at any time between the date of issue and the third anniversary thereof. In the event that the conversion does not take place the Loan Notes are repayable by the Company on 30 April 2016. The conversion price of 10p is at a 48% premium to the mid-price of 6.75p as at the close of market on 8 May 2014.

 

Application will be made to the London Stock Exchange for any new Ordinary Shares (which rank parri passu with the existing Ordinary Shares) to be admitted to trading upon conversion.

 

The convertible loan notes amounting to SGD 209,000 have been classified as debt. In accordance with IAS32, the company has estimated that using an interest rate of 12%, the equity element of the convertible loan is SGD nil.

 

       On 28 May 2014, SGD1,140,000 convertible loan notes ("loan notes") were issued with a final repayment date of 31 December 2016. The loan notes bear interest at 3 per cent per annum and will be convertible by the note holder into new ordinary shares in the company at a price of 10p per ordinary share at any time between the date of issue and 31 December 2016.

       The convertible loan note issue announced on 9 May 2013, which has been superseded by this new issue, is now closed.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

22.     Provision for Restoration Costs




2014

2013




SGD'000

SGD'000






Not later than one year



15

10

Later than one year and not later than five years



172

180




───────

───────




187

190




_________

_________

         The movement in provision for restoration costs is as follows:

 




2014

2013




SGD'000

SGD'000






At 1 January



190

59

Provision made



9

153

Provision utilised



(12)

(22)




───────

───────




187

190




_________

_________

 

 

         Provision for restoration costs relate to the estimated cost of dismantling, removing and restoring the premises to their original conditions upon expiration of the leases. The provision is expected to be recognised after one year but within three years from the balance sheet date.

 

23.     Share capital




2014

2013




SGD'000

SGD'000






At the beginning and end of year



199

199




_________

_________






 

         The issued share capital as at 31 December 2014 was 100,000,000 Ordinary Shares of 0.1p each.

        

        

 

24.     Warrants


Number

of warrants

Exercise

price

Weighted average

remaining

contractual

life

At 1 January 2014

3,000,000

8p

6.6 years

Warrants issued in the year

-

-

-

At 31 December 2014

3,000,000

8p

5.6 years

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

24.     Warrants (continued)

The fair value of the warrants issued in a previous year was £0.026 and was derived using

the Black Scholes model. The following assumptions were used in the calculation:

 

Bid price discount

25%

Risk-free rate

0.88%

Volatility

60%

 

 

25.      Share options


Number

of options

Exercise

price

Weighted average

remaining

contractual

life

At 1 January 2014 and 31 December 2014

600,000

8p

9.4 years





 

 

The fair value of the share options issued in the previous year is £0.009 and was derived using the Black Scholes model. The following assumptions were used in the calculation:

 

Bid price discount

25%

Risk-free rate

0.67%

Volatility

60%

Expected life

3 years

 

Expected volatility was determined by calculating the historical volatility of the Company's share price over the last four years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non transferability, exercise restrictions, and behavioural considerations.

 

There were no share options which lapsed or were exercised during the year.

 

 

 

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

26.     Related-party transactions

         Some of the arrangements with related parties (as defined in Note 2) and the effects of these bases determined between the parties are reflected elsewhere in this report. Details of transactions between the Group and related parties are disclosed below: 

 




2014

2013




SGD'000

SGD'000

Transactions and balances with Group members





Loans provided from the Company to:





- New Trend Lifestyle Pte Limited



208

(492)

- New Trend Lifestyle (HK) Limited



698

698






Key management personnel

compensation





Directors' remuneration





- Salaries, wages and bonuses



867

776

- Pension contributions



16

16

- Directors' fees



186

197

- Share based payment



8

8

 

         Related parties comprise mainly companies which are controlled or jointly controlled by Master Phang and his close family members. 

 

         Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. 

 

         During the year, SGD 103,388 (2013: 58,795) was paid to Nas Corporate Services Limited and SGD 82,053 (2013: 78,471) was paid to Redstart Partners LLP for non-executive directors fees in relation to Ajay Kumar Rajpal and Robert John Goddard respectively.

        

         Significant Related Party Balances




2014

2013




SGD'000

SGD'000

Phang Song Hua



  -

(2)

Lawrence, Cheung Chor Kiu



-

2

           

 

On 27 November 2013 Phang Song Hua obtained a short term loan from Hao Tian Development Group Limited ("Hao Tian") in the sum of HK$6 million (approximately SGD 1 million).

Hao Tian is the subsidiary of a substantial company (Ha Tian Resources Limited) listed on the HK Stock Exchange. As security for the loan, which was due to be fully repaid by August 2014,  Phang Song Hua has pledged, in favour of Hao Tian, 54,721,333 shares of the Company representing approximately 54% of the entire issued share capital of Company.

The loan was repaid on 30 July 2014 and the pledge has now been released.



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

27.     Operating lease commitments

 

         (i)            Where the Group is the lessee

         The Group leases certain retail outlets and premises under non-cancellable operating lease agreements. The leases have varying terms, renewal rights and contingent rent. The Group is required to pay either absolute fixed annual increase to the lease payments or contingent rents computed based on its sales achieved during the lease period. 

 

         The future aggregate minimum leases payments under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:

 




2014

2013




SGD'000

SGD'000






Not later than one year



1,599

1,466

Later than one year and not later than five years



941

2,262




───────

───────



2,540

3,728



_________

_________

 

         The leases on the retail outlets and office premises on which rentals are payable will expire between February 2014 to June 2017 (2013: February 2014 to March 2017).

        

         (ii) Where the Group is the lessor

            The future aggregate minimum lease payments receivable under non-cancellable operating leases contracted for at the reporting date but not recognised as receivables are as follows:

        




2014

2013




SGD'000

SGD'000






Not later than one year



396

396

Later than one year and not later than five years


165

561



───────

───────



561

957



_________

_________

        

         The leases on the Group office premises leased to a third party on which rentals are receivable will expire in May 2016 (2013: May 2016).

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

        

28.     Financial instruments

         Financial risk management objectives and policies 

 

         The Group is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks are market risks (including foreign exchange risk and interest rate risk), liquidity risk and credit risk. The Director reviews and agrees policies and procedures for the management of these risks.  

 

It is the Group's policy not to trade in derivative contracts. 

 

(a)     Market risk 

 

         i)    Foreign currency risk 

               The Group is exposed to movement in foreign currency exchange rates arising from normal trading transactions that are denominated in currencies other than the respective functional currencies of the Group entities, primarily with respect to United States dollars and Hong Kong dollars.  The group does not have a policy to hedge its exposure to foreign currency exchange risk.

 

2014


SGD

RMB

HKD

GBP

Total



SGD' 000

SGD' 000

SGD' 000

SGD '000

SGD' 000

Financial assets







Financial assets at fair value through profit or loss


-

-

-

15

15

Trade and other receivables


944

324

21

-

1,289

Cash and bank balances


3,162

51

27

20

3,260



──────

──────

───────

──────

──────



4,106

375

48

35

4,564



________

_______

_________

_______

________








Financial liabilities







Trade and other payables


836

233

62

163

1,294

Lease obligations


23

-

-

-

23

Borrowings, secured


3,843

-

-

-

3,843

Convertible loans


-

-

-

1,122

1,122



──────

──────

───────

──────

──────



4,702

233

62

1,285

6,282



________

_______

_________

________

________








Net financial  assets/(liabilities)


(596)

142

(14)

(1,250)

(1,718)








Less: Net financial assets

 denominated in the respective

entities' functional currencies


596

(203)

14

1,273

1,681



──────

  ─────

───────

──────

──────

Foreign currency exposure


-

(60)

-

23

(37)



________

_______

_________

________

________

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

28.     Financial instruments (continued)

 

2013


SGD

RMB

HKD

GBP

Total



SGD' 000

SGD' 000

SGD' 000

SGD '000

SGD' 000

Financial assets







Financial assets at fair value through profit or loss


-

-

-

99

99

Other receivables


330

477

92

93

992

Cash and bank balances


1,912

26

55

167

2,160



──────

──────

───────

──────

──────



2,242

503

147

359

3,251



________

_______

_________

_______

________








Financial liabilities







Trade and other payables


 1,012

 79

 66

 118

 1,275

Lease obligations


 58

 -  

 -  

 -  

 58

Borrowings, secured


 2,064

 -  

 -  

 -  

 2,064

Convertible loans


 -  

 -  

 -  

 209

 209



──────

──────

───────

──────

──────



       3,134

            79

             66

         327

       3,606



________

_______

_________

________

________








Net financial  assets/(liabilities)


 (892)

 424

 81

 32

 (355)








Less: Net financial assets

 denominated in the respective

entities' functional currencies


 892

 (410)

 9

 168

 660



──────

  ─────

───────

──────

──────

Foreign currency exposure


 -

 14

 90

 200

 305



________

_______

_________

________

________

 

Foreign exchange risk sensitivity  

The following table details the sensitivity to a 10% increase and decrease in the Singapore Dollars against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

 

If the foreign currencies strengthen by 10% against the relevant functional currencies, with all other variables held constant profit or loss and other equity will increase (decrease) by:

 

2014

RMB

HKD

GBP


SGD '000

SGD '000

SGD '000





Profit (Loss)/Other comprehensive income

           (5)

              -

              2


_________

  _________

_________

 

2013

RMB

HKD

GBP


SGD '000

SGD '000

SGD '000





Profit (Loss)/Other comprehensive income

 

1

 

8

 

17


_________

_________

_________

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

28.     Financial instruments (continued)

 

A 10% weakening of foreign currencies against the respective functional currencies at the balance sheet date would have had the equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remains constant. 

 

         (ii) Interest rate risk 

               The Group obtains additional financing through bank borrowings (interest bearing).  The Group's policy to obtain the most favourable interest rates available without increasing its foreign currency exposure.  The Group constantly monitors its interest rate risk and does not utilise interest rate swap or other arrangements for trading or speculative purposes. As at 31 December 2014, there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding. 

 

               Summary quantitative data of the Group's interest-bearing financial instruments can be found in part (b) of this note. 

 

Interest in financial instruments subject to floating interest rates is repriced regularly. The other financial instruments of the Group that are not included in the above table are not subject to interest rate risks. 

 

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting periods in the case of instruments that have floating rates. A 100 basis point increase or decrease is used as it represents management's assessment of the possible change in interest rates. 

 

               Interest risk sensitivity  

 

               If the interest rates had been 100 basis point higher or lower and all other variables were held constant, the Group's profit for the year ended 31 December 2014 would decrease or increase by SGD 31,893 (2013: SGD 6,845). This mainly is attributable to the Group's exposure to interest rates on its variable rate borrowings. 

 

(b) Liquidity risk 

 

      The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group's operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations.  Management monitors the Group's liquidity reserve, comprising cash and cash equivalents (Note 19) on the basis of expected cash flows. 

 

      The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

28.     Financial instruments (continued)

 

(b)  Liquidity risk (continued)

 

 

2014


Weighted average

interest rate

On demand or not later than 1 year

Later than 1 year and not later than 5 years

Later than 5 years



%

SGD'000

SGD'000

SGD'000







Trade and other payables


-

1,456

-

-

Lease obligations (Fixed rates)


5.48

17

6

-

Borrowings, secured (Floating rates)


1.35

393

1,706

2,527

Convertible loans


3

1,122

-

-




───────

───────

───────




          2,988

1,712

2,527




_________

_________

_________

2013












Trade and other payables


-

264

-

-

Lease obligations (Fixed rates)


5.48

22

-

-

Borrowings, secured (Floating rates)


1.68 - 2.53

2,064

-

-

Convertible loans


12

209

-

-




───────

───────

───────




2,559

-

-




_________

_________

_________

 

        

         (c) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The carrying amounts of other receivables and cash and bank balances represent the Company's maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

 

As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount of that class of financial instruments presented on the balance sheet.

 

Cash and bank balances, including fixed deposits are placed with reputable financial institutions.

        

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 

 

28.     Financial instruments (continued)

 

         (d) Financial instruments by category 

               The following table sets out the financial instruments as at the statement of balance sheet date:   




2014

2013




SGD'000

SGD'000

Derivative financial instrument



-

-

Financial assets at fair value through profit or loss



15

99

Loans and receivables (including cash and cash balances)



4,548

3,037




───────

───────




4,563

3,136




_________

_________

Financial liabilities at amortised cost



6,282

4,624




_________

_________

 

Capital risk management policies and objectives 

 

The Group's policy is to maintain adequate capital based on ensure continuity as a going concern while maximising the return to shareholder through the optimisation of the debts and equity balance. 

 

The capital structure of the Company consists of equity, comprising issued capital and retained earnings as disclosed in the financial statements.  The Group's overall strategy remains unchanged since 2013.

 

 

29.     Fair value of financial instruments

 

(i) Fair value of financial instruments that are carried at fair value

 

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy as at 31 December:

 


                 Group


Level 1

Level 2

Level 3

Total

2014





Financial asset:





Financial assets at fair value through profit or loss (Note 17)

15

-

-

15


_________

_________

_________

_________

2013





Financial asset:





Financial assets at fair value through profit or loss (Note 17)

99

-

-

99


_________

_________

_________

_________

      

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 

 

29.     Fair value of financial instruments (continued)

 

Fair value hierarchy

 

The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

 

·              Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

·              Level 2 - 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 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

 

There have been no transfers between Level 1 and Level 2 during the financial years ended 31 December 2014 and 2013.

 

         Determination of fair value

Financial assets at fair value through profit or loss (Note 17):

 

The fair value of financial assets at fair value through profit or loss is determined by direct reference to their bid quotations in an active market at the balance sheet date.

 

Derivative financial instrument (Note 16):

 

The fair value of the derivative financial instrument is estimated by using a discounted cash flow model based on various assumptions and certain parameters such as the probability of the listing date from inception until maturity of the of the convertible loan notes and the expected return based on the estimated credit rating.

 

 

(ii) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

 

As at balance sheet date, there are no financial instruments in this category.

 

30.     Controlling Party Note

 

The Group is controlled by the director, Phang Song Hua.

 

31.     Post balance sheet event

 

Matthew Pau resigned from the Board on 28 February 2015.

 

 


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